Rule: Medicare: Hospital Outpatient Prospective Payment System and CY 2008 Payment Rates, Etc.

Tuesday,
November 27, 2007
Book 2 of 2 Books
Pages 66579–67226
Part III
Department of
Health and Human
Services
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 411, 412, et al.

Medicare and Medicaid Programs; Interim
and Final Rule
hsrobinson on PROD1PC76 with NOTICES
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66580 Federal Register / Vol. 72, No. 227 / Tuesday, November 27, 2007 / Rules and Regulations
DEPARTMENT OF HEALTH AND 90. In addition, we are changing the 2. By regular mail. You may mail
HUMAN SERVICES provisions in our previously issued FY written comments (one original and two
2008 IPPS final rule and are establishing copies) to the following address ONLY:
Centers for Medicare & Medicaid a new policy, retroactive to October 1, Centers for Medicare & Medicaid
Services 2007, of not applying the Services, Department of Health and
documentation and coding adjustment Human Services, Attention: CMS–1392–
42 CFR Parts 410, 411, 412, 413, 414, to the FY 2008 hospital-specific rates for FC (for OPPS and ASC matters),
416, 419, 482, and 485 Medicare-dependent, small rural Attention: CMS–1531–IFC (for Medicare
hospitals (MDHs) and sole community GME matters), P.O. Box 8013, Baltimore,
[CMS–1392–FC], [CMS–1533–F2], and
hospitals (SCHs). In the interim final MD 21244–1850.
[CMS–1531–IFC2]
rule with comment period in this Please allow sufficient time for mailed
RIN 0938–AO71, RIN 0938–AO70, and RIN document, we are modifying our comments to be received before the
0938–AO35 regulations relating to graduate medical close of the comment period.
education (GME) payments made to 3. By express or overnight mail. You
Medicare Program: Changes to the teaching hospitals that have Medicare may send written comments (one
Hospital Outpatient Prospective affiliation agreements for certain original and two copies) to the following
Payment System and CY 2008 Payment emergency situations. address ONLY: Centers for Medicare &
Rates, the Ambulatory Surgical Center Medicaid Services, Department of
DATES: Effective Date: The provisions of
Payment System and CY 2008 Payment Health and Human Services, Attention:
this rule are effective on January 1,
Rates, the Hospital Inpatient CMS–1392–FC (for OPPS and ASC
2008.
Prospective Payment System and FY matters), Attention: CMS–1531–IFC (for
IPPS Payment Rates: The FY 2008
2008 Payment Rates; and Payments for Medicare GME matters), Mail Stop C4–
IPPS payment rates, provided in section
Graduate Medical Education for 26–05, 7500 Security Boulevard,
XIX of the preamble of this document,
Affiliated Teaching Hospitals in Certain Baltimore, MD 21244–1850.
became effective October 1, 2007.
Emergency Situations Medicare and Comment Period: We will consider 4. By hand or courier. If you prefer,
Medicaid Programs: Hospital comments on the payment you may deliver (by hand or courier)
Conditions of Participation; Necessary classifications assigned to HCPCS codes your written comments (one original
Provider Designations of Critical identified in Addenda B, AA, and BB to and two copies) before the close of the
Access Hospitals this final rule with the ‘‘NI’’ comment comment period to one of the following
indicator, and other areas specified addresses: Room 445–G, Hubert H.
AGENCY: Centers for Medicare & Humphrey Building, 200 Independence
Medicaid Services (CMS), HHS. throughout this rule, at the appropriate
address, as provided below, no later Avenue, SW., Washington, DC 20201; or
ACTION: Interim and final rule with 7500 Security Boulevard, Baltimore, MD
comment period. than 5 p.m. EST on January 28, 2008.
We will also consider comments 21244–1850.
If you intend to deliver your
SUMMARY: This final rule with comment relating to the Medicare GME teaching
comments to the Baltimore address,
period revises the Medicare hospital hospital affiliated agreement provisions,
please call telephone number (410) 786–
outpatient prospective payment system as provided below, no later than 5 p.m.
9994 in advance to schedule your
to implement applicable statutory EST on January 28, 2008.
arrival with one of our staff members.
requirements and changes arising from Application Deadline—New Class of (Because access to the interior of the
our continuing experience with this New Technology Intraocular Lens: Hubert H. Humphrey Building is not
system. We describe the changes to the Requests for review of applications for readily available to persons without
amounts and factors used to determine a new class of new technology Federal Government identification,
the payment rates for Medicare hospital intraocular lenses must be received by commenters are encouraged to leave
outpatient services paid under the 5 p.m. EST on April 1, 2008. their comments in the CMS drop slots
prospective payment system. These Deadline for Submission of Written
located in the main lobby of the
changes are applicable to services Medicare GME Affiliation Agreements:
building. A stamp-in clock is available
furnished on or after January 1, 2008. In Written Medicare GME affiliation
for persons who wish to retain proof of
addition, the rule sets forth the agreements must be received by 5 p.m.
filing by stamping in and retain an extra
applicable relative payment weights and EST on January 1, 2008.
copy of the comments being filed.)
amounts for services furnished in ASCs, ADDRESSES: In commenting, please refer Comments mailed to the addresses
specific HCPCS codes to which the final to file codes CMS–1392–FC (for OPPS indicated as appropriate for hand or
policies of the ASC payment system and ASC matters) or CMS–1531–IFC (for courier delivery may be delayed and
apply, and other pertinent rate setting Medicare GME matters), as appropriate. received after the comment period.
information for the CY 2008 ASC Because of staff and resource For information on viewing public
payment system. Furthermore, this final limitations, we cannot accept comments comments, see the beginning of the
rule with comment period will make by facsimile (FAX) transmission. SUPPLEMENTARY INFORMATION section.
changes to the policies relating to the You may submit comments in one of Applications for a new class of new
necessary provider designations of four ways (no duplicates, please): technology intraocular lenses: Requests
critical access hospitals and changes to 1. Electronically. You may submit for review of applications for a new
several of the current conditions of electronic comments on specific issues class of new technology intraocular
participation requirements. in this regulation to http:// lenses must be sent by regular mail
The attached document also www.cms.hhs.gov/eRulemaking. Click to:ASC/NTIOL, Division of Outpatient
incorporates the changes to the FY 2008 on the link ‘‘Submit electronic Care, Mailstop C4–05–17, Centers for
hospital inpatient prospective payment comments on CMS regulations with an Medicare and Medicaid Services,7500
system (IPPS) payment rates made as a open comment period.’’ (Attachments Security Boulevard,Baltimore, MD
result of the enactment of the TMA, should be in Microsoft Word, 21244–1850.
Abstinence Education, and QI Programs WordPerfect, or Excel; however, we Submissions of written Medicare
Extension Act of 2007, Public Law 110– prefer Microsoft Word.) GME affiliation agreements: Written
Federal Register / Vol. 72, No. 227 / Tuesday, November 27, 2007 / Rules and Regulations 66581
Medicare GME affiliation agreements been received: http://www.cms.hhs.gov/ CMS Centers for Medicare & Medicaid
must be sent by regular mail to:Centers eRulemaking. Click on the link Services
for Medicare and Medicaid Services, ‘‘Electronic Comments on CMS CoP [Hospital] Condition of participation
CORF Comprehensive outpatient
Division of Acute Care, Attention: Regulations’’ on that Web site to view
rehabilitation facility
Elizabeth Troung or Renate public comments. CPT [Physicians’] Current Procedural
Rockwell,Mailstop C4–08–06,7500 Comments received timely will also Terminology, Fourth Edition, 2007,
Security Boulevard, Baltimore, MD be available for public inspection as copyrighted by the American Medical
21244–1850. they are received, generally beginning Association
FOR FURTHER INFORMATION CONTACT: approximately 3 weeks after publication CRNA Certified registered nurse anesthetist
Alberta Dwivedi, (410) 786–0378, of a document, at the headquarters of CY Calendar year
DMEPOS Durable medical equipment,
Hospital outpatient prospective the Centers for Medicare & Medicaid
prosthetics, orthotics, and supplies
payment issues. Services, 7500 Security Boulevard, DMERC Durable medical equipment
Dana Burley, (410) 786–0378, Baltimore, MD 21244, on Monday regional carrier
Ambulatory surgical center issues. through Friday of each week from 8:30 DRA Deficit Reduction Act of 2005, Pub. L.
Suzanne Asplen, (410) 786–4558, a.m. to 4 p.m. To schedule an 109–171
Partial hospitalization and community appointment to view public comments, DSH Disproportionate share hospital
mental health center issues. phone 1–800–743–3951. EACH Essential Access Community
Sheila Blackstock, (410) 786–3502, Hospital
Electronic Access E/M Evaluation and management
Reporting of quality data issues.
EPO Erythropoietin
Mary Collins, (410) 786–3189, and This Federal Register document is ESRD End-stage renal disease
Jeannie Miller, (410) 786–3164, also available from the Federal Register FACA Federal Advisory Committee Act,
Necessary provider designations for online database through GPO Access, a Pub. L. 92–463
CAHs issues. service of the U.S. Government Printing FAR Federal Acquisition Regulations
Scott Cooper, (410) 786–9465, and Office. Free public access is available on FDA Food and Drug Administration
Jeannie Miller, (410) 786–3164, Hospital a Wide Area Information Server (WAIS) FFS Fee-for-service
conditions of participation issues. through the Internet and via FSS Federal Supply Schedule
Miechal Lefkowitz, (410) 786–5316, asynchronous dial-in. Internet users can FTE Full-time equivalent
Hospital inpatient prospective payment access the database by using the World FY Federal fiscal year
GAO Government Accountability Office
system issues. Wide Web; the Superintendent of GME Graduate medical education
Tzvi Hefter, (410) 786–4487, Graduate Documents’ home page address is HCPCS Healthcare Common Procedure
medical education program issues. http://www.gpoaccess.gov/index.html, Coding System
SUPPLEMENTARY INFORMATION: by using local WAIS client software, or HCRIS Hospital Cost Report Information
Submitting Comments: We welcome by telnet to swais.access.gpo.gov, then System
comments from the public on the OPPS login as guest (no password required). HHA Home health agency
APC assignments and/or status Dial-in users should use HIPAA Health Insurance Portability and
communications software and modem Accountability Act of 1996, Pub. L. 104–
indicators assigned to HCPCS codes
to call (202) 512–1661; type swais, then 191
identified in Addendum B to this final HOPD Hospital outpatient department
rule with comment period with login as guest (no password required). HOP QDRP Hospital Outpatient Quality
comment indicator ‘‘NI’’ and on the Alphabetical List of Acronyms Data Reporting Program
ASC payment indicators assigned to Appearing in This Final Rule With ICD–9–CM International Classification of
HCPCS codes identified in Addenda AA Comment Period Diseases, Ninth Edition, Clinical
and BB to this final rule with comment Modification
period with comment indicator ‘‘NI’’ in ACEP American College of Emergency IDE Investigational device exemption
order to assist us in fully considering Physicians IME Indirect medical education
AHA American Hospital Association IOL Intraocular lens
issues and developing OPPS and ASC
AHIMA American Health Information IPPS [Hospital] Inpatient prospective
payment policies for those services. You Management Association payment system
can assist us by referencing file code AMA American Medical Association IVIG Intravenous immune globulin
CMS–1392–FC. APC Ambulatory payment classification MAC Medicare Administrative Contractors
We also welcome comments from the AMP Average manufacturer price MedPAC Medicare Payment Advisory
public on all issues set forth regarding ASC Ambulatory Surgical Center Commission
the revised regulations regarding the ASP Average sales price MDH Medicare-dependent, small rural
Medicare GME affiliation agreements to AWP Average wholesale price hospital
assist us in fully considering issues and BBA Balanced Budget Act of 1997, Pub. L. MIEA–TRHCA Medicare Improvements and
105–33 Extension Act under Division B, Title I of
developing policies. You can assist us
BBRA Medicare, Medicaid, and SCHIP the Tax Relief Health Care Act of 2006,
by referencing the file code CMS–1531– [State Children’s Health Insurance Pub. L. 109–432
IFC2 and the specific ‘‘issue identifier’’ Program] Balanced Budget Refinement Act MMA Medicare Prescription Drug,
that precedes the section on which you of 1999, Pub. L. 106–113 Improvement, and Modernization Act of
choose to comment. BCA Blue Cross Association 2003, Pub. L. 108–173
Inspection of Public Comments: All BCBSA Blue Cross and Blue Shield MPFS Medicare Physician Fee Schedule
comments received before the close of Association MSA Metropolitan Statistical Area
the comment period are available for BIPA Medicare, Medicaid, and SCHIP NCCI National Correct Coding Initiative
viewing by the public, including any Benefits Improvement and Protection Act NCD National Coverage Determination
personally identifiable or confidential of 2000, Pub. L. 106–554 NTIOL New technology intraocular lens
CAH Critical access hospital OCE Outpatient Code Editor
business information that is included in CAP Competitive Acquisition Program OMB Office of Management and Budget
a comment. We post all comments CBSA Core-Based Statistical Area OPD [Hospital] Outpatient department
received before the close of the CCR Cost-to-charge ratio OPPS [Hospital] Outpatient prospective
comment period on the following Web CERT Comprehensive Error Rate Testing payment system
site as soon as possible after they have CMHC Community mental health center PHP Partial hospitalization program
PM Program memorandum Division B, Title I of the Tax Relief and (1) Background
PPI Producer Price Index Health Care Act of 2006 (2) Low Dose Rate (LDR) Prostate
PPS Prospective payment system F. Summary of the Major Contents of the Brachytherapy Composite APC
PPV Pneumococcal pneumonia vaccine CY 2008 OPPS/ASC Proposed Rule (a) Background
PRA Paperwork Reduction Act 1. Updates Affecting OPPS Payments (b) Payment for LDR Prostate
QIO Quality Improvement Organization 2. OPPS Ambulatory Payment Brachytherapy
RFA Regulatory Flexibility Act Classification (APC) Group Policies (3) Cardiac Electrophysiologic Evaluation
RHQDAPU Reporting Hospital Quality Data 3. OPPS Payment for Devices and Ablation Composite APC
for Annual Payment Update [Program] 4. OPPS Payment for Drugs, Biologicals, (a) Background
RHHI Regional home health intermediary and Radiopharmaceuticals (b) Payment for Cardiac Electrophysiologic
SBA Small Business Administration 5. Estimate of OPPS Transitional Pass- Evaluation and Ablation
SCH Sole community hospital Through Spending for Drugs, Biologicals, e. Service-Specific Packaging Issues
SDP Single Drug Pricer and Devices B. Payment for Partial Hospitalization
SI Status indicator 6. OPPS Payment for Brachytherapy 1. Background
TEFRA Tax Equity and Fiscal Sources 2. PHP APC Update
Responsibility Act of 1982, Pub. L. 97–248 7. OPPS Coding and Payment for Drug 3. Separate Threshold for Outlier Payments
TOPS Transitional outpatient payments Administration Services to CMHCs
USPDI United States Pharmacopoeia Drug 8. OPPS Hospital Coding and Payment for C. Conversion Factor Update
Information Visits D. Wage Index Changes
WAC Wholesale acquisition cost 9. OPPS Payment for Blood and Blood E. Statewide Average Default CCRs
Products F. OPPS Payments to Certain Rural
In this document, we address several 10. OPPS Payment for Observation Hospitals
payment systems under the Medicare Services 1. Hold Harmless Transitional Payment
program: The hospital outpatient 11. Procedures That Will Be Paid Only as Changes Made by Pub. L. 109–171 (DRA)
prospective payment system (OPPS); the Inpatient Services 2. Adjustment for Rural SCHs Implemented
revised ambulatory surgical center 12. Nonrecurring Technical and Policy in CY 2006 Related to Pub. L. 108–173
Changes (MMA)
(ASC) payment system; the hospital 13. OPPS Payment Status and Comment G. Hospital Outpatient Outlier Payments
inpatient prospective payment system Indicators H. Calculation of an Adjusted Medicare
(IPPS); and payments for direct and 14. OPPS Policy and Payment Payment from the National Unadjusted
indirect graduate medical education Recommendations Medicare Payment
(GME). The provisions relating to the 15. Update of the Revised ASC Payment I. Beneficiary Copayments
OPPS are included in sections I. through System 1. Background
XV., XVII., XXI. through XXIV. of this 16. Quality Data for Annual Payment 2. Copayment
final rule with comment period and in Updates 3. Calculation of an Adjusted Copayment
Addenda A, B, C (Addendum C is 17. Changes Affecting Necessary Provider Amount for an APC Group
Critical Access Hospitals (CAHs) and III. OPPS Ambulatory Payment Classification
available on the Internet only; see Hospital Conditions of Participation (APC) Group Policies
section XXI. of this final rule with (CoPs) A. Treatment of New HCPCS and CPT
comment period), D1, D2, E, L, and M 18. Regulatory Impact Analysis Codes
to this final rule with comment period. G. Public Comments Received in Response 1. Treatment of New HCPCS Codes
The provisions related to the revised to the CY 2008 OPPS/ASC Proposed Included in the April and July Quarterly
ASC payment system are included in Rule OPPS Updates for CY 2007
sections XVI., XVII., and XXI. through H. Public Comments Received on the a. Background
XXIV. of this final rule with comment November 24, 2006 OPPS/ASC Final b. Implantation of Interstitial Devices (APC
period and in Addenda AA, BB, DD1, Rule with Comment Period 0156)
II. Updates Affecting OPPS Payments c. Other New HCPCS Codes Implemented
DD2, and EE (Addendum EE is available A. Recalibration of APC Relative Weights in April or July 2007
on the Internet only; see section XXI. of 1. Database Construction 2. Treatment of New Category I and III CPT
this final rule with comment period) to a. Database Source and Methodology Codes and Level II HCPCS Codes
this final rule with comment period. b. Use of Single and Multiple Procedure a. Establishment and Assignment of New
The provisions relating to the IPPS Claims Codes
payment rates are included in section (1) Use of Date of Service Stratification and b. Electronic Brachytherapy (New
XIX., XXIV., and XXV. of this a Bypass List to Increase the Amount of Technology APC 1519)
Data Used to Determine Medians c. Other Mid-Year CPT Codes
document. The provisions relating to (2) Exploration of Allocation of Packaged B. Variations within APCs
policy changes to the Medicare GME Costs to Separately Paid Procedure 1. Background
affiliation provisions for teaching Codes 2. Application of the 2 Times Rule
hospitals in certain emergency c. Calculation of CCRs 3. Exceptions to the 2 Times Rule
situations are included in sections XX., 2. Calculation of Median Costs C. New Technology APCs
XXIV., and XXV. of this document. 3. Calculation of OPPS Scaled Payment 1. Introduction
Weights 2. Movement of Procedures from New
Table of Contents 4. Changes to Packaged Services Technology APCs to Clinical APCs
I. Background for the OPPS a. Background a. Positron Emission Tomography (PET)/
A. Legislative and Regulatory Authority for b. Addressing Growth in OPPS Volume Computed Tomography (CT) Scans (APC
the Hospital Outpatient Prospective and Spending 0308)
Payment System c. Packaging Approach b. IVIG Preadministration-Related Services
B. Excluded OPPS Services and Hospitals (1) Guidance Services (APC 0430)
C. Prior Rulemaking (2) Image Processing Services c. Other Services in New Technology APCs
D. APC Advisory Panel (3) Intraoperative Services (1) Breast Brachytherapy Catheter
1. Authority of the APC Panel (4) Imaging Supervision and Interpretation Implantation (APC 0648)
2. Establishment of the APC Panel Services (2) Preoperative Services for Lung Volume
3. APC Panel Meetings and Organizational (5) Diagnostic Radiopharmaceuticals Reduction Surgery (LVRS) (APCs 0209
Structure (6) Contrast Agents and 0213)
E. Provisions of the Medicare (7) Observation Services D. APC Specific Policies
Improvements and Extension Act under d. Development of Composite APCs 1. Cardiac Procedures
a. Cardiac Computed Tomography and 10. Medical Services 2. Emergency Department Visits
Computed Tomographic Angiography a. Single Allergy Tests (APC 0381) C. Visit Reporting Guidelines
(APCs 0282 and 0383) b. Continuous Glucose Monitoring (APC 1. Background
b. Coronary and Non-Coronary Angioplasty 0097) 2. CY 2007 Work on Visit Guidelines
(PTCA/PTA)(APCs 0082, 0083, and c. Home International Normalized Ratio 3. Visit Guidelines
0103) (INR) Monitoring (APC 0097) X. OPPS Payment for Blood and Blood
c. Implantation of Cardioverter- d. Mental Health Services (APC 0322, Products
Defibrillators (APCs 0107 and 0108) 0323, 0324, 0325) A. Background
d. Removal of Patient-Activated Cardiac IV. OPPS Payment for Devices B. Payment for Blood and Blood Products
Event Recorder (APC 0109) A. Treatment of Device Dependent APCs XI. OPPS Payment for Observation Services
e. Stress Echocardiography (APC 0697) 1. Background A. Observation Services (HCPCS Code
2. Gastrointestinal Procedures 2. Payment under the OPPS G0378)
a. Computed Tomographic Colonography 3. Payment When Devices Are Replaced B. Direct Admission to Observation
(APC 0332) with Partial Credit to the Hospital (HCPCS Code G0379)
b. Laparoscopic Neurostimulator Electrode B. Pass-Through Payments for Devices XII. Procedures That Will Be Paid Only as
Implantation (APC 0130) 1. Expiration of Transitional Pass Through Inpatient Procedures
c. Screening Colonoscopies and Screening Payments for Certain Devices A. Background
Flexible Sigmoidoscopies (APCs 0158 a. Background B. Changes to the Inpatient List
and 0159) b. Final Policy XIII. Nonrecurring Technical and Policy
3. Genitourinary Procedures 2. Provisions for Reducing Transitional Changes
a. Cystoscopy with Stent (APC 0163) Pass Through Payments to Offset Costs A. Outpatient Hospital Services and
b. Percutaneous Renal Cryoablation (APC Packaged into APC Groups Supplies Incident to a Physician Service
0423) a. Background B. Interrupted Procedures
c. Prostatic Thermotherapy (APC 0163) b. Final Policy C. Transitional Adjustments—Hold
d. Radiofrequency Ablation of Prostate V. OPPS Payment Changes for Drugs, Harmless Provisions
(APC 0163) Biologicals, and Radiopharmaceuticals D. Reporting of Wound Care Services
e. Ultrasound Ablation of Uterine Fibroids A. Transitional Pass-Through Payment for E. Reporting of Cardiac Rehabilitation
with Magnetic Resonance Guidance Additional Costs of Drugs and Services
(MRgFUS) (APC 0067) Biologicals F. Reporting of Bone Marrow and Stem
f. Uterine Fibroid Embolization (APC 0202) 1. Background Cell Processing Services
4. Nervous System Procedures 2. Drugs and Biologicals with Expiring G. Reporting of Alcohol and/or Substance
Abuse Assessment and Intervention
a. Chemodenervation (APC 0206) Pass-Through Status in CY 2007
Services
b. Implantation of Intrathecal or Epidural 3. Drugs and Biologicals with Pass-
XIV. OPPS Payment Status and Comment
Catheter (APC 0224) Through Status in CY 2008
Indicators
c. Implantation of Spinal Neurostimulators B. Payment for Drugs, Biologicals, and
A. Payment Status Indicator Definitions
(APC 0222) Radiopharmaceuticals without Pass
1. Payment Status Indicators to Designate
5. Nuclear Medicine and Radiation Through Status Services That Are Paid under the OPPS
Oncology Procedures 1. Background 2. Payment Status Indicators to Designate
a. Adrenal Imaging (APC 0391) 2. Criteria for Packaging Payment for Drugs Services That Are Paid under a Payment
b. Injection for Sentinel Node and Biologicals System Other Than the OPPS
Identification (APC 0389) 3. Payment for Drugs and Biologicals 3. Payment Status Indicators to Designate
c. Myocardial Positron Emission without Pass Through Status That Are Services That Are Not Recognized under
Tomography (PET) Scans (APC 0307) Not Packaged the OPPS But That May Be Recognized
d. Nonmyocardial Positron Emission a. Payment for Specified Covered by Other Institutional Providers
Tomography (PET) Scans (APC 0308) Outpatient Drugs 4. Payment Status Indicators to Designate
e. Proton Beam Therapy (APCs 0664 and (1) Background Services That Are Not Payable by
0667) (2) Payment Policy Medicare
6. Ocular and Ear, Nose and Throat (3) Payment for Blood Clotting Factors B. Comment Indicator Definitions
Procedures (a) Background XV. OPPS Policy and Payment
a. Amniotic Membrane for Ocular Surface (b) Payment for Diagnostic Recommendations
Reconstruction (APC 0244) Radiopharmaceuticals A. MedPAC Recommendations
b. Keratoprosthesis (APC 0293) (c) Payment for Therapeutic B. APC Panel Recommendations
c. Palatal Implant (New Technology APC Radiopharmaceuticals XVI. Update of the Revised Ambulatory
1510) b. Payment for Nonpass-Through Drugs, Surgical Center Payment System
7. Orthopedic Procedures Biologicals, and Radiopharmaceuticals A. Legislative and Regulatory Authority for
a. Arthroscopic Procedures (APCs 0041 with HCPCS Codes, But without OPPS the ASC Payment System
and 0042) Hospital Claims Data B. Rulemaking for the Revised ASC
b. Closed Fracture Treatment (APC 0043) VI. Estimate of OPPS Transitional Pass Payment System
c. Insertion of Posterior Spinous Process Through Spending for Drugs, Biologicals, C. Revisions to the ASC Payment System
Distraction Device (APC 0050) Radiopharmaceuticals, and Devices Effective January 1, 2008
d. Intradiscal Annuloplasty (APC 0050) A. Total Allowed Pass Through Spending 1. Covered Surgical Procedures under the
e. Kyphoplasty Procedures (APC 0052) B. Estimate of Pass Through Spending Revised ASC Payment System
8. Vascular Procedures VII. OPPS Payment for Brachytherapy a. Definition of Surgical Procedure
a. Blood Transfusion (APC 0110) Sources b. Identification of Surgical Procedures
b. Endovenous Ablation (APC 0092) A. Background Eligible for Payment under the Revised
c. Insertion of Central Venous Access B. Payment for Brachytherapy Sources ASC Payment System
Device (APC 0625) VIII. OPPS Drug Administration Coding and c. Payment for Covered Surgical
d. Noninvasive Vascular Studies (APC Payment Procedures under the Revised ASC
0267) A. Background Payment System
9. Other Procedures B. Coding and Payment for Drug (1) General Policies
a. Hyperbaric Oxygen Therapy (APC 0659) Administration Services (2) Office-Based Procedures
b. Skin Repair Procedures (APCs 0133, IX. Hospital Coding and Payments for Visits (3) Device-Intensive Procedures
0134, 0135, 0136, and 0137) A. Background (4) Multiple and Interrupted Procedure
c. Stereotactic Radiosurgery (SRS) B. Policies for Hospital Outpatient Visits Discounting
Treatment Delivery Services (APCs 0065, 1. Clinic Visits: New and Established (5) Transition to Revised ASC Payment
0066, and 0067) Patient Visits and Consultations Rates
2. Covered Ancillary Services under the D. Implementation of the HOP QDRP and 1. Executive Order 12866
Revised ASC Payment System Request for Additional Suggested 2. Regulatory Flexibility Act (RFA)
a. General Policies Measures 3. Small Rural Hospitals
b. Payment Policies for Specific Items and E. Requirements for HOP Quality Data 4. Unfunded Mandates
Services Reporting for CY 2009 and Subsequent 5. Federalism
(1) Radiology Services Calendar Years B. Effects of OPPS Changes in This Final
(2) Brachytherapy Sources 1. Administrative Requirements Rule with Comment Period
3. General Payment Policies 2. Data Collection and Submission 1. Alternatives Considered
a. Adjustment for Geographic Wage Requirements 2. Limitation of Our Analysis
Differences 3. HOP QDRP Validation Requirements 3. Estimated Impact of This Final Rule
b. Beneficiary Coinsurance F. Publication of HOP QDRP Data with Comment Period on Hospitals and
D. Treatment of New HCPCS Codes Collected CMHCs
1. Treatment of New CY 2008 Category I G. Attestation Requirement for Future 4. Estimated Effect of This Final Rule with
and III CPT Codes and Level II HCPCS Payment Years Comment Period on Beneficiaries
Codes H. HOP QDRP Reconsiderations 5. Conclusion
2. Treatment of New Mid-Year Category III I. Reporting of ASC Quality Data 6. Accounting Statement
CPT Codes J. FY 2009 IPPS Quality Measures under C. Effects of ASC Payment System Changes
3. Treatment of Level II HCPCS Codes the RHQDAPU Program in This Final Rule with Comment Period
Released on a Quarterly Basis XVIII. Changes Affecting Critical Access 1. Alternatives Considered
E. Updates to Covered Surgical Procedures Hospitals (CAHs) and Hospital 2. Limitations on Our Analysis
and Covered Ancillary Services Conditions of Participation (CoPs) 3. Estimated Effects of This Final Rule with
1. Identification of Covered Surgical A. Changes Affecting CAHs Comment Period on ASCs
Procedures 1. Background 4. Estimated Effects of This Final Rule with
a. General Policies 2. Co-Location of Necessary Provider CAHs Comment Period on Beneficiaries
b. Changes in Designation of Covered 3. Provider-Based Facilities of CAHs 5. Conclusion
Surgical Procedures as Office-Based 4. Termination of Provider Agreement 6. Accounting Statement
c. Changes in Designation of Covered 5. Regulation Changes D. Effects of the Requirements for
Surgical Procedures as Device Intensive B. Revisions to Hospital CoPs Reporting of Quality Data for Hospital
2. Changes in Identification of Covered 1. Background Outpatient Settings
Ancillary Services 2. Provisions of the Final Regulation E. Effects of the Policy on CAH Off-Campus
F. Payment for Covered Surgical a. Timeframes for Completion of the and Co-Location Requirements
Medical History and Physical F. Effects of the Policy Revisions to the
Procedures and Covered Ancillary
Examination Hospital CoPs
Services
b. Requirements for Preanesthesia and G. Effects of the Changes to the Hospital
1. Payment for Covered Surgical
Postanesthesia Evaluations Inpatient Prospective Payment System
Procedures
c. Technical Amendment to Nursing (IPPS) Payment Rates
a. Update to Payment Rates
Services CoP 1. Overall Impact
b. Payment Policies When Devices Are XIX. Changes to the FY 2008 Hospital
Replaced at No Cost or with Credit 2. Objectives
Inpatient Prospective Payment System 3. Limitations of Our Analysis
(1) Policy When Devices Are Replaced at (IPPS) Payment Rates
No Cost or with Full Credit 4. Quantitative Effects of the IPPS Policy
A. Background Changes on Operating Costs
(2) Policy When Implantable Devices Are B. Revised IPPS Payment Rates
Replaced with Partial Credit 5. Analysis of Table I
1. MS–DRG Documentation and Coding a. Effects of All Changes with CMI
2. Payment for Covered Ancillary Services Adjustment
G. Physician Payment for Procedures and Adjustment Prior to Estimated Growth
2. Application of the Documentation and (Columns 2a and 2b)
Services Provided in ASC Coding Adjustment to the Hospital
H. Changes to Definitions of ‘‘Radiology b. Effects of All Changes with CMI
Specific Rates Adjustment and Estimated Growth
and Certain Other Imaging Services’’ and XX. Medicare Graduate Medical Education
‘‘Outpatient Prescription Drugs’’ (Column 3)
Affiliation Provisions for Teaching 6. Overall Conclusion
I. New Technology Intraocular Lenses Hospitals in Certain Emergency
(NTIOLs) 7. Accounting Statement
Situations 8. Executive order 12866
1. Background A. Background
2. Changes to the NTIOL Determination H. Impact of the Policy Revisions to the
1. Legislative Authority Emergency Medicare GME Affiliated
Process Finalized for CY 2008 2. Existing Medicare Direct GME and
3. NTIOL Application Process for CY 2008 Groups for Hospitals in Certain Declared
Indirect GME Policies Emergency Areas
Payment Adjustment 3. Regulatory Changes Issued in 2006 to
4. Classes of NTIOLS Approved for 1. Overall Impact
Address Certain Emergency Situations 2. RFA
Payment Adjustment B. Additional Changes in This Interim
5. Payment Adjustment 3. Small Rural Hospitals
Final Rule with Comment Period 4. Unfunded Mandates
6. CY 2008 ASC Payment for Insertion of 1. Summary of Regulatory Changes
IOLs 5. Federalism
2. Discussion of Training in Nonhospital 6. Anticipated Effects
J. ASC Payment and Comment Indicators Settings 7. Alternatives Considered
K. ASC Policy and Payment C. Responses to Comments on the April 12, 8. Conclusion
Recommendations 2006 Interim Final Rule with Comment 9. Executive Order 12866
L. Calculation of the ASC Conversion Period and This Interim Final Rule with XXV. Waiver of Proposed Rulemaking,
Factor and ASC Payment Rates Comment Period Waiver of Delay in Effective Date, and
XVII. Reporting Quality Data for Annual XXI. Files Available to the Public Via the Retroactive Effective Date
Payment Rate Updates Internet
A. Requirements for Waivers and
A. Background A. Information in Addenda Related to the
Retroactive Rulemaking
1. Reporting Hospital Outpatient Quality Revised CY 2008 Hospital OPPS
B. IPPS Payment Rate Policies
Data for Annual Payment Update B. Information in Addenda Related to the

C. Medicare GME Affiliation Agreement
2. Reporting ASC Quality Data for Annual Revised CY 2008 ASC Payment System
Provisions
Payment Increase XXII. Collection of Information Requirements
3. Reporting Hospital Inpatient Quality XXIII. Response to Comments Regulation Text
Data for Annual Payment Update XXIV. Regulatory Impact Analysis
B. Hospital Outpatient Measures A. Overall Impact of Changes to the OPPS Addenda
C. Other Hospital Outpatient Measures and ASC Payment Systems Addendum A–OPPS APCs for CY 2008
Addendum AA–ASC Covered Surgical 2000. Implementing regulations for the which we refer to as ‘‘transitional pass
Procedures for CY 2008 (Including OPPS are located at 42 CFR part 419. through payments,’’ for at least 2 but not
Surgical Procedures for Which Payment Under the OPPS, we pay for hospital more than 3 years for certain drugs,
is Packaged) outpatient services on a rate-per-service biological agents, brachytherapy devices
Addendum B–OPPS Payment By HCPCS
Code for CY 2008
basis that varies according to the used for the treatment of cancer, and
Addendum BB–ASC Covered Ancillary ambulatory payment classification categories of other medical devices. For
Services Integral to Covered Surgical (APC) group to which the service is new technology services that are not
Procedures for CY 2008 (Including assigned. We use the Healthcare eligible for transitional pass through
Ancillary Services for Which Payment Is Common Procedure Coding System payments, and for which we lack
Packaged) (HCPCS) codes (which include certain sufficient data to appropriately assign
Addendum D1–OPPS Payment Status Current Procedural Terminology (CPT) them to a clinical APC group, we have
Indicators codes) and descriptors to identify and established special APC groups based
Addendum DD1–ASC Payment Indicators
Addendum D2–OPPS Comment Indicators
group the services within each APC on costs, which we refer to as New
Addendum DD2–ASC Comment Indicators group. The OPPS includes payment for Technology APCs. These New
Addendum E–HCPCS Codes That Would Be most hospital outpatient services, Technology APCs are designated by cost
Paid Only as Inpatient Procedures for CY except those identified in section I.B. of bands which allow us to provide
2008 this final rule with comment period. appropriate and consistent payment for
Addendum L–Out-Migration Adjustment Section 1833(t)(1)(B)(ii) of the Act designated new procedures that are not
Addendum M–HCPCS Codes for Assignment provides for Medicare payment under yet reflected in our claims data. Similar
to Composite APCs for CY 2008 the OPPS for hospital outpatient to pass through payments, an
I. Background for the OPPS services designated by the Secretary assignment to a New Technology APC is
(which includes partial hospitalization temporary; that is, we retain a service
A. Legislative and Regulatory Authority services furnished by community within a New Technology APC until we
for the Hospital Outpatient Prospective mental health centers (CMHCs)) and acquire sufficient data to assign it to a
Payment System hospital outpatient services that are clinically appropriate APC group.
When the Medicare statute was furnished to inpatients who have
originally enacted, Medicare payment exhausted their Part A benefits, or who B. Excluded OPPS Services and
for hospital outpatient services was are otherwise not in a covered Part A Hospitals
based on hospital-specific costs. In an stay. Section 611 of Pub. L. 108–173 Section 1833(t)(1)(B)(i) of the Act
effort to ensure that Medicare and its added provisions for Medicare coverage authorizes the Secretary to designate the
beneficiaries pay appropriately for of an initial preventive physical hospital outpatient services that are
services and to encourage more efficient examination, subject to the applicable paid under the OPPS. While most
delivery of care, the Congress mandated deductible and coinsurance, as an hospital outpatient services are payable
replacement of the reasonable cost- outpatient department service, payable under the OPPS, section
based payment methodology with a under the OPPS. 1833(t)(1)(B)(iv) of the Act excludes
prospective payment system (PPS). The The OPPS rate is an unadjusted payment for ambulance, physical and
Balanced Budget Act (BBA) of 1997 national payment amount that includes occupational therapy, and speech-
(Pub. L. 105–33) added section 1833(t) the Medicare payment and the language pathology services, for which
to the Social Security Act (the Act) beneficiary copayment. This rate is payment is made under a fee schedule.
authorizing implementation of a PPS for divided into a labor-related amount and Section 614 of Pub. L. 108–173
hospital outpatient services. a nonlabor-related amount. The labor- amended section 1833(t)(1)(B)(iv) of the
The Medicare, Medicaid, and SCHIP related amount is adjusted for area wage Act to exclude payment for screening
Balanced Budget Refinement Act differences using the hospital inpatient and diagnostic mammography services
(BBRA) of 1999 (Pub. L. 106–113) made wage index value for the locality in from the OPPS. The Secretary exercised
major changes in the hospital outpatient which the hospital or CMHC is located. the authority granted under the statute
prospective payment system (OPPS). All services and items within an APC to also exclude from the OPPS those
The Medicare, Medicaid, and SCHIP group are comparable clinically and services that are paid under fee
Benefits Improvement and Protection with respect to resource use (section schedules or other payment systems.
Act (BIPA) of 2000 (Pub. L. 106–554) 1833(t)(2)(B) of the Act). In accordance Such excluded services include, for
made further changes in the OPPS. with section 1833(t)(2) of the Act, example, the professional services of
Section 1833(t) of the Act was also subject to certain exceptions, services physicians and nonphysician
amended by the Medicare Prescription and items within an APC group cannot practitioners paid under the Medicare
Drug, Improvement, and Modernization be considered comparable with respect Physician Fee Schedule (MPFS);
Act (MMA) of 2003 (Pub. L. 108 173). to the use of resources if the highest laboratory services paid under the
The Deficit Reduction Act (DRA) of median (or mean cost, if elected by the clinical diagnostic laboratory fee
2005 (Pub. L. 109–171), enacted on Secretary) for an item or service in the schedule (CLFS); services for
February 8, 2006, also made additional APC group is more than 2 times greater beneficiaries with end stage renal
changes in the OPPS. In addition, the than the lowest median cost for an item disease (ESRD) that are paid under the
Medicare Improvements and Extension or service within the same APC group ESRD composite rate; and services and
Act under Division B of Title I of the (referred to as the ‘‘2 times rule’’). In procedures that require an inpatient stay
Tax Relief and Health Care Act (MIEA– implementing this provision, we that are paid under the hospital
TRHCA) of 2006 (Pub. L. 109–432), generally use the median cost of the inpatient prospective payment system
enacted on December 20, 2006, made item or service assigned to an APC (IPPS). We set forth the services that are
further changes in the OPPS. A group. excluded from payment under the OPPS
discussion of these changes is included For new technology items and in § 419.22 of the regulations.
in sections I.E., VII., and XVII. of this services, special payments under the Under § 419.20(b) of the regulations,
final rule with comment period. OPPS may be made in one of two ways. we specify the types of hospitals and
The OPPS was first implemented for Section 1833(t)(6) of the Act provides entities that are excluded from payment
services furnished on or after August 1, for temporary additional payments, under the OPPS. These excluded
entities include Maryland hospitals, but comments are included in the specific 3. APC Panel Meetings and
only for services that are paid under a sections of this final rule with comment Organizational Structure
cost containment waiver in accordance period. The APC Panel first met on February
with section 1814(b)(3) of the Act; 27, February 28, and March 1, 2001.
D. APC Advisory Panel
critical access hospitals (CAHs); Since the initial meeting, the APC Panel
hospitals located outside of the 50 1. Authority of the APC Panel has held 12 subsequent meetings, with
States, the District of Columbia, and the last meeting taking place on
Puerto Rico; and Indian Health Service Section 1833(t)(9)(A) of the Act, as
amended by section 201(h) of the BBRA, September 5 and 6, 2007. Prior to each
hospitals. meeting, we publish a notice in the
and redesignated by section 202(a)(2) of
C. Prior Rulemaking the BBRA, requires that we consult with Federal Register to announce the
On April 7, 2000, we published in the an outside panel of experts to review the meeting, and when necessary, to solicit
Federal Register a final rule with clinical integrity of the payment groups nominations for APC Panel
comment period (65 FR 18434) to and their weights under the OPPS. The membership, and to announce new
implement a prospective payment Act further specifies that the panel will members.
system for hospital outpatient services. act in an advisory capacity. The APC Panel has established an
The hospital OPPS was first operational structure that, in part,
The Advisory Panel on Ambulatory
implemented for services furnished on includes the use of three subcommittees
Payment Classification (APC) Groups
or after August 1, 2000. Section to facilitate its required APC review
(the APC Panel), discussed under
1833(t)(9) of the Act requires the process. The three current
section I.D.2. of this final rule with
Secretary to review certain components subcommittees are the Data
comment period, fulfills these
of the OPPS, not less often than Subcommittee, the Observation and
requirements. The APC Panel is not
annually, and to revise the groups, Visit Subcommittee, and the Packaging
restricted to using data compiled by
relative payment weights, and other Subcommittee. The Data Subcommittee
CMS, and may use data collected or
adjustments that take into account is responsible for studying the data
developed by organizations outside the
changes in medical practices, changes in issues confronting the APC Panel, and
Department in conducting its review.
technologies, and the addition of new for recommending options for resolving
services, new cost data, and other 2. Establishment of the APC Panel them. The Observation and Visit
relevant information and factors. Subcommittee reviews and makes
On November 21, 2000, the Secretary recommendations to the APC Panel on
Since initially implementing the
signed the initial charter establishing all technical issues pertaining to
OPPS, we have published final rules in
the APC Panel. This expert panel, which observation services and hospital
the Federal Register annually to
may be composed of up to 15 outpatient visits paid under the OPPS
implement statutory requirements and
representatives of providers subject to (for example, APC configurations and
changes arising from our continuing
experience with this system. We the OPPS (currently employed full-time, APC payment weights). The Packaging
published in the Federal Register on not as consultants, in their respective Subcommittee studies and makes
November 24, 2006 the CY 2007 OPPS/ areas of expertise), reviews clinical data recommendations on issues pertaining
ASC final rule with comment period (71 and advises CMS about the clinical to services that are not separately
FR 67960). In that final rule with integrity of the APC groups and their payable under the OPPS, but whose
comment period, we revised the OPPS payment weights. For purposes of this payments are bundled or packaged into
to update the payment weights and Panel, consultants or independent APC payments. Each of these
conversion factor for services payable contractors are not considered to be full- subcommittees was established by a
under the CY 2007 OPPS on the basis time employees. The APC Panel is majority vote from the full APC Panel
of claims data from January 1, 2005, technical in nature, and is governed by during a scheduled APC Panel meeting,
through December 31, 2005, and to the provisions of the Federal Advisory and their continuation as
implement certain provisions of Pub. L. Committee Act (FACA). Since its initial subcommittees was last approved at the
108–173 and Pub. L. 109–171. In chartering, the Secretary has renewed September 2007 APC Panel meetings.
addition, we responded to public the APC Panel’s charter three times: On All subcommittee recommendations are
comments received on the provisions of November 1, 2002; on November 1, discussed and voted upon by the full
the November 10, 2005 final rule with 2004; and effective November 21, 2006. APC Panel.
comment period (70 FR 86516) The current charter specifies, among Discussions of the recommendations
pertaining to the APC assignment of other requirements, that the APC Panel resulting from the APC Panel’s March
HCPCS codes identified in Addendum B continue to be technical in nature; be 2007 and September 2007 meetings are
of that rule with the new interim (NI) governed by the provisions of the included in the sections of this final
comment indicator; and public FACA; may convene up to three rule with comment period that are
comments received on the August 23, meetings per year; has a Designated specific to each recommendation. For
2006 OPPS/ASC proposed rule for CY Federal Officer (DFO); and is chaired by discussions of earlier APC Panel
2007 (71 FR 49506). a Federal official designated by the meetings and recommendations, we
On August 2, 2007, we issued in the Secretary. refer readers to previously published
Federal Register (72 FR 42628) a The current APC Panel membership hospital OPPS final rules or the Web
proposed rule for the CY 2008 OPPS/ and other information pertaining to the site mentioned earlier in this section.
ASC to implement statutory APC Panel, including its charter,
requirements and changes arising from Federal Register notices, membership, E. Provisions of the Medicare
our continuing experience with both meeting dates, agenda topics, and Improvements and Extension Act under
systems. We received approximately meeting reports can be viewed on the Division B of Title I of the Tax Relief
2,180 pieces of timely correspondence CMS Web site at: http:// and Health Care Act of 2006
in response to the proposed rule. A www.cms.hhs.gov/FACA/05_Advisory The Medicare Improvements and
summary of the public comments we PanelonAmbulatoryPayment Extension Act under Division B of Title
received and our responses to those ClassificationGroups.asp#TopOfPage. I of the Tax Relief and Health Care Act
(MIEA–TRHCA) of 2006, Pub. L. 109– Medicare ASC payment system for CY • The proposed calculation of the
432, enacted on December 20, 2006, 2008 such as adding procedures to the hospital outpatient outlier payment.
included the following provisions list of covered surgical procedures and • The calculation of the proposed
affecting the OPPS: adjusting the ASC rates so that the national unadjusted Medicare OPPS
1. Section 107(a) of the MIEA–TRHCA revised ASC payment system is budget payment.
amended section 1833(t)(16)(C) of the neutral. We also proposed to make • The proposed beneficiary
Act to extend the period for payment of changes to the policies relating to the copayments for OPPS services.
brachytherapy devices based on the necessary provider designations of
hospital’s charges adjusted to cost for 1 2. OPPS Ambulatory Payment
CAHs that are being recertified when a
additional year, through December 31, Classification (APC) Group Policies
CAH enters into a new co-location
2007. arrangement with another hospital or In section III. of the proposed rule, we
2. Section 107(b)(1) of the MIEA– CAH or when the CAH creates or discussed the proposed additions of
TRHCA amended section 1833(t)(2)(H) acquires an off-campus location. new procedure codes to the APCs; our
of the Act by adding stranded and non Further, we proposed changes to several proposal to establish a number of new
stranded devices furnished on or after of the current conditions of APCs; and our analyses of Medicare
July 1, 2007, as additional participation that hospitals must meet to claims data and certain
classifications of brachytherapy devices participate in the Medicare and recommendations of the APC Panel. We
for which separate payment groups Medicaid programs to require the also discussed the application of the 2
must be established for payment under completion and documentation in the times rule and proposed exceptions to
the OPPS. Section 107(b)(2) of the MIEA medical record of medical histories and it; proposed changes to specific APCs;
TRCHA provides that the Secretary may physical examinations of patients and the proposed movement of
implement the section 107(b)(1) conducted after admission and prior to procedures from New Technology APCs
amendment to section 1833(t)(2)(H) of surgery or a procedure requiring to clinical APCs.
the Act ‘‘by program instruction or anesthesia services and for
otherwise.’’ 3. OPPS Payment for Devices
postanesthesia evaluations of patients
3. Section 109(a) of the MIEA–TRHCA before discharge or transfer from the In section IV. of the proposed rule, we
added new paragraph (17) to section postanesthesia recovery area. Finally, discussed proposed payment for device
1833(t) of the Act which authorizes the we set forth proposed quality measures dependent APCs and pass-through
Secretary, beginning in 2009 and each for a Hospital Outpatient Quality Data payment for specific categories of
subsequent year, to reduce the OPPS devices.
Reporting (HOP QDRP) program for
full annual update by 2.0 percentage
reporting quality data for annual 4. OPPS Payment for Drugs, Biologicals,
points if a hospital paid under the OPPS
payment rate updates for CY 2009 and and Radiopharmaceuticals
fails to submit data as required by the
subsequent calendar years. We also
Secretary in the form and manner In section V. of the proposed rule, we
briefly discussed the legislative
specified on selected measures of discussed the proposed CY 2008 OPPS
provisions of the MIEA–TRHCA that
quality of care, including medication payment for drugs, biologicals, and
give the Secretary authority to develop
errors. In accordance with this radiopharmaceuticals, including the
quality measures for reporting data by
provision, the selected measures are proposed payment for drugs,
ASCs. The following is a summary of
those that are appropriate for the biologicals, and radiopharmaceuticals
measurement of quality of care the major changes included in the CY
2008 OPPS/ASC proposed rule: with and without pass-through status.
furnished by hospitals in the outpatient
setting, that reflect consensus among 1. Updates Affecting OPPS Payments 5. Estimate of OPPS Transitional Pass-
affected parties and, to the extent Through Spending for Drugs,
In section II. of the proposed rule, we Biologicals, and Devices
feasible and practicable, that include set forth—
measures set forth by one or more of the • The methodology used to In section VI. of the proposed rule, we
national consensus entities, and that recalibrate the proposed APC relative discussed the estimate of CY 2008 OPPS
may be the same as those required for payment weights. transitional pass-through spending for
reporting by hospitals paid under the • The proposed payment for partial drugs, biologicals, and devices.
IPPS. This provision specifies that a hospitalization services, including the
reduction for 1 year cannot be taken into 6. OPPS Payment for Brachytherapy
proposed separate threshold for outlier Sources
account when computing the OPPS payments for CMHCs.
update for a subsequent year. In • The proposed update to the In section VII. of the proposed rule,
addition, this provision requires the conversion factor used to determine we discussed our proposal concerning
Secretary to establish a process for payment rates under the OPPS. coding and payment for brachytherapy
making the submitted data available for • The proposed retention of our sources.
public review. current policy to use the IPPS wage
7. OPPS Coding and Payment for Drug
F. Summary of the Major Contents of the indices to adjust, for geographic wage
Administration Services
CY 2008 OPPS/ASC Proposed Rule differences, the portion of the OPPS
payment rate and the copayment In section VIII. of the proposed rule,
On August 2, 2007, we published a standardized amount attributable to we set forth our proposed policy
proposed rule in the Federal Register labor related cost. concerning coding and payment for
(72 FR 42628) that set forth proposed • The proposed update of statewide drug administration services.
changes to the Medicare hospital OPPS average default CCRs.
8. OPPS Hospital Coding and Payments

for CY 2008 to implement statutory • The proposed application of hold
requirements and changes arising from for Visits
harmless transitional outpatient
our continuing experience with the payments (TOPs) for certain small rural In section IX. of the proposed rule, we
system and to implement certain hospitals. set forth our proposed policies for the
statutory provisions. In addition, we • The proposed payment adjustment coding and reporting of clinic and
proposed changes to the revised for rural SCHs. emergency department visits and
critical care services on claims paid discussed our proposed changes to our the proposed changes would have on
under the OPPS. regulations at §§ 414.22(b)(5)(i)(A) and affected entities and beneficiaries. (We
(B) regarding physician payment for note that this regulatory impact analysis
9. OPPS Payment for Blood and Blood
performing excluded surgical section is redesignated as section XXIV.
Products
procedures in ASCs. In addition, we set of this final rule with comment period.)
In section X. of the proposed rule, we forth our proposal to revise the
discussed our proposed payment for G. Public Comments Received in
definitions of ‘‘radiology and certain
Response to the CY 2008 OPPS/ASC
blood and blood products. other imaging services’’ and ‘‘outpatient
Proposed Rule
prescription drugs’’ when provided
10. Proposed OPPS Payment for We received approximately 2,180
integral to an ASC covered surgical
Observation Services timely pieces of correspondence
procedure.
In section XI. of the proposed rule, we containing multiple comments on the
discussed the proposed payment 16. Reporting Quality Data for Annual CY 2008 OPPS/ASC proposed rule. We
policies for observation services Payment Rate Updates note that we received some comments
furnished to patients on an outpatient In section XVII. of the proposed rule, that were outside the scope of the CY
basis. we discussed the proposed quality 2008 OPS/ASC proposed rule. These
measures for reporting hospital comments are not addressed in this CY
11. Procedures That Will Be Paid Only outpatient quality data for CY 2009 and 2008 OPPS/ASC final rule with
as Inpatient Services subsequent years and set forth the comment period. Summaries of the
In section XII. of the proposed rule, requirements for data collection and public comments that are within the
we discussed the procedures that we submission for the annual payment scope of the proposals and our
proposed to remove from the inpatient update. We also briefly discussed the responses to those comments are set
list and assign to APCs. legislative provisions of the MIEA– forth in the various sections of this final
TRHCA that give the Secretary authority rule with comment period under the
12. Nonrecurring Technical and Policy appropriate headings.
to develop quality measures for
Changes
reporting by ASCs. (We note that, as
H. Public Comments Received on the
In section XIII. of the proposed rule, discussed in section XVII.J. of this final
November 24, 2006 OPPS/ASC Final
we set forth our proposals for rule with comment period, we are also Rule with Comment Period
nonrecurring technical and policy finalizing a proposal from the FY 2008
changes and clarifications relating to IPPS proposed rule relating to the FY We received approximately 21 timely
outpatient services and supplies 2009 RHQDAPU quality measures. items of correspondence on the CY 2007
incident to physicians’ services; Specifically, we are finalizing the OPPS/ASC final rule with comment
payment for interrupted procedures inclusion of SCIP Infection 4: Cardiac period, some of which contained
prior to and after the administration of Surgery Patients with Controlled 6AM multiple comments on the interim final
anesthesia; transitional adjustments to Postoperative Serum Glucose and SCIP APC assignments and/or status
payments for covered outpatient Infection 6: Surgery Patients with indicators of HCPCS codes identified
services furnished by small rural Appropriate Hair Removal in the FY with comment indicator ‘‘NI’’ in
hospitals and SCHs located in rural 2009 RHQDAPU measure set, bringing Addendum B to that final rule with
areas; and reporting requirements for the total number of measures in that comment period. Summaries of those
wound care services, cardiac measure set to 30.) public comments and our responses to
rehabilitation services, and bone them are set forth in the various sections
17. Changes Affecting Necessary of this final rule with comment period
marrow and stem cell processing
Provider Critical Access Hospitals under the appropriate headings.
services.
(CAHs) and Hospital Conditions of
13. OPPS Payment Status and Comment Participation (CoPs) II. Updates Affecting OPPS Payments
Indicators In section XVIII. of the proposed rule, A. Recalibration of APC Relative
In section XIV. of the proposed rule, we discussed our proposed changes Weights
we discussed proposed changes to the affecting CAHs both when the CAH 1. Database Construction
definitions of status indicators assigned enters into a new co-location
to APCs and presented our proposed arrangement with another hospital or a. Database Source and Methodology
comment indicators for the OPPS/ASC CAH and when the CAH creates or Section 1833(t)(9)(A) of the Act
final rule with comment period. acquires a provider-based off campus requires that the Secretary review and
location. We also discussed our revise the relative payment weights for
14. OPPS Policy and Payment APCs at least annually. In the April 7,
proposed changes relating to several
Recommendations 2000 OPPS final rule with comment
hospital CoPs to require the completion
In section XV. of the proposed rule, of physical examinations and medical period (65 FR 18482), we explained in
we addressed recommendations made histories and documentation in the detail how we calculated the relative
by the Medicare Payment Advisory medical records for patients after payment weights that were
Commission (MedPAC) in its March and admission and prior to surgery or a implemented on August 1, 2000 for each
June 2007 Reports to Congress and by procedure requiring anesthesia services, APC group. Except for some reweighting
the APC Panel regarding the OPPS for and for postanesthesia evaluations of due to a small number of APC changes,
CY 2008. patients after surgery or a procedure these relative payment weights
requiring anesthesia services but before continued to be in effect for CY 2001.
15. Update of the Revised ASC Payment

discharge or transfer from the This policy is discussed in the
System
postanesthesia recovery area. November 13, 2000 interim final rule
In section XVI. of the proposed rule, (65 FR 67824 through 67827).
we discussed the proposed update of 18. Regulatory Impact Analysis In the CY 2008 OPPS/ASC proposed
the revised ASC payment system In section XXII. of the proposed rule, rule, we proposed to use the same basic
payment rates for CY 2008. We also we set forth an analysis of the impact methodology that we described in the
April 7, 2000 OPPS final rule with Addenda A and B to this final rule with packaging for drug administration
comment period to recalibrate the APC comment period were calculated using services in the single and multiple bill
relative payment weights for services claims from this period that were claims. Moreover, in many cases, the
furnished on or after January 1, 2008 processed before June 30, 2007, and packaging approach that we proposed
and before January 1, 2009. That is, we continue to be based on the median for the CY 2008 OPPS also allows the
proposed to recalibrate the relative hospital costs for services in the APC use of more claims data by enabling us
payment weights for each APC based on groups. We selected claims for services to treat claims with multiple procedure
claims and cost report data for paid under the OPPS and matched these codes as single claims. We refer readers
outpatient services. We proposed to use claims to the most recent cost report to section II.A.4. of the proposed rule for
the most recent available data to filed by the individual hospitals a full discussion of the packaging
construct the database for calculating represented in our claims data. We approach for CY 2008.
APC group weights. For the purpose of continue to believe that it is appropriate We received several public comments
recalibrating the proposed APC relative to use the most current full calendar on our proposed use of single bills to
payment weights for CY 2008, we used year claims data and the most recently calculate the APC median costs for
approximately 131 million final action submitted cost reports to calculate the ratesetting under the CY 2008 OPPS. A
claims for hospital outpatient median costs which we proposed to summary of the public comments and
department (HOPD) services furnished convert to relative payment weights for our responses follow.
on or after January 1, 2006 and before purposes of calculating the CY 2008 Comment: Some commenters
January 1, 2007. (For exact counts of payment rates. supported the ‘‘natural’’ and ‘‘pseudo’’
claims used, we refer readers to the We did not receive any comments on single methodology but asked that CMS
claims accounting narrative under our proposal to base the CY 2008 APC continue to refine the approach in order
supporting documentation for the relative weights on the most currently to improve the accuracy of the estimates
proposed rule on the CMS Web site at: available cost reports and on claims for because the medians are used to
http://www.cms.hhs.gov/ services furnished in CY 2006. develop payment rates for services on
HospitalOutpatientPPS/HORD/). Therefore, we are finalizing our data both single and multiple procedure
Of the 141 million final action claims source for the recalibration of the CY claims. Other commenters asserted that
for services provided in hospital 2008 APC relative payment weights as continued reliance on single procedure
outpatient settings used to calculate the proposed, without modification, as bills to establish the medians from
CY 2008 OPPS payment rates for this described in this section of this final which the rates were calculated failed to
final rule with comment period, rule with comment period. produce a statistically valid sample of
approximately 103 million claims were services for ratesetting, in particular for
b. Use of Single and Multiple Procedure brachytherapy services that are often
of the type of bill potentially
Claims provided in combination with one
appropriate for use in setting rates for
OPPS services (but did not necessarily For CY 2008, in general, we proposed another in a single encounter. Other
contain services payable under the to continue to use single procedure commenters requested that CMS explore
OPPS). Of the 103 million claims, claims to set the medians on which the additional revisions to the current
approximately 45 million were not for APC relative payment weights would be methodology to ensure that OPPS
services paid under the OPPS or were based, with some exceptions as payment would be based on a
excluded as not appropriate for use (for discussed below. We generally use substantial number of accurate hospital
example, erroneous cost-to-charge ratios single procedure claims to set the claims.
(CCRs) or no HCPCS codes reported on median costs for APCs because we Response: We generally base median
the claim). We were able to use believe that it is important that the costs for services on single procedure
approximately 54 million whole claims OPPS relative weights on which claims to ensure that the median cost
of the approximately 58 million claims payment rates are based be appropriate captures the full cost of a service when
that remained to set the OPPS APC when one and only one procedure is it is the only service furnished. We
relative weights for the CY 2008 OPPS. furnished and because we are, so far, recognize that this approach has
From the 54 million whole claims, we unable to ensure that packaged costs can limitations and, in some cases, prevents
created approximately 97 million single be appropriately allocated across us from using many of the claims for
records, of which approximately 65 multiple procedures performed on the services that are most commonly
million were ‘‘pseudo’’ single claims same date of service. We agree that, furnished at the same time as other
(created from multiple procedure claims optimally, it is desirable to use the data services. For this reason, we have
using the process we discuss in this from as many claims as possible to developed a number of different
section). Approximately 926,000 claims recalibrate the APC relative payment strategies, such as date of service
trimmed out on cost or units in excess weights, including those claims for stratification and the use of the bypass
of +/¥3 standard deviations from the multiple procedures. We engaged in list, that enable us to break multiple
geometric mean, yielding approximately several efforts this year to improve our procedure claims into ‘‘pseudo’’ single
96 million single bills used for median use of multiple procedure claims for procedure claims where we have
setting. Ultimately, we were able to use ratesetting. As we have for several years, confidence that the ‘‘pseudo’’ single
for CY 2008 ratesetting some portion of we continued to use date of service claim contains the full cost of the
93 ercent of the CY 2006 claims stratification and a list of codes to be service, including related packaged
containing services payable under the bypassed to convert multiple procedure costs. In recent years, however, we have
OPPS. This is approximately the same claims to ‘‘pseudo’’ single procedure increasingly used multiple procedure
percentage of CY 2005 claims where claims. We also continued our internal claims to develop median costs for
some portion could be used for CY 2007 efforts to better understand the patterns individual services or groups of
ratesetting as described in the CY 2007 of services and costs from multiple bills services. We have developed these
OPPS/ASC final rule with comment toward the goal of using more multiple methodologies so that we can use more
period (71 FR 67970). bill information by assessing the amount naturally occurring claims data in cases
As proposed, the final APC relative of packaging in the multiple bills and, in which care is most commonly
weights and payments for CY 2008 in specifically, by exploring the amount of reported with multiple major procedure
codes on the same date, such as The date of service stratification codes that remained on the bypass list
observation services, hyperbaric oxygen (sorting the lines by date of service and from prior years) was open to public
therapy (HBOT), and single allergy tests. treating all lines with the same date of comment. For the CY 2008 proposed
Similarly, for CY 2008, we developed service as a separate claim) and bypass rule, we explicitly reviewed all
and proposed composite APCs for low list process we used for the CY 2007 ‘‘natural’’ single bills against the
dose rate prostate brachytherapy (APC OPPS (combined with the packaging empirical criteria for all codes on the CY
8001 (LDR Prostate Brachytherapy changes we proposed in section II.A.4. 2007 bypass list because of the proposal
Composite)) and cardiac of the proposed rule) resulted in our for greater packaging discussed in
electrophysiology services (APC 8000 being able to use some part of section II.A.4. of the proposed rule, as
(Cardiac Electrophysiologic Evaluation approximately 92 percent of the total this effort increased the packaging
and Ablation Composite)). These APCs claims that were eligible for use in the associated with some codes. We
are designed to use multiple procedure OPPS ratesetting and modeling for the removed 106 HCPCS codes from the CY
claims to establish a median cost and proposed rule. This process enabled us 2007 bypass list for the CY 2008
APC payment for multiple major to create, for the CY 2008 proposed rule, proposal. In addition, we note that
procedures when they are furnished approximately 58 million ‘‘pseudo’’ many of the codes we proposed to
together. As we discuss in section singles and approximately 30 million newly package for CY 2008 were on the
II.A.4.d. of this final rule with comment ‘‘natural’’ single bills. For the proposed bypass list used for setting the OPPS
period, we intend to explore the rule, ‘‘pseudo’’ single procedure bills payment rates for CY 2007 and were not
creation of additional composite APCs represented 66 percent of all single bills proposed for bypass because we also
for services that frequently are provided used to calculate median costs. This proposed to package them. We proposed
in the same HOPD encounter. We also compared favorably to the CY 2007 to add to the bypass list HCPCS codes
plan to continue to develop and refine OPPS final rule data in which ‘‘pseudo’’ that, using the proposed rule data, met
methods to increase the amount of single bills represented 68 percent of all the same previously established
claims data that we can use for setting single bills used to calculate the median empirical criteria for the bypass list that
OPPS payment rates in a manner that costs on which the CY 2007 OPPS are reviewed below or which our
gives us the most confidence that the payment rates were based. We believed clinicians believed would have little
costs derived from these approaches are that the reduction in the percent of associated packaging if the services
valid reflections of the costs of the ‘‘pseudo’’ single bills and the were coded correctly.
services described by HCPCS codes or, corresponding increase in the The CY 2008 packaging proposal
in the case of composite APCs, proportion of ‘‘natural’’ single bills minimally reduced the percentage of
described by the APCs. We anticipate observed for the CY 2008 proposed rule total claims that we were able to use, in
that the Data Subcommittee of the APC occurred largely because of our proposal whole or in part, from 93 percent for CY
Panel will continue to provide us with to increase packaging as discussed in 2007 to 92 percent for the proposed
valuable advice regarding possible section II.A.4. of the proposed rule. In rule. The proposed packaging approach
methodologies for increasing the OPPS many cases, the packaging proposal for increased the number of ‘‘natural’’
use of multiple procedure claims for CY 2008 enabled us to use claims that single bills, in spite of reducing the
ratesetting. would otherwise have been considered universe of codes requiring single bills
After consideration of the public to be multiple procedure claims and, for ratesetting, but reduced the number
comments received, we are finalizing absent the proposal for additional of ‘‘pseudo’’ single bills. More ‘‘natural’’
our proposal, without modification, to packaging, could have been used for single procedure bills can be created by
calculate median costs for APCs using ratesetting only if we had been able to the packaging of codes that always
single and ‘‘pseudo’’ single procedure create ‘‘pseudo’’ single claims from appear with another procedure because
claims, except where otherwise them. these dependent services are supportive
specified. For CY 2008, we proposed to bypass of and ancillary to the primary
425 HCPCS codes that are identified in independent procedures for which
(1) Use of Date of Service Stratification
Table 1 of the proposed rule. We payment is being made. A claim
and a Bypass List To Increase the
proposed to continue the use of the containing two independent procedure
Amount of Data Used To Determine
codes on the CY 2007 OPPS bypass list codes on the same date of service and
Medians
but to remove codes we proposed to not on the bypass list previously could
Through bypassing specified codes package for CY 2008. We also proposed not be used for ratesetting, but
that we believe do not have significant to remove codes that were on the CY packaging the cost of one of the codes
packaged costs, we are able to use more 2007 bypass list that ceased to meet the on the claim frees the claim to be used
data from multiple procedure claims. In empirical criteria under the proposed to calculate the median cost of the
many cases, this enables us to create packaging changes when clinical review procedure that is not packaged. On the
multiple ‘‘pseudo’’ single claims from confirmed that their removal would be other hand, our proposed packaging
claims that, as submitted, contained appropriate in the context of the full approach reduced the number of codes
numerous separately paid procedures proposal for the CY 2008 OPPS. Since eligible for the bypass list because of the
reported on the same date on one claim. the inception of the bypass list, we have limitation on packaging set by our
We refer to these newly created single calculated the percent of ‘‘natural’’ previously established empirical
procedure claims as ‘‘pseudo’’ single single bills that contained packaging for criteria. A smaller bypass list and the
claims because they were submitted by each code and the amount of packaging presence of greater packaging on claims
providers as multiple procedure claims. in each ‘‘natural’’ single bill for each reduced the final number of ‘‘pseudo’’
The history of our use of a bypass list code. We retained the codes on the single claims. In prior years, roughly 68
to generate ‘‘pseudo’’ single claims is previous year’s bypass list and used the percent of single bills were ‘‘pseudo’’
well documented, most recently in the update year’s data to determine whether single bills, but based on the CY 2008
CY 2007 OPPS/ASC final rule with it would be appropriate to add proposed rule data, 66 percent of single
comment period (71 FR 67969 through additional codes to the previous year’s bills were ‘‘pseudo’’ singles. Similarly,
67970). bypass list. The entire list (including the for this final rule with comment period,
66 percent of single bills were ‘‘pseudo’’ result of increased packaging in the bills for high dose rate (HDR)
singles. Moreover, the numbers of ‘‘natural’’ single claims due to the brachytherapy from 62 percent to 48
‘‘natural’’ single bills and ‘‘pseudo’’ proposed packaging approach. The percent of the total frequency. The
single bills were reduced by the volume commenters objected to the removal of commenter believed that the payment
of services that we proposed to package. codes from the bypass list for this for APC 0313 (Brachytherapy) dropped
Hence, our CY 2008 proposal to package reason because they asserted that it from $789.70 in CY 2007 to $739.46 in
payment for some HCPCS codes with caused claims that would otherwise the CY 2008 proposed rule because
relatively high frequencies would have become ‘‘pseudo’’ single claims to there were packaged costs on claims
eliminate for ratesetting the number of not be used and, thereby, reduced the that could no longer be used because the
available ‘‘natural’’ and ‘‘pseudo’’ single number of single bills that were multiple procedure claims included
bills attributable to the codes that we available for ratesetting for certain codes that were removed from the
proposed to package. services. bypass list. The commenter asked that
As in prior years, we proposed to use Response: We agree with the these codes be restored to the bypass list
the following empirical criteria to commenters, so we have reevaluated the so that these claims could be used.
determine the additional codes to add to bypass list for this final rule with Other commenters asked that CMS place
the CY 2007 bypass list to create the CY comment period and restored a number CPT code 93017 (Cardiovascular stress
2008 bypass list. We assumed that the of codes on the bypass list prior to the test using maximal or submaximal
representation of packaging in the single CY 2008 proposal to maximize the treadmill or bicycle exercise,
claims for any given code was creation of single and ‘‘pseudo’’ single continuous electrocardiographic
comparable to packaging for that code in procedure bills. As we discuss later in monitoring, and/or pharmacological
the multiple claims: this section and in section II.A.4. of this
stress; tracing only, without
• There are 100 or more single claims final rule with comment period, we
interpretation and report) on the bypass
for the code. This number of single have made changes to the data process
list because it is typically performed
claims ensures that observed outcomes to ensure that we capture as much data
with single photon emission computed
are sufficiently representative of as possible for services assigned status
tomography (SPECT) procedures (CPT
packaging that might occur in the indicator ‘‘Q.’’ Although we revised the
code 78465 (Myocardial perfusion
multiple claims. process to apply the specific ‘‘Q’’ status
• Five percent or fewer of the single imaging; tomographic (SPECT), multiple
indicator policies before assessment of
claims for the code have packaged costs studies (including attenuation
the bypass list so that additional HCPCS
on that single claim for the code. This codes could be considered for the correction when performed), at rest and/
criterion results in limiting the amount bypass list without risk of losing their or stress (exercise and/or
of packaging being redistributed to the data regarding packaging, we pharmacologic) and redistribution and/
separately payable procedure remaining determined that no codes with status or rest injection, without or without
on the claim after the bypass code is indicator ‘‘Q’’ were appropriate for quantification)). These commenters
removed and ensures that the costs addition to the final CY 2008 bypass list believed that significant data from
associated with the bypass code because of their significant associated multiple procedure claims were lost
represent the cost of the bypassed packaging. because CPT code 93017 was not
service. Comment: Several commenters asked bypassed. Other commenters asked that
• The median cost of packaging that CMS add certain HCPCS codes to CMS add the following drug
observed in the single claims is equal to the bypass list so that more single bills administration CPT codes to the bypass
or less than $50. This limits the amount would be available for median setting. list because doing so would enable use
of error in redistributed costs. Some commenters specifically objected of more multiple procedure claims data
• The code is not a code for an to the removal of the following radiation to establish median costs for drug
unlisted service. oncology services that they indicated administration services: CPT codes
In addition, we proposed to add to the should seldom have any associated 90767 (Intravenous infusion, for
bypass list codes that our clinicians packaging: CPT codes 77280 therapy, prophylaxis, or diagnosis
believe have minimal associated (Therapeutic radiology simulation-aided (specify substance or drug); additional
packaging based on their clinical field setting; simple); 77285 sequential infusion, up to 1 hour (List
assessment of the complete CY 2008 (Therapeutic radiology simulation-aided separately in addition to code for
OPPS proposal. As proposed, this list field setting; intermediate); 77290 primary procedure)); 90768 (Intravenous
contained bypass codes that were (Therapeutic radiology simulation-aided infusion, for therapy, prophylaxis, or
appropriate to claims for services in CY field setting; complex); 77295 diagnosis (specify substance or drug);
2006 and, therefore, included codes that (Therapeutic radiology simulation-aided concurrent infusion (List separately in
were deleted for CY 2007. Moreover, field setting; 3-dimensional); 77332 addition to code for primary procedure);
there were codes on the proposed (Treatment devices, design and 90775 (Therapeutic, prophylactic or
bypass list that were new for CY 2007 construction; simple (simple block, diagnostic injection (specify substance
and which were appropriate additions simple bolus)); 77333 (Treatment or drug); each additional sequential
to the bypass list in preparation for use devices, design and construction; intravenous push of a new substance/
of the CY 2007 claims for creation of the intermediate (multiple blocks, stents, drug (List separately in addition to code
CY 2009 OPPS. bite blocks, special bolus)); 77334 for primary procedure)); 96411
We received a number of public (Treatment devices, design and (Chemotherapy administration;
comments on the use of the bypass list construction; complex (irregular blocks, intravenous, push technique, each
for creation of ‘‘pseudo’’ single special shields, compensators, wedges, additional substance/drug (List
procedure claims. A summary of the molds or casts)); and 77417 separately in addition to code for
comments and our responses follow. (Therapeutic radiology port film(s)). primary procedure)); and 96417
Comment: Some commenters objected One commenter explained that there (Chemotherapy administration,
to the removal of HCPCS codes from the was an interaction with the packaging of intravenous infusion technique; each
bypass list because the codes ceased to image guided radiation therapy codes additional sequential infusion (different
meet the criteria for the bypass list as a that reduced the percentage of single substance/drug), up to 1 hour (List
separately in addition to code for assigned to the code for the first hour of and ways that CMS could use data that
primary procedure)). A commenter infusion on the same claim. If we had were more reflective of the real costs for
asked that we add HCPCS code 88307 not placed the codes for additional these procedures. The commenter
(Level V Surgical pathology, gross and hours of infusion on the bypass list, we believed that the median cost of CPT
microscopic examination) because it is would have had a substantial set of drug code 93880 should be based on the cost
so similar to HCPCS codes 88305 (Level administration multiple procedure of the typical patient and not the least
III Surgical pathology, gross and claims that were unusable for ratesetting expensive patient because the OPPS
microscopic examination) and 88306 purposes. However, adding the payment caps payment in the
(Level IV Surgical pathology, gross and sequential drug administration services physician’s office for the service. The
microscopic examination) that were to the bypass list too would force all of commenter explained that using the
already included on the bypass list. the costs of the associated additional bypass list to generate more ‘‘pseudo’’
Response: We have reviewed the drugs and supplies to be packaged into single claims without any packaging
requests to add these codes to the the payment for the initial drug resulted in stagnation in payment that
bypass list and we have made the administration service for another drug, encouraged hospitals to pressure
following decisions for CY 2008 for the which we do not believe is an physicians to order more expensive tests
reasons stated below: appropriate allocation of packaging. and threatened access to care for
We have added the radiation oncology While we understand the concerns of beneficiaries who would be served well
services listed above, with the exception the commenters regarding the by simpler tests that were being
of CPT code 77417, to the bypass list challenges associated with setting underpaid as a result of inclusion of
because we agree that they are of the appropriate payment rates for these CPT code 93880 on the bypass list.
type that should not have packaging sequential services reported on multiple One commenter asked that CMS
associated with them. We recognize that procedure claims, we have very little CY provide a code-specific analysis of the
including them on the bypass list may 2006 claims data for the four codes impact of bypassing each code on the
yield significantly more single because they were not recognized for bypass list because the commenter
procedure bills and may also increase payment under the CY 2006 OPPS. We believed that removing and using the
the number of claims that we can use for will reconsider the treatment of these line item costs for the bypass codes to
calculation of the low dose rate prostate CPT codes for the CY 2009 OPPS update set the median costs for the APCs to
brachytherapy composite APC when CY 2007 data, where these codes which the bypass codes are assigned
(APC8001). We have not added CPT were separately paid under the OPPS, results in understatement of the median
code 77417 to the CY 2008 bypass list are available. We have not added CPT costs for those APCs.
because, based on its final CY 2008 code 90768 to the bypass list because Response: The bypass list has been
unconditionally packaged status, the our final CY 2008 policy very effective in enabling us to use
code would not be a candidate for the unconditionally packages payment for claims data that would not otherwise be
bypass list. Unconditionally packaged this service and, therefore, it is not a available for median calculation. Since
codes are not included on the bypass candidate for the bypass list. its origin for the CY 2004 OPPS, we
list because their presence on a claim We agree that HCPCS code 88307 have been very careful in determining
does not make that claim a multiple (which was on the proposed bypass list the codes to be placed on the bypass
procedure bill. for the CY 2008 OPPS) is appropriate list. As described above, we use a
We have added CPT code 93017 to the and we have added it to the final CY standard set of criteria to select claims
bypass list because we agree that it 2008 bypass list. that seldom have packaging (that is,
should not have significant associated In addition to these responses to fewer than 5 percent of ‘‘natural’’ single
packaging, and we recognize that comments, we have added six other bills); that have little packaging (that is,
including it on the bypass list may yield HCPCS codes to the final CY 2008 less than $50); for which we have at
significantly more single procedure bills bypass list that met the empirical least 100 ‘‘natural’’ single bills; and that
for median setting. criteria for inclusion using the final rule are not unlisted codes (for which there
We have not added the drug data, and we have also added three is no specified service). In addition to
administration services listed above to HCPCS codes for clinical consistency codes that pass these criteria, we also
the bypass list. Four of these five codes with codes that are already on the have added HCPCS codes to the bypass
are for sequential drug infusion services bypass list. New bypass codes for this list that have been recommended to us
or injections of additional drugs and, final rule with comment period are by members of the public, including the
therefore, by definition, new drugs and identified in Table 1 with an asterisk. specialty societies that are most familiar
medical supplies that are associated Comment: One commenter objected to with them, as services with which
with these codes should be reported in the use of the bypass list to create packaging should be seldom, if ever,
all cases in which the services are ‘‘pseudo’’ single claims for median associated. Therefore, we believe that
furnished. We note that, beginning in setting on the basis that it artificially we have been very prudent with regard
CY 2007, we placed the CPT codes for lowers the median cost of the services to our selection of the codes to be added
additional hours of infusion on the on the bypass list by sending all to the bypass list and with our use of the
bypass list, recognizing that all packaging on the claim to the other list. Moreover, we open the criteria and
packaging related to these hours would major separately paid service on the the list to public comment each year
be associated with the initial services on claim. Specifically, the commenter and we respond to comments in the
the claim. We proposed and finalized believed that inclusion of CPT code final rule for the update year.
this approach for CY 2007, because we 93880 (Duplex scan of extracranial We also make available the claims
were unable to accurately assign arteries; complete bilateral study) on the data used to calculate the median costs
representative portions of packaged bypass list resulted in the use of the cost on which the relative weights are based,
costs to multiple different drug data for the lowest cost services and, and we provide an extensive narrative
administration services. We expected thereby, lowered the cost of this service. description of our data process. Hence,
that the packaging related to additional The commenter stated that CMS should we provide commenters with the tools
hours of infusion of drugs that spanned work with stakeholders on use of the to conduct any further analyses they
several hours would be appropriately bypass list, its impact on median costs, chose with regard to the codes on the
bypass list or otherwise. In the case of TABLE 1.—CY 2008 FINAL BYPASS TABLE 1.—CY 2008 FINAL BYPASS
CPT code 93880, the median packaged CODES FOR CREATING ‘‘PSEUDO’’ CODES FOR CREATING ‘‘PSEUDO’’
cost on ‘‘natural’’ single procedure SINGLE CLAIMS FOR CALCULATING SINGLE CLAIMS FOR CALCULATING
claims (of which there were 403,106) MEDIAN COSTS MEDIAN COSTS—Continued
was $0 and the percent of natural single
procedure claims on which there was Added for Added for
any packaging was 0.47 percent (1,899 HCPCS HCPCS
Short description this final Short description this final
code code
claims out of 403,106 ). Therefore, the rule rule
code meets the criteria for inclusion on
the bypass list and will remain on it for 11056 ..... Trim skin lesions, 70371 ..... Speech evaluation,
2 to 4. complex.
CY 2008. We have no evidence that
11057 ..... Trim skin lesions, 70450 ..... Ct head/brain w/o
physicians or hospitals are billing more over 4. dye.
expensive tests as a result of the OPPS 11300 ..... Shave skin lesion. 70480 ..... Ct orbit/ear/fossa
payment rate for CPT code 93880, and 11301 ..... Shave skin lesion. w/o dye.
our data show there is very little 11719 ..... Trim nail(s). 70486 ..... Ct maxillofacial w/o
packaging associated with the service in 11720 ..... Debride nail, 1–5. dye.
the typical case. 11721 ..... Debride nail, 6 or 70490 ..... Ct soft tissue neck
In order to keep the established more. w/o dye.
11954 ..... Therapy for con- 70544 ..... Mr angiography
empirical criteria for the bypass list
tour defects. head w/o dye.
constant, we specifically solicited 70551 ..... Mri brain w/o dye.
17003 ..... Destruct premalg
public comment on whether we should les, 2–14. 71010 ..... Chest x-ray.
adjust the $50 packaging cost criterion 31231 ..... Nasal endoscopy, 71015 ..... Chest x-ray.
for inflation each year and, if so, dx. 71020 ..... Chest x-ray.
recommendations for the source of the 31579 ..... Diagnostic laryn- 71021 ..... Chest x-ray.
adjustment. We believed that adding an goscopy. 71022 ..... Chest x-ray.
inflation adjustment factor would 51798 ..... Us urine capacity 71023 ..... Chest x-ray and
ensure that the same amount of measure. fluoroscopy.
packaging associated with candidate 53661 ..... Dilation of urethra * 71030 ..... Chest x-ray.
codes for the bypass list was reviewed 54240 ..... Penis study. 71034 ..... Chest x-ray and
each year relative to nominal costs. 56820 ..... Exam of vulva w/ fluoroscopy.
scope. 71035 ..... Chest x-ray.
We received one public comment on 57150 ..... Treat vagina infec- * 71100 ..... X-ray exam of ribs.
the appropriateness of updating the $50 tion. 71101 ..... X-ray exam of ribs/
packaging cost criteria for inclusion of 67820 ..... Revise eyelashes. chest.
a code on the bypass list to account for 69210 ..... Remove impacted 71110 ..... X-ray exam of ribs.
annual inflation. A summary of the ear wax. 71111 ..... X-ray exam of ribs/
comment and our response follow. 69220 ..... Clean out mastoid chest.
cavity. 71120 ..... X-ray exam of
Comment: One commenter stated that 70030 ..... X-ray eye for for- breastbone.
CMS should update the $50 maximum eign body. 71130 ..... X-ray exam of
‘‘natural’’ single bill median packaging 70100 ..... X-ray exam of jaw. breastbone.
cost criterion for including HCPCS 70110 ..... X-ray exam of jaw. 71250 ..... Ct thorax w/o dye.
codes on the bypass list on the basis of 70120 ..... X-ray exam of 72010 ..... X-ray exam of
empirical criteria. The commenter did mastoids. spine.
not suggest a methodology we might use 70130 ..... X-ray exam of 72020 ..... X-ray exam of
for the update. mastoids. spine.
70140 ..... X-ray exam of fa- 72040 ..... X-ray exam of
Response: We have not changed the cial bones. neck spine.
$50 maximum ‘‘natural’’ bill median 70150 ..... X-ray exam of fa- 72050 ..... X-ray exam of
packaging cost criterion for this final cial bones. neck spine.
rule with comment period. However, we 70160 ..... X-ray exam of 72052 ..... X-ray exam of
will consider whether to update the nasal bones. neck spine.
criterion and, if so, what methodology 70200 ..... X-ray exam of eye 72069 ..... X-ray exam of
would be used, as part of the sockets. trunk spine.
development of the proposals for the CY 70210 ..... X-ray exam of si- 72070 ..... X-ray exam of tho-
2009 OPPS. nuses. racic spine.
70220 ..... X-ray exam of si- 72072 ..... X-ray exam of tho-
After consideration of the public nuses. racic spine.
comments received, we are adopting, as 70250 ..... X-ray exam of skull. 72074 ..... X-ray exam of tho-
final, the proposed ‘‘pseudo’’ single 70260 ..... X-ray exam of skull. racic spine.
claims process and the CY 2008 bypass 70328 ..... X-ray exam of jaw 72080 ..... X-ray exam of
codes listed in Table 1 below. This list joint. trunk spine.
has been modified from the CY 2008 70330 ..... X-ray exam of jaw 72090 ..... X-ray exam of
proposed list, with the addition of joints. trunk spine.
HCPCS codes that meet the empirical 70336 ..... Magnetic image, 72100 ..... X-ray exam of
jaw joint. lower spine.

criteria based on updated claims data 70355 ..... Panoramic x-ray of 72110 ..... X-ray exam of
and certain HCPCS codes recommended jaws. lower spine.
by commenters, as discussed above. As 70360 ..... X-ray exam of 72114 ..... X-ray exam of
stated earlier, the new bypass codes for neck. lower spine.
this final rule with comment period are 70370 ..... Throat x-ray & flu- 72120 ..... X-ray exam of
identified in Table 1 with an asterisk. oroscopy. lower spine.
TABLE 1.—CY 2008 FINAL BYPASS TABLE 1.—CY 2008 FINAL BYPASS TABLE 1.—CY 2008 FINAL BYPASS
CODES FOR CREATING ‘‘PSEUDO’’ CODES FOR CREATING ‘‘PSEUDO’’ CODES FOR CREATING ‘‘PSEUDO’’
SINGLE CLAIMS FOR CALCULATING SINGLE CLAIMS FOR CALCULATING SINGLE CLAIMS FOR CALCULATING
MEDIAN COSTS—Continued MEDIAN COSTS—Continued MEDIAN COSTS—Continued
Added for Added for Added for
HCPCS HCPCS HCPCS
Short description this final Short description this final Short description this final
code code code
rule rule rule
72125 ..... Ct neck spine w/o 73564 ..... X-ray exam, knee, 76078 ..... Radiographic
dye. 4 or more. absorptiometry.
72128 ..... Ct chest spine w/o 73565 ..... X-ray exam of 76100 ..... X-ray exam of
dye. knees. body section.
72131 ..... Ct lumbar spine w/ 73590 ..... X-ray exam of 76400 ..... Magnetic image,
o dye. lower leg. bone marrow.
72141 ..... Mri neck spine w/o 73600 ..... X-ray exam of 76510 ..... Ophth us, b &
dye. ankle. quant a.
72146 ..... Mri chest spine w/ 73610 ..... X-ray exam of 76511 ..... Ophth us, quant a
o dye. ankle. only.
72148 ..... Mri lumbar spine 73620 ..... X-ray exam of foot. 76512 ..... Ophth us, b w/non-
w/o dye. 73630 ..... X-ray exam of foot. quant a.
72170 ..... X-ray exam of pel- 73650 ..... X-ray exam of heel. 76513 ..... Echo exam of eye,
vis. 73660 ..... X-ray exam of water bath.
72190 ..... X-ray exam of pel- toe(s). 76514 ..... Echo exam of eye,
vis. 73700 ..... Ct lower extremity thickness.
72192 ..... Ct pelvis w/o dye. w/o dye. 76516 ..... Echo exam of eye.
72202 ..... X-ray exam sacro- 73718 ..... Mri lower extremity 76519 ..... Echo exam of eye.
iliac joints. w/o dye. 76536 ..... Us exam of head
72220 ..... X-ray exam of 73721 ..... Mri jnt of lwr extre and neck.
tailbone. w/o dye. 76645 ..... Us exam, breast(s).
73000 ..... X-ray exam of col- 74000 ..... X-ray exam of ab- 76700 ..... Us exam, abdom,
lar bone. domen. complete.
73010 ..... X-ray exam of 74010 ..... X-ray exam of ab- 76705 ..... Echo exam of ab-
shoulder blade. domen. domen.
73020 ..... X-ray exam of 74020 ..... X-ray exam of ab- 76770 ..... Us exam abdo
shoulder. domen. back wall, comp.
73030 ..... X-ray exam of 74022 ..... X-ray exam series, 76775 ..... Us exam abdo
shoulder. abdomen. back wall, lim.
73050 ..... X-ray exam of 74150 ..... Ct abdomen w/o 76778 ..... Us exam kidney
shoulders. dye. transplant.
73060 ..... X-ray exam of hu- 74210 ..... Contrast x-ray 76801 ..... Ob us < 14 wks,
merus. exam of throat. single fetus.
73070 ..... X-ray exam of 74220 ..... Contrast x-ray, 76805 ..... Ob us >/= 14 wks,
elbow. esophagus. sngl fetus.
73080 ..... X-ray exam of 74230 ..... Cine/vid x-ray, 76811 ..... Ob us, detailed,
elbow. throat/esoph. sngl fetus.
73090 ..... X-ray exam of 74246 ..... Contrast x-ray uppr 76816 ..... Ob us, follow-up,
forearm. gi tract. per fetus.
73100 ..... X-ray exam of 74247 ..... Contrst x-ray uppr 76817 ..... Transvaginal us,
wrist. gi tract. obstetric.
73110 ..... X-ray exam of 74249 ..... Contrst x-ray uppr 76830 ..... Transvaginal us,
wrist. gi tract. non-ob.
73120 ..... X-ray exam of 76020 ..... X-rays for bone 76856 ..... Us exam, pelvic,
hand. age. complete.
73130 ..... X-ray exam of 76040 ..... X-rays, bone eval- 76857 ..... Us exam, pelvic,
hand. uation. limited.
73140 ..... X-ray exam of fin- 76061 ..... X-rays, bone sur- 76870 ..... Us exam, scrotum.
ger(s). vey. 76880 ..... Us exam, extremity.
73200 ..... Ct upper extremity 76062 ..... X-rays, bone sur- 76970 ..... Ultrasound exam
w/o dye. vey. follow-up.
73218 ..... Mri upper extremity 76065 ..... X-rays, bone eval- 76977 ..... Us bone density
w/o dye. uation. measure.
73221 ..... Mri joint upr 76066 ..... Joint survey, single 76999 ..... Echo examination
extrem w/o dye. view. procedure.
73510 ..... X-ray exam of hip. 76070 ..... Ct bone density, 77280 ..... Set radiation ther- *
73520 ..... X-ray exam of hips. axial. apy field.
73540 ..... X-ray exam of pel- 76071 ..... Ct bone density, 77285 ..... Set radiation ther- *
vis & hips. peripheral. apy field.

73550 ..... X-ray exam of 76075 ..... Dxa bone density, 77290 ..... Set radiation ther- *
thigh. axial. apy field.
73560 ..... X-ray exam of 76076 ..... Dxa bone density/ 77295 ..... Set radiation ther- *
knee, 1 or 2. peripheral. apy field.
73562 ..... X-ray exam of 76077 ..... Dxa bone density/ 77300 ..... Radiation therapy
knee, 3. v-fracture. dose plan.
HCPCS HCPCS HCPCS
code code code
rule rule rule
77301 ..... Radiotherapy dose 86880 ..... Coombs test, di- 88331 ..... Path consult
plan, imrt. rect. intraop, 1 bloc.
77315 ..... Teletx isodose 86885 ..... Coombs test, indi- 88342 ..... Immunohistochem-
plan complex. rect, qual. istry.
77326 ..... Brachytx isodose 86886 ..... Coombs test, indi- 88346 ..... Immunofluorescent
calc simp. rect, titer. study.
77327 ..... Brachytx isodose 86890 ..... Autologous blood 88347 ..... Immunofluorescent
calc interm. process. study.
77328 ..... Brachytx isodose 86900 ..... Blood typing, ABO. 88348 ..... Electron micros-
plan compl. 86901 ..... Blood typing, Rh copy.
77331 ..... Special radiation (D). 88358 ..... Analysis, tumor.
dosimetry. 86903 ..... Blood typing, anti- 88360 ..... Tumor
77332 ..... Radiation treat- * gen screen. immunohistoche-
ment aid(s). 86904 ..... Blood typing, pa- m/manual.
77333 ..... Radiation treat- * tient serum. 88361 ..... Tumor *
ment aid(s). 86905 ..... Blood typing, RBC immunohistoche-
77334 ..... Radiation treat- * antigens. m/comput.
ment aid(s). 86906 ..... Blood typing, Rh 88365 ..... Insitu hybridization
77336 ..... Radiation physics phenotype. (fish).
consult. 86930 ..... Frozen blood prep. 88368 ..... Insitu hybridization,
77370 ..... Radiation physics 86970 ..... RBC pretreatment. manual.
consult. 88104 ..... Cytopath fl 88399 ..... Surgical pathology
77401 ..... Radiation treat- nongyn, smears. procedure.
ment delivery. 88106 ..... Cytopath fl 89049 ..... Chct for mal
77402 ..... Radiation treat- nongyn, filter. hyperthermia.
ment delivery. 89230 ..... Collect sweat for
88107 ..... Cytopath fl
77403 ..... Radiation treat- test.
nongyn, sm/fltr.
ment delivery. 89240 ..... Pathology lab pro-
88108 ..... Cytopath, con-
77404 ..... Radiation treat- cedure.
centrate tech.
ment delivery.
88112 ..... Cytopath, cell en- 90761 ..... Hydrate iv infusion,
77407 ..... Radiation treat-
hance tech. add-on.
ment delivery.
88160 ..... Cytopath smear, 90761 ..... Hydrate iv infusion, *
other source. add-on.
ment delivery.
88161 ..... Cytopath smear, 90766 ..... Ther/proph/dg iv *
other source. inf, add-on.
ment delivery.
88162 ..... Cytopath smear, 90801 ..... Psy dx interview.
ment delivery. other source. 90802 ..... Intac psy dx inter-
77412 ..... Radiation treat- 88172 ..... Cytopathology eval view.
ment delivery. of fna. 90804 ..... Psytx, office, 20–
77413 ..... Radiation treat- 88173 ..... Cytopath eval, fna, 30 min.
ment delivery. report. 90805 ..... Psytx, off, 20–30
77414 ..... Radiation treat- 88182 ..... Cell marker study. min w/e&m.
ment delivery. 88184 ..... Flowcytometry/ tc, 90806 ..... Psytx, off, 45–50
77416 ..... Radiation treat- 1 marker. min.
ment delivery. 88185 ..... Flowcytometry/tc, 90807 ..... Psytx, off, 45–50
77418 ..... Radiation tx deliv- add-on. min w/e&m.
ery, imrt. 88300 ..... Surgical path, 90808 ..... Psytx, office, 75–
77470 ..... Special radiation gross. 80 min.
treatment. 88302 ..... Tissue exam by 90809 ..... Psytx, off, 75–80,
77520 ..... Proton trmt, simple pathologist. w/e&m.
w/o comp. 88304 ..... Tissue exam by 90810 ..... Intac psytx, off,
77523 ..... Proton trmt, inter- pathologist. 20–30 min.
mediate. 88305 ..... Tissue exam by 90812 ..... Intac psytx, off,
80500 ..... Lab pathology con- pathologist. 45–50 min.
sultation. 88307 ..... Tissue exam by 90816 ..... Psytx, hosp, 20–30
80502 ..... Lab pathology con- pathologist. min.
sultation. 88311 ..... Decalcify tissue. 90818 ..... Psytx, hosp, 45–50
85097 ..... Bone marrow inter- 88312 ..... Special stains. min.
pretation. 88313 ..... Special stains. 90826 ..... Intac psytx, hosp, *
86510 ..... Histoplasmosis 88321 ..... Microslide con- 45–50 min.
skin test. sultation. 90845 ..... Psychoanalysis.
86850 ..... RBC antibody 88323 ..... Microslide con- 90846 ..... Family psytx w/o
screen. sultation. patient.
86870 ..... RBC antibody 88325 ..... Comprehensive re- 90847 ..... Family psytx w/pa-
identification. view of data. tient.
HCPCS HCPCS HCPCS
code code code
rule rule rule
90853 ..... Group psycho- 93005 ..... Electrocardiogram, 93975 ..... Vascular study.
therapy. tracing. 93976 ..... Vascular study.
90857 ..... Intac group psytx. 93017 ..... Cardiovascular * 93978 ..... Vascular study.
90862 ..... Medication man- stress test. 93979 ..... Vascular study.
agement. 93225 ..... ECG monitor/ 93990 ..... Doppler flow test-
92002 ..... Eye exam, new record, 24 hrs. ing.
patient. 93226 ..... ECG monitor/re- 94015 ..... Patient recorded
92004 ..... Eye exam, new port, 24 hrs. spirometry.
patient. 93231 ..... Ecg monitor/ 94690 ..... Exhaled air anal-
92012 ..... Eye exam estab- record, 24 hrs. ysis.
lished pat. 93232 ..... ECG monitor/re- 95115 ..... Immunotherapy,
92014 ..... Eye exam & treat- port, 24 hrs. one injection.
ment. 93236 ..... ECG monitor/re- 95117 ..... Immunotherapy in-
92020 ..... Special eye eval- port, 24 hrs. jections.
uation. 93270 ..... ECG recording. 95165 ..... Antigen therapy
92081 ..... Visual field exam- 93271 ..... Ecg/monitoring and services.
ination(s). analysis. 95250 ..... Glucose moni- *
92082 ..... Visual field exam- 93278 ..... ECG/signal-aver- toring, cont.
ination(s). aged. 95805 ..... Multiple sleep la-
92083 ..... Visual field exam- 93727 ..... Analyze ilr system. tency test.
ination(s). 93731 ..... Analyze pace- 95806 ..... Sleep study, unat-
92135 ..... Ophth dx imaging maker system. tended.
post seg. 93732 ..... Analyze pace- 95807 ..... Sleep study, at-
92136 ..... Ophthalmic biome- maker system. tended.
try. 93733 ..... Telephone analy,
95808 ..... Polysomnography,
92225 ..... Special eye exam, pacemaker.
1–3.
initial. 93734 ..... Analyze pace-
95812 ..... Eeg, 41–60 min-
92226 ..... Special eye exam, maker system.
utes.
subsequent. 93735 ..... Analyze pace-
95813 ..... Eeg, over 1 hour.
92230 ..... Eye exam with maker system.
95816 ..... Eeg, awake and
photos. 93736 ..... Telephonic analy,
drowsy.
92240 ..... Icg angiography. pacemaker.
92250 ..... Eye exam with 93741 ..... Analyze ht pace 95819 ..... Eeg, awake and
photos. device sngl. asleep.
92275 ..... Electroretinography. 93742 ..... Analyze ht pace 95822 ..... Eeg, coma or
92285 ..... Eye photography. device sngl. sleep only.
92286 ..... Internal eye pho- 93743 ..... Analyze ht pace 95869 ..... Muscle test, thor
tography. device dual. paraspinal.
92520 ..... Laryngeal function 93744 ..... Analyze ht pace 95872 ..... Muscle test, one *
studies. device dual. fiber.
92541 ..... Spontaneous nys- 93786 ..... Ambulatory BP re- 95900 ..... Motor nerve con-
tagmus test. cording. duction test.
92546 ..... Sinusoidal rota- 93788 ..... Ambulatory BP 95921 ..... Autonomic nerv
tional test. analysis. function test.
92548 ..... Posturography. 93797 ..... Cardiac rehab. 95925 ..... Somatosensory
92552 ..... Pure tone audiom- 93798 ..... Cardiac rehab/ testing.
etry, air. monitor. 95926 ..... Somatosensory *
92553 ..... Audiometry, air & 93875 ..... Extracranial study. testing.
bone. 93880 ..... Extracranial study. 95930 ..... Visual evoked po-
92555 ..... Speech threshold 93882 ..... Extracranial study. tential test.
audiometry. 93886 ..... Intracranial study. 95950 ..... Ambulatory eeg
92556 ..... Speech audiom- 93888 ..... Intracranial study. monitoring.
etry, complete. 93922 ..... Extremity study. 95953 ..... EEG monitoring/
92557 ..... Comprehensive 93923 ..... Extremity study. computer.
hearing test. 93924 ..... Extremity study. 95970 ..... Analyze neurostim,
92567 ..... Tympanometry. 93925 ..... Lower extremity no prog.
92582 ..... Conditioning play study. 95972 ..... Analyze neurostim,
audiometry. 93926 ..... Lower extremity complex.
92585 ..... Auditor evoke po- study. 95974 ..... Cranial neurostim,
tent, compre. 93930 ..... Upper extremity complex.

92603 ..... Cochlear implt f/up study. 95978 ..... Analyze neurostim
exam 7 >. 93931 ..... Upper extremity brain/1h.
92604 ..... Reprogram coch- study. 96000 ..... Motion analysis,
lear implt 7 >. 93965 ..... Extremity study. video/3d.
92626 ..... Eval aud rehab 93970 ..... Extremity study. 96101 ..... Psycho testing by
status. 93971 ..... Extremity study. psych/phys.
TABLE 1.—CY 2008 FINAL BYPASS TABLE 1.—CY 2008 FINAL BYPASS proposed packaging approach presented
CODES FOR CREATING ‘‘PSEUDO’’ CODES FOR CREATING ‘‘PSEUDO’’ in the CY 2008 OPPS/ASC proposed
SINGLE CLAIMS FOR CALCULATING SINGLE CLAIMS FOR CALCULATING rule. However, we did not expect the
MEDIAN COSTS—Continued MEDIAN COSTS—Continued services newly proposed for packaged
payment to commonly appear with a
Added for Added for drug administration service. Therefore,
HCPCS HCPCS we believed that the analysis conducted
Short description this final Short description this final
code code
rule rule on the CY 2007 final rule with comment
period data was sufficient to inform our
96111 ..... Developmental G0130 .... Single energy x- development of the CY 2008 OPPS/ASC
test, extend. ray study.
proposed rule.
96116 ..... Neurobehavioral G0166 .... Extrnl
In general, we did not believe that the
status exam. counterpulse,
96118 ..... Neuropsych tst by per tx. proportionate amount of packaged costs
psych/phys. G0175 .... OPPS Serv- in the multiple bills relative to the
96119 ..... Neuropsych testing ice,sched team number of primary services would be
by tec. conf. greater than that in the single bills. Our
96150 ..... Assess hlth/be- G0332 .... Preadmin IV findings supported our hypothesis. The
have, init. immunoglobulin. costs in uncoded revenue codes and
96151 ..... Assess hlth/be- G0340 .... Robt lin-radsurg HCPCS codes with a packaged status
have, subseq. fractx 2–5. indicator accounted for 22 percent of
96152 ..... Intervene hlth/be- G0344 .... Initial preventive
observed costs in the universe of all CY
have, indiv. exam.
G0365 .... Vessel mapping 2005 claims that we used to model the
96153 ..... Intervene hlth/be-
hemo access. CY 2007 OPPS (including both the
have, group.
96415 ..... Chemo, iv infusion, G0367 .... EKG tracing for ini- single and multiple procedure bills).
addl hr. tial prev. Similarly, the costs in uncoded revenue
96423 ..... Chemo ia infuse G0376 .... Smoke/tobacco codes and HCPCS codes with a
each addl hr. counseling >10. packaged status indicator accounted for
96900 ..... Ultraviolet light M0064 .... Visit for drug moni- 18 percent of the total cost in the subset
therapy. toring. of CY 2005 single bills that we used to
96910 ..... Photochemothera- Q0091 .... Obtaining screen
calculate the median costs on which the
py with UV–B. pap smear.
relative weights were based.
96912 ..... Photochemothera- However, the bypass methodology
py with UV–A. (2) Exploration of Allocation of creates a ‘‘pseudo’’ single bill for all
96913 ..... Photochemothera- Packaged Costs to Separately Paid claims for services or items on the
py, UV–A or B. Procedure Codes
96920 ..... Laser tx, skin < bypass list, and these ‘‘pseudo’’ single
250 sq cm. During its August 23–24, 2006 bills have no associated packaging, by
98925 ..... Osteopathic ma- meeting, the APC Panel recommended definition of the application of the
nipulation. that CMS provide claims analysis of the bypass list. Excluding the total cost
98926 ..... Osteopathic ma- contributions of packaged costs associated with bypass codes, 28
nipulation. (including packaged revenue code percent of observed costs in the single
98927 ..... Osteopathic ma- charges and charges for packaged bills were attributable to packaged
nipulation. HCPCS codes) to the median cost of services, and 29 percent of observed
98940 ..... Chiropractic ma- each drug administration service. (We costs across all claims were attributable
nipulation.
refer readers to Recommendation #28 in to packaged services. Therefore, we
98941 ..... Chiropractic ma-
nipulation.
the August 23–24, 2006 meeting concluded that, in general, the extent of
98942 ..... Chiropractic ma- recommendation summary on the CMS packaging in all bills was similar to the
nipulation. Web site at: http://www.cms.hhs.gov/ amount of packaging in the single
99204 ..... Office/outpatient FACA/05_Advisory procedure bills we used to set median
visit, new. PanelonAmbulatoryPayment costs for most APCs.
99212 ..... Office/outpatient ClassificationGroups.asp#TopOfPage.) In the CY 2008 proposed rule (72 FR
visit, est. In our continued effort to better 42640), we recognized that aggregate
99213 ..... Office/outpatient understand the multiple claims in order numbers do not address the packaging
visit, est. to extract single bill information from associated with single and multiple
99214 ..... Office/outpatient
them, we examined the extent to which procedure claims for specific services.
visit, est.
99241 ..... Office consultation.
the packaging in multiple procedure In past years, we received comments
99242 ..... Office consultation. claims differs from the packaging in the stating that the amount of packaging in
99243 ..... Office consultation. single procedure claims on which we the single bills for drug administration
99244 ..... Office consultation. base the median costs both in general services was not representative of the
99245 ..... Office consultation. and more specifically for drug typical packaged costs of these drug
0144T ..... CT heart wo dye; administration services. We performed administration services, which were
qual calc. this analysis using the claims data on usually performed in combination with
C8951 .... IV inf, tx/dx, each which we based the CY 2007 OPPS/ASC one another, because the single bills
addl hr. final rule with comment period. We represented less complex and less
C8955 .... Chemotx adm, IV

examined the amount of packaging in resource-intensive services than the
inf, addl hr.
G0008 .... Admin influenza multiple procedure versus single usual cases.
virus vac. procedure claims in general and in We published a study in the CY 2007
G0101 .... CA screen; pelvic/ claims for drug administration services OPPS/ASC final rule with comment
breast exam. in particular. We conducted this period (71 FR 68120 through 68121) that
G0127 .... Trim nail(s). analysis without taking into account the discussed the amount of packaging on
the single bills for drug administration bills as the ‘‘hardcore’’ multiple bills. single and multiple procedure claims
procedure codes, and we promised to For the first subset of ‘‘hardcore’’ for ratesetting. A summary of the public
replicate that study for the APC Panel. multiple bills with only drug comments and our responses follow.
We discussed the results of this study administration codes, that is, where Comment: Several commenters
with the APC Panel at its March 2007 multiple drug administration codes expressed appreciation for CMS’
meeting, in accordance with the APC were the only separately paid procedure analysis of packaged costs included on
Panel’s August 2006 recommendation codes on the claim, we estimated that single and multiple procedure claims
and also published the results in the CY packaged costs were 22 percent of total for drug administration services. One
2008 OPPS/ASC proposed rule (72 FR costs (27 percent, on average), where commenter encouraged CMS to further
42640 through 42641). total costs consisted of costs for all analyze the total amount and percentage
As discussed in the proposed rule, we payable codes. Costs for packaged drug of packaged costs associated with all
found that drug administration services HCPCS codes and pharmacy revenue packaged HCPCS codes, as well as other
demonstrated reasonable single bill codes comprised 13 percent of total cost packaged services reported by hospitals,
representation in comparison with other at the median (19 percent, on average). and examine this information on single
OPPS services. Single bills for drug For the second subset of ‘‘hardcore’’ versus multiple procedure claims in
administration constituted, roughly, 30 multiple bills with any drug order to increase hospitals’
percent of all observed occurrences of administration code, that is, where a understanding of the actual packaged
drug administration services, varying by drug administration code appeared with costs used in the ratesetting process.
code from 7 to 55 percent. The study other payable codes (largely radiology Once again, several commenters
also demonstrated that packaged costs services and visits), we estimated encouraged CMS to consider specific
substantially contributed to median cost packaged costs were 13 percent of total packaging algorithms to allocate
estimates for the majority of drug cost at the median (19 percent, on packaged costs on multiple procedures
administration HCPCS codes (72 FR average). Costs for packaged drugs and claims, in order to create additional
42640 through 42641). pharmacy revenue codes comprised 6 ‘‘pseudo’’ single claims for ratesetting.
For all single bills for CPT code 90780 percent of total cost at the median (10 Response: The packaging of
(Intravenous infusion for therapy/ percent, on average). The amount of associated costs into payment for major
diagnosis, administered by physician or packaging in both proxy measures, but procedures is a longstanding principle
under direct supervision of physician; especially the first subset, closely of the OPPS. The OPPS packages
up to one hour), on average, packaged resembled the packaged costs as a payment for the operating and capital-
costs were 31 percent of total cost percentage of drug administration costs related costs that are directly related
(median 27 percent). For the same code, observed in the single bills for drug and integral to furnishing a service on
packaged drug and pharmacy costs administration services. While finding a an outpatient basis. These packaged
comprised, on average, 23 percent of way to accurately use data from the costs have historically included costs
total costs (median 15 percent). Single ‘‘hardcore’’ multiple bills to estimate related to use of an operating or
bills made up 34 percent of all line-item drug administration median costs treatment room, anesthesia, medical
occurrences of the service, suggesting undoubtedly would impact medians, supplies, implantable devices,
that this single bill median cost was these comparisons suggested that the inexpensive drugs, etc. Our findings
fairly robust and probably captured multiple bill data probably would related to the packaged costs on single
packaging adequately. On the other support current median estimates. and multiple claims for drug
hand, CPT code 90784 (Therapeutic, In the CY 2008 OPPS/ASC proposed administration services confirm that the
prophylactic or diagnostic injection rule (72 FR 42641), we noted that we packaging on the single bills used for
(specify material injected); had received several comments over the ratesetting resembles the drug and
subcutaneous or intramuscular) past few years offering algorithms for pharmacy-related packaged costs on
demonstrated limited packaging packaging the costs associated with multiple procedure claims. The
(median 0 percent and mean 17 specific revenue codes or packaging packaging associated with drug
percent), and the median cost for the drugs with certain drug administration administration services on single and
code was derived from only 7 percent of codes. Because of the complexity of multiple claims has historically been of
all occurrences of the code. Across all even routine OPPS claims, prior particular concern to the public, so we
drug administration codes, over half research suggested that such algorithms are reassured by this finding. We are not
showed significant median packaged have limited power to generate convinced that developing this
costs largely attributable to packaged additional single bill claims and do information for all other HCPCS codes
drug and pharmacy costs. little to change median cost estimates. would provide further useful
By definition, we were unable to In the proposed rule (72 FR 42641), we information to hospitals. Instead, we
precisely assess the amount of explained that we continue to look for prefer to direct our analytic resources
packaging associated with drug simple, but powerful, methodologies toward exploring additional approaches
administration codes in the multiple like the bypass list and packaging of to using more cost data from multiple
bills. As a proxy, we estimated HCPCS codes for additional ancillary procedure claims for ratesetting. If we
packaging as a percent of total cost on and supportive services to assign are eventually able to use all OPPS
each claim for two subsets of claims. packaged costs to all services within the claims in developing median costs, then
Both analyses suggested the presence of ‘‘hardcore’’ multiple bills. Ideally, these all packaged costs on claims would also
moderate packaged costs, especially methodologies should be intuitive to the be incorporated in ratesetting under the
drug and pharmacy costs, associated provider community, easily integrated OPPS. We remind hospitals that they
with drug administration services in the into the complexity of OPPS median should continue to take into
multiple bills. We calculated measures cost estimation, and simple to maintain consideration all costs associated with
of central tendency for packaging from year to year. We specifically providing HOPD services in establishing
percentages in the multiple bills or solicited methodologies for creation of their charges for the services. In
portions of multiple bills remaining single bills that meet these criteria. addition, hospitals should report
after ‘‘pseudo’’ singles were created. We We received several public comments packaged HCPCS codes and charges,
referred to this group of the multiple with regard to the use of data from consistent with all CPT, OPPS, and local
contractor instructions, whenever those we calculated CCRs was the hospital- codes demonstrating significant IPPS
services are provided to ensure that the specific departmental level. expenditures and utilization. RTI
associated costs are included in Following the expiration of most assessed the correlation between cost
ratesetting for the major services. medical devices from pass-through report CCRs and the percent of charges
As we have stated previously status in CY 2003, prior to which in a cost center attributable to a set of
regarding our exploration of specific devices were paid at charges reduced to similar services represented by a group
packaging algorithms, we have found cost using the hospital’s overall CCR, we of revenue codes. RTI did not examine
that these approaches, while resource- received comments that our OPPS cost the correlation between CCRs and
intensive on our part, have limited estimates for device implantation revenue codes without significant IPPS
power to generate additional single bill procedures systematically expenditures or a demonstrated
claims and do little to change median underestimate the cost of the devices concentration in a specific Diagnosis
cost estimates. We received no other included in the packaged payment for Related Group (DRG). For example, RTI
specific suggestions for other the procedures because hospitals did not examine revenue code groups
approaches to allocating packaged costs routinely mark up charges for low cost within the pharmacy cost center with
on ‘‘hardcore’’ multiple bills that would items to a much greater extent than they low proportionate inpatient charges that
be intuitive to the provider community, mark up high cost items, and that these might be important to the OPPS, such as
easily integrated into the complexity of items are often combined in a single ‘‘Pharmacy Incident to Radiology.’’ RTI
OPPS median cost estimation, and cost center on their Medicare cost states this limitation in its study and
simple to maintain from year to year. report. This is commonly known as specifically recommends that
We will continue to explore these data ‘‘charge compression.’’ disaggregated CCRs be reestimated for
challenges with the assistance of the In CY 2006, the device industry hospital outpatient charges.
commissioned a study to interpolate a Cost report CCRs combine both
Data Subcommittee of the APC Panel.
device specific CCR from the medical inpatient and outpatient services.
We believe that further progression
supply CCR, using publicly available Ideally, RTI would be able to examine
toward encounter-based or episode-
hospital claims and Medicare cost the correlation between CCRs for
based payment for commonly provided
report data rather than proprietary data Medicare inpatient services and
combinations of services could reduce
on device costs. After reviewing the inpatient claim charges and the
the number of these multiple claims and
device industry’s data analysis and correlation between CCRs for Medicare
incorporate additional claims data, as
study model, CMS contracted with RTI outpatient services and outpatient claim
discussed in section II.A.4.d. of this
International (RTI) to study the impact charges. However, the comprehensive
final rule with comment period
of charge compression on the cost-based nature of the cost report CCR (which
regarding low dose rate prostate weight methodology adopted in the FY combines inpatient and outpatient
brachytherapy and cardiac 2007 IPPS final rule, to evaluate this services) argues for an analysis of the
electrophysiologic evaluation and model, and to propose solutions. For correlation between CCRs and combined
ablation procedures. more information, interested inpatient and outpatient claim charges.
After consideration of the public individuals can view RTI’s report on the As noted, the RTI study accepted some
comments received, we are finalizing CMS Web site at: http:// measurement error in its analysis by
our CY 2008 proposal for the use of www.cms.hhs.gov/reports/downloads/ matching an ‘‘all charges’’ CCR to
single and multiple procedure claims Dalton.pdf. inpatient estimates of charges for groups
for ratesetting. We will continue to Any study of cost estimation in of similar services represented by
pursue additional methodologies that general, and charge compression revenue codes because of short
would allow use of cost data from specifically, has obvious importance for timelines and because inpatient costs
‘‘hardcore’’ multiple claims for both the OPPS and the IPPS. RTI’s dominate outpatient costs in many
ratesetting. research explicitly focused on the IPPS ancillary cost centers. We believe that
c. Calculation of CCRs for several reasons, which include CCR adjustments used to calculate
greater Medicare expenditures under the payment should be based on the
We calculated hospital-specific IPPS, a desire to evaluate the model comparison of cost report CCRs to
overall CCRs and hospital-specific quickly given IPPS regulation deadlines, combined inpatient and outpatient
departmental CCRs for each hospital for and a focus on other components of the charges. An ‘‘all charges’’ model would
which we had claims data in the period new FY 2007 IPPS cost-based weight reduce measurement error and estimate
of claims being used to calculate the methodology (CMS Contract No. 500– adjustments to disaggregated CCRs that
median costs that we converted to 00–0024–T012, ‘‘A Study of Charge could be used in both hospital inpatient
scaled relative weights for purposes of Compression in Calculating DRG and outpatient payment systems.
setting the OPPS payment rates. We Relative Weights,’’ page 5). The study RTI made several short-term
applied the hospital-specific CCR to the first addressed the possibility of cross- recommendations for improving the
hospital’s charges at the most detailed aggregation bias in the CCRs used to accuracy of DRG weight estimates from
level possible, based on a revenue code estimate costs under the IPPS created by a cost-based methodology to address
to cost center crosswalk that contains a the IPPS methodology of aggregating bias in combining cost centers and
hierarchy of CCRs used to estimate costs cost centers into larger departments charge compression that could be
from charges for each revenue code. before calculating CCRs. The report also considered in the context of OPPS
That crosswalk is available for review addressed potential bias created by policy. We discussed each
and continuous comment on the CMS estimating costs using a CCR that recommendation within the context of
Web site at: http://www.cms.hhs.gov/ reflects the combined costs and charges the OPPS and provided our assessment
HospitalOutpatientPPS/ of services with wide variation in the of its application to the OPPS in the CY
03_crosswalk.asp#TopOfPage. We amount of hospital markup. In its 2008 OPPS/ASC proposed rule (72 FR
calculated CCRs for the standard and assessment of the latter, RTI targeted its 42642). Of the four short term
nonstandard cost centers accepted by attempt to identify the presence of recommendations, we believe that only
the electronic cost report database. In charge compression to those cost centers the recommendation to establish
general, the most detailed level at which presumably associated with revenue regression based estimates as a
temporary or permanent method for There are several reasons why we did costs of devices, implants, and drugs
disaggregating national average CCRs for not propose to use the under the CY 2008 OPPS. Other
medical supplies, drugs, and radiology intradepartmental regression-based commenters urged CMS not to apply
services under the IPPS has specific CCRs that RTI estimated using IPPS this charge compression adjustment
application to the OPPS (RTI study, charges for the CY 2008 OPPS methodology to diagnostic radiology
pages 11 and 86). Moreover, with regard estimation of median costs. We agree services because the application of the
to radiology services, the OPPS already with RTI that the intradepartmental methodology to these capital intensive
has partially implemented RTI’s CCRs calculated for the IPPS would not procedures has not been fully validated
recommendation to use lower CCRs to always be appropriate for application to and would benefit from additional
estimate costs for those OPPS services the OPPS (RTI study, pages 34 and 35). analysis. The commenters who
allocated to MRI or CT Scan cost centers While RTI recommends that the model supported the application of the
through its use of hospital-specific CCRs be recalibrated for outpatient charges adjustment methodology for CY 2008
for nonstandard cost centers. before it is applied to the OPPS, we asserted that CMS should disregard the
For reasons discussed below and in believed that the combined nature of the fact that the estimated regression-based
more detail in the proposed rule (72 FR CCRs available from the cost report CCRs were calculated using only
42642 through 42643), we proposed to prevents an accurate outpatient inpatient charge data because the
develop an all charges model that would recalibration that would be appropriate commenters had found that using
compare variation in CCRs with for the OPPS alone. Therefore, we inpatient or outpatient charges yielded
variation in combined inpatient and believed that an all charges model similar CCR estimates for implantable
outpatient charges for sets of similar examining an expanded subset of devices and all other supplies. These
services and establish disaggregated revenue codes would be the most commenters believed that CMS should
regression-based CCRs that could be appropriate, and that this model should accept the RTI findings that were based
applied to both inpatient and outpatient be developed before we could apply the on inpatient charges alone and apply
charges. We proposed to evaluate the resulting regression based CCRs to the them to the calculation of median costs
results of that methodology for purposes charges for supplies paid under the for all OPPS weights. They explained
of determining whether the resulting OPPS. that CMS could consider further
regression-based CCRs should be Moreover, we were concerned that refinements to the methodology in
proposed for use in developing the CY implementing the regression-based IPPS future years, such as estimating the
related CCRs in the OPPS that RTI regression-based CCRs using either
2009 OPPS payment rates. As noted in
estimated for CY 2008 could result in outpatient or combined charges, but that
the proposed rule (72 FR 42642), the
greater instability in relative payment CMS should not delay implementing
revised all charges model and resulting
weights for CY 2008 than would this important change as it evaluates an
regression-based CCRs were not
otherwise occur, and that a subsequent all charges model.
available in time for use in developing
change to application of the regression- Some commenters who supported the
this final rule with comment period.
based CCRs resulting from development application of the adjustment for CY
Since publication of the proposed of an all charges model might also result 2008 also stated that the most glaring
rule, we have contracted with RTI to in significant fluctuations in median cases of charge compression occur with
determine whether the statistical model costs and increased instability in high cost implantable devices that are
that RTI recommended in its January payments from CY 2008 to CY 2009. reported by hospitals with low cost
2007 report for adjusting CCRs in Therefore, these sequential changes supplies in the same supply cost center.
inpatient cost computations can be could result in significant increases in They asserted that the need for analysis
expanded to include cost computations median costs in one year and significant of the extent of a problem in other cost
for significant categories of outpatient declines in median costs in the next centers should not stop CMS from
services that are paid under the OPPS year. applying the estimated regression-based
and to assess the impact of any such Therefore, we did not propose to CCRs for CY 2008 to charges for medical
changes on payment under the OPPS adopt the RTI regression-based CCRs supplies, drugs, and radiology services.
(HHSM 500–2005–00029I Task Order under the CY 2008 OPPS. As indicated One commenter submitted a set of
0008, ‘‘Refining Cost-to-Charge Ratios in the proposed rule (72 FR 42643), we revised weights for all APCs reflecting
for Calculating APC and DRG Relative stated that we would consider whether regression-based CCRs for implantable
Payment Weights’’). Under this task it would be appropriate to adopt devices and all other supplies, as well
order, RTI will assess the validity of the regression-based CCRs for the OPPS as its assumptions in developing the
revenue code-to-cost center crosswalk after we received RTI’s comprehensive weights, and asked that CMS review the
used under the OPPS by comparing review of the OPPS cost estimation results. Some commenters stated that if
revenue code and cost center charges, methodology and reviewed the results CMS decides not to implement the RTI
make recommendations for changes to of the use of both inpatient and recommendations for regression-based
the crosswalk, and assess the OPPS use outpatient charges across all payers to CCRs for CY 2008, it should ensure that
of nonstandard cost centers. RTI will reestimate regression-based CCRs. an all charges model is implemented in
estimate regression-based CCRs using We received many public comments both the IPPS and the OPPS for CY 2009
charge data from both inpatient and on the issue of application of the through a joint IPPS/OPPS task force.
outpatient claims for hospital ancillary disaggregated CCRs that RTI estimated Some commenters believed that CMS
departments. RTI will extend its using regression analysis to calculate should either implement the regression-
recommended models to estimate payments for the CY 2008 OPPS. A based adjustments in CY 2008 or begin
regression-based CCRs for cost centers summary of the public comments and a transition to them over a period of 2
that are particularly relevant to APCs, our responses follow. to 3 years.

working with CMS staff to analyze the Comment: The commenters made a The MedPAC recommended that CMS
sensitivity of APC weights to proposed number of requests for the CY 2008 use the RTI’s estimated disaggregated,
adjustments. RTI also will convene a OPPS. Some commenters asked regression-based CCRs for medical
technical expert panel to review specifically that CMS use the RTI supplies, drugs, and radiology as part of
analyses, as it did for its first study. regression-based CCRs to calculate the the OPPS ratesetting process for CY
2008. It stated that, although the with significant supply packaging. In conclusion, we believe that it is
application of the regression based CCR Adoption of regression-based CCRs important that the initial RTI estimation
estimates is not a perfect solution to the could interact with other potential of regression-based CCRs be replicated
problem of charge compression, the changes to the APC payment groups with the inclusion of hospital outpatient
possibility of payment inaccuracies is under the OPPS. Budget neutrality charges, that the study examine the
sufficiently serious that CMS should adjustments could further increase the current OPPS revenue code-to-cost
implement this imperfect solution. The magnitude of these observed center crosswalk and the use of
MedPAC also recommended that if CMS differences. We believe that these nonstandard cost centers, and that the
prefers to await the results of the all significant redistributional effects analysis focus on the cost centers that
charges model and chooses not to would have to be confirmed through have significant hospital outpatient
correct for the effects of charge CMS analysis, modeled, and made charges. Regression-based CCRs may
compression under the CY 2008 OPPS, available for public comment should have potential to address issues of
CMS must do so for the CY 2009 OPPS. CMS decide to adopt regression-based charge compression under the OPPS
Response: While the RTI CCRs. and possible mismatches between how
recommendations for regression-based Third, we anticipate overall changes costs and charges are reported in the
CCRs may have the potential to address to our cost estimation methodology in cost reports and on OPPS claims.
issues of charge compression raised in the future, including changes to the However, given the potential resulting
the public comments about OPPS cost- revenue code-to-cost center crosswalk change in APC weights and
based weights, we are not sufficiently and use of nonstandard cost centers. We redistributional impact, we believe we
convinced that we should adopt the believe that a comprehensive review of would need to apply regression-based
regression-based CCR estimates for the cost estimation is an appropriate time to CCRs in all areas eligible for an
CY 2008 OPPS from the January 2007 explore the potential use of adjustment, as well as implement
RTI short-term recommendations for disaggregated CCRs for the OPPS. For appropriate crosswalk refinements, in
several reasons. First, the focus of the example, if we implemented only select order to not under-or overvalue relative
RTI study on inpatient charges did more regression-based CCRs or crosswalk weights within the system. We continue
than just restrict the regression model refinements, we could inappropriately to have concerns about premature
dependent variables to inpatient redistribute weight within the system. adoption of regression-based CCRs
percentages. The study also limited the without the benefit of knowing how
Finally, as noted in the FY 2008 IPPS
cost centers addressed to those where they would interact with other APC
the inpatient charges comprised a final rule (72 FR 47192 through 47200),
despite commenters’ support for the changes. We further believe that such
significant portion of the cost center methodological changes would need to
charges and substantially contributed to disaggregated CCRs developed from
regression analysis, we remain be proposed, including presentation of
the DRGs. The RTI analysis did not our assessment of the possible impact of
examine cost centers that have a much concerned about the accuracy of using
regression-based estimates to determine the methodology and solicitation of
greater proportion of outpatient charges, public comment. Once we have received
and as such, are particularly important relative weights rather than the
Medicare cost report. This is especially the results of RTI’s evaluation, we will
to APC weights, while also potentially analyze the findings and then consider
having a residual import for DRG weight true for the OPPS, given the potential
redistribution of resource costs among whether it could be appropriate to
calculations as well. propose to use regression-based CCRs
Second, adoption of regression-based services. One commenter noted that
poor capital allocation to MRI and CT under the OPPS. Once we have
CCRs in this final rule with comment
Scan revenue code charges could completed our analysis, we will then
period would produce significant
changes to the proposed APC payment explain the observed differences in examine whether the educational
rates beyond those already introduced CCRs for these services, and a activities being undertaken by the
with our CY 2008 packaging approach. regression-based adjustment based on hospital community to improve cost
The lengthy discussion of public incorrect capital allocation would be reporting accuracy under the IPPS
comments to our proposed packaging equally inaccurate. As discussed in the would help to mitigate charge
approach in section II.A.4. of this final FY 2008 IPPS final rule (72 FR 47196), compression under the OPPS, either as
rule with comment period reflects the we fully support voluntary educational an adjunct to the application of
public concern raised by a modest initiatives to improve uniformity in regression-based CCRs or in lieu of such
change in the methodology for reporting costs and charges on the cost an adjustment. After the conclusion of
estimating APC relative weights. report. Participation in these our analysis of the RTI evaluation and
Disaggregating drug and supply cost educational initiatives by hospitals is our review of hospital educational
centers clearly would redistribute voluntary. Hospitals are not required to activities, we will then determine
hospitals’ resource costs among relative change how they report costs and whether any refinements should be
weights for different APCs. Estimated charges if their current cost reporting proposed.
APC median costs calculated using practices are consistent with rules and Comment: One commenter indicated
regression-based CCRs for implantable regulations and applicable instructions. that the standard hospital accounting
devices and all other supplies, which However, both the IPPS and OPPS methodology for treatment of high
were furnished by one commenter, relative weight estimates will benefit capital costs, including the costs of
showed increases for some services of as from any steps taken to improve cost expensive nonmovable radiology
high as 28 percent, such as APC 0418 reporting. To the extent allowed under equipment, results in CCRs for radiology
(Insertion of Left Ventricular Lead). current regulations and cost report services that understate the true costs of
Others would decline by as much as 11 instructions, we encourage hospitals to radiology services because the high
percent, including APC 0674 (Prostate report costs and charges consistently capital costs are spread over all
Cryoablation) and APC 0086 (Level III with how the data are used to determine departments of the hospital on a square
Electrophysiologic Procedures). An relative weights. We believe this goal is footage basis. The commenter argued
adjusted ‘‘all other supply’’ CCR would of mutual benefit to both Medicare and that this understatement of the costs in
reduce the median cost of any service hospitals. the CCR for radiology-related
departments results in calculated costs claims and hospital claims for clinical OPPS rates. If the most recent available
for radiology services that are too low laboratory services for persons who are cost report was submitted but not
because flawed CCRs are applied to the neither inpatients nor outpatients of the settled, we looked at the last settled cost
charges for the services provided by the hospital). report to determine the ratio of
radiology department. We then excluded claims with submitted to settled cost using the
Response: We will consider the issue condition codes 04, 20, 21, and 77. overall CCR, and we then adjusted the
as part of our assessment of CCRs over These are claims that providers most recent available submitted but not
the upcoming year, in the context of the submitted to Medicare knowing that no settled cost report using that ratio. We
RTI study as described earlier and the payment would be made. For example, calculated both an overall CCR and cost
ongoing work that the hospital industry providers submit claims with a center-specific CCRs for each hospital.
is undertaking with respect to cost condition code 21 to elicit an official We used the final overall CCR
reporting. denial notice from Medicare and calculation discussed in section II.A.1.c.
document that a service is not covered. of this final rule with comment period
2. Calculation of Median Costs
We then excluded claims for services for all purposes that required use of an
In this section of this final rule with furnished in Maryland, Guam, the U.S. overall CCR.
comment period, we discuss the use of Virgin Islands, American Samoa, and
claims to calculate the final OPPS We then flagged CAH claims, which
the Northern Mariana Islands because are not paid under the OPPS, and claims
payment rates for CY 2008. The hospital hospitals in those geographic areas are
OPPS page on the CMS Web site on from hospitals with invalid CCRs. The
not paid under the OPPS. latter included claims from hospitals
which this final rule with comment We divided the remaining claims into
period is posted provides an accounting without a CCR; those from hospitals
the three groups shown below. Groups
of claims used in the development of paid an all-inclusive rate; those from
2 and 3 comprise the 108 million claims
the final rates on the CMS Web site at: that contain hospital bill types paid hospitals with obviously erroneous
http://www.cms.hhs.gov/ under the OPPS. CCRs (greater than 90 or less than
HospitalOutpatientPPS. The accounting 1. Claims that were not bill types 12X, .0001); and those from hospitals with
of claims used in the development of 13X, 14X (hospital bill types), or 76X overall CCRs that were identified as
this final rule with comment period is (CMHC bill types). Other bill types are outliers (3 standard deviations from the
included on the Web site under not paid under the OPPS and, therefore, geometric mean after removing error
supplemental materials for the CY 2008 these claims were not used to set OPPS CCRs). In addition, we trimmed the
final rule with comment period. That payment. CCRs at the cost center (that is,
accounting provides additional detail 2. Claims that were bill types 12X, departmental) level by removing the
regarding the number of claims derived 13X, or 14X (hospital bill types). These CCRs for each cost center as outliers if
at each stage of the process. In addition, claims are hospital outpatient claims. they exceeded +/-3 standard deviations
below we discuss the files of claims that 3. Claims that were bill type 76X from the geometric mean. We used a
comprise the data sets that are available (CMHC). (These claims are later four tiered hierarchy of cost center CCRs
for purchase under a CMS data user combined with any claims in item 2 to match a cost center to every possible
contract. Our CMS Web site, http:// above with a condition code 41 to set revenue code appearing in the
www.cms.hhs.gov/ the per diem partial hospitalization rate outpatient claims, with the top tier
HospitalOutpatientPPS, includes determined through a separate process.) being the most common cost center and
information about purchasing the For the CCR calculation process, we the last tier being the default CCR. If a
following two OPPS data files: ‘‘OPPS used the same general approach as we hospital’s cost center CCR was deleted
Limited Data Set’’ and ‘‘OPPS used in developing the final APC rates by trimming, we set the CCR for that
Identifiable Data Set.’’ These files are for CY 2007, using the revised CCR cost center to ‘‘missing’’ so that another
available for both the claims that were calculation which excluded the costs of cost center CCR in the revenue center
used to calculate the proposed payment paramedical education programs and hierarchy could apply. If no other cost
rates for the CY 2008 OPPS and also for weighted the outpatient charges by the center CCR could apply to the revenue
the claims that were used to calculate volume of outpatient services furnished code on the claim, we used the
the final payment rates for the CY 2008 by the hospital. We refer readers to the hospital’s overall CCR for the revenue
OPPS. CY 2007 OPPS/ASC final rule with code in question. For example, if a visit
As proposed, we used the following comment period for more information was reported under the clinic revenue
methodology to establish the relative (71 FR 67983 through 67985). We first code, but the hospital did not have a
weights used in calculating the OPPS limited the population of cost reports to clinic cost center, we mapped the
payment rates for CY 2008 shown in only those for hospitals that filed hospital-specific overall CCR to the
Addenda A and B to this final rule with outpatient claims in CY 2006 before clinic revenue code. The hierarchy of
comment period. This methodology is determining whether the CCRs for such CCRs is available for inspection and
as follows: hospitals were valid. comment on the CMS Web site: http://
We then calculated the CCRs for each www.cms.hhs.gov/
a. Claims Preparation cost center and the overall CCR for each HospitalOutpatientPPS. We then
We used hospital outpatient claims hospital for which we had claims data. converted the charges to costs on each
for the full CY 2006, processed before We did this using hospital-specific data claim by applying the CCR that we
June 30, 2007, to set the final relative from the Healthcare Cost Report believed was best suited to the revenue
weights for CY 2008. To begin the Information System (HCRIS). We used code indicated on the line with the
calculation of the relative weights for the most recent available cost report charge. Table 4 of the proposed rule
CY 2008, we pulled all claims for data, in most cases, cost reports for CY contained a list of the revenue codes we
outpatient services furnished in CY 2005. As proposed, for this final rule proposed to package. Revenue codes not
2006 from the national claims history with comment period, we used the most included in Table 4 were those not
file. This is not the population of claims recently submitted cost reports to allowed under the OPPS because their
paid under the OPPS, but all outpatient calculate the CCRs to be used to services could not be paid under the
claims (including, for example, CAH calculate median costs for the CY 2008 OPPS (for example, inpatient room and
board charges), and thus charges with groups. We defined major procedures as purposes of median cost calculations.
those revenue codes were not packaged any procedure having a status indicator We proposed to define ‘‘other’’ services
for creation of the OPPS median costs. of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X;’’ defined minor as HCPCS codes that had a status
One exception is the calculation of procedures as any code having a status indicator other than those defined as
median blood costs, as discussed in indicator of ‘‘N;’’ and classified ‘‘other’’ majors or minors.
section X. of this final rule with procedures as any code having a status We received several public comments
comment period. indicator other than ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ ‘‘X,’’ regarding our proposal to continue to
Thus, we applied CCRs as described or ‘‘N.’’ For the CY 2007 OPPS proposed process OPPS claims for a separately
above to claims with bill types 12X, rule limited data set and identifiable paid drug or device that did not also
13X, or 14X, excluding all claims from data set, these definitions excluded report a procedural HCPCS code with a
CAHs and hospitals in Maryland, Guam, claims on which hospitals billed drugs status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or
the U.S. Virgin Islands, American and devices without also reporting ‘‘X.’’ A summary of the public
Samoa, and the Northern Mariana separately paid procedure codes and, comments and our responses follow.
Islands and claims from all hospitals for therefore, those public use files did not Comment: Several commenters
which CCRs were flagged as invalid. contain all claims used to calculate the requested that we adopt the
We identified claims with condition drug and device frequencies and recommendation of the APC Panel that
code 41 as partial hospitalization medians. We corrected this for the CY CMS edit and return for correction
services of hospitals and moved them to 2007 OPPS/ASC final rule with claims that contained a HCPCS code for
another file. These claims were comment period limited data set and a separately paid drug or device but that
combined with the 76X claims identifiable data set by extracting claims did not also report a HCPCS code with
identified previously to calculate the containing drugs and devices from the a status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or
partial hospitalization per diem rate. set of ‘‘other’’ claims and adding them ‘‘X.’’ These commenters believed that
We then excluded claims without a to the public use files. this process would generally improve
HCPCS code. We moved to another file hospitals’ coding and charging
claims that contained nothing but At its March 2007 meeting, the APC practices. One commenter indicated
influenza and pneumococcal Panel recommended that CMS edit and that, under some circumstances, a
pneumonia (‘‘PPV’’) vaccines. Influenza return for correction claims that contain hospital may bill for a diagnostic
and PPV vaccines are paid at reasonable a HCPCS code for a separately paid drug radiopharmaceutical that is
cost and, therefore, these claims are not or device but that also do not contain a administered on one day but may not
used to set OPPS rates. We note that the HCPCS code assigned to a procedural report the associated nuclear medicine
separate file containing partial APC (that is, those not assigned status procedure on the same claim because
hospitalization claims is included in the indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’). The the procedure would be provided
files that are available for purchase as APC Panel stated that this edit should several days later. In this case, the bill
discussed above. Unlike years past, we improve the claims data and may for the diagnostic radiopharmaceutical
did not create a separate file of claims increase the number of single bills would include no other services with a
containing observation services because available for ratesetting. We noted that status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’
we are packaging all observation care for such an edit would be broader than the because the administration of the
the CY 2008 OPPS. device-to-procedure code edits we radiopharmaceutical would be
We next copied line-item costs for implemented for CY 2007 for selected considered to be a part of the nuclear
drugs, blood, and brachytherapy sources devices, and we solicited comments on medicine study.
(the lines stay on the claim, but are the impact of establishing such edits on Response: We have accepted this
copied onto another file) to a separate hospital billing processes and related recommendation in selective situations.
file. No claims were deleted when we potential improvements to claims data. We currently edit claims in the
copied these lines onto another file. In the CY 2008 proposed rule (72 FR Outpatient Code Editor (OCE) for
These line-items are used to calculate a 42645), we explained that in view of the selected devices for which our data
per unit mean and median and a per day prior public comments and our desire to show that hospitals have a history of
mean and median for drugs, ensure that the public data files reporting the HCPCS device code but
radiopharmaceutical agents, blood and contained all appropriate data, for the not reporting the HCPCS procedure
blood products, and brachytherapy CY 2008 OPPS, we proposed to define code that is necessary for the device to
sources, as well as other information majors as HCPCS codes that have a have therapeutic benefit. See the device-
used to set payment rates, such as a status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or to-procedure edits on the OPPS Web
unit-to-day ratio for drugs. ‘‘X.’’ We proposed to define minors as page at http://www.cms.hhs.gov/
HCPCS codes that have a status HospitalOutpatientPPS/. Moreover, as
b. Splitting Claims and Creation of indicator of ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ ‘‘K,’’ ‘‘L,’’ or discussed in more detail in section
‘‘Pseudo’’ Single Claims. ‘‘N’’ but, as discussed above, to make II.A.4.c.(5) of this final rule with
We then split the claims into five single bills out of any claims for single comment period, effective for dates of
groups: single majors, multiple majors, procedures with a minor code that also service on or after January 1, 2008, we
single minors, multiple minors, and has an APC assignment. This ensured will implement OCE edits for diagnostic
other claims. (Specific definitions of that the claims that contained only nuclear medicine services that will
these groups follow below.) In years HCPCS codes for drugs and biologicals require that a HCPCS code for a
prior to the CY 2007 OPPS, we made a or devices but that did not contain diagnostic radiopharmaceutical must be
determination about whether each codes for procedures were included in on the claim for the claim to be
HCPCS code was a major code or a the limited data set and the identifiable processed to payment. Claims will be
minor code or a code other than a major data set. It also ensured that returned to the provider for correction if
or minor code. We used those code- conditionally packaged services they contain a nuclear medicine service
specific determinations to sort claims proposed to receive separate payment but the hospital does not also report a
into the five groups identified above. only when they were billed without any radiopharmaceutical on the same claim.
For the CY 2007 OPPS, we used status other separately payable OPPS services We will continue to assess the need for
indicators to sort the claims into these would be treated appropriately for OCE edits based upon the unique
circumstances of individual services or proposed rule were those codes that we we changed the status indicator on the
categories of services. identified as ‘‘special’’ packaged codes, line to the status indicator of the APC
In the CY 2008 proposed rule (72 FR where we proposed that a hospital to which the code was assigned,
42645), we explained our continued would receive separate payment for converting the service from a single
belief that using status indicators, with providing one unit of a service when the minor to a single major. This created
the proposed changes, was an ‘‘special’’ packaged code appears on the ‘‘natural’’ single bills for the ‘‘STVX-
appropriate way to sort the claims into same day on a claim without another packaged’’ codes. In the case of multiple
these groups and also to make our service that was assigned status ‘‘STVX-packaged’’ codes reported on a
process more transparent to the public. indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’ We claim on the same date of service but
We further believed that this proposed proposed to package payment for these without a major separately paid
method of sorting claims would HCPCS codes when the code appears on procedure (that is, ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or
enhance the public’s ability to derive the same date of service on a claim with ‘‘X’’), we first identified the ‘‘STVX-
useful information for analysis and any other service that was assigned packaged’’ code with the highest CY
public comment on the proposed rule. status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’ 2007 OPPS payment weight. We then
We used status indicator ‘‘Q’’ in In response to public comments as changed the status indicator on the line
Addendum B to the proposed rule to discussed in detail in section II.A.4. of to the status indicator of the APC to
identify services that would receive this final rule with comment period, we which this particular code was assigned,
separate HCPCS code-specific payment refined the proposed methodology for converting the service from a single
when specific criteria are met, and paying claims that contain ‘‘special’’ minor to a single major, and we forced
payment for the individual service packaged codes with status indicator the units to be one to conform with our
would be packaged in all other ‘‘Q’’ when there is a major separately policy of paying only one unit of a ‘‘Q’’
circumstances. We proposed several paid procedure on the claim for the status service. We extracted these claims
different sets of criteria to determine same date and when there are multiple from the multiple minors to create
whether separate payment would be ‘‘special’’ packaged codes with status ‘‘pseudo’’ single bills. We summed all
made for specific services. For example, indicator ‘‘Q’’ but no major procedure costs on the claim and associated the
we proposed that HCPCS code G0379 on the claim. This last and largest subset resulting cost with the payable ‘‘STVX-
(Direct admission of patient for hospital of conditionally packaged services, packaged’’ code that had the highest CY
observation care) be assigned status referred to as ‘‘special’’ packaged codes 2007 OPPS payment weight. We used
indicator ‘‘Q’’ in Addendum B to the in the proposed rule, had to be natural and ‘‘pseudo’’ single procedure
proposed rule because we proposed that integrated into the identification of claims for ‘‘STVX-packaged’’ codes to
it receive separate payment only if it is single and multiple bills for ratesetting set the median costs for the APCs to
billed on the same date of service as to ensure that the costs for these which the codes were assigned when
HCPCS code G0378 (Hospital services were appropriately packaged they would be separately paid.
observation service, per hour), without when they appeared with any other
any services with status indicator ‘‘T’’ or separately paid service or paid We modified this methodology for the
‘‘V’’ or Critical Care (APC 0617). We separately when appearing by ‘‘T-packaged’’ codes (imaging
also proposed to assign the specific themselves. supervision and interpretation services
services in the proposed composite We handled these ‘‘special’’ packaged in CY 2008) because our final CY 2008
APCs discussed in section II.A.4.d. of ‘‘Q’’ status codes in the data for this payment policy for these services differs
the proposed rule status indicator ‘‘Q’’ final rule with comment period by from the policy for ‘‘STVX-packaged’’
in Addendum B to the proposed rule assigning the HCPCS code an APC and codes. Although we treated all ‘‘special’’
because we proposed that their payment a data status indicator of ‘‘N.’’ This gives packaged codes as ‘‘STVX-packaged’’
would be bundled into a single all special packaged codes an initial codes in the proposed rule, in this final
composite payment for a combination of status of ‘‘minor’’ that is changed, when rule with comment period, ‘‘T-
major procedures under certain appropriate, through the split process. packaged’’ services are packaged only
circumstances. As proposed, these We identified two subsets of the when they appear with a service with a
services would only receive separate ‘‘special’’ packaged codes for the status indicator of ‘‘T’’ on the same date;
code-specific payment if certain criteria purpose of payment and ratesetting. otherwise, ‘‘T packaged’’ services are
were met. The same is true for those less Imaging supervision and interpretation paid separately. We assessed all claims
intensive outpatient mental health ‘‘special’’ packaged codes are now for the presence of ‘‘T packaged’’
treatment services for which payment named ‘‘T-packaged’’ codes. All other services and determined their final
would be limited to the partial ‘‘special’’ packaged codes are referred to payment disposition, packaged or
hospitalization per diem rate and which as ‘‘STVX-packaged’’ codes. When an separately paid, prior to splitting the
also were assigned status indicator ‘‘Q’’ ‘‘STVX-packaged’’ code appeared with a claims into single and multiple majors
in Addendum B to the proposed rule. HCPCS code with a status indicator of and minors. When a ‘‘T-packaged’’ code
According to longstanding OPPS ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ on the same date appeared with a HCPCS code with a
payment policy (65 FR 18455), payment of service, it retained its minor status status indicator of ‘‘T’’ on the same date
for these individual mental health and was treated as a packaged code and of service, the ‘‘T-packaged’’ code was
services is bundled into a single received a status indicator of ‘‘N.’’ The treated as a packaged code and retained
payment, APC 0034 (Mental Health costs that appeared on the lines with its minor status and a status indicator of
Services Composite), when the sum of these codes were packaged into the cost ‘‘N.’’ Otherwise, we designated a ‘‘T-
the individual mental health service of the HCPCS code with a status packaged’’ service that would be
payments for all of those mental health indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ in the separately paid by identifying the ‘‘T-
services provided on the same day single bills and contributed to the packaged’’ code on the date of service
would exceed payment for a day of median cost for the primary service with with the highest CY 2007 payment
partial hospitalization services. which they appeared. When the ‘‘STVX weight. We changed the status indicator
However, the largest number of specific packaged’’ code appeared by itself, on the line of the ‘‘T-packaged’’ code
HCPCS codes identified by status without other special packaged codes on with the highest CY 2007 payment
indicator ‘‘Q’’ in Addendum B to the the same claim, and had a unit of one, weight to the status indicator of the APC
to which the code was assigned, Specifically, we divided the major file, the multiple major file, and
converting it from a single minor to a remaining claims into the following five the multiple minor file.
single major. We forced the units to be groups: We set aside the single minor,
one to conform with our policy of 1. Single Major Claims: Claims with a multiple minor, and non-OPPS claims
paying only one unit of a service with single separately payable procedure (numbers 3, 4, and 5 above) because we
a status indicator of ‘‘Q.’’ Any remaining (that is, status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ did not use these claims in calculating
‘‘T-packaged’’ codes appearing on the or ‘‘X’’). Claims with one unit of a status median costs of procedural APCs. We
same date of service retained their indicator ‘‘Q’’ code that was an ‘‘STVX- then used the bypass codes listed earlier
minor status and a status indicator of packaged’’ code or ‘‘T-packaged’’ code in Table 1 and discussed in section
‘‘N.’’ In the single and ‘‘pseudo’’ single where there was no code on the claim II.A.1.b. of this final rule with comment
bills, the costs that appeared on the with status indicator ‘‘S,’’ ‘‘T,’’ ‘‘ V,’’ or period to remove separately payable
lines with these codes were packaged ‘‘X,’’ or ‘‘T,’’ respectively. procedures that we determined
2. Multiple Major Claims: Claims with contained limited or no packaged costs
into the cost of the HCPCS code with a
more than one separately payable or that were otherwise suitable for
status indicator of ‘‘T.’’ The remaining
procedure (that is, status indicator ‘‘S,’’ inclusion on the bypass list from a
claims, ‘‘T-packaged’’ services on claims ‘‘T,’’ ‘‘V,’’ or ‘‘X’’), or multiple units of multiple procedure bill. When one of
with another service with a status one payable procedure. As discussed the two separately payable procedures
indicator of ‘‘S,’’ ‘‘V,’’ or ‘‘X’’ on the below, some of these were used in on a multiple procedure claim was on
same date, became multiple majors. The median setting. These claims included the bypass list, we split the claim into
bypass process for breaking multiple those with a status indicator ‘‘Q’’ code two ‘‘pseudo’’ single procedure claim
major claims created additional that was a ‘‘T-packaged’’ code and no records. The single procedure claim
‘‘pseudo’’ single bills for the ‘‘T- procedure with a status indicator ‘‘T’’ record that contained the bypass code
packaged’’ codes that had been on the same date of service. We also did not retain packaged services. The
converted to major status. When the ‘‘T- included in this set claims that single procedure claim record that
packaged’’ code appeared by itself with contained one unit of one code when contained the other separately payable
packaged services and one unit, we the bilateral modifier was appended to procedure (but no bypass code) retained
changed the status indicator on the line the code and the code was conditionally the packaged revenue code charges and
to the status indicator of the APC to or independently bilateral. In these the packaged HCPCS code charges. We
which the code was assigned, cases, the claims represented more than then examined the multiple major
converting the service to a single major one unit of the service described by the claims for dates of service to determine
procedure. In the case of multiple ‘‘T- code, notwithstanding that only one if we could break them into ‘‘pseudo’’
packaged’’ codes reported on a claim on unit was billed. single procedure claims using the dates
the same date of service but without a 3. Single Minor Claims: Claims with a of service on all lines on the claim. If
major separately paid procedure (‘‘S,’’ single HCPCS code that was assigned we could create claims with single
‘‘T,’’ ‘‘V,’’ or ‘‘X’’), we summed all costs status indicator ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ ‘‘K,’’ major procedures by using dates of
on the claim, associated the resulting ‘‘L,’’ or ‘‘N’’ and was not an ‘‘STVX- service, we created a single procedure
cost with the ‘‘T-packaged’’ or ‘‘STVX- packaged’’ or ‘‘T packaged code.’’ claim record for each separately paid
packaged’’ code that had the highest 4. Multiple Minor Claims: Claims with procedure on a different date of service
2007 OPPS payment weight, and forced multiple HCPCS codes that were (that is, a ‘‘pseudo’’ single).
the units to one. We extracted these assigned status indicator ‘‘F,’’ ‘‘G,’’ ‘‘H,’’ We also removed lines that contained
claims from the multiple minors to ‘‘K,’’ ‘‘L,’’ or ‘‘N.’’ This set included multiple units of codes on the bypass
created new single bills. These ‘‘STVX packaged’’ and ‘‘T-packaged’’ list and treated them as ‘‘pseudo’’ single
processes created ‘‘natural’’ and codes with more than one unit of the claims by dividing the cost for the
‘‘pseudo’’ single bills for the ‘‘T- code or more than one line of these multiple units by the number of units
packaged’’ codes that were then used to codes on the same date of service. As on the line. Where one unit of a single,
set the median cost for each specific noted above, we created ‘‘pseudo’’ separately paid procedure code
code and for the APCs to which the singles from some of these claims when remained on the claim after removal of
codes would be assigned when they we broke the claim by date, packaged the multiple units of the bypass code,
were separately paid. the costs into the code with the highest we created a ‘‘pseudo’’ single claim
CY 2007 payment weight, and forced from that residual claim record, which
We added the logic necessary to deal the units to one to match our payment retained the costs of packaged revenue
with these codes as part of the split of policy of paying one unit. codes and packaged HCPCS codes. This
the claims into the five groups defined 5. Non-OPPS Claims: Claims that enabled us to use claims that would
below and in our review of the multiple contained no services payable under the otherwise be multiple procedure claims
minor claims. We evaluated the ‘‘T- OPPS (that is, all status indicators other and could not be used. We excluded
packaged’’ codes that had been on the than those listed for major or minor those claims that we were not able to
bypass list to see if they might be status). These claims were excluded convert to single claims even after
eligible for continuation on the list, as from the files used for the OPPS. Non- applying all of the techniques for
these codes would appear with their OPPS claims have codes paid under creation of ‘‘pseudo’’ singles. Among
final payment disposition in the other fee schedules, for example, those excluded were claims that
multiple majors. However, we durable medical equipment or clinical contained codes that were viewed as
determined that none of these codes laboratory tests, and do not contain independently or conditionally bilateral
should be returned to the bypass list either a code for a separately paid and that contained the bilateral modifier
because their associated packaging service or a code for a packaged service. (Modifier 50 (Bilateral procedure))
under their CY 2008 ‘‘Q’’ payment The claims listed in numbers 1, 2, 3, because the line-item cost for the code
status exceeded the empirical criteria and 4 above were included in the data represented the cost of two units of the
designed to limit error in the allocation files that can be purchased as described procedure, notwithstanding that the
of packaged costs through the bypass above. ‘‘STVX-packaged’’ and ‘‘T- code appeared with a unit of one.
process. packaged’’ codes appear in the single Therefore, the charge on the line
represented the charge for two services II.A.4. of this final rule with comment million whole claims (93 percent of
rather than a single service and using period for a more complete discussion approximately 58 million potentially
the line as reported would have of the final packaging changes for CY usable claims) to create approximately
overstated the cost of a single 2008. 97 million single and ‘‘pseudo’’ single
procedure. We also excluded (1) claims that had claims, of which we used 96 million
zero costs after summing all costs on the single bills (after trimming out just over
c. Completion of Claim Records and claim and (2) claims containing 900,000 claims as discussed below) in
Median Cost Calculations packaging flag number 3. Effective for the CY 2008 median development and
We then packaged the costs of services furnished on or after July 1, ratesetting.
packaged HCPCS codes (codes with 2004, the OCE assigned packaging flag We used the remaining claims to
status indicator ‘‘N’’ listed in number 3 to claims on which hospitals calculate the CY 2008 median costs for
Addendum B to the proposed rule and submitted token charges for a service each separately payable HCPCS code
the costs of those lines for ‘‘Q’’ status with status indicator ‘‘S’’ or ‘‘T’’ (a and each APC. The comparison of
services that retained status indicator major separately paid service under the HCPCS and APC medians determines
‘‘N’’ through the split process as OPPS) for which the fiscal intermediary the applicability of the ‘‘2 times’’ rule.
described above) and packaged revenue was required to allocate the sum of Section 1833(t)(2) of the Act provides
codes into the cost of the single major charges for services with a status that, subject to certain exceptions, the
procedure remaining on the claim. indicator equaling ‘‘S’’ or ‘‘T’’ based on items and services within an APC group
The final list of packaged revenue the weight of the APC to which each cannot be considered comparable with
codes is shown in Table 2 below. At its code was assigned. We did not believe respect to the use of resources if the
March 2007 meeting, the APC Panel that these charges, which were token highest median (or mean cost, if elected
recommended that CMS review the final charges as submitted by the hospital, by the Secretary) for an item or service
list of packaged revenue codes for were valid reflections of hospital in the group is more than 2 times greater
consistency with OPPS policy and resources. Therefore, we deleted these than the lowest median cost for an item
ensure that future versions of the OCE claims. We also deleted claims for or service within the same group (‘‘the
edit accordingly. We compared the which the charges equaled the revenue 2 times rule’’). Finally, we reviewed the
packaged revenue codes in the OCE to center payment (that is, the Medicare medians and reassigned HCPCS codes to
the final list of packaged revenue codes payment) on the assumption that where different APCs where we believed that
for the CY 2007 OPPS (71 FR 67989 the charge equaled the payment, to it was appropriate. Section III. of this
through 67990) that we used for apply a CCR to the charge would not final rule with comment period includes
packaging costs in median calculation. yield a valid estimate of relative a discussion of certain HCPCS code
As a result of that analysis, we stated in provider cost. assignment changes that resulted from
the CY 2008 OPPS/ASC proposed rule For the remaining claims, we then examination of the medians and for
(72 RF 42646) that we accepted the APC standardized 60 percent of the costs of other reasons. The APC medians were
Panel’s recommendation and we the claim (which we have previously recalculated after we reassigned the
proposed to change the list of packaged determined to be the labor-related affected HCPCS codes. Both the HCPCS
revenue codes for the CY 2008 OPPS in portion) for geographic differences in medians and the APC medians were
the following manner. First, we labor input costs. We made this weighted to account for the inclusion of
proposed to remove revenue codes 0274 adjustment by determining the wage multiple units of the bypass codes in the
(Prosthetic/Orthotic devices) and 0290 index that applied to the hospital that creation of ‘‘pseudo’’ single bills.
(Durable Medical Equipment) from the furnished the service and dividing the In the CY 2008 proposed rule (72 FR
list of packaged revenue codes because cost for the separately paid HCPCS code 42646), we explained that in our review
we do not permit hospitals to report furnished by the hospital by that wage of median costs for HCPCS codes and
implantable devices in these revenue index. As has been our policy since the their assigned APCs, we had frequently
codes (Internet Only Manual 100–4, inception of the OPPS, we used the pre noticed that some services were
Chapter 4, section 20.5.1.1). We also reclassified wage indices for consistently rarely performed in the
specifically proposed to add revenue standardization because we believed hospital outpatient setting for the
code 0273 (Take Home Supplies) to the that they better reflected the true costs Medicare population. In particular,
list of packaged revenue codes because of items and services in the area in there were a number of services, such as
we believed that the charges under this which the hospital was located than the several procedures related to the care of
revenue code were for the incidental post reclassification wage indices and, pregnant women, that had annual
supplies that hospitals sometimes therefore, would result in the most Medicare claims volume of 100 or fewer
provided for patients who were accurate unadjusted median costs. occurrences. By definition, these
discharged at a time when it was not We also excluded claims that were services also had a small number of
possible to secure the supplies needed outside 3 standard deviations from the single bills from which to estimate
for a brief time at home. We proposed geometric mean of units for each HCPCS median costs. In addition, in some
to conform the list of packaged revenue code on the bypass list (because, as cases, these codes had been historically
codes in the OCE to the OPPS for CY discussed above, we used claims that assigned to clinical APCs where all the
2008. We made these changes in the contain multiple units of the bypass services were low volume. Therefore,
calculation of the CY 2008 OPPS codes). the median costs for these services and
payment rates. The final CY 2008 After removing claims for hospitals APCs often fluctuated from year to year,
packaged revenue codes are displayed with error CCRs, claims without HCPCS in part due to the variability created by
in Table 2 below. codes, claims for immunizations not such a small number of claims. One of
We packaged the costs of the HCPCS covered under the OPPS, and claims for the benefits of basing payment on the
codes that were shown with status services not paid under the OPPS, median cost of many HCPCS codes with
indicator ‘‘N’’ into the cost of the approximately 58 million claims were sufficient single bill representation in an
independent service to which the left for this final rule comment period. APC is that such fluctuation would be
packaged service was ancillary or Of these 58 million claims, we were able moderated by the increased number of
supportive. We refer readers to section to use some portion of approximately 54 observations for similar services on
which the APC median cost was also payment rate to change by more than 5 numbers of single bills where we could
based. We considered proposing a percent from one year to the next. do so. We received no public comments
distinct methodology for calculation of Response: There are a number of that objected to our proposal to
the median cost of low total volume factors pertinent to the OPPS that cause eliminate a number of very low volume
APCs in order to provide more stability median costs to change from one year to APCs; therefore, we are adopting these
in payment from year to year for these the next. Some of these are a reflection reconfigurations for CY 2008. We
low total volume services. However, of hospital behavior, and some of them recognize that changes to payment
after examination of the low total are a reflection of fundamental policies, such as the packaging of
volume OPPS services and their characteristics of the OPPS as defined in payment for ancillary and supportive
assigned APCs, we concluded that there statute. For example, the OPPS payment services and the implementation of
were other clinical APCs with higher rates are based on hospital cost report composite APCs, may contribute to
volumes of total claims to which these and claims data. However, hospital volatility in payment rates in the short
low total volume services could be costs and charges change each year and term, but we believe that larger payment
reassigned, while ensuring the this results in both changes to the CCRs packages and bundles will help to
continued clinical and resource taken from the most currently available stabilize payments in future years by
homogeneity of the clinical APCs to cost reports and also differences in the enabling us to use more claims data and
which they would be newly reassigned. charges on the claims that are the basis by establishing payments for larger
Therefore, we believed that it would be of the calculation of the median costs on groups of services.
more appropriate to reconfigure clinical which OPPS rates are based. Similarly, Comment: A commenter stated that
APCs to eliminate most of the low total hospitals adjust their mix of services CMS should crosswalk revenue code
volume APCs. We observed that these from year to year by offering new 0278 (Other implants, under the
low volume services differed from other services and ceasing to furnish services Medical/Surgical Supplies category) to
OPPS services only because they were or changing the proportion of the cost center 3540 (Prosthetic Devices),
not often furnished to the Medicare various services they furnish, which has which generally represents higher cost
population. Therefore, we proposed to impact on the CCRs that we derive from technology, instead of crosswalking it to
reconfigure certain clinical APCs for CY their cost reports. CMS cannot stabilize cost center 5500 (Medical Supplies
2008 as a way to promote stability and these hospital-driven fundamental Charge to Patient), which often
appropriate payment for the services inputs to the calculation of OPPS represents lower cost items. The
assigned to them, including low total payment rates. Moreover, there are other commenter indicated that this change to
volume services. We believed that these essential elements of the OPPS which the revenue code-to-cost center
proposed reconfigurations maintained contribute to the changes in relative crosswalk would result in improved
APC clinical and resource homogeneity. weights each year. These include, but estimates of the costs of the devices
We proposed these changes as an are not limited to, reassignments of billed under revenue code 0278 and,
alternative to developing specific HCPCS codes to APCs to rectify 2 times therefore, would result in more accurate
quantitative approaches to treating low violations as required by the law, to payments.
total volume APCs differently for address the costs of new services, and Response: We will carefully examine
purposes of median calculation. to respond to public comments. the implications of making this change
Specifically, we proposed that 3 APCs Moreover, for some services, we cannot in the future. However, for CY 2008 this
(all of which are New Technology APCs) avoid using small numbers of claims, change would have a negligible effect on
would have a total volume of services either because the volume of services is the median costs for services with
less than 100, and only 17 APCs would naturally low or because the claims data charges reported under revenue code
have a total volume of less than 1,000, do not facilitate the calculation of a 0278. Only 20 providers out of 4,201 in
in comparison with CY 2007 where 9 median cost for a single service. Where the file of the 2005–2006 cost reports
APCs (including 3 New Technology there are small numbers of claims to be used cost center 3540.
APCs) had a total volume of less than used in median calculation, there is Comment: Some commenters asked
100 and 36 APCs had a total volume of more volatility in the median cost from that CMS provide an adjustment for
less than 1,000. In this final rule with one year to the next. Lastly, changes to medical education costs under the OPPS
comment period, 3 APCs (all New OPPS payment policy (for example, because so much of the costs of teaching
Technology APCs) have a total volume changes to packaging) also contribute to services are being incurred in the HOPD
of less than 100 and 15 APCs have a some extent to the fluctuations in the as many of the services previously
total volume of less than 1,000. OPPS payment rates for the same furnished only in the inpatient setting
We received a number of public service from year to year. are now being furnished in the HOPD.
comments on our proposed process for We cannot avoid the naturally The commenters stated that CMS
calculating the median costs on which occurring volatility in the cost report indicated that it would study the costs
our payment rates are based. A and claims data that hospitals submit and payment differential among
summary of the pubic comments and and on which the payment rates are different classes of providers in the
our responses follow. based. Moreover (with limited April 7, 2000 OPPS final rule with
Comment: Some commenters objected exceptions), we are required by law to comment period but has not done so.
to the volatility of the OPPS rates from reassign HCPCS codes to APCs where it The commenters also asserted that
year to year. The commenters asserted is necessary to avoid 2 times violations. section 4523 of the BBA requires the
that the absence of stability in the OPPS However, we have made other changes Secretary to establish adjustments ‘‘as
rates creates budgeting, planning, and to resolve some of the other potential determined to be necessary to ensure
operating problems for hospitals, and reasons for instability from year to year. equitable payments * * * for certain
that as more care is provided on an Specifically, we continue to seek ways classes of hospitals’’ and, therefore,
outpatient, rather than inpatient basis, to use more claims data so that we have CMS should study whether the hospital
the need for stable payment rates from fewer APCs for which there are small outpatient costs of teaching hospitals
one year to the next becomes more numbers of single bills used to set the are higher than the costs of other
important to hospitals. Some APC median costs. Moreover, we have hospitals for purposes of determining
commenters asked that CMS permit no tried to eliminate APCs with very small whether there should be a teaching
hospital adjustment. The commenters impacts by class of hospital are between the extent to which efficiencies
explained that their internal analysis of displayed in Table 61 in section are incorporated into the median costs
2004 Medicare cost reports showed that XXIV.B. of this final rule with comment and the degree to which charge
the average outpatient margins were period. Therefore, we do not believe compression affects the median costs for
¥20.2 percent for major teaching that there is sufficient reason to develop imaging services. RTI’s study of charge
hospitals, ¥10.1 percent for other an adjustment to the OPPS payment to compression using inpatient charges
teaching hospitals, and ¥11.8 percent teaching hospitals for the CY 2008 found that use of regression adjusted
for non-teaching hospitals. They OPPS. CCRs would reduce the costs of
believed these findings demonstrated Comment: The MedPAC commented magnetic resonance imaging and
that the hospital outpatient costs of that while CMS proposed to apply a computed tomography services. This is
major teaching hospitals are multiple procedure reduction to one of the categories of hospital services
significantly greater than the costs of imaging services for CY 2006, CMS did that has high outpatient utilization.
other hospitals. The commenters not adopt this proposal as final but Over the coming year, as discussed
requested that CMS conduct its own stated that it would continue to study earlier in this section of this final rule
analysis, and added that if that analysis whether such a reduction was with comment period, we will explore
shows such a difference, CMS should appropriate. The MedPAC asked that through the RTI contract the results of
add a teaching adjustment to the OPPS. CMS continue to examine ways to including hospital outpatient charges to
improve payment accuracy for imaging determine regression-adjusted CCRs for
Response: Unlike payment under the services, including considering applying
IPPS, the law does not provide for calculation of the median costs for
a multiple procedure reduction to these imaging services. We believe that this
payment for indirect medical education services.
costs to be made through the OPPS. information could be useful in the
Response: The question of whether it reassessment of whether it would be
Section 1833(t)(2)(E) of the Act, as would be appropriate to apply a
added by section 4523 of the BBA, states appropriate to apply a multiple
multiple procedure reduction pertains procedure reduction to separately paid
that the Secretary shall establish, in a only to those imaging services for which
budget neutral manner ‘‘ * * * other imaging services.
we make separate payment. It is not an
adjustments as determined to be issue for packaged imaging services, A detailed discussion of the
necessary to ensure equitable payments, including the numerous imaging development of median costs for blood
such as adjustments for certain classes services that we are packaging for CY and blood products is included in
of hospitals.’’ We have not found such 2008 as part of our expanded payment section X. of this final rule with
an adjustment to be necessary to ensure bundles under the OPPS. The concern, comment period. A discussion of the
equitable payments to teaching therefore, is partially mitigated by our calculation of medians for APCs that
hospitals and, therefore, have not final CY 2008 packaging policies. require one or more implantable devices
developed such an adjustment. We do Commenters responding to the CY 2006 when the service is performed is
not believe an indirect medical proposal OPPS indicated that, in provided in section IV.A. of this final
education add-on payment is contrast to the MPFS payment rates, the rule with comment period. The
appropriate in a budget neutral payment hospital cost data used by CMS to set methodology for developing the median
system where such changes would payment rates for imaging services costs for composite APCs is included
result in reduced payments to all other already reflects savings due to the below in section II.A.4.d. of this final
hospitals. Furthermore, in this final rule efficiencies of performing multiple rule with comment period. A
with comment period, we have procedures during the same session and description of the methodology for
developed payment weights that we that the proposal to discount second calculating the median cost for partial
believe provide appropriate and and subsequent procedures would be hospitalization services is presented
adequate payment for the complex tantamount to discounting those below in section II.B. of this final rule
medical services, such as visits procedures twice (70 FR 68707). As we with comment period.
requiring prolonged observation, new indicated in our response to that After consideration of the public
technology services and device- comment, we were unable to disprove comments received, we are finalizing
dependent procedures, which we commenters’ contentions that there are our proposed CY 2008 methodology for
understand are furnished largely by already efficiencies included in calculating the median costs upon
teaching hospitals. Teaching hospitals hospitals’ costs and, therefore, in their which the CY 2008 OPPS payment rates
benefit from the recalibration of the CCRs and in the median costs on which are based, with the modifications
APCs and the changes to packaging that the OPPS payments are based (70 FR described earlier regarding the treatment
are implemented in this final rule with 68708). However, we believe it is of services which are assigned status
comment period. The final CY 2008 possible that there may be a relationship indicator ‘‘Q.’’
TABLE 2.—CY 2008 PACKAGED REVENUE CODES

Revenue code Description
0250 ................................................ PHARMACY.

0251 ................................................ GENERIC.
0252 ................................................ NONGENERIC.
0254 ................................................ PHARMACY INCIDENT TO OTHER DIAGNOSTIC.
0255 ................................................ PHARMACY INCIDENT TO RADIOLOGY.
0257 ................................................ NONPRESCRIPTION DRUGS.

0258 ................................................ IV SOLUTIONS.
0259 ................................................ OTHER PHARMACY.
0260 ................................................ IV THERAPY, GENERAL CLASS.
0262 ................................................ IV THERAPY/PHARMACY SERVICES.
0263 ................................................ SUPPLY/DELIVERY.
TABLE 2.—CY 2008 PACKAGED REVENUE CODES—Continued

Revenue code Description
0264 ................................................ IV THERAPY/SUPPLIES.

0269 ................................................ OTHER IV THERAPY.
0270 ................................................ M&S SUPPLIES.
0271 ................................................ NONSTERILE SUPPLIES.
0272 ................................................ STERILE SUPPLIES.
0273 ................................................ TAKE HOME SUPPLIES.
0275 ................................................ PACEMAKER DRUG.
0276 ................................................ INTRAOCULAR LENS SOURCE DRUG.
0278 ................................................ OTHER IMPLANTS.
0279 ................................................ OTHER M&S SUPPLIES.
0280 ................................................ ONCOLOGY.
0289 ................................................ OTHER ONCOLOGY.
0343 ................................................ DIAGNOSTIC RADIOPHARMS.
0344 ................................................ THERAPEUTIC RADIOPHARMS.
0370 ................................................ ANESTHESIA.
0371 ................................................ ANESTHESIA INCIDENT TO RADIOLOGY.
0372 ................................................ ANESTHESIA INCIDENT TO OTHER DIAGNOSTIC.
0379 ................................................ OTHER ANESTHESIA.
0390 ................................................ BLOOD STORAGE AND PROCESSING.
0399 ................................................ OTHER BLOOD STORAGE AND PROCESSING.
0560 ................................................ MEDICAL SOCIAL SERVICES.
0569 ................................................ OTHER MEDICAL SOCIAL SERVICES.
0621 ................................................ SUPPLIES INCIDENT TO RADIOLOGY.
0622 ................................................ SUPPLIES INCIDENT TO OTHER DIAGNOSTIC.
0624 ................................................ INVESTIGATIONAL DEVICE (IDE).
0630 ................................................ DRUGS REQUIRING SPECIFIC IDENTIFICATION, GENERAL CLASS.
0631 ................................................ SINGLE SOURCE.
0632 ................................................ MULTIPLE.
0633 ................................................ RESTRICTIVE PRESCRIPTION.
0681 ................................................ TRAUMA RESPONSE, LEVEL I.
0682 ................................................ TRAUMA RESPONSE, LEVEL II.
0683 ................................................ TRAUMA RESPONSE, LEVEL III.
0684 ................................................ TRAUMA RESPONSE, LEVEL IV.
0689 ................................................ TRAUMA RESPONSE, OTHER.
0700 ................................................ CAST ROOM.
0709 ................................................ OTHER CAST ROOM.
0710 ................................................ RECOVERY ROOM.
0719 ................................................ OTHER RECOVERY ROOM.
0720 ................................................ LABOR ROOM.
0721 ................................................ LABOR.
0732 ................................................ TELEMETRY.
0762 ................................................ OBSERVATION ROOM.
0801 ................................................ HEMODIALYSIS.
0802 ................................................ PERITONEAL DIALYSIS.
0803 ................................................ CAPD.
0804 ................................................ CCPD.
0809 ................................................ OTHER INPATIENT DIALYSIS.
0810 ................................................ ORGAN ACQUISITION.
0819 ................................................ OTHER ORGAN ACQUISITION.
0821 ................................................ HEMODIALYSIS COMP OR OTHER RATE.
0824 ................................................ MAINTENANCE 100%.
0825 ................................................ SUPPORT SERVICES.
0829 ................................................ OTHER HEMO OUTPATIENT.
0942 ................................................ EDUCATION/TRAINING.
3. Calculation of OPPS Scaled Payment APC 0601 a relative payment weight of five levels). We had historically used
Weights 1.00 and divided the median cost for the median cost of the middle level
Using the median APC costs each APC by the median cost for APC clinic visit APC (that is APC 0601
discussed previously, we calculated the 0601 to derive the relative payment through CY 2006) to calculate unscaled
final relative payment weights for each weight for each APC. weights because mid-level clinic visits
APC for CY 2008 shown in Addenda A Beginning with the CY 2007 OPPS, were among the most frequently
and B to this final rule with comment we standardized all of the relative performed services in the hospital
period. In years prior to CY 2007, we payment weights to APC 0606 (Level 3 outpatient setting. As proposed for CY
standardized all the relative payment Clinic Visits) because we deleted APC 2008, to maintain consistency in using
weights to APC 0601 (Mid Level Clinic 0601 as part of the reconfiguration of the a median for calculating unscaled
Visit) because it was one of the most visit APCs. We chose APC 0606 as the weights representing the median cost of
frequently performed services in the base because APC 0606 was the middle some of the most frequently provided
hospital outpatient setting. We assigned level clinic visit APC (that is, Level 3 of services, we continued to use the
median cost of the mid-level clinic APC, the recalibration adjustments discussed different approaches to prospective
proposed APC 0606, to calculate in sections II.A.1. and 2. of this final payment for hospital outpatient services
unscaled weights. Following our rule with comment period. were being considered, a variety of
standard methodology, but using the CY Section 1833(t)(14)(H) of the Act, as reports to Congress (June 1988,
2008 median for APC 0606, for CY 2008 added by section 621(a)(1) of Pub. L. September 1990, and March 1995)
we assigned APC 0606 a relative 108–173, states that ‘‘Additional discussed three major issues related to
payment weight of 1.00 and divided the expenditures resulting from this defining the unit of payment for the
median cost of each APC by the median paragraph shall not be taken into payment system, specifically the extent
cost for APC 0606 to derive the unscaled account in establishing the conversion to which clinically similar procedures
relative payment weight for each APC. factor, weighting and other adjustment should be grouped for payment
The choice of the APC on which to base factors for 2004 and 2005 under purposes and the logic that should be
the relative weights for all other APCs paragraph (9) but shall be taken into used for the groupings; the extent to
does not affect the payments made account for subsequent years.’’ Section which payment for minor, ancillary
under the OPPS because we scale the 1833(t)(14) of the Act provides the services associated with a significant
weights for budget neutrality. payment rates for certain ‘‘specified procedure should be packaged into a
Section 1833(t)(9)(B) of the Act covered outpatient drugs.’’ Therefore, single payment for the procedure
requires that APC reclassification and the cost of those specified covered (which we refer to as ‘‘packaging’’); and
recalibration changes, wage index outpatient drugs (as discussed in section the extent to which payment for
changes, and other adjustments be made V. of this final rule with comment multiple significant procedures or
in a manner that assures that aggregate period) is included in the budget multiple units of the same procedure
payments under the OPPS for CY 2008 neutrality calculations for the CY 2008 related to an outpatient encounter or to
are neither greater than nor less than the OPPS. We did not receive any public an episode of care should be bundled
aggregate payments that would have comments on the methodology for into a single unit of payment (which we
been made without the changes. To calculating scaled weights from the refer to as ‘‘bundling’’). Both packaging
comply with this requirement median costs for the CY 2008 OPPS. and bundling were presented as
concerning the APC changes, we Therefore, we are finalizing our approaches to creating incentives for
compared aggregate payments using the proposed methodology, without efficiency, with their potential policy
CY 2007 relative weights to aggregate modification, including updating of the disadvantages including inconsistency
payments using the CY 2008 final budget neutrality scaler for the final rule with other ambulatory fee schedules,
relative weights. This year, we included as proposed. reduced transparency of service-specific
payments to CMHCs in our comparison. payment, and the potential for hospitals
Based on this comparison, we adjusted 4. Changes to Packaged Services
shifting the delivery of packaged or
the relative weights for purposes of a. Background bundled services to delivery settings
budget neutrality. The final unscaled other than the hospital outpatient
relative payment weights were adjusted When the Medicare program was first
implemented, it paid for hospital department (HOPD).
by a weight scaler of 1.3226 for budget
neutrality. In addition to adjusting for services (inpatient and outpatient) based The OPPS, like other prospective
increases and decreases in weight due to on hospital-specific reasonable costs payment systems, relies on the concept
the recalibration of APC medians, the attributable to furnishing services to of averaging, where the payment may be
scaler also accounts for any change in Medicare beneficiaries. Later, the law more or less than the estimated costs of
the base, other than changes in volume was amended to limit payment to the providing a service or package of
which are not a factor in the weight lesser of the hospital’s reasonable cost services for a particular patient, but
scaler. The decline in the weight scaler or customary charges for services with the exception of outlier cases, it is
compared to the proposed weight scaler furnished to Medicare beneficiaries. adequate to ensure access to appropriate
of 1.3665 results largely from the Specific service-based methodologies care. Decisions about packaging and
refinement for this final rule with were then developed for certain types of bundling payment involve a balance
comment period of the proposed services, such as clinical laboratory tests between ensuring some separate
packaging policy to package imaging and durable medical equipment, while payment for individual services and
supervision and interpretation services payments for outpatient surgical establishing incentives for efficiency
only if they are reported on the same procedures and other diagnostic tests through larger units of payment. In
date of service as a HCPCS code that has were based on a blend of the hospital’s many situations, the final payment rate
a status indicator of ‘‘T.’’ This change aggregate Medicare costs for these for a package of services may do a better
both increased the median costs for services and Medicare’s payment for job of balancing variability in the
these imaging supervision and similar services in other ambulatory relative costs of component services
interpretation services and added a settings. While this mix of different compared to individual rates covering a
significant number of units for these payment methodologies was in use, smaller unit of service without
services that would be separately paid hospital outpatient services were packaging or bundling. Packaging
under the final CY 2008 policy. The growing rapidly following the payments into larger payment bundles
other factors that contributed to the implementation of the IPPS in 1983. promotes the stability of payment for
decline of the scaler from the proposed The brisk increase in hospital outpatient services over time, a characteristic that
rule to this final rule with comment services led to an interest in creating reportedly is very important to
period include the creation of the payment incentives to promote more hospitals. Unlike packaged services, the
observation composite APCs and the efficient delivery of hospital outpatient costs of individual services typically
increase in the final CY 2008 payment services through a Medicare prospective show greater variation because the
rate for partial hospitalization services payment system for hospital outpatient higher variability for some component
compared to the proposed payment rate. services, and the final statutory items and services cannot be balanced
The final relative payment weights requirements for the OPPS were with lower variability for others and
listed in Addenda A and B to this final established by the BBA and the BBRA. because relative weights are typically
rule with comment period incorporate During the period of time when estimated using a smaller set of claims.
When compared to service-specific percent increase in 4 years. Similarly, to use the least expensive item that
payment, packaging or bundling the percentage of CPT codes for meets the patient’s needs, rather than to
payment for component services may procedural services that receive routinely use a more expensive item.
change payment at the hospital level to packaged payment declined by over 10 Packaging also encourages hospitals to
the extent that there are systematic percent between CY 2003 and CY 2007. negotiate carefully with manufacturers
differences across hospitals in their Currently, the APC groups reflect a and suppliers to reduce the costs of
performance of the services included in modest degree of packaging, including purchased items and services or to
that unit of payment. Hospitals packaged payment for minor ancillary explore alternative group purchasing
spending more per case than payment services, inexpensive drugs, medical arrangements, thereby encouraging the
received would be encouraged to review supplies, implantable devices, capital- most economical health care. Similarly,
their service patterns to ensure that they related costs, operating and recovery packaging encourages hospitals to
furnish services as efficiently as room use, and anesthesia services. establish protocols that ensure that
possible. Similarly, we believe that Bundling payment for multiple services are furnished only when they
unpackaging services heightens the significant services provided in the are important and to carefully scrutinize
hospital’s focus on pricing individual same hospital outpatient encounter or the services ordered by practitioners to
services, rather than the efficient during an episode of care is not maximize the efficient use of hospital
delivery of those services. Over the past currently a common OPPS payment resources. Finally, packaging payments
several years of the OPPS, greater practice, because the APC groups into larger payment bundles promotes
unpackaging of payment has occurred generally reflect only the modest the stability of payment for services over
simultaneously with continued packaging associated with individual time. Packaging and bundling also may
tremendous growth in OPPS procedures or services. Unconditionally
reduce the importance of refining
expenditures as a result of increasing packaged services with HCPCS codes
service-specific payment because there
volumes of individual services, as are identified by the status indicator
is more opportunity for hospitals to
discussed in further detail below. Also ‘‘N.’’ Conditionally packaged services,
average payment across higher cost
discussed in further detail below, most specifically those services whose
cases requiring many ancillary services
recently in its comments to the CY 2007 payment is packaged unless specific
and lower cost cases requiring fewer
OPPS/ASC proposed rule and in the criteria for separate payment are met,
ancillary services.
context of this rapid spending growth, are assigned status indicator ‘‘Q.’’ To the
MedPAC encouraged CMS to broaden extent possible, hospitals may use b. Addressing Growth in OPPS Volume
the payment bundles under the OPPS to HCPCS codes to report any packaged and Spending
encourage providers to use resources services that were performed, consistent
efficiently. with CPT or CMS coding guidelines, but Creating additional incentives for
As permitted under section packaged costs also may be uncoded providing only necessary services in the
1833(t)(2)(B) of the Act, the OPPS and included in specific revenue code most efficient manner is of vital
establishes groups of covered HOPD charges. Hospitals include charges for importance to Medicare today, in view
services, namely APC groups, and uses packaged services on their claims, and of the recent explosion of growth in
them as the basic unit of payment. the costs associated with those packaged program expenditures for hospital
During the evolution of the OPPS over services are then added into the costs of outpatient services paid under the
the past 7 years, significant attention separately payable procedures on the OPPS. As illustrated in Table 3 below,
has been concentrated on service- same claims in establishing payment total spending has been growing at a
specific payment for services furnished rates for the separately payable services. rate of roughly 10 percent per year
to particular patients, rather than on Packaging and bundling payment for under the OPPS, and the Medicare
creating incentives for the efficient multiple interrelated services into a Trustees project that total spending
delivery of services through encounter single payment create incentives for under the OPPS will increase by more
or episode-of-care-based payment. providers to furnish services in the most than $3 billion from CY 2007 through
Overall packaging included in the efficient way by enabling hospitals to CY 2008 to nearly $35 billion.
clinical APCs has decreased, and the manage their resources with maximum Implementation of the OPPS has not
procedure groupings have become flexibility, thereby encouraging long- slowed outpatient spending growth over
smaller as the focus has shifted to term cost containment. For example, the past few years; in fact, double-digit
refining service-level payment. where there are a variety of supplies spending growth has generally been
Specifically, in the CY 2003 OPPS, there that could be used to furnish a service, occurring. We are greatly concerned
were 569 APCs, but by CY 2007, the some of which are more expensive than with this rate of increase in program
number of APCs had grown to 862, a 51 others, packaging encourages hospitals expenditures under the OPPS.
TABLE 3.–GROWTH IN EXPENDITURES UNDER OPPS FROM CY 2001–CY 2008

[Projected expenditures for CY 2006–CY 2008 in billions]
OPPS growth CY 2001 CY 2002 CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008
Incurred Cost ................................... 17.702 19.561 21.156 23.866 26.572 29.741 32.714 36.072
Percent Increase .............................. .................. 10.5 8.2 12.8 11.3 11.9 10.1 10.26
Based on the Midsession Review of the President’s FY 2008 Budget.
As with the other Medicare fee-for- utilization of services is the major illustrates the increases in the volume
service payment systems that are reason for the current rates of growth in and intensity of hospital outpatient
experiencing rapid spending growth, the OPPS, rather than general price or services over the past several years.
brisk growth in the intensity and enrollment changes. Table 4 below
TABLE 4.–PERCENTAGE INCREASE IN VOLUME AND INTENSITY OF HOSPITAL OUTPATIENT SERVICES

CY 2006 CY 2007 CY 2008
CY 2002 CY 2003 CY 2004 CY 2005 (Est.) (Est.) (Est.)
Percent Increase .................................................... 3.5 2.5 7.6 7.4 10.1 9.4 5.8
Based on the Midsession Review of the President’s FY 2008 Budget.
For hospital outpatient services, the toward those higher quality services (71 We described the CY 2009 program,
volume and intensity of services are FR 68189 through 68197). We believe which would be based upon CY 2008
estimated to have continued to increase that Medicare payments should hospital reporting of appropriate
significantly in recent years, at a rate of encourage physicians and other measures of the quality of hospital
10.1 percent between CY 2005 and CY providers in their efforts to achieve outpatient care that have been carefully
2006, the last two completed calendar better health outcomes for Medicare developed and evaluated, and endorsed
years. As we discussed in the CY 2007 beneficiaries at a lower cost. In the CY as appropriate, with significant input
OPPS/ASC final rule with comment 2007 OPPS/ASC final rule with from stakeholders. We reiterated our
period (71 FR 68189 through 68190), the comment period, we discussed the belief that ensuring that Medicare
rapid growth in utilization of services concept of ‘‘value-based purchasing’’ in beneficiaries receive the care they need
under the OPPS shows that Medicare is the OPPS as well as in other Medicare and that such services are of high
paying mainly for more services each payment systems. ‘‘Value-based quality are the necessary initial steps to
year, regardless of their quality or purchasing’’ may use a range of budget- incorporating value-based purchasing
impact on beneficiary health. In its neutral incentives to achieve identified into the OPPS. We explained that we are
March 2007 Report to Congress (pages quality and efficiency goals, as a means specifically seeking to encourage care
55 and 56), MedPAC confirmed that of promoting better quality of care and that is both efficient and of high quality
much of the growth in service volume more effective resource use in the in the HOPD.
from 2003 to 2005 resulted from Medicare payment systems. In Subsequent to the publication of the
increases in the number of services per developing the concept of value-based CY 2007 OPPS/ASC final rule with
beneficiary who received care, rather purchasing for Medicare, we have been comment period, section 109(a) of the
than from increases in the number of working closely with stakeholder MIEA–TRHCA, which added section
beneficiaries served. MedPAC found partners. 1833(t)(19) to the Act, specifies that in
that while the rate of growth in service We continue to believe that the the case of a subsection (d) hospital
volume declined over that time period, collection and submission of (defined under section 1886(d)(1)(B) of
the complexity of services, defined as performance data and the public the Act as hospitals that are located in
the sum of the relative payment weights reporting of comparative information the 50 States or the District of Columbia
of all OPPS services divided by the are strong incentives for hospital other than those categories of hospitals
volume of all services, increased, and accountability in general and quality or hospital units that are specifically
that most of the growth was attributable improvement in particular, while excluded from the IPPS, including
to the insertion of devices and the encouraging the most efficient and psychiatric, rehabilitation, long-term
provision of complex imaging services. effective care. Measurement and care, children’s, and cancer hospitals or
MedPAC further found that regression reporting can focus the attention of hospital units) that does not submit to
analysis suggested that relatively hospitals and consumers on specific the Secretary the quality reporting data
complex hospital outpatient services goals and on hospitals’ performance required for CY 2009 and each
may be more profitable for hospitals relative to those goals. Development and subsequent year, the OPPS annual
than less complex services. In addition, implementation of performance update factor shall be reduced by 2.0
its analysis indicated that favorable measurement and reporting by hospitals percentage points. The quality reporting
payments for complex services give can thus produce quality improvement program proposed for CY 2008
hospitals an incentive to provide more in health care delivery. Hospital according to this provision is referred to
of those complex services rather than performance measures may also provide as the Hospital Outpatient Quality Data
fewer basic services, which increases a foundation for performance-based Reporting Program (HOP QDRP) and is
overall service complexity. MedPAC rather than volume-based payments. discussed in detail in section XVII. of
expressed concern about this In the CY 2007 OPPS/ASC final rule this final rule with comment period.
relationship and concluded that the with comment period, as a first step in As the next step in our movement
historically large increases in outpatient the OPPS toward value-based toward value-based purchasing under
volume and service complexity suggest purchasing, we finalized a policy that the OPPS and to complement the HOP
a need to recalibrate the OPPS. In the would employ our equitable adjustment QDRP for CY 2009, with measure
future, MedPAC plans to examine authority under section 1833(t)(2)(E) of reporting beginning in CY 2008, we
options for recalibrating the payment the Act to establish an OPPS Reporting believe it is important to initiate specific
system to accurately match payments to Hospital Quality Data for Annual payment approaches to explicitly
the costs of individual services Payment Update (RHQDAPU) program encourage efficiency in the hospital
(Medicare Payment Advisory based on measures specifically outpatient setting that we believe will
Commission Report to the Congress: developed to characterize the quality of control future growth in the volume of
Medicare Payment Policy, March 2007, outpatient care (71 FR 68197). We OPPS services. While the HOP QDRP
pages 55 and 56). finalized implementation of the program will encourage the provision of higher
As proposed for the CY 2007 OPPS for CY 2009, when we would implement quality hospital outpatient services that
and finalized for the CY 2009 OPPS, we a 2.0 point reduction to the OPPS lead to improved health outcomes for
developed a plan to promote higher conversion factor update for those Medicare beneficiaries, we believe that
quality services under the OPPS, so that hospitals that do not meet the specific more targeted approaches are also
Medicare spending would be directed requirements of the CY 2009 program. necessary to encourage increased
hospital efficiency. Two alternatives we growth in volume and program substantial financial risk but which
have considered that would be feasible spending with lower payments. would create incentives for efficiency
under current law include establishing In its October 6, 2006 letter of and volume control, while providing
a methodology to measure the growth in comment on the CY 2007 OPPS/ASC hospitals with flexibility to provide care
volume and reduce OPPS payment rates proposed rule, MedPAC urged us to in the most appropriate way for each
to account for unnecessary increases in establish broader payment bundles in Medicare beneficiary. We are
volume or developing payment both the revised ASC payment system considering the possibility of greater
incentives for hospitals to ensure that and the OPPS to promote efficient bundling of payment for major hospital
they provide necessary services as resource use and better align the two outpatient services, which could result
efficiently as possible. payment systems. In particular, our in establishing OPPS payments for
With respect to the first alternative, proposal for the CY 2008 revised ASC episodes of care, and for this reason we
section 1833(t)(2)(F) of the Act requires payment system proposed to package particularly welcome MedPAC’s
us to establish a methodology for payment for all items and services exploration of how such an approach
controlling unnecessary increases in the directly related to the provision of might be incorporated into the OPPS
volume of covered OPPS services, and covered surgical procedures into the payment methodology. We are
section 1833(t)(9)(C) of the Act ASC facility payment for the associated particularly concerned about the
authorizes us to adjust the update to the surgical procedure (71 FR 49468). These potential for shifting higher cost
conversion factor if, under section other items and services included all bundled services to other ambulatory
1833(t)(2)(F) of the Act, we determine drugs, biologicals, contrast agents, settings. We are currently considering
that there is growth in volume that implantable devices, and diagnostic the complex policy issues related to the
exceeds established tolerances. As we services such as imaging. Because a possible development and
indicated in the September 8, 1998 number of these items and services are implementation of a bundled payment
proposed rule proposing the separately paid under the OPPS and the policy for hospital outpatient services
establishment of the OPPS (63 FR proposal included the establishment of that involves significant services
47585), we considered creating a system most ASC payment weights based on provided over a period of time which
that mirrors the sustainable growth rate the procedures’ corresponding OPPS could be paid through an episode-based
(SGR) methodology applied to the MPFS payment weights, MedPAC encouraged payment methodology, but we consider
update to control unnecessary growth in us to align the payment bundles in the this possible approach to be a long-term
two payment systems by increasing the policy objective.
service volume. However, implementing
size of the payment bundles under the
such a system could have the We also are examining how we might
OPPS.
potentially undesirable effect of Moreover, MedPAC staff indicated in possibly establish payments for same-
escalating service volume as payment testimony at the January 9, 2007 day care encounters, building upon the
rates stagnate and hospital costs rise, MedPAC public meeting that the growth current use of APCs for payment
thus actually resulting in a growth in in OPPS spending and volume raises through greater packaging of supportive
volume rather than providing an questions about whether the OPPS ancillary services. This could include
incentive to control volume. Therefore, should be changed to encourage greater conditional packaging of supportive
this approach to addressing the volume efficiency (page 390 of the January 9, ancillary services into payment for the
growth under the OPPS could 2007 MedPAC meeting transcript procedure that is the reason for the
inadvertently result in the exact available at the Web site at: http:// OPPS encounter (for example,
opposite of our desired outcome. www.medpac.gov). MedPAC staff diagnostic tests performed on the day of
The second alternative we considered explained at that time that MedPAC a scheduled procedure). Another
is to expand the packaging of supportive intends to perform a long term approach could include creation of
ancillary services and ultimately bundle assessment of the design of the OPPS, composite APCs for frequently
payment for multiple independent including considering the bundling of performed combinations of surgical
services into a single OPPS payment. payments for procedures and visits procedures (for example, one APC
We believe that this would create furnished over a period of time into a payment for multiple cardiac
incentives for hospitals to monitor and single payment, assessing whether there electrophysiologic procedures
adjust the volume and efficiency of should be an expenditure target for performed on the same date). Not only
services themselves, by enabling them hospital outpatient services, evaluating could these encounter-based payment
to manage their resources with whether payments for multiple imaging groups create enhanced incentives for
maximum flexibility. Instead of external services provided in the same session efficiency, but they may also enable us
controls on volume, we believe that it is should be discounted, and reviewing to utilize for ratesetting many of the
preferable for the OPPS to create the methodology used by CMS to multiple procedure claims that are not
payment incentives for hospitals to determine relative payment weights for now used in our establishment of OPPS
carefully scrutinize their service hospital outpatient services. We rates for single procedures. (We refer
patterns to ensure that they furnish only welcome MedPAC’s study of these readers to section II.A.1.b. of this final
those services that are necessary for areas, particularly with regard to how rule with comment period for a more
high quality care and to ensure that they we might develop appropriate payment detailed discussion of the treatment of
provide care as efficiently as possible. rates for larger bundles of services. multiple procedure claims in the
Specifically, we believe that increased Because we believe it is important ratesetting process.) In the CY 2008
packaging and bundling are the most that the OPPS create enhanced OPPS/ASC proposed rule, we proposed
appropriate payment strategies to incentives for hospitals to provide only two new composite APCs for CY 2008
establish such incentives in a necessary, high quality care and to payment of combinations of services in
prospective payment system, and that provide that care as efficiently as two clinical care areas, as discussed in
this approach is clearly preferable to the possible, we have given considerable section II.A.4.d. of this final rule with
establishment of an SGR or other thought to how we could increase comment period. In that section, we
methodology that seeks to control packaging under the OPPS in a manner summarize and respond to the public
spending by addressing significant that would not place hospitals at comments we received on this proposal
as we explore the possibility of moving As an example of a previous change units of service, in development of the
toward basing OPPS payment on larger in the OPPS packaging status for a proposed rule, we examined whether
packages and bundles of services HCPCS code that is ancillary and there were categories of HCPCS codes
provided in a single hospital outpatient supportive, under the CY 2007 OPPS, that are typically ancillary and
encounter. we note that CPT code 93641 supportive to diagnostic and therapeutic
We intend to involve the APC Panel (Electrophysiologic evaluation of single modalities.
in our future exploration of how we can or dual chamber pacing cardioverter Specifically, as our initial substantial
develop encounter-based and episode- defibrillator leads including step toward creating larger payment
based payment groups, and we look defibrillation threshold evaluation groups for hospital outpatient care, in
forward to the findings and (induction of arrhythmia, evaluate of the CY 2008 OPPS/ASC proposed rule
recommendations of MedPAC in this sensing an pacing for arrhythmia (72 FR 42652), we proposed to package
area. This is a significant change in termination) at the time of initial payment for items and services in the
direction for the OPPS, and we implantation or replacement; with seven categories listed below into the
specifically seek the recommendations testing of single chamber or dual payment for the primary diagnostic or
of all stakeholders with regard to which chamber cardioverter defibrillator) went therapeutic modality to which we
ancillary services could be packaged from separate to packaged payment. believe these items and services are
and those combinations of services This service is only performed during typically ancillary and supportive. We
provided in a single encounter or over the course of a surgical procedure for specifically chose these categories of
time that could be bundled together for implantation or replacement of HCPCS codes for packaging because we
payment. We are hopeful that expanded implantable cardioverter-defibrillator believe that the items and services
packaging and, ultimately, greater (ICD) leads, and these surgical described by the codes in these
bundling under the OPPS may result in implantation procedures are currently categories are the HCPCS codes that are
sufficient moderation of growth in assigned to APC 0106 (Insertion/ typically ancillary and supportive to a
Replacement/Repair of Pacemaker and/ primary diagnostic or therapeutic
volume and spending that further
or Electrodes) and APC 0108 (Insertion/ modality and, in those cases, are an
controls would not be needed. However,
Replacement/Repair of Cardioverter- integral part of the primary service they
if spending were to continue to escalate
Defibrillator Leads). We considered the support. We proposed to assign status
at the current rates, even after we have
electrophysiologic evaluation service indicator ‘‘N’’ to those HCPCS codes
exhausted our options for increased
(CPT code 93641) to be an ancillary that we believe are always integral to
packaging and bundling, we are
supportive service that may be the performance of the primary
considering multiple options under our
performed only in the same operative modality and to package their costs into
authority to address these issues.
session as a procedure that could the costs of the separately paid primary
c. Packaging Approach otherwise be performed independently services with which they are billed. We
of the electrophysiologic evaluation proposed to assign status indicator ‘‘Q’’
With the exception of the two to those HCPCS codes that we believe
composite APCs that we proposed for service. In this particular case, the APC
Panel recommended for CY 2007 that are typically integral to the performance
CY 2008 and discuss in detail in section of the primary modality and to package
II.A.4.d. of this final rule with comment we package payment for this diagnostic
test, and we adopted that payment for their costs into the costs of
period, we indicated in the CY 2008 the separately paid primary services
OPPS/ASC proposed rule that we were recommendation for the CY 2007 OPPS.
with which they are usually billed but
not prepared to propose an episode- Making this payment change in this
to pay them separately in those
based or fully developed encounter- specific case resulted in the availability
uncommon cases in which no other
based payment methodology for CY of significantly more claims data and,
separately paid primary service is
2008 as our next step in value-based therefore, establishment of more valid
furnished in the hospital outpatient
purchasing for the OPPS. However, in and representative estimated median
encounter.
reviewing our approach to revising costs for the lead insertion and For ease of reference in our
payment packages and bundles for the electrophysiologic evaluation services subsequent discussion in each of the
proposed rule, we examined services furnished in the single hospital seven areas, we refer to the HCPCS
currently provided under the OPPS, encounter. codes for which we proposed to package
looking for categories of ancillary items In the case of much of the care (or conditionally package) payment as
and services for which we believed furnished in the HOPD, we believe that dependent services. We use the term
payment could be appropriately it is appropriate to view a complete ‘‘independent service’’ to refer to the
packaged into larger payment packages service as potentially being reported by HCPCS codes that represent the primary
for the encounter. For this first step in a combination of two or more HCPCS therapeutic or diagnostic modality into
creating larger payment groups, we codes, rather than a single code, and to which we are proposing to package
examined the HCPCS code definitions establish payment policy that supports payment for the dependent service. We
(including CPT code descriptors) to see this view. Ideally, we would consider a note that, in future years as we consider
whether there were categories of codes complete HOPD service to be the totality the development of larger payment
for which packaging would be a logical of care furnished in a hospital groups that more broadly reflect services
expansion of the longstanding outpatient encounter or in an episode of provided in an encounter or episode of
packaging policy that has been a part of care. In general, we believe that it is care, it is possible that we might
the OPPS since its inception. In general, particularly appropriate to package propose to bundle payment for a service
we have often packaged the costs of payment for those items and services that we now refer to as ‘‘independent’’
selected HCPCS codes into payment for that are typically ancillary and in this final rule with comment period.
services reported with other HCPCS supportive into the payment for the Specifically, we proposed to package
codes where we believed that one code primary diagnostic or therapeutic the payment for HCPCS codes
reported an item or service that was modalities in which they are used. As describing the dependent items and
integral to the provision of care that was a significant first step towards creating services in the following seven
reported by another HCPCS code. payment units that represent larger categories into the payment for the
independent services with which they medians typically do not reflect subtle rule with comment period for an
are furnished: changes in cost distributions. The OPPS’ explanation of the weight scaler.) In a
• Guidance services use of medians rather than means budget neutral system, the monies
• Image processing services usually results in relative weight previously paid for services that were
• Intraoperative services estimates being less sensitive to proposed to be packaged are not lost,
• Imaging supervision and packaging decisions. Specifically, the but are redistributed to all other
interpretation services median cost for a particular services. A higher weight scaler would
• Diagnostic radiopharmaceuticals independent procedure generally will increase payment rates relative to
• Contrast media be higher as a result of added packaging, observed median costs for independent
• Observation services but also could change little or be lower services by redistributing the lost weight
In the proposed rule, we identified
because median costs typically do not of packaged items that historically have
the HCPCS codes we proposed to
reflect small distributional changes and been paid separately and the lost weight
package for CY 2008, explained our
also because changes to the packaged when the median costs of independent
rationale for proposing to package the
HCPCS codes affect both the number services did not completely reflect the
codes in these categories, provided and composition of single bills and the full incremental cost of the packaged
examples of how HCPCS and APC mix of hospitals contributing those services. The impact of the cumulative
median costs and payments would single bills. Such a decline, no change, changes for the CY 2008 OPPS
change under these proposals, and or an increase in the median cost at the payments is discussed in section
discussed the impact of these changes HCPCS code level could result from a XXIV.B. of this final rule with comment
under each category, as follows: change in the number of single bills period.
The median costs of services at the We estimated that our CY 2008
used to set the median cost. With greater
HCPCS level for many separately paid packaging, more ‘‘natural’’ single bills packaging proposal would redistribute
procedures changed as a result of our are created for some codes but fewer approximately 1.2 percent of the
proposal because we proposed to ‘‘pseudo’’ single bills are created. Thus, estimated CY 2007 base year
change the composition of the payment some APCs gain single bills and some expenditures under the OPPS. The
packages associated with the HCPCS lose single bills due to packaging monies associated with this
codes. Moreover, as a result of changes changes, as well as to the reassignment redistribution were in addition to any
to the HCPCS median costs, we of some codes to different APCs. When increases that would otherwise occur
proposed to reassign some HCPCS codes more claims from a different mix of due to a higher median cost for the APC
to different clinical APCs for CY 2008 to providers are used to set the median as a result of the expanded payment
avoid 2 times violations and to ensure cost for the HCPCS code, the median package. If the relative weight for a
continuing clinical and resource cost could move higher or lower within particular APC decreased as a result of
homogeneity of the APCs. Therefore, the the array of per claim costs. the proposed packaging approach, the
proposed APC median costs changed Similarly, revisions to APC increased weight scaler may or may not
not only as a result of the increased assignments that are necessary to result in a relative weight that is equal
packaging itself but also as a result of resolve 2 times violations that could to or greater than the relative weight
the migration of HCPCS codes into and arise as a result of changes in the that would occur without the proposed
out of APCs through APC HCPCS median cost for one or more packaging approach. In general, the
reconfiguration. The file of HCPCS code codes due to additional packaging may packaging that we proposed would have
and APC median costs resulting from also result in increases or decreases to more effect on payment for some
our proposal is found under supporting APC median costs and, therefore, to services than on payment for others
documentation for the proposed rule on increases or decreases in the payments because the dependent items and
the CMS Web site at http:// for HCPCS codes that would not be services that we proposed for packaging
www.cms.hhs.gov/ otherwise affected except for the CY are furnished more often with some
HospitalOutpatientPPS/HORD/ 2008 proposed packaging approach for independent services than with others.
list.asp#TopOfPage. the seven categories of items and However, because of the amount of
Review of the HCPCS median costs services. payment weight that would be
for the proposed rule indicated that, We examined the aggregate impact of redistributed by our proposal, there
while the proposed median costs rise for making these proposed changes on would be some impact on payments for
some HCPCS codes as a result of payment for CY 2008 in the proposed all OPPS services whose rates are set
increased packaging that expands the rule. Because the OPPS is a budget based on payment weights, and the
costs included in the payment packages, neutral payment system in which the impact on any given hospital would
there are also cases in which the amount of payment weight in the vary based on the mix of services
proposed median costs decline as a system is annually adjusted for changes furnished by the hospital.
result of these proposed changes. While in expenditures created by changes in We received many, often widely
it seems intuitive to believe that the APC weights and codes (but is not diverging, public comments on the CY
proposed median costs of the remaining currently adjusted based on estimated 2008 proposed packaging approach. In
separately paid services should rise growth in service volume), the effects of many cases the comments were
when the costs of services previously the packaging changes we proposed generally applicable to the totality of the
paid separately are packaged into larger resulted in changes to scaled weights packaging proposal and, in other cases,
payment groups, it is more challenging and, therefore, to the proposed payment the same general comments were made
to understand why the proposed median rates for all separately paid procedures. but only with regard to a specific
costs of separately paid services would These changes resulted from both shifts category or set of services of interest to
not change or would decline when the in median costs as a result of increased the commenter. We have addressed all
costs of previously paid services are packaging, changes in multiple similar public comments in the
packaged. procedure discounting patterns, and a discussion of general comments,
Medians are generally more stable higher weight scaler that was applied to whether they were made in general or
than means because they are less all unscaled APC weights. (We refer for specific categories of services,
sensitive to extreme observations, but readers to section II.A.3. of this final because the same response applies
whether the comment was on packaging Some commenters supported the specified independent service. The
in general or on a specific service. We encounter-based or episode-based commenters stated that items and
have limited the summary of public payment, but asked that this approach services should be packaged only where
comments and our responses in the be based on single encounter only and there are substitutable services that
individual category discussions to not span a period of time, because they could be chosen by the hospital, and
issues that pertain only to the category believed that it would be very difficult that no packaging should occur where
or specific services within the category. to set rates for periods of recurring there is only one dependent service that
During the September 2007 APC services. The commenters supported use would be provided with the
Panel meeting, the APC Panel supported of multiple procedure claims and independent service.
packaging for contrast agents, image payment for combinations of services Some commenters contended that
processing services, guidance (except but encouraged CMS to carefully CMS should not implement the
for radiation oncology guidance evaluate the overall impact of packaging proposed packaging changes until after
procedures), diagnostic on all hospitals. Other commenters it implements an adjustment for charge
radiopharmaceuticals with a median per suggested that CMS package only compression because errors in the
day cost of less than $200, and services that are low cost and furnished proposed rates as a result of charge
intraoperative testing other than at a high frequency with the compression would result in too little
possibly for CPT code 96020 independent service. Several payment being packaged into the
(Neurofunctional testing selection and commenters stated that CMS should not independent service and would create
administration during noninvasive finalize the proposed packaging disincentives for hospital to furnish the
imaging functional brain mapping, with approach because it would lead to packaged services, thus harming
test administered entirely by a inappropriate payment, including both beneficiary access to advanced
physician or psychologist, with review overpayments and underpayments. technologies.
Several commenters asked that CMS Some commenters requested that
of test results and report). The Panel
delay the packaging approach for at CMS develop and propose a set of
recommended a delay in packaging for
least a year because they believed the criteria for packaging services that
imaging supervision and interpretation
proposed rule did not furnish sufficient would be open to public comment and
services because of excessive payment
data analysis in support of the proposal. that would control whether and, if so,
reductions that the Panel believed
They asserted that the aggregate impact when CMS could package payment for
would occur under the CMS proposal,
analysis provided no information that a service. The commenters stated that
particularly with regard to packaging
commenters could use to evaluate the the criteria in the proposed rule were
payment for those supervision and
individual codes proposed to be too vague, undefined, and subjective to
interpretation services that already identify which codes should be
packaged, making it impossible for the
include packaged injection services. The packaged. The commenters provided
public to determine how payment for
Panel did not support packaging of criteria that they believe should govern
services would be affected. Some
observation services, although it whether a service should be packaged.
commenters requested that CMS furnish
suggested that if CMS were to package The suggested criteria included, but
the same level of impact discussion for
observation, it should instead create a were not limited to, requiring that
each of the services in each of the
composite APC (or a group of composite packaging should only be adopted for
categories as it did for the composite
APCs) for observation and the related APCs. Other commenters asked CMS to high volume, low cost, minor and
visit services, without restriction to identify the percent of charges for ancillary services that are very
specific clinical conditions. The APC dependent services that were packaged frequently performed with the specified
Panel also recommended that CMS into each independent procedure, independent service; no packaging of
provide additional information in the identify all independent procedures into services that require specialized
CY 2008 final rule with comment period which cost was packaged from each equipment or devices; no packaging of
about packaging, including crosswalks packaged procedure, and identify the services that are only furnished in a
and information clarifying how newly cost of each procedure code with and small number of hospitals; no packaging
packaged services map back to primary without the proposed packaging. They of add-on services unless the service is
procedures. recommended that, before furnished with its base code at least 50
Comment: MedPAC generally implementing the proposed packaging, percent or 75 percent of the time;
supported the proposed packaging CMS publish all HCPCS and revenue packaging only when a service is being
because the services proposed for codes and the costs for each that enter packaged into a specified service and,
packaging are typically furnished on the into the consideration of packaging for therefore, no general packaging of
same day as a separately paid service every code proposed to be packaged. services into the service with which it
and there is little potential for them to The commenters believed that the lack is performed; no packaging unless CMS
be furnished on another date to avoid of transparency, together with late has provided the public with a full data
the effects of packaging. MedPAC availability of a correct OPPS proposed assessment of the effects of packaging
explained that packaging of observation rule claims data set, made it difficult to each service; and no packaging if the
services is logical because currently 70 determine whether packaged costs were median cost for the code exceeds an
percent of observation care is packaged. retained or lost in the median setting established amount.
MedPAC’s principal concern about the process. Other commenters suggested CMS not
proposed packaging of observation was Other commenters suggested that implement the proposed packaging
that this approach could result in CMS explicitly crosswalk packaged because the 60-day comment period
hospitals’ costs being higher than OPPS services to identified independent provided insufficient time for analysis
payments in some cases, and thereby services, rather than packaging payment and because the APC Panel
create an incentive for inpatient into the independent service with recommendations and report were not
admissions. It encouraged CMS to which the packaged services is billed on posted on the Web site immediately
carefully monitoring whether hospitals each claim. They asserted that no after the meeting.
change their behavior with regard to service should be packaged unless it is Response: We have reviewed all of the
inpatient admissions. furnished the majority of the time with public comments we received on the
proposed packaging approach, and we service, and in other cases they are packaging approach because it will
have decided to finalize our proposal furnished with many independent ‘‘overpay’’ some services and
with significant modifications and services. Similarly, in some cases they ‘‘underpay’’ others. Payment based on a
refinements to address some of the are furnished frequently with measure of central tendency is also a
concerns raised by commenters on our independent services, and in some cases principle of any prospective payment
proposal to package payment for they are uncommonly furnished with system. In some cases, payment in an
diagnostic radiopharmaceuticals, independent services. individual case exceeds the average cost
imaging supervision and interpretation We believe that packaging should and in other cases payment is less than
services, contrast agents, and reflect the reality of how the services are the average cost, but on balance,
observation services. We refer readers to furnished and reported on claims by payment should approximate the
sections II.A.4.c.(4), (5), (6), and (7) of hospitals. We believe that nonspecific relative cost of the average case,
this final rule with comment period for packaging (as opposed to selected code recognizing that the OPPS, as created in
detailed discussion of these packaging) based on combinations of the statute, was not intended to pay the
modifications and section II.A.2 of this services observed on hospital claims is full cost of HOPD services.
final rule with comment period for fully appropriate because of the myriad We also do not agree that it would be
discussion of the changes we made to combinations of services that can be beneficial to delay the implementation
the data process in this regard. We are appropriately provided together. This of the proposed packaging approach for
finalizing our proposal for guidance, approach to packaging payment has a year because that would delay the
image processing, and intraoperative long existed in prospective payment implementation of incentives under the
services without substantial systems, including the OPPS. For OPPS for hospitals to look carefully at
modification. Table 10, which appears example, in the IPPS, Medicare’s oldest ways that they could provide care more
in section II.A.4., contains a prospective payment system, payment efficiently. We recognize that, as with
comprehensive list of all codes in the for all services furnished is packaged any payment policy, there will be
final seven categories for which we will into a single payment for an entire affected parties that will ask for changes
package payment either unconditionally hospital inpatient stay that is based on to the policy, and we are always willing
(to which we assign status indicator the diagnosis-related group (DRG) into to hear their concerns and to make
‘‘N’’) or conditionally, providing which the stay is categorized. The DRG changes if the changes are appropriate.
separate payment if certain criteria are payment packages together all payment Moreover, both APC and status
met (to which we assign status indicator for routine care, drugs, biologicals, indicator assignments are open to public
‘‘Q’’). There is a category of medical supplies, diagnostic tests, and comment each year in the proposed
conditionally packaged codes assigned all other covered services that were rule, and hence affected parties may
status indicator ‘‘Q,’’ which we provided to the patient, regardless of the provide their arguments for separate
previously referred to as ‘‘special’’ extent to which different patients in the payment as part of that process in the
packaged codes because their payment same DRG received somewhat different future.
services during their stay. We believe We further disagree that we should
was packaged when provided on the
that a similar approach to nonspecific delay or not finalize the proposed
same date as a service that was assigned
packaging under the OPPS is likewise packaging approach pending provision
status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’
fully appropriate. We have used this of the extensive data that the
These ‘‘special’’ packaged codes will
packaging approach for ratesetting commenters requested. We make
now be referred to as ‘‘STVX-packaged
throughout the history of the OPPS, and available a considerable amount of data
codes.’’ We have identified a new
note that payment for APC groups for public analysis each year and while
category of conditionally packaged we are not developing and providing the
currently reflects significant nonspecific
codes that are called ‘‘T-packaged extensively detailed information that
packaging in many cases. Similarly, we
codes,’’ whose payment is packaged the commenters request, we provide the
believe that it is appropriate to establish
when provided on the same date as public use files of claims and a detailed
under the OPPS a single payment for
another service that is assigned status narrative description of our data process
multiple independent procedures that
indicator ‘‘T.’’ The rationale for these that the public can use to perform any
are frequently furnished together. For
changes are discussed in detail below in desired analyses. While we
that reason, we are adopting five
section II.A.4.c.(4) of this final rule with composite APCs for CY 2008 and intend acknowledge that we needed to issue a
comment period. to explore developing others. second corrected file of claims data, the
We believe that it is appropriate and We do not agree with the commenters second file differed from the first only
fully consistent with the principles of a that we should not package a service in that it deleted a relatively small
prospective payment system to package unless it is a low cost ancillary and number of duplicate claims for
payment for ancillary and supportive supportive service that appears observation that would have been used
services into the payment for the frequently with an independent service. to calculate an APC rate for separately
independent service with which they To establish that policy would negate payable observation, had we proposed
are furnished as a means of making the concept of averaging that is an to pay separately for observation, and
payment for a more comprehensive underlying premise of a prospective hence we believe that the accidental
service package. Although separate payment system by packaging only inclusion of these duplicate claims for
payment will no longer be made for the services that will increase the payment observation care should have had little
packaged services, the payments for the for the independent service. To do that or no effect on the majority of studies
independent services with which they would also create incentives for of the HCPCS codes we proposed to
are furnished will reflect the costs of the hospitals to provide ancillary and package.
packaged services to the extent that the dependent services that are higher cost With regard to the request for
packaged services are provided with the or historically were infrequently extensive data on all HCPCS codes we
independent service. We recognize that, furnished with an independent service proposed to package, it would not be
in some cases, certain supportive and and would remain separately paid. possible for us to anticipate the specific
ancillary dependent services are Similarly, we do not agree that we combinations of services of interest to
furnished with only one independent should not finalize the proposed the public. In addition, we believe that
the commenters must examine the data appropriateness of using regression- certainly, if we were not to adopt
themselves to develop the specific adjusted CCRs to estimate OPPS costs. packaging of the additional services for
arguments to support their requests for We do not agree that we should CY 2008, the APC configurations,
changes to payments under the OPPS. develop and establish criteria with bypass list, single claims available for
We note that we pay hospitals under the stakeholder input before we finalize the ratesetting, and other important features
OPPS, and we showed the impact of the packaging proposal. Nor do we believe upon which the final median costs
CY 2008 packaging proposal on that the specific criteria the commenters depend would differ in significant ways
payment to different classes of hospitals recommended are appropriate for from those aspects under our final CY
in Table 67 of the proposed rule (72 FR determining when services should be 2008 policies.
42822 through 42824). We believe our packaged. The criteria that the Comment: A number of commenters
estimate of the impact of these changes commenters provided are focused disagreed with the CMS estimate of the
provided valuable information to the almost exclusively on preventing amount of payment that would be
hospitals that would receive packaged packaging, rather than on determining redistributed under the proposed rule.
payment for services that had been when packaging would be appropriate. The commenters indicated that the
previously paid separately under the We believe that packaging is appropriate services proposed to be newly packaged
OPPS. when the nature of a service is such that constitute 6 percent of the OPPS costs,
With regard to the public comments it is supportive and ancillary to another although CMS estimated that the
that we should explicitly crosswalk service, whether the dependent service packaging proposal would redistribute
packaged codes to the independent is frequently furnished with the 1.2 percent of the CY 2008 expenditures
codes into which the costs would be independent service or not and under the OPPS. They attributed the
packaged, we do not believe that this is regardless of the cost of the supportive difference in cost estimates to the
feasible, given the myriad combinations ancillary service. This is largely a methodology for applying status
of services that are furnished in the clinical decision based on the nature of indicator ‘‘Q.’’ The commenters
HOPD, nor is it consistent with the the service being considered for believed that the resulting impact
principles of a prospective payment packaging. analysis would be quite different from
Lastly, we do not agree that we should CMS’ estimated impact displayed in the
system, which bases payment on real
not implement the proposed changes proposed rule and, therefore, the
occurrences of services that are
because the commenters believed that implications of the policy are not fully
furnished by hospitals and reported on
the 60 day comment period was understood. They objected to packaging
claims. Moreover, creation of such a
insufficient or because the APC Panel of observation services in particular, but
crosswalk would undoubtedly result in
recommendations and report were not recommended that CMS reevaluate the
omissions of appropriate packaging of posted to the Web site immediately after entire packaging proposal in light of
services and would create a the public meeting. The 60 day methodological and data concerns.
maintenance task that would not be comment period is generally the Response: In the proposed rule, we
sustainable, given the number of standard comment period for the estimated that the proposed packaging
changes to HCPCS codes each year and proposed rule process. The availability approach would redistribute 1.2 percent
the ever changing way in which services of updated claims and cost report data of the CY 2007 base expenditures under
are furnished. Similarly, it is not necessary to develop the proposed rule the OPPS to other OPPS services as part
consistent with the concept of and issue the final rule for the OPPS of our budget neutrality adjustments for
packaging within a prospective payment precludes a longer period for comment. the proposed CY 2008 payment system.
system to package only those services Moreover, we do not believe that the This 1.2 percent is the aggregate
for which there are substitutes that Web site posting of the APC Panel payment weight reduction from the
could be furnished. In contrast, it is recommendations and report is packaging proposal, where the medians
fully consistent with the principles of a necessary for the public to provide are marginally less than the costs for the
prospective payment system for groups meaningful comments, in light of the individual services prior to packaging.
of services to package items and services fact that the APC Panel meeting is open This is not inconsistent with a finding
that are always furnished with an to the public. that the total cost of services proposed
independent service and for which there We are not accepting the to be packaged constitutes 6 percent of
are no substitutes. recommendation of the APC Panel to HOPD costs. These percentages measure
We also do not agree that we should provide information in this final rule different things. The first provides an
delay creation of larger payment with comment period clarifying how estimate of money redistributed to other
bundles through packaging until after newly packaged services map back to services and the second an estimate of
there is adjustment for charge primary procedures because we would the proportion of OPPS spending on
compression under the OPPS. As we be unable to display in a meaningful services addressed by the policy. We
discuss in section II.A.1.c. of this final way all of the many combinations of understand, and intended, that the
rule with comment period, we will services that may be of interest to the packaging proposal affect services
consider whether to use regression- public. Moreover, given the numerous responsible for significant OPPS
adjusted CCRs to adjust for charge new, refined, and interrelated payment spending, in order to provide hospitals
compression under the OPPS after RTI policies finalized for CY 2008 involving with meaningful incentives to examine
reviews the OPPS cost estimation APC reconfiguration, HCPCS migration, their patterns of care delivery and
process, including an assessment of the reduction in the numbers of low volume improve efficiency. The 1.2 percent
revenue code-to-cost center crosswalk APCs, and others, to adopt the APC reflects the difference in total weight
and estimating regression-adjusted CCRs Panel’s example of simulating median with and without the packaging
from a model that includes outpatient costs holding all other CY 2008 policies proposal relative to the CY 2007 total
charges. There is no reason to delay the constant for HCPCS codes with and base weight. Whether or not the 1.2
creation of incentives for encouraging without the additional packaging of percent of redistributed dollars was
cost-effective utilization and efficiency those services newly packaged for CY entirely attributable to the proposed
in the provision of HOPD services until 2008 would not provide meaningful policy for estimating the median cost for
a decision is made regarding the comparative information. Almost ‘‘Q’’ status indicator services cannot be
determined. For this final rule with to our longstanding policy, we will Medicare beneficiaries from those
comment period, we made continue to encourage hospitals to restrictions or apply them to Medicare
modifications to the policy governing report the HCPCS codes and associated beneficiaries the same as to all other
the handling of many services assigned charges for all services they provide, persons seeking care. We do not believe
status indicator ‘‘Q,’’ as discussed in taking into consideration all CPT, OPPS, that a hospital would risk termination of
section II.A.4.c.(4) of this final rule with and local contracture instructions, its provider agreement by Medicare by
comment period, that resulted in use of regardless of whether payment for those refusing to furnish a medically
more claims data and significant HCPCS codes is packaged or separately necessary service to a Medicare
changes to the median costs for some provided. Similarly, we do not believe beneficiary, although it provides the
services. We also accepted the public that the implementation of MS–DRGs same service to other patients for the
comments that recommended that we will create operational issues for same clinical indications.
create a composite APC for observation hospitals that would be complicated by As we indicated in the proposed rule,
services, as discussed in section increased packaging under the OPPS. we will examine our claims data for
II.A.4.c.(7) of this final rule with Comment: Some commenters asserted patterns of fragmented care and if we
comment period. that increased packaging will create find a pattern in which a hospital
Comment: Some commenters stated disincentives to provide certain services appears to be fragmenting care across
that CMS must undertake provider and that providers may stop furnishing multiple days, we will refer it for
education and claims monitoring these services to Medicare beneficiaries. investigation to the QIO or to the
because providers will cease to bill The commenters stated that increased program safeguard contractor, as
HCPCS codes and charges for packaged packaging would reduce expenditures, appropriate to the circumstances we
services, which will result in lower but the ultimate result would be find. However, we do not believe that,
payment rates than would otherwise be reduced access to necessary care as the in general, hospitals would routinely,
made if they reported all codes and payment incentives to provide care are and for purposes of financial gain,
charges and thus the costs of packaged reduced. Other commenters believed require patients to return on multiple
services would be lost to the payment that increased packaging will result in days to receive services that could have
system in future years. They indicated services being furnished on multiple been furnished on the same day.
that this presents huge operational days in order to maximize payment, Comment: One commenter objected to
challenges to hospitals to ensure that which will increase, rather than the implication in the proposed rule
they bill and charge for the packaged decrease, volumes of services and that hospitals provide whatever services
codes. Other commenters believed that provide a significant inconvenience to they wish at whatever cost, with their
the implementation of increased beneficiaries. only concern being payment for the
packaging will be particularly difficult Response: We also do not agree that services, and that payment rates could
in CY 2008 because CMS is beneficiary access to care will be motivate hospitals to report services on
simultaneously implementing Medicare- harmed by increased packaging. We separate claims or split the service
Severity DRGs (MS–DRGs) for IPPS believe that packaging will create among different hospitals in order to be
payment, which also poses operational incentives for hospitals and their paid more. The commenter stated that
challenges for hospitals. physician partners to work together to 42 CFR 411.15(m) requires that
Response: We do not believe that establish appropriate protocols that will hospitals must furnish and bill for
there will be a significant change in eliminate unnecessary services where services necessary to complete an
what hospitals charge and report for the they exist and will institutionalize outpatient encounter and that, therefore,
services they furnish to Medicare approaches to providing necessary it would be a violation of CMS
beneficiaries and to others as a result of services more efficiently. Where this regulations for a hospital to deliver part
the increased packaging for the CY 2008 review results in reductions in services of the service at one hospital and the
OPPS. Medicare cost reporting that are only marginally beneficial, we rest at another hospital.
standards specify that hospitals must believe that this could improve rather Response: We believe that hospitals
impose the same charges for Medicare than harm the quality of care for strive to provide the best care they can
patients as for other patients. We are beneficiaries because every service to the patients they serve. However, we
often told by hospitals that many private furnished in a hospital carries some are aware that there are financial
payers pay based on a percentage of level of risk to the patient. Similarly, pressures on hospitals that might
charges and that hospital chargemasters where this review results in the motivate some of them to split services
do not differentiate between the charges concentration of some services in a in such a way as to maximize payments.
to Medicare patients and others. reduced number of hospitals in the While we do not expect that hospitals
Therefore, we have no reason to believe community, we believe that the quality would routinely change the way they
that hospitals will cease to report of care and hospital efficiency may both furnish services or the way they bill in
charges and HCPCS codes for packaged be enhanced as a result. The medical order to maximize payment, we do
services they provide to Medicare literature shows that concentration of believe that it would be possible, and
beneficiaries. We expect that hospitals, services in certain hospitals often hence we offered the cautionary note in
as other prudent businesses, will have a results in both greater efficiency and the proposed rule that we will consider
quality review process that ensures that higher quality of care for patients. that possibility as we review our claims
they accurately and completely report Moreover, we do not believe that data. Other commenters, as described in
the services they furnish, with the packaging will result in Medicare the preceding comment, stated that
appropriate charges for those services to beneficiaries being treated differently volumes of services and expenditures
Medicare and all other payers. from other patients with regard to the would increase because hospitals would
Therefore, we do not see either the need care they receive in the hospital. A provide services on multiple days to
or the responsibility to undertake a hospital may have its provider maximize payment.
special effort to educate providers to agreement terminated by Medicare We note that 42 CFR 411.15(m)
report and charge Medicare for the under 42 CFR 489.53(a)(2) if it places specifies exclusions from Medicare
services they furnish, whether restrictions on the persons it accepts for coverage in cases in which the hospital
separately paid or packaged. According treatment and either fails to exempt does not furnish a service directly or
under arrangements as defined in 42 rely on CPT and HCPCS code pays separately for them. The OPPS is
CFR 409.3 and, therefore, would not descriptors because the descriptors are not a fee schedule, but a prospective
prohibit a hospital from discharging a complex and many do not accurately payment system based on relative
patient and sending that patient to describe the services furnished. Some weights derived from costs and charges.
another hospital for a service that would commenters argued that CMS should Packaging of payments into appropriate
otherwise be packaged if furnished pay across settings in the same way and, groups is a fundamental principle that
during the same encounter. However, as therefore, should not package under the distinguishes a prospective payment
noted above, a hospital that does not OPPS services that are paid separately system from a fee schedule and we do
make available the same services to under the MPFS. not believe that we should refrain from
Medicare beneficiaries as to its other Response: Our general process for packaging payment for ancillary and
hospital patients can be terminated from developing the OPPS, including making supportive services into payment for the
Medicare under 42 CFR 489.53(a)(2). major payment policy decisions, is independent services with which they
Additionally, we remind hospitals that prescribed by the Administrative are furnished because they may be
any business models or arrangements Procedure Act (APA) and the Federal treated differently in the MPFS or
they make for the provision of services Advisory Committee Act (FACA). As because of the unlikely possibility that
intended to be billed by that hospital such, proposed payment rates and the this policy may have some influence on
must comply with all applicable laws attendant policies are open to public the AMA CPT Editorial Panel’s
and regulations, including, but not comment both through the Federal decisions regarding creation of codes.
limited to, the Stark law and other anti- Register notice and comment Comment: One commenter stated that
kickback laws, the provider-based rules rulemaking process and through the the concept of creating incentives for
at 42 CFR 413.65, the ‘‘incident-to’’ public meetings of the APC Panel, hospitals to negotiate better prices on
rules at 42 CFR 410.27, and the which is a Federal Advisory Committee goods and services through packaging is
conditions for outpatient diagnostic chartered by the Secretary of Health and not applicable to small rural hospitals
services at 42 CFR 410.28. In regard to Human Services. Therefore, our and, therefore, it should not apply to
hospital services provided under proposed packaging for the CY 2008 them. The commenter argued that
arrangements, as defined in 42 CFR OPPS and the decisions we are smaller rural hospitals cannot negotiate
409.3, we have specified in the announcing in this final rule with for better prices on goods and services
Eligibility and Entitlement Manual that, comment period are neither arbitrary because they buy smaller amounts of
‘‘In permitting providers to furnish nor single-sided, as all stakeholders products and lack the ability that large
services under arrangements, it was not have had the opportunity to comment. urban hospitals have to negotiate for
intended that the provider merely serve In this final rule with comment period, better prices on goods and services.
we are responding to their comments. Response: We believe that the
as a billing mechanism for the other
We note that the AMA, as a member of creation of incentives for hospitals to
party. Accordingly, for services
the public, has the same opportunity to seek more efficient ways of furnishing
provided under arrangements to be
comment on the packaging proposal in services is applicable to all hospitals,
covered, the provider must exercise
the proposed rule as any other member including small rural hospitals. Small
professional responsibility over the
of the public. rural hospitals and their physician
arranged for services’’ (Pub. 100–1,
We believe that it is entirely partners have the same capacity and
Chapter 5, section 10.3). Therefore, we
appropriate to rely on the HCPCS capability as other hospitals to evaluate
would not expect hospitals to send
descriptors, including the AMA’s CPT the appropriateness and efficiency of
patients to a separate entity merely to
descriptors, for the definition of the the packaged services they furnish.
avoid packaged payment, but, as stated services furnished for purposes of the Moreover, small rural hospitals can join
above, we will consider that possibility proposed packaging approach and other in cooperatives and group purchasing
as we review our claims data. payment policies. The OPPS is based on organizations that can achieve
Comment: Some commenters the definitions of services reported with purchasing efficiencies that they could
suggested that CMS work with and HCPCS codes, of which the CPT code not achieve by themselves. We
through the AMA process in making any set is a fundamental part. The HCPCS recognize that some costs are higher for
packaging decisions and not make any codes are the only means by which certain categories of rural hospitals,
arbitrary and single-sided bundling hospitals report the services they therefore we have provided the 7.1
decisions that have not been fully furnish and the charges for those percent rural adjustment for rural SCHs.
reviewed and analyzed for impact by services and, therefore, they are basis of Moreover, the law holds harmless rural
the stakeholders. They suggested that the OPPS. For that reason, we look to hospitals with 100 or fewer beds.
CMS discuss with the AMA CPT the HCPCS definition of the service to However, we also expect that small
Editorial Panel the potential for determine whether a particular service rural hospitals will be motivated by the
unintended consequences of proposed is ancillary and supportive of another packaging approach to seek ways of
packaging or bundling on the service. To the extent that there are furnishing services as efficiently as
establishment of CPT codes. For changes to the HCPCS codes and, by possible and to eliminate services that
example, one commenter believed that extension, to the CPT code descriptors, are essential to the appropriate
packaging add-on codes, which the we will reevaluate the decisions we treatment of the patient in any clinical
commenter viewed as integral to make with regard to packaging payment. case.
maintaining flexibility of CPT coding, However, we do not believe that the Comment: Some commenters
would likely discourage future AMA’s CPT Editorial Board is contended that the proposed packaging
consideration of creating add-on codes influenced by OPPS payment policy in approach has the potential for
as a means to describe code-specific its deliberations, nor should it be systemwide net savings and
procedures and resources. Other influenced by OPPS payment policy in redistribution of payments away from
commenters objected to what they view its creation of CPT codes. hospitals that invested in high-cost
as a ‘‘codebook’’ approach to Moreover, we disagree that we should equipment and toward hospitals that do
determining what should be packaged. not package payment for ancillary and not have such costs. They believed that
The commenters stated that CMS not supportive services because the MPFS charge compression contributes to this
problem because hospitals are limited in physicians, and it would be the effects of no longer paying
what they can charge, and the allocation inappropriate to penalize hospitals for separately for the packaged services.
of radiology equipment capital costs performing services whose utilization is Response: We do not agree that we
exacerbates the problem. The not within their control. The should impose a payment floor to limit
commenters suggested that CMS not commenters believed that innovation the amount of decline in any APC
finalize the packaging proposal because and best practices have increased payment as a means of mitigating the
packaging creates incentives for utilization, not the provision of effects of no longer paying separately for
hospitals to divest themselves of excessive services. the packaged services. The purpose of
important but expensive technologies Response: Section 1833(t)(2)(F) of the creating larger payment packages is to
because those technologies have ceased Act requires us to develop a method of create incentives for hospitals to assess
to be profitable. controlling unnecessary increases in the the services they are furnishing to
Response: We agree that there is the volume of covered OPS services and ensure that they are furnishing only
potential for systemwide redistribution section 1833(t)(9)(C) of the Act medically necessary services as
of payments away from hospitals that authorizes us to adjust the update to the efficiently as possible. To establish a
invested in costly equipment for conversion factor if under section payment floor that would artificially
services for which payment will be 1833(t)(2)(F) of the Act, we determine inflate payments for APCs that are
packaged and toward hospitals that do that there is growth in volume that declining would reduce what would
not have such costs. However, to the exceeds established tolerances. As we otherwise be appropriate increases in
extent that packaging payment for indicated in our proposed rule, we payments for other APCs. We believe
ancillary and supportive services prefer not to take the approach of that this would be contrary to the stated
reduces the amount of payment weight creating an SGR-type mechanism that goal of paying appropriately for all
in the system for separately paid could result in a reduced conversion services through larger payment bundles
services, that amount will be factor under the OPPS and that could that are intended to create incentives for
redistributed to all hospitals across all inadvertently result in actually efficiency.
services paid under the OPPS through Comment: Several commenters
increasing the volume of services. We
the budget neutral weight scaler. Any objected to the proposed packaging
prefer to establish larger packages of
reduction in the growth of OPPS approach because they believed that it
services on which to base OPPS
expenditures will result from slower would be more difficult for new services
payment in order to create incentives for
growth in hospital costs in future years to be approved for payment under New
hospitals and their physician partners to
as a result of hospitals reducing the Technology APCs. One commenter
make thoughtful decisions regarding
volume of certain services or finding believed that it would be difficult for
what services are medically necessary new guidance services, in particular, to
more efficient ways to provide care.
for their patients and to continuously be approved for assignment to a New
That potential future savings is one of
reassess how they might be able to Technology APC if CMS considers
the purposes of this packaging initiative
provide care more efficiently. We guidance to be a supportive and
and the exploration of episode-based or
recognize that decisions regarding the ancillary service rather than a separately
encounter-based payments under the
care provided in HOPDs are not made paid complete service. Therefore, the
OPPS. Similarly, if increased packaging
unilaterally by the hospital, nor are they commenter concluded that the proposed
causes hospitals to be more cautious in
made unilaterally by the physician who packaging not only packages existing
their decision making regarding
investing in new equipment or incurring is ordering the care. While physicians, services but creates the potential for
other large capital expenditures, we rather than hospital staff, may order new technologies to not be approved for
view that as a positive result of the specific services for patients, hospitals New Technology APC payment.
policy. Hospitals make decisions decide what HOPD services they will Response: We assess applications for
regarding the equipment they buy for and will not furnish, what drugs and New Technology APC placement on a
general business reasons, of which supplies they will or will not buy and case-by-case basis. The commenter is
payment under the OPPS is only one from whom they will buy them, what correct that, to qualify for New
factor among many, including, but not investments in equipment they will or Technology APC placement, the service
limited to, utilization and payments will not make, and what programs they must be a complete service, by which
from other payers and payments from will open or close. Certainly, they make we mean a comprehensive service that
Medicare for IPPS services, which is the these decisions with significant input stands alone as a meaningful diagnostic
dominant source of Medicare payment from their medical staff, but it is the or therapeutic service. To the extent that
for hospital care. hospital administration that makes the a service for which New Technology
Comment: One commenter asserted final decisions in this regard. Moreover, APC status is being requested is
that linking growth in volume to hospitals control, to some extent, the ancillary and supportive of another
reduced payments is premature, physicians on their medical staff and service, for example, a new
inappropriate, and not supported by increasingly employ physicians to intraoperative service or a new guidance
statutory authority. The commenter was provide services to patients and to service, we might not consider it to be
particularly concerned about any supervise the provision of hospital a complete service because its value is
methodology that would establish services. Hence, we do not agree with as part of an independent service.
different update factors for different the argument that hospitals have no However, if the entire, complete service,
OPPS service categories, where the control over the services they furnish or including the guidance component of
update factor is determined in a manner that they have no influence over the the service, for example, is ‘‘truly new,’’
that takes into account utilization physicians who order the specific as we explained that term at length in
trends. Many commenters stated that services furnished to their patients. the November 30, 2001 final rule (66 FR
HOPD utilization of services is only Comment: Some commenters asked 59898) which set forth the criteria for
marginally within the control of CMS to impose a payment floor to limit eligibility for assignment of services to
hospitals. They explained that hospitals the amount of decline in any APC New Technology APCs, we would
provide services ordered by their payment in at least the first year of consider the new complete procedure
medical staff and community implementation as a means of mitigating for New Technology APC assignment.
As stated in the November 30, 2001 payments for the separately paid to be reported in addition to the CPT
final rule, by way of examples provided, services with which it is reported. code for the primary procedure. We also
‘‘The use of a new expensive instrument Payment for a HCPCS code with a status note that there are a number of CPT
for tissue debridement or a new, indicator of ‘‘Q’’ is either packaged or codes describing independent surgical
expensive wound dressing does not in separately paid, depending on the procedures that have code descriptors
and of itself warrant creation of a new services with which it is reported. that indicate that guidance is included
HCPCS code to describe the instrument Payment for a HCPCS code with a status in the code reported for the surgical
or dressing; rather, the existing wound indicator of ‘‘Q’’ that is ‘‘STVX- procedure if it is used and, therefore,
repair code appropriately describes the packaged’’ is packaged unless the packaged payment is already made for
service that is being furnished * * * ’’ HCPCS code is not reported on the same the associated guidance service under
(66 FR 59898). This example may hold day with a service that has a status the OPPS. For example, the
for some new guidance technologies as indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ in independent procedure described by
well. which case it would be paid separately. CPT code 55873 (Cryosurgical ablation
The following discussions separately Payment for a HCPCS code with a status of the prostate (includes ultrasonic
address each of the seven categories of indicator of ‘‘Q’’ that is ‘‘T-packaged’’ is guidance for interstitial cryosurgical
items and services for which we packaged unless the HCPCS code is not probe placement)) already includes the
proposed to package payment under the reported on the same day with a service ultrasound guidance that may be used.
CY 2008 OPPS as part of our packaging that has a status indicator of ‘‘T,’’ in We believed packaging payment for
proposal and which we are adopting in which case it would be paid separately. every guidance service under the OPPS
this final rule with comment period, Payment for a HCPCS code with a status would provide consistently packaged
with the modifications discussed under indicator of ‘‘Q’’ that is assigned to a payment for all these services that are
the applicable topic. Many codes that composite APC is packaged into the used to direct independent procedures,
we proposed to package for CY 2008 payment for the composite APC when even if they are currently separately
could fit into more than one of those the criteria for payment of the reported.
seven categories. For example, CPT code composite APC are met. Because these dependent guidance
93325 (Doppler echocardiography color procedures support the performance of
flow velocity mapping (List separately (1) Guidance Services an independent procedure and they are
in addition to codes for We proposed to package payment for generally provided in the same
echocardiography)) could be included HCPCS guidance codes for CY 2008, operative session as the independent
in both the intraoperative and image specifically those codes that are procedure, we believed that it would be
processing categories. Therefore, for reported for supportive guidance appropriate to package their payment
organizational purposes, both to ensure services, such as ultrasound, into the OPPS payment for the
that each code appears in only one fluoroscopic, and stereotactic navigation independent procedure performed.
category and to facilitate discussion of services, that aid the performance of an However, guidance services differ from
our CY 2008 proposed and final policy, independent procedure. We performed a some of the other categories of services
we have created a hierarchy of broad search for such services, relying that we proposed to package for CY
categories that determines which upon the AMA’s CY 2007 book of CPT 2008. Hospitals sometimes may have the
category each code appropriately falls codes and the CY 2007 book of Level II option of choosing whether to perform
into. This hierarchy is organized from HCPCS codes, which identified specific a guidance service immediately
the most clinically specific to the most HCPCS codes as guidance codes. preceding or during the main
general type of category. The hierarchy Moreover, we performed a clinical independent procedure, or not at all,
of categories is as follows: guidance review of all HCPCS codes to capture unlike many of the imaging supervision
services; image processing services; additional codes that are not necessarily and interpretation services, for example,
intraoperative services; and imaging identified as ‘‘guidance’’ services but which are generally always reported
supervision and interpretation services. describe services that provide when the independent procedure is
Therefore, while CPT code 93325 may directional information during the performed. Once a hospital decides that
logically be grouped with either image course of performing an independent guidance is appropriate, the hospital
processing services or intraoperative procedure. For example, we proposed to may have several options regarding the
services, it is treated as an image package CPT code 61795 (Stereotactic type of guidance service that can be
processing service because that group is computer-assisted volumetric performed. For example, when inserting
more clinically specific and precedes (navigational) procedure, intracranial, a central venous access device, hospitals
intraoperative services in the hierarchy. extracranial, or spinal (List separately in have the option of using no guidance,
We did not believe it was necessary to addition to code for primary procedure)) ultrasound guidance, or fluoroscopic
include diagnostic because we consider it to be a guidance guidance, and the selection in any
radiopharmaceuticals, contrast media, service that provides three-dimensional specific case will depend upon the
or observation categories in this list information to direct the performance of specific clinical circumstances of the
because those services generally map to intracranial or other diagnostic or device insertion procedure. In fact, as
only one of those categories. We note therapeutic procedures. We also we noted in the CY 2008 proposed rule,
that there is no cost estimation or included HCPCS codes that existed in the historical hospital claims data
payment implications related to the CY 2006 but were deleted and were demonstrated that various guidance
assignment of a HCPCS code for replaced in CY 2007. We included the services for the insertion of these
purposes of discussion to any specific CY 2006 HCPCS codes because we devices, which have historically
category. proposed to use the CY 2006 claims data received packaged payment under the
Each HCPCS code we discuss in this to calculate the CY 2008 OPPS median OPPS, are used frequently for the
section has a status indicator of either costs on which the CY 2008 payment insertion of vascular access devices.
‘‘N’’ or ‘‘Q.’’ The payment for a HCPCS rates would be based. Many, although Thus, we recognized that hospitals
code with a status indicator of ‘‘N’’ is not all, of the CPT guidance codes we have several options regarding the
unconditionally packaged so that its identified are designated in the CPT performance and types of guidance
payment is always incorporated into the coding scheme as add-on codes that are services they use. However, we believed
that hospitals utilize the most independent procedure as a function of unconditionally (that is, always)
appropriate form of guidance for the the frequency that guidance is reported packaged under the CY 2007 OPPS,
specific procedure that is performed. with that procedure. As we stated where they have been assigned status
We did not want to create payment previously, the median cost for a indicator ‘‘N.’’ Payment for these
incentives to use guidance for all particular independent procedure services is currently made as part of the
independent procedures or to provide generally will be higher as a result of payment for the separately payable,
one form of guidance instead of another. added packaging, but also could change independent services with which they
Therefore, by proposing to package little or be lower because median costs are billed. No separate payment is made
payment for all forms of guidance, we typically do not reflect small for services that we have assigned to
specifically encouraged hospitals to distributional changes and because status indicator ‘‘N.’’ We did not
utilize the most cost effective and changes to the packaged HCPCS codes propose status indicator changes for the
clinically advantageous method of affect both the number and composition five guidance procedures that were
guidance that is appropriate in each of single bills and the mix of hospitals unconditionally packaged for CY 2007.
situation by providing them with the contributing those single bills. In fact, We proposed to change the status
maximum flexibility associated with a the CY 2007 CPT book indicates that if indicators for 31 guidance procedures
single payment for the independent guidance is performed with CPT code from separately paid to unconditionally
procedure. Similarly, hospitals may 20610, it may be appropriate to bill CPT packaged (status indicator ‘‘N’’) for the
appropriately not utilize guidance code 76942 (Ultrasonic guidance for CY 2008 OPPS. We believed that these
services in certain situations based on needle placement (e.g., biopsy, services are always integral to and
clinical indications. aspiration, injection, localization dependent upon the independent
Because guidance services can be device), imaging supervision and services that they support and,
appropriately reported in association interpretation); 77002 (Fluoroscopic therefore, their payment would be
with many independent procedures, guidance for needle placement (e.g., appropriately packaged because they
under our proposed packaging of biopsy, aspiration, injection, would generally be performed on the
guidance services for CY 2008, the costs localization device)); 77012 (Computed same date and in the same hospital as
associated with guidance services tomography guidance for needle the independent services.
would be mapped to a larger number of placement (e.g., biopsy, aspiration, We proposed to change the status
independent procedures than some injection, localization device), indicator for one guidance procedure
other categories of codes that we radiological supervision and from separately paid to conditionally
proposed to package. For example, CPT interpretation); or 77021 (Magnetic packaged (status indicator ‘‘Q’’), and to
code 76001 (Fluoroscopy, physician resonance guidance for needle treat it as a ‘‘special’’ ‘‘packaged code
time more than one hour, assisting a placement (e.g., for biopsy, needle for the CY 2008 OPPS, specifically, CPT
non-radiologic physician (e.g., aspiration, injection, or placement of code 76000 (Fluoroscopy (separate
nephrostolithotomy, ERCP, localization device) radiological procedure), up to 1 hour physician time,
bronchoscopy, transbronchial biopsy)) supervision and interpretation). The CY other than 71023 or 71034 (e.g., cardiac
can be reported with a wide range of 2007 CPT book also implies that it is not fluoroscopy)). This code was discussed
services. According to the CPT code always clinically necessary to use in the past with the Packaging
descriptor, these procedures include guidance in performing an Subcommittee of the APC Panel, which
nephrostolithotomy, which may be arthrocentesis described by CPT code determined that, consistent with its
reported with CPT code 50080 20610. code descriptor as a separate procedure,
(Percutaneous nephrostolithotomy or The guidance procedures that we this procedure could sometimes be
pyelostolithotomy, with or without proposed to package for CY 2008 vary provided alone, without any other
dilation, endoscopy, lithotripsy, in their resource costs. Resource cost services on the claim. We believe that
stenting, or basket extraction; up to 2 was not a factor we considered when this procedure will usually be provided
cm), and endoscopic retrograde proposing to package guidance by a hospital as guidance in conjunction
cholangiopancreatography, which may procedures. Notably, most of the with another significant independent
be reported with CPT code 43260 guidance procedures are relatively low procedure on the same date of service
(Endoscopic retrograde cost in comparison to the independent but may occasionally be provided
cholangiopancreatography (ERCP); services they frequently accompany. without another independent service.
diagnostic, with or without collection of The codes we proposed to identify as As a ‘‘special’’ packaged code, if the
specimen(s) by brushing or washing guidance codes for CY 2008 that would fluoroscopy service were billed without
(separate procedure)). Therefore, the receive packaged payment were listed in any other service assigned status
cost of the fluoroscopic guidance would Table 8 of the CY 2008 proposed rule indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ reported
be reflected in the payment for each of (72 FR 42657). (Table 10 in this final on the same date of service, under our
these independent services, in addition rule with comment period contains a proposal we would not treat the
to numerous other procedures, rather comprehensive list of all codes in the fluoroscopy procedure as a dependent
than in the payment for only one or two final seven categories for services that service for purposes of payment. If we
independent services, as is the case for are packaged for CY 2008.) were to unconditionally package
some of the other categories of codes Several of these codes, including CPT payment for this procedure, treating it
that we proposed to package for CY code 76937 (Ultrasound guidance for as a dependent service, hospitals would
2008. vascular access requiring ultrasound receive no payment at all when
In addition, because independent evaluation of potential access sites, providing this service alone, although
procedures such as CPT code 20610 documentation of selected vessel the procedure would not be functioning
(Arthrocentesis, aspiration and/or patency, concurrent real time as a guidance service in that case.
injection; major joint or bursa (e.g., ultrasound visualization of vascular However, according to our proposal, its
shoulder, hip, knee joint, subacromial needle entry, with permanent recording conditionally packaged status with its
bursa)) may be reported with or without and reporting (List separately in designation as a ‘‘special’’ packaged
guidance, the cost for the guidance will addition to code for primary code would allow payment to be
be reflected in the median cost for the procedure)), were already provided for this ‘‘Q’’ status fluoroscopy
procedure, in which case it would be there is reason to request that QIOs services, as proposed. These services are
treated as an independent service under review the quality of care furnished or ancillary and dependent in relation to
these limited circumstances. On the to request that Program Safeguard the radiation therapy services with
other hand, when the fluoroscopy Contractors review the claims against which they are most commonly
service is furnished as a guidance the medical record. furnished. Moreover, there are no
procedure on the same day and in the During the September 2007 APC unique clinical aspects to these
same hospital as independent, Panel meeting, the Panel recommended radiation oncology guidance services
separately paid services that are that CMS finalize the proposal to that would differentiate them from other
assigned status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ package guidance services, with the guidance services. Consistent with the
or ‘‘X,’’ we proposed to package exception of radiation oncology principles of a prospective payment
payment for it as a dependent service. guidance procedures. system, in some cases, payment in an
In all cases, we proposed that hospitals We received many public comments individual case exceeds the average
that furnish independent services on the on our proposal to package guidance costs, and in other cases payment is less
same date as dependent guidance services for CY 2008. A summary of the than the average cost, but on balance,
services must bill them all on the same public comments and our responses payment should approximate the
claim. We believed that when follow. relative cost of the average case. We do
dependent guidance services and Comment: Many commenters not believe that beneficiary access to
independent services are furnished on requested that, if CMS elected to finalize care will be harmed by increased
the same date and in the same facility, the packaging status of the guidance packaging. We believe that packaging
they are part of a single complete codes proposed for packaging, CMS will create incentives for hospitals and
hospital outpatient service that is exclude radiation oncology guidance their physician partners to work
reported with more than one HCPCS procedures, in accordance with the APC together to establish appropriate
code, and no separate payment should Panel recommendation. Specifically, protocols that will eliminate
be made for the guidance service that many commenters requested that CMS unnecessary services where they exist
supports the independent service. pay separately for CPT codes 76950 and institutionalize approaches to
The estimated overall impact of these (Ultrasonic guidance for placement of
providing necessary services more
changes presented in section XXII.B. of radiation therapy fields); 76965
efficiently. Therefore, we see no basis
the proposed rule (section XXIV.B. in (Ultrasonic guidance for interstitial
for treating radiation oncology services
this final rule with comment period) radioelement application); 77014
differently from other guidance services
was based on the assumption that (Computed tomography guidance for
that are ancillary and dependent to the
hospital behavior would not change placement of radiation therapy fields);
procedure that they facilitate.
with regard to when these dependent 77417 (Therapeutic radiology port
services are performed on the same date film(s)); and 77421 (Stereoscopic X-ray Comment: Many commenters were
and by the same hospital that performs guidance for localization of target concerned with the proposal to package
the independent services. To the extent volume for the delivery of radiation payment for electrodiagnostic guidance
that hospitals could change their therapy). The commenters were for chemodenervation procedures,
behavior and perform the guidance concerned that packaging radiation specifically, CPT codes 95873 (Electrical
services more or less frequently, on oncology guidance procedures would stimulation for guidance in conjunction
subsequent dates, or at settings outside encourage hospitals to decrease with chemodenervation (List separately
of the hospital, the data would show utilization of advanced technologies for in addition to code for primary
such a change in practice in future years localization used in radiation oncology procedure)), and 95874 (Needle
and that change would be reflected in treatment delivery. The commenters electromyography for guidance in
future budget neutrality adjustments. noted that packaging payment for conjunction with chemodenervation
However, with respect to guidance radiation oncology guidance services (List separately in addition to code for
services in particular, we believe that offers a financial incentive to those primary procedure)). The commenters
hospitals are limited in the extent to hospitals that use little or no daily indicated that chemodenervation
which they could change their behavior localization when providing radiation involves the injection of
with regard to how they furnish these therapy. One commenter believed that chemodenervation agents, such as
services. By their definition, these packaging payment for these guidance botulinum toxin, to control the
guidance services generally must be services encourages hospitals to use symptoms associated with dystonia and
furnished on the same date and at the older, less effective technologies, other disorders. According to the
same operative location as the thereby discouraging development of commenters, physicians often, but not
independent procedure in order for the new, more effective technologies. always, use electromyography or
guidance service to meaningfully Another commenter noted that if electrical stimulation guidance to guide
contribute to the treatment of the patient hospitals are discouraged from using the needle to the most appropriate
in directing the performance of the new technologies due to low payment location. The commenters were
independent procedure. We do not rates, it will take many years to gather concerned that the proposal to package
believe the clinical characteristics of the robust cost data that reflect these new payment for these guidance services
guidance services will change in the technologies, likely even longer than may discourage utilization of this
immediate future. New Technology APC and pass-through particular form of guidance, even when
As we indicated earlier, in all cases, payments are available for new medically appropriate. Several
we proposed that hospitals that furnish technologies. commenters noted that the CY 2008
the guidance service on the same date Response: After reviewing these proposed payment rate for the injection
as the independent service must bill public comments, considering the and the associated guidance is a 15
both services on the same claim. We recommendation of the APC Panel, and percent decrease from the CY 2007
indicated that we expected to carefully ensuring that CMS clinical staff payment rate. Most commenters
monitor any changes in billing practices analyzed the content of these comments, requested that CMS pay separately for
on a service-specific and hospital- we have decided to finalize our electrodiagnostic guidance, several of
specific basis to determine whether proposal to package these guidance whom specified that CMS assign the
three chemodenervation procedures to package. In general, each commenter HCPCS codes to capture additional
their own APC. The commenters noted requested that we pay separately for codes that we consider to be image
that even if the median cost for the several of the guidance codes that we processing. For example, we proposed
chemodenervation procedures proposed to package. The commenters to package payment for CPT code 93325
increased, the payment rate would not expressed concern in several areas, (Doppler echocardiography color flow
increase because chemodenervation specifically, that insufficient payment velocity mapping (List separately in
procedures are only a small proportion rates would discourage new addition to codes for echocardiography))
of all claims in their proposed APC 0204 technologies; that guidance services because it is an image processing
(Level I Nervous System Injections). used infrequently with specific services procedure, even though the code
Several other commenters stated that contribute very little to the payment descriptor does not specifically indicate
the median costs for the rates for those services; that the it as such.
chemodenervation procedures do not expected decrease in utilization for An image processing service
reflect the full cost of the guidance guidance services could ultimately lead processes and integrates diagnostic test
because the guidance is performed with to increased costs, as a result of worse data that were captured during another
the procedure infrequently. patient outcomes; that packaged independent procedure, usually one
Response: We note that the cost of the payment under the OPPS and separate that is separately payable under the
chemodenervation guidance services payment under the MPFS leads to OPPS. The image processing service is
will be reflected in the median cost for payment disparity; and, in general, that not necessarily provided on the same
the independent HCPCS code as a the lack of published crosswalks makes date of service as the independent
function of the frequency that it difficult to analyze the specific effects procedure. In fact, several of the image
chemodenervation services are reported of this policy. processing services that we proposed to
with that particular HCPCS code. As Response: We note that we did not package for CY 2008 do not need to be
noted above, we recognize that, in some receive any unique arguments specific provided face-to-face with the patient in
cases, supportive and ancillary to any particular code. We received the same encounter as the independent
dependent services are furnished at high many similar public comments service. While this approach to service
frequency with independent services, regarding all the categories of codes that delivery may be administratively
and in other cases, they are furnished we proposed for packaged payment. advantageous from a hospital’s
with independent services at a low Therefore, we have responded to these perspective, providing separate payment
frequency. We believe that packaging general comments above in section for each image processing service
should reflect the reality of how services II.A.4.c. of this final rule with comment whenever it is performed is not
are furnished. While the commenters period. In light of the public comments consistent with encouraging value-based
are correct that the chemodenervation we received, our clinical advisors purchasing under the OPPS. We
procedures reflect only approximately reassessed every guidance code on the believed it was important to package
10 percent of the services that comprise list to ensure that it was still appropriate payment for supportive dependent
APC 0204, we note that they for packaged payment. services that accompany independent
appropriately map to this APC both For CY 2008, we are finalizing the CY services but that may not need to be
clinically and in terms of resource use. 2008 proposal, without modification, to provided face-to-face with the patient in
If the median costs for the individual package payment for all guidance the same encounter because the
chemodenervation procedures were to services for CY 2008. We are partially supportive services utilize data that
change dramatically, based on resource accepting the APC Panel were collected during the preceding
cost data, we would review these recommendation. Specifically, we are independent services and packaging
services as part of our annual review packaging all guidance services for CY their payment encourages the most
process to determine if a different APC 2008, including radiation oncology efficient use of hospital resources. We
were more appropriate. We also note services. The guidance codes that are are particularly concerned with any
that if these three chemodenervation packaged for CY 2008 are identified and continuance of current OPPS payment
procedures were mapped to their own displayed in Table 10 of this final rule policies that could encourage certain
APC, the estimated median cost of the with comment period. These services inefficient and more costly service
APC would be in the same general cost are assigned status indicator ‘‘N’’ to patterns. As stated above, packaging
range as the current median cost for indicate their unconditional packaging, encourages hospitals to establish
APC 0204. Therefore, it is unnecessary with the exception of CPT code 76000, protocols that ensure that services are
to map these three services to their own which is an ‘‘STVX-packaged’’ code furnished only when they are medically
APC for CY 2008. assigned status indicator ‘‘Q.’’ necessary and to carefully scrutinize the
Comment: Several commenters services ordered by practitioners to
(2) Image Processing Services
requested that CMS clarify how the DRA minimize unnecessary use of hospital
imaging cap for services paid under the We proposed to package payment for resources. Our standard methodology to
MPFS would be applied to services that ‘‘image processing’’ HCPCS codes for calculate median costs packages the
are packaged under the OPPS. CY 2008, specifically those codes that costs of dependent services with the
Response: If an imaging service is are reported as supportive dependent costs of independent services on
packaged under the OPPS, the DRA cap services to process and integrate ‘‘natural’’ single claims across different
on the technical component payment for diagnostic test data in the development dates of service, so we are confident that
that service under the MPFS is not of images, performed concurrently or we would capture the costs of the
applicable. after the independent service is supportive image processing services for
Comment: Many commenters complete. We performed a broad search ratesetting when they are packaged
supported the proposal to package each for such services, relying upon the according to our CY 2008 proposal, even
of the guidance services that we AMA’s CY 2007 book of CPT codes and if they were provided on a different date
identified in the proposed rule. The the CY 2007 book of Level II HCPCS than the independent procedure.
commenters also gave specific codes, which identified specific codes We listed the image processing
comments related to almost every as ‘‘processing’’ codes. In addition, we services that we proposed to be
guidance code that we proposed to performed a clinical review of all packaged for CY 2008 in Table 10 in the
CY 2008 proposed rule (72 FR 42659). services with which they are billed. No revise this CPT code for CY 2009, and
As these services support the separate payment is made for services that changing the payment status of this
performance of an independent service, that we have assigned status indicator code may confuse hospital coding staff.
we believe it would be appropriate to ‘‘N.’’ We did not propose status Some commenters requested that CMS
package their payment into the OPPS indicator changes for the four image make no changes to the payment status
payment for the independent service processing services that were of this code until this code’s descriptor
provided. unconditionally packaged for CY 2007. has been revised by the AMA, while
As many independent services may be We proposed to change the status others requested that CMS instruct
reported with or without image indicator for seven image processing hospitals not to use the new CPT code
processing services, the cost of the services from separately paid to that will be created by the AMA.
image processing services will be unconditionally packaged (status Response: We acknowledge that this
reflected in the median cost for the indicator ‘‘N’’) for the CY 2008 OPPS. service may be an important clinical
independent HCPCS code as a function We believe that these services are tool that is critical to decisionmaking.
of the frequency that image processing always integral to and dependent upon However, we continue to believe that
services are reported with that the independent service that they packaged payment is appropriate for
particular HCPCS code. Again, while support and, therefore, their payment this dependent service that must, per
the median cost for a particular would be appropriately packaged. the CY 2007 CPT book, be provided in
independent procedure generally will The estimated overall impact of these conjunction with echocardiography. In
be higher as a result of added packaging, changes presented in section XXII.B. of fact, packaging the status of this code
it could also change little or be lower the proposed rule (section XXIV.B. of may make it easier to crosswalk the data
because median costs typically do not this final rule with comment period) from this code to the new CPT code that
reflect small distributional changes and was based on the assumption that the AMA may create for CY 2009. We
because changes to the packaged HCPCS hospital behavior would not change see no compelling reason to postpone
codes affect both the number and with regard to when these dependent packaging this service until CY 2009.
composition of single bills and the mix image processing services are performed Comment: One commenter requested
of hospitals contributing those single on the same date and by the same that CMS pay separately for HCPCS
bills. For example, CPT code 70450 hospital that performs the independent code G0288 (Reconstruction, computed
(Computed tomography, head or brain; services. To the extent that hospitals tomographic angiography of aorta for
without contrast material) may be could change their behavior and surgical planning for vascular surgery)
provided alone or in conjunction with perform the image processing services because it is different than the other
CPT code 76376 (3D rendering with more or less frequently, the data would image processing codes proposed for
interpretation and reporting of show such a change in practice in future packaged payment. The commenter
computed tomography, magnetic years and that change would be stated that the service is often an out-
resource imaging, ultrasound, or other reflected in future budget neutrality sourced service purchased by the
tomographic modality; not requiring adjustments. hospital. The commenter was
image post-processing on an As we indicated earlier, in all cases, particularly concerned that hospitals
independent workstation). In fact, CPT we provided that hospitals that furnish would no longer continue to purchase
code 70450 was provided approximately the image processing procedure in this service if insufficient payment was
1.5 million times based on CY 2008 association with the independent provided. Another commenter requested
proposed rule claims data. CPT code service must bill both services on the separate payment for CPT code 95957
76376 was provided with CPT code same claim. We indicated that we (Digital analysis of
70450 less than 2 percent of the total expected to carefully monitor any electroencephalogram (EEG) (eg, for
instances that CPT code 70450 was changes in billing practices on a service- epileptic spike analysis)). The
billed. Therefore, as the frequency of specific and hospital-specific basis to commenter stated that this service is
CPT code 76376 provided in determine whether there is reason to often performed on a different day than
conjunction with CPT code 70450 request that QIOs review the quality of the EEG and by a technologist other
increases, the median cost for CPT code care furnished or to request that than the one who performed the EEG.
70450 would be more likely to reflect Program Safeguard Contractors review Response: As noted above, we believe
that additional cost. the claims against the medical record. it is important to package payment for
The image processing services that we The APC Panel recommended that all supportive dependent services that may
proposed to package vary in their image processing services be packaged not need to be provided face-to-face
hospital resource costs. Resource cost as proposed in the proposed rule. with the patient in the same encounter
was not a factor we considered when we We received a number of public as the independent service. Packaging
proposed to package supportive image comments on our proposal to package payment for supportive services that
processing services. Notably, the image processing service for CY 2008. A utilize data that were collected during
majority of image processing services summary of the public comments and the preceding independent services
that we proposed to package have our responses follow. encourages the most efficient use of
modest median costs in relationship to Comment: Many commenters were hospital resources. In fact, as part of our
the cost of the independent service that concerned with the proposal to package proposed CY 2008 packaging approach,
they typically accompany. payment for CPT code 93325 (Doppler we also proposed to unconditionally
Several of these codes, including CPT echocardiography color flow velocity package payment in CY 2008 for several
code 76350 (Subtraction in conjunction mapping (List separately in addition to other image processing services that are
with contrast studies), are already codes for echocardiography)). The not always performed face-to-face,
unconditionally (that is, always) commenters noted that this service is including CPT codes 0174T (Computer
packaged under the CY 2007 OPPS, often critical to decisionmaking and aided detection (CAD) (computer
where they have been assigned status consumes significantly greater resources algorithm analysis of digital image data
indicator ‘‘N.’’ Payment for these than the general echocardiography for lesion detection) with further
services is made as part of the payment study process. Several commenters physician review for interpretation and
for the separately payable, independent noted that the AMA is planning to report, with or without digitization of
film radiographic images, chest proposed rule. However, Table 10 of the for all imaging processing codes listed
radiograph(s), performed concurrent proposed rule listed the accurate in Table 10 of this final rule with
with primary interpretation); 0175T proposed payment status of HCPCS comment period. We are accepting the
((Computer aided detection (CAD) code G0288. APC Panel recommendation to package
(computer algorithm analysis of digital Comment: Many commenters all image processing services. These
image data for lesion detection) with supported the proposal to package each services are assigned status indicator
further physician review for of the image processing services that ‘‘N’’ to indicate their unconditional
interpretation and report, with or was identified in the proposed rule. packaging.
without digitization of film radiographic Numerous other commenters requested
that CMS postpone packaging all the (3) Intraoperative Services
images, chest radiograph(s), performed
remote from primary interpretation); packaged codes included in all We proposed to package payment for
and CPT code 76377 (3D rendering with categories of the proposal until ‘‘intraoperative’’ HCPCS codes for CY
interpretation and reporting of additional data were provided to the 2008, specifically those codes that are
computed tomography, magnetic public. These commenters also reported for supportive dependent
resource imaging, ultrasound, or other submitted specific comments related to diagnostic testing or other minor
tomographic modality; requiring image almost every image processing code that procedures performed during
postprocessing on an independent CMS proposed to package. The independent procedures. We performed
workstation). commenters expressed concern in a broad search for possible
We also believe it is likely that a several areas, specifically, that what intraoperative HCPCS codes, relying
hospital that performed the computed they considered to be insufficient upon the AMA’s CY 2007 book of CPT
tomographic angiography diagnostic payment rates would discourage new codes and the CY 2007 book of Level II
procedure but does not have the technologies; that image processing HCPCS codes, to identify specific codes
technology necessary to provide the services used infrequently with specific as ‘‘intraoperative’’ codes. Furthermore,
preoperative image reconstruction services contribute very little to the we performed a clinical review of all
would send the results to another payment rates for those services; that HCPCS codes to capture additional
hospital for performance of the the expected decrease in utilization for supportive diagnostic testing or other
reconstruction. In this situation, the image processing services could minor intraoperative or intraprocedural
second hospital would be providing the ultimately lead to increased costs, as a codes that are not necessarily identified
reconstruction under arrangement and, result of worse patient outcomes; and in as ‘‘intraoperative’’ codes. For example,
therefore, at least one service provided general, that the lack of published we proposed to package payment for
by the first hospital would be separately crosswalks makes it difficult to analyze CPT code 95955 (Electroencephalogram
paid. We believe that packaged payment the specific effects of this policy. (EEG) during nonintracranial surgery
for image reconstruction under a Several commenters requested a (e.g., carotid surgery)) because it is a
prospective payment methodology for crosswalk that specified how the minor intraoperative diagnostic testing
hospital outpatient services is most packaged costs were allocated from each procedure even though the code
appropriate. The same situation occurs dependent code to each independent descriptor does not indicate it as such.
when hospitals provide the service code. Other commenters requested that Although we use the term
described by CPT code 95957. We CMS create edits to ensure that costs are ‘‘intraoperative’’ to categorize these
proposed to unconditionally package appropriately mapped to independent procedures, we also have included
payment for HCPCS code G0288 and codes. Several commenters requested supportive dependent services in this
CPT code 95957 for CY 2008, fully that CMS consider resource cost when group that are provided during an
consistent with the packaging approach determining which codes to package. independent procedure, although that
for the CY 2008 OPPS. Because HCPCS The commenters were concerned that procedure may not necessarily be a
code G0288 and CPT code 95957 are what they considered to be insufficient surgical procedure. These dependent
supportive ancillary services that fit into payment would create a disincentive for services clearly fit into this category
the image processing category, and we hospitals to adopt new technology. because they are provided during, and
proposed to package payment for all Response: We note that we did not are integral to, an independent
image processing services for CY 2008, receive any unique arguments specific procedure, like all the other
we believe it is appropriate to to any particular code. These comments intraoperative codes, but the
unconditionally package payment are similar to those received for all the independent procedure they accompany
associated with these codes. categories of codes that we proposed for may not necessarily be a surgical
Specifically, we determined that these packaged payment. Therefore, we have procedure. For example, we proposed to
services are dependent services that are responded to these general comments package HCPCS code G0268 (Removal
integral to independent services, in this above in section II.A.4.c. of this final of impacted cerumen (one or both ears)
case, the computed tomographic rule with comment period. In light of by physician on same date of service as
angiography and the EEG that we would the public comments we received, our audiologic function testing). While
expect to be provided. Even if the clinical advisors reassessed every image specific audiologic function testing
imaging process services were provided processing code on the list to ensure procedures are not surgical procedures
on another day than the independent that it was still appropriate for packaged performed in an operating room, they
services, our packaging methodology payment. are independent procedures that are
packages costs across dates of service on We received one comment related to separately payable under the OPPS, and
‘‘natural’’ single claims, so that the costs CPT codes 0174T and 0175T. The HCPCS code G0268 is a supportive
of image process services would be comment summary and response related dependent service always provided in
captured. to those codes are located in section association with one of these
For CY 2008, we are finalizing the II.A.4.e. of this final rule with comment independent services. All references to
packaged status of HCPCS code G0288 period. ‘‘intraoperative’’ below refer to services
and CPT code 95957, as listed in Table For CY 2008, we are finalizing our that are usually or always provided
10 of the proposed rule. We note an proposal, without modification, to during a surgical procedure or other
inadvertent error in Addendum B to the unconditionally package the payment independent procedure.
By definition, a service that is services that they support and, complete hospital outpatient service
performed intraoperatively is provided therefore, their payment would be that is reported with more than one
during and, therefore, on the same date appropriately packaged because they HCPCS code, and no separate payment
of service as another procedure that is would generally be performed on the should be made for the intraoperative
separately payable under the OPPS. same date and in the same hospital as procedure that supports the
Because these intraoperative services the independent services. independent service.
support the performance of an We also proposed to change the status The estimated overall impact of these
independent procedure and they are indicator for one intraoperative changes presented in section XXII.B. of
provided in the same operative session procedure from unconditionally the proposed rule (section XXIV.B. of
as the independent procedure, we packaged to conditionally packaged this final rule with comment period)
believed it would be appropriate to (status indicator ‘‘Q’’) as a ‘‘special’’ was based on the assumption that
package their payment into the OPPS packaged code for the CY 2008 OPPS, hospital behavior would not change
payment for the independent procedure specifically, CPT code 0126T (Common with regard to when these intraoperative
performed. Therefore, we did not carotid intima-media thickness (IMT) dependent services are performed on
propose to package payment for CY study for evaluation of atherosclerotic the same date and by the same hospital
2008 for those diagnostic services, such burden or coronary heart disease risk that performs the independent services.
as CPT code 93005 (Electrocardiogram, factor assessment). This code was To the extent that hospitals could
routine ECG with at least 12 leads; discussed in the past with the Packaging change their behavior and perform the
tracing only, without interpretation and intraoperative services more or less
Subcommittee of the APC Panel, which
report) that are sometimes or only rarely frequently, on subsequent dates, or at
determined that, consistent with its
performed and reported as supportive settings outside of the hospital, the data
code descriptor as a separate procedure,
services in association with other would show such a change in practice
this procedure could sometimes be
independent procedures. Instead, we in future years and that change would
provided alone, without any other OPPS
proposed to include those HCPCS codes be reflected in future budget neutrality
services on the claim. We believed that
that are usually or always performed adjustments. However, with respect to
this procedure would usually be
intraoperatively, based upon our review intraoperative services in particular, we
provided by a hospital in conjunction
of the codes described above. The believed that hospitals are limited in the
with another independent procedure on
intraoperative services that we proposed extent to which they could change their
the same date of service but may behavior with regard to how they
to package vary in hospital resource
occasionally be provided without furnish these services. By their
costs. Resource cost was not a factor we
another independent service. As a definition, these intraoperative services
considered when determining which
‘‘special’’ packaged code, if the study generally must be furnished on the same
supportive intraoperative procedures to
were billed without any other service date and at the same operative location
package.
The codes we proposed to identify as assigned status indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ as the independent procedure in order
intraoperative services for CY 2008 that or ‘‘X’’ reported on the same date of to be considered intraoperative. For
would receive packaged payment under service, under our proposal we these codes, we assume that both the
the OPPS were listed in Table 12 of the proposed not to treat the IMT study as dependent and independent services
proposed rule (72 FR 42661 through a dependent service for purposes of would be furnished on the same date in
42662). payment. If we were to continue to the same hospital, and hospitals should
Several of these codes, including CPT unconditionally package payment for bill them on the same claim with the
code 93640 (Electrophysiologic this procedure, treating it as a same date of service.
evaluation of single or dual chamber dependent service, hospitals would As we indicated earlier, in all cases
pacing cardioverter-defibrillator leads receive no payment at all when we provided that hospitals that furnish
including defibrillation threshold providing this service alone, although the intraoperative procedure on the
evaluation (induction of arrhythmia, the procedure would not be functioning same date as the independent service
evaluation of sensing and pacing for as an intraoperative service in that case. must bill both services on the same
arrhythmia termination) at the time of However, according to our proposal, its claim. We expect to carefully monitor
initial implantation or replacement), are conditionally packaged status as a any changes in billing practices on a
already unconditionally (that is, always) ‘‘special’’ packaged code would allow service-specific and hospital-specific
packaged under the CY 2007 OPPS, payment to be provided for this ‘‘Q’’ basis to determine whether there is
where they have been assigned status status IMT study when provided alone, reason to request that QIOs review the
indicator ‘‘N.’’ Payment for these in which case it would be treated as an quality of care furnished or to request
services is made through the payment independent service under these limited that Program Safeguard Contractors
for the separately payable, independent circumstances. On the other hand, when review the claims against the medical
services with which they are billed. No this service is furnished as an record.
separate payment is made for services intraoperative procedure on the same During the September 2007 APC
that we have assigned status indicator day and in the same hospital as Panel meeting, the Panel recommended
‘‘N.’’ We did not propose status independent, separately paid services that CMS finalize the proposal to
indicator changes for the five diagnostic that are assigned status indicator ‘‘S,’’ package intraoperative services and that
intraoperative services that were ‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ we proposed to CMS consider assigning status indicator
unconditionally packaged for CY 2007. package payment for it as a dependent ‘‘Q’’ to CPT code 96020
We proposed to change the status service. In all cases, we proposed that (Neurofunctional testing selection and
indicator for 34 intraoperative services hospitals that furnish independent administration during noninvasive
from separately paid to unconditionally services on the same date as this IMT imaging functional brain mapping, with
packaged (status indicator ‘‘N’’) for the procedure must bill them all on the test administered entirely by a
CY 2008 OPPS. As stated in the CY 2008 same claim. We believed that when physician or psychologist, with review
proposed rule, we believe that these dependent and independent services are of test results and report).
services are always integral to and furnished on the same date and in the We received many public comments
dependent upon the independent same facility, they are part of a single on our proposal to package
intraoperative services for CY 2008. A vessel) during diagnostic evaluation OPPS data included a median cost of
summary of the public comments and and/or therapeutic intervention; each $2,000 for IVUS, with approximately
our responses follow. additional vessel (List separately in $800 of those costs related solely to the
Comment: Several commenters addition to code for primary device component. One commenter
requested that CMS change the status of procedure)); 75946 (Intravascular stated that IVUS may be performed in
CPT code 96020 to conditionally ultrasound (non coronary vessel), conjunction with a diagnostic procedure
packaged or separately payable instead radiological supervision and that maps to an APC such as 0080
of finalizing the proposal to interpretation; each additional non- (Diagnostic Cardiac Catheterization);
unconditionally package this code. coronary vessel (List separately in 0267 (Level III Diagnostic and Screening
According to the commenters, addition to code for primary Ultrasound); or 0280 (Level III
functional brain mapping is often procedure)); 92978 (Intravascular Angiography and Venography), rather
performed prior to epilepsy surgery. The ultrasound (coronary vessel or graft) than a major therapeutic procedure such
commenters noted that functional brain during diagnostic evaluation and/or as stenting or angioplasty, resulting in a
mapping is performed by staff other therapeutic intervention including total payment of $150 to $2,500, which
than the neurologist or imaging supervision, interpretation and would not cover the hospital’s costs.
neuropsychologist who performs the report; initial vessel (List separately in Other commenters elaborated on the
accompanying functional MRI, reported addition to code for primary costs associated with ICE, which is
with CPT code 70555 (Magnetic procedure)); 92979 (Intravascular reported with the corresponding
resonance imaging, brain, functional ultrasound (coronary vessel or graft) independent services described by CPT
MRI; requiring physician or during diagnostic evaluation and/or codes 93621 (Comprehensive
psychologist administration of entire therapeutic intervention including electrophysiologic evaluation including
neurofunctional testing). One imaging supervision, interpretation and insertion and repositioning of multiple
commenter clarified that functional MRI report; each additional vessel (List electrode catheters with induction or
is more commonly performed without separately in addition to code for attempted induction of arrhythmia; with
functional brain mapping. If CPT code primary procedure)); 93571 left atrial pacing and recording from
96020 were conditionally packaged, the (Intravascular Doppler velocity and/or coronary sinus or left atrium (List
commenter believed that separate pressure derived coronary flow reserve separately in addition to code for
payment should be made for CPT code measurement (coronary vessel or graft) primary procedure)); 93622
96020 when it was provided with the during coronary angiography including
functional MRI. Another commenter (Comprehensive electrophysiologic
pharmacologically induced stress; evaluation including insertion and
stated that functional brain mapping is initial vessel (List separately in addition
a separate service from the functional repositioning of multiple electrode
to code for primary procedure)); 93572 catheters with induction or attempted
MRI, and therefore should not be (Intravascular Doppler velocity and/or
packaged. induction of arrhythmia; with left
pressure derived coronary flow reserve ventricular pacing and recording (List
Response: The AMA 2007 CPT book
measurement (coronary vessel or graft) separately in addition to code for
specifically states that CPT code 70555
during coronary angiography including primary procedure)); 93651
can only be reported if CPT code 96020
pharmacologically induced stress; each (Intracardiac catheter ablation of
is also performed. CPT code 70555 is
additional vessel (List separately in arrhythmogenic focus; for treatment of
separately payable under the CY 2008
addition to code for primary supraventricular tachycardia by ablation
OPPS. Therefore, whenever CPT code
procedure)); and 93662 (Intracardiac of fast or slow atrioventricular
70555, the independent procedure, is
echocardiography during therapeutic/ pathways, accessory atrioventricular
billed with CPT code 96020, the
dependent procedure, the payment diagnostic intervention, including connections or other atrial foci, singly or
associated with CPT code 96020 is imaging supervision and interpretation in combination); and 93652
appropriately packaged into the (List separately in addition to code for (Intracardiac catheter ablation of
payment for CPT code 70555. Even if primary procedure)). arrhythmogenic focus; for treatment of
CPT code 96020 were conditionally The commenters noted that, while use ventricular tachycardia), in only 5
packaged, separate payment would not of these procedures often results in percent of the claims involving the
be made when it was billed with CPT better patient outcomes and reduced above procedures. The commenters also
code 70555. In addition, we believe that need for subsequent procedures, they noted that only 14 percent of hospitals
functional brain mapping is never are only provided to a small proportion billed ICE with the CPT codes listed
provided to a patient as a sole service. of patients who undergo stenting, above, indicating that the impact of
Instead, it is always provided in angioplasty, and other related services. packaged payment will affect a subset of
conjunction with a functional MRI. A number of commenters specified that hospitals who invested in this capital
Therefore, we continue to believe that IVUS is performed on 1 to 20 percent of equipment. One commenter noted that
unconditional packaging is appropriate patients who undergo a related IVUS and ICE are clearly not integral to
for CPT code 96020. diagnostic or therapeutic intervention, any independent procedure because
Comment: Many commenters using Medicare claims and internal they are used infrequently. Other
requested that CMS continue to pay hospital assessments. Therefore, the commenters noted that costs will be
separately for intravascular ultrasound commenters stated that the costs for improperly allocated to hospitals that
(IVUS), fractional flow reserve (FFR), IVUS, FFR, and ICE do not affect the perform the independent procedure,
and intracardiac echocardiography (ICE) payment rates for the independent regardless of whether they purchased
reported with CPT codes 37250 procedures in a significant way, if at all. the equipment for the dependent
(Intravascular ultrasound (non-coronary In addition, the commenters noted that procedure. One commenter disputed
vessel) during diagnostic evaluation IVUS, in particular, involves high describing FFR services as ‘‘ancillary’’
and/or therapeutic intervention; initial resource costs because of expensive and stated that they are ‘‘decisional’’
vessel (List separately in addition to capital equipment, significant labor and therefore should not be packaged.
code for primary procedure)); 37251 cost, and disposable supplies. Several The commenters expressed concern that
(Intravascular ultrasound (non-coronary commenters noted that the CY 2005 packaged payment will create a
significant financial disincentive to procedure. In this case, IVUS, FFR, and Comment: Many commenters
provide these services. The commenters ICE are not the services themselves that supported the proposal to package
also noted that these procedures should must be mapped to contrast or payment for all intraoperative services
not be described as ‘‘intraoperative’’ noncontrast APCs for payment. Instead, and recommended that CMS finalize the
because they precede the independent independent services must map to proposal without modification. Several
procedure, and may even result in contrast or noncontrast APCs, as we commenters requested that CMS pay
canceling the independent procedure. have done. IVUS, FFR, and ICE are separately for other intraoperative
One commenter requested that CMS similar to other supportive packaged services that it proposed to package for
assign status indicator ‘‘Q’’ to CPT codes services, including drugs and CY 2008, but did not present unique
93571 and 93572. On the other hand, anesthesia. Packaged codes never map arguments specific to any code.
several commenters specified that these to an APC, and, therefore, it is Response: We agree with commenters
services are not stand alone procedures. unnecessary to distinguish whether they that packaging payment for
One commenter stated that it is illegal require contrast agents or not. Instead, intraoperative services is consistent
under section 1833(t)(2)(G) of the Act to the independent procedure must map to with the principles of the OPPS and will
package payment for IVUS and FFR, a contrast or noncontrast APC. help contain costs while creating an
which do not use contrast agents, into For the reasons stated above, we are incentive for hospitals to utilize
payment for coronary or peripheral finalizing our proposal to resources in a cost efficient manner. We
angiography, which require contrast unconditionally package payment for understand that hospitals would prefer
agents. Specifically, the commenter IVUS, FFR, and ICE services for CY if certain intraoperative services were
summarized the Act which states that 2008. paid separately. In light of the public
CMS must create payment groups under Comment: One commenter requested comments we received, our clinical
the OPPS that ‘‘classify separately those that CMS conditionally package advisors reassessed each intraoperative
procedures that utilize contrast agents payment for CPT code 75898 code on the list to ensure that it was still
from those that do not.’’ (Angiography through existing catheter appropriate for packaged payment.
Response: We appreciate the many for follow-up study for transcatheter However, we did not see any
thoughtful comments related to the therapy, embolization or infusion), compelling reason to pay separately for
packaged status of IVUS, FFR, and ICE instead of finalizing the proposal to any of the intraoperative services that
services. We acknowledge that the costs unconditionally package payment for were not already discussed and revised
associated with packaged services may this service. The commenter clarified above.
contribute more or less to the median For CY 2008, we are finalizing our CY
that this is often the only service
cost of the independent service, 2008 proposal, with modification, to
performed when a patient has lengthy
depending on how often the dependent package the payment for all
thrombolytic therapy.
service is billed with the independent intraoperative HCPCS codes with three
Response: We agree with the exceptions. Specifically, we are
service. It is our goal to adhere to the
commenter that this code should be finalizing all of the packaging changes
principles inherent in a prospective
conditionally packaged rather than we proposed, with the exception of
payment system and to encourage
unconditionally packaged, so that conditionally packaging CPT code
hospitals to utilize resources in a cost-
effective manner. In this case, hospitals separate payment is made when this 75898 as an ‘‘STVX-packaged’’ code and
must choose whether to utilize IVUS, service is provided without any other paying separately for CPT codes 67299
FFR, and ICE, balancing the needs of the separately payable services on the same and 95999. Except as otherwise
patient with the costs associated with date of service. We are changing the specified above, we are fully adopting
the services. status indicator for CPT code 75898 to the APC Panel recommendation to
We continue to believe that IVUS, ‘‘Q’’ for CY 2008 and including it as an package all intraoperative services and
FFR, and ICE are dependent services ‘‘STVX-packaged’’ code. When provided to review the status indicator of CPT
that are always provided in association on the same date of service as other code 96020. Table 10 of this final rule
with independent services. This is separately payable services, payment for with comment period includes the final
different than stating that every CPT code 75898 will be packaged into comprehensive list of all codes in the
angioplasty or other related payment for the other services. seven categories that are packaged for
independent procedure utilizes IVUS, Comment: One commenter requested CY 2008.
FFR, or ICE. In fact, all of the codes that CMS continue to pay separately for
CPT codes 67299 (Unlisted procedure, (4) Imaging Supervision and
about which we received comment are
posterior segment) and 95999 (Unlisted Interpretation Services
listed as add-on codes in the CY 2007
CPT book. While we agree that some of neurological or neuromuscular We proposed to change the packaging
these services may contribute to diagnostic procedure). These codes status of many imaging supervision and
decisionmaking, we still believe that describe unlisted procedures, and the interpretation codes for CY 2008. We
these services are never provided commenter explained that it would be define ‘‘imaging supervision and
without another independent service on impossible to know whether the interpretation codes’’ as HCPCS codes
the same day. Therefore, we do not services they describe should be for services that are defined as
believe it is appropriate to assign status appropriately packaged or separately ‘‘radiological supervision and
indicator ‘‘Q’’ to CPT codes 93571 and paid. interpretation’’ in the radiology series,
93572, or any of the other IVUS, FFR, Response: We agree with the 70000 through 79999, of the AMA CY
or ICE services. commenter that CPT codes 67299 and 2007 book of CPT codes, with the
While the statute requires us to 95999 should not be packaged under the addition of some services in other code
establish separate APCs for those OPPS for CY 2008 because they are ranges of CPT, Category III CPT tracking
services that require contrast and those unlisted procedures. Therefore, we are codes, or Level II HCPCS codes that are
that do not require contrast, the statute finalizing a separately payable status clinically similar or directly crosswalk
does not state a similar requirement for indicator and APC assignment for them to codes defined as radiological
the packaged services that are ancillary in Addendum B to this final rule with supervision and interpretation services
and supportive to the main independent comment period. in the CPT radiology range. We also
included HCPCS codes that existed in CPT code 93555 describes an imaging were to unconditionally package
CY 2006 but were deleted and were supervision and interpretation service payment for these imaging supervision
replaced in CY 2007. We included the in support of the cardiac catheterization and interpretation services as dependent
CY 2006 HCPCS codes because we procedure, and this dependent service is services, hospitals would receive no
proposed to use the CY 2006 claims data clinically quite similar to radiological payment at all for providing the imaging
to calculate the CY 2008 OPPS median supervision and interpretation codes in supervision and interpretation service
costs on which the CY 2008 payment the radiology range of CPT. Payment for and the other minor procedure(s).
rates would be based. the cardiac catheterization imaging However, according to our proposal,
In its discussion of ‘‘radiological supervision and interpretation services their conditional packaging status as
supervision and interpretation,’’ CPT has been packaged since the beginning ‘‘special’’ packaged codes would allow
indicates that ‘‘when a procedure is of the OPPS. Therefore, in developing payment to be provided for these ‘‘Q’’
performed by two physicians, the the proposal for the CY 2008 proposed status imaging supervision and
radiologic portion of the procedure is rule, we conducted a comprehensive interpretation services as independent
designated as ‘radiological supervision clinical review of all Category I and services in these limited circumstances,
and interpretation’.’’ In addition, CPT Category III CPT codes and Level II and for which payment for the
guidance notes that, ‘‘When a physician HCPCS codes to identify all codes that accompanying minor procedure would
performs both the procedure and describe imaging supervision and be packaged. However, when these
provides imaging supervision and interpretation services. The codes we imaging supervision and interpretation
interpretation, a combination of proposed to identify as imaging dependent services are furnished on the
procedure codes outside the 70000 supervision and interpretation codes for same day and in the same hospital as
series and imaging supervision and CY 2008 that would receive packaged independent separately paid services,
interpretation codes are to be used.’’ In payment were listed in Table 14 of the specifically, any service assigned status
the hospital outpatient setting, the proposed rule (72 FR 42665–42667). indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ we
concept of one or more than one Several of these codes, including CPT proposed to package payment for them
physician performing related code 93555 discussed above, are already as dependent services. In all cases, we
procedures does not apply to the unconditionally (that is, always) proposed that hospitals that furnish the
reporting of these codes, but the packaged under the CY 2007 OPPS, independent services on the same date
radiological supervision and where they have been assigned status as the dependent services must bill
interpretation codes clearly are indicator ‘‘N.’’ Payment for these them all on the same claim. We believe
established for reporting in association services is made as part of the payment that when the dependent and
with other procedural services outside for the separately payable, independent independent services are furnished on
the CPT 70000 series. Because these services with which they are billed. No the same date and in the same hospital,
imaging supervision and interpretation separate payment is made for services they are part of a single complete
codes are always reported for imaging that we have assigned to status indicator hospital outpatient service that is
services that support the performance of ‘‘N.’’ We did not propose status reported with more than one HCPCS
an independent procedure and they are, indicator changes for the six imaging code, and no separate payment should
by definition, always provided in the supervision and interpretation services be made for the imaging supervision
same operative session as the that were unconditionally packaged for and interpretation service that supports
independent procedure, we believe that CY 2007. the independent service.
it is appropriate to package their We proposed to change the status In the case of services for which we
payment into the OPPS payment for the indicator for 33 imaging supervision proposed conditional packaging, we
independent procedure performed. and interpretation services from indicated that we would expect that,
In addition to radiological supervision separately paid to unconditionally although these services would always be
and interpretation codes in the packaged (status indicator ‘‘N’’) for the performed in the same session as
radiology range of CPT codes, there are CY 2008 OPPS. We believed that these another procedure, in some cases that
CPT codes in other series that describe services are always integral to and other procedure’s payment would also
similar procedures that we proposed to dependent upon the independent be packaged. For example, CPT code
include in the group of imaging services that they support and, 73525 (Radiological examination, hip,
supervision and interpretation codes therefore, their payment would be arthrography, radiological supervision
proposed for packaging under the CY appropriately packaged because they and interpretation) and CPT code 27093
2008 OPPS. For example, CPT code would generally be performed on the (Injection procedure for hip
93555 (Imaging supervision, same date and in the same hospital as arthrography; without anesthesia) could
interpretation and report for injection the independent services. be provided in a single hospital
procedure(s) during cardiac We proposed to change the status outpatient encounter and reported as
catheterization; ventricular and/or atrial indicator for 93 imaging supervision the only two services on a claim. In the
angiography) whose payment under the and interpretation services from case where only these two services were
OPPS is currently packaged, is separately paid to conditionally performed, the conditionally packaged
commonly reported with an injection packaged (status indicator ‘‘Q’’) as status of CPT code 73525 would
procedure code, such as CPT code ‘‘special’’ packaged codes for the CY appropriately allow for its separate
93543 (Injection procedure during 2008 OPPS. These services may payment as an independent imaging
cardiac catheterization; for selective left occasionally be provided at the same supervision and interpretation
ventricular or left atrial angiography), time and at the same hospital with one arthrography service, into which
whose payment is also currently or more other procedures for which payment for the dependent injection
packaged under the OPPS, and a cardiac payment is currently packaged under procedure would be packaged.
catheterization procedure code, such as the OPPS, most commonly injection The estimated overall impact of these
CPT code 93526 (Combined right heart procedures, and in these cases we changes presented in section XXII.B. of
catheterization and retrograde left heart would not treat the imaging supervision the proposed rule (section XXIV.B. of
catheterization), that is separately paid. and interpretation services as dependent this final rule with comment period)
In the case of cardiac catheterization, services for purposes of payment. If we was based on the assumption that
hospital behavior would not change model for these services and present it sufficiently analyzed prior to being
with regard to when these dependent at the next APC Panel meeting. proposed and should not be made final.
services are performed on the same date We received many public comments The commenters cited several examples
and by the same hospital that performs on our proposal to package imaging of packaging with minor services or
the independent services. To the extent supervision and interpretation services packaged services that they view as
that hospitals could change their for CY 2008. A summary of the public common, which they believe illuminate
behavior and perform the imaging comments and our response follows. the problems with packaging imaging
supervision and interpretation services Comment: Many commenters objected supervision and interpretation services.
more or less frequently, on subsequent to the packaging of imaging supervision The commenters asserted that CMS
dates, or at settings outside of the and interpretation services. They should ensure that no service is
hospital, the data would show such a asserted that the proposal would, in packaged into a service that is already
change in practice in future years and many cases, excessively reduce packaged. Some commenters believed
that change would be reflected in future payments because the proposal that the proposed policy would reduce
budget neutrality adjustments. However, packaged the cost of the service into one payment for important interventional
with respect to the imaging supervision or more services that are already imaging services by 25 percent in the
and interpretation services in particular, packaged or would inappropriately aggregate, would cause CMS to use
we believed that hospitals are limited in package the cost of expensive imaging fewer claims for ratesetting, and would
the extent to which they could change supervision and interpretation services result in access problems for patients.
their behavior with regard to how they into more minor services, like visits or Some commenters stated that the
furnish these services. By their minor diagnostic tests. The commenters methodology reduces the number of
definition, these imaging and believed that this would result in little records that could be used to value
supervision services generally must be or no payment being made for the more these imaging codes for separate
furnished on the same date and at the expensive services provided in an payment, thereby resulting in costs that
same operative location as the encounter. Other commenters suggested would be much lower than would be the
independent procedure in order for the that CMS package only the 33 codes for case if the medians were calculated with
imaging service to meaningfully which the associated surgical service is a higher number of claims.
contribute to the diagnosis or treatment separately paid but not package the 93 The commenters explained that some
of the patient. For those radiological codes proposed to be conditionally of the most common scenarios for the
supervision and interpretation codes in packaged because payments would be services that are assigned to APC 0280
the radiology range of CPT in particular, excessively reduced. As an alternative, (Level III Angiography and Venography)
if the same physician is able to perform one commenter suggested that CMS and are proposed for packaging are
review claims data for the 93 imaging comparable to cardiac catheterization
both the procedure and the supervision
supervision and interpretation codes (APC 0080 (Diagnostic Cardiac
and interpretation as stated by CPT, we
proposed to be assigned status indicator Catheterization)) in time, equipment,
assume that both the dependent and
‘‘Q’’ to identify high volume supply, and labor but under the CMS
independent services would be
combinations of services and evaluate proposal, the payment made under APC
furnished on the same date in the same
the combinations for creation of 0280 would be significantly less than
hospital, and hospitals should bill them
composite APCs. For example, the the payment for APC 0080. Therefore,
on the same claim with the same date
commenter suggested that CMS could the commenters asked that the proposal
of service.
create a composite APC for CPT codes to package services in APCs 0279 (Level
As we indicated earlier in this 72265 (Myelography, lumbosacral, II Angiography and Venography), 280,
section, in all cases, we are providing radiological supervision and and 668 (Level I Angiography and
that hospitals that furnish the imaging interpretation) and 72132 (Computed Venography) not be adopted in CY 2008
supervision and interpretation service tomography lumbar spine, with contrast because the packaging would result in
on the same date as the independent material) that would ensure that the full payments that are much less than the
service must bill both services on the payment for CPT code 72265 would cost of furnishing the services. One
same claim. We expect to carefully always be made when furnished with commenter added that it is
monitor any changes in billing practices CPT code 72132. The commenter was methodologically circular and
on a service-specific and hospital- concerned that CMS could ‘‘overpay’’ unreasonable to package payment for
specific basis to determine whether lumbar CT when no myelography was services that already include other
there is reason to request that QIOs furnished but could ‘‘underpay’’ when packaged services.
review the quality of care furnished or myelography is performed without Response: We have carefully
to request that Program Safeguard lumbar computed tomography (CT) but considered the comments of the APC
Contractors review the claims against in addition to another minor services Panel and the many thoughtful public
the medical record. such as an emergency department visit comments we received on the proposal
During the September 2007 APC or other radiological service. Like to package imaging supervision and
Panel meeting, the APC Panel others, the commenter was concerned interpretation services for the CY 2008
recommended that CMS delay that, as proposed, if an expensive OPPS. We spent considerable time and
packaging the imaging supervision and imaging supervision and interpretation effort in analysis of the data as we
interpretation services because of the service is billed on the same date as a developed our proposed rule, and we
reductions in payment that would occur visit, the visit would be paid and the appreciate the helpful comments we
for services that would only be paid expensive service would not be paid. received on this issue. We have decided
separately if they occurred with other Some commenters believed that the to finalize our proposal to package these
minor procedures that are already absence of consideration of how services after refining our methodology
packaged. The Panel was concerned payment would be made when for estimating the median cost of
about the proposed reductions in unrelated services or packaged services conditionally packaged codes assigned
payment for typical combinations of were the only other services on the status indicator ‘‘Q’’ to address concerns
expensive imaging services. The Panel claim demonstrated that the CMS that packaging significant services into
asked that CMS develop an alternative proposal was not carefully or services that either are already packaged
or are minor services leads to a status indicator ‘‘Q’’ on the same date, Furthermore, the refinements, especially
underpayment and concerns that the we would pay one unit of the ‘‘T- those creating single bills from multiple
proposal reduced the number of claims packaged’’ service with the highest minor claims, allowed us to use many
available for setting APC medians for relative payment weight. We discuss more claims to estimate a median cost
these services. We agree that we should how we split the claims to acquire ‘‘T- for these conditionally packaged codes
not pay for a more minor service, such packaged’’ single bills that represent all and, therefore, to develop an APC
as a visit or minor diagnostic procedure, of the resource costs associated with the median cost estimate that better reflects
when the conditionally packaged conditionally packaged service in the resources consumed by these
imaging supervision and interpretation greater detail in section II.A.2. of this services that are commonly performed
services require more resources. We final rule with comment period. The
in combination with one another.
have modified the conditionally ratesetting methodology specifically
packaged status of these services to be includes single bill claims for T-packed We believe that our changes have
specific to surgical procedures and services that represent the costs of resulted in resolution of many of the
called them ‘‘T-packaged services.’’ The multiple services with status indicator concerns raised by the commenters and
payment for these imaging supervision ‘‘Q’’ and other packaged services. We the APC Panel. There were a number of
and interpretation codes will be believe that this resolves many of the specific examples cited by the
packaged into the payment for services payment concerns with regard to our commenters to illustrate their concerns
with a status indicator ‘‘T’’ when they proposal to treat the majority of on this issue. We include the
appear on the same date as the surgical supervision and interpretation codes as commenters’ examples below, expanded
procedure. When these imaging conditionally packaged codes. These to add the CY 2008 final rule payment.
supervision and interpretation services refinements to our methodology In the examples below, ‘‘pkg’’ means
appear with other codes that have any significantly raised the median costs for payment is packaged; ‘‘na’’ means not
other payable status indicator (‘‘S,’’ ’’V,’’ a number of these services compared to applicable.
or ’’X’’) or with other services that have the proposed rule median costs.
EXAMPLE 1.—MYLEOGRAPHY AND LUMBOSACRAL CT WITH CONTRAST

CY 2008 CY 2008
CY 2007 CY 2007 CY 2007 CY 2008 CY 2008
HCPCS Code Descriptor Proposed Final
APC SI Payment APC SI
payment payment
72265 ................ Contrast X-ray lower spine ................ 0274 S ........... $157.01 ... pkg ........... 0274 Q .......... $481.46
72132 ................ CT lumbar spine w/dye ...................... 0283 S ........... $250.94 ... $751.09 .... 0283 S ........... $277.48
Sum ........... ............................................................ ................ .............. $407.95 ... $751.09 .... ................ .............. $758.94
EXAMPLE 2.—ANGIOGRAPHY, CAROTID, CERVICAL, VERTEBRAL AND/OR INTRACRANIAL

CY 2008 CY 2008
CY 2007 CY 2007 CY 2007 CY 2008 CY 2008
payment payment
36216 ................ Place catheter in artery ...................... ................ N .......... pkg ........... pkg ........... na N .......... pkg
36216–59 .......... Place catheter in artery ...................... ................ N .......... pkg ........... pkg ........... na N .......... pkg
75671 ................ Artery Xrays head and neck .............. 0280 S ........... $1,279.92 pkg ........... 0280 Q .......... $2,847.85
75680 ................ Artery Xrays, neck ............................. 0280 S ........... $1,279.92 pkg ........... 0279 Q .......... pkg
75685X2 ........... Artery Xrays, spine ............................ 0280 S ........... $2,559.84 $1,442.28 0279 Q .......... pkg
Sum ........... ............................................................ ................ .............. $5,119.68 $1,442.28 ................ .............. $2,847.85
Note: Several commenters submitted this example or this example with minor variation. The final payment for this service in its entirety is simi-
lar to the payment for cardiac catheterization (APC 0080), to which the commenters compared this service.
EXAMPLE 3.—EVALUATION AND PERCUTANEOUS REVASCULARIZATION OF GRAFT

CY 2008 CY 2008
CY 2007 CY 2007 CY 2007 CY 2008 CY 2008
payment payment
36145X2 ........... Place catheter in artery ...................... na N .......... pkg ........... pkg ........... na N .......... pkg
75790 ................ Visualize A–V shunt ........................... 0279 S ........... $584.32 ... pkg ........... 0668 Q .......... pkg
G0393 ............... A–V fistula or graft venous ................ 0081 T ........... $2,639.19 $2,934.24 0083 T ........... $2,890.72
75978X2 ........... Repair venous blockage .................... 0668 S ........... $767.90 ... pkg ........... 0083 Q .......... pkg
35476 ................ Repair venous blockage .................... 0081 T ........... $1,319.60 $1,467.37 0083 T ........... $1,445.36
Sum ........... ............................................................ ................ .............. $5,311.01 $4,401.61 ................ .............. $4,336.08
EXAMPLE 4.—DIAGNOSTIC ANGIOGRAPHY WITH BALLOON ANGIOPLASTY OF SUPERFICIAL FEMORAL ARTERY

CY 2008 CY 2008
CY 2007 CY 2007 CY 2007 CY 2008 CY 2008
payment payment
75625 ................ Contrast Xray exam of aorta ............. 0280 S ........... $1,279.92 pkg ........... 0279 Q .......... pkg
75716 ................ Artery Xrays, arms/legs ..................... 0280 S ........... $1,279.92 pkg ........... 0279 Q .......... pkg
75774 ................ Artery Xray, each vessel .................... 0279 S ........... $584.32 .... pkg ........... na N .......... pkg
75774 ................ Artery Xray, each vessel .................... 0279 S ........... $584.32 .... pkg ........... na N .......... pkg
35474 ................ Repair arterial blockage ..................... 0081 T ........... $2,639.19 $2,934.24 0083 T ........... $2,890.72
35474 ................ Repair arterial blockage ..................... 0081 T ........... $1,319.60 $1,467.37 0083 T ........... $1,445.36
75962 ................ Repair atrial blockage ........................ 0668 S ........... $383.95 ... pkg ........... 0083 Q .......... pkg
75964 ................ Repair artery blockage, each ............. 0668 S ........... $383.95 ... pkg ........... na N .......... pkg
Sum ........... ............................................................ ................ .............. $8,455.17 $4,401.61 ................ .............. $4336.08
Comment: Some commenters believed therefore, their median cost calculation imaging supervision and interpretation
that CMS should not package imaging is highly suspect. packaging proposal would present huge
supervision and interpretation services Response: We do not view the operational challenges for hospitals to
because CMS did not conduct a unknown amount of error that occurs as ensure that the codes and charges
sufficiently thorough analysis of the a result of a theoretical conflict between continue to be billed so that future
many ways that CPT codes can be the revenue code reported for a service claims will contain the necessary costs
reported for services where there could and the CCR used to reduce that charge for setting relative weights for the OPPS.
be more than one surgical CPT code to an estimated cost as justification to Hospitals need only continue to report
associated with a single imaging not package these services. The costs we the codes and charges for all of the
supervision and interpretation service. calculate for purposes of establishing services they furnish. There are no new
The commenters stated that these codes median costs for ratesetting are billing requirements associated with
are created on a ‘‘component’’ basis to estimated costs and as such, in general, this change in payment policy.
deal effectively with the huge variation there is error in them to the extent that Moreover, hospitals are required to
in the combinations of services that the charges are reported under a charge the same amount to all payers for
could occur. revenue code that maps to a cost center the same services. We understand that
in which the costs for the services are many private payers continue to pay a
Response: We disagree with the
not found. Hospitals select the revenue percent of charges, creating incentives
commenters. We acknowledge that the
codes with which they report services to for hospitals to report and charge for all
APC Panel and the commenters raised
Medicare and other payers for a wide services furnished to all patients.
concerns about the packaging of these
range of reasons over which CMS Comment: Some commenters
services that we did not fully anticipate
generally exercises no control. The CMS suggested that CMS update the OPPS
in development of the proposed rule.
crosswalk of revenue codes to cost packaging policies to address newly
However, the purpose of the APC Panel
centers is available for inspection and added or deleted codes.
and the exposure of the proposal to
comment at the CMS Web site at: http://
public comment are to raise issues for Response: We routinely review all
www.cms.hhs.gov/
our consideration as we develop final new or revised HCPCS codes each year
HospitalOutpatientPPS/. Hospitals that
policies for the final rule. We appreciate to determine what status indicator to
want to ensure that the correct CCR is
the assistance of the APC Panel and the assign and whether other changes to our
applied to a service could, if they chose,
many thoughtful public comments we files are needed. We also indicate new
use this crosswalk to select either the
received on the proposal to package codes with a change indicator in
revenue codes to report or the cost
these codes. We recognize that the codes Addendum B to this final rule with
center to use for costs reported with a
are created as they exist, in order to comment period, and we solicit public
particular revenue code.
describe many different treatment Comment: Some commenters believed comments on the interim APC
scenarios through the use of multiple that implementation of the imaging and placement and status indicator we
and varied combinations of codes. As supervision packaging would present assign to them for those HCPCS codes
we discuss above, we have developed a huge operational challenges for designated with comment indicator
methodology that addresses the hospitals to ensure that codes and ‘‘NI’’ in the final rule with comment
concerns raised by the commenters and, charges continue to be billed so that the period. We do not review deleted codes
as such, continue to believe that it is data in future years will be acceptable because they naturally fall out of the
appropriate to package these services for as the basis for setting relative weights system, beginning in the claims for the
CY 2008. for the OPPS. The commenters stated period in which they are deleted,
Comment: Some commenters believed that hospitals will cease to report the although we continue to assign their
that the revenue code to CCR mapping codes and charges for the services that claims data for ratesetting purposes.
for these services is problematic because are no longer separately paid and that Comment: Some commenters
most are billed with revenue code 0361 the costs of the services will then be lost expressed concerns with the treatment
and revenue code 0361 is mapped to the to the payment system and the median of the claims data for imaging
surgery cost center. However, as the costs for the services that should carry supervision and interpretation codes
commenters pointed out, most of these the packaging will be inappropriately with status indicator ‘‘Q’’ with regard to
procedures are performed in the low. the impact on the number of multiple
imaging department or the heart Response: The commenters did not procedure claims. Some commenters
catheterization laboratory and, articulate how implementation of the stated that reporting packaged services
will create more multiple procedure conditionally packaged codes are packaged costs in the calculation of the
bills that will not be used to set rates. assigned. medians for these costs codes.
Response: The reporting of packaged Comment: One commenter believed Response: The commenter is correct
services will not result in more multiple that the data for many single bills for the in that we inadvertently erred and did
procedure claims because the packaged services with status indicator ‘‘Q’’ will not include the packaged costs of ‘‘Q’’
service, which has a status indicator of be lost because CMS assesses the status status procedures in the calculation of
‘‘N’’ for data purposes, unless it is of the status indicator ‘‘Q’’ code before the medians for these codes and their
changed to be separately paid, will not applying the bypass list. The related APCs in the proposed rule. We
by itself cause a claim to be viewed as commenters stated that where there are have packaged these costs with the ‘‘Q’’
a multiple major procedure claim. three services on the claim, two of procedures for this final rule with
Moreover, if packaged services and their which are on the bypass list, the status comment period, in addition to making
charges are not reported, the payment indicator ‘‘Q’’ service will be changed to the other modifications to the
for the services into which their cost is packaged before the bypass list is calculation of the median costs for these
packaged may be understated. applied and the two bypass codes will codes as discussed in detail above and
Therefore, it is important that hospitals leave the claim without packaging. The in section II.A.2. of this final rule with
report all services furnished and the commenter added that there will then comment period.
associated charges. be no code to which to package the cost For CY 2008, we are finalizing our
of the status indicator ‘‘Q’’ code and the proposal, with modification as
Comment: Some commenters
data will neither be used nor packaged discussed above, to unconditionally or
indicated that where there are multiple
into anything (because nothing is left for conditionally packaged imaging
codes with status indicator ‘‘Q’’ on a
it to be packaged with). The commenter supervision and interpretation services.
claim and no separately paid services,
believed that if CMS had made the These codes, with their assigned status
they are assigned status indicator ‘‘N’’
assignment of the ‘‘Q’’ after the bypass indicator ‘‘N’’ as unconditionally
and sent to multiple minors because the
codes were removed, the data could be packaged or ‘‘Q’’ as ‘‘T-packaged’’
assignment of the status indicator ‘‘N’’
used to set the APC median for the ‘‘Q’’ codes, are listed in Table 10 of this final
happens before the split. They suggested
service and more claims could have rule with comment period. We are not
that if the assignment happened after
been used. accepting the APC Panel
the split and after the ‘‘pseudo’’ single Response: The commenter accurately recommendation to delay packaging of
creation, they could be used in the described the treatment of a code with these services and provide an
median calculation for the APC. status indicator ‘‘Q’’ if it is on the same alternative model at the next Panel
Response: The commenter correctly claim with two codes that are on the meeting, because we are finalizing a
describes how codes with status bypass list. However, we disagree with modified model. We will review the
indicator ‘‘Q’’ were treated in this the commenter’s recommendation. First, final CY 2008 policy, including the
circumstance for the proposed rule data. by definition, codes on the bypass list ratesetting methodology, with the APC
We agree that claims with multiple do not have significant packaging. We Panel at its 2008 winter meeting.
occurrences of codes with status specifically reassessed the codes
indicator ‘‘Q’’ should be used to (5) Diagnostic Radiopharmaceuticals
included on the bypass list in light of
estimate the APC median cost through this packaging proposal to ensure For CY 2008, we proposed to change
which they will be separately paid. In removal of any services with significant the packaging status of diagnostic
response to the public comments we packaging. The circumstances where radiopharmaceuticals as part of our
received, we have revised the data ‘‘Q’’ service data would remain on a overall enhanced packaging approach
process in several places to address the claim as ‘‘packaging’’ after removing the for the CY 2008 OPPS. Packaging costs
estimation of costs for services with a other two codes as bypass codes should into a single aggregate payment for a
status indicator of ‘‘Q.’’ (See section be very limited. Second, we would not service, encounter, or episode of care is
II.A.2.b. of this final rule with comment want to use that data to set the median a fundamental principle that
period for further discussion of the cost for the ‘‘Q’’ status service because distinguishes a prospective payment
changes to the data process.) With the final payment disposition of the system from a fee schedule. In general,
regard to this particular comment, we code with status indicator ‘‘Q’’ on the packaging the costs of supportive items
continue to assign claims with multiple claim would be packaged. Under this and services into the payment for the
‘‘Q’’ procedure or packaged services to commenter’s recommendation, we independent procedure or service with
the multiple minor file. We then create would be sending the data for the status which they are associated encourages
additional single bills from the multiple indicator ‘‘Q’’ codes to the APC to hospital efficiencies and also enables
minor file by identifying which which it is assigned even though, when hospitals to manage their resources with
conditionally packaged code will be the the claim was processed, no separate maximum flexibility. As we stated in
prime code that will carry the packaging payment would be made for the status the CY 2007 OPPS/ASC final rule with
by selecting the conditionally packaged indicator ‘‘Q’’ code. comment period, we believe that a
code with the highest payment for CY Comment: One commenter found that policy to package payment for
2007 and packaging all costs of the other its calculation of median costs using additional radiopharmaceuticals (other
codes into the cost for that code. We proposed rule data for the imaging than those already packaged when their
also set the units to one for the prime supervision and interpretation services per day costs are below the packaging
code to reflect our policy of only paying to which CMS proposed to assign status threshold for OPPS drugs, biologicals,
one unit of a service for codes with a indicator ‘‘Q’’ resulted in median costs and radiopharmaceuticals based on data
status indicator of ‘‘Q.’’ That claim then for these codes and the APCs to which for the update year) is consistent with
becomes a single procedure claim they were assigned that were OPPS packaging principles and would
assigned to the APC to which the prime significantly higher than the median provide greater administrative
code is assigned. These modifications costs calculated by CMS for these codes simplicity for hospitals (71 FR 68094).
have resulted in the use of many more and their APCs. The commenter was All nuclear medicine procedures
claims than were used for the proposed concerned that CMS may have require the use of at least one
rule to set APC medians where inadvertently failed to include the radiopharmaceutical, and there are only
a small number of radiopharmaceuticals the payment for diagnostic nuclear outpatient drugs identified in section
that may be appropriately billed with medicine procedures for CY 2008. We 1833(t)(B) of the Act.
each diagnostic nuclear medicine expect that packaging would encourage Diagnostic radiopharmaceuticals are
procedure. While examining the CY hospitals to use the most cost efficient always intended to be used with a
2005 hospital claims data in preparation diagnostic radiopharmaceutical diagnostic nuclear medicine procedure.
for the CY 2007 OPPS/ASC proposed products that are clinically appropriate. In examining our CY 2006 claims data,
rule, we identified a significant number We anticipate that hospitals would we were able to match most diagnostic
of diagnostic nuclear medicine continue to provide care that is aligned radiopharmaceuticals to their associated
procedure claims that were missing with the best interests of the patient. diagnostic procedures and most
HCPCS codes for the associated Furthermore, we believe that it would diagnostic nuclear medicine procedures
radiopharmaceutical. At that time, we be the intent of most hospitals to to their associated diagnostic
believed that there could be two reasons provide both the diagnostic radiopharmaceuticals in the vast
for the presence of these claims in the radiopharmaceutical and the associated majority of single bills used for
data. One reason could be that the diagnostic nuclear medicine procedure ratesetting. We estimate that less than 5
radiopharmaceutical used for the at the time the diagnostic percent of all claims with a diagnostic
procedure was packaged under the radiopharmaceutical is administered radiopharmaceutical had no
OPPS and, therefore, some hospitals and not to send patients to a different corresponding diagnostic nuclear
may have decided not to include the provider for administration of the medicine procedure. In addition, we
specific radiopharmaceutical HCPCS radiopharmaceutical. As we indicated found that only about 13 percent of all
code and an associated charge on the in the proposed rule, we do not believe single bills with a diagnostic nuclear
claim. A second reason could be that the that our packaging proposal would limit medicine procedure code had no
hospitals may have incorporated the beneficiaries’ ability to receive clinically corresponding diagnostic
cost of the radiopharmaceutical into the appropriate diagnostic procedures. radiopharmaceutical billed. These
charges for the associated nuclear Again, the OPPS is a system of averages, statistics indicate that, in a majority of
medicine procedures. A third possibility and payment in the aggregate is our single bills for diagnostic nuclear
not offered in the CY 2007 OPPS/ASC intended to be adequate, although medicine procedures, a diagnostic
proposed rule is that hospitals may have payment for any one service may be radiopharmaceutical HCPCS code is
included the charges for higher or lower than a hospital’s actual included on the single bill. Table 15 in
radiopharmaceuticals on an uncoded costs in that case. the proposed rule (72 FR 42668)
revenue code line. presented the top 20 diagnostic nuclear
In the CY 2007 OPPS/ASC proposed For CY 2008, we have separated medicine procedures in terms of the
rule, we did not propose packaging radiopharmaceuticals into two overall frequency with which they are
payment for radiopharmaceuticals with groupings. The first group includes reported in the OPPS claims data.
per day costs above the $55 CY 2007 diagnostic radiopharmaceuticals, while Among these high volume diagnostic
packaging threshold because we the second group includes therapeutic nuclear medicine procedures, their
indicated that we were concerned that radiopharmaceuticals. We identified all single bills included a HCPCS code for
payments for certain nuclear medicine diagnostic radiopharmaceuticals as a diagnostic radiopharmaceutical at
procedures could potentially be less those Level II HCPCS codes that include least 84 percent of the time for 19 of the
than the costs of some of the packaged the term ‘‘diagnostic’’ along with a top 20 procedures. More specifically, 84
radiopharmaceuticals, especially those radiopharmaceutical in their long code to 86 percent of the single bills for 4
that are relatively expensive. At the descriptors. Therefore, we were able to diagnostic nuclear medicine procedures
same time, we also noted the GAO’s distinguish therapeutic included a diagnostic
comment in reference to the CY 2006 radiopharmaceuticals from diagnostic radiopharmaceutical, 87 to 89 percent of
OPPS proposed rule that stated a radiopharmaceuticals as those Level II the single bills for 8 diagnostic nuclear
methodology that includes packaging all HCPCS codes that have the term medicine procedures included a
radiopharmaceutical costs into the ‘‘therapeutic’’ along with a diagnostic radiopharmaceutical, and 90
payments for the nuclear medicine radiopharmaceutical in their long code percent or more of the single bills for 7
procedures may result in payments that descriptors. There currently are no diagnostic nuclear medicine procedures
exceed hospitals’ acquisition costs for HCPCS C-codes used to report included a diagnostic
certain radiopharmaceuticals because radiopharmaceuticals under the OPPS. radiopharmaceutical.
there may be more than one For CY 2008, we proposed to package Among the lower volume diagnostic
radiopharmaceutical that may be used payment for all diagnostic nuclear medicine procedures (which
for a particular procedure. We also radiopharmaceuticals that are not were outside the top 20 in terms of
expressed concern that packaging otherwise packaged according to the CY volume), there was still good
payment for additional 2008 packaging threshold for drugs, representation of diagnostic
radiopharmaceuticals could provoke biologicals, and radiopharmaceuticals radiopharmaceutical HCPCS codes on
treatment decisions that may not reflect that we proposed. We proposed this the single bills for most procedures.
use of the most clinically appropriate packaging approach for diagnostic About 40 percent of the low volume
radiopharmaceutical for a particular radiopharmaceuticals, while we diagnostic nuclear medicine procedures
nuclear medicine procedure in any proposed to continue to pay separately had at least 80 percent of the single bills
specific case (71 FR 68094). for therapeutic radiopharmaceuticals for that diagnostic procedure that
After considering this issue further with an average per day cost of more included a diagnostic
and examining our CY 2006 claims data than $60 as discussed in section radiopharmaceutical HCPCS code; about
for the CY 2008 OPPS update, as we V.B.3.a.(c) of this final rule with 37 percent of the low volume diagnostic
indicated in the CY 2008 OPPS/ASC comment period. In that section, we procedures had between 50 to 79
proposed rule, we believe that it is most review our reasons for treating percent of the single bills that included
appropriate to package payment for diagnostic radiopharmaceuticals (as a diagnostic radiopharmaceutical
some radiopharmaceuticals, specifically well as contrast media) differently from HCPCS code; and about 23 percent of
diagnostic radiopharmaceuticals, into other types of specified covered the low volume diagnostic procedures
had less than 50 percent of the single with stakeholders on issues related to percentages of extended half-life
bills that include a diagnostic payment for radiopharmaceuticals, diagnostic radiopharmaceuticals with
radiopharmaceutical HCPCS code. For including evaluating claims data for same day diagnostic nuclear medicine
the few diagnostic nuclear medicine different classes of scans and the ability of ‘‘natural’’
procedures where less than 50 percent radiopharmaceuticals and ensuring that singles to package costs across days, we
of the single bills included a diagnostic a nuclear medicine procedure claim indicated in the proposed rule that we
radiopharmaceutical HCPCS code, we always includes at least one reported believe that our standard OPPS
believed there could be several reasons radiopharmaceutical agent. In the ratesetting methodology of using
why the percentage of single bills for the proposed rule, we noted that we median costs calculated from claims
diagnostic nuclear medicine procedure planned to accept the APC Panel’s data would adequately capture the costs
with a diagnostic radiopharmaceutical recommendation, and we specifically of diagnostic radiopharmaceuticals
HCPCS code was low. welcomed public comment on the associated with diagnostic nuclear
As noted earlier, it is possible that hospitals’ burden involved should we medicine procedures that are not
hospitals may have included the charge require such precise reporting. We also provided on the same date of service.
for the radiopharmaceutical in the sought public comment on the The packaging proposal we presented
charge for the diagnostic nuclear importance of such a requirement in would have reduced the overall
medicine procedure itself or on an light of our above discussion on the frequency of single bills for diagnostic
uncoded revenue code line instead of representation of diagnostic nuclear medicine procedures, but the
reporting charges for a specific radiopharmaceuticals in the single bills percent of single bills out of total claims
diagnostic radiopharmaceutical HCPCS for diagnostic nuclear medicine remained robust for the majority of
code. We found that 24 percent of all procedures, the presence of uncoded diagnostic nuclear medicine procedures.
single bills for a diagnostic nuclear revenue code charges specific to Typically, packaging more procedures
medicine procedure but without a diagnostic radiopharmaceuticals on should improve the number of single
coded diagnostic radiopharmaceutical claims without a coded diagnostic bill claims from which to derive median
had uncoded costs in a revenue code radiopharmaceutical, and our proposal cost estimates because packaging
that might contain diagnostic to package payment for all diagnostic reduces the number of separately paid
radiopharmaceutical costs, specifically, radiopharmaceuticals. procedures on a claim, thereby creating
revenue codes 0254 (Drugs Incident to
As we indicated in the proposed rule, more single procedure bills. In the case
Other Diagnostic Services), 0255 (Drugs
Incident to Radiology), 0343 (Diagnostic we are aware that several diagnostic of diagnostic nuclear medicine
Radiopharmaceuticals), 0621 (Supplies radiopharmaceuticals may be used for procedures, packaging diagnostic
Incident to Radiology), and 0622 multiple day studies; that is, a particular radiopharmaceuticals reduced the
(Supplies Incident to Other Diagnostic diagnostic radiopharmaceutical may be overall number of single bills available
Services). In comparison, we found that administered on one day and a related to calculate median costs by increasing
only 2 percent of diagnostic nuclear diagnostic nuclear medicine procedure packaged costs that previously were
medicine single bills with a nuclear may be performed on a subsequent day. ignored in the bypass process. In prior
medicine procedure and a coded While we understand that multiple day years, we did not consider the costs of
diagnostic radiopharmaceutical had episodes for diagnostic radiopharmaceuticals when we used our
uncoded costs in these revenue codes. It radiopharmaceuticals and the related bypass methodology to extract ‘‘pseudo’’
is also possible that some of these diagnostic nuclear medicine procedures single claims because we assumed that
procedures typically used a diagnostic occur, we expect that this would be a the cost of radiopharmaceutical
radiopharmaceutical subject to small proportion of all diagnostic overhead and handling would be
packaged payment under the CY 2006 nuclear medicine imaging procedures. included in the line-item charge for the
OPPS, and hospitals may have chosen We estimate that, roughly, 15 diagnostic radiopharmaceutical, and the diagnostic
not to report a separate charge for the radiopharmaceuticals have a half-life radiopharmaceuticals were subject to
diagnostic radiopharmaceutical. longer than one day such that they potential separate payment if their mean
Payment for diagnostic could support diagnostic nuclear per day cost fell above the packaging
radiopharmaceuticals commonly used medicine scans on different days. We threshold. The bypass process sets
with some diagnostic nuclear medicine believe these diagnostic empirical and clinical criteria for
procedures would already be packaged radiopharmaceuticals would be minimal packaging for a specific list of
because these diagnostic concentrated in a specific set of procedures and services in order to
radiopharmaceuticals’ average per day diagnostic procedures. Excluding the 5 assign packaged costs to other
costs were less than $50 in CY 2006. We percent of diagnostic procedures on a claim and is discussed
stated in the proposed rule that the CY radiopharmaceutical claims with no at length in section II.A.1. of the
2008 proposal to package additional matching diagnostic nuclear medicine proposed rule, and this final rule with
diagnostic radiopharmaceuticals would scan for the same beneficiary, we found comment period. Generally, we found
have little impact on the payment for that a diagnostic nuclear medicine scan that changing the status of diagnostic
those diagnostic procedures that was reported on the same day as a radiopharmaceuticals to packaged
typically use inexpensive diagnostic coded diagnostic radiopharmaceutical increased the packaging on each claim.
radiopharmaceuticals that would be 90 percent or more of the time for 10 of This would make it both harder for
packaged under our proposed CY 2008 these 15 diagnostic nuclear medicine procedures to qualify
packaging threshold of $60, except to radiopharmaceuticals. Further, between for the bypass list and more difficult to
the extent that the budget neutrality 80 and 90 percent single bills for each assign packaging to individual
adjustment due to the broader packaging of the remaining 5 diagnostic diagnostic nuclear medicine procedures,
proposal leads to an increase in the radiopharmaceuticals had a diagnostic resulting in a possible reduction of the
scaler and an increase in the payment nuclear medicine scan on the same day. number of ‘‘pseudo’’ singles that are
for procedures in general. In the ‘‘natural’’ single bills we use for produced by the bypass process.
At its March 2007 meeting, the APC ratesetting, we package payment across Notwithstanding this potentiality,
Panel recommended that CMS work dates of service. In light of such high diagnostic nuclear medicine procedures
continued to have good representation We also continued to have reasonable the cost of the radiopharmaceutical is
in the single bills. On average, single representation of single bills out of total packaged into the payment for the
bills as a percent of total occurrences claims in general. Finally, as noted nuclear medicine service.
remained substantial at 55 percent for previously, to the extent that the We received many public comments
individual procedures. We discuss our diagnostic radiopharmaceuticals on our proposal to package payment for
process for ratesetting, including the commonly used with a particular diagnostic radiopharmaceuticals for CY
construction and use of single and diagnostic nuclear medicine procedure 2008. A summary of the public
multiple bills, in greater detail in were already packaged, the proposal to comments and our responses follow.
section II.A.1. of this final rule with package additional diagnostic Comment: Some commenters
comment period. radiopharmaceuticals would have had recommended that CMS package
We indicated in the proposed rule little impact on the payment for these radiopharmaceuticals with a per day
procedures. cost less than $200 but pay separately
that we believe our CY 2006 claims data
The estimated overall impact of these for radiopharmaceuticals with a per day
supported our CY 2008 proposal to
changes presented in section XXII.B. of cost of $200 or more. Other commenters
package payment for all diagnostic
the proposed rule (section XXIV.B. of objected to packaging diagnostic
radiopharmaceuticals and would lead to
this final rule with comment period) radiopharmaceuticals and asked that
payment rates for diagnostic nuclear
was based on the assumption that CMS continue to pay separately for
medicine procedures that appropriately
hospital behavior would not change radiopharmaceuticals with per day costs
reflect payment for the costs of the
with regard to whether the dependent that exceed the packaging threshold for
diagnostic radiopharmaceuticals that are
diagnostic radiopharmaceuticals drugs. These commenters explained that
administered to carry out those
services are provided by the same FDA views radiopharmaceuticals to be
diagnostic nuclear medicine procedures. drugs, they are defined as drugs for
hospital that performs the independent
Among the top 20 high volume purposes of pass-through payment
services. In order to provide diagnostic
diagnostic nuclear medicine procedures, under OPPS in sections 1833(t)(6)(A)(iii)
nuclear medicine procedures under this
at least 84 percent of the single bills for of the Act, and for purposes of payment
policy, hospitals would either need to
almost every diagnostic nuclear as specified covered outpatient drugs
administer the necessary diagnostic
medicine procedure included a (SCODs) and biologicals in section
radiopharmaceuticals themselves or
diagnostic radiopharmaceutical HCPCS 1833(t)(14)(B)(i)(l) of the Act. The
refer patients elsewhere for the
code. While a diagnostic administration of the diagnostic commenters argued that CMS should,
radiopharmaceutical, by definition, radiopharmaceuticals. In the latter case, therefore, pay separately for
would be anticipated to accompany 100 claims data would show such a change radiopharmaceuticals with a per day
percent of the diagnostic nuclear in practice in future years and that cost in excess of $60, as it does for other
medicine procedures, it is not change would be reflected in future drugs.
unexpected that, while percentages in ratesetting. However, with respect to The commenters believed that section
our claims data are high, they are less diagnostic radiopharmaceuticals, we 1833(t)(14)(B)(i)(l) of the Act requires
than 100 percent. As noted previously, believe that hospitals are limited in the CMS to treat radiopharmaceuticals no
we have heard anecdotal reports that extent to which they could change their differently from other SCODs and,
some hospitals may include the charges behavior with regard to how they therefore, CMS must pay
for diagnostic radiopharmaceuticals in furnish these items because diagnostic radiopharmaceuticals actual acquisition
their charge for the diagnostic nuclear radiopharmaceuticals are typically costs or, failing that, charges adjusted to
medicine procedure or on an uncoded provided on the same day as a costs. Some commenters believed that
revenue code line, rather than reporting diagnostic nuclear medicine procedure. there is no authority for CMS to package
a HCPCS code for the diagnostic It would be difficult for Hospital A to drugs that are incidental or ancillary to
radiopharmaceutical. Thus, it is likely send patients to receive diagnostic a procedure and that by doing so, CMS
that the frequency of diagnostic radiopharmaceuticals from Hospital B is relying on a form of ‘‘functional
radiopharmaceutical costs reflected in and then have the patients return to equivalence’’ which is expressly limited
our claims data were even higher than Hospital A for the diagnostic nuclear by statute under section 1833(t)(6)(F) of
the percentages indicated. Furthermore, medicine procedure in the appropriate the Act. The commenters argued that
we note that the OPPS ratesetting timeframe (given the the proposal will create an incentive for
methodology is based on medians, radiopharmaceutical’s half-life) to hospitals to not use advanced
which are less sensitive to extremes perform a high quality study. We expect technologies and will harm patient care.
than means and typically do not reflect that hospitals would always bill the Some commenters believed that
subtle changes in cost distributions. diagnostic radiopharmaceutical on the packaging diagnostic
Therefore, to the extent that the vast same claim as the other independent radiopharmaceuticals could discourage
majority of single bills for a particular services for which the hospitals from using the most
diagnostic nuclear medicine procedure radiopharmaceutical was administered. appropriate drug for each patient and
included a diagnostic The APC Panel recommended that encourage them to use less clinically
radiopharmaceutical HCPCS code, the CMS package radiopharmaceuticals effective radiopharmaceuticals when
fact that the percentage was somewhat with a median per day cost of less than there is a choice of radiopharmaceutical.
less than 100 percent was likely to have $200 but pay separately for Some commenters added that the
minimal impact on the median cost of radiopharmaceuticals with a per day proposal ignores medical indications
the procedure in most cases. Even in cost of $200 or more. The APC Panel and focuses solely on cost reduction,
those few instances where we had a low also recommended that CMS should which could result in constraints on
total number of single bills, largely identify nuclear medicine procedure medical decisionmaking and would
because of low overall volume, we had claims with and without compromise medical care.
ample representation of diagnostic radiopharmaceuticals and should Response: After review of the public
radiopharmaceutical HCPCS codes on present its findings to the Panel at the comments we received on this issue, we
the single bills for the majority of lower next meeting for consideration of have decided to finalize our proposal to
volume nuclear medicine procedures. whether an edit is needed to ensure that package payment for diagnostic
radiopharmaceuticals into the payment a charge be reported under the hospital average acquisition costs for
for the nuclear medicine services which diagnostic radiopharmaceutical revenue radiopharmaceuticals. The commenters,
cannot be performed without the code 0343 when there was a charge in therefore, concluded that the costs of
administration of a revenue codes 0340 or 0341 for a low volume, high cost
radiopharmaceutical. We refer readers nuclear medicine procedure. Other radiopharmaceuticals are not captured
to section V.B.4.b. of this final rule with commenters recommended that CMS in the claims data that is used to set the
comment period for a discussion of the establish OCE edits that would require median costs on which the nuclear
rationale to package payment for a HCPCS code for a diagnostic medicine services payment rates are
diagnostic radiopharmaceuticals as radiopharmaceutical be reported on a based and the packaged payment for
SCODs and our belief that the packaged claim for a diagnostic nuclear medicine radiopharmaceuticals will be
payment provides payment at average procedure. Some commenters were inadequate to pay for the cost of the
acquisition cost for the products. concerned that the actual cost of drug. The commenters believed that
We find the argument that we are radiopharmaceuticals would be lost these incorrectly priced products are
creating functional equivalence by because hospitals would not report the unlikely to continue to be manufactured
packaging the payment for diagnostic charges on the claim unless CMS and thus will cease to be available. The
radiopharmaceuticals into the payment mandates and enforces their reporting. commenters also stated that it is
for the nuclear medicine services Response: We agree that it is unlikely that the industry will develop
without which they cannot be important that the costs of new products for the market if they find
performed to be unconvincing. We are radiopharmaceuticals be reported on the that hospitals will not use them because
not establishing an equivalent payment same claim with the nuclear medicine of inadequate payment. The
for different products based on their service so that we can have confidence commenters believed that beneficiary
function. We are instead packaging the that the payment for the nuclear care would suffer as hospitals ceased to
cost of radiopharmaceuticals, however medicine procedure reflects the cost of furnish the service because payment
differential those costs may be, into the the radiopharmaceutical as well as the would be inadequate to cover the cost.
payment for nuclear medicine services nuclear medicine service. Therefore, we Some commenters explained that, while
to create an appropriate payment for the have used only claims that contain a CMS implemented revenue codes for
nuclear medicine services that use these HCPCS code and charge for a diagnostic diagnostic and therapeutic
products, whether there is one product radiopharmaceutical to calculate the radiopharmaceuticals in CY 2004,
or multiple products that could be used median costs of the nuclear medicine hospitals have not yet fully reflected
to furnish the service. This is analogous procedures for CY 2008. Moreover, these revenue codes in their billing
to our longstanding practice of effective for services furnished on and practices and, therefore, the claims data
packaging of medical devices into the after January 1, 2008, the OCE will are not correct or reliable and CMS
payment for the procedure in which return for correction any claim for a should continue to pay separately for
they are used, notwithstanding that nuclear medicine procedure that does radiopharmaceuticals at charges
there may be different devices that not contain a HCPCS code and charge adjusted to cost. Other commenters
could be used to furnish the service. for a diagnostic radiopharmaceutical. believed that the proposed changes
Moreover, we do not agree with the These edits are similar to the edits we would overestimate payments for some
argument that paying for have had in place in the OCE since CY diagnostic radiopharmaceuticals,
radiopharmaceuticals as part of the 2005 for medical devices. The underestimate others, and create
payment for the nuclear medicine significant difference, however, is that improper financial incentives for
service to which they are essential will we recognize that, for some nuclear hospitals and physicians to select
harm patient care. We believe that medicine procedures, there is a choice certain radiopharmaceuticals rather
providing packaged payment for of radiopharmaceuticals that could be than others, potentially reducing the
radiopharmaceuticals as part of the used and, therefore, the edits will not quality of care.
nuclear medicine service will cause specify which radiopharmaceutical Response: We believe that we have
hospitals and their physician partners to must be billed with any given nuclear appropriately calculated the
give even more careful consideration to medicine procedure. We also recognize radiopharmaceutical costs that we are
the selection of the radiopharmaceutical that, in some cases, the packaging into the nuclear medicine
that is the most appropriate for the radiopharmaceutical is administered services by using only claims for
patient whom they are treating. several days before the nuclear nuclear medicine services that contain a
We are not accepting the APC Panel medicine service is furnished. In these radiopharmaceutical, as noted above.
recommendation to pay separately for cases, the hospital will need to hold the This is analogous to our process for
radiopharmaceuticals with a per day claim until after the service is furnished ensuring that the costs of devices are
cost in excess of $200 because we could so that the radiopharmaceutical can packaged into the payment for the APC
not determine an empirical basis for appear on the bill with the nuclear in which they are used, and we believe
paying separately for medicine procedure or the bill for the that using only these claims will negate
radiopharmaceuticals with a per day procedure will be returned for any existing problems with the use or
cost in excess of $200. correction. We did not accept the lack of use of the radiopharmaceutical
Comment: Many commenters stated comment that we should establish the revenue codes.
that a diagnostic radiopharmaceutical is edits using combinations of revenue With regard to the concern that
always needed to provide a nuclear codes because to do so would not packaging radiopharmaceuticals will
medicine service and, therefore, CMS provide specific information on the result in overpayment in some cases and
should use only claims in which both particular radiopharmaceutical being underpayment in others, we note that
services were present to compute the furnished and we could not be certain the most fundamental characteristic of a
median cost for the nuclear medicine that the charges were for prospective payment system is that
procedure if CMS decides to package radiopharmaceuticals. payment is to be set at an average for the
diagnostic radiopharmaceuticals. Some Comment: Some commenters asserted service, which, by definition, means
commenters suggested that CMS that, based on survey data they that some services are paid more or less
establish OCE edits that would require gathered, claims data fail to capture than the average. However, the average
should provide adequate payment for Response: We agree that packaging represented by a HCPCS code for the
the service, while creating incentives for costs into the median for a service to major procedure that is assigned to an
hospitals to control costs and utilization which they are an integral part can APC group for payment, we assess the
of high cost services where it is change the median cost for that service applicability of the 2 times rule to
appropriate to do so. We do not believe and result in 2 times violations. As we services at the HCPCS code level, not at
that either beneficiary access to care or noted in the proposed rule, there were a more specific level based on the
the quality of care will be adversely a significant number of APC individual diagnostic
affected because we pay for diagnostic reassignments to eliminate 2 times radiopharmaceuticals that may be
radiopharmaceuticals as part of the violations that would otherwise have utilized in a service reported with a
payment for the procedure to which resulted from the proposed packaging single HCPCS code. If the use of a very
they are an integral part. With regard to approach. However, we disagree that we expensive diagnostic
the influence this may have on the should refrain from packaging payment radiopharmaceutical in a clinical
development and production of for necessary items into the payment for scenario causes a specific procedure to
radiopharmaceuticals, there are many the service in which they are required be much more expensive for the
aspects of the health care economy that in order to prevent 2 times violations hospital than the APC payment, we
influence what is developed and from occurring. Instead, we believe that consider such a case to be the natural
produced, of which Medicare payment we should make the necessary consequence of a prospective payment
under the OPPS is merely one. reassignments to different APCs where system that anticipates that some cases
Comment: Some commenters stated necessary to resolve 2 times violations will be more costly and other less costly
that CMS has not provided adequate where they occur. For example, to than the procedure payment. In
information for specialty societies and resolve 2 times violations that would addition, very high cost cases could be
others to adequately review the otherwise have occurred when we used eligible for outlier payment. As we note
matching of the drugs with the services only those claims for nuclear medicine elsewhere in this final rule with
to determine whether an appropriate procedures reporting HCPCS code for comment period, decisions about
radiopharmaceutical is packaged into diagnostic radiopharmaceuticals, we packaging and bundling payment
the nuclear medicine services. The made the following APC reassignments involve a balance between ensuring
commenters indicated that CMS should for this final rule with comment period. some separate payment for individual
provide data on the percent of nuclear We reassigned CPT code 78730 (Urinary services and establishing incentives for
medicine claims that were reported with bladder residual study (List separately efficiency through larger units of
and without a corresponding in addition to code for primary payment. In the case of diagnostic
radiopharmaceutical so that the public procedure)) from APC 0340 (Minor radiopharmaceuticals, these products
can determine whether an edit is Ancillary Procedures) to APC 0389 will be part of the OPPS payment
indicated for reporting these services (Level I Non-Imaging Nuclear package for the procedures in which
either through OCE or backend rate Medicine). We reassigned CPT code they are used beginning in CY 2008.
setting and, if so, what edit would be 78725 (Kidney function study, non- Comment: One commenter objected to
appropriate. imaging radioisotopic study) from APC packaging of diagnostic
Response: We provided considerable 0389 to APC 0392 (Level II Non-Imaging radiopharmaceuticals because the
information and data in support of our Nuclear Medicine). We reassigned CPT commenter believed that including the
proposal. Moreover, we make available code 78006 (Thyroid imaging, with payment for the item in the payment for
our claims data both for the proposed uptake; single determination) from APC the procedure would improperly subject
rule and the final rule so that the public 0390 (Level I Endocrine Imaging) to the portion of the payment that is
can perform any analysis they choose. APC 0391 (Level II Endocrine Imaging). attributable to the diagnostic
There are limits to our ability to provide With regard to APC 0408 (Level III radiopharmaceutical to wage
specialized studies of interest. Tumor/Infection Imaging), that APC adjustment. The commenter indicated
Therefore, we provide a narrative claims contained only one code for the that there should be no wage adjustment
accounting that is intended to proposed rule, CPT code 78804 applied to the cost of a diagnostic
illuminate our data process for those (Radiopharmaceutical localization of radiopharmaceutical.
who would like to use the claims data tumor or distribution of Response: We disagree that we should
to explore alternatives. radiopharmaceutical agent(s); whole not package the payment for a
Comment: Some commenters believed body, requiring two or more days radiopharmaceutical into the payment
that packaging diagnostic imaging), and it had a proposed median for the procedure in which it is an
radiopharmaceuticals would undermine of approximately $1,010. For this final integral part because part of the
the clinical and resource homogeneity rule with comment period, APC 0408 procedure payment will be wage
of the nuclear medicine APCs, contains 3 CPT codes: 78804 adjusted. Since the inception of the
especially the cardiac imaging APCs, (Radiopharmaceutical localization of OPPS, we have determined that,
resulting in 2 times violations. The tumor or distribution of approximately 60 percent of the cost of
commenters stated that the APC radiopharmaceutical agent(s); whole an OPPS service is attributable to wage
revision that is proposed as a result of body, requiring two or more days costs. That figure is an overall average
the proposed packaging results in a lack imaging); 78075 (Adrenal Imaging, percent that takes into account the
of resource and clinical homogeneity cortex and/or medulla); and 78803 extent to which there are costs in the
within the APCs. Specifically, the (Radiopharmaceutical localization of OPPS payments that are not attributable
commenters believed that, by packaging tumor or distribution of to wages. We have a longstanding policy
diagnostic radiopharmaceuticals, CMS radiopharmaceutical agent(t); of wage adjusting 60 percent of the cost
created a 2 times violation in APC 0408 tomographic (SPECT)). For this final of the APC, regardless of whether it is
because the median costs for the rule with comment period, APC 408 has an office visit (which is mostly wage
services assigned to the APC vary a median cost of approximately $969. costs) or an ICD replacement (in which
widely for the procedure code based on Because we have traditionally paid for most of the cost is a device), because our
the radiopharmaceutical used. a service package under the OPPS as analysis shows that, overall, OPPS
services approximately 60 percent of the physician is seeking information to use nuclear medicine procedures. Some
cost is attributable to wages. in planning a course of therapy. The commenters indicated that continuation
Comment: Some commenters stated scan is a diagnostic service, of the current payment at charges
that diagnostic radiopharmaceuticals are notwithstanding that the disease has reduced to cost by the overall CCR,
not interchangeable and carry high costs previously been diagnosed and the while not ideal, is a reasonable
because, if the patient for whom the diagnostic service is essential to temporary solution until CMS can
hospital secures a radiopharmaceutical planning therapy. While we recognize implement a long term solution to pay
cannot use the product, the hospital that these radiopharmaceuticals are sole acquisition costs for
cannot bill for it and must absorb the source products, we do not believe that radiopharmaceuticals as required by
loss. The commenters stated that is sufficient to justify treating them law. Some commenters supported CMS’
hospitals have little or no flexibility in differently from other diagnostic use of its claims data alone to set the CY
determining the diagnostic radiopharmaceuticals. Moreover, given 2008 payment rates, but only if no
radiopharmaceutical that they purchase that the Medicare population is such a external data source is available to pay
and have little ability to achieve dominant portion of the population to actual acquisition costs for
efficiency. which these services are targeted, we do radiopharmaceuticals.
Response: We recognize that not believe that hospitals will cease to Response: As we previously stated,
radiopharmaceuticals are specialized provide the service because the payment we have decided to package payment for
products that have unique costs is packaged into the payment for the diagnostic radiopharmaceuticals into
associated with them. However, we service to which the the payment for nuclear medicine
believe that the costs should be reflected radiopharmaceutical is an integral part. services. Therefore, proposals for
in the charges that hospitals set for them We also note that, under 42 CFR gathering data on which separate
and in the cost report where the full 489.53(a)(2), CMS may terminate the payment could be based are not
costs of the services are carried. provider agreement of any hospital that relevant. However, we note that when
Therefore, the costs will be calculated furnishes this or any other service to its we proposed to acquire ASP data for
like any other OPPS cost and packaged patients but fails to also furnish it to radiopharmaceuticals for purposes of
into the total cost of the nuclear Medicare patients who need it. paying separately for them under the CY
medicine service to which they are an 2006 OPPS, commenters were virtually
integral part and will be the basis for the Comment: Some commenters asked
unanimous that the industry could not
payment rate for the nuclear medicine that CMS pay hospitals separately for report valid sales price data on
service in the same way that other diagnostic radiopharmaceuticals based radiopharmaceuticals.
packaged costs contribute to the on acquisition costs. The commenters After consideration of the public
payment rate for the services to which had a variety of recommendations comments received, we are finalizing
they are an integral part. regarding how CMS should acquire our CY 2008 proposal to provide
Comment: Several commenters stated acquisition cost data on which CMS packaged payment for diagnostic
that HCPCS codes A9542 (Indium IN– could base separate payment for radiopharmaceuticals, with
111 ibritumomab tiuxetan, diagnostic, radiopharmaceuticals. Some modification to calculate the median
per study dose, up to 5 millicuires) and commenters recommended that CMS costs for the APCs for nuclear medicine
A9544 (Iodine I–131 tositumomab, conduct surveys of radiopharmaceutical studies that require a diagnostic
diagnostic, per study dose) are not costs or rely on the external data from radiopharmaceutical using only claims
diagnostic radiopharmaceuticals and surveys conducted by outside entities to on which at least one diagnostic
should not be packaged. The obtain cost data. Some commenters radiopharmaceutical is present. We will
commenters reported that they are not recommended that CMS work with implement edits in the OCE for services
used to diagnose the patient’s disease stakeholders to develop a standardized furnished on and after January 1, 2008,
but instead are used to assess the radiopharmaceutical reporting format that will return to providers any claim
biodistribution of radioimmunotherapy and base separate payment for for a nuclear medicine study that does
agents or to calculate the therapeutic radiopharmaceuticals on a not also report a HCPCS code and
dose of those agents. The commenters radiopharmaceutical average selling charge for a diagnostic
contended that, although packaging is nuclear pharmacy price (ASNPP), radiopharmaceutical. We are not
intended to create incentives for using average acquisition cost (ACC), or accepting the APC Panel’s
the most cost-effective product, in these another voluntarily reported amount if recommendation to set a packaging
cases there are no other products that furnished by manufacturers and nuclear threshold for diagnostic
are available, and hence these products pharmacies, instead of claims data radiopharmaceuticals at a median cost
should always be paid separately. The charges adjusted to cost by departmental of $200 per day. We are accepting the
commenters concluded that the CCRs. Other commenters suggested that APC Panel’s recommendation to provide
proposed payments for these services CMS require hospitals to report information regarding claims for
are so low that hospitals will not offer acquisition costs for diagnostic radiopharmaceuticals
the treatments to Medicare beneficiaries. radiopharmaceuticals, instruct reported with nuclear medicine
Response: We continue to believe that contractors to collect periodic reports procedures, and we will discuss that
HCPCS codes A9542 and A9544 are from hospitals of diagnostic information with the Panel at the 2008
diagnostic radiopharmaceuticals. While radiopharmaceutical costs, and gather winter meeting. Diagnostic
they are not used to diagnose disease, and summarize nuclear pharmacy radiopharmaceuticals assigned status
they are used to determine whether invoice data through CY 2008 that indicator ‘‘N’’ that will be
future therapeutic services would be would be used to set CY 2009 rates. The unconditionally packaged are listed in
beneficial to the patient and to commenters stated that separate Table 10 of this final rule with comment
determine how to proceed with therapy. payment of diagnostic period.
This is analogous to the use of positron radiopharmaceuticals for CY 2008 is
emission tomography (PET) scanning for critical to enable hospitals to account (6) Contrast Agents
staging purposes when there has already for the complex combinations of For CY 2008, we proposed to package
been a diagnosis of disease but the radiopharmaceuticals used to provide payment for all contrast media into their
associated independent diagnostic and specified above used to report contrast and promote value-based purchasing
therapeutic procedures as part of our agents under the OPPS. As shown in under the OPPS, their payment would
proposed packaging approach for the CY Table 19 of the proposed rule, in CY be appropriately packaged for CY 2008.
2008 OPPS (72 FR 42672 through 2007 we packaged 7 out of 20 of these The estimated overall impact of these
42674). As noted in section II.A.4.c. of contrast agent HCPCS codes based on changes presented in section XXII.B. of
the proposed rule and this final rule the $55 packaging threshold. For CY the proposed rule (and section XXIV.B.
with comment period, packaging the 2008, we proposed to package all drugs of this final rule with comment period)
costs of supportive items and services with a per day mean cost of $60 or less. was based on the assumption that
into the payment for the independent For CY 2008, the vast majority of hospital behavior would not change
procedure or service with which they contrast agents would be packaged with regard to when these contrast
are associated encourages hospital under the traditional OPPS packaging agents are provided by the same
efficiencies and also enables hospitals to methodology using the $60 packaging hospital that performs the imaging
manage their resources with maximum threshold, based on the CY 2006 claims procedure. Under this policy, in order to
flexibility. As stated in the proposed data available for the proposed rule. In provide imaging procedures requiring
rule (72 FR 42672), we believe that fact, of the 20 contrast agent HCPCS contrast agents, hospitals will either
contrast agents are particularly well codes we included in our proposed need to administer the necessary
suited for packaging because they are packaging approach, 15 would have contrast agent themselves or refer
always provided in support of an been proposed to be packaged for CY patients elsewhere for the
independent diagnostic or therapeutic 2008 under our drug packaging administration of the contrast agent. In
procedure that involves imaging, and the latter case, claims data would show
methodology. These 15 codes represent
thus payment for contrast agents can be such a change in practice in future years
94 percent of all occurrences of contrast
packaged into the payment for the and that change would be reflected in
agents billed under the OPPS, using
associated separately payable future ratesetting. However, with
proposed rule data. As stated in the
procedures. respect to contrast agents, we believe
proposed rule (72 FR 42672), we believe
Contrast agents are generally that hospitals are limited in the extent
that this shift in the packaging status for
considered to be those substances to which they could change their
several of these agents between CYs
introduced into or around a structure behavior with regard to how they
2007 and 2008 may be because, in CY
that, because of the differential furnish these services because contrast
2007, a number of the contrast agents
absorption of x-rays, alteration of agents are typically provided on the
magnetic fields, or other effects of the exceeded the $55 threshold by only a same day immediately prior to an
contrast medium in comparison with small amount and, based on our latest imaging procedure being performed. We
surrounding tissues, permit claims data for CY 2008, a number of expected that hospitals would always
visualization of the structure through an these products have now fallen below bill the contrast agent on the same claim
imaging modality. The use of certain the proposed $60 threshold. Given that as the other independent services for
contrast agents is generally associated the vast majority of contrast agents which the contrast agent was
with specific imaging modalities, billed would already be packaged under administered.
including x-ray, computed tomography the OPPS in CY 2008, we stated in the As we indicated earlier, in all cases
(CT), ultrasound, and magnetic proposed rule (72 FR 42672) that we we are providing that hospitals that
resonance imaging (MRI), for purposes believe it would be desirable to package furnish the supportive contrast agent in
of diagnostic testing or treatment. They payment for the remaining contrast association with independent
are most commonly administered agents as it promotes efficiency and procedures involving imaging must bill
through an oral or intravascular route in results in a consistent payment policy both services on the same claim so that
association with the performance of the across products that may be used in the cost of the contrast agent can be
independent procedures involving many of the same independent appropriately packaged into payment
imaging that are the basis for their procedures. We also noted in the for the significant independent
administration. Even in the absence of proposed rule (72 FR 42672) that the procedure. As noted in the proposed
this proposal to package payment for all significant costs associated with these rule (72 FR 42673), we expect to
contrast agents, we indicated that we 15 contrast agents would already be carefully monitor any changes in billing
would propose to package the majority reflected in the median costs for those practices on a service-specific and
of HCPCS codes for contrast agents independent procedures and, if we were hospital-specific basis to determine
recognized under the OPPS in CY 2008. to pay for the 5 remaining agents whether there is reason to request that
We consider contrast agents to be drugs separately, we would be treating these 5 QIOs review the quality of care
under the OPPS, and as a result they are agents differently than the others. If the furnished or to request that Program
packaged if their estimated mean per 5 agents remained separately payable, Safeguard Contractors review the claims
day cost is equal to or less than $60 for there would effectively be two payments against the medical record.
CY 2008. (For more discussion of our for contrast agents when these 5 agents During its September 2007 APC Panel
drug packaging criteria, we refer readers were billed—a separate payment and a meeting, the Panel recommended that
to section V.B.2 of this final rule with payment for packaged contrast agents contrast agents be packaged as
comment period.) Seventy-five percent that was part of the procedure payment. proposed.
of contrast agents HCPCS codes have an This could potentially provide a We received many public comments
estimated mean per day cost equal to or payment incentive to administer certain on the proposal to package payment for
less than $60 based on our CY 2006 contrast agents that might not be the all contrast agents. A summary of the
proposed rule claims data. most clinically appropriate or cost public comments and our responses
At the time of the proposed rule, effective. Moreover, as noted previously, follow.
contrast agents were described by those contrast agents are always provided Comment: Many commenters
Level II HCPCS codes in the range from with independent procedures and, supported our proposal to package all
Q9945 through Q9964. There were under a consistent approach to contrast agents, while others requested
currently no HCPCS C-codes or other packaging in keeping with our enhanced that we pay separately for all contrast
Level II HCPCS codes outside the range efforts to encourage hospital efficiency agents in accordance with the Average
Sales Price (ASP) payment contrast are accurate, further bolstering In response to the commenter who
methodology. Many commenters our perspective that hospitals are found it difficult operationally to
requested that we treat contrast agents correctly billing the charges for contrast manage changes in the packaged status
in the same manner as we treat other agents for those services that require of contrast media, we note that we do
drugs under the OPPS, thereby them. There is currently a significant not anticipate regular changes to the
continuing to apply the proposed $60 cost differential that appears to be packaged status of contrast media, now
threshold to determine packaging status. appropriate between CT scans with and that we are finalizing our proposal to
One commenter expressed concern with without contrast, and we have no reason package payment for all contrast media.
the accuracy of CMS’ cost data, and to believe that this cost differential is In response to the commenter’s
estimated that if contrast agents were inaccurate. For example, the CY 2008 concern about payment for expensive
packaged, hospitals would not receive median cost for CPT code 72192 contrast agents like gadolinium-based
any payment in addition to the payment (Computer tomographic angiography, contrast media, we note that the
for the procedure without contrast. pelvis, without contrast material) is gadolinium-based contrast agents would
Several commenters requested that CMS approximately $190. The CY 2008 be packaged under the $60 packaging
create edits to ensure that the costs for median cost for CPT code 72193 threshold, regardless of whether this
contrast agents are only packaged with (Computer tomographic angiography, proposal to package payment for all
appropriate procedures, rather than pelvis, with contrast material) the same contrast media was finalized. Packaging
with any code that may appear on the procedure, with contrast, is payment for these products provides
claim. Other commenters requested that approximately $249. The CY 2008 hospitals with an incentive to choose
CMS implement edits to ensure that median costs for the services in APC the most cost-effective contrast agent
contrast agents are always billed with 0332 (Computed Tomography Without that meets the needs of the patient.
procedures that require contrast agents. Contrast) range from approximately Comment: Several commenters
Some commenters were concerned that $164 to $227. The CY 2008 proposed questioned whether we have the
CMS may not be accounting for the full median costs for the services in APC authority under the Social Security Act
cost of the contrast agent, because of the 0283 (Computed Tomography with to package all contrast agents.
methodology used to determine the Contrast) range from approximately Response: See section V.B.4.b. of this
acquisition costs of the agents. One $247 to $333, significantly higher than final rule with comment period for a
commenter noted that it is difficult for the median costs for the procedures that discussion of the rationale to package
hospitals operationally to treat contrast do not involve contrast media. payment for contrast agents as SCODs
agents as packaged, then separately Providers have several ways to report and our belief that the packaged
payable the following year, and then contrast agents, including uncoded payment provides payment at average
packaged again. In addition, charges on revenue code lines, acquisition cost for the products.
commenters were concerned that including the charge for the contrast Comment: Several commenters
packaged status would encourage less agent in the charge for the procedure, or requested that contrast agents used for
coding accuracy, which would hinder reporting the appropriate HCPCS code echocardiography imaging procedures
the development of accurate future for the contrast agent that was used. remain separately paid in CY 2008.
payment rates. One commenter
Prior to proposing to package payment These commenters were concerned that
expressed concern that patient access to
for all contrast agents, we note that there echocardiography procedure codes do
more expensive contrast agents, such as
were no concerns or complaints about not distinguish between services
gadolinium-based contrast agents, may
the payment rates for imaging studies provided with contrast and those
be limited, if the proposal to package all
with and without contrast, when a provided without contrast, although
contrast agents were finalized.
Response: We have considered all of number of the commonly used contrast section 1833(t)(2)(G) of the Act requires
the comments on this issue and have agents were packaged. In addition, if we that contrast and noncontrast
concluded that it is appropriate to were to subset claims for procedures procedures be paid through separate
package all contrast agents into payment that require a contrast agent to use only APC groups. As echocardiography
for the procedure in which they are those claims that included a coded procedures are not usually performed
used. Many contrast agents are packaged contrast agent, we would be able to use with contrast, the commenters asserted
currently under the OPPS and have many fewer claims, which would cause that the packaged payment for contrast
been packaged since the inception of the our median costs to be less accurate and and echocardiography would be
OPPS. We have no reason to believe that representative. insufficient to cover both costs, and that
the cost data that we developed for Most of the contrast media would physicians would therefore be limited
contrast agents are insufficient to result have been packaged in the absence of in their ability to use contrast when
in an appropriate median cost for the this packaging proposal, because 75 necessary.
services in which the contrast agent is percent of all contrast agents fall below Response: The commenters are
used. Moreover, we are not convinced the $60 threshold for CY 2008. correct; section 1833(t)(2)(G) of the Act
that there are benefits to making However, we are interested to know requires us to create additional groups
separate payment that would outweigh whether the public thinks it would be of services for procedures that use
the incentives for appropriate utilization beneficial from a ratesetting perspective contrast agents. As contrast agents were
and efficiency that are created by to require hospitals to report contrast eligible for separate payment in CY 2007
packaging the payment for the contrast media by including HCPCS codes for but subject to the OPPS drug packaging
agent into the payment for the service in contrast on all claims for procedures threshold, a distinction was made in
which it is used. that use contrast. We are particularly payment between those procedures
In addition, we do not believe it is concerned with unnecessarily performed with contrast from those
necessary to create edits to ensure that burdening hospitals, and are seeking without contrast. However, as noted
contrast agents are billed in conjunction comments in this final rule with above, we are finalizing our proposal to
with services that require contrast comment period related to how package all contrast agents in CY 2008
agents. For example, we believe that the administratively burdensome this regardless of if they meet the OPPS drug
payment rates for CT with and without requirement would be for hospitals. packaging threshold.
Because current CPT codes do not and in terms of resource use, as assigned HCPCS codes C8921 through
distinguish between echocardiography evidenced by similar HCPCS median C8928 to the newly created APC 0128.
procedures performed without contrast costs. Therefore, pursuant to the statute, Hospitals performing echocardiography
from those performed with contrast, we we have created APC 0128 procedures without contrast will
calculated HCPCS–specific median (Echocardiogram With Contrast) to continue to use the CPT codes indicated
costs for echocardiography procedures provide payment for echocardiography in Table 5, while echocardiography
that were performed with contrast by procedures that are performed with a procedures performed with contrast will
isolating single and ‘‘pseudo’’ single contrast agent in CY 2008. be reported with the newly developed
claims with CPT codes 93303 through In order for hospitals to report C-codes also identified in Table 5. We
93350 where there was also a contrast echocardiography procedures performed will provide further instruction about
agent on the claim. Our analysis with contrast, as all contrast will be
reporting echocardiography procedures
indicated that median costs for packaged in CY 2008, we have also
with and without contrast in the January
echocardiography procedures performed created the eight new HCPCS codes
with contrast are similar both clinically shown in Table 3 below. We have 2007 OPPS update.
TABLE 5.—CY 2008 ECHOCARDIOGRAPHY HCPCS CODES FOR PROCEDURES WITH AND WITHOUT CONTRAST
Echocardiography without contrast Echocardiography with contrast
HCPCS Descriptor SI APC HCPCS Descriptor SI APC
93303 ....... Transthoracic echocardiography for con- S 0269 C8921 ...... Transthoracic echocardiography with con- S 0128
genital cardiac anomalies; complete. trast for congenital cardiac anomalies;
complete.
93304 ....... Transthoracic echocardiography for con- S 0697 C8922 ...... Transthoracic echocardiography with con- S 0128
genital cardiac anomalies; follow-up or trast for congenital cardiac anomalies;
limited study. follow-up or limited study.
93307 ....... Echocardiography, transthoracic, real-time S 0269 C8923 ...... Transthoracic echocardiography with con- S 0128
with image documentation (2D) with or trast, real-time with image documenta-
without M-mode recording; complete. tion (2D) with or without M-mode re-
cording; complete.
with image documentation (2D) with or trast, real-time with image documenta-
without M-mode recording; follow-up or tion (2D) with or without M-mode re-
limited study. cording; follow-up or limited study.
93312 ....... Echocardiography, transesophageal, real S 0270 C8925 ...... Transesophageal echocardiography (TEE) S 0128
time with image documentation (2D) with contrast, real time with image doc-
(with or without M-mode recording); in- umentation (2D) (with or without M-
cluding probe placement, image acqui- mode recording); including probe place-
sition, interpretation and report. ment, image acquisition, interpretation
and report.
93313 ....... Echocardiography, transesophageal, real S 0270
time with image documentation (2D)
(with or without M-mode recording);
placement of transesophageal probe
only.
93314 ....... Echocardiography, transesophageal, real N
time with image documentation (2D)
(with or without M-mode recording);
image acquisition, interpretation and re-
port only.
93315 ....... Transesophageal echocardiography for S 0270 C8926 ...... Transesophageal echocardiography (TEE) S 0128
congenital cardiac anomalies; including with contrast for congenital cardiac
probe placement, image acquisition, in- anomalies; including probe placement,
terpretation and report. image acquisition, interpretation and re-
port.
93316 ....... Transesophageal echocardiography for S 0270
congenital cardiac anomalies; place-
ment of transesophageal probe only.
93317 ....... Transesophageal echocardiography for N
congenital cardiac anomalies; image ac-
quisition, interpretation and report only.
93318 ....... Echocardiography, transesophageal (TEE) S 0270 C8927 ...... Transesophageal echocardiography (TEE) S 0128
for monitoring purposes, including probe with contrast for monitoring purposes,
placement, real time 2-dimensional including probe placement, real time 2-
image acquisition and interpretation dimensional image acquisition and inter-
leading to ongoing (continuous) assess- pretation leading to ongoing (contin-
ment of (dynamically changing) cardiac uous) assessment of (dynamically

pumping function and to therapeutic changing) cardiac pumping function and
measures on an immediate time basis. to therapeutic measures on an imme-
diate time basis.
TABLE 5.—CY 2008 ECHOCARDIOGRAPHY HCPCS CODES FOR PROCEDURES WITH AND WITHOUT CONTRAST—
Continued
Echocardiography without contrast Echocardiography with contrast
HCPCS Descriptor SI APC HCPCS Descriptor SI APC
93320 ....... Doppler echocardiography, pulsed wave N

and/or continuous wave with spectral
display (List separately in addition to
codes for echocardiographic imaging);
complete.
93321 ....... Doppler echocardiography, pulsed wave N
and/or continuous wave with spectral
display (List separately in addition to
codes for echocardiographic imaging);
follow-up or limited study (List sepa-
rately in addition to codes for echo-
cardiographic imaging).
93325 ....... Doppler echocardiography color flow ve- N
locity mapping (List separately in addi-
tion to codes for echocardiography).
with image documentation (2D), with or trast, real-time with image documenta-
without M-mode recording, during rest tion (2D), with or without M-mode re-
and cardiovascular stress test using cording, during rest and cardiovascular
treadmill, bicycle exercise and/or phar- stress test using treadmill, bicycle exer-
macologically induced stress, with inter- cise and/or pharmacologically induced
pretation and report. stress, with interpretation and report.
In order to determine a payment rate or without contrast. For claims where an (Transesophageal Echocardiogram
for APC 0128 for CY 2008, we isolated echocardiography procedure was billed Without Contrast); and 0697 (Level I
single and ‘‘pseudo’’ single claims in with a contrast agent, we packaged the Echocardiogram Without Contrast
our database that included those CPT payment for the contrast agent into the Except Transesophageal), as we needed
codes in the range of 93303 through echocardiography procedure and then to remove the claims from the
93350 that correspond to the contrast calculated the median cost for this ratesetting process that included
studies described by the new C-codes. subset of claims. This became the contrast because they were used to set
We created new C-codes for contrast median for APC 0128. In addition, we the median cost for APC 0128. The
studies only to parallel those CPT codes recalculated the medians for APCs 0269 resulting CY 2008 APC medians are
for procedures where we expected that (Level II Echocardiogram Without shown in Table 6.
the procedures could be provided with Contrast Except Transesophageal); 0270
TABLE 6.–CY 2008 FINAL RULE ECHOCARDIOGRAM APC MEDIANS

HCPCS
APC Title Median
Codes
0269 ............................. Level II Echocardiogram Without Contrast Except Transesophageal .............................................. 93303 $401
93307
0270 ............................. Transesophageal Without Contrast Echocardiogram ....................................................................... 93312 $517
93313
93315
93316
93318
0697 ............................. Level I Echocardiogram Without Contrast Except Transesophageal ............................................... 93304 $210
93308
93350
0128 ............................. Echocardiogram With Contrast ......................................................................................................... C8921 $534
C8922
C8923
C8924
C8925
C8926
C8927
C8928
We believe that these medians contrast. This final coding and payment procedures that use contrast agents and
accurately reflect hospital costs when methodology allows us to both adhere to to package payment contrast agents in
performing echocardiography the statutory requirement to create CY 2008. Therefore, we are finalizing
procedures, both with and without additional groups of services for our policy to assign HCPCS codes C8921
through C8928 to APC 0128 and will (66 FR 59856, 59879). Payment for reported under HCPCS code G0378
instruct hospitals to use these contrast- observation care that did not meet these provided to a patient when all of the
specific HCPCS codes when submitting specified criteria was packaged. following requirements are met. The
an OPPS claim for echocardiography Between CY 2003 and CY 2006, several hospital would receive a single separate
procedures performed with contrast. more changes were made to the OPPS payment for an episode of observation
For CY 2008, we are finalizing our policy regarding separate payment for care (APC 0339) when:
proposal to unconditionally packaged observation services, such as:
payment for all contrast agents, with clarification that observation is not 1. Diagnosis Requirements
modification as discussed above. We are separately payable when billed with a. The beneficiary must have one of
fully adopting the APC Panel ‘‘T’’ status procedures on the day of or three medical conditions: congestive
recommendation to package all contrast day before observation care; heart failure, chest pain, or asthma.
media for CY 2008. Consistent with the development of specific Level II HCPCS b. Qualifying ICD–9–CM diagnosis
statute, we are also finalizing the codes for hospital observation services codes must be reported in Form Locator
creation of APC 0128, as well as eight and direct admission to observation (FL) 76, Patient Reason for Visit, or FL
Level II HCPCS codes that describe care; and removal of the initially 67, principal diagnosis, or both in order
echocardiography procedures performed established diagnostic testing for the hospital to receive separate
with contrast. Contrast agents that are requirements for separately payable payment for APC 0339. If a qualifying
packaged are assigned status indicator observation (67 FR 66794, 69 FR 65828, ICD–9–CM diagnosis code(s) is reported
‘‘N’’ and are listed in Table 10 of this and 70 FR 68688). Throughout this time in the secondary diagnosis field, but is
final rule with comment period. period, we maintained separate not reported in either the Patient Reason
(7) Observation Services payment for observation care only for for Visit field (FL 76) or in the principal
the three specified medical conditions, diagnosis field (FL 67), separate
We proposed to package payment for and OPPS payment for observation for payment for APC 0339 is not allowed.
all observation care, reported under all other clinical conditions remained
HCPCS code G0378 (Hospital packaged. 2. Observation Time
observation services, per hour) for CY Since January 1, 2006, hospitals have a. Observation time must be
2008. We proposed that payment for reported observation services based on documented in the medical record.
observation care would be packaged as an hourly unit of care using HCPCS b. A beneficiary’s time in observation
part of the payment for the separately code G0378. This code has a status (and hospital billing) begins with the
payable services with which it is billed. indicator of ‘‘Q’’ under the CY 2007 beneficiary’s admission to an
We have defined observation care as a OPPS, meaning that the OPPS claims observation bed.
well defined set of specific, clinically processing logic determines whether the c. A beneficiary’s time in observation
appropriate services that include observation is packaged or separately (and hospital billing) ends when all
ongoing short-term treatment, payable. The OCE’s current logic clinical or medical interventions have
assessment, and reassessment before a determines whether observation been completed, including follow-up
decision can be made regarding whether services billed under HCPCS code care furnished by hospital staff and
patients will require further treatment as G0378 are separately payable through physicians that may take place after a
hospital inpatients or if they are able to APC 0339 (Observation) or whether physician has ordered the patient be
be discharged from the hospital. payment for observation services will be released or admitted as an inpatient.
Observation status is commonly packaged into the payment for other d. The number of units reported with
assigned to patients who present to the separately payable services provided by HCPCS code G0378 must equal or
emergency department and who then the hospital in the same encounter exceed 8 hours.
require a significant period of treatment based on criteria discussed
or monitoring before a decision is made subsequently. (We note that if an HOPD 3. Additional Hospital Services
concerning their next placement or to directly admits a patient to observation, a. The claim for observation services
patients with unexpectedly prolonged Medicare currently pays separately for must include one of the following
recovery after surgery. Throughout the that direct admission reported under services in addition to the reported
proposed rule and in this final rule with HCPCS code G0379 (Direct admission of observation services. The additional
comment period, as well as in our patient for hospital observation care) in services listed below must have a line-
manuals and guidance documents, we situations where payment for the actual item date of service on the same day or
use both of the terms ‘‘observation observation care reported under HCPCS the day before the date reported for
services’’ and ‘‘observation care’’ in code G0378 is packaged.) For CY 2008, observation:
reference to the services defined above. as discussed in more detail later in this • An emergency department visit
Payment for all observation care final rule with comment period (section (APC 0609, 0613, 0614, 0615, or 0616);
under the OPPS was packaged prior to XI.), we proposed to continue the or
CY 2002. Since CY 2002, separate coding and payment methodology for • A clinic visit (APC 0604, 0605,
payment of a single unit of an direct admission to observation status, 0606, 0607, or 0608); or
observation APC for an episode of with the exception of the requirement • Critical care (APC 0617); or
observation care has been provided in that HCPCS code G0379 is only eligible • Direct admission to observation
limited circumstances. Effective for for separate payment if observation care reported with HCPCS code G0379 (APC
services furnished on or after April 1, reported under HCPCS code G0378 does 0604).
2002, separate payment for observation not qualify for separate payment. As b. No procedure with a ‘‘T’’ status
was made if the beneficiary had chest noted in the proposed rule (72 FR indicator can be reported on the same
pain, asthma, or congestive heart failure 42674), this requirement would no day or day before observation care is
and met additional criteria for longer be applicable under our proposal provided.
diagnostic testing, minimum and to package all observation services
maximum limits to observation care 4. Physician Evaluation
reported under HCPCS code G0378.
time, physician care, and For CY 2007, separate OPPS payment a. The beneficiary must be in the care
documentation in the medical record may be made for observation services of a physician during the period of
observation, as documented in the CY 2004, there were approximately expanding separate payment for
medical record by admission, discharge, 77,000 claims for separately payable observation services to include two
and other appropriate progress notes observation care. By CY 2005, that additional diagnoses, syncope and
that are timed, written, and signed by number had increased to approximately dehydration. As mentioned previously,
the physician. 124,300 claims, representing an increase we have defined observation care as a
b. The medical record must include of approximately 61 percent over the well-defined set of specific, clinically
documentation that the physician previous calendar year. Based on the CY appropriate services, which include
explicitly assessed patient risk to 2006 data available for issuance of the ongoing, short term treatment,
determine that the beneficiary would proposed rule, the frequency of claims assessment, and reassessment, that are
benefit from observation care. for separately payable observation furnished while a decision is being
In the context of our proposed CY services increased to more than 271,200 made regarding whether a patient will
2008 packaging approach, we indicated claims which represents an increase of require further treatment as a hospital
that we believed that it was appropriate approximately 118 percent over CY inpatient or if the individual is able to
to package payment for all observation 2005 and more than triple the number be discharged from the hospital. Given
services reported with HCPCS code of claims for CY 2004. While it is not the definition of observation services, it
G0378 under the CY 2008 OPPS. possible to discern the specific factors is clear that, in certain circumstances,
Primarily, observation services are ideal responsible for the growth in claims for observation care could be appropriate
for packaging because they are always separately payable observation services, for patients with a range of diagnoses.
provided as a supportive service in as there have been minor changes in Both the APC Panel and numerous
conjunction with other independent both the process and criteria for separate commenters to prior OPPS proposed
separately payable hospital outpatient payment for these services over this rules have confirmed their agreement
services such as an emergency time period, the substantial growth by with this perspective. In addition, the
department (ED) visit, surgical itself is noteworthy. June 2006 Institute of Medicine (IOM)
procedure, or another separately In the proposed rule (72 FR 42675), Report entitled, ‘‘Hospital-Based
payable service, and thus observation we indicated that we were also Emergency Care: At the Breaking Point,’’
costs can logically be packaged into concerned that the current criteria for encourages hospitals to apply tools to
OPPS payment for independent separate payment for observation improve the flow of patients through
services. As discussed extensively in services may provide disincentives for emergency departments, including
this section, packaging payment into efficiency. For CY 2007, in order for developing clinical decisions units
larger payment bundles creates observation services to be separately where observation care is provided. The
incentives for providers to furnish payable, they must last at least 8 hours. IOM’s Committee on the Future of
services in the most efficient way that While this criterion was put in place to Emergency Care in the United States
meets the needs of the patient, ensure that separate payment is made Health System recommended that CMS
encouraging long-term cost only for observation services of a remove the current limitations on the
containment. substantial duration, it may create a
As we discussed in the general medical conditions that are eligible for
financial disincentive for an HOPD to separate observation care payment in
overview of the CY 2008 packaging make a timely determination regarding
approach (section II.A.4.b. of this final order to encourage the development of
a patient’s safe disposition after such observation units.
rule with comment period), there has observation care ends. By packaging
been substantial growth in program payment for all observation services, We indicated in the proposed rule (72
expenditures for hospital outpatient regardless of their duration, we would FR 42676) that, as packaging payment
services under the OPPS in recent years. provide incentives for more efficient provides desirable incentives for greater
The primary reason for this upsurge is delivery of services and timely decision- efficiency in the delivery of health care
growth in the intensity and utilization making. The current criterion also and provides hospitals with significant
of services rather than the general price prohibits separate payment for flexibility to manage their resources, we
of services or enrollment changes. This observation services when a ‘‘T’’ status believed it was most appropriate to treat
observed trend is notably reflected in procedure (generally a surgical observation care for all diagnoses
the frequency and costs of separately procedure) is provided on the same day similarly by packaging its costs into
payable observation care for the last few or the previous day by the HOPD to the payment for the separately payable
years. While median costs for an same Medicare beneficiary. Again, this independent services with which the
episode of observation care that would may create a financial disincentive for observation is associated. We noted in
meet the criteria for separate payment hospitals to provide minor surgical the proposed rule (72 FR 42676) that
have remained relatively stable between procedures during a patient’s this consistent payment methodology
CYs 2003 and 2006, the frequency of observation stay, unless those would provide hospitals with the
claims for separately payable procedures are essential to the patient’s flexibility to assess their approaches to
observation services has rapidly care during that time period, even if the patient care and patient flow and
increased. Comparing claims data for most efficient and effective performance provide observation care for patients
separately payable observation care of those procedures could be during the with a variety of clinical conditions
available for proposed rules spanning single HOPD encounter. when hospitals conclude that
from CYs 2005 to 2008 (that is, claims Currently, the OPPS pays separately observation services would improve
data reflecting services furnished from for observation care for only the three their treatment of those patients.
CYs 2003 to 2006), we saw substantial original medical conditions designated Approximately 70 percent of the
growth in separately payable in CY 2002, specifically chest pain, occurrences of observation care billed
observation care billed under the OPPS asthma, and congestive heart failure. As under the OPPS are currently packaged,
over that time. In CY 2003, the first full discussed in more detail in the and this expansion would extend the
year that observation care was observation section (section XI.) of this incentives for efficiency already present
separately payable, there were final rule with comment period, the for the vast majority of observation
approximately 56,000 claims for APC Panel recommended at its March services that are already packaged under
separately payable observation care. In 2007 meeting that we consider the OPPS to the remaining 30 percent of
observation services for which we maintaining the CY 2007 payment to observation, or critical care services
currently make separate payment. policy. However, the APC Panel and it is not provided in conjunction
The estimated overall impact of these indicated that if CMS were to package with a surgical procedure. In addition,
changes, presented in section XXII.B. of observation, CMS should create a based on our review of the clinical
the proposed rule (and in section composite emergency department/clinic circumstances provided by many
XXIV.B. of this final rule with comment and observation APC (or group of commenters, we recognize that
period), was based on the assumption composite APCs) that would be paid observation care can be a major
that hospital behavior would not change only when both services were furnished; component service when provided to
with regard to when the dependent if the composite APC were paid, neither patients with clinical conditions other
observation care is provided in the same the emergency department nor the clinic than congestive heart pain, chest pain,
encounter and by the same hospital that visit would be paid separately. The APC and asthma for which separate
performs the independent services. To Panel recommended that coding and observation payment may currently by
the extent that hospitals could change service requirements currently provided under the OPPS.
their behavior and cease providing applicable to separately paid Consistent with our statutory
observation services, refer patients observation would remain the same, flexibility to define what constitutes a
elsewhere for that care, or increase the with the exception that there would be service under the OPPS, we proposed to
frequency of observation services, the no clinical condition (that is, diagnosis) view a service, in some cases, as the
data would show such a change in restrictions on payment for the totality of care provided in a hospital
practice in future years and that change composte APC. The APC Panel noted outpatient encounter that would be
would be reflected in future budget that payment rates for this (these) reported with two or more HCPCS codes
neutrality adjustments. However, with composite APC(s) would need to be for component services with the
respect to observation care, we adjusted based on readily available proposal of composite APCs for low
indicated that we believe that hospitals historical visit and observation data. dose rate prostate brachytherapy and
are limited in the extent to which they We received many public comments cardiac electrophysiological evaluation
could change their behavior with regard on our proposal to package payment for and ablation services. In general, we
to how they furnish these services observation services into the payment intend to request public comment on
because observation care, by definition, for the services with which it is possible composite APCs in the annual
is short-term treatment, assessment, and furnished. A summary of public OPPS proposed rulemaking cycle. This
reassessment before a decision can be comments and our responses follow. also includes creating composite APCs,
made regarding whether patients will Comment: Several commenters, as appropriate, in response to those
require further treatment as hospital including MedPAC, requested that CMS public comments received during
inpatients or if they are able to be finalize its policy to package payment rulemaking.
discharged from the hospital after for all observation care. MedPAC Therefore, we have decided to create
receiving the independent services. We specifically stated that packaging of two composite APCs that will provide
indicated that we believe it is unlikely observation care is logical because payment to hospitals in certain
that hospitals will cease providing currently 70 percent of observation care circumstances when extended
medically necessary observation care or is packaged. However, most commenters assessment and management of a patient
refer patients elsewhere for that care if addressing observation packaging occur. These composite APCs describe
they were unable to reach a decision requested that CMS finalize its proposal an extended encounter for care provided
that the patient could be safely to package all of the categories of codes to a patient. Specifically, we are creating
discharged from the outpatient that it identified in the proposed rule, two new composite APCs for CY 2008,
department. We stated in the proposed with the exception of observation care. APCs 8002 (Level I Extended
rule (72 FR 42677) that we expect that Many of these commenters stated that Assessment and Management
hospitals would always bill the observation care is often a significant Composite) and 8003 (Level II Extended
supportive observation services on the service and is not supportive and Assessment and Management
same claim as the other independent integral to an independent service. Composite). APC 8002 describes an
services provided in the single hospital These commenters recommended that encounter for care provided to a patient
encounter. CMS implement various policies, such that includes a high level (Level 5)
As we indicated earlier, in all cases as paying separately for all observation clinic visit or direct admission to
we proposed that hospitals that furnish care regardless of diagnosis, expanding observation in conjunction with
the observation care in association with the diagnoses that would enable observation services of substantial
independent services must bill those separate payment, postponing packaging duration. APC 8003 describes an
services on the same claim so that the observation services, or creating a encounter for care provided to a patient
costs of the observation services can be composite APC to allow separate that includes a high level (Level 4 or 5)
appropriately packaged into payment payment for observation care in certain emergency department visit or critical
for the independent services. We stated circumstances. care services in conjunction with
in the proposed rule (72 FR 42677) that Response: Based on our review of the observation services of substantial
we expected to carefully monitor any comments received, we continue to duration. As with the other composite
changes in billing practices on a service- believe that observation services are APCs that we proposed, we anticipate
specific and hospital-specific basis to usually ancillary and supportive to the that assignment to and payment through
determine whether there is reason to other independent services that are one of these two new composite APCs
request that QIOs review the quality of provided to the patient on the same day. will be transparent from a billing
care furnished or to request that However, we accept the commenters’ perspective. The OCE will evaluate
Program Safeguard Contractors review and the APC Panel’s statements that every claim received to determine if
the claims against the medical record. observation care may sometimes rise to payment through a composite APC is
During its September 2007 APC Panel the level of a major component service, appropriate. If payment through a
meeting, the APC Panel recommended specifically, when it is provided for 8 composite APC is inappropriate, the
that CMS not package observation hours or more in association with a high OCE in conjunction with the PRICER,
services as proposed, thereby level clinic or ED visit, direct admission will determine the appropriate status
indicator, APC, and payment for every payment for HCPCS code G0378 for median cost using all CY 2006 single
code on a claim. The specific logic observation services will remain bill claims that met the criteria for APC
associated with the two Extended packaged because we consider the 8003, as specified above.
Assessment and Management observation care to be supportive and While analyzing CY 2006 claims data,
Composite APCs is detailed below. ancillary to whichever service(s) it the most current full year claims data
APC 8002 will be assigned when 8 or accompanies. There is no diagnosis available, we observed that applying CY
more units of HCPCS code G0378 requirement for purposes of this 2008 criteria for composite APCs
(Hospital observation service, per hour) composite APC either. Instead, patients resulted in payment for 55 percent more
are billed— with any diagnosis may trigger payment
• On the same day as HCPCS code instances of observation care through a
of APC 8003.
G0379 (Direct admission of patient for We note that HCPCS code G0378 will composite APC than if we had applied
hospital observation care); or continue to be assigned status indicator the CY 2007 criteria to those same
• On the same day or the day after— ‘‘N,’’ signifying that its payment is claims. In addition, our CY 2006 claims
++ CPT code 99205 (Office or other always packaged. As stated above, in data indicate that close to 30 percent of
outpatient visit for the evaluation and most circumstances, observation all observation care was paid separately.
management of a new patient (Level 5)); services are supportive and ancillary to We estimate that roughly 90 percent of
or the other services provided to a patient. those instances of separately payable
++ CPT code 99215 (Office or other In the circumstances when observation observation care reported in CY 2006
outpatient visit for the evaluation and care is elevated to a major component would be eligible for payment through
management of an established patient service in conjunction with a high level composite APCs 8002 and 8003, using
(Level 5)). visit or direct admission that is an CY 2008 criteria. Those separately
If a hospital provides a service with integral part of a patient’s extended payable observation services that would
status indicator ‘‘T’’ on the same date of encounter for care, payment is made for not be eligible for payment through a
service, or 1 day earlier than the date of the entire care encounter through APC composite APC involve observation
service associated with HCPCS code 8002 or 8003, as appropriate. services that were associated with low
G0378, the hospital will not be eligible We are retaining as general reporting level clinic or emergency department
for payment under APC 8002. There is requirements for all observation services visits. In addition, some of the packaged
no diagnosis requirement for purposes those criteria related to physician order observation care that was provided in
of this composite APC. Rather, patients and evaluation, documentation, and CY 2006 would be eligible for payment
with any diagnosis may trigger payment observation beginning and ending time through composite APCs 8002 and 8003
of APC 8002. If any of the criteria listed as listed in section XI. of this final rule because we are eliminating the
above are not met, payment would not with comment period. Those are more diagnosis requirement for CY 2008.
be made through APC 8002. Instead, general requirements that encourage
payment for any separately payable As noted in detail in section IX.C of
hospitals to provide medically this final rule with comment period, we
services, including the clinic visit, reasonable and necessary care and help
would be made through the usual see a normal and stable distribution of
to ensure the proper reporting of clinic and ED visit levels. We do not
associated APCs. Payment for a direct observation services on correctly coded
admission to observation would be expect this distribution to change due to
hospital claims that reflect the full the increase in claims for high level
made according to the usual HCPCS charges associated with all hospital
code G0379 payment criteria and visits that may result from the new
resources utilized to provide the composite APCs. Depending on our CY
payment for HCPCS code G0378 would reported services.
remain packaged because we consider 2008 claims data (which would be used
The CY 2008 median cost for APC
the observation care to be supportive for the CY 2010 OPPS), we may choose
8002 (Level I Extended Assessment and
and ancillary to whichever service(s) it to modify the composite APCs that we
Management Composite) is
accompanies. are creating for CY 2008 or move to
approximately $347. The payment
APC 8003 will be assigned when eight packaging observation care as we
associated with APC 8002 is intended to
or more units of HCPCS code G0378 originally proposed to create further
pay the hospital for the costs associated
(Hospital observation service, per hour) with a single episode of extended incentives for hospitals to operate in an
are billed on the same day or the day assessment and management that efficient way.
after CPT code 99284 (Emergency includes a high level clinic visit or In summary, for CY 2008, payment for
department visit for the evaluation and direct admission to the hospital for observation services will remain
management of a patient (Level 4)), observation care, 8 hours or more of packaged with status indicator ‘‘N.’’ We
99285 (Emergency department visit for observation services, and any associated are creating two composite APCs for
the evaluation and management of a packaged services. We calculated this extended assessment and management,
patient (Level 5)); or 99291 (Critical median cost using all CY 2006 single of which observation care is a
care, evaluation and management of the bill claims that met the criteria for APC component major service. When criteria
critically ill or critically injured patient; 8002, as specified above. The CY 2008 for payment of the composite APCs are
first 30–74 minutes). The remaining median cost for APC 8003 (Level II met, separate payment will be made to
criteria are identical to the criteria Extended Assessment and Management the hospital through the composite APC.
associated with composite APC 8002. If Composite) is approximately $631. The This composite APC payment
a hospital provides a service with status payment associated with APC 8003 is methodology will contribute to our goal
indicator ‘‘T’’ on the same date of intended to pay the hospital for the of providing payment under the OPPS
service, or one day earlier than the date costs associated with a single episode of for a larger bundle of component
of service associated with HCPCS code more intense extended assessment and services provided in a single hospital
G0378, the composite APC 8003 would management that includes a high level outpatient encounter, creating
not apply. Instead, payment for the ED emergency department visit or critical additional hospital incentives for
visit or critical care and any other care services, 8 hours or more of efficiency and cost containment, while
separately payable services will be made observation services, and any associated providing hospitals with the most
through the usual associated APCs, and packaged services. We calculated this flexibility to manage their resources.
d. Development of Composite APCs a service, in some cases, as not just the otherwise be unusable hardcore
(1) Background diagnostic or treatment modality multiples as the basis for an encounter-
identified by one individual HCPCS based composite APC that would make
As we discuss above in regard to our code but as the totality of care provided a single payment when both codes are
reasons for our packaging approach for in a hospital outpatient encounter that reported with the same date of service.
the CY 2008 OPPS, we believe that it is would be reported with two or more We also proposed to pay separately for
crucial that the payment approach of the HCPCS codes for component services. these procedure codes in cases where
OPPS create incentives for hospitals to In view of this statutory flexibility to only one of the two procedures is
seek ways to provide services more define what constitutes a ‘‘service’’ for provided in a hospital encounter,
efficiently than exist under the current purposes of OPPS payment, our desire through the APC associated with that
OPPS structure and allow hospitals to encourage efficiency in HOPD care, component procedure code that is
maximum flexibility to manage their our focus on value-based purchasing, furnished.
resources. The current OPPS structure and our desire to use as much claims Similarly, we have been told (and our
usually provides payment for individual data as possible to set payment rates data support) that multiple cardiac
services which are generally defined by under the OPPS, we examined our electrophysiologic evaluation, mapping,
individual HCPCS codes. We currently claims data to determine how we could and ablation services are typically
package the costs of some items and best use the multiple procedure claims furnished on the same date of service
services (such as drugs and biologicals (‘‘hardcore’’ multiples) that are and that the correctly coded claims are
with an average per day cost of less than otherwise not available for ratesetting typically the multiple procedure claims
$55) into the payment for separately because they include multiple that include several component services
payable individual services. However, separately payable procedures furnished and that we are unable to use in our
because the extent of packaging in the on the same date of service. As current claims process. The CY 2007
OPPS is currently modest, furnishing discussed in more detail in our CPT book introductory discussion in the
many individual separately payable discussion of single and multiple section entitled ‘‘Intracardiac
services increases total payment to the procedure claims in section II.A.1.b. of Electrophysiological Procedures/
hospital. We believe that this aspect of this final rule with comment period, we Studies’’ notes that, in many
the current OPPS structure is a have focused in recent years on ways to circumstances, patients with
significant factor in the growth in convert multiple procedure claims to arrhythmias are evaluated and treated at
volume and spending that we discuss in single procedure claims to maximize the same encounter. Therefore, as
our general overview and provides a our use of the claims data in setting discussed in detail below, we also
primary rationale for the packaging median costs for separately payable proposed to establish an encounter
approach for services that we proposed procedures. We have been successful in based composite APC for these services
for the CY 2008 OPPS. While packaging using the bypass list to generate that would provide a single payment for
payment for supportive dependent ‘‘pseudo’’ single procedure claims for certain common combinations of
services into the payment for the use in median setting, but this approach component cardiac electrophysiologic
independent services which they generally does not enable us to use the services that are reported on the same
accompany promotes greater efficiency hardcore multiple claims that contain date of service.
and gives hospitals some flexibility to multiple separately payable procedures, These composite APCs reflect an
manage their resources, we believe that all with associated packaging that evolution in our approach to payment
payment for larger bundles of major cannot be split among them. We believe under the OPPS. Where the claims data
separately paid services that are that we could use the data from many show that combinations of services are
commonly performed in the same more multiple procedure claims by commonly furnished together, in the
hospital outpatient encounter or as part creating APCs for payment of those future we will actively examine whether
of a multi-day episode of care would services defined as frequently occurring it would be more appropriate to
create even more incentives for common combinations of HCPCS codes establish a composite APC under which
efficiency, as discussed earlier. for component services that we see in we would pay a single rate for the
Moreover, defining the ‘‘service’’ paid correctly coded multiple procedure service reported with a combination of
under the OPPS by combinations of claims. HCPCS codes on the same date of
HCPCS codes for component services Our examination of data for multiple service (or different dates of service)
that are commonly performed in the procedure claims identified two specific than to continue to pay for these
same encounter and that result in the sets of services that we believe are good individual services under service-
provision of a complete service would candidates for payment based on the specific APCs. We proposed these
enable us to use more claims data and naturally occurring common specific encounter-based composite
to establish payment rates that we combinations of component codes that APCs for CY 2008 because we believe
believe more appropriately capture the we see on the multiple procedure that this approach could move the OPPS
costs of services paid under the OPPS. claims. These are low dose rate (LDR) toward possible payment based on an
Section 1833(t)(1)(B) of the Act prostate brachytherapy and cardiac encounter or episode-of-care basis,
permits us to define what constitutes a electrophysiologic evaluation and enable us to use more valid and
‘‘service’’ for purposes of payment ablation services. complete claims data, create hospital
under the OPPS and is not restricted to Specifically, we have been told (and incentives for efficiency, and provide
defining a ‘‘service’’ as a single HCPCS our data support) that claims for LDR hospitals with significant flexibility to
code. For example, the OPPS currently prostate brachytherapy, when correctly manage their resources that do not exist
packages payment for certain items and coded, report at least two major when we pay for services on a per
services reported with HCPCS codes separately payable procedure codes the service basis. As such, we indicated that
into the payment for other separately majority of the time. For reasons these proposed composite APCs may
payable services on the claim. discussed below, in the CY2008 OPPS/ serve as a prototype for future creation
Consistent with our statutory flexibility ASC proposed rule (72 FR 42678 of more composite APCs, through which
to define what constitutes a service through 42679), we proposed to use we could provide OPPS payment for
under the OPPS, we proposed to view these correctly coded claims that would other types of services in the future. We
noted that while these proposed established policy for payment of APC Low Dose Rate Prostate Brachytherapy
composite APCs for CY 2008 are based 0034 differs from the proposed policies Composite (APC 8001). Commenters,
on observed combinations of component for the new CY 2008 composite APCs including MedPAC and the APC Panel,
HCPCS codes reported on the same date because APC 0034 is only paid if the supported the implementation of the
of service for a single encounter, we also sum of the individual payment rates for proposed composite APCs. Commenters
would be exploring in the future how the specified mental health services stated that creation of these composites
we could potentially set payments based provided on one date of service exceeds will enable use of more multiple claims
on episodes of care involving services the APC 0034 payment rate, which data and enable the payment system to
that extend beyond the same date but equals the per diem rate of APC 0033 for better reflect the reality of how services
which are all supportive of a single, partial hospitalization. are commonly furnished. In particular,
related course of treatment. While we We did not propose to change this MedPAC indicated that it supports the
did not propose to implement multiday mental health services payment policy proposed composite APCs because they
episode-of-care APCs in CY 2008, we for CY 2008. However, we proposed to will increase incentives for efficiency
welcomed comments on the concept of change the status indicator from ‘‘S’’ to and can serve as a starting point for
developing these APCs to provide ‘‘Q’’ for the HCPCS codes for the payment bundles that reflect encounters
payment for such episodes in order to specified mental health services to or episodes of care. MedPAC indicated
inform our future analyses in this area. which APC 0034 applies because those that it will be exploring both packaging
While we have never previously used codes are conditionally packaged when and bundling under the OPPS in its
the sum of the payment rates for the future work. Other commenters objected
the term ‘‘composite’’ APC under the
single code APCs to which they are to the creation of composite APCs
OPPS, we have one historical payment
assigned exceeds the per diem payment because they believed that they are
policy that resembles the CY 2008
rate for partial hospitalization. While we dependent on proposed packaging
proposed composite APC policy. Since
have not published APC 0034 in changes that the commenters do not
the inception of the OPPS, CMS has
Addendum A in the past, we are support. Other commenters supported
limited the aggregate payment for
including it in Addendum A to this the concept of composite APCS as long
specified less intensive mental health
final rule with comment period entitled as a composite is limited to related
services furnished on the same date to
‘‘Mental Health Composite,’’ consistent services furnished on the same date of
the payment for a day of partial
with our naming taxonomy and service. These commenters believed that
hospitalization, which we considered to publication of the two other composite the creation of composite APCs for
be the most resource intensive of all APCs. We are also including the mental discontinuous services that span
outpatient mental health treatment (65 health composite APC 0034 and its multiple dates of service would present
FR 18455). The costs associated with member HCPCS codes in Addendum M too many problems to be viable.
administering a partial hospitalization to this final rule with comment period Response: We appreciate the
program represent the most resource in the same way that we show the commenters’ support for the creation of
intensive of all outpatient mental health HCPCS codes to which the LDR Prostate the two proposed composite APCs and
treatment, and we do not believe that Brachytherapy Composite APC and we will implement the proposed new
we should pay more for a day of Cardiac Electrophysiologic Evaluation composite APCs 8000 and 8001 for
individual mental health services under and Ablation Composite APC apply. services furnished on and after January
the OPPS. Through the OCE, when the We solicited public comments on the 1, 2008. We also acknowledge that the
payment for specified mental health concept of composite APCs in general viability of the composite APCs is
services provided by one hospital to a and, specifically, the two new proposed dependent on packaging of the
single beneficiary on one date of service encounter-based composite APCs for CY supportive and ancillary services.
based on the payment rates associated 2008, and we expressed our hope of However, as discussed above, we are
with the APCs for the individual involving the public and the APC Panel finalizing the proposed packaging
services would exceed the per diem in the creation of additional composite approach, with modifications, and
partial hospitalization payment (listed APCs. As stated in the proposed rule (72 therefore, we believe that it is
as APC 0033 (Partial Hospitalization)), FR 42679), our goal is to use the many appropriate to finalize the creation of
those specified mental health services naturally occurring multiple procedure these two composite APCs for the CY
are assigned to APC 0034, which has the claims that cannot currently be 2008 OPPS. We will take the
same payment rate as APC 0033, and the incorporated under the existing APC commenters’ concerns with regard to
hospital is paid one unit of APC 0034. structure, regardless of whether the the possible creation of composite APCs
This longstanding policy regarding naturally occurring pattern of multiple for discontinuous services that span
payment of APC 0034 for combinations procedure claims prevents the multiple dates of service into account in
of independent services provided in a development of single bills for development of future proposals for
single hospital encounter resembles the individual services. composite APCs.
payment policy for composite APCs that We received many comments on the Comment: Some commenters asked
we proposed for LDR prostate concept of composite APCs in general that CMS provide a clear and
brachytherapy and cardiac and on the proposal to create the LDR transparent process for identifying and
electrophysiologic evaluation and Prostate Brachytherapy Composite and calculating payments for future
ablation services for CY 2008. Similar to the Electrophysiologic Evaluation and composite APCs and asked that CMS
the logic for the proposed composite Ablation Composite APC in particular. evaluate closely the impact of the
APCs, the OCE determines whether to A summary of the comments and our proposed composites on payment
pay these specified mental health responses follow. adequacy and access to care before
services individually or to make a single Comment: In general, most expanding to other services. They
payment at the same rate as the per commenters supported the creation of asserted that any development of further
diem rate for partial hospitalization for the two composite APCs that were composite APCs should include the
all of the specified mental health proposed for CY 2008: Cardiac views of all stakeholders.
services furnished on that date of Electrophysiologic Evaluation and Response: We expect that in the
service. However, we note this Ablation Composite (APC 8000) and future, we would identify possible
composite APCs using the same process claims that meet the criteria for whether it would be more appropriate to
that we used to identify the codes in composite payment. The effectiveness of assign status indicators based on the
composite APCs 8000 and 8001. As we the composite APCs is highly dependent particular packaging policy that applies
described in the proposed rule, we upon the packaging of the ancillary and to the code.
examined the multiple procedure claims supportive services that are furnished at We appreciate the comments on
that we could not convert to single the same encounter with the services in composite APCs. With respect to our
procedure claims to identify common the composite APC. By packaging treatment of mental health services, we
combinations of services for which we guidance, imaging post processing, are not making a change to the
had relatively few single procedure intraoperative, and imaging supervision longstanding payment policy under
claims. We then performed a clinical and interpretation services we are able which the OPPS pays one unit of APC
assessment of the combinations that we to identify many more services that 0034 in cases in which the total
identified to determine whether our contain only the separately paid payments for specified mental health
findings were consistent with our procedures that are assigned to the services provided on the same date of
understanding of the services furnished. composite APC that we can then use to service would otherwise exceed the
After we defined the minimal calculate a median cost for the payment rate for APC 0033. However,
combination of services for which we composite APC. Separate payment for we are changing the status indicator to
would pay under the composite APC, guidance, imaging post processing, ‘‘Q’’ for the HCPCS codes for mental
we then identified claims for which the intraoperative, and imaging supervision health services to which this policy
only separately paid codes were and interpretation services would applies and which comprise this
members of the composite, and we greatly reduce the number of claims that existing composite APC, because
calculated the median cost for the would be available for use in composite payment for these services would be
package of services, including the costs APCs because the HCPCS codes packaged unless the sum of the
of the packaged services. We intend to assigned to the composite APC would individual payments assigned to the
proceed carefully in examining the no longer be the only separately paid codes would be less than the payment
potential for creation of more composite procedure codes on the claims and one for APC 0034.
APCs. In general, we intend to follow of the benefits of using a composite APC
this process for creation of composite (enabling use of more claims) would be (2) Low Dose Rate (LDR) Prostate
APCs and to request public comment in lost. As with packaging of the costs of Brachytherapy Composite APC
the rulemaking cycle, which is our OPPS services in general, we package (a) Background
standard process for securing the views costs into the cost of the major
LDR prostate brachytherapy is a
of stakeholders. See section II.A.4.c.(7). separately paid service being furnished.
treatment for prostate cancer in which
for our discussion of the composite In the case of the composite APCs, the
needles or catheters are inserted into the
APCs we created for this final rule with costs of ancillary and dependent
comment period, specifically APC 8002 services are packaged into the payment prostate, and then radioactive sources
(Level I Extended Assessment and for the composite APC to the extent that are permanently implanted into the
Management Composite) and APC 8003 they are furnished with the services that prostate through the hollow needles or
(Level II Extended Assessment and are assigned to the composite APC. In catheters. The needles or catheters are
Management Composite). general, the premise of the OPPS, like then removed from the body, leaving the
Comment: Some commenters asked that of other claims-based prospective radioactive sources in the prostate
that CMS ensure that all packaged costs payment systems, is that hospitals forever, where they slowly give off
are captured in the payment rate for the report HCPCS codes and charges to radiation to destroy the cancer cells
composite APC. Other commenters reflect the reality of how they furnish until the sources are no longer
stated that there are many intraoperative services. In general, we believe we can radioactive. At least two CPT codes are
services that we proposed to package rely on the claims data to be an accurate used to report the composite treatment
that may or may not be done at the same reflection of the services that were service because there are separate codes
time and whose costs, when packaged furnished to Medicare beneficiaries. that describe placement of the needles
may not be fully accommodated in the Comment: A commenter stated that or catheters and application of the
composite payment and should the composite APCs differ significantly brachytherapy sources. LDR prostate
therefore be paid separately in addition in concept from the conditionally brachytherapy cannot be furnished
to the payment for the composite APCs. packaged services to which CMS also without the services described by both
Some commenters identified services proposed to assign status indicator ‘‘Q’’ of these codes. Generally, the
that CMS proposed to package for which and urged CMS to assign a status component services represented by both
they believed separate payment should indicator other than ‘‘Q’’ to composites codes occur in the same operative
be made outside of the composite APC so that they would be more easily session in the same hospital on the same
payment. For example, one commenter distinguishable from a conditionally date of service. However, we have been
asked that CPT code 93662 (Intracardiac packaged service. Other commenters told of uncommon cases in which they
echocardiography during therapeutic/ stated that the definition of the status are furnished in different locations, with
diagnostic intervention, including indicator Q was ill defined and the patient being transported from one
imaging supervision and interpretation confusing. location to another for application of the
(List separately in addition to code for Response: For CY 2008, we will sources. In addition, other services,
primary procedure)) continue to be paid assign the status indicator ‘‘Q’’ to commonly CPT code 76965 (Ultrasonic
separately and not as part of composite composite APCs, to codes that are guidance for interstitial radioelement
APC 8000 because its cost is high but packaged when billed on the same claim application) and CPT code 77290
the frequency of its use with the main with a procedure that has status (Therapeutic radiology simulation-aided
procedures in APC 8000 is low. indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X,’’ and to field setting; complex) are often
Response: We capture the packaged codes that are packaged only when provided in the same hospital
costs in the creation of the composite billed on the same claim with a encounter.
APC medians to the extent that the procedure that has a status indicator CPT code 55875 (Transperineal
packaged services are reported on the ‘‘T.’’ We will consider for CY 2009 placement of needles or catheters into
prostate for interstitial radioelement 55859 (as reported in the CY 2006 brachytherapy sources to the prostate is
application, with or without cystoscopy) claims data) are for the placement of estimated to be about 85 percent of all
is used to report the placement of the needles or catheters for prostate occurrences of CPT code 77778 under
needles or catheters for services brachytherapy, although not all are the OPPS, consistent with our CY 2006
furnished on or after January 1, 2007. related to permanent brachytherapy claims data used for CY 2008
Before this date, including in the claims source application. ratesetting. CPT code 77778 is also used
for services furnished in CY 2006 that CPT code 77778 (Interstitial radiation to report the application of sources of
were used to develop the CY 2008 source application; complex) is used to brachytherapy to body sites other than
proposed rule, CPT code 55859 report the application of brachytherapy the prostate.
(Transperineal placement of needles or sources and, when billed with CPT code
catheters into prostate for interstitial 55859 (or CPT code 55875 after January Historical coding, APC assignments,
radioelement application, with or 1, 2007) for the same encounter, reports and payment rates for CPT codes 55859
without cystoscopy) reported this placement of the sources in the prostate. (CPT code 55875 beginning in CY 2007)
service. All of the claims for CPT code We have been told that application of and 77778 are shown below in Table 7.
TABLE 7.—HISTORICAL PAYMENT RATES FOR COMPLEX INTERSTITIAL APPLICATION OF BRACHYTHERAPY SOURCES
Payment
Payment APC for rate for CPT APC for
OPPS CY Combination APC rate for CPT HCPCS codes HCPCS Brachytherapy source
code 77778 code 77778 55859/ code 55859
55875
2000 .................................. n/a ..................................... $198.31 APC 0312 $848.04 APC 0162 Pass-through
2001 .................................. n/a ..................................... $205.49 APC 0312 $878.72 APC 0162 Pass-through
2002 .................................. n/a ..................................... $6,344.67 APC 0312 $2,068.23 APC 0163 Pass-through with pro rata
reduction
2003 (prostate G0261, APC 648, n/a n/a n/a n/a Packaged
brachytherapy with io- $5,154.34.
dine sources).
2003 (prostate G0256, APC 649, n/a n/a n/a n/a Packaged
brachytherapy with pal- $5,998.24.
ladium sources).
2003 (not prostate N/A .................................... $2,853.58 APC 0651 $1,479.60 APC 0163 Separate payment based
brachytherapy, not in- on scaled median cost
cluding sources). per source
2004 .................................. N/A .................................... $558.24 APC 0651 $1,848.55 APC 0163 Cost
2005 .................................. N/A .................................... $1,248.93 APC 0651 $2,055.63 APC 0163 Cost
2006 .................................. N/A .................................... $666.21 APC 0651 $1,993.35 APC 0163 Cost
2007 .................................. N/A .................................... $1,035.50 APC 0651 $2,146.84 APC 0163 Cost
Payment rates for CPT code 77778, in payment rate for LDR prostate charges for the associated brachytherapy
particular, have fluctuated over the brachytherapy services using only source application procedure than
years. We have frequently been multiple procedure claims. Specifically hospitals that did not report the
informed by the public that reliance on for CY 2007, they urged us to sum the separately payable brachytherapy
single procedure claims to set the costs on multiple procedure claims sources.
median costs for these services results containing CPT codes 77778 and 55859 As a result of those comments, for
in use of only incorrectly coded claims (and no other separately payable both CYs 2006 and 2007, we used
for LDR prostate brachytherapy because, services not on the bypass list) and, multiple procedure claims containing
for application of brachytherapy sources excluding the costs of sources, split the both CPT codes 55859 and 77778 to
to the prostate, a correctly coded claim resulting aggregate median cost on the determine a median cost for the totality
is a multiple procedure claim. multiple procedure claim according to a of both services (with both packaging
Specifically, we have been informed preestablished attribution ratio between and bypassing of the other commonly
that a correctly coded claim for LDR CPT codes 77778 and 55859. They furnished services). We compared the
prostate brachytherapy should include, indicated that any claim for a median calculated from this subset of
for the same date of service, both CPT brachytherapy service that did not also claims reflecting the most common
codes 55859 and 77778, brachytherapy report a brachytherapy source should be clinical scenario to the single bill
sources reported with Level II HCPCS considered to be incorrectly coded and median costs for CPT codes 55859 and
codes, and typically separately coded thus not reflective of the hospital’s 77778 as a method of determining
imaging and radiation therapy planning resources required for the interstitial whether the total payment to the
services, and that we should use source application procedure. The hospital for both services furnished to
correctly coded claims to set the median presenters to the APC Panel believed provide LDR prostate brachytherapy
for APC 0651 (Complex Interstitial that claims that did not contain both would be reasonable. In both years, we
Radiation Source Application) in brachytherapy source and source found that the sum of the single bill
particular (where CPT code 77778 is application codes should be excluded medians was reasonably close to the
assigned). In presentations to the APC from use in establishing the median cost median cost of both services from
Panel at its March 2006 meeting, and in for APC 0651. They believed that multiple claims when they were treated
response to the CY 2006 OPPS proposed hospitals that reported the as a single procedure and the supporting
rule and CY 2007 OPPS/ASC proposed brachytherapy sources on their claims services were either packaged or
rule, commenters urged us to set the were more likely to report complete bypassed for purposes of calculating the
median for the combined pair of codes. needles or catheters. These data are the composite APC for the payment of
(We refer readers to the CY 2006 final consistent with our understanding of LDR prostate brachytherapy is
rule with comment period (70 FR current clinical practice for prostate consistent with the statute and with our
68596) and the CY 2007 final rule with brachytherapy, and we believe that desire to use more claims data for
comment period (71 FR 68043) for those multiple claims are correctly ratesetting, particularly data from
specific discussion of these findings.) coded claims for this common clinical correctly coded claims that reflect
Hence, we concluded that the single bill scenario. Similarly, 83 percent of the typical clinical practice, and to make
median costs were reasonable and, for claims for complex interstitial payment for larger packages and
both the CYs 2006 and CY 2007 OPPS, brachytherapy source application CPT bundles of services to provide enhanced
we based payment for CPT codes 55859 code 77778 also included the CPT code incentives for efficiency and cost
and 77778 on single procedure claims. for inserting needles or catheters into containment under the OPPS and to
the prostate, consistent with our maximize hospital flexibility in
(b) Payment for LDR Prostate
understanding that the vast majority of managing resources.
Brachytherapy Under our proposal, hospitals that
cases of complex interstitial
For the CY 2008 OPPS, we proposed brachytherapy source application furnish LDR prostate brachytherapy
to create a composite APC 8001, titled procedures are specifically for the would report CPT codes 55875 and
‘‘LDR Prostate Brachytherapy treatment of prostate cancer, rather than 77778 and the codes for the applicable
Composite,’’ that would provide one other types of cancer. brachytherapy sources in the same
bundled payment for LDR prostate Using the proposed packaging manner that they currently report these
brachytherapy when the hospital bills approach for imaging supervision and items and services (in addition to
both CPT codes 55875 and 77778 as interpretation services and guidance reporting any other services provided),
component services provided during the services for CY 2008, we were able to using the same HCPCS codes and
same hospital encounter. It is shown in identify 1,343 claims, 14 percent of all reporting the same charges. We would
Addendum A to this final rule with OPPS claims that reported these two require that hospitals report both CPT
comment period as APC 8001 (LDR procedures on the same date, that codes resulting in the composite APC
Prostate Brachytherapy Composite). As contain both CPT codes 55859 and payment on the same claim when they
discussed in detail in section VII. of this 77778 on the same date of service and are furnished to a single Medicare
final rule with comment period, as we no other separately paid procedure beneficiary in the same facility on the
proposed, we are continuing to pay code. We were not able to use more same date of service, and we would
sources of brachytherapy separately in claims to develop this composite APC make any necessary conforming changes
accordance with the statute. median cost because there are several to the billing instructions to ensure that
In the CY 2006 claims used to radiation therapy planning codes that they do not present an obstacle to
calculate the proposed CY 2008 median are commonly reported with CPT codes correct reporting. We may implement
costs, CPT code 55859 was reported 55859 and 77778 and that are both edits to ensure that hospitals do not
14,083 times. The proposed rule median separately paid and not on the bypass submit two separate claims for these
cost for CPT code 55859, calculated list because the amount of their two procedures when furnished on the
from 2,232 single and ‘‘pseudo’’ single associated packaging exceeds the same date in the same facility. When
bills, was approximately $2,329. The CY threshold for inclusion on the bypass this combination of codes is reported,
2008 proposed rule median cost for APC list. A complete discussion of the the OCE would assign the composite
0163 (Level IV Cystourethroscopy and bypass list under our CY 2008 APC 8001 and the PRICER would pay
other Genitourinary Procedures) to packaging policy is provided in section based on the payment rate for the
which CPT code 55859 was assigned for II.A. of this final rule with comment composite APC. The OCE would assign
CY 2006 and to which CPT code 55875 period. APC 0163 or APC 0651 only when both
is assigned for CY 2007 was We packaged the costs of packaged codes are not reported on the same
approximately $2,322. In the set of revenue codes and packaged HCPCS claim with the same date of service, and
claims used to calculate the median cost codes into the sum of the costs for CPT we would expect this to be the atypical
for APC 0651, to which CPT code 77778 codes 55859 and 77778 to derive a total case. The composite APC would have a
is the only assigned service, CPT code proposed median cost of approximately status indicator of ‘‘T’’ so that payment
77778 was reported 11,850 times. The $3,127 for the composite LDR prostate for other procedures also assigned to
CY 2008 proposed rule median cost for brachytherapy service based upon the status indicator ‘‘T’’ with lower
APC 0651 (and, therefore, for CPT code 1,343 claims that contained both CPT payment rates would be reduced by 50
77778) based on 339 single and codes and no other separately paid percent when furnished on the same
‘‘pseudo’’ single procedure bills was procedure codes. This is reasonably date of service as the composite service,
approximately $970. comparable to $3,298, the sum of the in order to reflect the efficiency that
In examining the claims data used to CPT median costs we calculated using occurs when multiple procedures are
calculate the median costs for the the single procedure bills for CPT codes furnished to a Medicare beneficiary in a
proposed rule, we found 9,807 claims 55859 and 77778 (($2,329 plus $969). single operative session. We would not
on which both CPT code 55859 and CPT As stated in the proposed rule (72 FR expect that the composite APC payment
code 77778 were billed on the same date 42680), we believe that the difference would be frequently reduced under the
of service. These data suggest that LDR between the composite APC median multiple procedure reduction policy
prostate brachytherapy constituted at cost based upon those claims that because we believe that it is unlikely
least 70 percent of CY 2006 claims for contain both codes and the sum of the that a higher paid procedure would be
CPT code 55859, with the remainder of median costs for the APCs to which the performed on the same date.
claims representing the insertion of two individual CPT codes map is We proposed to continue to establish
needles or catheters for high dose rate minimal and may be attributable to separate payment rates for APC 0651 (to
prostate brachytherapy or unusual efficiencies in furnishing the services which only CPT code 77778 is assigned)
clinical situations where the LDR together during a single encounter. and for APC 0163 (to which we
sources were not applied in the same In the proposed rule (72 FR 42681), proposed to continue to assign CPT
operative session as the insertion of the we indicated our belief that creation of code 55875). In some cases, CPT 55875
may be reported for the insertion of has a status indicator of ‘‘T,’’ payment unreliable because they are calculated
needles or catheters for high dose rate for the service with the lower payment from single bills although there should
prostate brachytherapy, and the low rate would be reduced by 50 percent. never be single bills for this procedure.
dose rate brachytherapy source Similarly, when CPT code 55875 is paid Hence, we believe that the median cost
application procedure (CPT code 77778) as part of composite APC 8001 and for the composite APC of approximately
would not be reported. In high dose rate another procedure that has a status $3,391, which is calculated from bills
prostate brachytherapy, the sources are indicator of ‘‘T’’ is also reported on the we believe to be correctly coded will
applied temporarily several times over a claim, payment for the composite APC result in a reasonable and appropriate
few days while the needles or catheters or the other procedure would be payment rate for this service.
remain in the prostate, and the needles reduced by 50 percent, depending on
or catheters are removed only after all (3) Cardiac Electrophysiologic
which payment rate was lower. This is
the treatment fractions have been Evaluation and Ablation Composite
the standard OPPS multiple surgical
completed. We have also been told by APC
procedure payment reduction policy.
hospitals that, even when LDR prostate As proposed, we are establishing a (a) Background
brachytherapy is planned, there are composite APC, shown in Addendum A During its March 2007 meeting,
occasions in which the needles or as APC 8001, to provide payment for members of the APC Panel indicated
catheters are inserted in one facility and LDR prostate brachytherapy when the that the reason we found so few single
the patient is moved to another facility composite service, billed as CPT codes bills for procedures assigned to APC
for the application of the sources. In 55875 and 77778, is furnished in a 0087 (Cardiac Electrophysiologic
those cases, we would need to be able single hospital encounter and to base Recording/Mapping), specifically 72 of
to appropriately pay the hospital that the payment for the composite APC on 11,834 or 0.61 percent of all proposed
inserted the needles or catheters before the median cost derived from claims rule CY 2006 claims, is that most of the
the patient was discharged prior to that contain both codes. These two CPT services assigned to APCs 0085 (Level II
source application. Moreover, there are codes are assigned status indicator ‘‘Q’’ Electrophysiologic Evaluation), 0086
cases in which the needles or catheters in Addendum B to this final rule with (Ablate Heart Dysrhythm Focus), and
are inserted but it is not possible to comment period to signify their 0087 are performed in varying
proceed to the application of the sources
conditionally packaged status, and their combinations with one another.
and, therefore, the hospital would
composite APC assignments are noted Therefore, correctly coded claims would
correctly report only CPT code 55875.
in Addendum M. This policy will most often include multiple codes for
Similarly, more than 10 brachytherapy
permit us to base payment on claims for component services that are reported
sources can be applied interstitially (as
the most common clinical scenario for with different CPT codes and that are
described by CPT code 77778) to sites
interstitial radiation source application now paid separately through different
other than the prostate and it is,
to the prostate. We note that this APCs. There would never be many
therefore, necessary to have a separate
payment bundle will also include single bills and those that are reported
payment rate for CPT code 77778.
payment for the commonly associated as single bills would likely represent
Hence, for CY 2008 we proposed to
continue to pay for CPT code 55875 (the imaging guidance services, which will atypical cases or incorrectly coded
successor to CPT code 55859) through be newly packaged under our CY 2008 claims.
APC 0163 and to pay for CPT code packaging approach. Most importantly, We examined the combinations of
77778 through APC 0651 when the this composite APC payment services observed in our claims data
services are individually furnished methodology will contribute to our goal across these three APCs to see whether
other than on the same date of service of providing payment under the OPPS there was the potential for handling the
in the same facility. for a larger bundle of component data differently so that we could use
Comment: One commenter supported services provided in a single hospital more claims data to set the payment
the creation of the composite APC for outpatient encounter, creating rates for these procedures, particularly
LDR Prostate Brachytherapy (APC 8001) additional hospital incentives for those services assigned to APC 0087
but was concerned about the assignment efficiency and cost containment, while where we have had a persistent concern
of status indicator ‘‘T’’ to APC 8001. The providing hospitals with the most regarding the limited and reportedly
commenter asked which codes would be flexibility to manage their resources. In unrepresentative single bills available
reduced when furnished with the our final calculation of the median cost for use in calculating the median cost
composite as a result of the assignment for this composite APC for CY 2008, we according to our standard OPPS
of the status indicator ‘‘T.’’ were able to use 7,870 claims that methodology. We initially developed
Response: We assigned status contained both CPT code 77778 and and examined frequency distributions of
indicator ‘‘T’’ to APC 8001 because CPT 55859 (the code in effect in 2006) and unique combinations of codes on claims
code 55875 is a surgical service that has the median cost on which payment is which contained at least one unit of any
a status indicator ‘‘T’’ in APC 163. The based is approximately $3,391. This code assigned to APC 0085, 0086, or
multiple surgical reduction will apply compares favorably to the proposed rule 0087 and then broadened these analysis
only when other surgical procedures in which we were able to us only 1,343 to any combination of an
that have the status indicator of ‘‘T’’ are claims containing both codes and electrophysiologic evaluation and
performed on the same date of service. calculated a proposed median cost of ablation code.
Payment for the APC with the highest approximately $3,127. We believe that Our initial frequency distributions
payment rate with status indicator ‘‘T’’ the number of usable claims increased supported the APC Panel members’
will not be reduced but payments for so greatly as the result of the addition description of their experiences. We
other codes on the same claim that also of related procedure codes to the bypass identified and enumerated the most
have a status indicator of ‘‘T’’ will be list as a result of public comments. The commonly appearing unique
reduced by 50 percent under our CY 2008 composite median is slightly occurrences (either single procedures or
standard multiple procedure reduction less than $3,410, the sum of the medians combinations) of codes for services
policy. Currently, when CPT code 55875 for APCs 163 and 651 ($2,270 + $1,140), assigned to status indicator ‘‘S,’’ ‘‘T,’’
is reported with another procedure that which commenters have told us are ‘‘V,’’ or ‘‘X’’ that contained at least one
code assigned to APC 0085, 0086, or top 100 occurrence types. Table 8 shows occurrences from CY 2006 proposed
0087. There were 7,379 claims in the the 10 most common unique rule claims data available at that time.
TABLE 8.—TEN MOST FREQUENTLY OCCURRING UNIQUE OCCURRENCES OF CARDIAC ELECTROPHYSIOLOGIC

EVALUATIONS, MAPPING, AND ABLATION PROCEDURES AND OTHER SEPARATELY PAYABLE SERVICES
Combination HCPCS CY 2007 CY 2007
Frequency Short descriptor
No. code APC SI
1 .......................... 763 93620 Electrophysiology evaluation ...................................................................... 0085 T

2 .......................... 509 93609 Map tachycardia, add-on ........................................................................... 0087 T
93620 Electrophysiology evaluation ...................................................................... 0085 T
93623 Stimulation, pacing heart ........................................................................... 0087 T
93651 Ablate heart dysrhythm focus .................................................................... 0086 T
3 .......................... 398 93609 Map tachycardia, add-on ........................................................................... 0087 T
4 .......................... 381 93650 Ablate heart dysrhythm focus .................................................................... 0086 T
5 .......................... 376 93620 Electrophysiology evaluation ...................................................................... 0085 T
6 .......................... 248 93005 Electrocardiogram, tracing ......................................................................... 0099 S
93609 Map tachycardia, add-on ........................................................................... 0087 T
93609 Map tachycardia, add-on ........................................................................... 0087 T
8 .......................... 225 93613 Electrophys map 3d, add-on ...................................................................... 0087 T
10 ........................ 185 93613 Electrophys map 3d, add-on ...................................................................... 0087 T
Although the number of claims for TABLE 9.—GROUPS OF CARDIAC When we studied proposed rule
each unique occurrence was modest, we ELECTROPHYSIOLOGIC EVALUATION claims that contained a code in group A
were able to determine that there were AND ABLATION PROCEDURES ON and also a code in group B, we found
certain combinations of codes that WHICH WE BASE THE COMPOSITE that there were 5,118 claims that met
occurred most often together. Based on these criteria, and that of these 5,118
APC claims, 4,552 (89 percent) contained
our review of the most frequently
occurring combinations of codes on both CPT code 93620 (Comprehensive
Codes Used in
claims that also contained at least one Combinations: At CY CY electrophysiologic evaluation including
HCPCS insertion and repositioning of multiple
code assigned to APC 0085, 0086 or Least One in 2007 2007
code
Group A and One APC SI electrode catheters with induction or
0087 and our clinical review of the in Group B
codes, we proceeded to study attempted induction of arrhythmia; with
right atrial pacing and recording, right
combination claims that contained at Group A
ventricular pacing and recording, His
least one code from group A for Electrophysiolo-
gy evaluation 93619 0085 T bundle recording) from APC 0085 and
evaluation services and at least one code
Electrophysiolo- CPT code 93651 (Intracardiac catheter
from group B for ablation services ablation of arrhythmogenic focus; for
gy evaluation 93620 0085 T
reported on the same date of service on treatment of supraventricular
Group B
an individual claim, as specified in Ablate heart tachycardia by ablation of fast or slow
Table 9 below. dysrhythm atrioventricular pathways, accessory
focus ............. 93650 0086 T atrioventricular connections or other
Ablate heart atrial foci, singly or in combination)

dysrhythm from APC 0086 with the same date of
focus ............. 93651 0086 T service. Given that CPT code 93651 had
Ablate heart a total frequency of 8,091, this means
dysrhythm
focus ............. 93652 0086 T
that more than 55 percent of the claims
for CPT code 93651 also contained CPT
code 93620. CPT code 93620 had a total CPT add-on codes that CPT indicates yielded 5,118 claims to use for the
frequency of 12,624, approximately 50 are to be reported in addition to the calculation. The proposed composite
percent higher than the total frequency code for the primary procedure. Our median cost for these claims using the
for CPT code 93651, which is consistent clinical review of the services described CY 2008 proposed rule data was
with our expectations because CPT code by these five CPT codes determined that approximately $8,529. We believe that
93620 describes a diagnostic service and they are supportive dependent services this cost is attributable largely to the
CPT code 93651 is a treatment service that are provided most often as 4,552 claims that contain one unit each
that may be provided based upon the supplemental to procedures assigned to of CPT code 93620 and CPT code 93651
findings of the evaluation described by APCs 0085 and 0086. The procedures in (and some unknown numbers and
CPT code 93620. In addition to the APCs 0085 and 0086 can be performed combinations of packaged services). In
codes for group A and group B services, without these supportive add-on comparison, the sum of the CY 2008
the combination claims also contained procedures, but these dependent proposed rule CPT code median costs
costs for packaged services that were services cannot be done except as a for CPT code 93620 (which is $3,111)
reported under revenue codes without supplement to another and CPT code 93651 (which is $5,644)
HCPCS codes and under packaged electrophysiologic procedure. Therefore, is approximately $8,756. If the 50
HCPCS codes. As we discuss in we proposed to unconditionally package percent multiple procedure discount is
considerable detail above, we lack a all of these five CPT codes under the applied to the CPT code median cost for
methodology that could be used to grouping of intraoperative services for the lower cost procedure based on its
allocate these packaged costs to major the CY 2008 OPPS. We discuss the assignment to an APC with a ‘‘T’’ status,
separately paid procedures in a manner packaging of intraoperative services in the adjusted sum of the median costs is
which gives us confidence that the costs general, including these services, in $7,200 ($5,644 + $1,556). These
would be attributed correctly. We have section II.A.4.c.(3) above. medians were calculated using only
explored and will continue to explore However, packaging these supportive claims that contain correct devices and
an alternative strategy that would enable ancillary services that are so often do not contain token charges or the
us to use these correctly coded multiple reported with the cardiac ‘‘FB’’ modifier. We believe the
procedure claims for ratesetting. electrophysiologic evaluation and significant positive difference between
ablation services did not, by itself, the composite and discounted costs still
In our review of these proposed rule
enable us to use many more claims reflects efficiencies, as the sum of the
claims, not only did we find a high because, as we noted previously, the
number of claims on which there was discounted median costs does not take
claims on which these codes most into account the cost of other
one code from group A and one code commonly appeared typically also
from group B, but we also found that procedures also provided that are
contained at least one separately paid assigned to APCs 0085 and 0086, while
claims for procedures assigned to APC code from APC 0085 and one code from
0087 for CY 2007 usually appeared on the composite median cost of $8,528.83
APC 0086. Although the most common does, to some extent, reflect the cost of
claims that contained a code from APC combination of codes from APCs 0085
0085 or APC 0086, or both. The most other multiple procedures in APCs 0085
and 0086 was the pair of CPT codes and 0086 that were also reported on the
frequently appearing CPT codes that 93620 and 93651, there are numerous
were assigned to APC 0087 for CY 2007 claims used to develop the composite
other combinations of services from median cost. In addition, these two
were, as shown above, 93609 APCs 0085 and 0086 that were
(Intraventricular and/or intra-atrial calculations are based upon two
performed and, while not as frequent,
mapping of tachycardia site(s), with different sets of claims, single procedure
these combinations were also reflected
catheter manipulation to record from claims in one case (which do not
in the multiple claims.
multiple sites to identify origin of In order to use more claims and represent the way the service is
tachycardia (List separately in addition adequately reflect the varied, common typically furnished) and the specified
to code for primary procedure)), 93613 combinations of electrophysiologic subset of clinically common
(Intracardiac electrophysiologic 3- evaluation and ablation CPT codes, we combination claims in the second case.
dimensional mapping (List separately in calculated a composite median cost Moreover, while the 50 percent multiple
addition to code for primary from all claims containing at least one procedure reduction is our best
procedure)), 93621 (Comprehensive code from group A and at least one code aggregate estimate of the overall degree
electrophysiologic evaluation including from group B as if they were a single of efficiency applicable to multiple
insertion and repositioning of multiple service. We selected multiple procedure surgeries, it may or may not be
electrode catheters with induction or claims that contained at least one code specifically appropriate to this
attempted induction of arrhythmia; with in group A and one code in group B on particular combination of procedures.
left atrial pacing and recording from the same date of service and calculated By selecting the multiple procedure
coronary sinus or left atrium (List a median cost from the total costs on claims that contained at least one code
separately in addition to code for these claims. Some claims had more in each group, we were able to use many
primary procedure)), 93622 than one code from each group. more claims than were available to
(Comprehensive electrophysiologic Although the claim was required to establish the individual APC medians.
evaluation including insertion and contain at least one code from each The percents by CPT code for the
repositioning of multiple electrode group to be included, the claim could composite configuration in Table 24 of
catheters with induction or attempted also contain any number of codes from the proposed rule (72 FR 42684)
induction of arrhythmia; with left either group and any number of units of represented the sum of the frequency of
ventricular pacing and recording (List those codes. In addition, the costs of the single bills used to set the medians for
separately in addition to code for five supportive intraoperative services APCs 0085 and 0086 with packaging of
primary procedure)), and 93623 previously assigned to APC 0087 that the five intraoperative services and the
(Programmed simulation and pacing we identify above were packaged, as frequency of multiple bills used to set
after intravenous drug infusion (List well as the costs of the other items and the medians for the composite claims
separately in addition to code for services proposed to be packaged for the containing at least one code from each
primary procedure)). These codes are all CY 2008 OPPS. This selection process group and with packaging of the costs
of the five intraoperative services, indicator ‘‘T’’ with lower payment rates proposed ratesetting methodology
divided by the total frequency of each would be reduced by 50 percent when results in an appropriate median cost for
CPT code. furnished on the same date of service as the composite service when at least one
Moreover, by packaging CPT codes the composite service, in order to reflect evaluation service in group A is
93609, 93613, 93621, 93622, and 93623, the efficiency that occurs when multiple furnished on the same date as at least
we were able to use many more of the procedures are furnished to a Medicare one ablation service in group B. This
claims for these codes from the most beneficiary in a single operative session. approach creates incentives for
common clinical scenarios than would We would not expect that the proposed efficiency by providing a single
otherwise be possible if the supportive composite APC payment would be payment for a larger bundle of major
intraoperative services were separately commonly reduced because we believe procedures when they are performed
paid. Wherever any of these codes that it is unlikely that a higher paid together, in contrast to continued
appears on a claim that could be used procedure would be performed on the separate payment for each of the
for median setting, the cost data for same date. We proposed to continue to individual procedures. We expect to
these codes are packaged in the pay separately for other separately paid develop additional composite APCs in
calculation of the median cost for the services that are not reported under the the future as we learn more about major
separately paid services on the claim. codes in groups A and B (such as chest currently separately paid services that
(b) Payment for Cardiac x-rays and electrocardiograms). are commonly furnished together during
Moreover, where a service in group A the same hospital outpatient encounter.
Electrophysiologic Evaluation and
is furnished on a date of service that is We did not receive any public
Ablation
different from the date of service for a comments specific to the creation of the
In view of our findings with regard to code in group B for the same composite APC for cardiac
how often the codes in groups A and B beneficiary, we proposed that payments electrophysiology evaluation and
appear together on the same claim, we would be made under the single ablation other than those included in
proposed to establish one composite procedure APCs and the composite APC the general discussion of composite
APC, shown in Addendum A of the would not apply. Given our CY 2008 APCs above. Therefore, we are finalizing
proposed rule as APC 8000 (Cardiac proposal to unconditionally package the creation of this APC as proposed.
Electrophysiologic Evaluation and payment for five cardiac For this final rule with comment period,
Ablation Composite), for CY 2008 that electrophysiologic CPT codes as we recalculated the median cost of the
would pay for a composite service made members of the category of APC as proposed. We were able to use
up of any number of services in groups intraoperative services that were 5,596 claims that met the criteria of
A and B when at least one code from previously assigned to APCs 0085 and having at least one code in group A and
group A and at least one code from 0087, we also proposed to reconfigure one code in group B, which had correct
group B appear on the same claim with APCs 0084 through 0087, where many device codes, no token charges for
the same date of service. The five CPT of the cardiac electrophysiologic devices and no FB modifiers on the
codes involved in this composite APC procedures that will be separately paid claims. Using these 5,596 correctly
are assigned to status indicator ‘‘Q’’ in when they are not paid according to the coded claims from the final rule data,
Addendum B to the proposed rule to composite APC are assigned. we calculated a median cost from the
identify their conditionally packaged Specifically, we proposed to final rule data of approximately $8,438.
status, and their composite APC discontinue APC 0087, and reconfigure We note that while the number of usable
assignments were identified in APCs 0084, 0085, and 0086, with claims for the final rule date increased
Addendum M of the proposed rule. We proposed titles and median costs of to 5,596 from the 5,118 claims used in
proposed to use the composite median Level I Electrophysiologic Procedures the proposed rule, the median cost
cost of approximately $8,529 as the (APC 0084) at approximately $603; declined slightly (approximately 1
basis for establishing the relative weight Level II Electrophysiologic Procedures percent) to approximately $8,438 from
for this newly created APC for the (APC 0085) at approximately $2,976; the $8,529 median cost calculated from
composite electrophysiology evaluation and Level III Electrophysiologic proposed rule data. However, we
and ablation service. Under this Procedures (APC 0086) at approximately believe that the median cost for this
composite APC, unlike most other $5,842, respectively. We refer readers to composite APC is a valid reflection of
APCs, we proposed to make a single section IV.A.2. of this his final rule with the estimated relative cost of these
payment for all services reported in comment period rule for a discussion of services when furnished in combination
groups A and B. We proposed that calculation of median costs for device- with one another.
hospitals would continue to code using dependent APCs. We believe this After consideration of the public
CPT codes to report these services and reconfiguration improved the clinical comments we received on the proposed
that the OCE would recognize when the and resource homogeneity of these composite APCs for LDR Prostate
criteria for payment of the composite APCs which would provide payment for Brachytherapy and Cardiac
APC are met and would assign the cardiac electrophysiologic procedures Electrophysiology Evaluation and
composite APC instead of the single that would be individually paid when Ablation, we are finalizing our proposed
procedure APCs as currently occurs. they do not meet the criteria for policy regarding these composite APCs
The PRICER would make a single payment of the composite APC. without modification.
payment for the composite APC that We believe that creation of the In conclusion, we are finalizing our
would encompass the program payment proposed composite APC for cardiac proposed packaging approach with the
for the code in group A, the code in electrophysiology evaluation and modifications discussed above for the
group B, and any other codes reported ablation services is the most efficient CY 2008 OPPS. Table 10 in this final
in groups A or B, as well as the and effective way to use the claims data rule with comment period displays the
packaged services furnished on the for the majority of these services and list of packaged services in the
same date of service. The proposed best represents the hospital resources categories of guidance, image
composite APC would have a status associated with performing the common processing, intraoperative services,
indicator of ‘‘T’’ so that payment for combinations of these services that are radiopharmaceuticals, contrast media,
other procedures also assigned to status clinically typical. We believe that the imaging supervision and interpretation,
and observation services. Codes in are conditionally packaged. Codes with sixth column. Codes that are packaged
composite APCs, including the two status indicator ‘‘Q’’ that are for imaging when they are reported on the same
extended assessment and management supervision and interpretation are claim with a code with status indicator
APCs, are displayed in Addendum M. In packaged only when reported on the ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ on the same day
Table 10, HCPCS codes with status same claim on the same day as a are identified as ‘‘STVX-packaged’’ in
indicator ‘‘N’’ are always packaged. procedure with status indicator ‘‘T’’ and the sixth column.
HCPCS codes with status indicator ‘‘Q’’ are identified as ‘‘T-packaged’’ in the
TABLE 10.—CY 2008 PACKAGED HCPCS CODES INCLUDED IN SEVEN PACKAGING CATEGORIES
Final ‘‘STVX-
2008 CY CY CY packaged’’ Final CY
HCPCS Short descriptor 2007 2007 Category
2008 or ‘‘T-pack- 2008 APC
code SI APC SI aged’’
(1) (2) (3) (4) (5) (6) (7) (8)
19295 ....... Place breast clip, percut ......................................... S 0657 N n/a n/a Guidance
20975 ....... Electrical bone stimulation ...................................... X 0340 N n/a n/a Intraoperative.
20985 ....... Cptr-asst dir ms px .................................................. n/a n/a N n/a n/a Guidance.
20986 ....... Cptr-asst dir ms px io img ....................................... n/a n/a N n/a n/a Guidance.
20987 ....... Cptr-asst dir ms px pre img .................................... n/a n/a N n/a n/a Guidance.
31620 ....... Endobronchial us add-on ........................................ S 0670 N n/a n/a Intraoperative.
37250 ....... Iv us first vessel add-on .......................................... S 0416 N n/a n/a Intraoperative.
37251 ....... Iv us each add vessel add-on ................................. S 0416 N n/a n/a Intraoperative.
58110 ....... Bx done w/colposcopy add-on ................................ T 0188 N n/a n/a Intraoperative.
61795 ....... Brain surgery using computer ................................. S 0302 N n/a n/a Guidance.
62160 ....... Neuroendoscopy add-on ......................................... T 0122 N n/a n/a Guidance.
70010 ....... Contrast x-ray of brain ............................................ S 0274 Q T 0274 Imaging S&I.
70015 ....... Contrast x-ray of brain ............................................ S 0274 Q T 0274 Imaging S&I.
70170 ....... X-ray exam of tear duct .......................................... X 0264 Q T 0317 Imaging S&I.
70332 ....... X-ray exam of jaw joint ........................................... S 0275 Q T 0275 Imaging S&I.
70373 ....... Contrast x-ray of larynx ........................................... X 0263 Q T 0263 Imaging S&I.
70390 ....... X-ray exam of salivary duct .................................... X 0263 Q T 0263 Imaging S&I.
71040 ....... Contrast x-ray of bronchi ........................................ X 0263 Q T 0263 Imaging S&I.
71060 ....... Contrast x-ray of bronchi ........................................ X 0263 Q T 0317 Imaging S&I.
71090 ....... X-ray & pacemaker insertion .................................. X 0272 N n/a n/a Imaging S&I.
72240 ....... Contrast x-ray of neck spine ................................... S 0274 Q T 0274 Imaging S&I.
72255 ....... Contrast x-ray, thorax spine .................................... S 0274 Q T 0274 Imaging S&I.
72265 ....... Contrast x-ray, lower spine ..................................... S 0274 Q T 0274 Imaging S&I.
72270 ....... Contrast x-ray, spine ............................................... S 0274 Q T 0274 Imaging S&I.
72275 ....... Epidurography ......................................................... S 0274 N n/a n/a Imaging S&I.
72285 ....... X-ray c/t spine disk ................................................. S 0388 Q T 0388 Imaging S&I.
72291 ....... Perq vertebroplasty, fluor ........................................ S 0274 N n/a n/a Imaging S&I.
72292 ....... Perq vertebroplasty, ct ............................................ S 0274 N n/a n/a Imaging S&I.
72295 ....... X-ray of lower spine disk ........................................ S 0388 Q T 0388 Imaging S&I.
73040 ....... Contrast x-ray of shoulder ...................................... S 0275 Q T 0275 Imaging S&I.
73085 ....... Contrast x-ray of elbow ........................................... S 0275 Q T 0275 Imaging S&I.
73115 ....... Contrast x-ray of wrist ............................................. S 0275 Q T 0275 Imaging S&I.
73525 ....... Contrast x-ray of hip ............................................... S 0275 Q T 0275 Imaging S&I.
73530 ....... X-ray exam of hip .................................................... X 0261 N n/a n/a Intraoperative.
73542 ....... X-ray exam, sacroiliac joint ..................................... S 0275 Q T 0275 Imaging S&I.
73580 ....... Contrast x-ray of knee joint ..................................... S 0275 Q T 0275 Imaging S&I.
73615 ....... Contrast x-ray of ankle ............................................ S 0275 Q T 0275 Imaging S&I.
74190 ....... X-ray exam of peritoneum ...................................... S 0264 Q T 0317 Imaging S&I.
74235 ....... Remove esophagus obstruction ............................. S 0257 N n/a n/a Imaging S&I.
74300 ....... X-ray bile ducts/pancreas ....................................... X 0263 N n/a n/a Intraoperative.
74301 ....... X-rays at surgery add-on ........................................ X 0263 N n/a n/a Intraoperative.
74305 ....... X-ray bile ducts/pancreas ....................................... X 0263 N n/a n/a Imaging S&I.
74320 ....... Contrast x-ray of bile ducts ..................................... X 0264 Q T 0317 Imaging S&I.
74327 ....... X-ray bile stone removal ......................................... S 0296 N n/a n/a Imaging S&I.
74328 ....... X-ray bile duct endoscopy ...................................... N n/a N n/a n/a Imaging S&I.
74329 ....... X-ray for pancreas endoscopy ................................ N n/a N n/a n/a Imaging S&I.
74330 ....... X-ray bile/panc endoscopy ...................................... N n/a N n/a n/a Imaging S&I.
74340 ....... X-ray guide for GI tube ........................................... X 0272 N n/a n/a Imaging S&I.
74355 ....... X-ray guide, intestinal tube ..................................... X 0263 N n/a n/a Imaging S&I.
74360 ....... X-ray guide, GI dilation ........................................... S 0257 N n/a n/a Imaging S&I.
74363 ....... X-ray, bile duct dilation ........................................... S 0297 N n/a n/a Imaging S&I.
74425 ....... Contrst x-ray, urinary tract ...................................... S 0278 Q T 0278 Imaging S&I.
74430 ....... Contrast x-ray, bladder ........................................... S 0278 Q T 0278 Imaging S&I.
74440 ....... X-ray, male genital tract .......................................... S 0278 Q T 0278 Imaging S&I.
74445 ....... X-ray exam of penis ................................................ S 0278 Q T 0278 Imaging S&I.
74450 ....... X-ray, urethra/bladder ............................................. S 0278 Q T 0278 Imaging S&I.
74455 ....... X-ray, urethra/bladder ............................................. S 0278 Q T 0278 Imaging S&I.
74470 ....... X-ray exam of kidney lesion ................................... X 0263 Q T 0263 Imaging S&I.
74475 ....... X-ray control, cath insert ......................................... S 0297 Q T 0317 Imaging S&I.
TABLE 10.—CY 2008 PACKAGED HCPCS CODES INCLUDED IN SEVEN PACKAGING CATEGORIES—Continued
Final ‘‘STVX-
2008 or ‘‘T-pack- 2008 APC
(1) (2) (3) (4) (5) (6) (7) (8)
74480 ....... X-ray control, cath insert ......................................... S 0296 Q T 0317 Imaging S&I.
74485 ....... X-ray guide, GU dilation .......................................... S 0296 Q T 0317 Imaging S&I.
74740 ....... X-ray, female genital tract ....................................... X 0264 Q T 0263 Imaging S&I.
74742 ....... X-ray, fallopian tube ................................................ X 0264 N n/a n/a Imaging S&I.
75600 ....... Contrast x-ray exam of aorta .................................. S 0280 Q T 0279 Imaging S&I.
75630 ....... X-ray aorta, leg arteries .......................................... S 0280 Q T 0279 Imaging S&I.
75635 ....... Ct angio abdominal arteries .................................... S 0662 Q T 0662 Imaging S&I.
75650 ....... Artery x-rays, head & neck ..................................... S 0280 Q T 0280 Imaging S&I.
75658 ....... Artery x-rays, arm ................................................... S 0279 Q T 0279 Imaging S&I.
75676 ....... Artery x-rays, neck .................................................. S 0280 Q T 0279 Imaging S&I.
75680 ....... Artery x-rays, neck .................................................. S 0280 Q T 0279 Imaging S&I.
75685 ....... Artery x-rays, spine ................................................. S 0280 Q T 0279 Imaging S&I.
75705 ....... Artery x-rays, spine ................................................. S 0668 Q T 0279 Imaging S&I.
75710 ....... Artery x-rays, arm/leg .............................................. S 0280 Q T 0279 Imaging S&I.
75716 ....... Artery x-rays, arms/legs .......................................... S 0280 Q T 0279 Imaging S&I.
75722 ....... Artery x-rays, kidney ............................................... S 0280 Q T 0279 Imaging S&I.
75724 ....... Artery x-rays, kidneys ............................................. S 0280 Q T 0279 Imaging S&I.
75726 ....... Artery x-rays, abdomen ........................................... S 0280 Q T 0279 Imaging S&I.
75731 ....... Artery x-rays, adrenal gland .................................... S 0280 Q T 0279 Imaging S&I.
75733 ....... Artery x-rays, adrenals ............................................ S 0668 Q T 0279 Imaging S&I.
75736 ....... Artery x-rays, pelvis ................................................ S 0280 Q T 0279 Imaging S&I.
75741 ....... Artery x-rays, lung ................................................... S 0279 Q T 0279 Imaging S&I.
75743 ....... Artery x-rays, lungs ................................................. S 0280 Q T 0279 Imaging S&I.
75746 ....... Artery x-rays, lung ................................................... S 0279 Q T 0668 Imaging S&I.
75756 ....... Artery x-rays, chest ................................................. S 0279 Q T 0668 Imaging S&I.
75774 ....... Artery x-ray, each vessel ........................................ S 0279 N n/a n/a Imaging S&I.
75790 ....... Visualize A–V shunt ................................................ S 0279 Q T 0668 Imaging S&I.
75801 ....... Lymph vessel x-ray, arm/leg ................................... X 0264 Q T 0317 Imaging S&I.
75803 ....... Lymph vessel x-ray, arms/legs ............................... X 0264 Q T 0317 Imaging S&I.
75805 ....... Lymph vessel x-ray, trunk ....................................... X 0264 Q T 0317 Imaging S&I.
75807 ....... Lymph vessel x-ray, trunk ....................................... X 0264 Q T 0317 Imaging S&I.
75809 ....... Nonvascular shunt, x-ray ........................................ X 0263 Q T 0263 Imaging S&I.
75810 ....... Vein x-ray, spleen/liver ............................................ S 0279 Q T 0279 Imaging S&I.
75820 ....... Vein x-ray, arm/leg .................................................. S 0668 Q T 0668 Imaging S&I.
75822 ....... Vein x-ray, arms/legs .............................................. S 0668 Q T 0668 Imaging S&I.
75825 ....... Vein x-ray, trunk ...................................................... S 0279 Q T 0279 Imaging S&I.
75827 ....... Vein x-ray, chest ..................................................... S 0279 Q T 0668 Imaging S&I.
75831 ....... Vein x-ray, kidney ................................................... S 0279 Q T 0279 Imaging S&I.
75833 ....... Vein x-ray, kidneys .................................................. S 0279 Q T 0279 Imaging S&I.
75840 ....... Vein x-ray, adrenal gland ........................................ S 0280 Q T 0279 Imaging S&I.
75842 ....... Vein x-ray, adrenal glands ...................................... S 0280 Q T 0279 Imaging S&I.
75860 ....... Vein x-ray, neck ...................................................... S 0668 Q T 0668 Imaging S&I.
75870 ....... Vein x-ray, skull ....................................................... S 0668 Q T 0668 Imaging S&I.
75872 ....... Vein x-ray, skull ....................................................... S 0279 Q T 0668 Imaging S&I.
75880 ....... Vein x-ray, eye socket ............................................ S 0668 Q T 0668 Imaging S&I.
75885 ....... Vein x-ray, liver ....................................................... S 0280 Q T 0279 Imaging S&I.
75893 ....... Venous sampling by catheter ................................. Q 0668 Q T 0279 Imaging S&I.
75894 ....... X-rays, transcath therapy ........................................ S 0298 N n/a n/a Imaging S&I.
75896 ....... X-rays, transcath therapy ........................................ S 0263 N n/a n/a Imaging S&I.
75898 ....... Follow-up angiography ............................................ X 0263 Q STVX 0263 Intraoperative.
75901 ....... Remove cva device obstruct ................................... X 0263 N n/a n/a Imaging S&I.
75902 ....... Remove cva lumen obstruct ................................... X 0263 N n/a n/a Imaging S&I.
75940 ....... X-ray placement, vein filter ..................................... S 0298 N n/a n/a Imaging S&I.
75945 ....... Intravascular us ....................................................... S 0267 Q T 0267 Imaging S&I.
75946 ....... Intravascular us add-on .......................................... S 0266 N n/a n/a Imaging S&I.
75960 ....... Transcath iv stent rs&i ............................................ S 0668 N n/a n/a Imaging S&I.
75961 ....... Retrieval, broken catheter ....................................... S 0668 N n/a n/a Imaging S&I.
75962 ....... Repair arterial blockage .......................................... S 0668 Q T 0083 Imaging S&I.
Final ‘‘STVX-
2008 or ‘‘T-pack- 2008 APC
(1) (2) (3) (4) (5) (6) (7) (8)
75964 ....... Repair artery blockage, each .................................. S 0668 N n/a n/a Imaging S&I.
75966 ....... Repair arterial blockage .......................................... S 0668 Q T 0083 Imaging S&I.
75968 ....... Repair artery blockage, each .................................. S 0668 N n/a n/a Imaging S&I.
75970 ....... Vascular biopsy ....................................................... S 0668 N n/a n/a Imaging S&I.
75978 ....... Repair venous blockage ......................................... S 0668 Q T 0083 Imaging S&I.
75980 ....... Contrast xray exam bile duct .................................. S 0297 N n/a n/a Imaging S&I.
75982 ....... Contrast xray exam bile duct .................................. S 0297 N n/a n/a Imaging S&I.
75984 ....... Xray control catheter change .................................. X 0263 N n/a n/a Imaging S&I.
75989 ....... Abscess drainage under x-ray ................................ N .......... N n/a n/a Imaging S&I.
75992 ....... Atherectomy, x-ray exam ........................................ S 0668 N n/a n/a Imaging S&I.
76000 ....... Fluoroscope examination ........................................ X 0272 Q STVX 0272 Guidance.
76001 ....... Fluoroscope exam, extensive ................................. N n/a N n/a n/a Guidance.
76080 ....... X-ray exam of fistula ............................................... X 0263 Q T 0263 Imaging S&I.
76125 ....... Cine/video x-rays add-on ........................................ X 0260 N n/a n/a Image Processing.
76350 ....... Special x-ray contrast study .................................... N n/a N n/a n/a Image Processing.
76376 ....... 3d render w/o postprocess ..................................... X 0340 N n/a n/a Image Processing.
76377 ....... 3d rendering w/postprocess .................................... S 0282 N n/a n/a Image Processing.
76930 ....... Echo guide, cardiocentesis ..................................... S 0268 N n/a n/a Guidance.
76932 ....... Echo guide for heart biopsy .................................... S 0309 N n/a n/a Guidance.
76936 ....... Echo guide for artery repair .................................... S 0309 N n/a n/a Guidance.
76937 ....... Us guide, vascular access ...................................... N n/a N n/a n/a Guidance.
76940 ....... Us guide, tissue ablation ......................................... S 0268 N n/a n/a Guidance.
76941 ....... Echo guide for transfusion ...................................... S 0268 N n/a n/a Guidance.
76942 ....... Echo guide for biopsy ............................................. S 0268 N n/a n/a Guidance.
76945 ....... Echo guide, villus sampling .................................... S 0268 N n/a n/a Guidance.
76946 ....... Echo guide for amniocentesis ................................. S 0268 N n/a n/a Guidance.
76948 ....... Echo guide, ova aspiration ..................................... S 0309 N n/a n/a Guidance.
76950 ....... Echo guidance radiotherapy ................................... S 0268 N n/a n/a Guidance.
76965 ....... Echo guidance radiotherapy ................................... S 0308 N n/a n/a Guidance.
76975 ....... GI endoscopic ultrasound ....................................... S 0266 Q T 0267 Imaging S&I.
76998 ....... Us guide, intraop ..................................................... S 0266 N n/a n/a Guidance.
77001 ....... Fluoro guide for vein device ................................... N n/a N n/a n/a Guidance.
77002 ....... Needle localization by xray ..................................... N n/a N n/a n/a Guidance.
77003 ....... Fluoroguide for spine inject ..................................... N n/a N n/a n/a Guidance.
77011 ....... Ct scan for localization ............................................ S 0283 N n/a n/a Guidance.
77012 ....... Ct scan for needle biopsy ....................................... S 0283 N n/a n/a Guidance.
77013 ....... Ct guide for tissue ablation ..................................... S 0333 N n/a n/a Guidance.
77014 ....... Ct scan for therapy guide ....................................... S 0282 N n/a n/a Guidance.
77021 ....... Mr guidance for needle place ................................. S 0335 N n/a n/a Guidance.
77022 ....... Mri for tissue ablation .............................................. S 0335 N n/a n/a Guidance.
77031 ....... Stereotact guide for brst bx .................................... X 0264 N n/a n/a Guidance.
77032 ....... Guidance for needle, breast ................................... X 0283 N n/a n/a Guidance.
77053 ....... X-ray of mammary duct .......................................... X 0263 Q T 0263 Imaging S&I.
77054 ....... X-ray of mammary ducts ......................................... X 0263 Q T 0263 Imaging S&I.
77417 ....... Radiology port film(s) .............................................. X 0260 N n/a n/a Guidance.
77421 ....... Stereoscopic x-ray guidance ................................... S 0257 N n/a n/a Guidance.
78020 ....... Thyroid met uptake ................................................. S 0399 N n/a n/a Intraoperative.
78478 ....... Heart wall motion add-on ........................................ S 0399 N n/a n/a Intraoperative.
78480 ....... Heart function add-on ............................................. S 0399 N n/a n/a Intraoperative.
78496 ....... Heart first pass add-on1 ......................................... S 0399 N n/a n/a Intraoperative.
92547 ....... Supplemental electrical test .................................... X 0363 N n/a n/a Intraoperative.
92978 ....... Intravasc us, heart add-on ...................................... S 0670 N n/a n/a Intraoperative.
92979 ....... Intravasc us, heart add-on ...................................... S 0416 N n/a n/a Intraoperative.
93320 ....... Doppler echo exam, heart ...................................... S 0697 N n/a n/a Intraoperative.
93321 ....... Doppler echo exam, heart ...................................... S 0697 N n/a n/a Intraoperative.
93325 ....... Doppler color flow add-on ....................................... S 0697 N .................... n/a Image Processing.
93555 ....... Imaging, cardiac cath .............................................. N n/a N n/a n/a Imaging S&I.
93556 ....... Imaging, cardiac cath .............................................. N n/a N n/a n/a Imaging S&I.
93571 ....... Heart flow reserve measure .................................... S 0670 N n/a n/a Intraoperative.
93572 ....... Heart flow reserve measure .................................... S 0416 N n/a n/a Intraoperative.
93609 ....... Map tachycardia, add-on ........................................ T 0087 N n/a n/a Intraoperative.
93613 ....... Electrophys map 3d, add-on ................................... T 0087 N n/a n/a Image Processing.
93621 ....... Electrophysiology evaluation ................................... T 0085 N n/a n/a Intraoperative.
Final ‘‘STVX-
2008 or ‘‘T-pack- 2008 APC
(1) (2) (3) (4) (5) (6) (7) (8)
93622 ....... Electrophysiology evaluation ................................... T 0085 N n/a n/a Intraoperative.

93623 ....... Stimulation, pacing heart ........................................ T 0087 N n/a n/a Intraoperative.
93631 ....... Heart pacing, mapping ............................................ T 0087 N n/a n/a Intraoperative.
93640 ....... Evaluation heart device ........................................... N n/a N n/a n/a Intraoperative.
93641 ....... Electrophysiology evaluation ................................... N n/a N n/a n/a Intraoperative.
93662 ....... Intracardiac ecg (ice) .............................................. S 0670 N n/a n/a Intraoperative.
95829 ....... Surgery electrocorticogram ..................................... S 0214 N n/a n/a Intraoperative.
95873 ....... Guide nerv destr, elec stim ..................................... S 0215 N n/a n/a Guidance.
95874 ....... Guide nerv destr, needle emg ................................ S 0215 N n/a n/a Guidance.
95920 ....... Intraop nerve test add-on ........................................ S 0216 N n/a n/a Intraoperative.
95955 ....... EEG during surgery ................................................ S 0213 N n/a n/a Intraoperative.
95957 ....... EEG digital analysis ................................................ S 0214 N n/a n/a Image Processing.
95980 ....... Io anal gast n-stim init ............................................. n/a n/a N n/a n/a Intraoperative.
96020 ....... Functional brain mapping ........................................ X 0373 N n/a n/a Intraoperative.
0126T ....... Chd risk imt study ................................................... N n/a Q STVX 0340 Intraoperative.
0159T ....... Cad breast MRI ....................................................... N n/a N n/a n/a Image Processing.
0173T ....... Iop monit io pressure .............................................. N n/a N n/a n/a Intraoperative.
0174T ....... Cad cxr remote ....................................................... N n/a N n/a n/a Image Processing.
0175T ....... Cad cxr with interp .................................................. N n/a N n/a n/a Image Processing.
A4641 ....... Radiopharm dx agent noc ....................................... N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A4642 ....... In111 satumomab ................................................... H 0704 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9500 ....... Tc99m sestamibi ..................................................... H 1600 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9501 ....... Technetium TC–99m teboroxime ............................ n/a n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9502 ....... Tc99m tetrofosmin .................................................. H 0705 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9503 ....... Tc99m medronate ................................................... N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9504 ....... Tc99m apcitide ........................................................ N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9505 ....... TL201 thallium ......................................................... H 1603 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9507 ....... In111 capromab ...................................................... H 1604 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9508 ....... I131 iodobenguate, dx ............................................ H 1045 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9509 ....... Iodine I–123 sod iodide mil ..................................... n/a n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9510 ....... Tc99m disofenin ...................................................... N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9512 ....... Tc99m pertechnetate .............................................. N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9516 ....... I123 iodide cap, dx .................................................. H 9148 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9521 ....... Tc99m exametazime ............................................... H 1096 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9524 ....... I131 serum albumin, dx .......................................... H 9100 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9526 ....... Nitrogen N–13 ammonia ......................................... H 0737 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9528 ....... Iodine I–131 iodide cap, dx ..................................... H 1088 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9529 ....... I131 iodide sol, dx ................................................... N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9531 ....... I131 max 100uCi ..................................................... N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9532 ....... I125 serum albumin, dx .......................................... N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9536 ....... Tc99m depreotide ................................................... H 0739 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9537 ....... Tc99m mebrofenin .................................................. N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9538 ....... Tc99m pyrophosphate ............................................ N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
Final ‘‘STVX-
2008 or ‘‘T-pack- 2008 APC
(1) (2) (3) (4) (5) (6) (7) (8)
A9539 ....... Tc99m pentetate ..................................................... H 0722 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9540 ....... Tc99m MAA ............................................................ N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9541 ....... Tc99m sulfur colloid ................................................ N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9542 ....... In111 ibritumomab, dx ............................................ H 1642 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9544 ....... I131 tositumomab, dx .............................................. H 1644 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9546 ....... Co57/58 ................................................................... H 0723 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9547 ....... In111 oxyquinoline .................................................. H 1646 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9548 ....... In111 pentetate ....................................................... H 1647 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9550 ....... Tc99m gluceptate .................................................... H 0740 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9551 ....... Tc99m succimer ...................................................... H 1650 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9552 ....... F18 fdg .................................................................... H 1651 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9553 ....... Cr51 chromate ........................................................ H 0741 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9554 ....... I125 iothalamate, dx ................................................ N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9555 ....... Rb82 rubidium ......................................................... H 1654 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9556 ....... Ga67 gallium ........................................................... H 1671 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9557 ....... Tc99m bicisate ........................................................ H 1672 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9558 ....... Xe133 xenon 10mci ................................................ N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9559 ....... Co57 cyano ............................................................. H 0724 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9560 ....... Tc99m labeled rbc .................................................. H 0742 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9561 ....... Tc99m oxidronate ................................................... N n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9562 ....... Tc99m mertiatide .................................................... H 0743 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9566 ....... Tc99m fanolesomab ................................................ H 1678 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9567 ....... Technetium TC–99m aerosol .................................. H 0829 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9568 ....... Tc99m arcitumomab ............................................... H 1648 N n/a n/a Diagnostic Radio-
pharmaceutical.
A9569 ....... Technetium TC–99m auto WBC ............................. n/a n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9570 ....... Indium In-111 auto WBC ........................................ n/a n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9571 ....... Indium In-111 auto platelet ..................................... n/a n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9572 ....... Indium In-111 pentetreotide .................................... n/a n/a N n/a n/a Diagnostic Radio-
pharmaceutical.
A9576 ....... Inj prohance multipack ............................................ n/a n/a N n/a n/a Contrast Agent.
A9577 ....... Inj multihance .......................................................... n/a n/a N n/a n/a Contrast Agent.
A9578 ....... Inj multihance multipack .......................................... n/a n/a N n/a n/a Contrast Agent.
A9579 ....... Gad-base MR contrast NOS, 1ml ........................... n/a n/a N n/a n/a Contrast Agent.
G0268 ....... Removal of impacted wax md ................................ X 0340 N n/a n/a Intraoperative.
G0275 ....... Renal angio, cardiac cath ....................................... N n/a N n/a n/a Intraoperative.
G0278 ....... Iliac art angio,cardiac cath ...................................... N n/a N n/a n/a Intraoperative.
G0288 ....... Recon, CTA for surg plan ....................................... S 0417 N n/a n/a Image Processing.
G0378 ....... Hospital observation per hr ..................................... Q 339 N n/a n/a Observation.
Q9951 ....... LOCM >= 400 mg/ml iodine, 1ml ............................ K 9163 N n/a n/a Contrast Agent.
Q9953 ....... Inj Fe-based MR contrast, 1ml ............................... K 1713 N n/a n/a Contrast Agent.
Final ‘‘STVX-
2008 or ‘‘T-pack- 2008 APC
(1) (2) (3) (4) (5) (6) (7) (8)
Q9954 ....... Oral MR contrast, 100 ml ........................................ K 9165 N n/a n/a Contrast Agent.
Q9955 ....... Inj perflexane lip micros, ml .................................... K 9203 N n/a n/a Contrast Agent.
Q9956 ....... Inj octafluoropropane mic, ml .................................. K 9202 N n/a n/a Contrast Agent.
Q9957 ....... Inj perflutren lip micros, ml ...................................... K 9112 N n/a n/a Contrast Agent.
Q9958 ....... HOCM <= 149 mg/ml iodine, 1ml ........................... N n/a N n/a n/a Contrast Agent.
Q9959 ....... HOCM 150–199mg/ml iodine, 1ml .......................... N n/a N n/a n/a Contrast Agent.
Q9964 ....... HOCM >= 400mg/ml iodine, 1ml ............................ N n/a N n/a n/a Contrast Agent.
Q9965 ....... LOCM 100–199mg/ml iodine, 1ml .......................... n/a n/a N n/a n/a Contrast Agent.
e. Service-Specific Packaging Issues payable for CY 2008. Specifically, we packaged HCPCS codes assigned to
As a result of requests from the determined whether the service is a status indicator ‘‘Q’’ for CY 2008. For
public, a Packaging Subcommittee to the dependent service falling into one of the CY 2008, payment for ‘‘special’’
APC Panel was established to review all seven specified categories that is always packaged codes would be packaged
the procedural CPT codes with a status or almost always provided integral to an when these HCPCS codes are billed on
indicator of ‘‘N.’’ Commenters to past independent service. For those four the same date of service as a code
rules have suggested that certain codes that were reviewed during the assigned to status indicator ‘‘S,’’ ‘‘T,’’
packaged services could be provided March 2007 APC Panel meeting but that ‘‘V,’’ or ‘‘X.’’ When one of the ‘‘special’’
alone, without any other separately do not fit into any of the seven packaged codes assigned to status
payable services on the claim, and categories of codes that are part of our indicator ‘‘Q’’ is billed on a date of
requested that these codes not be CY 2008 proposed packaging approach, service without a code that is assigned
assigned status indicator ‘‘N.’’ In we applied the packaging criteria to any of the four status indicators noted
deciding whether to package a service or described above that were historically above, the ‘‘special’’ packaged code
pay for a code separately, we have used under the OPPS. Moreover, we assigned to status indicator ‘‘Q’’ would
historically considered a variety of took into consideration our interest in be separately payable.
factors, including whether the service is exploring the possibility of expanding The Packaging Subcommittee
normally provided separately or in the size of payment groups for identified areas for change for some
conjunction with other services; how component services to provide currently packaged CPT codes that it
likely it is for the costs of the packaged encounter-based and episode-of-care- believed could frequently be provided
code to be appropriately mapped to the based payment in the future in order to to patients as the sole service on a given
separately payable codes with which it encourage hospital efficiency and date and that required significant
was performed; and whether the provide hospitals with maximal hospital resources as determined from
expected cost of the service is relatively flexibility to manage their resources. hospital claims data. Based on the
low. As discussed above regarding our In accordance with a recommendation comments received, additional issues,
packaging approach for CY 2008, we of the APC Panel, for the CY 2007 OPPS, and new data that we shared with the
have modified the historical we implemented a new policy that Packaging Subcommittee concerning the
considerations outlined above in designates certain codes as ‘‘special’’ packaging status of codes for CY 2008,
developing our policy for the CY 2008 packaged codes, assigned to status the Packaging Subcommittee reviewed
OPPS. The Packaging Subcommittee indicator ‘‘Q’’ under the OPPS, where the packaging status of numerous
discussed many HCPCS codes during separate payment is provided if the code HCPCS codes and reported its findings
the March 2007 APC Panel meeting, is reported without any other services to the APC Panel at its March 2007
prior to development of the packaging that are separately payable under the meeting. The APC Panel accepted the
approach discussed above, and we have OPPS on the same date of service. report of the Packaging Subcommittee,
summarized and responded to the APC Otherwise, payment for the ‘‘special’’ heard several presentations on certain
Panel’s packaging-related packaged code is packaged into packaged services, discussed the
recommendations below. Three of the payment for the separately payable deliberations of the Packaging
codes reviewed by the Packaging services provided by the hospital on the Subcommittee, and recommended
Subcommittee at the March 2007 APC same date. We note that these ‘‘special’’ that—
Panel meeting are included in the seven packaged codes are a subset of those 1. CMS place CPT code 76937
categories of services identified for HCPCS codes that are assigned to status (Ultrasound guidance for vascular
packaging under the CY 2008 OPPS. For indicator ‘‘Q,’’ which means that their access requiring ultrasound evaluation
those three codes, we specifically payment is conditionally packaged of potential access sites, documentation
applied the proposed CY 2008 criteria under the OPPS. We proposed to update of selected vessel patency, concurrent
for determining whether a code should our criteria to determine packaged real-time ultrasound visualization of
be proposed as packaged or separately versus separate payment for ‘‘special’’ vascular needle entry, with permanent
recording and reporting (list separately system, flow rate of less than 50 mL per insertion of vascular access devices, and
in addition to code for primary hour). (Recommendation 9) we had no evidence that patients lacked
procedure)) on the list of ‘‘special’’ 10. The Packaging Subcommittee appropriate access to guidance services
packaged codes (status indicator ‘‘Q’’). remains active until the next APC Panel necessary for the safe insertion of
(Recommendation 1) meeting. (Recommendation 10) vascular access devices in the hospital
2. CMS evaluate providing separate We address each of these outpatient setting. Because we believe
payment for trauma activation when it recommendations in turn in the that ultrasound guidance would almost
is reported on a claim for an ED visit, discussion that follows. always be provided with one or more
regardless of the level of the emergency Recommendation 1 separately payable independent
department visit. (Recommendation 2) procedures, its costs would be
For CY 2008, we proposed to appropriately bundled with the handful
3. CMS place CPT code 0175T
maintain CPT code 76937 as a packaged of vascular access device insertion
(Computer aided detection (CAD)
service. We are not adopting the APC procedures with which it was most
(computer algorithm analysis of digital
Panel’s recommendation to pay commonly performed. We further
image data for lesion detection) with
separately for this code in some believe that hospital staff chose whether
further physician review for
circumstances as a ‘‘special’’ packaged to use no guidance or fluoroscopic
interpretation and report, with or
code. In the CY 2006 OPPS final rule guidance or ultrasound guidance on an
without digitization of film radiographic
with comment period (70 FR 68544 individual basis, depending on the
images, chest radiograph(s), performed through 68545), in response to several
remote from primary interpretation) on clinical circumstances of the vascular
public comments, we reviewed in detail access device insertion procedure.
the list of ‘‘special’’ packaged codes the claims data related to CPT code
(status indicator ‘‘Q’’). Therefore, we do not believe that CPT
76937. During its March 2006 APC code 76937 is an appropriate candidate
(Recommendation 3) Panel meeting, after reviewing data
4. CMS place CPT code 0126T for designation as a ‘‘special’’ packaged
pertinent to CPT code 76937, the APC code. The CY 2007 CPT book indicates
(Common carotid intima-media Panel recommended that CMS maintain
thickness (IMT) study for evaluation of that this code is an add-on code and
the packaged status of this code for CY should be reported in addition to the
atherosclerotic burden or coronary heart 2007, and we accepted that
disease risk factor assessment) on the code reported for the primary
recommendation. During the March procedure. According to our CY 2006
list of ‘‘special’’ packaged codes (status 2007 APC Panel meeting, after
indicator ‘‘Q’’) and that CMS consider claims data available for the proposed
reviewing current data and listening to rule, this code was billed over 60,000
mapping the code to APC 340 (Minor a public presentation, the Panel times, yet less than one-tenth of 1
Ancillary Procedures). recommended that we treat this code as percent of all claims for the procedure
(Recommendation 4) a ‘‘special’’ packaged code for CY 2008, were billed without any separately
5. CMS place CPT code 0069T noting that certain uncommon clinical payable OPPS service on the claim.
(Acoustic heart sound recording and scenarios could occur where it would be Because this code is provided alone
computer analysis only) on the list of possible to bill this service alone on a only extremely rarely, we believe this
‘‘special’’ packaged codes (status claim, without any other separately code would not be appropriately treated
indicator ‘‘Q’’) and that CMS exclude payable OPPS services. as a ‘‘special’’ packaged code. Therefore,
APC 0096 (Non-Invasive Vascular We proposed to maintain CPT code we proposed to continue to
Studies) as a potential placement for 76937 as an unconditionally packaged unconditionally package CPT code
this CPT code. (Recommendation 5) service for CY 2008, fully consistent 76937 for CY 2008.
6. CMS maintain the packaged status with the proposed packaging approach We received several comments that
of HCPCS code A4306 (Disposable drug for the CY 2008 OPPS, as discussed referenced CPT code 76937 in
delivery system, flow rate of less than above. Because CPT code 76937 is a discussions related to the packaged
50 ml per hour) and that CMS present guidance procedure and we proposed to status of guidance services in general.
additional data on this system to the package payment for all guidance Those comments are summarized and
APC Panel when available. procedures for CY 2008, we believe it is responded to in section II.4.c.1 of this
(Recommendation 6) still appropriate to maintain the final rule with comment period. As
7. CMS reevaluate the packaged OPPS unconditionally packaged status of this noted in that section, we are finalizing
payment for CPT code 99186 code, which is a CPT designated add-on our proposal, without modification, to
(Hypothermia; total body) based on procedure that we expected to be unconditionally package CPT code
current research and availability of new generally provided only in association 76937 for CY 2008.
therapeutic modalities. with other independent services. We
(Recommendation 7) applied the updated criteria for Recommendation 2
8. The Packaging Subcommittee determining whether this service should For CY 2008, we proposed to
remains active until the next APC Panel receive packaged or separately payment maintain the packaged status of revenue
meeting. (Recommendation 8) under the CY 2008 OPPS. Specifically, code 068x, trauma response, when the
In addition, the Packaging we determined that this service was a trauma response is provided without
Subcommittee reported its findings to supportive ancillary service that was critical care services. During the August
the APC Panel at its September 2007 integral to an independent service, 2006 APC Panel meeting, the APC Panel
meeting. The APC Panel accepted the resulting in our CY 2008 proposal to encouraged CMS to pay differentially
report of the Packaging Subcommittee, packaged payment for the service. for critical care services provided with
heard presentations on certain packaged We discussed this code extensively in and without trauma activation. For CY
services, discussed the deliberations of both the CY 2006 and CY 2007 final 2007, as a result of the APC Panel’s
the Packaging Subcommittee, and rules with comment period (70 FR August 2006 discussion and our own
recommended that— 68544 through 68545; 71 FR 67996 data analysis, we finalized a policy to
9. CMS provide more data at the next through 67997). Our hospital claims pay differentially for critical care
APC Panel meeting on HCPCS code data demonstrated that guidance provided with and without trauma
A4306 (Disposable drug delivery services were used frequently for the activation. The CY 2007 payment rate
for critical care unassociated with for future OPPS updates as we explore radiograph(s), performed concurrent
trauma activation is $405.04 (APC 0617, the possibility of developing encounter with primary interpretation) and 0175T.
Critical Care), while the payment rate based and episode-of-care-based These services involve the application
for critical care associated with trauma payment approaches. of computer algorithms and
activation is $899.58 (APC 0617 and Furthermore, continued packaged classification technologies to chest x-ray
APC 0618 (Trauma Response with payment for trauma activation when images to acquire and display
Critical Care)). During the March 2007 unassociated with critical care is information regarding chest x-ray
APC Panel meeting, a presenter consistent with the principles of the regions that may contain indications of
requested that CMS also pay OPPS, where hospitals receive payment cancer. CPT code 0152T (Computer
differentially for emergency department based on the median cost related to all aided detection (computer algorithm
visits provided with and without trauma of the hospital resources associated with analysis of digital image data for lesion
activation. Two organizations that the main service provided. In various detection) with further physician review
submitted comment letters for the APC situations, each hospital’s costs may be for interpretation, with or without
Panel’s review specifically requested higher or lower than the median cost digitization of film radiographic images;
separate payment for revenue code 068x used to set payment rates. In light of our chest radiograph(s) (List separately in
every time it appears on a claim, packaging approach for the CY 2008 addition to code for primary
regardless of the other services that were OPPS, we believe it is particularly procedure)), the predecessor code to
billed on that claim. The APC Panel important not to make any changes in CPT codes 0174T and 0175T, was
recommended that CMS evaluate our payment policies for other services indicated as an add-on code to chest x-
providing separate payment for trauma that are not fully aligned with ray CPT codes for CY 2006, according to
activation when it is reported on a claim promoting efficient, judicious, and the AMA’s CY 2006 CPT book.
for an emergency department visit, deliberate care decisions by hospitals However, on July 1, 2006, the AMA
regardless of the level of the emergency that allow them maximum flexibility to released to the public an update that
department visit. manage their resources through deleted CPT codes 0152T and replaced
encouraging the most cost-effective use it with the two new Category III CPT
After accepting the APC Panel’s
of hospital resources in providing the codes 0174T and 0175T.
recommendation and evaluating this
care necessary for the treatment of In its March 2006 presentation to the
issue, we continue to believe that, while
Medicare beneficiaries. Packaging APC Panel, before the AMA had
it is currently appropriate to pay payment encourages hospitals to released the CY 2007 changes to CPT
separately for trauma activation when establish protocols that ensure that code 0152T, a presenter requested that
billed in association with critical care services are furnished only when they we pay separately for this service and
services, it is also currently appropriate are medically necessary and to carefully assign it to a New Technology APC with
to maintain the packaged payment scrutinize the services ordered by a payment rate of $15, based on its
status of revenue code 068x when practitioners to minimize unnecessary estimated cost, clinical considerations,
trauma response services are provided use of hospital resources. and similarity to other image post-
in association with both clinic and Therefore, we are adopting the APC processing services that are paid
emergency department visits under the Panel’s recommendation that we separately. We proposed to accept the
CY 2008 OPPS. As mentioned above, we evaluate providing separate payment for APC Panel’s recommendation to
are exploring the possibility of revenue code 068x when provided in package CPT code 0152T for CY 2007.
expanding the size of the payment association with emergency department In its August 2006 presentation to the
groups under the OPPS to move toward visits. For CY 2008, after our thorough APC Panel, after the AMA had released
encounter-based and episode-of-care- assessment, we proposed to maintain the CY 2007 code changes, the same
based payments in order to encourage the packaged status of revenue code presenter requested that we assign both
maximum hospital efficiency with a 068x, except when revenue code 068x is of the two new codes to a New
focus on budget-neutral value-based billed in association with critical care Technology APC with a payment rate of
purchasing. Because trauma activation services. $15. The APC Panel members discussed
in association with emergency We did not receive any comments on these codes extensively. They
department or clinic visits would this proposal. Therefore, we are considered the possibility of treating
always be provided in the same hospital finalizing our proposal, without CPT code 0175T as a ‘‘special’’
outpatient encounter as the visit for care modification, to maintain the packaged packaged code, thereby assigning
of the injured Medicare beneficiary, status of revenue code 068x, trauma payment to the code only when it was
packaging payment for trauma response, when the trauma response is performed by a hospital without any
activation when billed in association provided without critical care services. other separately payable OPPS service
with both clinic and emergency We note that we do not anticipate that also provided on the same day. They
department visits is most consistent the new composite Extended questioned the meaning of the word
with our proposed packaging approach. Assessment and Management APCs, ‘‘remote’’ in the code descriptor for CPT
We are also concerned that unpackaging 8002 and 8003, will affect this policy in code 0175T, noting that was unclear as
payment for trauma activation in those any way. to whether remote referred to time,
circumstances where the trauma geography, or a specific provider. They
response would be less likely to be Recommendation 3 believed it was likely that a hospital
essential to appropriately treating a For CY 2008, we proposed to without a CAD system that performed a
Medicare beneficiary would reduce the maintain the unconditionally packaged chest x-ray and sent the x-ray to another
incentive for hospitals to provide the status of CPT codes 0174T (Computer hospital for performance of the CAD
most efficient and cost-effective care. aided detection (CAD) (computer would be providing the CAD service
We note that, while we proposed for CY algorithm analysis of digital image data under arrangement and, therefore,
2008 to continue to provide separate for lesion detection) with further would be providing at least one other
payment for trauma activation in physician review for interpretation and service (chest x-ray) that would be
association with critical care services, report, with or without digitization of separately paid. Thus, even in these
we may reconsider this payment policy film radiographic images, chest cases, payment for the CAD service
could be appropriately packaged. After to believe that even the remote service fact, as part of our proposed CY 2008
significant and lengthy deliberation, the would almost always be provided by a packaging approach, we also proposed
APC Panel recommended that we hospital either in conjunction with to unconditionally package payment in
package payment for both of the new other separately payable services or CY 2008 for several other image
CPT codes, 0174T and 0175T, for CY under arrangement. For example, if a processing services that are not always
2007. physician orders a chest x-ray and CAD performed face-to-face, including
In its March 2007 presentation to the service to be performed at hospital A HCPCS code G0288 (Reconstruction,
APC Panel, the same presenter and hospital A, which does not have the computer tomographic angiography of
requested that we pay separately for CAD technology, sends the chest x-ray aorta for surgical planning for vascular
CPT codes 0174T and 0175T, mapping to hospital B for the performance of surgery) and CPT code 76377 (3D
them to New Technology APC 1492, chest x-ray CAD, hospital B could only rendering with interpretation and
with a payment rate of $15. The provide the CAD service if it were reporting of computed tomography,
presenter indicated that chest x-ray CAD provided under arrangement, to avoid magnetic resource imaging, ultrasound,
is not a screening tool and should only the OPPS unbundling prohibition. or other tomographic modality;
be billed to Medicare when applied to Assuming that the CAD service was requiring image postprocessing on an
chest x-rays suspicious for lung cancer. provided under arrangement, hospital A independent workstation). As noted in
The presenter also explained that would bill for the chest x-ray CAD that section II.A.4.c.(2) of this final rule with
additional and distinct hospital was performed by hospital B and would comment period, we are finalizing our
resources are required for chest x-ray pay hospital B for the service provided. proposal for those codes and they will
CAD that are not required for a standard In that case, hospital A would also bill be unconditionally packaged for CY
chest x-ray. In addition, remote chest x- the chest x-ray service that it provided. 2008.
ray CAD described by CPT code 0175T In another scenario that has been The proposed unconditionally
can be performed at a different time or described to us, if a physician were to packaged treatment of the two CPT
location or by a different provider than send a patient to a hospital clinic with codes for chest x-ray CAD is fully
the chest x-ray service. The presenter the patient’s chest x-ray for consistent with the packaging approach
expressed concern that if hospitals were consultation, we believe that the patient for the CY 2008 OPPS, as discussed
not paid separately for this technology, would likely receive a visit service, in above, and the principles and incentives
hospitals would not be able to provide addition to the chest x-ray CAD. for efficiency inherent in a prospective
it, thereby limiting beneficiary access to Therefore, in both of these payment system based on groups of
chest x-ray CAD. The APC Panel circumstances, payment for the chest x- services. Packaging these services
recommended conditional packaging as ray CAD would be appropriately creates incentives for providers to
a ‘‘special’’ packaged code for CPT code packaged into payment for the furnish services in the most cost-
0175T, but did not recommend a change separately payable services with which effective way and provides them with
to the unconditionally packaged status it was provided. the most flexibility to manage their
of CPT code 0174T. We are not adopting resources. As stated above, packaging
the APC Panel’s recommendation for We also do not believe that CPT code encourages hospitals to establish
designation of CPT code 0175T as a 0175T should be treated as a ‘‘special’’ protocols that ensure that services are
‘‘special’’ packaged code under the CY packaged code. As discussed earlier in furnished only when they are medically
2008 OPPS. this section with regard to our necessary and to carefully scrutinize the
We believed and continue to believe packaging approach for image services ordered by practitioners to
that packaged payment for diagnostic processing services for CY 2008, we are minimize unnecessary use of hospital
chest x-ray CAD under a prospective concerned with establishing payment resources. Therefore, we proposed to
payment methodology for outpatient policies that could encourage certain continue to unconditionally package
hospital services is most appropriate. inefficient and more costly service payment for CPT codes 0174T and
We proposed to maintain CPT codes patterns, particularly for those services 0175T for CY 2008.
0174T and 0175T as unconditionally that do not need to be provided as a Comment: One commenter requested
packaged services for CY 2008, fully face-to-face encounter with the patient. that CPT codes 0174T and 0175T, which
consistent with the packaging approach If we were to assign CPT code 0175T to were provided interim assignments in
for the CY 2008 OPPS, as discussed ‘‘special’’ packaged status, we would CY 2007 be assigned to status indicator
above. Because CPT codes 0174T and likely create an incentive for hospitals ‘‘S’’ and be paid separately with a
0175T are supportive ancillary services to perform chest x-ray CAD remotely, payment rate of $15. That commenter
that fit into the ‘‘image processing’’ for example, several days after then requested conditional payment for
category, and we proposed to package performance of the initial chest x-ray, both of these CPT codes, status indicator
payment for all image processing rather than immediately following the ‘‘Q’’ assignment, and a payment rate of
services for CY 2008, we believe it is chest x-ray on the same day, to enable $15. The commenter indicated that this
appropriate to maintain the packaged the hospital to receive separate payment technology is an important diagnostic
status of these code. We applied the for the service. In CY 2005, there were test for lung cancer patients, and that
updated criteria for determining approximately 7.3 million claims for all insufficient payment will limit access to
whether these two CAD services should chest x-ray services in the HOPD, so a this cost-effective diagnostic tool.
receive packaged or separate payment. payment policy that could induce such Response: As discussed extensively
Specifically, we determined that this changes in service delivery would be above, after thorough discussion with
service is a dependent service that is problematic in light of our commitment the APC Panel and repeated review by
integral to an independent service, in to encouraging the most efficient and our clinical advisors, we continue to
this case, the chest x-ray or other OPPS cost-effective care for Medicare believe that these codes are
service that we would expect to be beneficiaries. Creating such perverse appropriately unconditionally
provided in addition to the CAD service. payment incentives through conditional packaged.
After hearing many public packaging is a particular problem for For CY 2008, we are finalizing our
presentations and discussions regarding those services that do not need a face- proposal without modification to
the use of chest x-ray CAD, we continue to-face encounter with the patient. In unconditionally package CPT codes
0174T and 0175T for CY 2008. We note frequency of separate payment for this payment rates of $94.06 and $62.85,
that these codes fall into the category of procedure as soon as we have more respectively. The presenter stated that
the image processing codes that are claims data available. the estimated true cost of this service
packaged for the CY 2008 OPPS. We did not receive any comments lies between $62 and $94. The presenter
related to this proposal. Therefore, we clarified that this service is usually
Recommendation 4 are finalizing our proposal without provided with an EKG, but noted that
For CY 2008, we adopted the APC modification to designate CPT code the test is sometimes provided without
Panel’s recommendation and proposed 0126T as a ‘‘special’’ packaged code for an EKG, according to its revised code
to add CPT code 0126T to the list of CY 2008. This code is an ‘‘STVX- descriptor for CY 2007. The presenter
‘‘special’’ packaged codes and assign packaged’’ code. agreed that it would be rare for the
this code to APC 0340 (Minor Ancillary acoustic heart sound procedure to be
Procedures). Recommendation 5
performed alone without any other
This service describes an ultrasound For CY 2008, we proposed to separately payable OPPS services. The
procedure that measures common maintain the packaged status of CPT APC Panel recommended that we place
carotid intima-media thickness to code 0069T, and we are not adopting CPT code on the list of ‘‘special’’
evaluate a patient’s degree of the APC Panel’s recommendation to packaged codes and that we exclude
atherosclerosis. This code became designate this service as a ‘‘special’’ APC 0096 as a potential placement for
effective January 1, 2006. We received a packaged code. This service uses signal this CPT code.
comment to the CY 2007 proposed rule processing technology to detect, Because this service does not fit into
requesting that this code become interpret, and document acoustical one of the seven identified categories of
separately payable for CY 2007. At that activities of the heart through special packaged codes proposed for the CY
point, we had no cost data for the sensors applied to a patient’s chest. This 2008 OPPS, we followed our historical
service and, as discussed in the CY 2007 code was a new Category III CPT code packaging guidelines to determine
OPPS/ASC final rule with comment implemented in the CY 2005 OPPS. CPT whether to maintain the packaged status
period (71 FR 67998), we reviewed this code 0069T was an add-on code to an of this code or to pay for it separately.
code with the Packaging Subcommittee, electrocardiography (EKG) service for Based on the clinical uses that were
as is our standard procedure for codes CYs 2005 and 2006. However, effective described during the March 2007 and
that we are asked to review during the January 1, 2007, the AMA changed the earlier APC Panel meetings, APC Panel
comment period. The APC Panel noted code descriptor to remove the add-on discussions, and our claims data review,
that this service could sometimes be code designation for CPT code 0069T. we continue to believe that it is highly
provided to a patient without any other This code has been packaged under the unlikely that CPT code 0069T would be
separately payable services. Therefore, OPPS since CY 2005. performed in the HOPD as a sole service
the APC Panel recommended that we During the August 2005 APC Panel without other separately payable OPPS
add this code to the list of ‘‘special’’ meeting, the APC Panel recommended services. In addition, our data indicate
packaged codes and pay for it separately packaging CPT code 0069T for CY 2005. that this service is estimated to require
when it is provided without any other In its March 2006 presentation to the only minimal hospital resources. Based
separately payable services on the same APC Panel, a presenter requested that on CY 2006 claims, we had only 8 single
day. For circumstances when this code we pay separately for CPT code 0069T claims for CPT code 0069T, with a
is paid separately, the APC Panel and assign it to APC 0099 median line-item cost of approximately
recommended that we consider (Electrocardiograms) based on its $5, consistent with its low expected
assigning this code to APC 0340. estimated cost and clinical cost. Therefore, we believe that payment
While we continue to believe that this characteristics. The presenter stated that for CPT code 0069T is appropriately
procedure would not commonly be the acoustic heart sound recording and packaged because it would usually be
provided alone, we adopted the APC analysis service may be provided with closely linked to the performance of an
Panel recommendation and proposed to or without a separately reportable EKG or other separately payable cardiac
treat this code as a ‘‘special’’ packaged electrocardiogram. Members of the APC service, would rarely, if ever, be the
code subject to conditional packaging, Panel engaged in extensive discussion only OPPS service provided to a patient
mapping to APC 0340 for CY 2008 when of clinical scenarios as they considered in an encounter, and has a low
it would be separately paid. This is fully whether CPT code 0069T could or could estimated resource cost. The proposed
consistent with the packaging approach not be appropriately reported alone or packaged treatment of this code is
for the CY 2008 OPPS, as discussed in conjunction with several different consistent with the principles and
above. Because CPT code 0126T is procedure codes. Ultimately, the APC incentives for efficiency inherent in a
almost always performed during another Panel recommended assigning this prospective payment system based on
procedure, and we proposed to package service to a separately payable status groups of services. Therefore, we
payment for all intraoperative indicator. However, during the August proposed to continue to package
procedures for CY 2008, we believe it is 2006 meeting, the APC Panel further payment for CPT code 0069T for CY
appropriate to designate this CPT code discussed CMS’ proposal to package 2008.
as a ‘‘special’’ packaged code. We payment for CPT code 0069T for CY We did not receive any comments
applied the updated criteria for 2007 and considered the CY 2007 code related to this proposal. Therefore, we
determining whether this service should descriptor change, finally are finalizing our proposal, without
receive packaged or separate payment. recommending that CMS continue to modification, to continue to package
Specifically, we determined that this package this code for CY 2007. payment for CPT code 0069T for CY
service is usually a dependent service During the March 2007 APC Panel 2008.
that is integral to an independent meeting, the same presenter requested

service, but that it could sometimes be that we pay separately for this service Recommendation 6
provided without an independent and assign it to APC 0096 (Non-Invasive For CY 2008, we proposed to adopt
service. Vascular Studies) or to APC 0097 the APC Panel’s recommendation and
As with all ‘‘special’’ packaged codes, (Cardiac and Ambulatory Blood maintain the packaged status of HCPCS
we will closely monitor cost data and Pressure Monitoring), with CY 2007 code A4306. We note that at its
September 2007 APC Panel meeting, the this code is misreported by hospitals associated with traditional methods of
Panel recommended specifically that and estimated that the true cost of the inducing total body hypothermia, such
CMS provide more data at the next supply is between $20 and $60. The as ice packs applied to the body. In fact,
meeting on this code. commenter requested that CMS provide the presenter noted that a
HCPCS code A4306 describes a instructions to hospitals on the technologically advanced total body
disposable drug delivery system with a appropriate revenue center for this hypothermia system costs $30,000, with
flow rate of less than 50 ml per hour. As supply and contact the AHA coding an additional cost of $1,600 per
discussed during the March 2007 APC clinic regarding the need for better disposable body suit. As expected, our
Panel meeting, there is a particular HCPCS code instructions for this claims data showed that this service was
disposable drug delivery system that is supply. provided most frequently with high
specifically used to treat postoperative Response: In general, we give level emergency department visits and
pain. Since the implementation of the hospitals the flexibility to report charges critical care services.
OPPS, this code was assigned to status under whichever revenue code the As we noted in the CY 2008 proposed
indicator ‘‘A,’’ indicating that it was hospital believes is most appropriate. In rule, we believed that the circumstances
payable according to another fee addition, it is not our usual practice to in which total body hypothermia would
schedule, in this case, the Durable refer codes to the AHA coding clinic for be provided to a Medicare beneficiary
Medical Equipment (DME) fee schedule. review. Instead, we encourage the and billed under the OPPS were
There were discussions during CYs commenter to submit any questions or extremely rare, as patients requiring this
2005 and 2006 between CMS and a requests for clarification to the AHA therapy would almost always be
manufacturer, and it was determined coding clinic, if appropriate. admitted as inpatients if they survive.
that this code should be removed from We are finalizing without Moreover, in the uncommon situation
the DME fee schedule as this code does modification our proposal to continue to where a patient presents to one hospital
not describe DME. For CY 2007, HCPCS package payment for HCPCS code and then is cooled and transported to
code A4306 is payable under the OPPS, A4306 for CY 2008. In addition, with another hospital without admission to
with status indicator ‘‘N’’ indicating that respect to APC Panel Recommendation the first hospital, payment for the
its payment is unconditionally 9, we will provide the APC Panel with
hypothermia service would be most
packaged. more cost data related to this code at its
appropriately packaged into payment
One presenter to the APC Panel next meeting.
for the many other separately payable
requested that we pay separately for this
Recommendation 7 services that it most likely accompanied
supply under the OPPS. For CY 2007,
For CY 2008, we proposed to and that would be paid to the first
we packaged payment for this code
maintain the packaged status of CPT hospital under the OPPS.
because it is considered to be a supply,
and since the inception of the OPPS the code 99186, consistent with the APC In addition, consistent with the
established payment policy packages Panel’s recommendation that we principles and incentives for efficiency
payment for supplies because they are reevaluate the packaged OPPS payment inherent in a prospective payment
directly related and integral to an for CPT code 99186 based on current system based on groups of services,
independent service furnished under research and the availability of new packaging payment for this procedure
the OPPS. therapeutic modalities. This service that is highly integrated with other
Our CY 2006 claims data indicate that describes induced total body services provided in the hospital
HCPCS code A4306 was billed on OPPS hypothermia that is performed on some outpatient encounter creates incentives
claims 1,773 times, yielding a line-item post-cardiac arrest patients to avoid or for providers to furnish services in the
median cost of approximately $3. The lessen brain damage. The service has most cost-effective way. In situations
APC Panel and a presenter believe that been packaged since the where there are a variety of supplies
this code may not always be implementation of the OPPS. One that could be used to furnish a service,
appropriately billed by hospitals as the presenter to the APC Panel at the March some of which are more expensive than
data also show that this code was billed 2007 meeting requested that this code others, packaging encourages hospitals
together with computed tomography be assigned a separately payable status to use the most cost-effective item that
(CT) scans of the thorax, abdomen, and indicator under the OPPS. The presenter meets the patient’s needs.
pelvis approximately 40 percent of the expressed concern that hospitals that This code was discussed by the APC
time that this supply was reported. The provide this service and subsequently Panel members during the September
APC Panel speculated that this code transfer the patient to another hospital 2007 APC Panel meeting, but they made
may be currently reported when other prior to admission are not adequately no official recommendation.
types of drug delivery devices are paid for their services. We did not receive any comments
utilized for nonsurgical procedures or Because this service does not fit into related to our proposal. Therefore, we
for purposes other than the treatment of one of the seven identified categories of are finalizing our proposal to maintain
postoperative pain. Therefore, the APC packaged codes proposed for the CY the packaged status of CPT code 99186
Panel requested that we share additional 2008 OPPS, we followed our historical for CY 2008.
data when available. packaging guidelines to determine
whether to maintain the packaged status Recommendation 8
In summary, because HCPCS code
A4306 represents a supply and payment of this code or to pay for it separately. We note that the Packaging
of supplies is packaged under the OPPS Claims data indicate that this code was Subcommittee remains active. See
according to longstanding policy, we billed 39 times under the OPPS in CY Recommendation 10 below.
proposed to maintain the packaged 2006 and was never billed without
Recommendation 9
status of HCPCS code A4306 for CY another separately payable service on
2008. the same date. The proposed CY 2008 As noted in Recommendation 6, in
Comment: A commenter supported median cost for this code was accordance with the APC Panel’s
CMS’ proposal to maintain the packaged approximately $35, with individual recommendation, we will provide more
status of HCPCS code A4306 for CY costs ranging from approximately $17 to cost data related to HCPCS code A4306
2008. The commenter suspected that $69, likely reflecting the costs (Disposable drug delivery system, flow
rate of less than 50 mL per hour) for the rates on median cost, we refer readers to but significantly lower than what it was
APC Panel’s review at its next meeting. the April 7, 2000 OPPS final rule with in CY 2003 ($1,184). We believed that
comment period (65 FR 18482). a combination of reduced charges and
Recommendation 10 Historically, the median per diem cost slightly lower CCRs for CMHCs resulted
In response to the APC Panel’s for CMHCs greatly exceeded the median in a significant decline in the CMHC
recommendation for the Packaging per diem cost for hospital-based PHPs median per diem cost between CY 2003
Subcommittee to remain active until the and fluctuated significantly from year to and CY 2004.
next APC Panel meeting, we note that year, while the median per diem cost for Following the methodology used for
the APC Panel Packaging Subcommittee hospital-based PHPs remained relatively the CY 2005 OPPS update, the CY 2006
remains active, and additional issues constant ($200–$225). We believe that OPPS updated combined hospital-based
and new data concerning the packaging CMHCs may have increased and and CMHC median per diem cost was
status of codes will be shared for its decreased their charges in response to $161, a decrease of 44 percent compared
consideration as information becomes Medicare payment policies. As to the CY 2005 combined median per
available. We continue to encourage discussed in more detail in section diem amount.
submission of common clinical II.B.2. of this final rule with comment Due to concern that this amount may
scenarios involving currently packaged period and in the CY 2004 OPPS final not cover the cost for PHPs, as stated in
HCPCS codes to the Packaging rule with comment period (68 FR the CY 2006 OPPS final rule with
Subcommittee for its ongoing review, 63470), we also believe that some comment period (70 FR 68548 and
and we also encourage CMHCs manipulated their charges in 68549), we applied a 15-percent
recommendations of specific services or order to inappropriately receive outlier reduction to the combined hospital-
procedures whose payment would be payments. based and CMHC median per diem cost
most appropriately packaged under the For CY 2005, the PHP per diem to establish the CY 2006 PHP APC. (We
OPPS. Additional detailed suggestions amount was based on 12 months of refer readers to the CY 2006 OPPS final
for the Packaging Subcommittee should hospital and CMHC PHP claims data rule with comment period for a full
be submitted to APCPanel@cms.hhs.gov, (for services furnished from January 1, discussion of how we established the
with ‘‘Packaging Subcommittee’’ in the 2003, through December 31, 2003). We CY 2006 PHP rate (70 FR 68548).) We
subject line. used data from all hospital bills stated our belief that a reduction in the
reporting condition code 41, which CY 2005 median per diem cost would
B. Payment for Partial Hospitalization identifies the claim as partial strike an appropriate balance between
1. Background hospitalization, and all bills from using the best available data and
CMHCs because CMHCs are Medicare providing adequate payment for a
Partial hospitalization is an intensive providers only for the purpose of program that often spans 5–6 hours a
outpatient program of psychiatric providing partial hospitalization day. We stated that 15 percent was an
services provided to patients as an services. We used CCRs from the most appropriate reduction because it
alternative to inpatient psychiatric care recently available hospital and CMHC recognized decreases in median per
for beneficiaries who have an acute cost reports to convert each provider’s diem costs in both the hospital data and
mental illness. A partial hospitalization line-item charges as reported on bills to the CMHC data, and also reduced the
program (PHP) may be provided by a estimate the provider’s cost for a day of risk of any adverse impact on access to
hospital to its outpatients or by a PHP services. Per diem costs were then these services that might result from a
Medicare-certified community mental computed by summing the line-item large single-year rate reduction.
health center (CMHC). Section costs on each bill and dividing by the However, we adopted this policy as a
1833(t)(1)(B)(i) of the Act provides the number of days on the bill. transitional measure, and stated in the
Secretary with the authority to designate In the CY 2005 OPPS update, the CY 2006 OPPS final rule with comment
the hospital outpatient services to be CMHC median per diem cost was $310, period that we would continue to
covered under the OPPS. The Medicare the hospital-based PHP median per monitor CMHC costs and charges for
regulations at § 419.21 that implement diem cost was $215, and the combined these services and work with CMHCs to
this provision specify that payments CMHC and hospital-based median per improve their reporting so that
under the OPPS will be made for partial diem cost was $289. We believed that payments could be calculated based on
hospitalization services furnished by the reduction in the CY 2005 CMHC better empirical data (70 FR 68548). To
CMHCs as well as those furnished to median per diem cost compared to prior apply this methodology for CY 2006, we
hospital outpatients. Section years indicated that the use of updated reduced the CY 2005 combined
1833(t)(2)(C) of the Act requires that we CCRs had accounted for the previous unscaled hospital-based and CMHC
establish relative payment weights increase in CMHC charges and median per diem cost of $289 by 15
based on median (or mean, at the represented a more accurate estimate of percent, resulting in a combined median
election of the Secretary) hospital costs CMHC per diem costs for PHP. per diem cost of $245.65 for CY 2006.
determined by 1996 claims data and For the CY 2006 OPPS final rule with For the CY 2007 final rule with
data from the most recent available cost comment period, we analyzed 12 comment period, we analyzed 12
reports. Payment to providers under the months of the most current claims data months of more current data for hospital
OPPS for PHPs represents the provider’s available for hospital and CMHC PHP and CMHC PHP claims for services
overhead costs associated with the services furnished between January 1, furnished between January 1, 2005, and
program. Because a day of care is the 2004, and December 31, 2004. We also December 31, 2005, and used the most
unit that defines the structure and used the most currently available CCRs currently available CCRs to estimate
scheduling of partial hospitalization to estimate costs. The median per diem costs. Using these updated data, we
services, we established a per diem cost for CMHCs dropped to $154, while recreated the analysis performed for the
payment methodology for the PHP APC, the median per diem cost for hospital- CY 2007 proposed rule to determine if
effective for services furnished on or based PHPs was $201. Based on the CY the significant factors we used in
after August 1, 2000. For a detailed 2004 claims data, the average charge per determining the proposed PHP rate had
discussion, which includes a discussion day for CMHCs was $760, considerably changed. The median per diem cost for
of the decision to base relative payment greater than hospital-based per day costs CMHCs increased $8 to $173, while the
median per diem cost for hospital-based understated the PHP median cost by not Revenue
PHPs decreased $19 to $190. The CY using a hospital-specific CCR for partial center Revenue center description
2005 average charge per day for CMHCs hospitalization. In our response to this code
was $675, similar to the figure noted in comment in the CY 2007 OPPS/ASC
0941 ..... Other Therapeutic Services:
the CY 2007 proposed rule ($673) but final rule with comment period (71 FR Recreation Rx.
still significantly lower than what was 68000), we noted that, although most 0942 ..... Other Therapeutic Services: Edu-
noted as the average charge for CY 2003 hospitals do not have a cost center for cation/training.
($1,184). partial hospitalization, we used the CCR
The combined hospital-based and as specific to PHP as possible. The We believed these 10 revenue center
CMHC median per diem cost would following CMS Web site contains the codes did not map to either a Primary
have been $175 for CY 2007. Rather revenue-code-to-cost-center crosswalk: Cost Center 3550 ‘‘Psychiatric/
than allowing the PHP median per diem http://www.cms.hhs.gov/ Psychological Services’’ or a Secondary
cost to drop to this level, we proposed HospitalOutpatientPPS/ Cost Center 6000 ‘‘Clinic’’ because these
to reduce the PHP median cost by 15 03_crosswalk.asp#TopOfPage. codes may be used for services that are
percent, similar to the methodology As noted in the proposed rule (72 FR not PHP or psychiatric related. For
used for the CY 2006 update. However, 42691), this crosswalk indicates how example, the majority of Occupational
after considering all public comments charges on a claim are mapped to a cost Therapy services are not furnished to
received concerning the proposed CY center for the purpose of converting PHP patients and, therefore, these
2007 PHP per diem rate and results charges to cost. One or more cost centers services should be appropriately
obtained using the more current data, are listed for most revenue codes that mapped to a Primary Cost Center 5100
we modified our proposal. We made a are used in the OPPS median ‘‘Occupation Therapy’’ (the general
5-percent reduction to the CY 2006 calculations, starting with the most Occupational Therapy Cost Center).
median per diem rate to provide a specific, and ending with the most Another example would be claims for
transitional path to the per diem cost general. Typically, we map the revenue Diabetes Education, which is also not
indicated by the data. This approach code to the most specific cost center furnished to PHP patients.
accounted for the downward direction with a provider-specific CCR. However, For this final rule with comment
of the data and addressed concerns if the hospital does not have a CCR for period, we have updated this analysis
raised by commenters about the any of the listed cost centers, we using updated claims and CCR data for
magnitude of another 15-percent consider the overall hospital CCR as the PHP claims. Again, we remapped the 10
reduction in 1 year. Thus, to calculate default. For partial hospitalization, the revenue center codes described earlier
the CY 2007 APC PHP per diem cost, we revenue center codes billed by PHPs are in this section to a Primary Cost Center
reduced $245.65 (the CY 2005 combined mapped to Primary Cost Center 3550 3550 ‘‘Psychiatric/Psychological
hospital-based and CMHC median per
‘‘Psychiatric/Psychological Services’’. If Services’’ or a Secondary Cost Center
diem cost of $289 reduced by 15
that cost center is not available, they are 6000 ‘‘Clinic’’. Once we remapped the
percent) by 5 percent, which resulted in
mapped to the Secondary Cost Center codes, we computed an alternate cost
a combined per diem cost of $233.37.
6000 ‘‘Clinic.’’ We use the overall for each line item of the CY 2006
2. PHP APC Update for CY 2008 facility CCR for CMHCs because PHPs hospital-based PHP claims. There are a
As noted in the CY 2008 OPPS/ASC are CMHCs’ only Medicare cost, and total of 723,749 line items in the CY
proposed rule (72 FR 42691), for the CMHCs do not have the same cost 2006 hospital-based PHP claims. Prior
past 2 years, we were concerned that we structure as hospitals. Therefore, for to remapping, there were 320,504 line
did not have sufficient evidence to CMHCs, we use the CCR from the items where a default CCR was used to
support using the median per diem cost outpatient provider-specific file. estimate costs. After the remapping,
produced by the most current year’s As indicated in the proposed rule (72 there were 160,351 line items left
PHP data. After extensive analysis, we FR 42691), closer examination of the defaulting to the hospitals’ overall CCR.
now believe the data reflects the level of revenue-code-to-cost-center crosswalk While this remapping creates a more
cost for the type of services that are revealed that 10 of the revenue center accurate estimate of PHP per diem costs
being provided. This analysis included codes (shown in the table below) that for a significant number of claims, again
an examination of revenue-to-cost are common among hospital-based PHP there was not a large change in the
center mapping, refinements to the per claims did not map to a Primary Cost resulting median per diem cost. The
diem methodology, and an in-depth Center 3550 ‘‘Psychiatric/Psychological median per diem costs for hospital-
analysis of the number of units of Services’’ or a Secondary Cost Center of based PHPs increased by $5 (from $172
service per day. 6000 ‘‘Clinic.’’ to $177). We note that, unlike the
As stated in the CY 2008 proposed proposed rule, this final rule analysis
rule (72 FR 42691), the CY 2006 and CY Revenue was done using the revised
center Revenue center description methodology for computing per diem
2007 OPPS updates data have produced code
median costs that we believed were too costs described below. We received no
low to cover the cost of a program that 0430 ..... Occupational Therapy. public comments in opposition to the
typically spans 5 to 6 hours per day. 0431 ..... Occupational Therapy: Visit proposed change in remapping revenue
However, we continued to observe a charge. codes to alternate cost centers.
clear downward trend in the data. We 0432 ..... Occupational Therapy: Hourly Therefore, we are adopting this
stated that if the data continued to charge. proposed change beginning in CY 2008.
0433 ..... Occupational Therapy: Group rate. As part of our effort to produce the
reflect a low PHP per diem cost in CY
0434 ..... Occupational Therapy: Evaluation/ most accurate per diem cost estimate,
2008, we expected to continue the re-evaluation.
transition of decreasing the PHP median 0439 ..... Occupational Therapy: Other occu-
we have reexamined our methodology
per diem cost to an amount that is more pational therapy. for computing the PHP per diem cost.
reflective of the data. 0904 ..... Psychiatric/Psychological Treat- Section 1833(t)(2)(C) of the Act requires
We received a comment on the CY ment: Activity therapy. that we establish relative payment
2007 proposed rates that CMS 0940 ..... Other Therapeutic Services. weights based on median (or mean, at
the election of the Secretary) hospital As indicated in the proposed rule (72 As noted previously, for the past 2
costs determined by 1996 claims data FR 42692), we have developed an years, the data have produced median
and data from the most recent available alternate way to determine median cost costs that we believed were too low to
cost reports. As explained in section by computing a separate per diem cost cover the cost of a program that
II.B.1. of this final rule with comment for each day rather than for each bill. typically spans 5 to 6 hours per day.
period, payment to providers under Under this method, a cost is computed This length of day would include five or
OPPS for PHP services represents the separately for each day of PHP care. six services with a break for lunch. We
provider’s overhead costs associated When there are multiple days of care looked at the number of units of service
with the program. Because a day of care entered on a claim, a unique cost is being provided in a day of care, as a
is the unit that defines the structure and computed for each day of care. All of possible explanation for the low per
scheduling of partial hospitalization these costs are then arrayed from lowest diem cost for PHP. Our analysis
services, we established a per diem to highest and the middle value of the revealed that both hospital based and
payment methodology for the PHP APC. array would be the median per diem CMHC PHPs have a significant number
Other than being a per diem payment, cost. of days where fewer than 4 units of
we use the general OPPS ratesetting We proposed to adopt this alternative service were provided.
methodology for determining median method of computing PHP per diem Using updated data from the CY 2008
cost. median cost because we believe it proposed rule, specifically, 64 percent
As we have described in prior Federal produces a more accurate estimate of the days that CMHCs were paid were
Register notices, our current method for because each day gets an equal weight for days where 3 or less units of services
computing per diem costs is as follows: towards computing the median. In light were provided, and 31 percent of the
We use data from all hospital bills of the stabilizing trend in the data, and days that hospital-based PHPs were paid
reporting condition code 41, which the robustness of recent data analysis,
were for days where 3 or less units of
identifies the claim as partial we believe it is now appropriate to
service were provided. We continue to
hospitalization, and all bills from adopt this method. We believe this
believe these findings are significant
CMHCs. We use CCRs from the most method for computing a PHP per diem
because they may explain a lower per
recently available hospital and CMHC median cost more accurately reflects the
diem cost. Based on these updated
cost reports to convert each provider’s costs of a PHP and uses all available
findings, we computed median per diem
line-item charges as reported on bills to PHP data. We received no public
costs in two categories:
estimate the provider’s cost for a day of comments in opposition to the revised
PHP services. Per diem costs are then method for computing per diem cost, (a) All days.
computed by summing the line-item although we did receive a few public (b) Days with 4 units of service or
costs on each bill and dividing by the comments critical of our current method more (removing days with 3 services or
number of days of PHP care provided on of computing per diem costs. (These less).
the bill. These computed per diem costs public comments and our response are These updated median per diem costs
are arrayed from lowest to highest and addressed below.) Therefore, we are were computed separately for CMHCs
the middle value of the array is the adopting this proposed change and hospital based PHPs and are shown
median per diem cost. beginning in CY 2008. in the table below:
Hospital-
CMHCs Combined
based PHPs
All Days .................................................................................................................................................... $172 $177 $172

Days with 4 units or more ....................................................................................................................... 192 189 192
As expected, excluding the low unit transitioning towards discharge (or a We believed the most appropriate
days resulted in a higher median per patient who is transitioning at the payment rate for PHPs is computed
diem cost estimate. However, if the beginning of their PHP stay). Rather using both hospital-based and CMHC
programs have many ‘‘low unit days,’’ than set separate rates for half-days and PHP data, including the remapped data
their cost and Medicare payment should full-days, we believed it was for all days, resulting in a median per
reflect this level of service. It would not appropriate to set one rate that would be diem cost of $178. Therefore, we
be appropriate to set the PHP rate to paid for all PHP days, including those proposed a CY 2008 APC PHP per diem
exclude the ‘‘low unit days’’ because for patients transitioning towards cost of $178.
these days are covered PHP days. We discharge (or admission). We intended We received a large number of public
believe the analysis of the number of that the PHP benefit is for a full day, comments on our proposal. A summary
units of service per day supports a lower with shorter days only occurring while of the public comments received and
per diem cost. Therefore, including all a patient transitions into or out of the our responses follow.
days supports the data trend towards a PHP. Comment: A number of commenters
lower per diem cost and we believe However, as indicated in the data, expressed concern about the magnitude
more accurately reflects the costs of many programs have these ‘‘low unit of the PHP per diem rate reduction,
providing PHP services. days,’’ and we believe their cost and particularly in light of the reductions
Although the minimum number of Medicare payment should reflect this over the past few years. Many
PHP services required in a PHP day is level of service. It would not be commenters believe that such a
three, it was never our intention that appropriate to set the PHP rate reduction would reduce the financial
this represented the number of services excluding the low unit days because viability and possibly lead to the closure
to be provided in a typical PHP day. Our these days are covered. Again, we of many PHPs, thus affecting access to
intention was to cover days that believe the data support the estimated this crucial service that serves
consisted of only three services, per diem cost under $200 that we have vulnerable populations. Many
generally because a patient was observed. commenters stated that PHPs are an
integral part of the continuum of care, centers and computed the median using providers. The commenters stated that
and if programs were forced to close, a per day methodology (as described all programs are strongly encouraged by
there would be an increase in the length earlier in this section). the fiscal intermediaries to submit all
and number of more costly inpatient In addition, based on our data PHP service days on claims, even when
hospital stays. In addition, because analysis, we have determined that the patient receives less than three
hospital outpatient mental health CMHCs (and hospital-based PHPs to a services. They further stated that
services paid under the OPPS are lesser extent) are furnishing a programs must report these days to be
capped at the PHP per diem rate, many substantial number of low unit days. able to meet the 57 percent attendance
commenters were concerned about Although these are all covered days in threshold and avoid potential delays in
overall access to outpatient mental the context of existing Medicare the claim payment. The commenters
health treatment. The majority of guidelines, PHPs are furnished in lieu of were concerned that programs are only
commenters requested that CMS freeze psychiatric hospitalization and are paid their per diem when three or more
the PHP per diem rate at the CY 2007 intended to be more intensive than a qualified services are presented for a
level, and some suggested inflating this half-day program. While the guidelines day of service. The commenters stated
rate each year by the consumer price have allowed a minimum of three that if only one or two services are
index or market basket update. In services per day, this was intended to be assigned a cost and the day is divided
addition, several patients were a floor, not the norm. into the aggregate data, the cost per day
concerned that the proposed 24-percent We conducted extensive data is significantly compromised and
reduction in payment would negatively analysis, which included unit analysis, diluted. They claimed that even days
impact their ability to continue therapy. revenue code and HCPCS/CPT that are paid but only have three
One commenter requested that CMS frequency analysis, and we have learned services dilute the cost factors on the
limit the annual reduction to 5 percent, that PHPs often use the least costly staff calculations.
phasing in the reduction over several and may not offer the full range of PHP Response: As discussed earlier in this
years if necessary. services contemplated in section section, we have refined our
Response: For this CY 2008 final rule 1861(ff) of the Act. However, we believe methodology for computing per diem
with comment period, we analyzed 12 the data accurately represent the level of costs. We have developed an alternate
months of more current data for hospital service provided. way to determine median cost by
and CMHC PHP claims for PHP services Because partial hospitalization is computing a separate per diem cost for
furnished between January 1, 2006 and provided in lieu of inpatient care, it each day rather than for each bill. Under
December 31, 2006. These claims data should be a highly structured and this method, a cost is computed
are more current than the CY 2008 clinically-intensive program, usually separately for each day of PHP care.
proposed rule claims data because the lasting most of the day. Our goal is to When there are multiple days of care
data include claims paid through June improve the level of service furnished in entered on a claim, a unique cost is
30, 2007. We also used the most a PHP day. We are concerned that the computed for each day of care. We only
currently available CCRs to estimate proposed decrease in PHP payment may assign costs for line items on days when
costs. Using these updated data, we not reflect the mix and quantity of a payment is made. All of these costs are
recreated the analysis performed for the services that should be provided under then arrayed from lowest to highest and
proposed rule to determine if the such an intensive program. In an effort the middle value of the array would be
significant factors we used in to ensure access to this needed service the median per diem cost.
determining the proposed PHP rate had to vulnerable populations, we are We adopted this alternative method of
changed. The median per diem cost for mitigating the reduction to 50 percent of computing PHP per diem median cost
CMHCs decreased $6 to $172, while the the difference between the current APC because we believe it produces a more
median per diem cost for hospital based amount ($233) and the computed accurate estimate because each day gets
PHPs decreased $9 to $177. The amount based on the PHP data ($172), an equal weight towards computing the
combined median per diem cost, which resulting in an APC median cost of median. This method for computing a
is computed from both hospital-based $203. We believe this payment amount PHP per diem median cost more
and CMHC PHP data, decreased $6 to will give the providers an opportunity accurately reflects the costs of a PHP
$172. The CY 2006 average charge per to increase the intensity of their and uses all available PHP data.
day for CMHCs was $615, similar to the programs and maintain partial Additionally, if a provider has charges
figure noted in the CY 2007 proposed hospitalization as part of the continuum on a bill for which the provider does not
rule ($613) and slightly lower than the of mental health care. receive payment, this will be reflected
average charge per day for hospital- We reiterate our expectation that in that provider’s CCRs. This lower CCR
based PHPs ($631). hospitals and CMHCs will provide a will be applied to the larger charges and
The data in this area have been comprehensive program consistent with will result in the appropriate cost per
volatile in the past and CMS must the statutory intent. We intend to diem.
establish a payment amount that reflects explore the changes to our regulations To gauge the effect that days with one
the intensity of the PHP, and that also and claims processing systems in order or two services had on the per diem
considers that costs for providing PHP to deny payment for low intensity days cost, we trimmed all days with less than
services are declining. We proposed two and we specifically invite public three services, and the recalculated
refinements to the methodology for comment on the most appropriate median per diem cost only changed by
computing the PHP median, however, threshold. $2.00. As such, we do not believe the
these refinements did not appreciably Comment: A few commenters calculations are adversely affected by
impact the median per diem cost. We disagreed with the CMS approach to the inclusion of these days.
received no public comments in establishing the median per diem cost Comment: One commenter suggested
opposition to these refinements and, by summarizing the line-item costs on that CMS set the PHP median per diem
therefore, we are adopting them in this each bill and dividing by the number of cost based on days when four or more
final rule with comment period. Thus, days on the bills. The commenters services are provided and then pay a
for CY 2008, we remapped the revenue indicated that this calculation can low-utilization payment adjustment
codes to the most appropriate cost severely dilute the rate and penalize amount for days when three or fewer
services are provided. The commenter different from that for the CCRs from (APC 0323, APC 0324 and APC 0325)
also suggested that CMS establish settled cost reports. The commenters are not computed from PHP bills. As
frequency constraints for billing three or indicated this methodology would stated earlier, we used data from PHP
fewer services to prevent the bulk of artificially lower the computed median programs (both hospitals and CMHCs) to
days furnished by a provider from costs, and that the data used to calculate determine the median cost of a day of
becoming low utilization days. The the PHP rate should be revised to PHP. PHP is a program of services
commenter urged CMS to further include costs that were subsequently where savings can be realized by
research this suggestion as a possible allowed. The commenters also stated hospitals and CMHCs over delivering
payment restructuring for CY 2009. that CMS uses costs that are at least 1 individual psychotherapy services.
Several commenters urged CMS to to 3 years old to project rates 2 years We structured the PHP APC (APC
reevaluate the PHP payment forward and that this approach does not 0033) as a per diem methodology in
methodology and to either refine the accurately reflect the true costs of the which the day of care is the unit that
APC structure for PHP to reflect providers. reflects the structure and scheduling of
different service levels or to exclude the Response: We use the best available PHPs and the composition of the PHP
low-volume days from the calculation of data in computing the APCs. On January APC consists of the cost of all services
the PHP rate and develop an alternate 17, 2003, we issued Program provided each day. Although we require
payment policy for low-volume days. Memorandum No. A–03–004 that that each PHP day include a
Response: The structure of partial directed fiscal intermediaries to update psychotherapy service, we do not
hospitalization is a full day of treatment. the CCRs on an on going basis whenever specify the specific mix of other services
We are concerned about providing an a more recent full year settled or provided and our payment methodology
incentive for providers to structure their tentatively settled cost report is reflects the cost per day rather than the
PHPs on a half-day basis. As discussed available. In this way, we minimize the cost of each service furnished within the
earlier in this section, in an effort to time lag between the CCRs and claims day.
ensure access to this needed service to data and continue to use the best CMS examined both CMHC and
vulnerable populations, we are available data for ratesetting purposes. hospital-based PHP program data to
mitigating the reduction to the PHP rate Comment: Several commenters determine what services these programs
for CY 2008. We think establishing a summed the payment rate for four are providing to their patients. An
half-day rate is inconsistent with this Group Therapy sessions (APC 0325) and important finding was that the days
policy. Therefore, we are not prepared requested that amount as the minimum cited by the commenter are not typical
to establish a half day rate at this time. for a day of PHP (that is, 4 x days for most CMHCs. For CMHCs, 60
However, we are willing to explore how $64.45=$257.80). Another commenter percent of services are Group
we could utilize frequency controls to presented two different typical days Psychotherapy (CPTs 90853 and 90857),
maintain the overall intensity of the using proposed CY 2008 rates. Typical 26 percent of services are Training and
partial hospitalization benefit. Day 1 included three Group Therapy Education (HCPCS G0177), 12 percent
Comment: One commenter noted that sessions (CPT code 90853, APC 0325, 3 are Activity Therapy (HCPCS G0176),
CMS did not respond to previous x $64.45) and one Individual and only 1 percent of PHP days
statements from commenters that the Psychotherapy session (CPT code included Individual Therapy (Brief or
industry would welcome accreditation 90818, APC 0323, $106.49). The Extended, CPTs 90816 or 90818)).
rules and/or stricter policies for PHPs. commenter priced Typical Day 1 at The days cited by the commenter are
Response: For the CY 2009 OPPS $299.84. Typical Day 2 included one not typical days for hospital-based PHPs
update, we are exploring proposing Group Therapy session (CPT code either. For hospital-based PHPs, 47
conditions of participation for CMHCs 90853, APC 0325, $64.45), one percent of services are Group
to establish minimum standards for Individual Psychotherapy session (CPT Psychotherapy (CPT codes 90853 and
patient rights, physical environment, code 90818, APC 0323, $106.49), and 90857), 27 percent of services are
staffing, and documentation one Family Therapy session (CPT code Training and Education (HCPCS code
requirements. In addition, we are 90847, APC 0324, $141.61). The G0177), 16 percent are Activity Therapy
considering changes that are necessary commenter priced Typical Day 2 at (HCPCS code G0176), 3 percent are
to our regulations and claims processing $312.55. Based on the commenter’s Occupational Therapy (HCPCS code
systems to deny payment for low presented material, the commenter G0129), 2 percent of PHP days include
intensity days. We specifically invite stated that the typical days yield an Brief Individual Psychotherapy (CPT
public comment on the most average componentized rate of $306. code 90816), and only 1 percent of PHP
appropriate threshold. The commenter questioned how CMS days include Extended Individual
Comment: Many commenters can set rates for APCs 0322 through Therapy (CPT code 90818).
requested that the CMHC cost report 0325, but is unable to determine a We note that the APCs for Training
data be included in the HCRIS so that payment rate for a day that is comprised and Education (HCPCS code G0177),
the industry can review and analyze of a minimum of three to four of those Activity Therapy (HCPCS code G0176),
CMHC cost data. services. Other commenters stated that and Occupational Therapy (HCPCS code
Response: We understand the while CMS requires a minimum of four G0129) are not separately payable under
commenters’ need to have CMHC data treatments per day to qualify for a day the OPPS. They are packaged services
available through the HCRIS system and of PHP, the proposed per diem rate of and only payable as part of a PHP day
are working to accomplish this task. $179.88 for PHP is less than what CMS of care. In CMHCs, Training and
Comment: With respect to the would pay for four Group Therapy Education (HCPCS code G0177) and
methodology used to establish the PHP sessions. Activity Therapy (HCPCS code G0176),
APC amount, commenters were Response: We do not believe this is an account for 38 percent of PHP services.
concerned that data from settled cost appropriate comparison. The In hospital-based PHPs, Training and
reports do not include costs reversed on commenter does not use the payment Education and Activity Therapy account
appeal. The commenters stated that rate for the PHP APC, that is, APC 0033, for 43 percent of PHP services. In
there are inherent problems in using in the calculations. The payment rates addition to not being separately payable,
claims data from a time period that is for APC services cited by the commenter these services may be provided to
patients by less costly staff than staff services have higher cost-to-charge Comment: A few commenters stated
that provide Psychotherapy and ratios than the overall CMHC cost-to- that hospitals that offer partial
Occupational Therapy. Based on the charge ratios. hospitalization services should not be
mix of services provided on the majority Response: We are unable to conduct penalized for the instability in data
of PHP days, we believe the data used a revenue code mapping analysis for reporting of CMHCs. Many commenters
for setting the PHP payment CMHCs because PHP is the CMHCs’ requested that CMS require that CMHCs
appropriately reflect the typical PHP only Medicare cost and CMHCs do not improve their reporting or have that
day. have the same cost centers as hospitals. provider group face economic
Comment: One commenter asked Therefore, for CMHCs, we use the consequences.
CMS to consider implementing a overall facility CCR from the outpatient Response: As described earlier in this
reimbursement level for intensive provider-specific file. section, after extensive analysis, we now
outpatient program (IOP) services Comment: Several commenters believe we have determined the
because the commenter’s State requires expressed concern that cost report data appropriate level of cost for the type of
3 hours of service for such programs. frequently do not reflect bad debt services that are being provided by
Response: While some private expense for the entire year. The PHPs. This analysis included an
insurers and some State Medicaid commenters are concerned that these examination of revenue-to-cost center
programs recognize IOP as a distinct costs are not being considered in the mapping, refinements to the per diem
benefit (like PHP), Medicare does not. CMS data and severely short change the methodology, and an in-depth analysis
However, hospitals that provide IOP rate calculations. of the number of units of service per
services may bill Medicare under the Response: While, the bad debt policy day. We note that for CY 2006, the
OPPS for individual mental health is outside the scope of this rule, we refer hospital-based PHPs per diem median
services that are otherwise covered and the commenter to § 413.89 and the cost is $177 and for CMHCs, the per
billable under the OPPS. Provider Reimbursement Manual Part I diem median cost is $172. We have
Comment: Several commenters observed a stabilizing trend in CMHC
(PRM), Chapter 3, concerning our bad
claimed that the costs of CMHCs are data and similar per diem costs between
debt requirements.
higher because ‘‘hospitals can share and hospital-based and CMHC PHPs.
spread their costs to other Comment: One commenter stated that
Comment: Two national behavioral
departments.’’ The commenters believed administrative costs for CMHCs
health care organizations expressed
that the CMHC patient acuity level is continue to be a major impediment to
concern that contrary to congressional
more intense than that for hospital operating PHPs for Medicare intent, the most intensive provider
patients because hospital outpatient beneficiaries. The commenter was settings are being penalized. The
departments need only provide one or concerned that Medicare does not cover commenters pointed out that CMS data
two therapies, yet still receive the full the cost of meals and transportation to show that PHP programs providing four
PHP per diem. and from programs. The commenter or more units of service per day
Response: CMHCs are required to stated that almost all programs offer (programs that are highly intensive)
furnish an array of outpatient services transportation because in most cases have a substantially higher median cost
including specialized outpatient Medicare beneficiaries with serious for those days than the overall median
services for children, the elderly, mental illnesses would not be able to cost per day. The commenters pointed
individuals with a serious mental access these programs without the out that hospital-based programs (66
illness, and residents of its service area transportation. percent of their days have 4 or more
who have been discharged from Response: The services that are units of service) have a median cost of
inpatient treatment. Accordingly, covered as part of a PHP are specified $218 versus a median cost of $186 for
CMHCs have the same ability as in section 1861(ff) of the Act. Meals and all days regardless of the number of
hospitals to share costs among its transportation are specifically excluded units of service. They noted that CMS’
programs as needed. Further, we believe under section 1861(ff)(2)(I) of the Act. use of the overall median cost per day
hospital costs in some areas, for Comment: One commenter requested understates the degree to which
example, capital and 24-hour that the same provisions given to rural hospital-based programs are structured
maintenance costs, greatly exceed HOPDs also be given to rural CMHCs. around four or more units of services,
comparable CMHC costs. Notably, we Several commenters urged CMS to but acknowledge that on some days a
believe patient acuity across hospital- reconsider the changes in funding for patient may only get three services (due
based and CMHC PHPs should be the these programs, especially the programs to leaving early for illness, transitioning
same, that is, the patients would in rural areas. out of the program, or other reasons).
otherwise require inpatient psychiatric Response: We believe the commenter Similarly, according to one commenter,
care regardless of setting (see sections may be referring to the statutory hold CMHCs have a median cost of $191 for
1861(ff) and 1835(a)(2)(F) of the Act). harmless provisions. Section those days with 4 or more units of
Comment: A few commenters 1833(t)(7)(D) of the Act authorizes such service provided versus a median cost of
expressed concern that the current payments, on a permanent basis, for $178 for all days. The commenter stated
methodology used to calculate the daily children’s hospitals and cancer that CMHCs have 36 percent of their
rate does not capture all relevant data hospitals and, through CY 2005, for days with 4 or more units of service
nor does it reflect the actual cost to rural hospitals having 100 or fewer beds provided. The commenter indicated that
providers to deliver these services. The and SCHs in rural areas. Section its State’s Medicaid program requires a
commenters asked that CMS analyze the 1866(t)(7)(D) of the Act does not minimum of four hours to qualify for a
mapping of revenue-codes-to-cost authorize hold harmless payments to day of PHP and believed the CMS
centers for CMHCs similar to the CMHCs. In addition, although section payment methodology is in conflict
analysis CMS completed for hospital- 411 of Pub. L. 108–173 required CMS to with its State’s laws.
based programs and discussed in the CY determine the appropriateness of Several commenters stated that the
2007 OPPS/ASC final rule with additional payments for certain rural CMS data, when it combines those
comment period (71 FR 68000). The hospitals, that authority also does not programs that offer 3 units with those
commenters indicated that CMHC PHP extend to CMHCs. that offer 4 or more units, clearly
penalizes the programs that routinely updating documents published in the that the proposed wage index in
offer 4 or more units. Federal Register. The commenter asked Louisiana has decreased post-hurricane
Response: We refer the commenter to if this is required by regulation. instead of increasing, which has
the table presented earlier in this Response: CMHCs do not share the resulted in a much lower payment rate
section that provides updated figures to same characteristics as hospitals and do in Louisiana. The commenters further
the ones cited by the commenter. We not fit into the traditional impact stated that the time lag for wage
recognize that by definition, 50 percent categories (like bed size). Therefore, we indexing is a huge factor for Hurricane
of PHP days will have per diem costs have not included them in the impact Zone providers and that the wage index
higher than the median per diem cost, chart. As PHP is the only Medicare decrease makes the assumption that the
while 50 percent will have costs lower service CMHCs provide, the impact is cost of labor has actually decreased
than the median per diem cost. It is the percentage change in the APC since the hurricanes. Some commenters
likely that the programs providing 4 amount from year to year. Assuming noted that the lack of facilities, trained
units of service are on the high side of that the number of PHP days provided professionals and inadequate
the median per diem cost. In addition, by CMHCs stays the same as it was in reimbursement will make Louisiana
we note that the final rate of $203 is CY 2006, the estimated impact on worse off now than prior to Hurricanes
well above the combined median per CMHCs as a result of the CY 2008 PHP Katrina and Rita. A few commenters
diem cost for days with 4 units of payment rate compared to the CY 2007 asked that CMS freeze the 2005 level
service of more ($192). Days where four PHP payment rate is a 13-percent rates to maintain the Hurricane Zones at
services are provided are certainly decrease. In this year’s impact table we status quo until a realistic impact study
within this amount. have included CMHCs in the total count can be commissioned.
Comment: One commenter asked that of providers, but they are not shown Response: The hospital wage data
CMS change the Medicare lifetime separately. (For additional information, used to compute the IPPS FY 2008
maximum of 190 mental health days of see section XXIV, ‘‘Regulatory Impact hospital wage index is from the FY 2004
stay in a psychiatric hospital, to Analysis’’ of this final rule with hospital cost reports for all hospitals.
unlimited. The commenter asserted that comment period.) This is the standard lag timeframe in
if a person is diagnosed with a mental Comment: Several commenters determining the hospital wage index. It
health illness of various kinds the suggested establishing a PHP rate will be another year before FY 2005 data
individual will need ‘‘maintenance’’ calculation task force to develop a new will be reflected in the IPPS FY 2009
throughout his or her entire life. rate methodology that captures all hospital wage index. However, we note
Response: The 190-day lifetime limit relevant data and reflects the actual that the wage index is a relative measure
on inpatient psychiatric care is costs to providers to deliver PHP of differences in area hourly wage
statutory, and established in section services. The commenter recommended levels. It compares a labor market’s
1812(b)(3) of the Act. that the ratesetting task force be average hourly wage to the national
Comment: Many commenters, composed of CMS staff and a diverse average hourly wage. To the extent that
including a national behavioral health group of stakeholder that include front- post-hurricane hospital labor costs are
association, recommended that PHP be line providers of PHP services and higher relative to the national average,
removed from the APC codes and representatives from national industry the wage index will reflect the higher
created under an independent status organizations. Other commenters relative labor cost beginning when the
using home health and hospice as requested that CMS further study the FY 2005 data will be used in the FY
examples. The commenters are possibility of differentiating payment 2009 IPPS hospital wage index (which
concerned that the current methodology based on the intensity of services will be applied to the CY 2009 OPPS
is not conducive to this APC code and provided during a day of PHP services rate year). In addition, the statutory
asserted that there is precedent in other for CY 2009. These commenters also authority for the OPPS wage index
CMS OPPS service industries to exclude recommended that CMS establish policy in section 1833(t)(2)(D) of the Act
the service from the APC code listing quality criteria to judge performance requires that the wage adjustments be
and treat it independently. and that would influence future rate made in a budget neutral manner.
Response: Section 1833(t)(1)(B)(i) of reimbursement. Therefore, we cannot raise one wage
the Act provides the Secretary with the Response: We agree that the payment area and still maintain budget
authority to designate the hospital rate for PHP needs to be accurate and neutrality. Finally, it should be noted
outpatient services to be covered under appropriate to sustain access to care. that CMHCs located in Federal
the OPPS. The Medicare regulations at While we believe we provide an Emergency Management Agency
42 CFR 419.21 that implement this accurate and appropriate approach to (FEMA) designated disaster areas were
provision specify that payments under payment for PHP, as changes to the provided with relief funds by the
the OPPS will be made for partial current methodology are considered, Department of Health and Human
hospitalization services furnished by input from the industry is an important Services in 2007.
CMHCs as well as those furnished to part of that process. Therefore, we
hospital outpatients and thus, PHP is welcome any input and information that 3. Separate Threshold for Outlier
paid under the OPPS. However, it the industry can provide about the costs Payments to CMHCs
would require a statutory change to of their programs and encourage In the November 7, 2003 final rule
establish an independent payment providers to submit information on their with comment period (68 FR 63469), we
system for partial hospitalization costs. We would also find information indicated that, given the difference in
programs outside the OPPS. The statute about the status of quality criteria useful PHP charges between hospitals and
provides specific separate and distinct and would encourage providers to CMHCs, we did not believe it was
payment systems for both home health submit that information as well. appropriate to make outlier payments to
and hospice services, which are also Comment: A few commenters stated CMHCs using the outlier percentage
separate and distinct benefit categories. that the wage index adjustment does not target amount and threshold established
Comment: One commenter asked why accurately reflect the cost of labor in for hospitals. There was a significant
there are no CMHCs shown in the areas affected by Hurricanes Katrina and difference in the amount of outlier
impact statements in the annual OPPS Rita. The commenters also pointed out payments made to hospitals and CMHCs
for PHP. In addition, further analysis which CMHCs may receive payment adjustment of 1.0001 for changes to the
indicated that using the same OPPS under the OPPS, we would not expect wage index and an additional 1.0018 to
outlier threshold for both hospitals and to redirect outlier payments by accommodate the IPPS budget neutrality
CMHCs did not limit outlier payments imposing a dollar threshold. Therefore, adjustment for inclusion of the rural
to high cost cases and resulted in we did not propose to set a dollar floor. As discussed further in section
excessive outlier payments to CMHCs. threshold for CMHC outliers. As noted II.D. of this final rule with comment
Therefore, beginning in CY 2004, we above, we proposed to set the outlier period, for the first time, the final FY
established a separate outlier threshold threshold for CMHCs for CY 2008 at 2008 IPPS wage indices included a
for CMHCs. For CYs 2004 and 2005, we 3.40 times the APC payment amount blanket budget neutrality adjustment for
designated a portion of the estimated 2.0 and the CY 2008 outlier payment including the rural floor provision,
percent outlier target amount percentage applicable to costs in excess which previously had been applied to
specifically for CMHCs, consistent with of the threshold at 50 percent. the IPPS standardized amount. For
the percentage of projected payments to We received no public comments on further discussion of this policy in its
CMHCs under the OPPS in each of those our proposal. As discussed in section entirety, we refer readers to the FY 2008
years, excluding outlier payments. For II.G. of this final rule with comment IPPS proposed rule (72 FR 24787
CY 2006, we set the estimated outlier period, using more recent data for this through 24792) and the FY 2008 IPPS
target at 1.0 percent and allocated a final rule with comment period, we set final rule with comment period (72 FR
portion of that 1.0 percent, 0.6 percent the target for hospital outpatient outlier 47325 through 47330). This adjustment
(or 0.006 percent of total OPPS payments at 1.0 percent of total OPPS is specific to the IPPS. For the OPPS, we
payments), to CMHCs for PHP services. payments. We allocate a portion of that are increasing the conversion factor by
For CY 2007, we set the estimated 1.0 percent, an amount equal to 0.02 the proportional amount of the rural
outlier target at 1.0 percent and percent of outlier payments and 0.0002 floor budget neutrality adjustment to
allocated a portion of that 1.0 percent, percent of total OPPS payments to accommodate this change.
an amount equal to 0.15 percent of CMHCs for PHP service outliers. For CY For this final rule with comment
outlier payments and 0.0015 percent of 2008, we set the outlier threshold for period, we estimated the rural
total OPPS payments to CMHCS for PHP CMHCs for CY 2008 at 3.40 times the adjustment for CY 2008 to reflect the
service outliers. The CY 2007 CMHC APC payment amount and the CY 2008 extension of the adjustment to payment
outlier threshold is met when the cost outlier percentage applicable to costs in for brachytherapy sources as discussed
of furnishing services by a CMHC excess of the threshold at 50 percent. in section II.F.2. of this final rule with
exceeds 3.40 times the PHP APC comment period, but as the impact of
C. Conversion Factor Update
payment amount. The CY 2007 OPPS the extension was negligible, we did not
outlier payment percentage is 50 Section 1833(t)(3)(C)(ii) of the Act change the rural adjustment. Therefore,
percent of the amount of costs in excess requires us to update the conversion we calculated a budget neutrality factor
of the threshold. factor used to determine payment rates of 1.000 for the rural adjustment. For CY
The separate outlier threshold for under the OPPS on an annual basis. 2008, in this final rule with comment
CMHCs became effective January 1, Section 1833(t)(3)(C)(iv) of the Act period, we estimated that allowed pass
2004, and has resulted in more provides that, for CY 2008, the update through spending for both drugs and
commensurate outlier payments. In CY is equal to the hospital inpatient market devices would equal approximately $32
2004, the separate outlier threshold for basket percentage increase applicable to million, which represents 0.09 percent
CMHCs resulted in $1.8 million in hospital discharges under section of total OPPS projected spending for CY
outlier payments to CMHCs. In CY 2005, 1886(b)(3)(B)(iii) of the Act. 2008. The conversion factor was also
the separate outlier threshold for The final hospital market basket adjusted by the difference between the
CMHCs resulted in $0.5 million in increase for FY 2008 published in the 0.21 percent pass through dollars set
outlier payments to CMHCs. In contrast, IPPS final rule with comment period on aside in CY 2007 and the 0.09 percent
in CY 2003, more than $30 million was August 22, 2007 is 3.3 percent (72 FR estimate for CY 2008 pass through
paid to CMHCs in outlier payments. We 48173), the same as the forecast spending. Finally, estimated payments
believe this difference in outlier published in the FY 2008 IPPS proposed for outliers remain at 1.0 percent of total
payments indicates that the separate rule on May 3, 2007 (72 FR 24787). To payments for CY 2008.
outlier threshold for CMHCs has been set the OPPS conversion factor for CY The market basket increase update
successful in keeping outlier payments 2008, we increased the CY 2007 factor of 3.3 percent for CY 2008, the
to CMHCs in line with the percentage of conversion factor of $61.468, as required wage index and rural budget
OPPS payments made to CMHCs. specified in the CY 2007 OPPS/ASC neutrality adjustment of approximately
As noted in section II.G. of this final final rule with comment period (71 FR 1.0019, and the adjustment of 0.12
rule with comment period, for CY 2008, 68003), by 3.3 percent. percent for the difference in the pass-
we proposed to continue our policy of In accordance with section through set aside resulted in a final
setting aside 1.0 percent of the aggregate 1833(t)(9)(B) of the Act, we further standard OPPS conversion factor for CY
total payments under the OPPS for adjusted the conversion factor for CY 2008 of $63.694.
outlier payments. We proposed that a 2007 to ensure that the revisions we are We received one public comment on
portion of that 1.0 percent, an amount making to our updates for a revised our proposed conversion factor update
equal to 0.03 percent of outlier wage index and rural adjustment are for CY 2008. A summary of the public
payments and 0.0003 percent of total made on a budget neutral basis. We comment and our response follow.
OPPS payments, would be allocated to calculated an overall budget neutrality Comment: A commenter objected to
CMHCs for PHP service outliers. As factor of 1.0019 for wage index changes the proposed market basket increase of
discussed in section II.G. of this final by comparing total payments from our 3.3 percent. The commenter stated that
rule with comment period, we again simulation model using the FY 2008 the average outpatient cost of service is
proposed to set a dollar threshold in IPPS final wage index values as projected to increase by at least 5
addition to an APC multiplier threshold finalized to those payments using the percent for CY 2008 due to increases in
for OPPS outlier payments. However, current (FY 2007) IPPS wage index salaries and medical supply costs for
because the PHP is the only APC for values. This adjustment reflected an services to Medicare beneficiaries. The
commenter recommended that the services is still appropriate during our provided for under Pub. L. 105–33 and
average payment to hospitals for regression analysis for the payment Pub. L. 108–173, and clarification of our
outpatient services be increased by 5 adjustment for rural hospitals in the CY policy for multicampus hospitals. The
percent, the actual amount by which the 2006 OPPS final rule with comment following is a brief summary of the
commenter believed costs would period (70 FR 68553). Therefore, we did components of the FY 2008 IPPS wage
increase for CY 2008. not propose to revise this policy for the indices and any adjustments that we are
Response: Section 1833(t)(3)(C)(iv) of CY 2008 OPPS. We refer readers to applying to the OPPS for CY 2008. We
the Act requires that CMS update the section II.H. of this final rule with refer the reader to the FY 2008 IPPS
conversion factor annually using an comment period for a description and final rule with comment period (72 FR
OPD fee schedule increase factor example of how the wage index for a 47308 through 47345) for a detailed
specific to the PPS year. However, the particular hospital is used to determine discussion of the changes to the wage
statute gives CMS the discretion to use the payment for the hospital. This indices. In this final rule with comment
the hospital inpatient update factor, the adjustment must be made in a budget period, we are not reprinting the final
hospital inpatient operating market neutral manner. As we have done in FY 2008 IPPS wage indices referenced
basket, as an appropriate substitute for prior years, we proposed to adopt the in the discussion below, with the
the OPD fee schedule increase for final IPPS wage indices for the OPPS exception of the out migration wage
purposes of the annual percentage and to extend these wage indices to adjustment table (Addendum L to this
increase specific to covered OPD hospitals that participate in the OPPS final rule with comment period), which
services. The statute permits, and we but not the IPPS (referred to in this includes non-IPPS providers paid under
continue to believe, that the hospital section as ‘‘non-IPPS’’ hospitals). the OPPS. We also refer readers to the
inpatient operating market basket is an As discussed in section II.A. of this CMS Web site for the OPPS at: http://
appropriate measure of change in final rule with comment period, we www.cms.hhs.gov/providers/hopps. At
hospital input prices for goods and standardize 60 percent of estimated this link, the reader will find a link to
services required to provide hospital costs as labor-related costs for the final FY 2008 IPPS wage indices
care, including that in the outpatient geographic area wage variation using the tables.
setting. Hospitals use similar resources IPPS pre-reclassified wage indices in
1. The continued use of the Core
in their hospital inpatient and order to remove the effects of
Based Statistical Areas (CBSAs) issued
outpatient departments. The hospital differences in area wage levels in
by the OMB as revised standards for
market basket is carefully estimated for determining the national unadjusted
each PPS year, and periodically rebased OPPS payment rate and the copayment designating geographical statistical
and revised. For these reasons, we have amount. areas based on the 2000 Census data, to
specified in the regulations governing As published in the original OPPS define labor market areas for hospitals
the annual OPPS update at § 419.32 April 7, 2000 final rule with comment for purposes of the IPPS wage index.
(b)(iv) that, for years beginning after CY period (65 FR 18545), the OPPS has The OMB revised standards were
2003, the update factor for the OPPS consistently adopted the final IPPS published in the Federal Register on
equals the update factor for the IPPS. wage indices as the wage indices for December 27, 2000 (65 FR 82235), and
We disagree that the update factor for adjusting the OPPS standard payment OMB announced the new CBSAs on
the CY 2008 OPPS should be 5 percent. amounts for labor market differences. June 6, 2003, through an OMB bulletin.
For FY 2008, the IPPS update factor is Thus, the wage index that applies to a In the FY 2005 IPPS final rule, CMS
the hospital market basket of 3.3 percent particular hospital under the IPPS will adopted the new OMB definitions for
and, therefore, we have used this update also apply to that hospital under the wage index purposes. In the FY 2008
factor in the establishment of the OPPS. As initially explained in the IPPS final rule with comment period,
conversion factor for the CY 2008 OPPS. September 8, 1998 OPPS proposed rule, we again stated that hospitals located in
After consideration of the public we believed and continue to believe that Metropolitan Statistical Areas (MSAs)
comment received, we are finalizing our using the IPPS wage index as the source will be urban and hospitals that are
CY 2008 proposal, without of an adjustment factor for the OPPS is located in Micropolitan Areas or outside
modification, to update the conversion reasonable and logical, given the CBSAs will be rural. We also reiterated
factor by the FY 2008 IPPS market inseparable, subordinate status of the our policy that when an MSA is divided
basket increase update factor of 3.3 hospital outpatient department within into one or more Metropolitan
percent, resulting in a final conversion the hospital overall. In accordance with Divisions, we use the Metropolitan
factor of $63.694. section 1886(d)(3)(E) of the Act, the Division for purposes of defining the
IPPS wage index is updated annually. In boundaries of a particular labor market
D. Wage Index Changes area. To help alleviate the decreased
accordance with our established policy,
Section 1833(t)(2)(D) of the Act we proposed to use the final FY 2008 payments for previously urban hospitals
requires the Secretary to determine a final version of these wage indices to that became rural under the new
wage adjustment factor to adjust, for determine the wage adjustments for the geographical definitions, we allowed
geographic wage differences, the portion OPPS payment rate and copayment these hospitals to maintain for the 3-
of the OPPS payment rate, which standardized amount that would be year period from FY 2005 through FY
includes the copayment standardized published in our final rule with 2007, the wage index of the MSA where
amount, that is attributable to labor and comment period for CY 2008. they previously had been located. This
labor related cost. Since the inception of We note that the FY 2008 IPPS wage hold harmless provision expired after
the OPPS, CMS policy has been to wage indices continue to reflect a number of FY 2007. We adopted the same policy
adjust 60 percent of the OPPS payment, changes implemented over the past few for the OPPS, but because the OPPS
based on a regression analysis that years as a result of the revised Office of operates on a calendar year, wage index
determined that approximately 60 Management and Budget (OMB) policies are in effect through December
percent of the costs of services paid standards for defining geographic 31, 2007. To be consistent with the
under the OPPS were attributable to statistical areas, the implementation of IPPS, as finalized in the FY 2008 IPPS
wage costs. We confirmed that this an occupational mix adjustment as part final rule with comment period,
labor-related share for outpatient of the wage index, wage adjustments beginning in CY 2008 (January 1, 2008)
under the OPPS, these hospitals will policy in CY 2008 to allow-non IPPS Medicare cost report could not be used
receive their statewide rural wage index. hospitals paid under the OPPS to to allocate wages and hours to each
Hospitals paid under the IPPS are qualify for the out-migration adjustment labor market by FTEs until at least the
eligible to apply for reclassification in if they are located in a section 505 out FY 2013 wage index. As part of this
FY 2008. migration county. Because non-IPPS policy, we would fully expect that an
As noted above, for purposes of hospitals cannot reclassify, they are HOPD that is part of a multicampus
estimating an adjustment for the OPPS eligible for the out-migration wage hospital system would receive a wage
payment rates to accommodate adjustment. Table 4J published in the index based on the geographic location
geographic differences in labor costs in Addendum to the FY 2008 IPPS final of the inpatient campus with which it
this final rule with comment period, we rule with comment period (and is associated. This would include cases
have used the wage indices identified in corrected in the second FY 2008 IPPS where one inpatient campus
the FY 2008 IPPS final rule with correction notice) identifies counties reclassified. Affiliated outpatient
comment period (and as corrected in the eligible for the out-migration adjustment facilities would receive the reclassified
September 28, 2007 second FY 2008 and providers receiving the adjustment. wage index of the inpatient campus. For
IPPS correction notice that was printed As stated earlier, we are reprinting the further discussion of the FY 2008 IPPS
in the October 10, 2007 Federal Register final version of Table 4J, as corrected, in final multicampus hospital policy in its
(72 FR 57634) that are fully adjusted for this final rule with comment period as entirety, we refer readers to the FY 2008
differences in occupational mix using Addendum L. IPPS final rule with comment period (72
the entire 6-month survey data collected 4. Wage Index for Multicampus FR 47317 through 47319).
in 2006. Hospitals. As indicated in the CY 2008 5. Rural Floor Provision. Section 4410
2. The reclassifications of hospitals to OPPS/ASC proposed rule (72 FR 42695), of Pub. L. 105–33 provides that the area
geographic areas for purposes of the we also wish to clarify that the IPPS wage index applicable to any hospital
wage index. For purposes of the OPPS policy for multicampus wage index that is located in an urban area of a State
wage index, we proposed to adopt all of payments also applies to the OPPS. As may not be less than the area wage
the IPPS reclassifications for FY 2008, a result of the new labor market areas index applicable to hospitals located in
including reclassifications that the introduced in FY 2005, there are rural areas of the State (‘‘the rural
Medicare Geographic Classification hospitals with multiple campuses floor’’). Table 4A in the FY 2008 IPPS
Review Board (MGCRB) approved. We previously located in a single MSA that final rule with comment period (72 FR
note that reclassifications under section are now in more than one CBSA. A 47503) (and as corrected in the
508 of Pub. L. 108–173 were set to multicampus hospital is an integrated September 28, 2007 second correction
terminate March 31, 2007. However, institution. For this reason, the notice for the FY 2008 IPPS final rule,
section 106(a) of the MIEA–TRHCA multicampus hospital has one CMS which appeared in the October 10, 2007
extended any geographic certification number (CCN) and submits issue of the Federal Register) identifies
reclassifications of hospitals that were a single cost report that combines the urban areas where hospitals located in
made under section 508 and that would total wages and hours of each of its those areas are assigned the rural floor
expire on March 31, 2007 until campuses in the manner described in (noted by a superscript ‘‘2’’). For CY
September 30, 2007. On March 23, 2007, the FY 2008 IPPS final rule with 2008 under the OPPS, we proposed to
we published a notice in the Federal comment period (72 FR 47317). continue our policy to allow non-IPPS
Register (72 FR 13799) that indicated In the FY 2008 IPPS final rule with hospitals paid under the OPPS to
how we are implementing section 106 of comment period, we finalized our receive the rural floor wage index, when
the MIEA–TRHCA through September proposal to apportion wages and hours applicable under the IPPS for FY 2008.
30, 2007. Because the section 508 across multiple campuses using full- For the first time, the final FY 2008 IPPS
provision expired on September 30, time equivalent (FTE) staff data or wage indices include a blanket budget
2007, the OPPS wage index will not Medicare discharge data in order to neutrality adjustment for including the
include any reclassifications under include wage data for the individual rural floor provision, which previously
section 508 for CY 2008. campuses of a multicampus hospital in had been applied to the IPPS
3. The out-migration wage adjustment its local wage index calculation. We standardized amount. For further
to the wage index. In the FY 2008 IPPS indicated our intent to collect campus discussion of this final policy in its
final rule with comment period (72 FR locations and numbers of FTE staff by entirety, we refer readers to the FY 2008
473398 through 47341), we discussed location by adding lines to Worksheet IPPS final rule with comment period (72
the out migration adjustment under S–2 of the Medicare cost report FR 47325 through 47330) and the
section 505 of Pub. L. 108–173 for submitted by hospitals. We stated that second FY 2008 IPPS correction notice
counties under this adjustment. we would continue to use either (72 FR 57634).
Hospitals paid under the IPPS located in Medicare discharge data or self-reported We note that all changes to the wage
the qualifying section 505 ‘‘out FTE data to apportion wage data by index resulting from geographic labor
migration’’ counties receive a wage campus until revisions are made to market area reclassifications or other
index increase unless they have already Worksheet S–2 of the Medicare cost adjustments must be incorporated in a
been otherwise reclassified. We note report to require reporting of FTE data budget neutral manner. Accordingly, in
that in the FY 2008 IPPS final rule with by campus and until such data in the calculating the OPPS budget neutrality
comment period, we finalized our cost report can be used to calculate the estimates for CY 2008 in this final rule
proposal to use the post-reclassified, wage index, at which time the wage data with comment period, we have included
rather than the pre-reclassified, wage of a multicampus hospital will be the wage index changes that would
indices in calculating the out-migration allocated among its campuses based result from the MGCRB reclassifications,
adjustment. (See the FY 2008 IPPS final only on FTE counts by campus reported implementation of sections 4410 of Pub.
rule with comment period and the in the Medicare cost report. We stated L. 105–33 and 505 of Pub. L. 108–173,
second FY 2008 IPPS correction notice that the effective date of the revised cost and other refinements adopted in the FY
for further information on the out report is not expected until FY 2009. 2008 IPPS final rule with comment
migration adjustment.) For OPPS Therefore the FTE data reported by period. For the CY 2008 OPPS, we
purposes, we proposed to continue our multicampus hospitals in the revised proposed to use the final FY 2008 IPPS
wage indices, including the budget index provides a measure of the wage most recent pair of final settled and
neutrality adjustment for the rural floor, level faced by a hospital relative to the submitted cost reports.
for calculating OPPS payment in CY national average, which should be For the proposed rule, approximately
2008. We discuss how the OPPS roughly the same for the institution 78 percent of the submitted cost reports
conversion factor would compensate for across inpatient and outpatient settings. represented data for CY 2005. We have
the inclusion of this budget neutrality Those initial analyses identified 60 since updated the cost report data we
adjustment in the wage indices in percent as the appropriate labor-related use to calculate CCRs with additional
section II.C. of this final rule with share for outpatient services. We submitted cost reports for CY 2006. For
comment period relating to the confirmed that this labor-related share is this final rule with comment period, 47
conversion factor update. still appropriate during our regression percent of the submitted cost reports
Comment: Commenters supported the analysis for the payment adjustment for utilized in the default ratio calculation
CMS proposal for CY 2008 to extend the rural hospitals, as discussed in the CY were for CY 2005 and 49 percent were
IPPS wage indices to the OPPS as we 2006 OPPS final rule with comment for CY 2006. We only used valid CCRs
had done in previous years. One period (70 FR 68556). Further, we to calculate these default ratios. That is,
commenter agreed with the proposal to would expect services delivered in the we removed the CCRs for all-inclusive
adopt the IPPS wage index but HOPD to require proportionately less hospitals, CAHs, and hospitals in Guam,
suggested that it would be logical to labor than more acute inpatient services and the U.S. Virgin Islands, American
adopt the same labor component that require greater nursing care and an Samoa, and the Northern Mariana
percentage as applied under the IPPS. extended stay. We believe that the 60 Islands because these entities are not
The commenter argued that the labor percent labor-related share for the OPPS paid under the OPPS, or in the case of
component is derived from hospital cost compares favorably to the hospital all inclusive hospitals, because their
report information that does not inpatient labor-related share of 69.731 CCRs are suspect. We further identified
separate inpatient from outpatient percent. and removed any obvious error CCRs
services for labor-related and nonlabor- We are finalizing our proposal, and trimmed any outliers. We limited
related costs, and thus the labor without modification, to use the final the hospitals used in the calculation of
component utilized in the IPPS is based IPPS FY 2008 wage indices to adjust the the default CCRs to those hospitals that
on a combination of inpatient and OPPS standard payment amounts for billed for services under the OPPS
outpatient costs. The commenter also labor market differences under the CY during CY 2006.
suggested that the 60 percent labor- 2008 OPPS. Finally, we calculated an overall
related share used in the OPPS was average CCR, weighted by a measure of
E. Statewide Average Default CCRs volume for CY 2006, for each State
derived nearly 10 years ago and has
never been supported by analysis. The CMS uses CCRs to determine outlier except Maryland. This measure of
commenter recommended that CMS payments, payments for pass-through volume is the total lines on claims and
revise the labor-related share from 60 devices, and monthly interim is the same one that we use in our
percent to 69.731 percent to be transitional corridor payments under impact tables. For Maryland, we used an
consistent with the IPPS. the OPPS. Some hospitals do not have overall weighted average CCR for all
Response: We appreciate the support a valid CCR. These hospitals include, hospitals in the nation as a substitute for
expressed by commenters concerning but are not limited to, hospitals that are Maryland CCRs. Few providers in
our proposed wage index policies for new and have not yet submitted a cost Maryland are eligible to receive
CY 2008. In response to the comment report, hospitals that have a CCR that payment under the OPPS, which limits
concerning the OPPS labor-related falls outside predetermined floor and the data available to calculate an
share, we do not believe that such a ceiling thresholds for a valid CCR, or accurate and representative CCR. The
change to adopt the IPPS labor related hospitals that have recently given up observed differences between last year’s
share is appropriate. The current IPPS their all-inclusive rate status. Last year, and this year’s default statewide CCRs
labor-related share of 69.731 percent we updated the default urban and rural largely reflect a general decline in the
was calculated by summing the relative CCRs for CY 2007 in our final rule with ratio between costs and charges widely
weights for labor components in the comment period (71 FR 68006 through observed in the cost report data.
IPPS operating market basket (70 FR 68009). As we proposed, in this final However, observed increases in some
2339). The IPPS estimates a labor- rule with comment period we have areas suggest that the decline in CCRs is
related share that is specific to inpatient updated the default ratios for CY 2008 moderating. Further, the addition of
services; the OPPS estimates a labor- using the most recent cost report data. weighting by Medicare Part B charges to
related share that is specific to We calculated the statewide default the overall CCR in CY 2007 slightly
outpatient services. The OPPS labor- CCRs using the same overall CCRs that increases the variability of the overall
related share was determined through we use to adjust charges to costs on CCR calculation.
regression analyses conducted for the claims data. Table 25 published in the As stated above, CMS uses default
initial OPPS proposed rule (63 FR CY 2008 OPPS/ASC proposed rule statewide CCRs for several groups of
47581). Those analyses examined the listed the proposed CY 2008 default hospitals, including, but not limited to,
extent of variability in hospital urban and rural CCRs by State and hospitals that are new and have not yet
outpatient cost per unit explained by compared them to last year’s default submitted a cost report, hospitals that
variability in the wage index, holding CCRs. These CCRs are the ratio of total have a CCR that falls outside
outpatient service mix under the costs to total charges from each predetermined floor and ceiling
proposed system, geographic location, provider’s most recently submitted cost thresholds for a valid CCR, and
volume, and other variables constant. report, for those cost centers relevant to hospitals that have recently given up
The unit cost dependent variable in outpatient services weighted by their all-inclusive rate status.
these analyses was derived by applying Medicare Part B charges. We also Prior to CY 2007, OPPS policy
the CCRs for ancillary cost centers to adjusted ratios from submitted cost required hospitals that experienced a
charges, and those ancillary CCRs reports to reflect final settled status by change of ownership, but that did not
should reflect the proportional labor applying the differential between settled accept assignment of the previous
costs for ancillary services. The wage to submitted costs and charges from the hospital’s provider agreement, to use the
previous provider’s CCR. However, in its first Medicare cost report. This the hospital should be provided time to
CY 2007 we revised this policy and policy is effective for hospitals establish its own costs and charges.
finalized our proposal to use default experiencing a change of ownership on Therefore, we proposed to use the
statewide CCRs for entities that had not or after January 1, 2007. As stated in the default statewide CCR to determine
accepted assignment of an existing CY 2007 OPPS/ASC final rule with cost-based payments until the hospital
hospital’s provider agreement in comment period (71 FR 68006), we has submitted its first Medicare cost
accordance with § 489.18 and that had believed that a hospital that has not report.
not yet submitted its first Medicare cost accepted assignment of an existing
report. For CY 2008, we proposed to hospital’s provider agreement is similar We did not receive any public
continue to apply this treatment of to a new hospital that will establish its comments concerning this issue.
using the default statewide CCR, to own costs and charges. We also believed Therefore, we are finalizing the
include an entity that has not accepted that the hospital that has chosen not to statewide average default CCRs as
assignment of an existing hospital’s accept assignment may have different shown in Table 11 below for OPPS
provider agreement in accordance with costs and charges than the existing services furnished on or after January 1,
§ 489.18 and that has not yet submitted hospital. Furthermore, we believed that 2008, without modification.
TABLE 11.—CY 2008 STATEWIDE AVERAGE CCRS

Previous
default CCR
CY 2008
State Rural/urban (CY 2007
default CCR OPPS
final rule)
ALASKA .................................................................................................................................... RURAL ............. 0.537 0.534

ALASKA .................................................................................................................................... URBAN ............. 0.351 0.383
ALABAMA ................................................................................................................................. RURAL ............. 0.228 0.232
ALABAMA ................................................................................................................................. URBAN ............. 0.213 0.223
ARKANSAS .............................................................................................................................. RURAL ............. 0.266 0.264
ARKANSAS .............................................................................................................................. URBAN ............. 0.270 0.275
ARIZONA .................................................................................................................................. RURAL ............. 0.264 0.282
ARIZONA .................................................................................................................................. URBAN ............. 0.232 0.232
CALIFORNIA ............................................................................................................................ RURAL ............. 0.232 0.246
CALIFORNIA ............................................................................................................................ URBAN ............. 0.218 0.232
COLORADO ............................................................................................................................. RURAL ............. 0.355 0.370
COLORADO ............................................................................................................................. URBAN ............. 0.254 0.267
CONNECTICUT ........................................................................................................................ RURAL ............. 0.391 0.389
CONNECTICUT ........................................................................................................................ URBAN ............. 0.339 0.349
DISTRICT OF COLUMBIA ....................................................................................................... URBAN ............. 0.346 0.339
DELAWARE .............................................................................................................................. RURAL ............. 0.302 0.323
DELAWARE .............................................................................................................................. URBAN ............. 0.400 0.395
FLORIDA .................................................................................................................................. RURAL ............. 0.219 0.219
FLORIDA .................................................................................................................................. URBAN ............. 0.198 0.199
GEORGIA ................................................................................................................................. RURAL ............. 0.279 0.285
GEORGIA ................................................................................................................................. URBAN ............. 0.269 0.289
HAWAII ..................................................................................................................................... RURAL ............. 0.373 0.357
HAWAII ..................................................................................................................................... URBAN ............. 0.317 0.320
IOWA ........................................................................................................................................ RURAL ............. 0.349 0.349
IOWA ........................................................................................................................................ URBAN ............. 0.325 0.343
IDAHO ....................................................................................................................................... RURAL ............. 0.445 0.436
IDAHO ....................................................................................................................................... URBAN ............. 0.414 0.416
ILLINOIS ................................................................................................................................... RURAL ............. 0.286 0.308
ILLINOIS ................................................................................................................................... URBAN ............. 0.271 0.288
INDIANA ................................................................................................................................... RURAL ............. 0.313 0.316
INDIANA ................................................................................................................................... URBAN ............. 0.301 0.320
KANSAS ................................................................................................................................... RURAL ............. 0.318 0.320
KANSAS ................................................................................................................................... URBAN ............. 0.240 0.252
KENTUCKY .............................................................................................................................. RURAL ............. 0.244 0.251
KENTUCKY .............................................................................................................................. URBAN ............. 0.262 0.270
LOUISIANA ............................................................................................................................... RURAL ............. 0.271 0.281
LOUISIANA ............................................................................................................................... URBAN ............. 0.277 0.273
MARYLAND .............................................................................................................................. RURAL ............. 0.308 0.318
MARYLAND .............................................................................................................................. URBAN ............. 0.284 0.298
MASSACHUSETTS .................................................................................................................. URBAN ............. 0.338 0.349
MAINE ....................................................................................................................................... RURAL ............. 0.433 0.457
MAINE ....................................................................................................................................... URBAN ............. 0.424 0.429
MICHIGAN ................................................................................................................................ RURAL ............. 0.331 0.346
MICHIGAN ................................................................................................................................ URBAN ............. 0.318 0.329
MINNESOTA ............................................................................................................................. RURAL ............. 0.499 0.508

MINNESOTA ............................................................................................................................. URBAN ............. 0.342 0.338
MISSOURI ................................................................................................................................ RURAL ............. 0.289 0.294
MISSOURI ................................................................................................................................ URBAN ............. 0.292 0.303
MISSISSIPPI ............................................................................................................................. RURAL ............. 0.267 0.284
MISSISSIPPI ............................................................................................................................. URBAN ............. 0.217 0.231
MONTANA ................................................................................................................................ RURAL ............. 0.453 0.439
TABLE 11.—CY 2008 STATEWIDE AVERAGE CCRS—Continued

Previous
default CCR
CY 2008
State Rural/urban (CY 2007
default CCR OPPS
final rule)
MONTANA ................................................................................................................................ URBAN ............. 0.450 0.463

NORTH CAROLINA .................................................................................................................. RURAL ............. 0.286 0.305
NORTH CAROLINA .................................................................................................................. URBAN ............. 0.321 0.370
NORTH DAKOTA ..................................................................................................................... RURAL ............. 0.379 0.367
NORTH DAKOTA ..................................................................................................................... URBAN ............. 0.378 0.395
NEBRASKA .............................................................................................................................. RURAL ............. 0.347 0.376
NEBRASKA .............................................................................................................................. URBAN ............. 0.290 0.290
NEW HAMPSHIRE ................................................................................................................... RURAL ............. 0.375 0.370
NEW HAMPSHIRE ................................................................................................................... URBAN ............. 0.337 0.325
NEW JERSEY .......................................................................................................................... URBAN ............. 0.276 0.297
NEW MEXICO .......................................................................................................................... RURAL ............. 0.275 0.274
NEW MEXICO .......................................................................................................................... URBAN ............. 0.353 0.398
NEVADA ................................................................................................................................... RURAL ............. 0.329 0.335
NEVADA ................................................................................................................................... URBAN ............. 0.200 0.214
NEW YORK .............................................................................................................................. RURAL ............. 0.417 0.445
NEW YORK .............................................................................................................................. URBAN ............. 0.402 0.427
OHIO ......................................................................................................................................... RURAL ............. 0.354 0.369
OHIO ......................................................................................................................................... URBAN ............. 0.268 0.283
OKLAHOMA .............................................................................................................................. RURAL ............. 0.288 0.295
OKLAHOMA .............................................................................................................................. URBAN ............. 0.245 0.261
OREGON .................................................................................................................................. RURAL ............. 0.321 0.344
OREGON .................................................................................................................................. URBAN ............. 0.366 0.405
PENNSYLVANIA ...................................................................................................................... RURAL ............. 0.298 0.305
PENNSYLVANIA ...................................................................................................................... URBAN ............. 0.241 0.252
PUERTO RICO ......................................................................................................................... URBAN ............. 0.474 0.469
RHODE ISLAND ....................................................................................................................... URBAN ............. 0.308 0.309
SOUTH CAROLINA .................................................................................................................. RURAL ............. 0.258 0.255
SOUTH CAROLINA .................................................................................................................. URBAN ............. 0.244 0.248
SOUTH DAKOTA ..................................................................................................................... RURAL ............. 0.334 0.348
SOUTH DAKOTA ..................................................................................................................... URBAN ............. 0.289 0.304
TENNESSEE ............................................................................................................................ RURAL ............. 0.256 0.265
TENNESSEE ............................................................................................................................ URBAN ............. 0.241 0.249
TEXAS ...................................................................................................................................... RURAL ............. 0.271 0.289
TEXAS ...................................................................................................................................... URBAN ............. 0.242 0.258
UTAH ........................................................................................................................................ RURAL ............. 0.416 0.441
UTAH ........................................................................................................................................ URBAN ............. 0.406 0.416
VIRGINIA .................................................................................................................................. RURAL ............. 0.268 0.282
VIRGINIA .................................................................................................................................. URBAN ............. 0.275 0.280
VERMONT ................................................................................................................................ RURAL ............. 0.416 0.432
VERMONT ................................................................................................................................ URBAN ............. 0.340 0.338
WASHINGTON ......................................................................................................................... RURAL ............. 0.358 0.374
WASHINGTON ......................................................................................................................... URBAN ............. 0.368 0.372
WISCONSIN ............................................................................................................................. RURAL ............. 0.384 0.367
WISCONSIN ............................................................................................................................. URBAN ............. 0.362 0.364
WEST VIRGINIA ....................................................................................................................... RURAL ............. 0.298 0.316
WEST VIRGINIA ....................................................................................................................... URBAN ............. 0.360 0.369
WYOMING ................................................................................................................................ RURAL ............. 0.449 0.471
WYOMING ................................................................................................................................ URBAN ............. 0.351 0.352
F. OPPS Payments to Certain Rural reasonable cost-based system. Section covered OPD services furnished before
Hospitals 1833(t)(7) of the Act provides that the January 1, 2004. However, section 411
1. Hold Harmless Transitional Payment transitional corridor payments are of Pub. L. 108–173 amended section
Changes Made by Pub. L. 109–171 temporary payments for most providers 1833(t)(7)(D)(i) of the Act to extend
(DRA) to ease their transition from the prior these payments through December 31,
reasonable cost-based payment system 2005, for rural hospitals with 100 or
When the OPPS was implemented,
to the OPPS system. There are two fewer beds. Section 411 also extended
every provider was eligible to receive an
exceptions, cancer hospitals and the transitional corridor payments to
additional payment adjustment (called
either transitional corridor payment or children’s hospitals, to this provision SCHs located in rural areas for services
transitional outpatient payment) if the and those hospitals receive the furnished during the period that begins
payments it received for covered transitional corridor payments on a with the provider’s first cost reporting
outpatient department (OPD) services permanent basis. Section 1833(t)(7)(D)(i) period beginning on or after January 1,
under the OPPS were less than the of the Act originally provided for 2004, and ended on December 31, 2005.
payments it would have received for the transitional corridor payments to rural Accordingly, the authority for making
same services under the prior hospitals with 100 or fewer beds for transitional corridor payments under
section 1833(t)(7)(D)(i) of the Act, as adjustment applies to EACHs, which are current policy of a budget neutral 7.1
amended by section 411 of Pub. L. 108– considered to be SCHs under section percent payment increase for rural
173, for rural hospitals having 100 or 1886(d)(5)(D)(iii)(III) of the Act. Thus, SCHs, including EACHs, for all services
fewer beds and SCHs located in rural under the statute, EACHs are treated as and procedures paid under the OPPS,
areas expired on December 31, 2005. SCHs. Therefore, in the CY 2007 OPPS/ excluding drugs, biologicals, and
Section 5105 of Pub. L. 109–171 ASC final rule with comment period, for services paid under the pass-through
reinstituted the hold harmless purposes of receiving this rural payment policy, and to make
transitional outpatient payments (TOPs) adjustment, we revised § 419.43(g) to brachytherapy sources eligible for the
for covered OPD services furnished on clarify that EACHs are also eligible to 7.1 percent payment increase for rural
or after January 1, 2006, and before receive the rural SCH adjustment, SCHs.
January 1, 2009, for rural hospitals assuming these entities otherwise meet Response: We appreciate the
having 100 or fewer beds that are not the rural adjustment criteria (71 FR commenters’ support of the policy.
SCHs. When the OPPS payment is less 68010 and 68227). Currently, fewer than After consideration of the public
than the payment the provider would 10 hospitals are classified as EACHs and comments received, we are finalizing,
have received under the previous as of CY 1998, under section 4201(c) of without modification, our policy to
reasonable cost-based system, the Pub. L. 105–33, a hospital can no longer continue a payment adjustment for rural
amount of payment is increased by 95 become newly classified as an EACH. SCHs, including EACHs, of 7.1 percent
percent of the amount of the difference This adjustment for rural SCHs is for CY 2008. We also are finalizing our
between the two payment systems for budget neutral and applied before proposed revision of § 419.43 to make
CY 2006, by 90 percent of the amount calculating outliers and copayment. As brachytherapy sources eligible for the
of that difference for CY 2007, and by stated in the CY 2006 OPPS final rule 7.1 percent payment increase for rural
85 percent of the amount of that with comment period (70 FR 68560), we SCHs, including EACHs, without
difference for CY 2008. would not reestablish the adjustment modification.
For CY 2006, we implemented section amount on an annual basis, but we note
5105 of Pub. L. 109–171 through that we may review the adjustment in G. Hospital Outpatient Outlier
Transmittal 877, issued on February 24, the future and, if appropriate, would Payments
2006. We did not specifically address revise the adjustment. 1. Background
whether TOPs apply to essential access For CY 2008, we proposed to continue
community hospitals (EACHs), which our current policy of a budget neutral Currently, the OPPS pays outlier
are considered to be SCHs under section 7.1 percent payment increase for rural payments on a service-by-service basis.
1886(d)(5)(D)(iii)(III) of the Act. SCHs, including EACHs, for all services For CY 2007, the outlier threshold is
Accordingly, under the statute, EACHs and procedures paid under the OPPS, met when the cost of furnishing a
are treated as SCHs. Therefore, we excluding drugs, biologicals, and service or procedure by a hospital
believed and continue to believe that services paid under the pass-through exceeds 1.75 times the APC payment
EACHs are not currently eligible for payment policy in accordance with amount and exceeds the APC payment
TOPs under Pub. L. 109–171. However, section 1833(t)(13)(B) of the Act. This rate plus a $1,825 fixed-dollar
they are eligible for the adjustment for adjustment is in accordance with threshold. We introduced a fixed-dollar
rural SCHs. In the CY 2007 OPPS/ASC section 411 of the MMA, which gave the threshold in CY 2005 in addition to the
final rule with comment period, we Secretary the authority to make an traditional multiple threshold in order
updated § 419.70(d) to reflect the adjustment to OPPS payments for rural to better target outliers to those high
requirements of Pub. L. 109–171 (71 FR hospitals, if justified by a study of the cost and complex procedures where a
68010 and 68228). difference in costs by APC between very costly service could present a
hospitals in rural and urban areas. Our hospital with significant financial loss.
2. Adjustment for Rural SCHs If a provider meets both of these
analysis showed a difference in costs
Implemented in CY 2006 Related to conditions, the multiple threshold and
only for rural SCHs, and we
Pub. L. 108–173 (MMA) implemented a payment adjustment for the fixed-dollar threshold, the outlier
In the CY 2006 OPPS final rule with those hospitals beginning January 1, payment is calculated as 50 percent of
comment period (70 FR 68556), we 2006. For CY 2008, we also proposed to the amount by which the cost of
finalized a payment increase for rural include brachytherapy sources in the furnishing the service exceeds 1.75
SCHs of 7.1 percent for all services and group of services eligible for the 7.1 times the APC payment rate.
procedures paid under the OPPS, percent payment increase because we As explained in the CY 2007 OPPS/
excluding drugs, biologicals, proposed to pay them at prospective ASC final rule with comment period (71
brachytherapy seeds, and services paid rates based on their median costs as FR 68011 through 68012), we set our
under pass-through payment policy in calculated from historical claims data. projected target for aggregate outlier
accordance with section 1833(t)(13)(B) Consequently, we proposed to revise payments at 1.0 percent of aggregate
of the Act, as added by section 411 of § 419.43 to reflect our proposal to make total payments under the OPPS for CY
Pub. L. 108–173. Section 411 gave the brachytherapy sources eligible for the 2007. The outlier thresholds were set so
Secretary the authority to make an 7.1 percent payment increase for rural that estimated CY 2007 aggregate outlier
adjustment to OPPS payments for rural SCHs. As indicated in our proposed rule payments would equal 1.0 percent of
hospitals, effective January 1, 2006, if (72 FR 42698), we intend to reassess the aggregate total payments under the
justified by a study of the difference in 7.1 percent adjustment in the near OPPS. In that final rule with comment
costs by APC between hospitals in rural future by examining differences period (71 FR 68010) we also published
and urban areas. Our analysis showed a between urban and rural costs using total outlier payments as a percent of
difference in costs for rural SCHs. updated claims, cost, and provider total expenditures for CY 2005. In the
Therefore, we implemented a payment information. In that process, we will past, we have received comments asking
adjustment for only those hospitals include brachytherapy sources in each us to publish estimated outlier
beginning January 1, 2006. hospital’s mix of services. payments to provide a context for the
Last year, we became aware that we Comment: Several commenters proposed outlier thresholds for the
did not specifically address whether the supported our proposals to continue our update year. In the CY 2008 OPPS/ASC
proposed rule (72 FR 42698), we rate plus a $2,000 fixed-dollar was discussed in the FY 2008 IPPS
estimated, using available CY 2006 threshold. This proposed threshold proposed rule (72 FR 24837) and in the
claims, that the outlier payments for CY reflected minor changes to the FY 2008 IPPS final rule with comment
2006 would be approximately 1.1 methodology discussed below as well as period (72 FR 47417). As we stated in
percent of total CY 2006 OPPS payment. APC recalibration, including changes the CY 2005 OPPS final rule with
In the final CY 2006 claims, aggregated due in part to the CY 2008 packaging comment period, we believe that the use
outlier payments were 1.1 percent of approach discussed in section II.A.4.c. of this charge inflation factor is
aggregated total OPPS payments. For CY of this final rule with comment period. appropriate for the OPPS because, with
2006, the estimated outlier payments We calculated the fixed-dollar the exception of the routine service cost
were set at 1.0 percent of the total threshold for the CY 2008 proposed rule centers, hospitals use the same cost
aggregated OPPS payments. Therefore, using largely the same methodology as centers to capture costs and charges
for CY 2006 we paid 0.1 percent in we did in CY 2007, except that we across inpatient and outpatient services
excess of the CY 2006 outlier target of proposed to adjust the overall CCRs to (69 FR 65845).
1.0 percent of total aggregated OPPS reflect the anticipated annual decline in In comments on the CY 2007 OPPS/
payments. Using the final CY 2006 overall CCRs, discussed below, and to ASC proposed rule, a commenter asked
claims and CY 2007 payment rates, we use CCRs from the most recent update that CMS modify the charge
currently estimate that outlier payments to the Outpatient Provider-Specific File methodology used to set the OPPS
for CY 2007 would be approximately 0.7 (OPSF), rather than CCRs we calculate outlier threshold to account for the
percent of total CY 2007 OPPS internally for ratesetting. As noted in change in CCRs over time in a manner
payments and the difference between the CY 2008 OPPS/ASC proposed rule similar to that used for the FY 2007
1.0 percent and 0.7 percent is reflected (72 FR 42699), in November 2006 we IPPS. The commenter indicated that it
in the regulatory impact analysis in issued Transmittal 1030, ‘‘Policy would be appropriate to apply an
section XXIV.B. of this final rule with Changes to the Fiscal Intermediary (FI) inflation adjustment factor so that the
comment period. We will not know the Calculation of Hospital Outpatient CCRs that CMS uses to simulate OPPS
final amount of outlier payments as a Payment System (OPPS) and outlier payments would more closely
percent of total payments until we have Community Mental Health Center reflect the CCRs that would be used in
final CY 2007 claims. We note that we (CMHC) Cost to Charge Ratios (CCRs),’’ CY 2007 to determine actual outlier
provide estimated CY 2008 outlier instructing fiscal intermediaries (or, if payment. In the CY 2007 OPPS/ASC
payments by hospital for hospitals with applicable, MACs) to update the overall final rule with comment period, we
claims included in the claims data that CCR calculation for outlier and other expressed concern that cost increases
we used to model impacts on the CMS cost-based payments using the CCR between inpatient and outpatient
Web site in the Hospital—Specific calculation methodology that we departments could be different and
Impacts—Provider-Specific Data file on finalized for CY 2007. As discussed in indicated that we would study the issue
the CMS Web site at: http:// the CY 2007 OPPS/ASC proposed rule and address any changes to the outlier
www.cms.hhs.gov/ and final rule with comment period, methodology through future rulemaking
HospitalOutpatientPPS/. this methodology aligned the fiscal (71 FR 68012).
intermediary’s CCR calculation and the In assessing the possibility of utilizing
2. Proposed Outlier Calculation CCR calculation we previously used to a cost inflation adjustment for the OPPS,
For CY 2008, we proposed to continue model outlier thresholds by removing we determined that we could not
our policy of setting aside 1.0 percent of allied and nursing health costs for those calculate an OPPS-specific reliable cost
aggregate total payments under the hospitals with paramedical education per unit, comparable to the cost per
OPPS for outlier payments. We programs from the fiscal intermediary’s discharge component of the IPPS
proposed that a portion of that 1.0 CCR calculation and weighting our calculation, because of variability in
percent, 0.03 percent, would be ‘‘traditional’’ CCR calculation by total definition of an OPPS unit of service
allocated to CMHCs for partial Medicare Part B charges. We believe across calendar years. However, we also
hospitalization program service outliers. that the OPSF best estimates the CCRs believed that the costs and charges
This amount is the amount of estimated that fiscal intermediaries (or, if reported under the applicable cost
outlier payments resulting from the applicable, MACs) would use to centers largely are commingled
proposed CMHC outlier threshold of 3.4 determine outlier payments in CY 2008. inpatient and outpatient costs and
times the APC payment rate, as a For the proposed rule, we used the charges. We did not want to
proportion of all payments dedicated to April update to the OPSF. We systematically overestimate the OPPS
outlier payments. For this final rule, we supplemented a CCR calculated outlier threshold as could occur if we
estimate that 0.02 percent of total outlier internally for the handful of providers did not apply a CCR inflation
payments would be allocated to CMHC’s with claims in our claims dataset that adjustment factor. Therefore, we
for partial hospitalization program were not listed in the April update to proposed to apply the CCR adjustment
service outliers. For further discussion the OPSF. factor that was proposed to be applied
of CMHC outliers, we refer readers to The claims that we use to model each for IPPS outlier calculation to the CCRs
section II.B.3. of this final rule with OPPS update lag by 2 years. For the used to simulate the CY 2008 OPPS
comment period. proposed rule, we used CY 2006 claims outlier payments that determined the
In order to ensure that estimated CY to model the CY 2008 OPPS. In order to fixed-dollar threshold. Specifically, for
2008 aggregate outlier payments would estimate CY 2008 outlier payments for CY 2008, we proposed to apply an
equal 1.0 percent of estimated aggregate the proposed rule, we inflated the adjustment of 0.9912 to the CCRs that
total payments under the OPPS, we charges on the CY 2006 claims using the are currently on the OPSF to trend them
proposed that the outlier threshold be same inflation factor of 1.1504 that we forward from CY 2007 to CY 2008. The
set so that outlier payments would be used to estimate the IPPS fixed-dollar methodology for calculating this
triggered when the cost of furnishing a outlier threshold for the FY 2008 IPPS adjustment is discussed in the FY 2008
service or procedure by a hospital proposed rule. For 1 year, the inflation IPPS proposed rule (72 FR 24837) and
exceeds 1.75 times the APC payment factor is 1.0726. The methodology for the FY 2008 IPPS final rule with
amount and exceeds the APC payment determining this charge inflation factor comment period (72 FR 47417).
Therefore, for the CY 2008 proposed number of services would be eligible for payments could come to be increasingly
rule, we applied the overall CCRs from outlier payments. One commenter noted targeted toward clinical cases rather
the April 2007 OPSF file after that the proposed increased fixed dollar than individual services, consistent
adjustment to approximate CY 2008 threshold significantly reduced the with the customary role of outlier
CCRs (using the proposed CCR inflation number of services that would be payment in a prospective payment
adjustment factor of 0.9912) to charges eligible for outlier payments. Another system. We prospectively set the outlier
on CY 2006 claims that were adjusted to commenter expressed concern that thresholds so that we will pay 1.0
approximate CY 2008 charges (using the increased OPPS packaging would cause percent of projected payment based on
proposed charge inflation factor of CMS to pay less in outlier payments our best inflation assumptions and
1.1504). We simulated aggregated CY than in the past. Other commenters model of final payment policies. The
2008 outlier payments using these costs were concerned that the fixed dollar final policy to increase packaging for the
for several different fixed-dollar outlier threshold that CMS proposed CY 2008 OPPS should not result in less
thresholds, holding the 1.75 multiple was set too high and would result in aggregate outlier payment in CY 2008
constant and assuming that outlier CMS spending less money than than other years, although the
payment would continue to be made at allocated for the projected 1.0 percent distribution of payment across APCs
50 percent of the amount by which the outlier target. These commenters argued will change.
cost of furnishing the service would that the estimated outlier target amount We believe that the estimated total CY
exceed 1.75 times the APC payment has historically been greater than the 2008 outlier payments will meet the
amount, until the total outlier payments actual need, and they asked that CMS target of 1.0 percent of total OPPS
equaled 1.0 percent of aggregated either reduce the set-aside amount and payments. In CY 2006, aggregated
estimated total CY 2008 OPPS retain that money in the base OPPS rates outlier payments were 1.1 percent of
payments. We estimated that a proposed or reduce the threshold for qualification aggregated total spending, while the
fixed-dollar threshold of $2,000, so that the outlier expenditures would target was set at 1.0. As we indicated in
combined with the proposed multiple be at a zero balance at the end of each the CY 2007 OPPS/ASC final rule with
threshold of 1.75 times the APC year. Several commenters asked that comment period (71 FR 68010), in the
payment rate, would allocate 1.0 CMS limit the increase in the outlier final set of CY 2005 OPPS claims,
percent of aggregated total OPPS threshold to the amount of the market aggregated outlier payments were 2.39
payments to outlier payments. We basket update each year, which would percent of aggregated total OPPS
proposed to continue to make an outlier mean, for CY 2008, that the CY 2008 payments, while the target was set at 2.0
payment that equals 50 percent of the threshold would be increased by only percent. Similarly, using the final set of
amount by which the cost of furnishing 3.3 percent. Other commenters CY 2004 OPPS claims, aggregated
the service exceeds 1.75 times the APC suggested that the outlier payment be outlier payments were 2.5 percent of
payment amount when both the 1.75 increased from 50 percent to 80 percent total OPPS payments, while the target
multiple threshold and the fixed-dollar of the difference between the APC was set at 2 percent. Hence, our historic
$2,000 threshold are met. For CMHCs, if payment and the cost of the service. estimation of outlier payments has
a CMHC provider’s cost for partial They believed that this would more resulted in outlier payments that
hospitalization exceeds 3.4 times the appropriately account for the additional exceeded our target. As noted above, we
payment rate for APC 0033, the outlier cost of the service and make the outlier currently estimate that we will pay 0.7
payment is calculated as 50 percent of payment policy consistent with IPPS percent of total payments in outlier
the amount by which the cost exceeds policy. payments in CY 2007. We believe that
3.4 times the APC payment rate. Response: Consistent with the views our proposed methodology that applies
We received several public comments of most commenters, we are reducing charge and CCR inflation factors to
related to this proposal. A summary of the proposed fixed dollar outlier updated CY 2006 claims and overall
the public comments and our responses threshold based on our updated analysis CCRs from the most recent OPSF file to
follow. for this final rule with comment period, approximate CY 2008 values yields an
Comment: Several commenters where we use the most current claims outlier threshold that will result in more
requested that CMS publish annual and cost report data and final payment accurate aggregate program outlier
outlier payments as a percentage of total policies to estimate the threshold that payments.
OPPS payment. would allow us to pay CY 2008 outlier We did not increase the CY 2008
Response: We currently publish the payments of 1.0 percent of total CY 2008 outlier threshold by the market basket
total outlier payments as a percent of OPPS payment. update of 3.3 percent because our
total payment for past years in the In CY 2008, the OPPS outlier outlay calculations are intended to best
annual OPPS/ASC proposed and final is projected to be 1.0 percent of total approximate the outlier target of 1.0
rules. We have projected outlier payments. We note that our projections percent of CY 2008 OPPS expenditures.
payments to be 1.1 percent of total for CY 2008 outlier payments take into We continue to believe that an outlier
OPPS payments for CY 2006, the most account the final packaging policies, as target of 1.0 percent of total OPPS
complete set of full year claims data that well as all other final payment policies, payment is appropriate for the OPPS.
currently exists. We plan to continue to of the OPPS. We acknowledge that However, we will monitor outlier
publish these numbers for future years, outlier payments are an integral payments distributed during CY 2008 to
after we have full year cost data. For CY component of the OPPS and could be determine whether a different outlier
2008, we estimate that outlier payments particularly important as the APC target would be more appropriate.
will be 1.0 percent of total payment. payment bundles grow larger and Similarly, we do not believe it is
Comment: One commenter agreed hospitals potentially experience appropriate to increase the payment
with our proposal to raise the fixed financially greater risk associated with percentage to 80 percent of the
dollar outlier threshold accordingly so individual patient encounters. In a difference between the APC payment
that the 1.0 percent target for outlier movement toward encounter-based or and the cost of the service in order to
payments is met. Other commenters episode-based payment, multiple align it with the IPPS outlier policy. In
requested that CMS lower the fixed service payments for a claim could a budget neutral system with a specified
dollar threshold so that a greater become less common, and OPPS outlier payment target, the payment percentage
and fixed-dollar threshold have an payment rate for APC 0033, the outlier final rule with comment period (70 FR
inverse relationship. Raising the payment is calculated as 50 percent of 68553).
payment percentage would require us to the amount by which the cost exceeds Individual providers interested in
significantly increase the fixed dollar 3.4 times the APC payment rate. calculating the final payment amount
threshold to ensure that the outlier that they will receive for a specific
H. Calculation of an Adjusted Medicare service from the national payment rates
target is not exceeded. We agree with
most commenters that a relatively lower Payment From the National Unadjusted presented in Addenda A and B to this
fixed-dollar threshold is more desirable Medicare Payment final rule with comment period should
for the OPPS than a higher fixed-dollar (We note that the title of this section follow the formulas presented in the
threshold, given the current size of the has been changed from that used in the following steps. The formula below is a
OPPS payment bundles. CY 2008 OPPS/ASC proposed rule. In mathematical representation of step 1
After consideration of the public that rule this section was entitled, discussed above and identifies the
comments received, we are finalizing ‘‘Proposed Calculation of the National labor-related portion of a specific
our CY 2008 proposal, without Unadjusted Medicare Payment.’’) payment rate for the specific service.
modification, for the outlier calculation The basic methodology for x—Labor-related portion of the national
as outlined below. determining prospective payment rates unadjusted payment rate
3. Final Outlier Calculation for HOPD services under the OPPS is set x = .60 * (national unadjusted payment rate)
forth in existing regulations at § 419.31 Step 2. Determine the wage index area
For CY 2008, we are applying the
and § 419.32, and § 419.43 and § 419.44. in which the hospital is located and
overall CCRs from the July 2007 OPSF
The payment rate for services and identify the wage index level that
file with a CCR adjustment factor of
procedures for which payment is made applies to the specific hospital. The
1.0027 to approximate CY 2008 CCRs to
under the OPPS is the product of the wage index values assigned to each area
charges on the final CY 2006 claims that
conversion factor calculated in reflect the new geographic statistical
were adjusted to approximate CY 2008
accordance with section II.C. of this areas as a result of revised OMB
charges (using the final charge inflation
final rule with comment period and the standards (urban and rural) to which
factor of 1.1278). These are the same
CCR adjustment and charge inflation relative weight determined under hospitals are assigned for FY 2008
factors that we used to set the IPPS section II.A. of this final rule with under the IPPS, reclassifications
fixed-dollar threshold for FY 2008 (72 comment period. Therefore, the national through the MCGRB, section
FR 47418). We simulated aggregated CY unadjusted payment rate for each APC 1886(d)(8)(B) ‘‘Lugar’’ hospitals, and
2008 outlier payments using these costs contained in Addendum A to this final section 401 of Pub. L. 108–173. We note
for several different fixed-dollar rule with comment period and for that the reclassifications of hospitals
thresholds, holding the 1.75 multiple HCPCS codes to which separate under the one-time appeals process
constant and assuming that outlier payment under the OPPS has been under section 508 of Pub. L. 108–173
payment would continue to be made at assigned in Addendum B to this final expired on September 30, 2007, and is
50 percent of the amount by which the rule with comment period (Addendum no longer applicable in this
cost of furnishing the service would B is provided as a convenience for determination of appropriate wage
exceed 1.75 times the APC payment readers) was calculated by multiplying values for the CY 2008 OPPS. The wage
amount, until the total outlier payments the final CY 2008 scaled weight for the index values include the occupational
equaled 1.0 percent of aggregated APC by the final CY 2008 conversion mix adjustment described in section
estimated total CY 2008 OPPS factor. II.D. of this final rule with comment
payments. We estimate that a fixed- However, to determine the payment period that was developed for the final
dollar threshold of $1,575, combined that will be made in a calendar year FY 2008 IPPS payment rates published
with the multiple threshold of 1.75 under the OPPS to a specific hospital for in the Federal Register on August 22,
times the APC payment rate, will an APC for a service that has any of the 2007 (72 FR 47309 through 47315) and
allocate 1.0 percent of aggregated total status indicator assignments ‘‘S,’’ ‘‘T,’’ corrected in the correction notice to the
OPPS payments to outlier payments. ‘‘V,’’ or ‘‘X,’’ as defined in Addendum FY 2008 IPPS final rule with comment
In summary, for CY 2008 we will D1 of this final rule with comment period published in the Federal
continue to make an outlier payment period, in a circumstance in which the Register on October 10, 2007 (72 FR
that equals 50 percent of the amount by multiple procedure discount does not 57634 through 57738).
which the cost of furnishing the service apply and the procedure is not bilateral Step 3. Adjust the wage index of
exceeds 1.75 times the APC payment or discontinued, we take the following hospitals located in certain qualifying
amount when both the 1.75 multiple steps: counties that have a relatively high
threshold and the fixed-dollar $1,575 Step 1. Calculate 60 percent (the percentage of hospital employees who
threshold are met. As discussed in labor-related portion) of the national reside in the county, but who work in
section VII.B. of this final rule with unadjusted payment rate. Since the a different county with a higher wage
comment period, brachytherapy sources initial implementation of the OPPS, we index, in accordance with section 505 of
will be eligible for outlier payment have used 60 percent to represent our Pub. L. 108–173. Addendum L to this
beginning in CY 2008. In addition, the estimate of that portion of costs final rule with comment period contains
costs of diagnostic radiopharmaceuticals attributable, on average, to labor. (We the qualifying counties and the final
and contrast media for which CY 2008 refer readers to the April 7, 2000 final wage index increase developed for the
payment is packaged into the APC rule with comment period (65 FR 18496 FY 2008 IPPS published in the FY 2008
payments for nuclear medicine and through 18497) for a detailed discussion IPPS final rule with comment period (72
other imaging procedures under the of how we derived this percentage.) We FR 47339) and corrected in the
final packaging approach will contribute confirmed that this labor-related share correction notice to the FY 2008 IPPS
to a claim’s eligibility for outlier for hospital outpatient services is still final rule with comment period
payment in CY 2008. For CMHCs, if a appropriate during our regression published in the Federal Register on
CMHC provider’s cost for partial analysis for the payment adjustment for October 10, 2007 (72 FR 57634 through
hospitalization exceeds 3.4 times the rural hospitals in the CY 2006 OPPS 57738). This step is to be followed only
if the hospital has chosen not to accept service (or group of such services) an amount that is payable, here $0.07
reclassification under Step 2 above. furnished in a year in a manner so that rather than $0.074. However, if we were
Step 4. Multiply the applicable wage the effective copayment rate to set a copayment amount of $0.07,
index determined under Steps 2 and 3 (determined on a national unadjusted which is 18.9 percent of $0.37, we
by the amount determined under Step 1 basis) for that service in the year does would not be setting a copayment rate
that represents the labor-related portion not exceed a specified percentage. For that is at least 20 percent of the OPPS
of the national unadjusted payment rate. all services paid under the OPPS in CY payment rate. As proposed, we continue
The formula below is a mathematical 2008, and in calendar years thereafter, to believe that section 1833(t)(3)(B) of
representation of step 4 discussed above the specified percentage is 40 percent of the Act requires us to set a copayment
and adjusts the labor-related portion of the APC payment rate (section amount that is at least 20 percent of the
the national payment rate for the 1833(t)(8)(C)(ii)(V) of the Act). Section OPPS payment amount, not less than 20
specific service by the wage index. 1833(t)(3)(B)(ii) of the Act provides that, percent. Therefore, we proposed to set
xa—Labor-related portion of the national for a covered OPD service (or group of the copayment rate for APC 9046 at
unadjusted payment rate (wage adjusted such services) furnished in a year, the $0.08. Eight cents represents the lowest
xa = 60 * (national unadjusted payment rate) national unadjusted copayment amount amount that we could set that would
* applicable wage index. cannot be less than 20 percent of the bring the copayment rate to 20 percent
Step 5. Calculate 40 percent (the OPD fee schedule amount. Sections or, in this case, just above 20 percent.
nonlabor-related portion) of the national 1834(d)(2)(C)(ii) and (d)(3)(C)(ii) of the We proposed to apply this same
unadjusted payment rate and add that Act further require that the copayment methodology in the future to instances
amount to the resulting product of Step for screening flexible sigmoidoscopies where the application of our standard
4. The result is the wage index adjusted and screening colonoscopies be equal to copayment methodology would result in
payment rate for the relevant wage 25 percent of the payment amount. We a copayment amount that is under 20
index area.The formula below is a have applied the 25-percent copayment percent and cannot be rounded, under
mathematical representation of step 5 to screening flexible sigmoidoscopies standard rounding principles, to 20
discussed above and calculates the and screening colonoscopies since the percent.
remaining portion of the national beginning of the OPPS. We did not receive any public
payment rate, the amount not 2. Copayment comments on this proposal, and,
attributable to labor, and the adjusted therefore, we are adopting it as final,
For CY 2008, we proposed to without modification.
payment for the specific service. determine copayment amounts for new
y—Nonlabor-related portion of the national and revised APCs using the same 3. Calculation of an Adjusted
unadjusted payment rate methodology that we implemented for Copayment Amount for an APC Group
y = .40 * (national unadjusted payment rate) CY 2004. (We refer readers to the
Adjusted Medicare Payment = y + xa To calculate the OPPS adjusted
November 7, 2003 OPPS final rule with copayment amount for an APC group,
Step 6. If a provider is a SCH, as comment period (68 FR 63458).) The take the following steps:
defined in § 412.92, or an EACH, which unadjusted copayment amounts for Step 1. Calculate the beneficiary
is considered to be a SCH under section services payable under the OPPS that payment percentage for the APC by
1886(d)(5)(D)(iii)(III) of the Act, and will be effective January 1, 2008, are dividing the APC’s national unadjusted
located in a rural area, as defined in shown in Addendum A and Addendum copayment by its payment rate. For
§ 412.64(b), or is treated as being located B to this final rule with comment example, using APC 0001, $7.00 is 23
in a rural area under § 412.103, multiply period. percent of $30.61.
the wage index adjusted payment rate We have historically used standard Individuals interested in calculating
by 1.071 to calculate the total payment. rounding principles to establish a 20 the their final copayment liability for a
The formula below is a mathematical percent copayment for those few given service from the national
representation of step 6 discussed above circumstances where the copayment copayment rates presented in Addenda
and applies the rural adjustment for rate was between 19.5 and 20 percent A and B should follow the formulas
rural SCHs. using our established copayment rules.
presented in the following steps. The
Adjusted Medicare Payment (SCH or EACH) For example, the CY 2008 proposed
formula below is a mathematical
= Adjusted Medicare Payment * 1.071 payment and copayment amounts for
representation of step 1 discussed above
APC 9228 (Tigecycline injection) were
We did not receive any public and calculates national copayment as a
$0.91 and $0.18, respectively. Twenty
comments on our proposed percentage of national payment for a
percent of $0.91 is $0.182. Because it
methodology for calculating an adjusted given service.
would be impossible to set a copayment
payment from the national unadjusted rate at exactly 20 percent in this case, b—Beneficiary payment percentage
Medicare payment amount for CY 2008. that is, $0.182, we proposed to round b = national unadjusted copayment for APC
Therefore, we are finalizing our the amount, using standard rounding / national unadjusted payment rate for APC
methodology as proposed for CY 2008, principles, to $0.18. Also using standard Step 2. Calculate the wage adjusted
without modification. rounding principles, 19.78 percent payment rate for the APC, for the
I. Beneficiary Copayments ($0.18 as a percentage of $0.91) rounds provider in question, as indicated in
to 20 percent and meets the statutory section II.H. of this final rule with
1. Background requirement of a copayment amount of comment period. Calculate the rural
Section 1833(t)(3)(B) of the Act at least 20 percent. For CY 2008, APC adjustment for eligible providers as
requires the Secretary to set rules for 9046 (Iron Sucrose Injection) had a indicated in section II.H. of this final
determining copayment amounts to be proposed payment amount and rule with comment period.
paid by beneficiaries for covered OPD copayment amount of $0.37 and $0.08, Step 3. Multiply the percentage
services. Section 1833(t)(8)(C)(ii) of the respectively. Using our established calculated in Step 1 by the payment rate
Act specifies that the Secretary must copayment rules, 20 percent of $0.37 is calculated in Step 2. The result is the
reduce the national unadjusted $0.074. Normally, we would apply wage-adjusted copayment amount for
copayment amount for a covered OPD standard rounding principles to achieve the APC.
The formula below is a mathematical with comment period for CY 2008, approximately $200 for gold markers, to
representation of step 3 discussed above which is consistent with our annual $900 for implantable dosimeters, to
and applies the beneficiary percentage APC updating policy. As noted in Table $1200 for electromagnetic transponders,
to the adjusted payment rate for a 13 of this final rule with comment which they believed justified separate
service calculated under II.H. above, period, HCPCS codes Q4087, Q4088, payment for the various types of
with and without the rural adjustment, Q4089, Q4090, Q4091, Q4092, and interstitial devices.
to calculate the final adjusted Q4095 will be deleted on December 31, Some commenters also expressed
beneficiary copayment for a given 2007 and replaced with HCPCS J-codes concern about the proposed CY 2008
service. effective January 1, 2008. Readers APC placement of a new code that CMS
Wage-adjusted copayment amount for the should refer to Table 13 for their created for non-prostate applications,
APC = Adjusted Medicare Payment * b replacement codes. specifically HCPCS code C9728 which
Wage-adjusted copayment amount for the was assigned to APC 0156, effective July
b. Implantation of Interstitial Devices 1, 2007, because it is similar to CPT
APC (SCH or EACH) = (Adjusted Medicare
Payment * 1.071)* b
(APC 0156) code 55876. Several commenters
The unadjusted copayments for Effective January 1, 2007, CPT code asserted that the payment for HCPCS
services payable under the OPPS that 55876 (Placement of interstitial code C9728 should include the costs of
device(s) for radiation therapy guidance dosimeter sensors, which they believed
will be effective January 1, 2008, are
(e.g., fiducial markers, dosimeter), are currently excluded. These
shown in Addenda A and B to this final
prostate (via needle, any approach), commenters also noted that payment for
rule with comment period.
We did not receive any public single or multiple) was implemented. CPT code 55876 excludes the cost of
comments concerning the proposed We assigned this code to APC 0156 dosimeter sensors. They recommended
methodology for calculating the (Level III Urinary and Anal Procedures) that CMS develop Level II HCPCS codes
unadjusted copayment amount for CY for CY 2007 on an interim final basis. that permit hospitals to report the
2008. Therefore, we are finalizing our We then created a new Level II HCPCS specific technologies associated with
code for a similar interstitial device HCPCS code C9728 and CPT code 55876
proposal without modification.
implantation service for non-prostate in each clinical case and receive
III. OPPS Ambulatory Payment sites, C9728 (Placement of interstitial appropriate payment for the specific
Classification (APC) Group Policies device(s) for radiation therapy/surgery interstitial device implanted.
guidance (e.g., fiducial markers, Several commenters pointed out that
A. Treatment of New HCPCS and CPT
dosimeter), other than prostate (any the CPT coding instructions for CPT
Codes
approach), single or multiple). We code 55876 instruct coders to report the
1. Treatment of New HCPCS Codes implemented HCPCS code C9728 supply of devices for the implantation
Included in the April and July Quarterly effective July 1, 2007 via Program procedure separately from CPT code
OPPS Updates for CY 2007 Transmittal 1259 dated June 1, 2007, as 55876. These commenters claimed that
a. Background a result of information we received when the CPT Editorial Panel
during our evaluation of an application established the code, it did not include
For the July quarter of CY 2007, we for assignment of the implantation of a the implantable interstitial device and
created a total of 16 new Level II HCPCS radiation dose verification system to a the imaging guidance for the
codes, specifically C2638, C2639, New Technology APC. We assigned implantation procedure in the code,
C2640, C2641, C2642, C2643, C2698, HCPCS code C9728 to APC 0156 and, therefore, both device costs and
C2699, C9728, Q4087, Q4088, Q4089, because we believed it was similar to imaging guidance costs were excluded
Q4090, Q4091, Q4092, and Q4095 that CPT code 55876 from both clinical and from the proposed CY 2008 APC
were not addressed in the CY 2007 resource perspectives. We proposed to payment for CPT code 55876. Because a
OPPS/ASC final rule with comment maintain both CPT code 55876 and dosimeter sensor could be implanted
period that updated the CY 2007 OPPS. HCPCS code C9728 in APC 0156 for CY with CPT code 55876 for prostate
We designated the payment status of 2008, with a proposed payment rate of applications, the commenters asserted
these codes and added them through the approximately $195. that its costs are not reflected in that
July 2007 update (Change Request 5623, We received a number of comments service. The commenters claimed that,
Transmittal 1259, dated June 1, 2007). on the APC assignments of these codes, unlike the instructions for CPT code
There were no new Level II HCPCS both on the CY 2007 OPPS/ASC final 55876, the descriptor for HCPCS code
codes for the April 2007 update. In the rule with comment period and on the C9728 does not direct coders to report
CY 2008 OPPS/ASC proposed rule, we CY 2008 proposed rule. A summary of the device separately. These
also solicited public comment on the the comments and our response follow. commenters recommended that CMS
status indicators, APC assignments, and Comment: A few commenters assign the DVS Dosimeter device for
payment rates of these codes, which expressed concern about CMS’ interim any body site to New Technology APC
were listed in Table 26A and Table 26B final placement of CPT code 55876 in 1514 (New Technology—Level XIV
of that proposed rule, and now appear APC 0156 for CY 2007 as shown in ($1200–$1300)), with a payment rate of
in Tables 10 and 11, respectively, of this Addendum B to the CY 2007 final rule $1250 for the device for CY 2008.
final rule with comment period. with comment period. Several Alternatively, they suggested that CMS
Because of the timing of the proposed commenters expressed similar concern package payment for all of the items and
rule, the codes implemented through regarding the proposed CY 2008 APC services needed to implant the
the July 2007 OPPS update were not assignment for this code. The dosimeter into payment for a single
included in Addendum B to that rule. commenters recommended that the code which they recommended be
In the CY 2008 OPPS/ASC proposed payment rate for implanting the assigned to New Technology APC 1522
rule, we proposed to assign the new interstitial devices not incorporate the (New Technology—Level XXII ($2000–
HCPCS codes for CY 2008 to APCs with cost of the devices, because such items $2500)). One commenter further
the proposed rates as displayed in have a range of costs. Several claimed that CMS was required to set
Tables 26A and 26B and incorporate commenters claimed that the costs of the APC assignment for the DVS
them into Addendum B of this final rule these devices range widely, from device based on the cost estimate
included in its New Technology APC would also be reported with CPT code a New Technology APC, we are not
application. 55876 and, similarly, we would package required to set the payment rate based
Response: Many procedures paid their payment under the OPPS. We note on the cost data presented in the New
under the OPPS include payment for that the CMS HCPCS Workgroup has Technology APC application alone, as
various implantable devices, where the created two related supply codes for CY we have stated in our final rule
procedure cost in an individual case 2008, specifically A4648 (Tissue published in the Federal Register on
would vary by the type of device. Our marker, implantable, any type, each) November 30, 2001. In that rule, we
long-standing policy is to package the and A4650 (Implantable radiation specifically explained that we do not
costs of implantable devices into dosimeter, each), which will be limit our determination of the cost of a
payment for the procedures in which packaged under the OPPS for CY 2008 service to information submitted by the
they are used, unless those devices are and which could also be reported in applicant. We obtain information on
paid separately for a limited period of association with CPT code 55876. costs from other appropriate sources
2 to 3 years based on their transitional Therefore, any of these HCPCS codes for before making a determination of the
pass-through status. Payment for OPPS devices or supplies, A4648, A4650 or cost of the procedure to hospitals (66 FR
services includes payment for all costs C1879, are reportable with service codes 59900). In addition, we note that only
that are directly related and integral to 55876 or C9728. complete services are currently assigned
performing a procedure or furnishing a In response to public comments on to New Technology APCs, not items,
service on an outpatient basis, as set the CY 2007 OPPS/ASC final rule with such as drugs or devices.
forth in § 419.2. comment period and on the CY 2008 In response to comments to the CY
According to our usual practice, when proposed rule on the proposed 2008 proposed rule on the proposed
we originally evaluated CPT code 55876 assignment of CPT code 55876 for CY assignment of HCPCS code C9728, we
for APC assignment for CY 2007, we 2008, we once again examined examined all information available to us
took into consideration all information information available to us regarding on procedures that could be reported
available to us about the particular procedures that could be reported with with the code, as well as updated cost
service, as well as other OPPS services the CPT code, along with updated data from claims regarding other OPPS
for which we have claims-based cost claims data for other OPPS services. We services. We continue to believe that the
data. In particular, we considered the continue to believe that APC 0156 is the resources and utilization associated
probable utilization of the various most appropriate APC assignment for with HCPCS code C9728, including the
devices, including fiducial markers and CPT code 55876, based on the expected cost of the various possible implantable
dosimeters, whose implantation could median cost and utilization of all of the devices that may be implanted in the
be reported with the CPT code, as well services that would be reported with the service and the different approaches to
as possible implantation approaches, code under the OPPS. We will first have the implantation, resemble those
recognizing that a prospective payment claims data for CPT code 55876 for the associated with CPT code 55876.
system is based on principles of CY 2009 OPPS update, which we will Therefore, we will maintain HCPCS
averaging. For established services paid review in the context of our CY 2009 code C9728 in APC 0156 for CY 2008.
under the OPPS, payment is generally update proposals. We will first have data for HCPCS code
based on the median cost of the service We note that during CY 2007, we C9728 for the CY 2009 OPPS update,
from claims data. Although CPT evaluated a New Technology APC which we will review in the context of
instructions state that the supply of the application submitted by the our CY 2009 update proposals. We
implantable device is to be reported manufacturer of the DVS System for a expect that these data will reflect the
separately, we considered the device service the applicant entitled costs of the implantable devices utilized
costs associated with CPT code 55876, ‘‘Implantation of the DVS Dosimeter.’’ and, the extent that more costly devices,
which would be packaged into payment We did not approve an item or service such as implantable dosimeters and
for the implantation procedure under for payment specifically for the DVS electromagnetic transponders, are
the OPPS even if the device were Dosimeter. However, we approved increasingly reported with this
separately reported, when we assigned creation of a new code for a service for procedure, the cost of these devices will
the CPT code to APC 0156. A previous non-prostate placement of interstitial gradually be reflected in the median
pass-through device category, C1879 device(s) for radiation therapy or cost of HCPCS code C9728.
(Tissue marker (implantable)) for a surgical guidance, using such devices as
device that we believe could be reported fiducial markers or dosimeters. As c. Other New HCPCS Codes
with CPT code 55876, was active from explained by the commenters, and Implemented in April or July 2007
August 2000 through December 2002. similar to CPT code 55876, this While we received public comments
After its expiration, the cost of tissue procedure could implant devices with a on the proposed CY 2008 OPPS
markers has been packaged into the wide range of costs, including treatment of HCPCS code C9728 as
OPPS payment for the procedures in dosimeters that commenters claimed discussed above and HCPCS codes
which they are used. We note that the ranged from $900 to $1200. Our general C2638, C2639, C2640, C2641, C2642,
line-item CY 2006 median cost for policy in creating a new service code C2643, C2698, and C2699 as discussed
HCPCS code C1879 for an implantable under the OPPS, whether we assign it to in section VII. of this final rule with
tissue marker was $88 based on a clinical or New Technology APC, is to comment period, we did not receive any
approximately 18,600 units of this develop a general service code so that it public comments on the proposed APC
device. Although there was no specific may be reported for a range of assignments and status indicators for
HCPCS device code for a dosimeter in technologies, rather than only for a HCPCS codes Q4087, Q4088, Q4089,
CY 2007, we would consider payment single proprietary service. This reduces Q4090, Q4091, Q4092, and Q4095 that
for the dosimeter packaged under the potential barriers to payment under the were implemented in July 2007.
OPPS into the implantation procedure OPPS for related new services and is However, for CY 2008, the CMS HCPCS
and would have no need to establish a consistent with the general coding Workgroup decided to delete the drug
specific HCPCS code for the dosimeter practices of the CPT Editorial Panel and codes described by Q-codes on
for OPPS payment purposes. There may the CMS HCPCS Workgroup. When we December 31, 2007 and replace them
be other devices whose implantation approve a new service for assignment to with permanent J-codes effective
January 1, 2008. Consistent with our codes,’’ are generally deleted once HCPCS code C9728, that were
general policy of using permanent permanent national HCPCS codes are implemented in July 2007, we are
HCPCS codes for the reporting of drugs created that describe the same item, adopting our proposal as final, without
under the OPPS in order to streamline service, or procedure. The J-codes modification, and are assigning the
coding, we are displaying the J-codes in describe the same drugs and the same replacement HCPCS J codes to the same
Table 13 that will replace the seven Q- dosages as the Q-codes that will be status indicators and APCs that were
codes, effective January 1, 2008. We deleted December 31, 2007. Because we proposed for the predecessor Q-codes,
note that Q codes are temporary did not receive any public comments on as shown in Addendum B to this final
national HCPCS codes. To avoid the proposed CY 2008 APC and status rule with comment period.
duplication, temporary national HCPCS indicator assignments for the new
codes, such as ‘‘C-,’’ ‘‘G-,’’ ‘‘K-,’’ and ‘‘Q- HCPCS codes, with the exception of
TABLE 12.—NEW NON-DRUG HCPCS CODES IMPLEMENTED IN JULY 2007

Final CY Final CY
HCPCS 2008 sta- Final CY
Long descriptor 2008 me-
code tus indi- 2008 APC dian cost
cator
C2638 ...... Brachytherapy source, stranded, iodine-125, per source ................................................... K .............. 2638 $45
C2639 ...... Brachytherapy source, non-stranded, iodine-125, per source ............................................ K .............. 2639 32
C2640 ...... Brachytherapy source, stranded, palladium-103, per source ............................................. K .............. 2640 65
C2641 ...... Brachytherapy source, non-stranded, palladium-103, per source ...................................... K .............. 2641 51
C2642 ...... Brachytherapy source, stranded, cesium-131, per source ................................................. K .............. 2642 97
C2643 ...... Brachytherapy source, non stranded, cesium-131, per source .......................................... K .............. 2643 63
C2698 ...... Brachytherapy source, stranded, not otherwise specified, per source ............................... K .............. 2698 45
C2699 ...... Brachytherapy source, non-stranded, not otherwise specified, per source ....................... K .............. 2699 31
C9728 ...... Placement of interstitial device(s) for radiation therapy/surgery guidance (eg, fiducial T .............. 0156 192
markers, dosimeter), other than prostate (any approach) single or multiple.
TABLE 13.—NEW DRUG HCPCS CODES IMPLEMENTED IN JULY 2007

New
HCPCS J- Final CY
HCPCS Q- Final CY
code effec- Long descriptor 2008 status
code 2008 APC
tive Janu- indicator
ary 1, 2008
J1568 ....... Q4087 Injection, immune globulin, (Octogam), intravenous, non-lyophilized, (e.g. liquid), 500 K 0943
mg.
J1569 ....... Q4088 Injection, immune globulin, (Gammagard), intravenous, non-lyophilized, (e.g. liquid), K 0944
500 mg.
J2791 ....... Q4089 Injection, rho(d) immune globulin (human), (Rhophylac), intravenous, 100 iu ............. K 0945
J1571 ....... Q4090 Injection, hepatitis b immune globulin (Hepagam B), intramuscular, 0.5 ml ................. K 0946
J1572 ....... Q4091 Injection, immune globulin, (Flebogamma), intravenous, non-lyophilized, (e.g. liquid), K 0947
500 mg.
J1561 ....... Q4092 Injection, immune globulin, (Gamunex), intravenous, non-lyophilized, (e.g. liquid), K 0948
500 mg.
J3488 ....... Q4095 Injection, zoledronic acid (Reclast), 1 mg ..................................................................... K 0951
2. Treatment of New Category I and III annual OPPS update. (We refer readers concerning these codes in a subsequent
CPT Codes and Level II HCPCS Codes to the discussion immediately below final rule for the next calendar year’s
concerning our policy for implementing OPPS/ASC update.
a. Establishment and Assignment of We did not receive any public
New Codes new Category I and III mid-year CPT
codes.) In the CY 2008 OPPS/ASC comments on our proposal to assign a
As has been our practice in the past, proposed rule, we proposed to continue comment indicator of ‘‘NI’’ in
we implement new Category I and III Addendum B of the OPPS final rule
this recognition and process for CY
CPT codes and new Level II HCPCS with comment period to the new codes
2008. Therefore, new Category I and III
codes through program transmittals, that are open to public comment.
which are released in the summer CPT codes and new Level II HCPCS
Therefore, we are finalizing our
through the fall of each year for annual codes, effective January 1, 2008, are
proposed treatment of new CY 2008
updating, effective January 1, in the listed in Addendum B to this final rule Category I and III CPT codes, as well as
final rule updating the OPPS for the with comment period and designated the Level II HCPCS codes, without
following calendar year. These codes are using comment indicator ‘‘NI.’’ The modification.
flagged with comment indicator ‘‘NI’’ in status indicator, the APC assignment, or We received some comments to the
Addendum B to the OPPS/ASC final both, for all such codes flagged with CY 2008 proposed rule regarding
rule with comment period to indicate comment indicator ‘‘NI’’ is open to individual new HCPCS codes that
that we are assigning them an interim public comment in this final rule with commenters expected to be
payment status which is subject to comment period. As indicated in the CY implemented for the first time in the CY
public comment following publication 2008 OPPS/ASC proposed rule, we will 2008 OPPS. We could not discuss the
of the final rule that implements the respond to all comments received CY 2008 codes, including their APC
and/or status indicator assignments, rule and are displayed in Table 14 of that New Technology APC for at least 2
because the codes were not available this final rule with comment period, years.
when we developed and issued the were subject to comment in the Another commenter expressed
proposed rule. For those new Category proposed rule, and we proposed to concern that the payment level was too
I CPT codes whose descriptors were not finalize their status in this final rule low for a single fraction treatment of
officially available during the comment with comment period. electronic brachytherapy. The
period and development of the CY 2008 commenter pointed out that two
b. Electronic Brachytherapy Services applications for New Technology APCs
final rule with comment period, we do
(New Technology APC 1519) were submitted to CMS for electronic
not specifically respond to those
comments in this final rule with The AMA’s CPT Editorial Panel brachytherapy with the following
comment period. For those new created a new Category III code, 0182T descriptions: (a) HDR electronic
Category III CPT codes that were (High dose rate (HDR) electronic brachytherapy, complete course as a
released on July 1, 2007, for brachytherapy, per fraction), as of July single fraction, and (b) HDR electronic
implementation January 1, 2008, we 1, 2007. We assigned CPT code 0182T brachytherapy, per fraction. The
respond to those comments in this final to New Technology APC 1519 (New commenter claimed that the two forms
rule with comment period because those Technology—Level IXX ($1700–$1800)), of HDR electronic brachytherapy are
codes were publicly available during the with a payment rate of $1750, as of July each unique and should not be
comment period to the proposed rule 1, 2007 (via Program Transmittal 1259, classified into the same APC. The
and the development of this final rule Change Request 5623). commenter requested that a new HCPCS
with comment period. Both of these We received a wide variety of code for HDR electronic brachytherapy,
groups of codes are flagged with comments regarding the proposed complete course as a single fraction, be
comment indicator ‘‘NI’’ in this final assignment of CPT code 0182T to New developed and assigned to APC 1529
rule with comment period, as discussed Technology APC 1519. A summary of (New Technology—Level XXIX ($5,500–
above, to signal that they are open to the comments and our response follows. $6,000)) for CY 2008.
public comment. Comment: Some commenters thought Response: The CY 2008 proposed
Effective for January 1, 2008, we have the proposed assignment provided a APC assignment of CPT code 0182T
created eight HCPCS C-codes that payment that was too high, some maintained our initial placement of
describe transthoracic echocardiography believed the proposed payment was too HDR electronic brachytherapy.
with contrast and transesophageal low, while others agreed with the Consistent with our recent OPPS
echocardiography with contrast to proposed APC assignment. A number of practice for Category III CPT codes that
enable facilities to appropriately report commenters believed that placement of are implemented mid-year by the AMA,
contrast-enhanced echocardiography CPT code 0182T into APC 1519 resulted we recognized CPT code 0182T under
services. (See section II.A.4.c(6) of this in a payment amount much higher the OPPS in July 2007. This recognition
final rule with comment period for relative to existing APCs for application ensures timely collection of data
further discussion of these codes). of brachytherapy sources, specifically, pertinent to the service described by the
Effective January 1, 2008, these C-codes APCs 0312 (Radioelement code, ensures patient access to the
will be used by HOPDs to report Applications), 0313 (Brachytherapy), service, and eliminates potential
contrast echocardiography services. and 0651 (Complex Interstitial redundancy between Category III CPT
These codes are assigned comment Radiation Source Application), with codes and Level II HCPCS codes that are
indicator ‘‘NI’’ in Addendum B to this proposed CY 2008 payment rates of created by us in response to
final rule with comment period. $534.48, $739.46, and $981.88, applications for new technology
In the CY 2008 OPPS/ASC proposed respectively. One commenter indicated services.
rule, we also proposed to continue our that only a very small number of Commenters did not provide analyses
policy of the last 2 years of recognizing patients would be treated using regarding the costs of the service;
new mid-year CPT codes, generally electronic brachytherapy. Another however, we received cost estimates
Category III CPT codes, that the AMA commenter expressed appreciation of from two manufacturers in their
releases in January for implementation CMS’s prompt assignment of new respective New Technology APC
the following July through the OPPS technologies to APCs, while some applications over the course of an
quarterly update process. Therefore, for commenters were concerned that the extensive evaluation period. As is our
CY 2008, we proposed to include in proposed payment for CPT code 0182T customary practice, we also used claims
Addendum B to the CY 2008 OPPS/ASC as a new technology service was data for related services and other
final rule with comment period the new between two and three times the sources of information to supplement
Category III CPT codes released in payment rate for the other conventional information included in the New
January 2007 for implementation on brachytherapy service APCs cited above. Technology APC applications in order
July 1, 2007 (through the OPPS These commenters believed that the to provide an APC assignment we
quarterly update process), and the new proposed payment for electronic believed to be appropriate at this time.
Category III codes released in July 2007 brachytherapy was excessive and, given Regarding the comments on potential
for implementation on January 1, 2008. that the risks of the treatment have yet complications or risks of the new
However, as proposed, only those new to be clearly established, such service that has a higher payment rate
Category III CPT codes implemented conditions would encourage the early than conventional brachytherapy
effective January 1, 2008, are flagged and possibly inappropriate adoption of procedures, we note that the APC
with comment indicator ‘‘NI’’ in this service. Some commenters assignment of a service based on its
Addendum B to this final rule with recommended that CMS consult with estimated cost is our usual practice for
comment period, to indicate that we specialty organizations regarding the new services under the OPPS, which
have assigned them an interim payment pricing of new technology services prior generally pays for services based on
status which is subject to public to assigning them to APCs. Other estimated hospital resources. In the
comment. Category III CPT codes commenters supported the proposed absence of cost data from hospital
implemented in July 2007, which assignment of CPT code 0182T and claims, we believe that comparisons of
appeared in Table 27 of the proposed recommended that the service reside in OPPS payment for electronic
brachytherapy to payment for program. Unless CMS has issued a After reviewing the public comments
conventional brachytherapy services national coverage determination (NCD), received and all current information
that are assigned to APCs 0312, 0313, local contractors determine whether a available to us regarding HDR electronic
and 0651 and that implant radioactive service meets all program requirements brachytherapy and other hospital
sources are not appropriate. The law for coverage. While we do not outpatient services, we continue to
specifically requires separate payment specifically consult with specialty believe that New Technology APC 1519,
for the brachytherapy sources, and, organizations during the New with a payment rate of $1750, is the
therefore, these costs are not included in Technology APC application evaluation most appropriate assignment for CPT
the procedure payment for conventional process that may result in an initial APC code 0182T. Therefore, we are finalizing
brachytherapy services that are reported assignment for a service, the APC
our proposal, without modification, to
for implanting the sources. We define assignments of new technology services,
maintain the assignment of CPT code
brachytherapy sources as containing a like all other OPPS services, are open to
radioactive isotope so, by definition, in comment in the annual OPPS update, 0182T to New Technology APC 1519,
the case of electronic brachytherapy and we welcome public comments. with a payment rate of $1750 for CY
treatment the New Technology APC We will not create a new Level II 2008.
payment for the procedure would HCPCS code for HDR electronic c. Other Mid-Year CPT Codes
include payment for the costs of the brachytherapy, complete course as a
radiation actually delivered to the single fraction, and assign it to a We did not receive any comments on
patient. Thus, it is not appropriate to different New Technology APC. We the proposed CY 2008 APC and status
compare the costs of conventional and evaluated both New Technology APC indicator assignments of Category III
electronic brachytherapy treatments applications at length and received CPT codes first implemented in July
based on a comparison of the treatment input from both applicants. We believe 2007 for services other than CPT code
procedure costs alone. that the two forms of HDR electronic 0182T. After considering the public
In light of the commenters’ concerns brachytherapy, whether provided in a comments received on CPT code 0182T,
regarding safety of the new procedures, single fraction or multiple fractions we are finalizing our general proposal
we reiterate that even though a service depending on the technology, are both
for the treatment of new mid-year CPT
is assigned a HCPCS code and a described by CPT code 0182T that is
codes, including our proposed APC
payment rate under the OPPS, it does appropriately assigned to a single APC.
not imply coverage by the Medicare We note that the payment is per assignments for CPT code 0182T and
program but indicates only how the fraction, and that would include a single other Category III CPT codes as
service may be paid if covered by the fraction treatment as well. displayed Table 14.
TABLE 14.—CATEGORY III CPT CODES IMPLEMENTED IN JULY 2007

Final CY
2008 sta- Final CY 2008
CPT code Long descriptor tus indi- APC
cator
0178T ....... Electrocardiogram, 64 leads or greater, with graphic presentation and analysis; with interpretation B .............. Not applicable.
and report.
0179T ....... Electrocardiogram, 64 leads or greater, with graphic presentation and analysis; tracing and X .............. 0100
graphics only, without interpretation and report.
0180T ....... Electrocardiogram, 64 leads or greater, with graphic presentation and analysis; interpretation and B .............. Not applicable.
report only.
0181T ....... Corneal hysteresis determination, by air impulse stimulation, bilateral, with interpretation and re- S .............. 0230
port.
0182T ....... High dose rate electronic brachytherapy, per fraction ....................................................................... S .............. 1519
B. Variations Within APCs group is homogeneous both clinically operating, treatment, or procedure room;
and in terms of resource use. Using this (2) use of a recovery room; (3) most
1. Background
classification system, we have observation services; (4) anesthesia; (5)
Section 1833(t)(2)(A) of the Act established distinct groups of similar medical/surgical supplies; (6)
requires the Secretary to develop a services, as well as medical visits. We pharmaceuticals (other than those for
classification system for covered also have developed separate APC which separate payment may be
hospital outpatient services. Section groups for certain medical devices, allowed under the provisions discussed
1833(t)(2)(B) of the Act provides that drugs, biologicals, in section V. of this final rule with
this classification system may be radiopharmaceuticals, and comment period); and (7) incidental
composed of groups of services, so that brachytherapy devices. services such as venipuncture. Our final
services within each group are We have packaged into payment for packaging methodology for ancillary
comparable clinically and with respect each procedure or service within an and supportive services is discussed in
to the use of resources. In accordance APC group the costs associated with section II.A.4.c. of this final rule with
with these provisions, we developed a those items or services that are directly comment period.
grouping classification system, referred related to and supportive of performing Under the OPPS, we pay for hospital
to as APCs, as set forth in § 419.31 of the the main procedures or furnishing outpatient services on a rate-per-service
regulations. We use Level I and Level II services. Therefore, we do not make basis, where the service may be reported
HCPCS codes and descriptors to identify separate payment for packaged items or with one or more HCPCS codes.
and group the services within each APC. services. For example, packaged items Payment varies according to the APC
The APCs are organized such that each and services include: (1) Use of an group to which the independent service
or combination of services is assigned. During the APC Panel’s March 2007 We received many public comments
Each APC weight represents the hospital meeting, we presented median cost and regarding the proposed APC and status
median cost of the services included in utilization data for services furnished indicator assignments for CY 2008 for
that APC relative to the hospital median during the period of January 1, 2006, specific HCPCS codes. These are
cost of the services included in APC through September 30, 2006, about discussed mainly in sections III.C. and
0606. The APC weights are scaled to which we had concerns or about which III.D. of this final rule with comment
APC 0606 because it is the middle level the public had raised concerns period, and the final action for CY 2008
clinic visit APC (that is, where the Level regarding their APC assignments, status related to each HCPCS code is noted in
3 Clinic Visit HCPCS code of five levels indicator assignments, or payment rates. those sections. We also received a
of clinic visits is assigned), and because The discussions of most service-specific number of specific comments about
middle level clinic visits are among the issues, the APC Panel recommendations some of the procedures assigned to
most frequently furnished services in if any, and our proposals for CY 2008 APCs that may have violated the 2 times
the hospital outpatient setting. are contained principally in sections rule. These comments are addressed
Section 1833(t)(9)(A) of the Act III.C. and III.D. of this final rule with elsewhere in the final rule with
requires the Secretary to review the comment period. comment period, primarily in sections
components of the OPPS not less than In addition to the assignment of related to the types of procedures that
annually and to revise the groups and specific services to APCs that we were the subject of the comments.
relative payment weights and make discussed with the APC Panel, we also
other adjustments to take into account identified APCs with 2 times violations 3. Exceptions to the 2 Times Rule
changes in medical practice, changes in that were not specifically discussed As discussed earlier, we may make
technology, and the addition of new with the APC Panel but for which we exceptions to the 2 times limit on the
services, new cost data, and other proposed changes to their HCPCS codes’ variation of costs within each APC
relevant information and factors. APC assignments in Addendum B to the group in unusual cases such as low-
Section 1833(t)(9)(A) of the Act, as proposed rule. In these cases, to volume items and services. Taking into
amended by section 201(h) of the BBRA eliminate a 2 times violation or to account the APC changes that we
of 1999, also requires the Secretary, improve clinical and resource proposed for CY 2008 based on the APC
beginning in CY 2001, to consult with homogeneity, we proposed to reassign Panel recommendations discussed
an outside panel of experts to review the the codes to APCs that contained mainly in sections III.C. and III.D. of this
APC groups and the relative payment services that were similar with regard to final rule with comment period, the
weights (the APC Panel both their clinical and resource proposed changes to status indicators
recommendations for specific services characteristics. We also proposed to and APC assignments as identified in
for the CY 2008 OPPS and our responses rename existing APCs, discontinue Addendum B to the proposed rule, and
to them are discussed in the relevant existing APCs, or create new clinical the use of CY 2006 claims data to
specific sections throughout this final APCs to complement proposed HCPCS calculate the median costs of procedures
rule with comment period). code reassignments. In many cases, the classified in the APCs, we reviewed all
Finally, as discussed earlier, section proposed HCPCS code reassignments the APCs to determine which APCs
1833(t)(2) of the Act provides that, and associated APC reconfigurations for would not satisfy the 2 times rule. We
subject to certain exceptions, the items CY 2008 included in the proposed rule used the following criteria to decide
and services within an APC group were related to changes in median costs whether to propose exceptions to the 2
cannot be considered comparable with of services and APCs resulting from our times rule for affected APCs:
respect to the use of resources if the proposed bundling approach for CY • Resource homogeneity
highest median for an item or service in 2008, as discussed in section II.A.4.c. of • Clinical homogeneity
the group is more than 2 times greater the proposed rule. We also proposed • Hospital concentration
than the lowest median cost for an item changes to the status indicators for some • Frequency of service (volume)
or service within the same group codes that were not specifically and • Opportunity for upcoding and code
(referred to as the ‘‘2 times rule’’). We separately discussed in the proposed fragments
use the median cost of the item or rule. In these cases, we proposed to For a detailed discussion of these
service in implementing this provision. change the status indicators for some criteria, we refer readers to the April 7,
The statute authorizes the Secretary to codes because we believed that another 2000 OPPS final rule with comment
make exceptions to the 2 times rule in status indicator more accurately period (65 FR 18457).
unusual cases, such as low-volume described their payment status from an Table 28 of the proposed rule listed
items and services. OPPS perspective based on the policies the APCs that we proposed to exempt
that we proposed for CY 2008. from the 2 times rule for CY 2008 based
2. Application of the 2 Times Rule Addendum B to the proposed rule on the criteria cited above. For cases in
In accordance with section 1833(t)(2) identified with a comment indicator which a recommendation by the APC
of the Act and § 419.31 of the ‘‘CH’’ those HCPCS codes for which we Panel appeared to result in or allow a
regulations, we annually review the proposed a change to the APC violation of the 2 times rule, we
items and services within an APC group assignment or status indicator as generally accepted the APC Panel’s
to determine, with respect to assigned in the April 2007 Addendum recommendation because those
comparability of the use of resources, if B update (via Change Request 5544, recommendations were based on
the median of the highest cost item or Transmittal 1209, dated March 21, explicit consideration of resource use,
service within an APC group is more 2007). Addendum B to this final rule clinical homogeneity, hospital
than 2 times greater than the median of with comment period identifies with the specialization, and the quality of the
the lowest cost item or service within ‘‘CH’’ comment indicator the final CY data used to determine the APC
that same group (‘‘2 times rule’’). We 2008 changes compared to the codes’ payment rates that we proposed for CY
make exceptions to this limit on the status as reflected in the October 2007 2008. The median costs for hospital
variation of costs within each APC Addendum B update (via Change outpatient services for these and all
group in unusual cases such as low Request 5718, Transmittal 1336, dated other APCs that were used in the
volume items and services. September 14, 2007). development of the proposed rule can
be found on the CMS Web site at: TABLE 15.—FINAL APC EXCEPTIONS 2. Movement of Procedures From New
http://www.cms.hhs.gov. TO THE 2 TIMES RULE FOR CY Technology APCs to Clinical APCs
We did not receive any general public 2008—Continued As we explained in the November 30,
comments related to the list of proposed 2001 final rule (66 FR 59897), we
exceptions to the 2 times rule, APC APC title generally keep a procedure in the New
specifically those listed in Table 28 of Technology APC to which it is initially
the proposed rule. For the proposed 0058 ......... Level I Strapping and Cast Ap- assigned until we have collected data
plication.
rule, the list of APCs excepted from the sufficient to enable us to move the
0060 ......... Manipulation Therapy.
2 times rule were based on data from 0080 ......... Diagnostic Cardiac Catheteriza- procedure to a clinically appropriate
January 1, 2006, through September 30, tion. APC. However, in cases where we find
2006. For this final rule with comment 0093 ......... Vascular Reconstruction/Fistula that our original New Technology APC
period, we used data from January 1, Repair Without Device. assignment was based on inaccurate or
2006 through December 1, 2006. Thus, 0105 ......... Repair/Revision/Removal of inadequate information, or where the
after responding to all of the comments Pacemakers, AICDs, or Vas- New Technology APCs are restructured,
on the proposed rule and making cular Devices. we may, based on more recent resource
changes to APC assignments based on 0106 ......... Insertion/Replacement of Pace- utilization information (including
maker Leads and/or Elec-
the comments received, we analyzed the claims data) or the availability of refined
trodes.
full CY 2006 data to identify APCs with 0141 ......... Level I Upper GI Procedures. New Technology APC cost bands,
2 times rule violations. In contrast to 0235 ......... Level I Posterior Segment Eye reassign the procedure or service to a
previous years, for CY 2008 we have Procedures. different New Technology APC that
calculated a significant number of APC 0251 ......... Level I ENT Procedures. most appropriately reflects its cost.
medians through customized 0256 ......... Level V ENT Procedures. At its March 2007 meeting, the APC
methodologies, such as device- 0260 ......... Level I Plain Film Except Teeth. Panel recommended that CMS keep
dependent APC, APCs to which nuclear 0303 ......... Treatment Device Construction. services in New Technology APCs until
medicine procedures are assigned, and 0323 ......... Extended Individual Psycho- sufficient data are available to assign
therapy. them to clinical APCs, but for no longer
Visit APCs, that are impacted by the
0330 ......... Dental Procedures.
Extended Assessment and Management 0409 ......... Red Blood Cell Tests.
than 2 years. We note that because of
Composite APCs. Therefore, for this 0432 ......... Health and Behavior Services. the potential for quarterly assignment of
final rule with comment period we 0437 ......... Level II Drug Administration. new services to New Technology APCs
assessed the HCPCS code-specific 0438 ......... Level III Drug Administration. and the 2-year time lag in claims data
median costs for HCPCS codes that are 0604 ......... Level 1 Hospital Clinic Visits. for an OPPS update (that is, CY 2006
part of these customized APC median 0688 ......... Revision/Removal of data are utilized for this CY 2008 OPPS
cost calculations to accurately identify 2 Neurostimulator Pulse Gener- rulemaking cycle), if we were to accept
times violations. We also have some ator Receiver. the APC Panel’s recommendation, we
APCs where the concept of a 2 times would always reassign services from
violation is not relevant, typically those C. New Technology APCs New Technology to clinical APCs based
set based on multiple claims, such as 1. Introduction on 1 year or less of claims data. For
APC 0381 for single allergy tests and example, if a new service was first
APC 0375 for ancillary services when a In the November 30, 2001 final rule assigned to a New Technology APC in
hospital outpatient dies. Table 15 below (66 FR 59903), we finalized changes to July 2006, we would have 6 months of
has been revised relative to prior years the time period a service was eligible for data for purposes of CY 2008
to remove APCs where a 2 times payment under a New Technology APC. rulemaking but, in order to ensure that
violation is not a relevant concept and Beginning in CY 2002, we retain the service was in a New Technology
to identify final APCs, including those services within New Technology APC APC for no longer than 2 years, we
with customized median cost groups until we gather sufficient claims would need to move the service to a
methodologies, with 2 times violations. data to enable us to assign the service clinical APC for CY 2008. While we
to a clinically appropriate APC. This might have sufficient claims data from
Based on our final data, we found that
policy allows us to move a service from 6 months of CY 2006 to support a
there were 21 APCs with 2 times rule
a New Technology APC in less than 2 proposal for such a reassignment for CY
violations. We applied the criteria as
years if sufficient data are available. It 2008, we are not confident that this
described earlier to finalize the APCs
also allows us to retain a service in a would always be the case for all new
that are exceptions to the 2 times rule
New Technology APC for more than 3 services, given our understanding of the
for CY 2008. After consideration of all
years if sufficient data upon which to dissemination of new technology
public comments received on the
base a decision for reassignment have procedures into medical practice and
proposed rule and the careful review of
not been collected. the diverse characteristics of new
the CY 2006 claims data for the full
year, we are finalizing the list of APCs We note that the cost bands for New technology services that treat different
exempted from the 2 times rule. The Technology APCs range from $0 to $50 clinical conditions. Therefore, we did
final list of APCs that are exceptions to in increments of $10, from $50 to $100 not accept the APC Panel’s
the 2 times rule for CY 2008 is in increments of $50, from $100 through recommendation for CY 2008 because
displayed in Table 15 below. $2,000 in increments of $100, and from we believed that accepting the
$2,000 through $10,000 in increments of recommendation would limit our ability
TABLE 15.—FINAL APC EXCEPTIONS $500. These increments, which are in to individually assess the OPPS
two parallel sets of New Technology treatment of each new technology

TO THE 2 TIMES RULE FOR CY 2008
APCs, one with status indicator ‘‘S’’ and service in the context of available
APC APC title the other with status indicator ‘‘T,’’ hospital claims data. We are particularly
allow us to price new technology concerned about continuing to provide
0043 ......... Closed Treatment Fracture Fin- services more appropriately and appropriate payment for low volume
ger/Toe/Trunk. consistently. new technology services that may be
expected to continue to be low volume including moving procedures to Technology APC to another New
under the OPPS due to the prevalence different APCs, utilizing external data Technology APC with a lower payment
of the target conditions in the Medicare for ratesetting, or maintaining rate if we believed that our data were
population. We appreciate the APC procedures in their current New not fully developed to support a final
Panel’s thoughtful discussion of new Technology APCs. clinical APC assignment, but we expect
technology services, and we agree with Response: As we have stated these cases to continue to be rare. In
the APC Panel that it should be our previously, we generally keep a addition, all reassignments of services
priority to regularly reassign services procedure in the New Technology APC out of New Technology APCs are
from New Technology APCs to clinical to which it is initially assigned until we proposed during the annual rulemaking
APCs under the OPPS, so that they are have collected sufficient claims data to cycle, allowing the opportunity for
treated like most other OPPS services enable us to move the procedure to a public comment prior to their
for purposes of ratesetting once clinically appropriate APC. However, in movement.
hospitals have had sufficient experience cases where we find that our original When evaluating new services for
with providing and reporting the new New Technology APC assignment was payment under the OPPS, we use all
services. Rather, consistent with our based on inaccurate or inadequate information available to us regarding the
current policy, for CY 2008 we proposed information, or where the New clinical characteristics of the procedures
to retain services within New Technology APCs are restructured, we and the expected hospital resource
Technology APC groups until we gather may, based on more recent resource costs. We reserve New Technology APC
sufficient claims data to enable us to utilization information (including assignments for those services where we
assign the service to a clinically claims data) or the availability of refined do not believe there is an appropriate
appropriate APC. The flexibility New Technology APC bands, reassign clinical APC for the new service. In
associated with this policy allows us to the procedure or service to a different many cases, new HCPCS codes describe
move a service from a New Technology New Technology APC that most services that are similar to existing
APC in less than 2 years if sufficient appropriately reflects its cost. This services that are paid under the OPPS
data are available. It also allows us to policy would allow us to retain a service and for which we have robust cost data
retain a service in a New Technology in a New Technology APC for more than from hospital claims. We continue to
APC for more than 2 years if sufficient 3 years if sufficient data upon which to believe that it is appropriate to assign
hospital claims data upon which to base base a decision for reassignment have similar new and existing services to the
a decision for reassignment have not not been collected, and also allows us same clinical APC in such cases. We
been collected. to move a service from a New follow the claims data closely and
We received a number of public Technology APC in less than 2 years if carefully review the New Technology
comments on our OPPS treatment of sufficient claims data are available. To and clinical APC assignments of
New Technology services. A summary retain a new service under a New
relatively new OPPS services for each
of the public comments and our Technology APC for a minimum of at
update year when new claims data
responses follow. least two years, especially for a service
Comment: Several commenters become available. In addition, the OPPS
for which we have significant claims
requested that CMS reconsider treatment of all new services is open to
data, may result in inappropriate
maintaining a new service in a New public comment in the annual OPPS/
payment of the service. We want to
Technology APC for a minimum of at ASC rule (either proposed or final with
ensure appropriate allocation of
least 2 years, to ensure sufficient claims comment period) that follows the
Medicare expenditures, and for a service
data, before assigning it to a clinical service’s implementation under the
that has been placed in a New
APC. These commenters were OPPS.
Technology APC with significant claims
concerned that reassigning a new data, we believe it is in the best interest After consideration of all public
service from a New Technology APC to of both the Medicare program and the comments received, we are finalizing
a clinical APC in less than 2 years may beneficiary to reassign the service to an our CY 2008 proposal, without
result in the collection of inaccurate appropriate clinical APC based on modification, to maintain a new service
claims data because integration of new clinical coherence and resource in a New Technology APC until we
technologies can be slow and hospitals similarity. gather sufficient claims data to assign
need time to update their chargemasters In response to the different the service to a clinically appropriate
to appropriately include charges that are suggestions for transitioning new APC. Thus, a service can be assigned to
related to the actual costs of the new technology services from New a New Technology APC for more than
service. Other commenters reported that Technology APCs to clinical APCs to 3 years if we have insufficient claims
while a new technology service may prevent excessive reductions in data to reassign the service to a clinical
increase hospital outpatient costs, it payment, because we generally move APC, or it could be reassigned to a
could ultimately replace more invasive new services from New Technology clinical APC in less than 2 years if we
inpatient procedures that are more APCs to clinical APCs only when we have adequate claims data. We will
costly for the Medicare program. have adequate data upon which to base continue to assess new services for
In addition, several commenters a decision, we do not believe a potential assignment to clinical APCs
recommended that CMS place all new transition would commonly be before assigning them to New
HCPCS codes for new services in New necessary in order to provide Technology APCs.
Technology APCs, rather than assigning appropriate payment for the services The procedures presented below in
them directly to clinical APCs, until based on their hospital costs. We have sections III.C.2.a., III.C.2.b., and III.C.2.c.
claims data are available in order to no need to utilize external data in these represent services assigned to New
ensure access to these services. Some cases where we believe our claims data, Technology APCs for CY 2007 for which
commenters also recommended that developed according to the standard we stated in the CY 2008 proposed rule
CMS consider alternatives to moving OPPS ratesetting methodology, are that we believed we had sufficient data
procedures from New Technology APCs adequate to reassign the new services to to propose their reassignment to
to clinical APCs that would prevent clinical APCs. In a few past situations, clinically appropriate APCs for CY
excessive reductions in payment, we have moved services from one New 2008.
a. Positron Emission Tomography that reassigned conventional PET and PET/CT procedures, and that the
(PET)/Computed Tomography (CT) procedures to APC 0308 (Non- scans had obvious clinical similarity as
Scans (APC 0308) Myocardial Positron Emission well. Therefore, for CY 2008 we
From August 2000 through April Tomography (PET) Imaging) with a final proposed to reassign the CPT codes for
2005, we paid separately for PET and median cost of approximately $850. We PET/CT scans to the clinical APC where
CT scans. In CY 2004, the payment rate also reassigned PET/CT services to a nonmyocardial PET scans were also
for nonmyocardial PET scans was different New Technology APC for CY assigned, specifically APC 0308, with a
$1,450, while it was $193 for typical 2007, specifically New Technology APC proposed median cost of approximately
diagnostic CT scans. Prior to CY 2005, 1511 (New Technology—Level XI $1,094.
nonmyocardial PET and the PET portion ($900–$1000)), thereby maintaining the We noted in the proposed rule (72 FR
historical payment differential of about 42705) that we had been paying
of PET/CT scans were described by G-
$100 between PET and PET/CT separately for fluorodeoxyglucose
codes for billing to Medicare. Several
procedures. Furthermore, we stated in (FDG), the radiopharmaceutical
commenters to the November 15, 2004
the CY 2007 OPPS/ASC final rule with described by HCPCS code A9552 (F18
final rule with comment period (69 FR
comment period (71 FR 68022) that we fdg), that is commonly administered
65682) urged that we replace the G-
would wait for a full year of CPT-coded during nonmyocardial PET and PET/CT
codes for nonmyocardial PET and PET/
claims data prior to assigning the PET/ procedures. For CY 2008, consistent
CT scan procedures with the established
CT services to a clinical APC and that with the proposed packaging approach
CPT codes. These commenters stated
maintaining a modest payment as discussed in section II.A.4.c.(5) of the
that movement to the established CPT
differential between PET and PET/CT proposed rule, we proposed to package
codes would greatly reduce the burden payment for the diagnostic
on hospitals of tracking and billing the procedures was warranted for CY 2007.
radiopharmaceutical FDG into payment
G-codes which were not recognized by For CY 2008, we proposed the
for the associated PET and PET/CT
other payers and would allow for more reassignment of concurrent PET/CT
procedures. Because FDG was the most
uniform hospital billing of these scans. scans, specifically CPT codes 78814,
commonly used radiopharmaceutical for
We agreed with the commenters that 78815, and 78816, to a clinical APC
both PET and PET/CT scans and our
movement from the G-codes to the because we believed we had adequate
single claims for these procedures
established CPT codes for claims data from CY 2006 upon which
included FDG more than 80 percent of
nonmyocardial PET and PET/CT scans to determine the median cost of the time, the packaging of this
would allow for more uniform billing of performing these procedures. Based on radiopharmaceutical fully maintained
these scans. As a result of a Medicare our proposed rule analysis of the clinical and resource homogeneity
national coverage determination approximately 117,000 CY 2006 single of the reconfigured APC 0308 that we
(Publication 100–3, Medicare Claims claims, the median cost of PET/CT scans proposed.
Processing Manual section 220.6) that was approximately $1,094. We then We received a number of public
was made effective January 28, 2005, we examined approximately 34,000 single comments concerning our proposed
discontinued numerous G-codes that claims from CY 2006 for nonmyocardial reassignment of concurrent PET/CT
described myocardial PET and PET scans, as described by CPT codes scans for CY 2008. A summary of the
nonmyocardial PET procedures and 78608, 78811, 78812, and 78813, and public comments and our response
replaced them with the established CPT found that the median cost was also follow.
codes. The CY 2005 payment rate for approximately $1,094. In the proposed Comment: Several commenters
concurrent PET/CT scans using the CPT rule, we noted that a comparison of the thanked CMS for proposing to increase
codes 78814 (Tumor imaging, positron median cost of PET/CT scans with the the payment rate for concurrent PET/CT
emission tomography (PET) with median cost of nonmyocardial PET scans from the CY 2007 payment of
concurrently acquired computed scans, as derived from CY 2006 claims approximately $950 to approximately
tomography (CT) for attenuation data, demonstrated that these costs were $1,107 for CY 2008 and ensuring that
correction and anatomical localization; almost the same, thereby reflecting these scans are assigned to a clinical
limited area (eg, chest, head/neck)); significant hospital resource APC with other services with similar
78815 (Tumor imaging, positron equivalency between the two types of median costs. However, these
emission tomography (PET) with services. This result was not unexpected commenters were concerned that the
concurrently acquired computed because many newer PET scanners also proposed payment rate for the PET/CT
tomography (CT) for attenuation have the capability of rapidly acquiring scans for CY 2008 would be inadequate
correction and anatomical localization; CT images for attenuation correction if the payment for the diagnostic
skull base to mid-thigh); and 78816 and anatomical localization, sometimes radiopharmaceutical used in these
(Tumor imaging, positron emission with simultaneous image acquisition. procedures, specifically FDG, was
tomography (PET) with concurrently The median costs for both PET and PET/ packaged into the payment for the
acquired computed tomography (CT) for CT scans were significantly higher for scans. Other commenters questioned the
attenuation correction and anatomical CY 2008 than for CY 2007 due to our CY validity of the claims used to set the
localization; whole body) was $1,250, 2008 proposal to package payment for proposed payment rate for the
which was $100 higher than the all diagnostic radiopharmaceuticals as concurrent PET/CT scan procedures.
payment rate for PET scans alone. These described in section II.A.4.c.(5) of this They indicated that the proposal to
PET/CT CPT codes were placed in New final rule with comment period that assign concurrent PET/CT scans from a
Technology APC 1514 (New would package payment for the costs of New Technology APC to clinical APC
Technology—Level XIV ($1,200– the radiopharmaceuticals utilized 0308 was inappropriate and
$1,300)) for CY 2005. similarly into the payment for both PET unsupported by reliable data. They
We continued with these coding and and PET/CT scans. As stated in the believed that CMS did not have
payment methodologies in CY 2006. For proposed rule (72 FR 42705), we believe sufficient or accurate claims data to
CY 2007, while we proposed to reassign that our claims data accurately reflected justify movement of the concurrent
both PET and PET/CT scans to the same the comparable hospital resources PET/CT services from New Technology
new clinical APC, we finalized a policy required to provide nonmyocardial PET APC 1514 to clinical APC 0308. Several
commenters suspected that the claims payment for the physician’s office immunoglobulin prior to administration
used to set the proposed payment rate practice expenses associated with a (this service is to be billed in
were flawed because they believed that procedure, based on direct cost inputs. conjunction with administration of
many hospitals had not yet updated Consequently, the application of the immunoglobulin)). Based on our
their chargemasters to distinguish different methodologies results in estimate of the costs of this service in
charges for the conventional different payment amounts in the two comparison with other services, HCPCS
nonmyocardial PET scans from charges settings. code G0332 was assigned to New
for concurrent PET/CT scans. One As noted previously, under the OPPS, Technology APC 1502 (New
commenter indicated that if CMS were we retain services within New Technology—Level II, $50–$100), with a
to blend its own external data from the Technology APC groups where they are payment rate of $75 effective January 1,
refined direct cost inputs used to assigned according to our estimates of 2006. In the CY 2007 OPPS/ASC final
establish the practice expense relative their costs until we gather sufficient rule with comment period, we indicated
value units under the MPFS with OPPS claims data to enable us to assign the our belief that it was appropriate to
claims data to establish a payment rate services to clinically appropriate APCs continue the temporary IVIG
for PET/CT, the payment rate would be based on hospital resource costs as preadministration-related services
significantly higher than the proposed calculated from claims. We disagree payment through HCPCS code G0332
payment. Several commenters claimed with the commenters’ argument that we and its continued assignment to New
that that proposed payment rate for the have insufficient claims data to justify Technology APC 1502 for CY 2007, in
concurrent PET/CT procedures failed to movement of concurrent PET/CT scans order to help ensure continued patient
recognize the differences in technology from New Technology APC 1511 to access to IVIG (71 FR 68092).
between the conventional clinical APC 0308. For this final rule For CY 2008, we proposed to continue
nonmyocardial PET procedures and the with comment period, our updated to provide separate payment for IVIG
concurrent PET/CT scans. They claims data for concurrent PET/CT preadministration-related services
indicated that concurrent PET/CT scans scans showed a total of over 149,000 through the assignment of HCPCS code
used more advanced technology, services performed, with about 126,000 G0332 to a clinical APC. This service
resulting in greater capital equipment single claims available for ratesetting. has been assigned to a New Technology
costs. Many commenters recommended The median cost for PET/CT scans alone APC under the OPPS for 2-full years. As
that CMS continue to assign these PET/ was approximately $1,076. Similarly, noted previously, under the OPPS, we
CT scans to a New Technology APC for we had over 40,000 total claims for retain services within New Technology
one more year while CMS collects conventional PET scans, with APC groups where they are assigned
additional data on the cost of these approximately 35,000 single claims according to our estimates of their costs
procedures. Conversely, several available for ratesetting. The median until we gather sufficient claims data to
commenters strongly urged CMS to cost for conventional PET scans alone enable us to assign the services to
assign the concurrent PET/CT scans to was approximately $1,029, very close to clinically appropriate APCs based on
a separate clinical APC, distinct from the median cost of PET/CT scans. Based hospital resource costs as calculated
the APC for conventional PET scans, to on their common clinical characteristics from claims. According to our analysis
better reflect the incremental cost and the hospital resource similarity of the hospital outpatient claims data,
differences associated with this observed in our claims data for we noted we had adequate claims data
technology. conventional PET and concurrent PET/ from CY 2006 upon which to determine
Response: As stated above, CPT codes CT scans, we believe that our claims the median cost of performing IVIG
78814, 78815, and 78816 were new data are sufficiently robust to support preadministration related services and
codes in CY 2005 and were assigned to reassignment of PET/CT scans to the to reassign HCPCS code G0332 to an
New Technology APC 1514 with a same clinical APC as conventional PET appropriate clinical APC for CY 2008.
payment rate of $1,250. We continued scans. The final median cost of APC For the CY 2008 OPPS/ASC proposed
with this same APC assignment in CY 0308 of approximately $1,044 rule, our claims data for this high
2006. In CY 2007, we assigned these appropriately reflects the similar costs volume service showed a total of over
services to a different New Technology of both conventional PET and 49,000 services performed, with about
APC, specifically New Technology APC concurrent PET/CT scans. 48,000 single claims available for
1511, with a payment rate of $950 in After consideration of the public ratesetting. Therefore, we proposed to
order to maintain the historical payment comments received, we are finalizing reassign HCPCS code G0332 to new
differential of about $100 between the our CY 2008 proposal, without clinical APC 0430 (Drug
conventional PET and concurrent PET/ modification, to assign concurrent PET/ Preadministration—Related Services)
CT procedures. For CY 2007 ratesetting, CT scan procedures described by CPT for CY 2008, with a proposed median
we had only 9 months of claims data codes 78814, 78815, and 78816 to cost of approximately $39, where it
and public commenters were concerned clinical APC 0308, with a CY 2008 would be the only service assigned to
that these data did not yet reflect median cost of approximately $1,044, the APC at this time.
updated and appropriate hospital which includes packaged costs for As noted in the proposed rule (72 FR
charges specifically for PET/CT scans. diagnostic radiopharmaceuticals used in 42705), IVIG preadministration-related
Therefore, concurrent PET/CT scan the scans. For further discussion of our services are always provided in
procedures have been assigned to a New final CY 2008 payment policy for conjunction with other separately
Technology APC under the OPPS since diagnostic radiopharmaceuticals, refer payable services such as drug
CY 2005, a period of almost 3 years. to section II.A.4.c.(5) of this final rule administration services, and thus are
As we have stated in other sections of with comment period. well suited for packaging into the
this final rule with comment period, payment for the separately payable
such as in section III.D., comparisons b. IVIG Preadministration-Related services. While we did not make a
between the MPFS and OPPS payments Services (APC 0430) determination about the appropriateness
for services are not appropriate because In CY 2006, we created the temporary of continuing separate OPPS payment
the MPFS applies a very different HCPCS code G0332 (Services for for HCPCS code G0332 after CY 2008,
methodology for establishing the intravenous infusion of we stated in the proposed rule (72 FR
42705) that we would consider MPFS payment rate for this service. code G0332 where the line-item charge
packaging payment for HCPCS code These commenters asserted that was exactly equal to the CY 2006
G0332 in future years if we determined establishing a difference in payment for payment rate, a process we followed for
that separate payment was no longer HCPCS code G0332 across systems all OPPS services. We did not remove
warranted. We intend to reevaluate the could drive patients from one site of claims whose charges were less than
appropriateness of separate payment for service to another. They further believed $75 because hospitals are free to set
IVIG preadministration-related services that maintaining payment parity for the their own charges for individual
for the CY 2009 OPPS rulemaking cycle, service at comparable levels across these services based on their own judgment.
especially as we explore the potential sites of service would mitigate potential
for greater packaging and possible disruptions to the sites of service where Under the OPPS, the current payment
encounter-based or episode-based OPPS patients are now receiving care and methodology for IVIG treatments
payment approaches. would also allow the choice of site of consists of three components, which
We received a number of public care to be dictated by particular patient include payment for the drug itself
comments on our CY 2008 proposed circumstances. Several commenters (described by a HCPCS J code),
payment for IVIG preadministration- commended CMS for continued support administration of the IVIG product
related services. A summary of the in extending the add-on payment for (described by one or more CPT codes),
public comments and our response HCPCS code G0332; however, they and the preadministration-related
follow. recommended that the $75 separate services (HCPCS code G0332). As stated
Comment: Many commenters payment under New Technology APC previously, this service has been
questioned the accuracy and reliability 1502 be continued for another year. assigned to New Technology APC 1502
of the CY 2006 hospital outpatient Alternatively, several commenters under the OPPS for 2 full years. Under
claims data that were used to set the requested that CMS reassign HCPCS the OPPS, we retain services within
proposed payment rate for HCPCS code code G0332 to a clinical APC whose New Technology APC groups where
G0332. Some commenters indicated that payment rate is equivalent to $75 to they are assigned according to our
because HCPCS code G0332 was a new ensure that hospitals would continue to
code for CY 2006, it was clearly not well estimates of their costs until we gather
be paid appropriately for the full range
understood by many hospitals, and as a sufficient claims data to enable us to
of costs incurred in furnishing IVIG to
result, it took some time for hospitals to their patients and to help mitigate the assign the services to clinically
appropriately determine the cost and possible adverse financial impact on appropriate APCs based on hospital
the reported charge for the service. hospitals acquiring IVIG that could resource costs as calculated from claims.
Many commenters stated that the result from a lower payment for We do not agree with the commenters’
proposed payment rate of $39 was likely preadministration-related services. argument that underreporting of this
based on flawed data, and as such, the Response: Just as our payment rates service in CY 2006 is a compelling
data should not be used as a basis for are updated annually, so too are billing rationale for delaying reassignment to a
reassigning HCPCS code G0332 from codes (that is, ICD–9–CM, Level II clinical APC. Our CY 2006 claims data
New Technology APC 1502 to APC HCPCS, and CPT). Annual updates to include approximately 59,000 total
0430. These commenters believed that the HCPCS coding system (whether claims for HCPCPS code G0332, and we
the low payment rate was due to through addition of a new code, revision have no reason to believe those claims
underreporting of this service because of a code descriptor, or deletion of a do not accurately represent the costs to
their findings revealed that hospitals code), are a well–established and hospitals of providing the service in CY
reported HCPCS code G0332 on only 49 predictable process that has been in 2006. We believe that the approximately
percent of the claims for IVIG place for some time. Hospitals are well 57,000 single claims used to set the CY
administration. One commenter aware of this practice because they have 2008 median cost of IVIG
believed that, based on an analysis of its successfully implemented these changes preadministration-related services at
hospital system’s claims data for HCPCS each year.
code G0332, that claims data were The MPFS applies a distinct approximately $37 accurately reflect
distorted due to a number of factors, methodology for establishing the hospitals’ costs for the service and that
including revenue code selections by payment for the physician’s office the final CY 2008 payment rate for
hospitals, differences in the CCRs practice expenses associated with a HCPCS code G0332 is adequate to
mapped to those revenue codes, and the procedure that differs significantly from ensure access to IVIG therapy.
actual dollar charges reported by the OPPS methodology which generally After consideration of the public
hospitals for this service. Several pays based on relative payment weights comments received, we are finalizing
commenters explained that hospitals set calculated from hospitals’ costs as our CY 2008 proposal, without
widely varying charges for HCPCS code determined from claims data. The modification, to assign HCPCS code
G0332, and some of these commenters application of the different G0332 to APC 0430, with a median cost
believed that it would be appropriate to methodologies results in different of approximately $37. As we stated
exclude from the ratesetting process payment amounts in the two settings. previously, we will consider packaging
claims where the reported charge is Therefore, comparisons between OPPS payment for HCPCS code G0332 in
equal to or less than the $75 payment and MPFS payments are not
future years if we determine separate
rate. appropriate.
Many commenters believed that In determining the CY 2008 final rule payment is no longer warranted. We
reducing this add-on payment would median cost of approximately $37 for intend to reevaluate the appropriateness
have a negative impact on patient access HCPCS code G0332, we used the most of separate payment for IVIG
to care, considering the short supply recent claims data available under the preadministration-related services for
and high costs of acquiring IVIG. OPPS, specifically CY 2006 claims. the CY 2009 OPPS rulemaking cycle,
Several commenters suggested that CMS According to our standard OPPS especially as we explore the potential
should maintain the $75 add-on methodology as described in section for greater packaging and possible
payment for HCPCS code G0332 to II.A.2. of this final rule with comment encounter-based or episode-based OPPS
maintain parity with the proposed $71 period, we excluded claims for HCPCS payment approaches.
c. Other Services in New Technology ($3,000–$3,500)) to APC 0648 (Level IV 19298 to APC 0648, with a median cost
APCs Breast Surgery), with a proposed of approximately $3,560.
Other than the concurrent PET/CT median cost of approximately $3,417.
We received several public comments (2) Preoperative Services for Lung
and IVIG preadministration-related new Volume Reduction Surgery (LVRS)
technology services discussed in concerning the proposed reassignment
of CPT code 19298. A summary of the (APCs 0209 and 0213)
sections III.C.2.a. and III.C.2.b. of this
final rule with comment period, there public comments and our response As illustrated in Table 16 below, CY
are five procedures currently assigned to follow. 2008, we proposed to reassign HCPCS
New Technology APCs for CY 2007 for Comment: Several commenters agreed codes G0302 (Pre operative pulmonary
which we believed we also had data that with CMS’s proposal to reassign CPT
surgery services for preparation for
were adequate to support their code 19298 to APC 0648. They
LVRS, complete course of services, to
reassignment to clinical APCs. For CY acknowledged that this proposed
include a minimum of 16 days of
2008, we proposed to reassign these reassignment of CPT code 19298 would
services) and G0303 (Pre-operative
procedures to clinically appropriate place the three surgical codes for the
pulmonary surgery services for
APCs, applying their CY 2006 claims placement of catheters for breast
preparation for LVRS, 10 to 15 days of
data to develop their clinical APC brachytherapy in the same APC, that is,
services) to APC 0209 (Level II Extended
median costs upon which payments CPT codes 19296 (Placement of
EEG and Sleep Studies). For CY 2008,
would be based. These procedures and radiotherapy afterloading balloon
we also proposed to reassign HCPCS
their proposed APC assignments were catheter into the breast for interstitial
codes G0304 (Pre-operative pulmonary
displayed in Table 29 of the proposed radioelement application following
partial mastectomy, includes imaging surgery services for preparation for
rule. This table has been reproduced as LVRS, 1 to 9 days of services) and
Table 16 at the end of this section and guidance; on date separate from partial
mastectomy); 19297 (Placement of G0305 (Post-discharge pulmonary
updated with the final status indicators, surgery services after LVRS, minimum
APC assignments, and median costs of radiotherapy afterloading balloon
catheter into the breast for interstitial of 6 days of services) to APC 0213 (Level
these services. I Extended EEG and Sleep Studies).
radioelement application following
(1) Breast Brachytherapy Catheter partial mastectomy, includes imaging We did not receive any public
Implantation (APC 0648) guidance; concurrent with partial comments on these two proposals and,
For CY 2008, we proposed to reassign mastectomy (List separately in addition therefore, we are finalizing our CY 2008
CPT code 19298 (Placement of to code for primary procedure)); and proposals for HCPCS codes G0302,
radiotherapy afterloading brachytherapy 19298. G0303, G0304, and G0305 without
catheters (multiple tube and button Response: We thank the commenters modification. Specifically, HCPCS codes
type) into the breast for interstitial for their input and support. Because of G0302 and G0303 are assigned to APC
radioelement application following (at its clinical and resource characteristics 0209, with a CY 2008 median cost of
the time of or subsequent to) partial similar to those other procedures also approximately $710. HCPCS codes
mastectomy, includes imaging assigned to APC 0648, we are finalizing G0304 and G0305 are assigned to APC
guidance) from New Technology APC our CY 2008 proposal, without 0213, with a CY 2008 median cost of
1524 (New Technology—Level XXIV modification, to reassign CPT code approximately $145.
TABLE 16.—FINAL CY 2008 APC REASSIGNMENTS OF OTHER NEW TECHNOLOGY PROCEDURES TO CLINICAL APCS
CY CY 2007 Final CY
HCPCS CY 2007 Final CY Final CY
Short descriptor 2007 APC pay- 2008 APC
code APC 2008 SI 2008 APC
SI ment rate median cost
19298 ....... Place breast rad tube/caths ..................................... S ....... 1524 $3,250 T ........... 0648 $3,560
G0302 ...... Pre-op service LVRS complete ................................ S ....... 1509 750 S ........... 0209 710
G0303 ...... Pre-op service LVRS 10–15 dos .............................. S ....... 1507 550 S ........... 0209 710
G0304 ...... Pre-op service LVRS 1–9 dos .................................. S ....... 1504 250 S ........... 0213 145
G0305 ...... Post op service LVRS min 6 .................................... S ....... 1504 250 S ........... 0213 145
D. APC–Specific Policies Currently, there are eight Category III did not receive any public comments on
CPT codes that describe CCT and CCTA the interim APC assignments.
1. Cardiac Procedures
procedures. The CPT codes, which were In the CY 2007 OPPS/ASC proposed
a. Cardiac Computed Tomography and shown in Table 31 of the proposed rule, rule, we proposed to retain the existing
Computed Tomographic are 0144T through 0151T. These codes APC assignments for the CCT and CCTA
Angiography(APCs 0282 and 0383) were new for CY 2006. In the CY 2006 procedure codes. We received several
OPPS final rule with comment period, public comments on the proposed APCs
Cardiac computed tomography (CCT) we assigned the CCT and CCTA assignments, which we addressed in the
and cardiac computed tomography procedure codes to interim APCs, which CY 2007 OPPS/ASC final rule with
angiography (CCTA) are noninvasive were subject to public comment. In CY comment period (71 FR 68038 and
diagnostic procedures that assist 2006, the CCT and CCTA procedure 68039). Several of the commenters
physicians in obtaining detailed images codes were assigned to four APCs, requested that we either not assign the
of coronary blood vessels. The data specifically, APC 0282 (Miscellaneous CCT and CCTA procedures to any APCs
obtained from these procedures can be Computerized Axial Tomography), APC or assign them to appropriate New
used for further diagnostic evaluations 0376 (Level II Cardiac Imaging), APC Technology APCs. In addition, some
and/or appropriate therapy for coronary 0377 (Level III Cardiac Imaging), and commenters were also concerned that
patients. APC 0398 (Level I Cardiac Imaging). We CCT and CCTA procedures were not
clinically homogeneous with other At its March 2007 meeting, the APC 0377, and 0398, where some of the CCT
procedures assigned to APCs 0282, Panel recommended that CMS work and CCTA were assigned for CY 2007
0376, 0377, and 0398, noting that the with stakeholders to determine more along with nuclear medicine cardiac
last three APCs previously contained appropriate APC placements for CCT imaging procedures. Because we
only nuclear medicine cardiac imaging and CCTA procedures. The APC Panel proposed to package payment for
procedures. made no specific recommendations diagnostic radiopharmaceuticals into
In the CY 2007 OPPS/ASC final rule regarding the appropriate APC payment for diagnostic nuclear
with comment period (71 FR 68038), we assignments for these services, although medicine procedures in CY 2008 as
indicated our belief that the clinical several different clinical APC discussed in detail in section II.A.4.c.(5)
characteristics and expected resource configurations were discussed, along of this final rule with comment period,
use associated with the CCT and CCTA with the alternative of assigning these we believed that to ensure the clinical
procedures were sufficiently similar to procedures to New Technology APCs. and resource homogeneity of APCs
the other procedures assigned to APCs We note that we generally meet with 0376, 0377, and 0398 in CY 2008, it
0282, 0376, 0377, and 0398 that we interested organizations concerning would be most appropriate to reassign
believed those APC assignments were their views about OPPS payment policy the CCT and CCTA services currently
appropriate. While several of those issues with respect to specific residing in those APCs to other clinical
APCs also contained nuclear medicine technologies or services. Following the APCs for CY 2008.
imaging procedures, we had never publication of the CY 2007 OPPS/ASC Therefore, for CY 2008, we proposed
final rule with comment period, we to assign the CCT and CCTA procedures
designated those APCs as specific to
received such information from to two clinical APCs, specifically new
nuclear medicine procedures. Therefore,
interested individuals and organizations clinical APC 0383 (Cardiac Computed
for CY 2007, we continued with the CY
regarding the clinical and facility Tomographic Imaging) and APC 0282,
2006 APC assignments for CPT codes
resource characteristics of CCT and as shown in Table 17 below. The
0144T through 0151T. We did not agree
CCTA procedures. In the CY 2008 proposed median cost of approximately
with the commenters that use of CT and
OPPS/ASC proposed rule (72 FR 42711), $314 for APC 0383 was based entirely
CTA for cardiac studies was a new
we reiterated that we would consider on claims data for CPT codes 0145T,
technology for which we had no
the input of any individual or 0146T, 0147T, 0148T, 0149T, and 0150T
relevant OPPS cost information that
organization to the extent allowed by that described CCT and CCTA services,
could be used to estimate hospital Federal law, including the a clinically homogeneous grouping of
resources for these procedures. We also Administrative Procedure Act (APA) services. In addition, the individual
believed these services could be and the FACA. We explained that we median costs of these services ranged
potentially covered hospital outpatient establish the OPPS payment rates for from a low of approximately $277 to a
services, so that it would not be services through regulations, during our high of $437, reflecting their hospital
appropriate for us to depart from our annual rulemaking cycle. We are resource similarity as well. We
standard OPPS policy and not assign required to consider the timely proposed to reassign the two other CCT
them to APCs. As we indicated in our comments of interested organizations, CPT codes, specifically CPT codes
CY 2007 OPPS/ASC proposed rule (71 establish the payment policies for the 0144T and 0151T, to APC 0282. The
FR 49549), some Category III CPT codes forthcoming year, and respond to the inclusion of these two codes in APC
describe services that we have timely comments of all public 0282 resulted in a CY 2008 proposed
determined to be similar in clinical commenters in the final rule in which APC median cost of about $105.
characteristics and resource use to we establish the payments for the We received a number of public
HCPCS codes assigned to existing forthcoming year. comments concerning our CY 2008
clinical APCs. In these instances, we During the development of the CY proposals for CCT and CCTA
may assign the Category III CPT code to 2008 proposed rule, we noted that procedures. A summary of the public
the appropriate clinical APC. Other analysis of our hospital data for claims comments and our responses follow.
Category III CPT codes describe services submitted for CY 2006 indicated that Comment: While several commenters
that we have determined are not CCT and CCTA procedures were expressed appreciation for the proposed
compatible with an existing clinical performed relatively frequently on reassignment of CCT and CCTA
APC, yet are appropriately provided in Medicare patients. Our claims data procedures into their own clinically
the hospital outpatient setting. In these showed a total of over 16,000 homogenous APC groups, many
cases, we may assign the Category III procedures performed, with about commenters disagreed with the proposal
CPT code to what we estimate is an 11,000 single claims available for to reassign these services from APCs
appropriately priced New Technology ratesetting. Based on our analysis of the 0282, 0376, 0377, and 0398 to APCs
APC. In other cases, we may assign a robust hospital outpatient claims data at 0282 and 0383 for CY 2008. These
Category III CPT code to one of several that time, we believed we had adequate commenters were especially concerned
nonseparately payable status indicators, claims data from CY 2006 upon which with the proposed payment rates for
including ‘‘N,’’ ‘‘C,’’ ‘‘B,’’ or ‘‘E,’’ which to determine the median costs of these procedures and asserted that the
we believe is appropriate for the specific performing these procedures and to proposed median costs of $105 for APC
code. As we noted in the CY 2007 assign them to appropriate clinical 0282 and $314 for APC 0383 were
OPPS/ASC final rule with comment APCs. We saw no rationale for inadequate because they were based on
period, we believed that CCT and CCTA reassigning these procedures to New limited data, thereby undervaluing these
procedures were appropriate for Technology APCs in CY 2008, when we new technology services. The
separate payment under the OPPS had claims-based cost information commenters further believed that the CY
should local contractors provide regarding these procedures, and they 2008 proposed payment rates of $107
coverage for these procedures and, were clinically similar to other for APC 0282 and $318 for APC 0383
therefore, they warranted status procedures paid under the OPPS. were unreasonably low based on only
indicator and APC assignments that We acknowledged the concerns that 16,000 total procedures, with about
would provide separate payment under had been expressed to us regarding the 11,000 single claims used for ratesetting.
the OPPS (71 FR 68038). clinical homogeneity of APCs 0376, Some commenters pointed out that the
first year in which the new procedures argument that our claims data are Further, in the case of CPT codes
were specifically reported by hospitals inadequate to support the reassignment 0144T and 0151T, the commenters
was CY 2006. They argued that because of CCT and CCTA procedures to clinical mistakenly believed that the CY 2008
it takes time for hospitals to completely APCs for CY 2008 based on hospital OPPS median costs for these procedures
capture and report the full costs costs derived from claims. We used the were $86 and $144, respectively. The
associated with new procedures in their approximately 12,000 single bills CY 2008 proposed rule median cost for
charges, hospitals could not have available for this final rule with CPT code 0144T was approximately $68
reported these services accurately in CY comment period in determining the and approximately $43 for CPT code
2006. One commenter believed that median costs for the CCT and CCTA 0151T, and their final rule median costs
because most hospitals do not procedures because the single bills are approximately $68 and $54,
specifically allocate capital costs to the provide us with the most accurate costs respectively. The $86 and $144 figures
cost centers involved, the CCRs used to that are the foundation of our standard reported by some commenters were
convert charges to costs for CCT and OPPS ratesetting methodology. As we based on the procedures’ mean costs,
CCTA procedures were likely discuss in section II.A.1.b. of this final not the median costs which are used for
understated. rule with comment period, we are ratesetting under the OPPS. We believe
Many commenters expressed concern unable to appropriately allocate that CPT codes 0144T and 0151T are
that there had not been sufficient time packaged costs on multiple procedure appropriately assigned to APC 0282 as
to develop accurate and reliable claims claims so we generally are not able to their median costs fall within the range
data for these new procedures and that use them in setting payment rates. As of costs of other procedures also
additional measures were necessary to we also discuss in that section, we are assigned to the APC, which has a final
ensure appropriate payments. Some continuing to work on additional median cost of approximately $100.
commenters recommended that CMS methodologies that would allow us to Comment: Some commenters were
delay the implementation of the CY use claims data from more OPPS claims. uncertain as to whether the costs of the
2008 median costs until a full year of While we recognize that reliance on contrast agents used in conjunction with
claims data were available from both single procedure claims may result in
CCT and CCTA procedures were
multiple and single claims and the use of fewer claims for some
included in the proposed payment rate
suggested that CMS continue with the services than for others, in the case of
calculations for APCs 0282 and 0383.
CY 2007 APC assignments for CCT and CCT and CCTA procedures, in
They requested that CMS address this
CCTA procedures. They argued that particular, we were able to use about
issue in this final rule with comment
inadequate payment rates would two-thirds of all approximately 18,000
period. The commenters requested that
unintentionally encourage the use of claims for ratesetting. These services
CMS increase the payment rates for
more expensive and invasive diagnostic were reported by many hospitals in CY
APCs 0282 and 0383 if the costs of the
procedures for Medicare beneficiaries. 2006, and we have no reason to believe
contrast agents were not included in the
Some commenters further requested that that costs based upon this large
percentage of all claims do not proposed payment rates.
CMS consult with stakeholders and
utilize external data to determine the accurately reflect the resource costs of Response: The proposed payment
degree to which OPPS claims data these services to hospitals. Our standard rates for APCs 0282 and 0383 included
accurately reflected the relative resource OPPS methodology determines the the costs of the contrast agents, because,
costs of these procedures and to make relative costs of services from claims, as discussed further in section
appropriate adjustments to the payment with a specific focus on relative costs II.A.4.c.(6) of this final rule with
rates, especially for APC 0383. Other and not absolute costs, and we do not comment period, we proposed to
commenters requested that CMS believe there is any need for us to utilize package payment for all contrast agents
reassign the CCT and CCTA procedures external data to determine the costs of for CY 2008. Our final CY 2008 policy
to appropriate New Technology APCs these services. Additionally, we do not packages payment for all contrast agents
for CY 2008. agree with the commenters’ suggestion and, therefore, the final payment rates
Some commenters requested that to place the CCT and CCTA procedures for CCT and CCTA procedures include
CMS reconsider the reassignment of in New Technology APCs. We believe these costs.
CPT codes 0144T and 0151T whose that, based on the clinical After consideration of the public
median costs varied significantly, from characteristics and resource use comments received, we are finalizing
$86 and $144, respectively, because calculated from CY 2006 claims for CCT our CY 2008 proposal, without
these services did not appear to be and CCTA procedures, our proposal modification, to assign CCT and CCTA
clinically appropriate when compared would assign them to appropriate procedures to APCs 0282 and 0383,
to the other procedures assigned to APC clinical APCs for CY 2008. In fact, with CY 2008 median costs of
0282. several commenters acknowledged that approximately $100 and approximately
Response: While we acknowledge that the proposed APC assignments of these $296, respectively. The final CY 2008
the CPT codes for CCT and CCTA procedures were appropriate based on APC assignments and APC median costs
procedures were new for January 2006, explicit consideration of clinical for the specific CCT and CCTA
we disagree with the commenters’ homogeneity. procedures are displayed in Table 17.
TABLE 17.—FINAL CY 2008 APC ASSIGNMENTS OF CCT AND CCTA PROCEDURES

CY 2007 Final CY
HCPCS CY 2007 CY 2007 Final CY Final CY
Short descriptor APC me- 2008 APC
code SI APC 2008 SI 2008 APC
dian cost median cost
0144T ....... CT heart wo dye; qual calc ................................... S ........... 0398 $252 S .............. 0282 $100
0145T ....... CT heart w/wo dye funct ....................................... S ........... 0376 305 S .............. 0383 296
0146T ....... CCTA w/wo dye .................................................... S ........... 0376 305 S .............. 0383 296
0147T ....... CCTA w/wo, quan calcium .................................... S ........... 0376 305 S .............. 0383 296
0148T ....... CCTA w/wo, strxr .................................................. S ........... 0377 397 S .............. 0383 296
TABLE 17.—FINAL CY 2008 APC ASSIGNMENTS OF CCT AND CCTA PROCEDURES—Continued

CY 2007 Final CY
HCPCS CY 2007 CY 2007 Final CY Final CY
Short descriptor APC me- 2008 APC
code SI APC 2008 SI 2008 APC
dian cost median cost
0149T ....... CCTA w/wo, strxr quan calc ................................. S ........... 0377 397 S .............. 0383 296
0150T ....... CCTA w/wo, disease strxr ..................................... S ........... 0398 252 S .............. 0383 296
0151T ....... CT heart funct add-on ........................................... S ........... 0282 94 S .............. 0282 100
b. Coronary and Non-Coronary specialty balloons could reduce also believe that a policy to provide
Angioplasty (PTCA/PTA) (APCs 0082, beneficiary access to this technology. different payments for PTCA/PTA
0083, and 0103) The commenter urged CMS to procedures involving specialty balloons
reconsider its proposal to reassign all would not be consistent with our overall
For CY 2008, we proposed to delete PTCA/PTA procedures to APC 0083. strategy to encourage hospitals to use
APC 0081 (Noncoronary Angioplasty or Specifically, the commenter requested resources more efficiently by increasing
Atherectomy) as a result of the effects of that CMS establish a HCPCS Level II G- the size of the payment bundles. If the
the proposed CY 2008 packaging code to differentiate coronary and use of a very expensive device in a
approach on median costs (see section noncoronary PTCA/PTA procedures clinical scenario, such as a specialty
II.A.4.c. of this final rule with comment using specialty balloons from those balloon, caused a specific procedure to
period for more discussion of our PTCA/PTA procedures using standard, be much more expensive for the
packaging approach). We proposed to nonspecialty balloons, defining hospital than the APC payment, we
reassign the procedures that mapped to specialty balloons as those which have consider such a case to be the natural
this APC in CY 2007 to APCs that would a median reported cost of more than consequence of a prospective payment
be homogeneous with respect to clinical $800 based on CY 2006 hospital claims system that anticipates that some cases
characteristics and resource use in CY containing the Level II HCPCS C-code will be more costly and others less
2008, specifically APCs 0082 (Coronary for PTCA/PTA balloons, C1725 costly than the procedure payment. We
or Non-Coronary Atherectomy), 0083 (Catheter, transluminal angioplasty, will continue to monitor the costs of
(Coronary or Non-Coronary Angioplasty non-laser). The commenter stated that PTCA/PTA procedures over time based
and Percutaneous Valvuloplasty), and nonspecialty balloons cost on the evolution of clinical practice and
0103 (Miscellaneous Vascular approximately $200 to $400. According will consider proposing future
Procedures). The CY 2008 proposed to the commenter’s suggestion, the new modifications to the configuration of
payment rates for these APCs were G-code would map to a new APC for APC 0083 as necessary.
approximately $5,654, $2,934, and $972, coronary and noncoronary angioplasty After consideration of the public
respectively. The CY 2007 payment rate procedures using specialty balloons, the comment received, we are finalizing our
for APC 0081 was approximately payment for which would be based CY 2008 proposal, without
$2,639. upon the median cost of procedures modification, to reassign angioplasty
We received one public comment on performed using specialty balloons, as procedures assigned to APC 0081 in CY
our CY 2008 proposal to delete APC indicated on CY 2006 claims by the 2007 to APC 0083 in CY 2008. The
0081 and reassign the procedures that reporting of C1725 where the reported median cost of APC 0083 is
mapped to this APC to APCs 0082 and catheter cost is more than $800. approximately $2,855.
0083. A summary of the public Response: We believe that the
comment and our response follow. proposed reassignment of the c. Implantation of Cardioverter-
Comment: One commenter stated that procedures assigned to APC 0081 in CY Defibrillators (APCs 0107 and 0108)
the proposed reassignment of some of 2007 to APC 0083 in CY 2008 is In CY 2003, we created four Level II
the angioplasty procedures assigned to appropriate, both in terms of the clinical HCPCS codes for implantation of single
APC 0081 in CY 2007 to APC 0083 in similarities and resource costs of the and dual chamber cardioverter-
CY 2008 fails to recognize the procedures involved. The HCPCS- defibrillators (ICDs) with and without
differences in median costs associated specific median costs of significant leads because, for the CY 2004 OPPS,
with the use of specialty balloons in procedures assigned to APC 0083 range we deleted the device HCPCS codes and
certain coronary and non-coronary from approximately $2,621 to $4,339. there was no other way of determining
angioplasty (PTCA/PTA) procedures. Even considering the information whether the device being implanted was
According to the commenter, specialty provided by the commenter about the a single chamber or dual chamber
balloons are defined as balloons that can expected differential cost between device. We were concerned that the
be used for purposes other than specialty and non-specialty balloons of costs of inserting single versus dual
inflation and deflation (eg, cutting $400 to $600, we would not expect chamber ICDs could be sufficiently
balloons and cold therapy balloons). Medicare beneficiaries to have problems different due to the two types of devices
The commenter estimated from an with access to procedures with specialty implanted such that separate APC
analysis of the CY 2006 Medicare claims balloons, when the APC 0083 CY 2008 assignments for the insertion procedures
data that the median costs for PTCA/ median cost is approximately $2,855. could be appropriate in the future. The
PTA procedures involving specialty Packaging payment for the variety of HCPCS codes are G0297 (Insertion of
balloons are approximately 55 percent implantable devices that are used in single chamber pacing cardioverter
higher than the median costs of all specific procedures is a well-established defibrillator pulse generator); G0298
PTCA/PTA procedures in APC 0083, principle of the OPPS, and we expect (Insertion of dual chamber pacing
and represent approximately 4 percent that hospitals will carefully consider the cardioverter defibrillator pulse
of the cases. The commenter expressed clinical benefits and costs of all generator); G0299 (Insertion or
concern that inadequate payment for technologies when performing repositioning of electrode lead for single
PTCA/PTA procedures involving procedures on patients. Therefore, we chamber pacing cardioverter
defibrillator and insertion of pulse the median costs for all single claims commenter, this would minimize the
generator); and G0300 (Insertion or without regard to adjustment or to administrative burden for providers,
repositioning of electrode lead for dual whether the claims met various allow coding to remain consistent across
chamber pacing cardioverter selection criteria; these were not the payers, and enable more appropriate
defibrillator and insertion of pulse median costs on which proposed payment for procedures with varying
generator). The pairs of codes were payments were based.) device costs.
assigned to two different clinical APCs, Hospitals have consistently indicated Response: Composite APCs provide a
depending on whether or not they that they would prefer to report services single payment for two or more major
included the possibility of electrode furnished using the CPT codes that procedures that are commonly
insertion, specifically APC 0107 describe them, rather than the Level II performed together, in order to promote
(Insertion of Cardioverter-Defibrillator) HCPCS G-codes, because many private efficiency by increasing the size of the
and APC 0108 (Insertion/Replacement/ payers require that they bill the CPT payment bundle. We do not agree that
Repair of Cardioverter-Defibrillator codes. We also prefer to recognize CPT the payment methodology outlined by
Leads). codes for procedures under the OPPS, one commenter, to base payment for
In the same year, the OPPS ceased to when possible, to minimize the ICDs on the combination of the ICD
recognize for payment the two CPT administrative coding burden on implantation CPT code and the existing
codes for insertion of ICDs with or hospitals. device code, is consistent with the
without ICD leads. These CPT codes are In the CY 2008 OPPS/ASC proposed concept of composite APCs as described
33240 (Insertion of single or dual rule (72 FR 42715), we stated our belief in the proposed rule and as finalized in
chamber pacing cardioverter- that the differences between the median section II.A.4.d. of this final rule with
defibrillator pulse generator) and 33249 costs for the two Level II HCPCS codes comment period. The scenario
(Insertion or repositioning of electrode assigned to each APC (that is, G0297 described by the commenter largely
lead(s) for single or dual chamber and G0298 for APC 0107 and G0299 and
describes the current packaging of
pacing cardioverter-defibrillator and G0300 for APC 0108) do not currently
device payment into the payment for the
insertion of pulse generator). support differential APC assignments
procedure, except that we generally base
We reinstated the device category for single and dual chamber ICD
payment on all of the devices associated
HCPCS codes on January 1, 2005. insertion procedures. The required
with a procedure as a mechanism to
Moreover, since January 1, 2005, device coding would allow us to
promote the efficient utilization of
hospitals have been required to report continue to follow the different costs
resources. The recommended approach
devices they use or implant when there over time by examining subsets of ICD
could actually reduce packaging under
is a device code that describes the implantation procedure claims based on
the OPPS by creating small and more
device. We began to edit to ensure that the type of device reported on the
hospitals are correctly billing devices claims. Moreover, we are sensitive to specific payment bundles, rather than
required for certain procedures in April the benefits of minimizing the reporting increasing the size of the payment
2005 and implemented the second burden on hospitals. Therefore, for CY bundles to provide hospitals with the
phase of device edits on October 1, 2008, we proposed to delete the Level flexibility to manage their resources as
2005. Therefore, we no longer need II HCPCS codes for ICD insertion they control costs. To establish a
different procedural Level II HCPCS procedures and require hospitals to bill separate APC for each combination of a
codes to identify whether hospitals the appropriate CPT codes, along with procedure and a particular device used,
inserted a single or dual chamber ICD the applicable device C-codes, for as described by the commenter, would
device. payment under the OPPS. create incentives for the use of the most
At its March 2007 meeting, the APC We received a number of public expensive device rather than creating
Panel recommended that CMS delete comments on our CY 2008 proposal for incentives for efficiency and therefore is
the Level II HCPCS codes for reporting ICD implantation procedures contrary to the principles of a
implantation of cardioverter- under the OPPS. A summary of the prospective payment system. As
defibrillator pulse generators with or public comments and our responses described above, we believe that the
without repositioning or implantation of follow. payment for the procedures and
electrode lead(s) for CY 2008 and Comment: Several commenters associated devices included in APCs
authorize hospitals to report the CPT supported implementing the policy as 0107 and 0108 is appropriate, as the
codes. The APC Panel indicated that the proposed. One commenter favored the differences between the median costs
requirement for reporting device codes elimination of the Level II HCPCS codes for the two Level II HCPCS codes
would enable CMS to continue to for ICD implantation, citing the currently assigned to each APC do not
identify costs when different types of administrative burden these pose for currently support differential APC
devices are implanted if that were to be hospitals, but remained concerned assignments for single and dual
necessary. about the potential negative impact to chamber ICD insertion procedures.
We analyzed the median cost data hospitals when the more expensive dual After consideration of the public
associated with APCs 0107 and 0108 as chamber device is used for Medicare comments received, we are adopting the
part of our preparation for the APC beneficiaries. The commenter suggested March 2007 APC Panel recommendation
Panel discussion. While there was a that CMS should consider creation of and finalizing our CY 2008 proposal,
difference in the median cost when a composite APCs for device-dependent without modification, to delete the
single chamber versus a dual chamber procedures, such as ICD implantation, Level II HCPCS codes (G0297, G0298,
device is implanted, the difference has where the device costs can vary G0299, and G0300) for ICD insertion
never been great enough to justify significantly based on the type of device procedures and require hospitals to bill
differential APC assignments for the used. The commenter suggested that the appropriate CPT codes for ICD
procedures. Table 34 included in the CY payment for these composite APCs insertion, specifically CPT code 33240
2008 OPPS/ASC proposed rule would be based on the combination of or CPT code 33249, as appropriate,
presented a historical summary of all the device implantation CPT code and along with the applicable device C-
single claim median costs. (For the existing Level II HCPCS code for the codes, for payment under the OPPS in
purposes of this analysis, we displayed particular device. According to the CY 2008.
d. Removal of Patient-Activated Cardiac rather than its proposed assignment to final CY 2008 bypass list, as described
Event Recorder (APC 0109) APC 0109, with an APC median cost of in section II.A.1.b. of this final rule with
In the CY 2008 OPPS/ASC proposed approximately $356. comment period. By adding CPT code
After consideration of the public 93017 to the CY 2008 bypass list, we did
rule, we proposed to continue our CY
comment received, we are not finalizing not attribute any packaged services that
2007 assignment of CPT code 33284
our CY 2008 proposal to assign CPT may be on the claim to this procedure,
(Removal of an implantable, patient-
code 33284 to APC 0109. Instead, we are and we were therefore able to create
activated cardiac event recorder) to APC
reassigning CPT code 33284 to APC single and ‘‘pseudo’’ single claims from
0109 (Removal/Repair of Implanted
0020 for CY 2008, with a median cost claims that would have otherwise been
Devices), with a proposed CY 2008
of approximately $546. considered multiple procedure claims.
payment rate of approximately $389.
e. Stress Echocardiography (APC 0697) The availability of additional claims for
The CY 2007 payment rate for this
ratesetting and our final policy for
service is approximately $676. In the CY 2008 OPPS/ASC proposed
We received one public comment on paying for contrast and nonconstrast
rule, we proposed to assign CPT code echocardiography through different
the CY 2008 proposed reconfiguration of 93350 (Echocardiography, transthoracic,
APC 0109. A summary of the public APCs also contribute to the differences
real-time with image documentation between the final rule median costs and
comment and our response follow. (2D), with or without M-mode
Comment: One commenter requested the proposed rule median costs for
recording, during rest and echocardiography CPT codes.
that CMS reexamine its proposed cardiovascular stress test using For CY 2008, we are establishing a
assignment of CPT code 33284 to APC treadmill, bicycle exercise and/or new APC for echocardiograms with
0109 in light of the proposed pharmacologically induced stress, with contrast as described in section
reassignment of CPT codes 36575 interpretation and report) to APC 0697 II.A.4.c.(6) of this final rule with
(Repair of tunneled or non-tunneled (Level I Echocardiogram, Except comment period, specifically APC 0128
central venous access catheter, without Transesophageal), with a proposed (Echocardiogram with Contrast). The
subcutaneous port or pump, central or payment rate of approximately $306. median cost of CPT code 93350 for
peripheral insertion site) and 36589 Currently, this service is assigned to contrast studies is approximately $527,
(Removal of tunneled central venous APC 0269 (Level II Echocardiogram while the median cost of CPT code
catheter, without subcutaneous port or Except Transesophageal), with a 93307 for contrast studies is
pump) from APC 0621 (Level I Vascular payment rate of approximately $198 for approximately $545. When these studies
Access Procedures) to APC 0109 for CY CY 2007. The proposed packaging are performed with contrast in CY 2008,
2008. The commenter asserted that the approach for CY 2008, as described they will be reported with HCPCS codes
proposed inclusion of CPT codes 36575 further in section II.A.4.c. of this final C8928 (Transthoracic echocardiography
and 36589 in APC 0109 significantly rule with comment period, proposed to with contrast, real-time with image
altered the proposed median cost of package significant additional costs for documentation (2D), with or without M-
APC 0109, to the extent that it was no ancillary and supportive services into mode recording, during rest and
longer representative of the resource the CY 2008 payment for CPT code cardiovascular stress test using
requirements of CPT code 33284. The 93350. treadmill, bicycle exercise and/or
commenter requested that CMS create a We received a few public comments pharmacologically induced stress, with
separate APC for CPT code 33284 if concerning our CY 2008 proposed interpretation and report); and C8923
CMS finalizes its proposal to reassign reassignment of CPT code 93350 to APC (Transthoracic echocardiography with
CPT codes 36575 and 36589 to APC 0697. A summary of the public contrast, real-time with image
0109. comments and our response follow. documentation (2D) with or without M-
Response: We agree with the Comment: A few commenters mode recording; complete),
commenter that the change in requested that we continue to assign respectively. Both of these C-codes are
composition of APC 0109 may no longer CPT code 93350 to APC 0269, instead of assigned to new APC 0128 based on
most accurately reflect the resource reassigning this procedure to APC 0697 their clinical and resource
characteristics of CPT code 33284. CPT as proposed. The commenters stated comparability, with a CY 2008 median
codes 36575 and 36589 have median that the Level II APC is a more cost of approximately $534.
costs of approximately $319 and $357, appropriate placement, as the procedure For this final rule with comment
respectively, while CPT code 33284 has is comparable in clinical and resource period, we have over 88,000 single bills
a median cost of approximately $682. characteristics to CPT code 93307 for noncontrast studies reported with
While we appreciate the commenter’s (Echocardiography, transthoracic, real- CPT code 93350 that have an updated
suggestion for a new APC for CPT code time with image documentation (2D) median cost of approximately $374.
33284, we believe that an existing with or without M-mode recoding; This median cost is quite close to the
clinical APC may sufficiently account complete) that CMS proposed to retain final rule median cost of CPT code
for the clinical and resource in APC 0269. 93307 for noncontrast studies of
characteristics of the procedure Response: We have a significantly approximately $404. We agree with the
described by CPT code 33284. The greater number of single and ‘‘pseudo’’ commenters that CPT code 93350 for
clinical characteristics of CPT code single claims available for CPT code noncontrast studies is more
33284 are similar to those procedures in 93350 for this final rule with comment appropriately placed in the Level II
APC 0020 (Level II Excision/Biopsy). period than we had for the proposed noncontrast APC that has a median cost
CPT code 33284 and the other rule because, in response to the request of approximately $401, and where CPT
procedures assigned to APC 0020 of commenters, we added CPT code code 93307 is also assigned. The two
generally require surgical incisions, 93017 (Cardiovascular stress test using procedures are clinically similar, both
local anesthesia, and suturing. In maximal or submaximal treadmill or representing comprehensive
addition, we believe that APC 0020, bicycle exercise, continuous transthoracic echocardiography
with an APC median cost of electrocardiographic monitoring, and/or services.
approximately $546, more closely aligns pharmacological stress; tracing only, Therefore, after consideration of the
with the resources of CPT code 33284, without interpretation or report) to the public comments received, we are not
finalizing our proposal to assign assigned to the same APC. The 2008 OPPS. However, even absent our
noncontrast studies reported with CPT commenter indicated that treatment of proposal to increase packaging for the
code 93350 to APC 0697, which has the peripheral vascular disease is more CY 2008 OPPS, the median cost of
new APC title of ‘‘Level I diffuse, requires a different approach, virtually all codes for procedural
Echocardiogram Without Contrast and utilizes different resources than services contains some costs for
Except Esophageal’’. Instead, we are treatment of coronary disease. The packaged services. Moreover, the
retaining the assignment of CPT code commenter noted that it could not movement of codes from one APC to
93350 for noncontrast studies to APC determine if the proposed payment rate another occurs for a variety of reasons,
0269, which has the new APC title of for APC 0082 is appropriate, due to the including changes in packaging from
‘‘Level II Echocardiogram Without proposed packaging of imaging one year to another. In addition, as
Contrast Except Transesophageal,’’ supervision and interpretation codes for discussed further in section II.A.2. of
because we believe this procedure is the noncoronary atherectomy this final rule with comment period, we
clinically similar to other procedures in procedures, and questioned whether the proposed to reconfigure certain clinical
the Level II APC and the median costs claims data could accurately reflect the APCs for CY 2008 as a way to promote
indicate that the noncontrast studies in costs associated with these different stability and appropriate payment for
this APC require similar hospital procedures. the services assigned to them, including
resources as well. Contrast studies Response: We believe that there is low total volume APCs, with a
reported with the corresponding C-code sufficient clinical homogeneity among particular focus on APCs with total
to CPT code 93350, specifically C8928, all the services that we proposed to frequencies of less than 1,000. APC
are assigned to APC 0128, with a CY assign to APC 0082 for the CY 2008 0082, as configured for CY 2007,
2008 median cost of approximately OPPS and that the resources that those includes only 232 services. Therefore,
$534. services require are sufficiently similar the reconfiguration of APC 0082 for CY
to justify assigning coronary and 2008, as a result of increased costs that
f. Coronary or Non-Coronary noncoronary atherectomy procedures to
Atherectomy (APC 0082) occur with more packaging and our
the same clinical APC. The CY 2006 effort to minimize the number of low
Currently, APC 0082 is titled claims data show that CPT codes 92995 volume APCs, among other reasons, is a
‘‘Coronary Atherectomy’’ and contains and 92996 are very uncommon services normal occurrence in the course of
only two CPT codes: 92995 in the HOPD, as they have a total updating the OPPS from one year to
(Percutaneous transluminal coronary combined frequency of 159 services for another.
atherectomy, by mechanical or other CY 2006. Moreover, the median costs for After consideration of the public
method, with or without balloon these codes (approximately $5,696 for comment received, we are finalizing our
angioplasty; single vessel) and 92996 CPT code 92995 and $3,924 for CPT CY 2008 proposal, without
(Percutaneous transluminal coronary code 92996) are very comparable to the modification, to reconfigure APC 0082
atherectomy, by mechanical or other median costs for the two highest volume as proposed, with a median cost of
method, with or without balloon noncoronary atherectomy codes in APC approximately $5,506.
angioplasty; each additional vessel (List 0082: CPT code 35493 (Transluminal
separately in addition to code for peripheral atherectomy, percutaneous; 2. Gastrointestinal Procedures
primary procedure)). We proposed to femoral-popliteal), which has a total a. Computed Tomographic
reconfigure APC 0082 for the CY 2008 frequency of 8,473 and a median cost of Colonography (APC 0332)
OPPS by adding 11 CPT codes, most of approximately $5,956; and CPT code
which were for percutaneous 37204 (Transcatheter occlusion or For CY 2008, we proposed to reassign
atherectomy procedures, and to change embolization (e.g., for tumor diagnostic computed tomographic
its title to ‘‘Coronary or Non-Coronary destruction, to achieve hemostasis, to colonography, specifically described by
Atherectomy’’, as shown in Addendum occlude a vascular malformation), CPT code 0067T (Computed
A to the proposed rule (72 FR 42838), percutaneous, any method, non-central tomographic (CT) colonography (i.e.,
to better reflect the composition of nervous system, non-head or neck), virtual colonoscopy); diagnostic), from
procedures that we proposed to assign which has a total frequency of 5,789 and APC 0333 (Computed Tomography
to this APC. The CY 2008 proposed a median cost of approximately $4,867. without Contrast followed by Contrast)
payment rate for APC 0082 was The CY 2008 OPPS median cost for APC to APC 0332 (Computed Tomography
approximately $5,654, while its CY 0082 (with correct devices, no token without Contrast), with a proposed
2007 payment rate is approximately claims, and no claims with the ‘‘FB’’ payment rate of approximately $201.
$4,438. modifier) is approximately $5,506 and We received several public comments
We received one public comment on the total frequency of services in the concerning this proposal. A summary of
the CY 2008 proposed reconfiguration of APC is 18,357. the public comments and our response
APC 0082. A summary of the public There are no HCPCS codes in APC follow.
comment and our response follow. 0082, as proposed, that would cause the Comment: Several commenters
Comment: A commenter objected to APC to violate the 2 times rule. We requested that CMS continue the CY
the proposed composition of APC 0082 believe that it is appropriate to reassign 2007 APC assignment for CPT code
on the basis that it includes both the noncoronary atherectomy 0067T, specifically APC 0333, rather
coronary and noncoronary atherectomy procedures to APC 0082 because we than reassign it to APC 0332 for CY
procedures, as a result of the proposed believe that the clinical characteristics 2008 as proposed.
packaging of imaging supervision and and resource costs are sufficiently Response: CPT code 0067T was
interpretation CPT codes. The similar to warrant their placement in the implemented on January 1, 2005, and
commenter stated that, as proposed, same APC with coronary atherectomy initially assigned to APC 0332. As part
APC 0082 no longer contains services procedures. We recognize that the of our annual APC review process, we
that are comparable clinically and with similar resource costs may result, to subsequently reassigned CPT code
respect to resource use and, therefore, some extent, from the packaging of 0067T to APC 0333 in CY 2006 and
believed that the coronary and guidance and imaging supervision and continued this APC assignment in CY
noncoronary services should not be interpretation services under the CY 2007. Based on analysis of the CY 2006
hospital outpatient claims data, we final rule with comment period. We commenters that APC 0061 would be an
proposed to reassign CPT code 0067T to respond to this recommendation below. appropriate APC assignment for CPT
APC 0332 for CY 2008 based on clinical We received a number of public code 43647 for CY 2008, taking into
homogeneity and resource comments on our interim final CY 2007 account the procedure’s clinical
considerations. Specifically, our and proposed CY 2008 assignments of characteristics and expected hospital
hospital outpatient claims data from CY CPT code 43647 to APC 0130, both on resource costs. We will reassign CPT
2006 showed a median cost of the CY 2007 OPPS/ASC final rule with code 43647 to APC 0061 for CY 2008,
approximately $164 for CPT code 0067T comment period and on the CY 2008 while we await the opportunity to
based on 1,421 single claims (of 1,904 OPPS/ASC proposed rule. A summary review its CY 2007 claims data in
total claims). Based on the median costs of the public comments and our preparation for the CY 2009 rulemaking
of the significant procedures assigned to response follow. cycle.
APC 0332 for CY 2008, which range Comment: A few commenters After consideration of the public
from $164 to $227, we believe that CPT objected to our assignment of CPT code comments received, we are not
code 0067T most closely resembles 43647 to APC 0130, stating that APC finalizing our CY 2008 proposal to
other noncontrast CT procedures also 0130 does not accurately reflect the assign CPT code 43647 to APC 0130.
assigned to APC 0332. We do not agree clinical and cost characteristics of CPT Instead, we will reassign CPT code
with the commenters’ recommendation code 43647. The commenters noted that 43647 to APC 0061, with a median cost
that APC 0333 is the most appropriate APC 0130 includes procedures for of approximately $5,213. In addition,
APC assignment for CPT code 0067T implanting minor devices that have we are changing the title of APC 0061
because the median cost of modest costs, while the laparoscopic to ‘‘Laminectomy, Laparoscopy, or
approximately $322 for APC 0333, implantation of gastric neurostimulator Incision for Implantation of
which contains significant procedures electrodes is an invasive procedure that Neurostimulator Electrodes, Excluding
with HCPCS-specific median costs is comparable to the surgical Cranial Nerve’’ to better reflect all of the
ranging from about $272 to $359, is implantation of neurostimulator procedures assigned to the APC for CY
much higher than the median cost of electrodes via incision or laminectomy 2008.
CPT code 0067T. In addition, as procedures that are assigned to APC
0061 (Laminectomy or Incision for c. Screening Colonoscopies and
discussed in section II.A.4.c. of this Screening Flexible Sigmoidoscopies
final rule with comment period, we are Implantation of Neurostimulator
Electrodes, Excluding Cranial Nerve). (APCs 0158 and 0159)
finalizing our proposal to package
payment for all contrasts agents in CY The commenters requested that we Since the implementation of the OPPS
2008. Because the CT scans assigned to assign CPT code 43647 to APC 0061, in August 2000, screening
APC 0333 for CY 2008 all include the which they believed more accurately colonoscopies and screening flexible
administration of contrast and CT reflects the clinical and resource aspects sigmoidoscopies have been paid
colonography is a noncontrast study, we of this procedure. In addition, the separately. In the CY 2007 OPPS/ASC
believe 0067T is most appropriately commenters noted that if CPT code final rule with comment period (71 FR
assigned to APC 0332, where other 43647 is reassigned to APC 0061, then 68013), we implemented certain
noncontrast CT scans reside. all peripheral neurostimulator lead changes associated with colorectal
After consideration of the public implantations would be assigned to the cancer screening services provided in
comments received, we are finalizing, same APC. HOPDs. First, section 5113 of Pub. L.
without modification, the proposed Response: We have no hospital claims 109–171 amended section 1833(b) of the
assignment of CPT code 0067T to APC data for CPT code 43647 because the Act to add colorectal cancer screening to
0332, with a median cost of about $189 code was new for CY 2007. However, the list of services for which the
for CY 2008. we agree with the commenters that CPT beneficiary deductible no longer
code 43647 would be expected to have applies. This provision applies to
b. Laparoscopic Neurostimulator device costs that are similar to other services furnished on or after January 1,
Electrode Implantation (APC 0130) procedures assigned to APC 0061 for CY 2007. Second, sections 1834(d)(2) and
In the CY 2008 OPPS/ASC proposed 2007 because all of these procedures (d)(3) of the Act require Medicare to pay
rule, we proposed to continue our CY implant neurostimulator electrodes. In the lesser of the ASC or OPPS payment
2007 assignment of CPT code 43647 particular, the device percentage of amount for screening flexible
(Laparoscopy, surgical; implantation or device-dependent APC 0061 is about 60 sigmoidoscopies and screening
replacement of gastric neurostimulators percent, so that assignment of CPT code colonoscopies. For CY 2007, the OPPS
electrodes, antrum) to APC 0130 (Level 43647 to an APC in the laparoscopic payment for screening colonoscopies,
I Laparoscopy), with a proposed APC series as proposed may not provide HCPCS codes G0105 (Colorectal cancer
payment rate of approximately $2,217. the most appropriate payment for the screening; colonoscopy on individual at
CPT code 43647 was a new code for CY procedure. While CPT code 43647 risk) and G0121 (Colorectal cancer
2007, so it received an interim final CY involves a different surgical approach to screening; colonoscopy on individual
2007 assignment to APC 0130, with a neurostimulator electrode implantation, not meeting criteria for high risk),
payment rate of approximately $1,975. in comparison with the potentially more developed in accordance with our
In addition, during the September 2007 invasive procedures currently assigned standard OPPS ratesetting methodology,
meeting of the APC Panel, the Panel to APC 0061, we still believe the would have slightly exceeded the CY
recommended that CMS reevaluate its procedure’s clinical characteristics more 2007 ASC payment of $446 for these
decision to assign the device-dependent closely resemble the other procedures procedures. Consistent with the
procedure described by CPT code 43647 assigned to APC 0061 than the requirements set forth in sections
to APC 0130 because the procedure minimally invasive percutaneous 1834(d)(2) and (d)(3) of the Act, the
requires a device and APC 0130 is not neurostimulator electrode implantation OPPS payment rates for HCPCS codes
a device-dependent APC. We accepted procedures assigned to APC 0040 G0105 and G0121 were set equal to the
the APC Panel recommendation and (Percutaneous Implantation of CY 2007 ASC rate of $446 effective
reassessed the proposed CY 2008 APC Neurostimulator Electrodes, Excluding January 1, 2007. This requirement did
assignment of CPT code 43647 for this Cranial Nerve). Therefore, we agree with not impact the OPPS payment rate for
screening flexible sigmoidoscopies payment groups of the OPPS accurately and (d)(3) of the Act would otherwise
(G0104, Colorectal cancer screening; reflect the relative costs of procedures require that the CY 2008 OPPS payment
flexible sigmoidoscopy) because performed in ASCs just as well as they rates for screening colonoscopies and
Medicare did not make payment to reflect the relative costs of the same screening flexible sigmoidoscopies be
ASCs for screening flexible procedures provided in HOPDs. set equal to their significantly lower
sigmoidoscopies in CY 2007, so there Screening colonoscopies were among ASC payment rates. However, we
was no payment comparison to be made the top 20 ASC procedures in terms of continue to believe it is necessary to
for those services. volume whose costs were specifically invoke the equitable adjustment
According to the policy for the studied by the GAO in its work that led authority provided by section
revised ASC payment system as to this conclusion. We see no clinical or 1833(t)(2)(E) of the Act to adjust the
described in the August 2007 final rule hospital resource explanation why the OPPS payment rates for these
for the revised ASC payment system (72 OPPS relative costs from CY 2006 OPPS procedures in order to establish the
FR 42493), ASCs will be paid for claims data for screening flexible most appropriate payment for these
screening colonoscopies based on their sigmoidoscopies and screening procedures in the context of the
ASC payment weights derived from the colonoscopies would not provide an contemporary payment policies of the
related OPPS APC payment weights and appropriate basis for establishing their OPPS and the revised ASC payment
multiplied by the final ASC conversion payment rates under both the OPPS and system.
factor (the product of the OPPS the revised ASC payment system, After consideration of the public
conversion factor and the ASC budget according to the standard ratesetting comments received, we are finalizing
neutrality adjustment). As an office- methodologies of each payment system our CY 2008 proposal, without
based procedure added to the ASC list for CY 2008. If we were to pay for these modification, to pay for screening
of covered surgical procedures for CY screening procedures under the OPPS colonoscopies and screening flexible
2008, ASC payment for screening according to their ASC rates in CY 2008, sigmoidoscopies under the OPPS at
flexible sigmoidoscopies will be capped we would significantly distort their payment rates developed according to
at the CY 2008 MPFS nonfacility payment relativity in comparison with the standard OPPS ratesetting
practice expense amount (72 FR 42511). other OPPS services. We believed and methodology.
Sections 1834(d)(2) and (d)(3) of the Act continue to believe it would be
would then require that the CY 2008 inequitable to pay these screening 3. Genitourinary Procedures
OPPS payment rates for these services in HOPDs at their ASC rates for a. Cystoscopy With Stent (APC 0163)
procedures be set equal to their CY 2008, thereby ignoring the relativity
significantly lower ASC payment rates. For CY 2008, we proposed to continue
of their costs in comparison with other
However, for CY 2008, we proposed assignment of CPT code 52282
OPPS services which have similar or
to use the equitable adjustment different clinical and resource (Cystourethroscopy, with insertion of
authority of section 1833(t)(2)(E) of the characteristics. Therefore, for CY 2008 urethral stent) to APC 0163 (Level IV
Act to adjust the OPPS payment rates when we will be paying for screening Cystourethroscopy and other
for screening colonoscopies and colonoscopies and screening flexible Genitourinary Procedures), with a
screening flexible sigmoidoscopies. sigmoidoscopies performed in ASCs proposed payment rate of approximately
Section 1833(t)(2)E) of the Act provides based upon their standard revised ASC $2,351. Payment for APC 0163 in CY
that the Secretary shall establish payment rates, we proposed to adjust 2007 is approximately $2,147.
adjustments, in a budget neutral the payment rates under the OPPS to We received one public comment on
manner, as determined to be necessary pay for the procedures according to the our CY 2008 proposed assignment of
to ensure equitable payments under the standard OPPS payment rates. We CPT code 52282 to APC 0163. A
OPPS. Sections 1834(d)(2) and (d)(3) of believed that the application of sections summary of the public comment and
the Act regarding payment for screening 1834(d)(2) and (d)(3) of the Act our response follow.
flexible sigmoidoscopies and screening produces inequitable results because of Comment: One commenter indicated
colonoscopies under the OPPS and ASC the revised ASC payment system to be that the procedure described by CPT
payment systems were established by implemented in CY 2008. We believed code 52282 is inappropriately assigned
Congress in 1997, many years prior to this proposal would provide the most to APC 0163, and that it should be
the CY 2008 initial implementation of appropriate payment for these reassigned to a new device-dependent
the revised ASC payment system. The procedures in the context of the APC for CY 2008. According to the
payment policies of the revised ASC contemporary payment policies of the commenter, the procedure described by
payment system, as summarized in OPPS and the revised ASC payment CPT code 52282 is dissimilar to the
section XVI.C. of this final rule with system. other procedures that map to APC 0163,
comment period, make fundamental We received several public both clinically and in terms of cost. The
changes to the methodology for commenters concerning this proposal. A commenter stated that this procedure is
developing ASC payment rates based on summary of the public comments and the only procedure in APC 0163 that
certain principles, specifically that the our response follow. involves an implant. In addition, the
OPPS payment weight relativity is Comment: Several commenters agreed commenter asserted that the APC’s CY
applicable to ASC procedures and that that it would be inequitable to pay for 2008 proposed payment of
ASC costs are lower than HOPD costs screening colonoscopies and screening approximately $2,351 is inadequate to
for providing the same procedures, that flexible sigmoidoscopies services in the cover hospitals’ costs for performing
contradict the original assumptions HOPD at their lower ASC payment rate. this procedure, and that as a result,
underlying these provisions. According They supported CMS’s use of the hospitals may limit beneficiary access to
to the findings of the GAO in its report, equitable adjustment authority to adjust this treatment. According to the
released on November 30, 2006 and the OPPS payment rates for these commenter, the urethral stent that is
entitled ‘‘Medicare: Payment for services. placed during these procedures is
Ambulatory Surgical Centers Should Be Response: We appreciate commenters’ approximately $4,200. The commenter
Based on the Hospital Outpatient support of our proposal. We also noted that other stent placement
Payment System’’ (GAO–07–86), the acknowledge that sections 1834(d)(2) procedures have device-dependent
status so that adequate costs can be with a CY 2008 median cost of 47382, which had a proposed median
tracked. The commenter recommended approximately $2,270. cost of about $2,706, or CPT code 50592,
that CMS create a new device- which had a proposed median cost of
b. Percutaneous Renal Cryoablation
dependent APC for CPT code 52282 about $2,658. The commenters urged
(APC 0423)
with a payment rate of at least $4,000. CMS to reevaluate the proposed
Response: In response to the concerns For CY 2008, we proposed to assign payment rate for APC 0423 and use
raised by the commenter, we reviewed CPT code 0135T (Ablation renal acquisition cost data provided by
the clinical characteristics and hospital tumor(s), unilateral, percutaneous, manufacturers, as many of the claims
costs from CY 2006 claims data for all cryotherapy) to APC 0423 (Level II used to set the payment rate do not
procedures proposed for CY 2008 Percutaneous Abdominal and Biliary contain the required device.
assignment to APC 0163. The APC Procedures), with a proposed payment Alternatively, some commenters
median cost is approximately $2,270, rate of approximately $2,810. This code requested that CMS consider creating a
while CPT code 52282 has a median was new in CY 2006, when it was unique clinical APC for renal
cost of approximately $2,016, based on assigned to APC 0163 (Level IV cryoablation that would be designated
291 single claims out of a total of 900 Cystourethroscopy and other as device-dependent to appropriately
claims for the procedure. Because of the Genitourinary Procedures) on an interim distinguish the resource costs associated
commenter’s concern about whether the final basis, with a payment rate of with renal cryoablation from
stent costs were appropriately reflected $1,999. In CY 2007, based on the APC radiofrequency ablation procedures.
in the procedure’s median cost, we Panel’s recommendation made at the Response: Based on our
compared the median costs of CY 2006 March 2006 APC Panel meeting, we comprehensive review of the procedures
claims that include both CPT code reassigned CPT code 0135T from APC assigned to APC 0423, public
52282 for cystoscopy with implant of a 0163 to APC 0423 with a payment rate comments, and the CY 2006
stent and a Level II HCPCS C code for of approximately $2,297. We expected recommendation of the APC Panel
a stent, to CY 2006 claims that include hospitals, when billing CPT code 0135T, regarding renal cryoablation, we believe
CPT code 52282 but do not include a to also report the device HCPCS code, that we have appropriately assigned
device C-code for a stent. While a stent C2618 (Probe, cryoablation), associated CPT code 0135T to APC 0423 for CY
is always necessary for the procedure with the procedure. 2008 based on clinical and resource
and we require that hospitals report We received several public comments considerations. We disagree with the
device HCPCS codes whenever they concerning this proposal. A summary of commenters’ argument regarding the
implant a device that is described by an the public comments and our responses clinical dissimilarity of the renal
available device code, we found that follow. cryoablation procedure from the
hospitals did not always report a stent Comment: Several commenters radiofrequency ablation procedures in
HCPCS code with CPT code 52282. This disagreed with our proposed APC APC 0423. The commenters to the CY
is similar to our findings in other cases assignment for CPT code 0135T. They 2007 OPPS proposed rule (71 FR 68049)
of device-related procedures. We indicated that the proposed payment acknowledged that cryoablation and
believe, however, that hospitals are rate for APC 0423 does not cover the radiofrequency percutaneous ablation
usually otherwise accounting for the cost hospitals incur for the cryoprobes procedures for renal tumors are
device cost in their charges on claims used in the procedure. One commenter clinically similar. We continue to
for CPT code 52282, either by reported that the average cost of one believe that CPT code 0135T is
incorporating the charge into the charge probe is about $1,000, while several appropriately assigned to APC 0423
for the procedure or reporting a charge commenters indicated that a single because it is placed with other
on an uncoded revenue code line. We procedure, on the average, uses about procedures that share its clinical and
found only a small difference in median 2.5 probes but may involve up to 4 resource characteristics. If hospitals use
costs of approximately $500 for probes depending on the size of the more than one probe in performing the
procedures reported with and without a tumor and the probe needle selected. renal cryoablation procedure, we expect
device C-code. This difference in costs Other commenters argued that CPT code hospitals to report this information on
is well within an appropriate range for 0135T requires more resources than the the claim and adjust their charges
the APC group. Furthermore, the other procedures currently assigned to accordingly. Hospitals should report the
median cost for the claims billed with APC 0423, specifically CPT codes 47382 number of cryoablation probes used to
CPT code 52282 and a stent C-code was (Ablation, one or more liver tumor(s), perform CPT code 0135T as the units of
approximately $2,369, very close to the percutaneous, radiofrequency) and HCPCS code C2618 which describes
CY 2008 median cost of APC 0163 of 50592 (Ablation, one or more renal these devices, with their charges for the
approximately $2,270. We also believe tumor(s), percutaneous, unilateral, probes. Since CY 2005, we have
that CPT code 52282 clinically radiofrequency). Several commenters required hospitals to report device
resembles the other cystourethroscopic highlighted the variance in the use of HCPCS codes for all devices used in
procedures also assigned to APC 0163. probes used for the procedures assigned procedures if there are appropriate
Therefore, we do not believe that there to APC 0423. Specifically, these HCPCS codes available. In this way, we
are sufficient differences in clinical commenters asserted that CPT code can be confident that hospitals have
characteristics or resources required to 0135T requires the use of multiple included charges on their claims for
perform the procedure described by CPT probes while the radiofrequency costly devices used in procedures when
code 52282 relative to the other ablation procedures require only a they submit claims for those procedures.
procedures assigned to APC 0163 to single probe in a procedure. Further, the Comment: Several commenters
warrant reassignment of CPT code commenters highlighted the various informed us that the hospital claims
52282 to a new, device-dependent APC median costs associated with the data that we used to set the proposed
as the commenter suggested. procedures assigned to APC 0423. That payment rate for CPT code 0135T do not
After consideration of the public is, they pointed out that the proposed accurately capture the full costs related
comment received, we are finalizing our median cost of about $3,520 for CPT to this procedure. They believed that the
proposal, without modification, to code 0135T was 30 to 32 percent more omission on the claims for the device C-
assign CPT code 52282 to APC 0163, than the median cost for CPT code code, specifically HCPCS code C2618,
for the cryoprobes leads to omission of will not create edits. We remind We received some public comments
cryoprobe cost information and hospitals that they must report all of the on the proposed deletion of APC 0675
undervaluation of the cost of the HCPCS codes that appropriately and the reassignment of the prostatic
procedure. Some commenters reported describe the items used to provide thermotherapy procedures in APC 0675
the results of their study of our hospital services, regardless of whether the to APC 0163. A summary of the public
outpatient claims data which revealed HCPCS codes are packaged or paid comments and our response follow.
that of the 110 Medicare claims separately. Comment: Specifically, some
submitted for CPT code 0135T, only 44 After further analysis of our CY 2006 commenters requested clarification from
single claims included the device hospital outpatient claims data, the APC CMS on the reassignment of CPT codes
HCPCS C-code (C2618) on the claims. Panel recommendation from the March 53850 and 53852 from APC 0675 to APC
Because the procedure cannot be 2006 meeting, and consideration of the 0163, as reflected in Addendum B of the
performed without the cryoprobe public comments received, we are CY 2008 OPPS proposed rule. One
device, these commenters strongly finalizing our proposal, without commenter urged CMS to investigate
urged CMS to designate the renal modification, to assign CPT code 0135T whether these procedures were correctly
cryoablation procedure as a ‘‘device- to APC 0423 for CY 2008 with a median assigned to APC 0163 as the procedures
dependent’’ procedure and require cost of approximately $2,705. described by CPT codes 53850 and
hospitals to submit claims with the For CY 2008, the CPT Editorial Panel 53852 seemed more appropriate, in
appropriate HCPCS C-code. One decided to delete CPT code 0135T on terms of clinical characteristics and
commenter who acknowledged its resource costs, for assignment to APC
December 31, 2007, and replace it with
experience with hospital billing 0429 (Level V Cystourethroscopy and
CPT code 50593 (Ablation, renal
reported that hospitals are not other Genitourinary Procedures). The
tumor(s), unilateral, percutaneous,
motivated to report the cost of the commenter recommended that the APC
cryotherapy). The replacement CPT
devices on the claim form unless a Panel discuss this issue at its next
code 50593 will be assigned to APC
HCPCS C-code is required by a code edit meeting to further review the data
0423 effective January 1, 2008. Similar
for claim submission. Several before the proposed change is finalized.
to its predecessor code, we expect Response: As part of our annual
commenters requested that CMS hospitals to report both the device
designate CPT code 0135T as a ‘‘device- review, we examine the APC
HCPCS code C2618 and CPT code 50593 assignments for all items and services
dependent’’ procedure to ensure that
to appropriately report the renal under the OPPS for appropriate
future claims data more accurately
cryoablation procedure. placements in the context of our
reflect the total cost of the procedure.
Response: We acknowledge the c. Prostatic Thermotherapy (APC 0163) proposed policies for the update year.
concerns raised by the commenters This review involves careful and
regarding the hospitals’ failure to report For CY 2008, we proposed to extensive analysis of our hospital
the device HCPCS code C2618 with the reconfigure certain clinical APCs to outpatient claims data, as well as input
procedure. We further examined our CY eliminate most of the low total volume from our medical advisors and the APC
2006 hospital outpatient claims data to APCs as an alternative to developing Panel and recommendations from the
determine the frequency of billing CPT specific quantitative approaches to public. Based on our analysis of the
code 0135T with and without HCPCS treating low total volume APCs hospital outpatient claims from CY
code C2618. Our analysis revealed that differently for purposes of median 2006, the final median cost for CPT code
the final rule median cost of calculation. We further concluded that 53850 is approximately $2,482 based on
approximately $3,446 based on 48 there were other clinical APCs with 199 single claims (223 total), and the
single bills used for ratesetting falls higher volumes of total claims to which final median cost for CPT code 53852 is
within the range for those procedures these low total volume services could be approximately $2,894 based on 195
billed with and without the device reassigned, while maintaining the single claims (315 total). We agree with
HCPCS code C2618. Specifically, our continued clinical and resource the commenter who recommended
data showed a median cost of about homogeneity of the clinical APCs to reassignment of these CPT codes to APC
$4,402 based on 17 single bills for which they would be newly reassigned. 0429, which has a median cost of
procedures billed with the device As a result, we eliminated certain APCs approximately $2,844 for CY 2008 and
HCPCS code C2618 and a median cost and reassigned the procedures includes several other procedures to
of about $2,834 based on 31 single bills associated with these APCs to other destroy prostate tissue. We believe that
for those procedures billed without the clinical APCs with higher volumes of APC 0429 is the most appropriate
device C-code. Even considering only claims. Prostatic thermotherapy assignment for both CPT codes based on
those claims for CPT code 0135T with procedures were assigned to APC 0675 clinical and resource considerations.
the device HCPCS code and higher (Prostatic Thermotherapy) for CY 2007, After consideration of the public
median cost, CPT code 0135T would be with a payment rate of approximately comments received, we are modifying
appropriately assigned to APC 0423 $2,529. For CY 2008, we proposed to our proposal and finalizing the CY 2008
based on that cost. reassign CPT codes 53850 assignments of CPT codes 53850 and
Further, we do not believe that we (Transurethral destruction of prostate 53852 to APC 0429, with a median cost
should create a claims processing edit in tissue; by microwave thermotherapy) of approximately $2,844.
this instance. We create device edits, and 53852 (Transurethral destruction of
when appropriate, for procedures prostate tissue; by radiofrequency d. Radiofrequency Ablation of Prostate
assigned to device-dependent APCs, thermotherapy) from APC 0675 to APC (APC 0163)
where those APCs have been 0163 (Level IV Cystourethroscopy and For CY 2008, we proposed to delete
historically identified under the OPPS other Genitourinary Procedures), with a APC 0675 (Prostatic Thermotherapy)
as having very high device costs. proposed payment rate of approximately and reassign the two CPT codes that
Because APC 0423 is not a device- $2,351. We proposed to eliminate APC mapped to this APC in CY 2007, CPT
dependent APC and the costs of the 0675, which would otherwise have code 53850 (Transurethral destruction
procedure with and without HCPCS included only approximately 550 total of prostate tissue; by microwave
code C2618 are reasonably similar, we services based on CY 2006 claims. thermotherapy) and CPT code 53852
(Transurethral destruction of prostate destruction of prostate tissue, and we most appropriate APC assignment for
tissue; by radiofrequency believe the procedure room time and the MRgFUS procedures would be APC
thermotherapy) to APC 0163 (Level IV recovery period for the services would 0127 (Level IV Stereotactic
Cystourethroscopy and other be relatively comparable. Radiosurgery), based on their analyses
Genitourinary Procedures). The CY 2007 After consideration of the public of the procedures’ resource use and
payment rate for APC 0675 is comments received, we are modifying clinical characteristics.
approximately $2,529, and the CY 2008 our CY 2008 proposal and will reassign As we stated in both the CY 2006
proposed payment rate for APC 0163 CPT code 53852 to APC 0429, with a OPPS final rule with comment period
was approximately $2,351. median cost of approximately $2,844. and the CY 2007 OPPS/ASC final rule
Comment: One commenter asserted with comment period, we believe that
e. Ultrasound Ablation of Uterine
that the proposed reassignment of CPT MRgFUS treatment bears a significant
Fibroids With Magnetic Resonance
code 53852 to APC 0163 is not clinically relationship to technologies already in
Guidance (MRgFUS) (APC 0067)
appropriate or consistent with the use in HOPDs (70 FR 68600 and 71 FR
resource costs of other procedures Magnetic resonance guided focused 68050, respectively). The use of focused
assigned to APC 0163. The commenter ultrasound (MRgFUS) is a noninvasive ultrasound for thermal tissue ablation
suggested that CMS reassign CPT code surgical procedure that uses high has been in development for decades,
53852 to APC 0429 (Level V intensity focused ultrasound waves to and the recent application of MRI to
Cystourethroscopy and other destroy tissue in combination with focused ultrasound therapy provides
Genitourinary Procedures), with a CY magnetic resonance imaging (MRI) monitoring capabilities that may make
2008 proposed payment rate of guidance. Currently, the two Category III the therapy more clinically useful. We
approximately $2,924. According to the CPT codes for this procedure are 0071T continue to believe that, although
commenter, CMS cost data showed that (Focused ultrasound ablation of uterine MRgFUS therapy is relatively new, it is
the median cost of CPT code 53852 is leiomyomata, including MR guidance; an integrated application of existing
26 percent higher than the median cost total leiomyomata volume less than 200 technologies (MRI and ultrasound), and
of the APC 0163 to which CMS cc of tissue) and 0072T (Focused its technology resembles other OPPS
proposed to reassign the procedure. The ultrasound ablation of uterine services that are assigned to clinical
commenter stated that the clinical leiomyomata, including MR guidance; APCs for which we have significant
characteristics of the procedure total leiomyomata volume greater or OPPS claims data. In the CY 2007
described by CPT code 53852 are more equal to 200 cc of tissue), which were OPPS/ASC final rule with comment
similar to the procedure described by implemented on January 1, 2005. period (71 FR 68050), we explained our
CPT code 52647 (Laser coagulation of In the CY 2006 OPPS proposed rule, belief that retaining MRgFUS
the prostate, including control of we proposed to continue to assign both procedures in clinical APCs with other
postoperative bleeding, complete codes to APC 0193 (Level V Female female reproductive procedures would
(vasectomy, meatotomy, Reproductive Proc). However, at the enable us both to set accurate payment
cystourethroscopy, urethral calibration August 2005 APC Panel meeting, the rates and to maintain appropriate
and/or dilation, and internal APC Panel recommended that CMS clinical homogeneity of the APCs.
urethrotomy are included if work with stakeholders to assign CPT Furthermore, we did not agree with
performed)), which maps to APC 0429, codes 0071T and 0072T to appropriate commenters that MRgFUS procedures
than the procedures that are included in New Technology APCs. Based on our shared sufficient clinical and resource
APC 0163. Specifically, the commenter review of several factors, which characteristics with cobalt-based
stated that both procedures can be done included information presented at the stereotactic radiosurgery (SRS) to
under direct visualization, placement of August 2005 APC Panel meeting, the reassign them to that particular clinical
the energies are customized, and there public comments received on the CY APC 0127, where only the single
is no incision or cutting of the tissues 2006 OPPS proposed rule, and our specific SRS procedure was assigned for
involved. The commenter also argued analysis of OPPS claims data for CY 2007 and which had a CY 2007 APC
that CMS data on intraservice procedure different procedures, we reassigned CPT median cost of approximately $8,461.
times and the direct costs of clinical code 0071T from APC 0193 to APC 0195 Consequently, in the CY 2007 OPPS/
labor, supplies, and equipment indicate (Level IX Female Reproductive Proc) ASC final rule with comment period (71
that CPT code 53852 should be and CPT code 0072T from APC 0193 to FR 68051), we finalized payment for
reassigned to APC 0429 rather than to APC 0202 (Level X Female these procedures in APCs 0195 and
APC 0163. Reproductive Proc) effective January 1, 0202 as proposed.
Response: We examined the clinical 2006, to reflect the higher level of Analysis of our hospital outpatient
characteristics and claims-based resources we estimated were required data for claims submitted for CY 2006
resource costs of all procedures when performing the MRgFUS during the development of the proposed
proposed for assignment to APC 0163 procedures. rule indicated that MRgFUS procedures
and APC 0429 for CY 2008. We agree In the CY 2007 OPPS/ASC proposed were rarely performed on Medicare
with the commenter that APC 0429 rule, we proposed to continue to assign patients. As we stated in the CY 2006
would be an appropriate assignment for CPT code 0071T to APC 0195 and CPT OPPS final rule with comment period
CPT code 53852 for CY 2008. CPT code code 0072T to APC 0202. We received and the CY 2007 OPPS/ASC final rule
53852 appears to be more closely comments on the CY 2007 proposed with comment period, because
related, both in terms of clinical APC assignments recommending that treatment of uterine fibroids is most
characteristics and resource costs, to the we revise the APC assignments for CPT common among women younger than
laser surgery procedures assigned to codes 0071T and 0072T. The 65 years of age, we did not expect that
APC 0429 than to many of the commenters indicated that, while there ever would be many Medicare
cystourethroscopy and transurethral MRgFUS treats anatomical sites that are claims for the MRgFUS procedures (70
resection procedures assigned to APC similar to other procedures assigned to FR 68600 and 71 FR 68050,
0163. CPT code 53852, like some other APCs 0195 and 0202, the resources respectively). For OPPS claims
procedures assigned to APC 0429, is a utilized differed dramatically. Several submitted from CY 2005 through CY
minimally invasive procedure for the commenters recommended that the 2006, our claims data showed that there
were only two claims submitted for CPT and resource considerations, these resource utilization. Some commenters
code 0071T in CY 2005 and one in CY linear accelerator-based SRS procedures suggested that CMS reassign these
2006. We had no hospital claims for are not performed solely on intracranial procedures, as previously done in CY
CPT code 0072T from either of those lesions and generally do not require 2007, to a female reproductive
years. immobilization of the patient’s head in procedure APC.
At its March 2007 meeting, the APC a frame that is screwed into the skull, Response: As we stated in the CY
Panel recommended that, for CY 2008, thereby exhibiting characteristics more 2006 OPPS final rule with comment
CMS reassign CPT codes 0071T and consistent with MRgFUS treatments. In period and the CY 2007 OPPS/ASC final
0072T from APCs 0195 and 0202 to APC addition, based on our understanding of rule with comment period, because
0067 (Level III Stereotactic the MRgFUS procedures described by treatment of uterine fibroids is most
Radiosurgery, MRgFUS, and MEG), the two CPT codes which differ only in common among women younger than
which had a proposed APC median cost the volume of uterine leiomyomata 65 years of age, we did not expect that
treated, we believed it would be most there ever would be many Medicare
of approximately $3,870 for CY 2008.
appropriate to assign both of these claims for the MRgFUS procedures (70
The APC Panel discussed its general
procedures to the same clinical APC, as FR 68600 and 71 FR 68050,
belief that while the MRgFUS
recommended by the APC Panel. respectively). Analysis of hospital
procedures might not be performed
Therefore, for CY 2008 we proposed to outpatient data for claims submitted for
frequently on Medicare patients, CMS
reassign CPT codes 0071T and 0072T to CY 2006 indicates that MRgFUS
should pay appropriately for the
APC 0067, with a proposed APC median procedures were rarely performed on
procedures to ensure access for
cost of approximately $3,870, which Medicare patients. For OPPS claims
Medicare beneficiaries. In addition,
was reflected in Table 32 of the submitted from CY 2005 through CY
following discussion of the potential for
proposed rule (72 FR 42713). 2006, our claims data showed that there
reassignment of the CPT codes to New We received several public comments
Technology APCs, the APC Panel were only two claims submitted for CPT
on our CY 2008 proposal concerning
specifically recommended that the code 0071T in CY 2005 and one in CY
MRgFUS procedures. A summary of the
procedures be assigned to a clinical APC 2006. We had no hospital claims for
public comments and our responses
at this point in their adoption into CPT code 0072T from either of those
follow.
clinical practice, instead of a New Comment: Several commenters agreed years. While we have no information
Technology APC. Furthermore, with CMS’s proposal to assign the from hospital claims regarding the costs
following publication of the CY 2007 MRgFUS procedures, specifically CPT of MRgFUS procedures, we continue to
OPPS/ASC final rule with comment codes 0071T and 0072T, to APC 0067 believe that the clinical and expected
period, we received input from because the services share similarities, resource characteristics of MRgFUS
interested individuals and organizations both clinically and with regard to procedures resemble the first or
regarding the clinical and resource resource costs, with other procedures complete session LINAC-based SRS
characteristics of MRgFUS procedures. also assigned to APC 0067. However, treatment delivery services that are also
Based on our consideration of all many commenters disagreed with the assigned to APC 0067. The APC Panel
information available to us regarding the proposed payment rate of approximately also recommended that MRgFUS
necessary hospital resources for the $3,918 for APC 0067. They procedures be assigned to that clinical
MRgFUS procedures in comparison recommended that MRgFUS be placed APC, instead of a New Technology APC.
with other procedures for which we in APC 0127 (Level IV Stereotactic While commenters pointed to specific
have historical hospital claims data, for Radiosurgery, MRgFUS, and MEG), differences in the technologies utilized
CY 2008 we proposed to accept the APC which had a proposed payment rate of for MRgFUS and SRS procedures, both
Panel’s recommendation to reassign approximately $7,864, as they believed services are noninvasive and utilize
these services to clinical APC 0067, an that this APC accurately reflected the specialized equipment and image
APC that currently contains two linear hospital charges and costs for this guidance in the targeted ablation of
accelerator-based stereotactic procedure. The commenters believed abnormal tissue during a lengthy
radiosurgery (SRS) procedures. We that the proposed payment rate for APC treatment session. Therefore, we believe
agreed with the APC Panel that these 0067 was far below the costs incurred to that the services are sufficiently similar
SRS procedures share sufficient clinical provide MRgFUS procedures and did to reside in the same clinical APC.
and resource similarity with the not accurately reflect the treatment After consideration of the public
MRgFUS services, including reliance on planning component that is part of the comments received and the APC Panel
image guidance in a single treatment MRgFUS procedure. Other commenters recommendation at its March 2007
session to ablate abnormal tissue, to disagreed with the placement of meeting, we are finalizing our proposal,
justify their assignment to the same MRgFUS services in an APC that without modification, to assign CPT
clinical APC. Unlike the cobalt-based historically had contained only SRS codes 0071T and 0072T to APC 0067,
SRS service that we concluded in the procedures. These same commenters with a CY 2008 median cost of
CY 2007 OPPS/ASC final rule with argued that the MRgFUS procedure is approximately $3,882. Table 18 lists the
comment period was not similar to not similar to SRS treatment delivery final APC median costs for the MRgFUS
MRgFUS procedures based on clinical services based on clinical coherence and CPT codes.
TABLE 18.—FINAL CY 2008 APC ASSIGNMENTS OF MRGFUS PROCEDURES

CY CY 2007 Final CY
Short descriptor 2007 APC me- 2008 APC

SI dian cost median cost
0071T ....... U/s leiomyomata ablate <200 ..................................... T ....... 0195 $1,742 S ............ 0067 $3,882
0072T ....... U/s leiomyomata ablate >200 ..................................... T ....... 0202 $2,534 S ............ 0067 $3,882
f. Uterine Fibroid Embolization (APC Panel’s recommendation to reassign require vascular catheterization or the
0202) CPT code 37210 to a different APC. The use of implantable devices. We
Prior to January 1, 2007, a specific commenters argued that the uterine examined the clinical characteristics
CPT code did not exist to describe fibroid embolization procedure is and resource costs of procedures
uterine fibroid embolization. CPT clinically dissimilar to the other assigned to APC 0229 and agree with
guidance suggests that hospitals procedures assigned to APC 0202, some of the commenters that this APC
previously reported this procedure which do not require the implantation would be an appropriate assignment for
using CPT codes 37204 (Transcatheter of a device and do not utilize imaging CPT code 37210 for CY 2008 while we
occlusion or embolization (eg, for tumor resources. The commenters suggested await claims data that will be available
destruction, to achieve hemostasis, to that CMS create a new APC for CPT for the CY 2009 OPPS update. CPT code
occlude a vascular malformation), code 37210 or reassign it to APC 0229. 37210, like other procedures assigned to
percutaneous, any method, non-central The commenters stated that the uterine APC 0229, requires the targeted use of
nervous system, non-head or neck) and fibroid embolization procedure is intravascular catheters, imaging
75894 (Transcatheter therapy, similar to the other vascular procedures guidance, and implantable devices, and
embolization, any method, radiological included in APC 0229, both clinically we believe the procedure room time and
supervision and interpretation). In CY and in terms of resource utilization. recovery period for the services would
2006, the combined APC payment for Specifically, the commenters noted that be relatively comparable. CPT code
these two procedures was the uterine fibroid embolization 37210 appears to be more closely
approximately $2,504. Effective January procedure is similar to the revision of related, both in terms of clinical
1, 2007, the CPT Editorial Panel created transvenous intrahepatic portosystemic characteristics and resource costs, to the
CPT code 37210 (Uterine fibroid shunts, described by CPT code 37183 minimally invasive interventional
embolization (UFE, embolization of the (Revision of transvenous intrahepatic procedures assigned to APC 0229 than
uterine arteries to treat uterine fibroids, portosystemic shunt(s) (TIPS) (includes to many of the open surgical repair
leiomyomata), percutaneous approach venous access, hepatic and portal vein procedures of the female reproductive
inclusive of vascular access, vessel catheterization, portography with system assigned to APC 0202. We are
selection, embolization, and all hemodynamic evaluation, intrahepatic unable to assign CPT code 37210 to a
radiological supervision and tract recanulization/dilatation, stent new clinical APC for CY 2008 because
interpretation, intraprocedural placement and all associated imaging we would have no claims data for the
roadmapping, and image guidance guidance and documentation)), which procedure upon which to base the
necessary to complete the procedure) to maps to APC 0229. According to the payment rate for that APC. Therefore,
describe this procedure. In the CY 2007 commenters, both uterine fibroid we have adopted the recommendation
OPPS/ASC final rule with comment embolization and the revision of of the APC Panel to consider moving
period (71 FR 68317), we provided an transvenous intrahepatic portosystemic CPT code 37210 to APC 0229 and will
interim final assignment of CPT code shunts involve device implantation, reassign the procedure to that APC for
37210 to APC 0202 (Level VII Female selective catheterization, and CY 2008.
Reproductive Procedures), with a CY radiological supervision and After consideration of the public
2007 payment rate of approximately interpretation. The commenters stated comments received, we are modifying
$2,642. For CY 2008, we proposed that the hospital resource consumption our CY 2008 proposal and will reassign
continued assignment of CPT code related to the devices used in uterine CPT code 37210 for uterine fibroid
37210 to APC 202 (72 FR 42936), with fibroid embolization are also similar to embolization to APC 0229, with a
a proposed payment rate of other procedures in APC 0229, median cost of approximately $5,570.
approximately $2,753. Because this is a including those described by CPT code
4. Nervous System Procedures
new code for CY 2007, the CY 2006 37205 (Transcatheter placement of an
intravascular stent(s) (except coronary, a. Chemodenervation (APC 0206)
claims data, upon which we set CY 2008
payment rates, do not reflect use of this carotid, and vertebral vessel), For CY 2008, we proposed to reassign
code. percutaneous; initial vessel) and CPT two chemodenervation procedures,
At the September 2007 meeting of the code 37206 (Transcatheter placement of specifically those described by CPT
APC Panel, the Panel recommended that an intravascular stent(s) (except codes 64650 (Chemodenervation of
CMS consider moving CPT code 37210 coronary, carotid, and vertebral vessel), eccrine glands; both axillae) and 64653
to another APC, such as APC 0067 percutaneous; each additional vessel). (Chemodenervation of eccrine glands;
(Level III Stereotactic Radiosurgery), Response: We reviewed the clinical other area(s) (eg, scalp, face, neck), per
with a CY 2008 proposed payment rate characteristics and claims-based costs of day) to APC 0206 (Level II Nerve
of approximately $3,918, or APC 0229 all procedures also proposed for Injections), with a proposed payment
(Transcatheter Placement of assignment to APC 0202 for CY 2008, as rate of approximately $265. These
Intravascular Shunts), with a CY 2008 well as the recommendation of the APC services are currently assigned to APC
proposed payment rate of approximately Panel from its September 2007 meeting. 0204 (Level I Nerve Injections) for CY
$5,713, to improve the clinical and We do not believe that the procedure 2007, with a payment rate of
resource homogeneity of the procedure described by CPT code 37210 approximately $139.
within its assigned APC. sufficiently resembles the services We received one public comment on
We received several public comments assigned to APC 0067, one of the our CY 2008 proposed assignment of
on the CY 2007 OPPS/ASC final rule possibilities recommended by the APC chemodenervation procedures to APC
with comment period and the CY 2008 Panel, for that clinical APC to be an 0206. A summary of the public
OPPS/ASC proposed rule regarding the appropriate assignment. The stereotactic comment and our response follow.
placement of CPT code 37210 in APC radiosurgery, magnetic resonance- Comment: One commenter was
0202. A summary of the public guided focused ultrasound ablation, and concerned that CMS proposed to
comments and our response follow. magnetoencephalography services reassign CPT codes 64650 and 64653 to
Comment: Several commenters assigned to APC 0067 all are APC 0206 for CY 2008, but retained
requested that CMS consider the APC noninvasive procedures that do not other chemodenervation procedures in
APC 0204, specifically CPT codes 64612 within the range of costs for other the payment bundles, and by
(Chemodenervation of muscle(s); significant services also assigned to APC eliminating, whenever possible, APCs
muscle(s) innervated by facial nerve (eg, 0204, where these muscle comprised of few procedures.
for blepharospasm, hemifacial spasm); chemodenervation procedures were Therefore, we are finalizing our
64613 (Chemodenervation of muscle(s); proposed for assignment in CY 2008. proposal, without modification, to
cervical spinal muscle(s) (eg, for We do not see any need to establish a delete APC 0223 and reassign CPT code
spasmodic torticollis); and 64614 new APC for CPT codes 64612 through 62350 to APC 0224, with a median cost
(Chemodenervation of muscle(s); 64614 for CY 2008 based on clinical and of approximately $2,282.
extremity(s) and/or trunk muscle(s) (eg, resource considerations. Therefore, we c. Implantation of Spinal
for dystonia, cerebral palsy, multiple believe that CPT codes 64650 and 65653 Neurostimulators (APC 0222)
sclerosis). The commenter believed that should remain in APC 0204 for CY
CPT codes 64650 and 64653 for 2008. As we accumulate additional The CPT code for insertion of a spinal
chemodenervation of eccrine glands claims data for these procedures we will neurostimulator (63685, Insertion or
should be grouped with the other three reassess their resource utilization and replacement of spinal neurostimulator
cited chemodenervation codes based on APC placement. pulse generator or receiver, direct or
clinical and resource considerations. Of After consideration of the public inductive coupling), which is currently
note, many commenters stated that if comment received, we are modifying assigned to APC 0222 (Implantation of
CMS proceeded with the packaging of the CY 2008 proposed assignments of Neurological Device), is reported for
electrodiagnostic guidance for CPT codes 64650 and 64653 and both the insertion of a nonrechargeable
chemodenervation procedures, a new retaining these two CPT codes in APC neurostimulator and a rechargeable
distinct APC should be established for 0204, with a median cost of neurostimulator. The costs of a
approximately $146, rather than nonrechargeable neurostimulator from
CPT codes 64612, 64613, and 64614, but
reassigning them to APC 0206 as the CY 2005 claims are packaged into
CPT codes 64650 and 64653 were not
proposed. the payment for APC 0222 in CY 2007.
included in that request.
We believe rechargeable
Response: CPT codes 64650 and b. Implantation of Intrathecal or neurostimulators are currently most
64653 were new codes in CY 2006, Epidural Catheter (APC 0224) commonly implanted for spinal
which were initially assigned to APC For CY 2008, we proposed to delete neurostimulation, consistent with the
0204 on an interim final basis, and APC 0223 (Implantation or Revision of information provided during our
subsequently retained in that APC for Pain Management Catheter) and reassign consideration of the device for pass-
CY 2007. For CY 2008, we proposed to CPT code 62350 (Implantation, revision, through designation. However, in
reassign them to APC 0206 based on or repositioning of tunneled intrathecal response to hospital requests, in CY
analysis of our first limited claims data or epidural catheter, for long-term 2007 we expanded our procedure-to-
from CY 2006. The final rule median medication administration via an device edits to allow device category
cost for APC 0204 is approximately external pump or implantable reservoir/ code C1820 (Generator, neurostimulator
$146 and for APC 0206 is approximately infusion pump; without laminectomy) (implantable), with rechargeable battery
$258. Our claims data showed a median to APC 0224 (Implantation of catheter/ and charging system) to be reported
cost of approximately $221 for CPT code reservoir/shunt). The procedure with two other procedures. These
64650 and a median cost of described by CPT code 62350 is the only procedures are CPT code 64590
approximately $235 for CPT code 64653 procedure assigned to APC 0223 in CY (Insertion or replacement of peripheral
based on only 7 claims (of 11 total 2007, with a payment rate of or gastric neurostimulator pulse
claims) and 15 claims (of 22 total approximately $1,896. The CY 2008 generator or receiver, direct or inductive
claims), respectively. We agree with the proposed payment for APC 0224 was coupling), assigned to APC 0222, and
commenter that these two approximately $2,364. CPT code 61885 (Insertion or
chemodenervation procedures are We received one public comment on replacement of cranial neurostimulator
clinically similar to the three our CY 2008 proposal to reassign CPT pulse generator or receiver, direct or
procedures reported for code 62350 to APC 0224. A summary of inductive coupling; with connection to
chemodenervation of the muscles. the public comment and our response a single electrode array), assigned to
Given the final CY 2008 packaging follow. APC 0039 (Level I Implantation of
policy as discussed section II.A.4.c.(1) Comment: One commenter supported Neurostimulator).
of this final rule with comment period the proposal to delete APC 0223 and The rechargeable neurostimulator
that will package payment for the reassign CPT code 62350 to APC 0224. reported as device category code C1820
electrodiagnostic guidance for According to the commenter, this policy has received pass-through payment
chemodenervation services, we would would increase resource homogeneity since January 1, 2006, and its pass-
expect that the hospital resources and clinical coherence. through status will expire on January 1,
required for CPT codes 64612 through Response: We appreciate the 2008, as discussed further in section
64614, where this guidance is commenter’s support and agree that the IV.B. of this final rule with comment
sometimes used, would be at least as deletion of APC 0223 and the period. During the 2 years of pass-
great as those required for reassignment of CPT code 62350 to APC through payment when device category
chemodenervation of eccrine glands. In 0224 would increase resource code C1820 has been paid at a hospital’s
view of the limited claims for CY 2006 homogeneity and clinical coherence of charges reduced to cost using the overall
for CPT codes 64650 and 64653, we the resulting APC configuration by hospital CCR, we have applied a device
agree with the commenters that these assigning multiple similar procedures offset when device category code C1820
two CPT codes should be assigned to for the implantation of nervous system is reported with a CPT code assigned to
the same APC as the other three shunts and catheters to the same clinical APCs 0039 or 0222 in order to remove
chemodenervation procedures, APC. We also believe this proposal is the costs of the predecessor
specifically CPT codes 64612 through consistent with our overall strategy to nonrechargeable device from the
64614, whose median costs of encourage hospitals to use resources payment for APCs 0039 and 0222. This
approximately $125 through $187 are more efficiently by increasing the size of device offset ensures that no duplicate
device payment is made. As a general implantation procedures based on the clinical improvement for select patients
policy, under the OPPS we package specific device used. The creation of and is more cost-effective compared to
payment for the costs of devices into the special Level II HCPCS codes for OPPS nonrechargeable neurostimulators. The
payment for the procedure in which reporting is generally undesirable, commenters argued that paying more
they are used. unless absolutely essential, because it initially for rechargeable
Because we traditionally have paid for increases hospital administrative neurostimulators would save the
a service package under the OPPS as burden as the codes may not be Medicare program and beneficiaries
represented by a HCPCS code for the accepted by other payers. Establishing money in the long term, and improve
major procedure that is assigned to an separate coding and payment would overall patient care and satisfaction. The
APC group for payment, we assess the reduce the size of the APC payment commenters also pointed to provider
applicability of the 2 times rule to groups in a year in which we proposed concentration as an additional factor
services at the HCPCS code level, not at to increase packaging under the OPPS that should be considered in APC
a more specific level based on the through expanded payment groups. assignments. In the case of
individual devices that may be utilized Therefore, for CY 2008 we proposed neurostimulators, commenters provided
in a service reported with a single to package the costs of rechargeable data that showed only 27 percent of the
HCPCS code. If the use of a very neurostimulators into the payment for total number of hospitals that implant
expensive device in a clinical scenario the CPT codes that describe the services nonrechargeable neurostimulators also
causes a specific procedure to be much furnished. Our proposed median cost implant rechargeable neurostimulators,
more expensive for the hospital than the for APC 0222 was approximately and stated that an APC payment that
APC payment, we consider such a case $12,162. We thought this approach to be combines payment for rechargeable and
to be the natural consequence of a the most administratively simple, nonrechargeable neurostimulator
prospective payment system that consistent with the OPPS packaging implantation procedures may bias the
anticipates that some cases will be more principles, and supportive of payment system against those hospitals.
costly and others less costly than the encouraging hospital efficiency, while The commenters disagreed with the
procedure payment. In addition, very also providing appropriate packaged assertion in the proposed rule that
high cost cases could be eligible for payment for implantable creating a new APC dedicated solely to
outlier payment. As we note in section neurostimulators. In the proposed rule rechargeable neurostimulator
II.A.4. of this final rule with comment (72 FR 42716), we specifically requested implantation procedures would be
period, decisions about packaging and that commenters submit comments that inconsistent with OPPS packaging
bundling payment involve a balance address how this specific device principles. According to the
between ensuring some separate implantation situation differed from commenters, distinct treatment of
payment for individual services and many other scenarios under the OPPS, rechargeable and nonrechargeable
establishing incentives for efficiency where relatively general HCPCS codes neurostimulators is not an issue of
through larger units of payment. In the describe procedures that may utilize a packaging, because the technologies are
case of implantable nonpass-through variety of devices with different costs, not ancillary services or products.
devices, these devices are part of the and payment for those devices is Instead, the commenters characterized
OPPS payment package for the packaged into the payment for the them as alternative treatments
procedures in which they are used. associated procedures. depending on patient needs, and
Stakeholders encouraged us to deem We received many public comments indicated that neither rechargeable nor
as two distinct procedures in response to this proposal. A summary nonrechargeable neurostimulators
neurostimulator implantation involving of the public comments and our represent subordinate, supportive, or
rechargeable and nonrechargeable response follow. optional services relative to the other.
devices, so in the CY 2008 proposed Comment: The commenters urged The commenters also disagreed that as
rule we conducted a review of our CY CMS to pay differentially for rechargeable neurostimulators become
2006 claims data for APC 0222. This rechargeable and nonrechargeable the dominant device implanted for
examination showed that the median neurostimulators by creating separate neurostimulation, the median costs of
costs of the associated neurostimulator APCs for the implantation procedures. APC 0222 would increase to reflect the
implantation procedures are higher for They argued that the 2 times rule is a costs of the technology. According to
rechargeable neurostimulator sufficient but not necessary condition their analysis of claims data,
implantation than for nonrechargeable for splitting APCs, and they identified approximately 60 percent of the CY
neurostimulator implantation, as shown other factors apart from the 2 times rule 2006 single procedure claims for APC
in Table 35 of the proposed rule (72 FR that should be taken into consideration 0222 were for implantation of gastric,
42716). However, the difference in costs in determining APC assignments. The sacral, or other types of peripheral nerve
(approximately $6,500 based on commenters argued that the resources neurostimulator devices, all of which
proposed rule data) was not so great that required to implant rechargeable versus utilize and are indicated for
retaining the procedures for the nonrechargeable neurostimulators vary nonrechargeable technologies only.
implantation of both types of devices for substantially, and that a combined APC Therefore, the commenters claimed that
spinal or peripheral neurostimulation in for these procedures would result in a the median costs for APC 0222 would
APC 0222 would cause a 2 times payment that is inequitable for both continue to be dominated by
violation, even if we were to consider technologies and may lead to incentives nonrechargeable neurostimulator
them to be distinct procedures. The data for facilities to furnish only the less implantation procedures, even as the
did not justify creating a new clinical costly technology, even when the more utilization of rechargeable
APC. In addition, to pay differentially expensive technology is clinically neurostimulators grows.
would require us to establish one or indicated for a particular patient. The The commenters responded to the
more Level II HCPCS codes for reporting commenters stated that the prospect of proposed rule request to describe how
under the OPPS, because the three CPT hospitals limiting patient access to this specific device implantation
codes for which device category code rechargeable neurostimulators is situation differed from many other
C1820 is currently an allowed device do particularly troubling because this scenarios under the OPPS, where
not differentiate among the device technology represents a substantial relatively general HCPCS codes describe
procedures that may utilize a variety of the nonrechargeable device (C1767) homogeneity is a fundamental criterion
devices with different costs, and continue to map to APC 0222. Other for evaluating changes to APC
payment for those devices is packaged commenters requested that CMS pursue assignments. We wrote in the CY 2001
into the payment for the associated new CPT codes through the AMA rather final rule that ‘‘if the procedures within
procedures. The commenters stated that than create new Level II HCPCS codes. an APC require widely varying
they were unaware of other APCs that Response: After consideration of the resources, it would be difficult to
include devices where the magnitude of comments received on this issue, we develop equitable payment rates.
the cost difference among packaged have decided to reconfigure the APC Aggregated payments to a facility that
services is as substantial as proposed for assignments of procedures involving performed a disproportionate share of
neurostimulators. They also asserted implantation of neurostimulators in either the expensive or inexpensive
that, unlike other OPPS services, order to improve the resource procedures within an APC would be
rechargeable neurostimulators can homogeneity of these APCs and ensure distorted. Further, the facility might be
reduce long-term costs. Rather than appropriate payment for both encouraged to furnish only the less
promoting efficiency, they argued, the rechargeable and nonrechargeable costly procedures within the APC,
CMS proposal to group payment for neurostimulators. Effective January 1, resulting in a potential access problem
rechargeable neurostimulator 2008, CMS will implement a revised for the more costly services’’ (65 FR
implantation procedures with APC configuration for neurostimulator 18457). In the case of the
procedures involving nonrechargeable implantation procedures that groups neurostimulator implantation APC
neurostimulators would discourage payment for certain procedures mainly configuration that we are adopting for
efficient resource utilization. They involving nonrechargeable CY 2008, two of the APCs contain only
submitted economic models presented neurostimulator technology (that is, one procedure and one APC contains
at special society meetings that cranial, sacral, gastric, or other only two CPT codes, with very close
concluded rechargeable spinal peripheral neurostimulators) into two CPT code-specific median costs, so
neurostimulators should reduce the clinical APCs (APCs 0039 and 0315), these three APCs reflect great resource
number of reimplantation procedures while establishing a single APC for homogeneity. We do not consider the
due to battery depletion as well as spinal neurostimulator implantation, implantation of rechargeable and
reduce the number of complications which may commonly utilize either nonrechargeable neurostimulators to be
associated with reimplantation rechargeable or nonrechargeable different procedures, so we see no need
procedures, and ultimately result in cost technologies (APC 0222). Specifically, to adopt differential coding and/or
savings to payers and the health system. CMS will reassign CPT code 64590 for payment for procedures that depend on
implantation of peripheral the device implanted. We believe our
The commenters offered various neurostimulators from APC 0222 to APC
coding mechanisms that would enable final APC configuration will provide
0039, which already includes CPT code appropriate payment for
the creation of unique APCs for 61885 for implantation of single array
rechargeable and nonrechargeable neurostimulator implantation
cranial neurostimulators. CPT code procedures that ensures access to the
neurostimulator implantation 63685 for the implantation of spinal
procedures. Some commenters urged appropriate neurostimulator
neurostimulators will be the only code technologies under the OPPS for
CMS to create new Level II HCPCS remaining in APC 0222. By moving CPT
codes to differentiate between Medicare beneficiaries.
code 64590 to APC 0039, all procedures
neurostimulator implantation that generally use nonrechargeable Just as we do not want to provide
procedures involving nonrechargeable technologies only will be removed from incentives for the underutilization of
and rechargeable devices, assign those ratesetting for spinal neurostimulator rechargeable neurostimulators, we also
HCPCS codes to separate APCs, and implantation, for which both do not want to provide incentives for
discontinue the use of CPT codes rechargeable and nonrechargeable the overutilization of this expensive
describing these procedures for OPPS neurostimulators are indicated and technology. According to information
payment purposes. These commenters commonly utilized. This APC provided by the manufacturers of
stated that any administrative burden reconfiguration will not affect CPT code rechargeable neurostimulators, these
posed by new Level II HCPCS codes assignment to APC 0315 (Level II devices are clinically indicated in only
would be outweighed by the higher Implantation of Neurostimulators), a subset of patients for whom spinal
payment the hospital would receive for which will continue to include only neurostimulation is a treatment option.
rechargeable neurostimulators, and that CPT code 61886 (Insertion or They estimate that approximately 35
this methodology is consistent with replacement of cranial neurostimulator percent of these patients are candidates
previous CMS actions to identify and pulse generator or receiver, direct or for rechargeable spinal
allow specific payment for services of inductive coupling; with connection to neurostimulators, although this
importance to Medicare. Other two or more electrode arrays), although proportion may be higher. Our claims
commenters, however, supported the we will rename all three APCs to data from CY 2006, the first year of
CMS proposal not to implement new accommodate this new configuration. device pass-through for the rechargeable
Level II HCPCS codes, arguing that it is The revised APC configuration and devices, already indicate that
too much of an administrative burden naming convention for neurostimulator rechargeable neurostimulators are being
for hospitals to follow coding rules for implantation APCs are summarized in implanted in about one-third of the
Medicare patients that are inconsistent Table 19 below. We note that this spinal neurostimulator implantation
with CPT coding guidelines. They approach does not require hospitals to cases. We received comments from
suggested that neurostimulator alter their coding practices in any way many providers, however, who stated
implantation procedures that contain to conform to the new payment policy. that they use or wish to use the
the existing C-code for the rechargeable We agree with commenters that there rechargeable technology in all of their
device (C1820) map to a new APC with are other important factors we consider patients. We believe that creating a
a higher payment rate, while claims for when deciding on APC assignments separate APC for rechargeable
neurostimulator implantation besides the 2 times rule. In our CY 2001 neurostimulator implantation, as was
procedures with the existing C-code for final rule, we recognized that resource recommended by commenters, could
create incentives for hospitals to use the CY 2008 will allow us to calculate spinal neurostimulator implantation,
more expensive rechargeable payment rates for procedures involving which commonly utilizes either
technology, even when the more spinal neurostimulators that reflect rechargeable or nonrechargeable
expensive technology is not clinically changes in surgical practice based on technologies (APC 0222). We believe
indicated. In contrast to the clinical, rather than financial, that this revised APC configuration best
commenters’ perspective, we believe considerations. To the extent that serves the principles of a prospective
that packaging payment for implantable rechargeable neurostimulators may payment system by following our
devices into the related procedures is an become the dominant device implanted standard practice of retaining a single
important packaging principle that for spinal neurostimulation over time CPT code for neurostimulator
contributes to the size of the OPPS based on the evolution of clinical implantation procedures that does not
payment bundles. Although our CY practice, the median costs for the spinal distinguish between the implantation of
2008 proposal was to newly package neurostimulator implantation APC may rechargeable and nonrechargeable
payment for certain ancillary and increase to reflect contemporary neurostimulators, into which the costs
supportive services, many other items utilization patterns. of both types of devices are packaged in
and types of services that are In summary, for CY 2008, we are relationship to their OPPS utilization.
fundamental to a procedure’s finalizing our proposal, with We also believe the revised APC
therapeutic effect have been historically modification, for payment of configuration is both consistent with
packaged under the payment system neurostimulator implantation our standard ratesetting practice for
and will remain packaged for CY 2008. procedures. We will implement a technologies coming off pass-through
A policy to provide different payments revised APC configuration for status, and reflective of the clinical and
for procedures according to the devices neurostimulator implantation resource considerations presented by
implanted would not be consistent with procedures that packages payment for commenters. Because no new codes or
our overall strategy to encourage procedures involving mainly coding practices will be required,
hospitals to use resources more nonrechargeable neurostimulator hospitals will not experience any
efficiently by increasing the size of the technology (i.e., cranial, sacral, gastric, change in the administrative burden
payment bundles. However, we believe or other peripheral neurostimulators) associated with reporting
that the revised neurostimulator APC into two APCs (APCs 0039 and 0315), neurostimulator implantation
configuration that we are adopting for while establishing a single APC for procedures.
TABLE 19.—CY 2008 APC CONFIGURATION FOR PAYMENT OF RECHARGEABLE AND NONRECHARGEABLE
NEUROSTIMULATOR IMPLANTATION PROCEDURES
HCPCS CY 2008
codes in- CY 2008
Revised title for CPT code
APC Previous title cluded in HCPCS descriptor APC me-
CY 2008 median
CY 2008 dian cost
cost
median cost
0039 ........... Level I Implanta- Level I Implanta- 61885 Insertion or replacement of cranial neurostimulator $12,799 $11,732
tion of tion of pulse generator or receiver, direct or inductive
Neurostimulator. Neurostimulator. coupling; with connection to a single electrode
array.
64590 Insertion or replacement of peripheral $10,954 $11,732
neurostimulator pulse generator or receiver, di-
rect or inductive coupling.
0222 ........... Level II Implanta- Implantation of 63685 Insertion or replacement of spinal neurostimulator $15,150 $15,150
tion of Neurological pulse generation or receiver, direct or inductive
Neurostimulator. Device. coupling.
0315 ........... Level III Implanta- Level II Implanta- 61886 Insertion or replacement of cranial neurostimulator $16,988 $16,988
tion of tion of pulse generator or receiver, direct or inductive
Neurostimulator. Neurostimulator. coupling; with connection to two or more elec-
trode arrays.
5. Nuclear Medicine and Radiation as a high intensity multiday imaging Both procedures require nuclear
Oncology Procedures procedure and reassign CPT code 78075 medicine imaging several days
a. Adrenal Imaging (APC 0391) to APC 0408 (Level III Tumor/Infection following the injection of a diagnostic
Imaging), along with another multiday radiopharmaceutical. We note that these
For CY 2008, we proposed to assign tumor imaging procedure code CPT services are nuclear medicine
CPT code 78075 (Adrenal imaging, code 78804 (Radiopharmaceutical procedures and, therefore, their final
cortex and/or medulla) to APC 0391 localization of tumor or distribution of rule median costs are calculated
(Level II Endocrine Imaging), with a radiopharmaceutical agent(s); whole
proposed payment rate of about $233. according to the temporary special
body, requiring two or more days methodology that relies on the subset of
Currently, this procedure is assigned to
imaging). claims reporting coded diagnostic
the same clinical APC for CY 2007.
We received several public comments Response: Based on our review of the radiopharmaceuticals, as described in
concerning this proposal. A summary of costs and clinical characteristics of CPT section II.A.4.c. of this final rule with
the public comments and our response code 78075, we agree with the comment period. Our claims data from
follow. commenters that this procedure is CY 2006 showed that the median cost
Comment: Some commenters similar to CPT code 78804, in terms of for CPT code 78075 is approximately
requested that CMS recognize this code clinical homogeneity and resource costs. $954 based on 124 single claims for
ratesetting, which is relatively similar to according to the special methodology two-level APC payment structure.
the median cost of approximately described in section II.A.4.c. of this final Therefore, for CY 2007, CPT codes
$1,194 for the sole procedure code rule with comment period, is more 78459, 78491, and 78492, were assigned
78804 proposed for assignment to APC consistent with the hospital resources to a single clinical APC, specifically
0408. In contrast, the HCPCS-specific required to perform CPT code 38792. APC 0307, which was renamed
median costs for the individual After consideration of the public ‘‘Myocardial Positron Emission
significant procedures in APC 0391 comments received, we are modifying Tomography (PET) Imaging,’’ with a
range from approximately $201 to $243, our proposal and reassigning CPT code median cost of approximately $727.
resulting in an APC median cost of 38792 to APC 0392, with a CY 2008 At its March 2007 meeting, the APC
approximately $217. The median cost of median cost of approximately $183, Panel recommended that CMS reassign
APC 0391 is significantly lower than the rather than to APC 0389 as proposed. CPT code 78492 to its own clinical APC,
APC 0408 median cost of approximately to distinguish this multiple study
c. Myocardial Positron Emission
$969 and the CPT code 78075 median procedure that the APC Panel believed
Tomography (PET) Scans (APC 0307)
cost of approximately $954. would require greater hospital resources
After considering the public From August 2000 to December 31, from less resource intensive single study
comments received, we are modifying 2005, under the OPPS, we assigned one procedures. However, as indicated in
our proposal and are reassigning CPT clinical APC to all myocardial positron the CY 2008 proposed rule (72 FR
code 78075 to APC 0408, with a CY emission tomography (PET) scan 42713), we did not accept the APC
2008 median cost of approximately procedures, which were reported with Panel’s recommendation because,
$969, rather than to APC 0391 as multiple G-codes through March 31, consistent with our observations from
proposed. 2005. Under the OPPS, effective April 1, the CY 2005 claims data, our CY 2006
2005, myocardial PET scans were claims data available for the proposed
b. Injection for Sentinel Node reported with three CPT codes, rule did not support the creation of a
Identification (APC 0389) specifically CPT codes 78459 clinical APC for CPT code 78492 alone.
For CY 2008, we proposed to assign (Myocardial imaging, positron emission Analysis of the latest CY 2006 claims
the sentinel node identification tomography (PET), metabolic data continued to support a single level
procedure, specifically described by evaluation), 78491 (Myocardial imaging, APC payment structure for the
CPT code 38792 (Injection procedure; positron emission tomography (PET), myocardial PET scan procedures
for identification of sentinel node), to perfusion; single study at rest or stress), because very few single scan studies
APC 0389 (Level I Non-imaging Nuclear and 78492 (Myocardial imaging, were performed and we believed single
Medicine), with a proposed payment positron emission tomography (PET), and multiple scan procedures were
rate of approximately $101. Currently, perfusion; multiple studies at rest and/ clinically similar. Our claims data
this procedure is assigned to the same or stress). From April 1, 2005 through available for the proposed rule showed
clinical APC for CY 2007. December 31, 2005, these three CPT a total of 2,547 procedures reported
We received several public comments codes were assigned to one APC, with the multiple scan CPT code 78492.
on our CY 2008 proposed assignment of specifically APC 0285 (Myocardial Alternatively, our claims data showed
CPT code 38792 to APC 0389. A Positron Emission Tomography (PET), only a combined total of 249 procedures
summary of the public comments and with a payment rate of approximately reported with the single scan CPT codes
our responses follow. $736. In CY 2006, in response to the 78459 and 78491, less than 10 percent
Comment: Some commenters public comments received on the CY of all studies reported. A similar
recommended that CPT code 38792 be 2006 OPPS proposed rule, and based on distribution was observed in the single
reassigned from APC 0389 to APC 0392 our claims information, myocardial PET bills available for ratesetting.
(Level II Non-imaging Nuclear services were assigned to two clinical Similar to findings from the CY 2005
Medicine), which had a proposed APCs for the CY 2006 OPPS. The CPT data, as we discussed in the proposed
payment rate of approximately $209. codes for the single scans, specifically rule, our CY 2006 claims data revealed
The commenters indicated that an 78459 and 78491, were assigned to APC that more hospitals were not only
injection for sentinel node identification 0306 (Myocardial Positron Emission providing multiple myocardial PET scan
is more resource intensive, as Tomography (PET) Imaging, Single services, but most myocardial PET scans
corroborated by the CMS hospital Study, Metabolic Evaluation) with a were multiple studies. Further, our most
outpatient claims data, than other payment rate of approximately $801, recent data analysis for this final rule
procedures also assigned to APC 0389. and the multiple scan CPT code 78492 with comment period revealed that
These commenters requested that CMS was assigned to APC 0307 (Myocardial multiple myocardial PET scan services
reassign CPT code 38792 to APC 0392 Positron Emission Tomography (PET) were commonly performed in the same
for CY 2008. Imaging, Multiple Studies) with a hospital encounter with a
Response: Based on our review of the payment rate of approximately $2,485, cardiovascular stress test, specifically
costs and clinical characteristics of CPT effective January 1, 2006. However, CPT code 93017 (Cardiovascular stress
code 38792, we agree with the analysis of the CY 2005 claims data that test using maximal or submaximal
commenters that this procedure is most were used to set the payment rates for treadmill or bicycle exercise,
similar to those procedures assigned to CY 2007 revealed that when all the continuous electrocardiographic
APC 0392 for CY 2008. Our claims data myocardial PET scan procedure codes monitoring, and/or pharmacological
from CY 2006 showed that the median were combined into a single clinical stress; tracing only, without
cost for CPT code 38792 is APC, as they were prior to CY 2006, the interpretation and report).
approximately $174 based on 390 single APC median cost for myocardial PET In the CY 2008 OPPS/ASC proposed
claims available for ratesetting, which is services was very similar to the median rule, we indicated our belief that the
significantly higher than the median cost of their single CY 2005 clinical assignment of CPT codes 78459, 78491,
cost of approximately $114 for APC APC. Further, our analysis revealed that and 78492 to a single clinical APC for
0389. The median cost of APC 0392 of the updated differential median costs of CY 2008 was still appropriate because
$183, which contains nuclear medicine the single and multiple study the CY 2006 claims data did not support
procedures and, therefore, is calculated procedures no longer supported the a resource differential among significant
myocardial PET services that would for providing multiple myocardial PET $731 for the scan (APC 0307) and
necessitate the placement of single and scan procedures. They reported that approximately $460 (average estimate of
multiple PET scan procedures into two multiple myocardial PET procedures charges reduced to cost) for the
separate clinical APCs. Therefore, we require greater hospital resources than commonly used diagnostic
proposed to continue to assign both the single myocardial PET scans. radiopharmaceutical A9555 (Rubidium
single and multiple myocardial PET Response: Based on our review of the Rb-82-diagnostic, per study dose, up to
scan procedure codes to APC 0307, with hospital outpatient claims data from CY 60 millicuries). Therefore, we believe
a proposed APC median cost of 2005 and CY 2006, as well as the that the final median cost of APC 0307
approximately $2,678 for CY 2008. We clinical characteristics of CPT code for the scans and associated diagnostic
noted that the proposed CY 2008 78492, we do not agree that we should radiopharmaceuticals appropriately
median cost of APC 0307 was establish a new clinical APC solely for reflects the hospital resources associated
significantly higher than its CY 2007 the multiple myocardial PET scans. Our with providing myocardial PET scans to
median cost, in part because of our claims data for this final rule with Medicare beneficiaries in cost-efficient
proposed CY 2008 packaging approach comment period showed a total of 2,808
settings and is adequate to ensure
discussed in detail in section II.A.4.c.(5) procedures reported with the multiple
appropriate access to these services for
of this final rule with comment period scan CPT code 78492. Conversely, our
Medicare beneficiaries.
that would package payment for claims data showed only a combined
diagnostic radiopharmaceuticals into total of 286 procedures reported with The CY 2008 median cost for APC
the payment for their related diagnostic the single scan CPT codes 78459 and 0307 of approximately $1,384 is very
nuclear medicine studies, such as 78491. similar to the median cost of CPT code
myocardial PET scans. The myocardial We note that our final median cost for 78492 of $1,467, so we do not believe
PET scan CPT codes and their proposed this APC is approximately $1,384, that the assignment of the relatively
CY 2008 APC assignments were which is significantly lower than the small number of generally lesser cost
displayed in Table 33 of the proposed proposed rule median cost for the APC. single scan claims to APC 0307
rule, which has been reproduced as According to our final ratesetting significantly reduces the payment rate
Table 20 below, and updated to show policies in which we included CPT code for multiple scan studies. In addition, as
the final status indicators, APC 93017 on the bypass list as discussed in discussed in section II.A.2. of this final
assignments, and median costs for these section II.1.b of this final rule with rule with comment period, we are
services. comment period, we based APC 0307’s attempting to reduce the number of low
We received a number of public final median cost on 1,832 single claims volume APCs under the OPPS to
comments concerning our proposed out of 3,094 CY 2006 claims for promote the stability of payment rates.
payment for myocardial PET scans. A myocardial PET procedures. Due to our If we were to create a new clinical APC
summary of the public comments and bypassing of CPT code 93017 for the for multiple myocardial PET scans, APC
our response follow. cardiovascular stress test commonly 0307 for single scan studies would
Comments: Some commenters reported with myocardial PET scans, we become a very low volume APC. We
disagreed with our proposal to assign were able to use almost twice the continue to believe that the assignment
CPT codes 78459, 78491, and 78492 to number of claims to develop the final of CPT codes 78459, 78491, and 78492
a single clinical APC even though the median cost based on claims from a to a single clinical APC for CY 2008
CY 2006 claims data did not support a large number of hospitals in comparison remains appropriate because the CY
resource differential. They requested with the proposed rule, and almost all 2006 claims data do not support a
that CMS separate single (rest or stress) of those additional single claims were resource differential among significant
from multiple (rest and stress) PET for multiple myocardial PET scan
myocardial PET services that would
myocardial perfusion imaging studies. services. As discussed in section
necessitate the placement of single and
Specifically, these commenters II.A.4.c.(5) of this final rule comment
multiple PET scan procedures into two
requested that CMS assign the single period, the final median cost for APC
separate clinical APCs.
myocardial PET codes, CPT codes 78459 0307 was also calculated only from
and 78491, to APC 0307, and create a those claims for myocardial PET scan After consideration of the public
new clinical APC for CPT code 78492, procedures that also contained a HCPCS comments received, we are finalizing
which describes the multiple code for a diagnostic our CY 2008 proposal, without
myocardial PET scan procedure. The radiopharmaceutical. The median cost modification, to provide payment for all
commenters believed that maintaining of approximately $1,384 compares myocardial PET scans through APC
the multiple myocardial PET scan in the favorably to our CY 2007 estimated 0307, with a CY 2008 median cost of
same APC as the single myocardial PET average total payment of $1191 for these approximately $1,384, as shown in
scans significantly underpaid hospitals services, consisting of approximately Table 20.
TABLE 20.—FINAL CY 2008 APC ASSIGNMENTS FOR MYOCARDIAL PET SCANS

CY CY 2007 Final CY
Short descriptor 2007 APC me- 2008 APC
SI dian cost median cost
78459 ....... Heart muscle imaging (PET) ...................................... S ....... 0307 $727 S ............ 0307 $ 1,384
78491 ....... Heart image (pet), single ............................................ S ....... 0307 $727 S ............ 0307 $ 1,384
78492 ....... Heart image (pet), multiple ......................................... S ....... 0307 $727 S ............ 0307 $ 1,384
d. Nonmyocardial Positron Emission After considering the public and cost data, and determined that the
Tomography (PET) Scans (APC 0308) comments received, we are finalizing CY 2008 proposed median costs for
For CY 2008, we proposed to continue our proposal, without modification, APCs 0664 and 0667 appropriately
to assign the nonmyocardial PET scans including assignment of CPT code reflect the cost of this technology.
78608 to APC 0308, with a CY 2008 Response: In response to one
to APC to 0308 (Non-Myocardial
median cost of approximately $1,044. commenter’s concern about the validity
Positron Emission Tomography (PET)
of our data and our ratesetting analyses,
Imaging), with a proposed payment rate e. Proton Beam Therapy (APCs 0664 and we examined the claims and cost
of approximately $1,107, specifically 0667) reports for proton beam therapy and
CPT codes 78811 (Tumor imaging, For CY 2008, we proposed to pay for verified our calculations. Consistent
positron emission tomography (PET); the following four CPT codes for proton with the other commenter’s examination
limited area (eg, chest, head/neck)), beam therapy: 77520 (Proton treatment of its own claims, charges, and costs, we
78812 (Tumor imaging, positron delivery; simple, without found both the data and our calculation
emission tomography (PET); skull base compensation); 77522 (Proton treatment of the median costs to be accurate for
to mid-thigh)), 78813 (Tumor imaging, delivery; simple, with compensation); APCs 0664 and 0667. We note that the
positron emission tomography (PET); 77523 (Proton treatment delivery; median costs for relatively low volume
whole body)), and 78608 (Brain intermediate); and CPT 77525 (Proton APCs, such as APCs 0664 and 0667,
imaging, positron emission tomography treatment delivery; complex). We often fluctuate from year to year, in part
(PET); metabolic evaluation). We note proposed to continue to assign the due to the variability created by a small
that this proposed payment will include simple proton beam therapy procedures number of claims. We agree with the
payment for the diagnostic to APC 0664 (Level I Proton Beam commenter that because our standard
radiopharmaceuticals used in the PET Radiation Therapy), with a proposed ratesetting methodology is based on
scans. APC 0308 will also include median cost of approximately $845, and OPPS claims, the payment rates for
concurrent PET/CT procedures. Refer to the intermediate and complex proton those services provided by only a few
section III.C.2.a. of this final rule with beam therapy procedures to APC 0667 hospitals to Medicare beneficiaries are
comment period for further discussion (Level II Proton Beam Radiation dependent on the particular costs and
of the CY 2008 OPPS assignment of Therapy), with a proposed median cost charging practices of that small subset of
concurrent PET/CT procedures. of approximately $1,012. The CY 2007 hospitals paid for the services under the
We received several public comments payment rates for these APCs are OPPS. Therefore, the small number of
concerning this proposal. A summary of approximately $1,161 and $1,389, hospitals providing proton beam
the public comments and our responses respectively. We also proposed to make therapy also may contribute to
follow. an exception to the 2 times rule for APC additional variation in payment rates as
Comment: Several commenters agreed 0664, as we did in CYs 2006 and 2007. those hospitals’ charging and cost
with the placement of CPT codes 78811, We received several public comments reporting practices evolve over time. As
78812, and 78813 in APC 0308; concerning this proposal. A summary of more hospitals adopt this technology,
however, some commenters requested the public comments and our responses we expect that the fluctuation in
that CMS reassign CPT code 78608 to a follow. payment for APCs 0664 and 0667 will
new clinical APC for PET brain imaging. Comment: One commenter expressed be moderated by the increased number
Response: We disagree with the concern that the CY 2008 proposed of observations for similar services and
commenters’ suggestion that we should payment rates for APCs 0664 and 0667 the incorporation of claims from a larger
create a separate clinical APC for CPT are approximately 27 percent lower than number of hospitals in the ratesetting
code 78608. Brain PET scan services the CY 2007 payment rates for these process.
have historically been assigned to the same APCs. The commenter We note that neither of these APCs
same APCs as other nonmyocardial PET characterized proton beam therapy as an violate the 2 times rule based on the CY
services for a number of years, initially extremely complex and expensive 2008 final rule data because the volume
to the same New Technology APCs and technology that is currently offered in of CPT code 77520 is such a small
for CY 2007 to the same clinical APC. only two hospitals. The commenter percentage of claims for APC 0664. The
Analysis of our hospital outpatient asked CMS to reevaluate the claims data law permits exceptions to the 2 times
claims data from CY 2006 reveals that and its analysis of the median costs rule for services that are low volume,
the median cost of approximately contained in those claims data for which we generally have considered as
$1,046 for CPT code 78608 falls within errors. The commenter asserted that if having a single bill frequency that is less
the range of the HCPCS-specific median the data and rate calculations were than or equal to 1,000, or less than or
costs, approximately $1,004 to $1,240, verified as valid, CMS should take into equal to 99 if the service constitutes less
for the other PET procedures also consideration that for any service than 2 percent of the single bill
assigned to APC 0308. We are not provided by only two hospitals, the frequency for an APC. CPT code 77520
convinced that separating payment rates for the service will be has a single bill frequency of 188 in the
nonmyocardial PET scans according to highly dependent on the idiosyncrasies CY 2008 OPPS data and constitutes only
the body site being examined is of the billing and charging practices of 1 percent of the single claims in the
necessary for clinical homogeneity, and those two facilities. The commenter APC. Therefore, there is no 2 times
the result of such a distinction would be stated that a 27 percent reduction in violation in APC 0664.
a single CPT code in one APC. The payment would discourage, if not After consideration of the public
OPPS is a prospective payment system eliminate, the adoption of this comments received, we are finalizing
that provides payment for groups of technology by other providers. In our CY 2008 proposal, without
services that share clinical and resource addition, the commenter offered support modification, to assign CPT codes 77520
characteristics. We believe that PET for the proposal to designate APC 0664 and 77522 to APC 0664, with a median
scans for tumor imaging and brain as an exception to the 2 times rule for cost of approximately $807, and to
imaging are similar in both respects and CY 2008. assign CPT codes 77523 and 77525 to
are appropriately assigned to the same Another commenter reviewed its APC 0667, with a median cost of
clinical APC. proton beam therapy claims, charges, approximately $965.
6. Ocular and Ear, Nose, and Throat 65780 (Ocular surface reconstruction; code V2790. While most claims did not
Procedures amniotic membrane transplantation), specifically include HCPCS code V2790,
a. Amniotic Membrane for Ocular are not adequately represented in the median costs for claims with and
Surface Reconstruction (APC 0244) hospital claims data. Despite without HCPCS code V2790 were
instructions from CMS that packaged reasonably close and consistent with the
We proposed to assign HCPCS code items and services should be reported costs of other services assigned to APC
V2790 (Amniotic membrane for surgical on claims, some commenters believed 0244. Specifically, claims with HCPCS
reconstruction, per procedure) status that hospitals often fail to report HCPCS code V2790 had a median cost of
indicator ‘‘N’’ (packaged) for CY 2008 code V2790 because payment for approximately $2,553, while claims
and to assign its related CPT procedure HCPCS code V2790 is packaged with its without HCPCS code V2790 had a
codes to APC 0244 (Corneal Transplant). related procedure code. They argued median cost of approximately $2,063.
The proposed status indicators for the that the underreporting of the use of The median line-item cost of HCPCS
item and procedures and the proposed amniotic membrane tissue, which code V2790 was $506, relatively
APC assignments for the procedures includes the costs of procuring, consistent with the difference in cost
were the same as their CY 2007 OPPS processing, storing, and distributing the between the claims with and without
treatment. product, leads to inadequate payment HCPCS code V2790. Based on our
We received several comments on the for CPT code 65780. Some commenters analysis, the proposed rule median cost
proposed OPPS treatment of HCPCS recommended that CMS establish of approximately $2,409 for all
code V2790 for CY 2008. A summary of claims processing edits to ensure the procedures in APC 0244, which would
the public comments and our response presence of the tissue HCPCS code and not include the costs of corneal tissue
follow. a charge for the item on claims for the but would incorporate the costs of
Comment: Several commenters ocular reconstruction procedure. One amniotic membrane tissue, is very close
requested that CMS consider assigning a commenter indicated that the costs for to the median cost of the amniotic tissue
status indicator of ‘‘F’’ (paid at amniotic membrane tissue can vary transplant procedure claims that
reasonable cost) to HCPCS code V2790 widely, similar to corneal tissue, and include the HCPCS code for amniotic
and creating a separate APC for that the procurement of the tissue adds membrane tissue. The CY 2008 APC
amniotic membrane transplantation to the highly variable costs because 0244 final rule median cost of
procedures that includes the costs of hospitals require different sized tissues approximately $2,359 is consistent with
amniotic membrane tissue. They to accommodate various treatment and the APC’s proposed rule cost.
compared V2785 (Processing, preserving patient requirements. These Based on our claims data from CY
and transporting corneal tissue) and commenters requested that CMS 2006, we believe that the current and
V2790, noting a difference in payment reassign HCPCS code V2790 from status proposed packaged status of HCPCS
policy and status indicator assignments indicator ‘‘N’’ to ‘‘F’’ and also create a code V2790 is appropriate based on
for the two types of tissues used for separate APC specifically for amniotic resource and clinical considerations. We
ocular surface transplant. That is, membrane transplantation procedures also believe that the proposed
HCPCS code V2785, which is assigned for CY 2008. composition of APC 0244, dominated by
status indicator ‘‘F’’ and HCPCS code Response: The OPPS has provided claims for corneal transplant
V2790, which is assigned status separate payment for corneal tissue procedures, reflects appropriate clinical
indicator ‘‘N,’’ are not treated similarly acquisition at reasonable cost since the and resource homogeneity. While some
with regard to status indicator beginning of the OPPS, due to the commenters were concerned with
assignments and OPPS payment policy. highly variable corneal tissue processing hospitals not reporting HCPCS code
Payment for items and services assigned fees required for eye banks to provide V2790 when reporting CPT code 65780,
status indicator ‘‘N’’ is packaged into safe corneal tissue from donors as we do not believe that we should create
payment for the associated procedures, needed for transplant, through special a claims processing edit in this instance.
while payment for items and services distribution channels. These costs may We create device edits, when
with status indicator ‘‘F’’ is made at vary substantially and unpredictably, appropriate, for procedures assigned to
reasonable cost, not under the OPPS. depending on philanthropic and in-kind device-dependent APCs, where those
Another commenter requested that CMS service contributions to eye banks that APCs have been historically identified
reassign the CPT procedure codes vary from community-to-community under the OPPS as having very high
associated with the amniotic tissue and from year-to-year. Our device costs. Because APC 0244 is not
transplant from APC 0244 to a separate understanding is that amniotic a device-dependent APC and the costs
APC. This commenter indicated that the membrane retrieved from donated of the procedure with and without
source tissue is not bundled into the placental tissues is a processed, HCPCS code V2790 are relatively close,
payment for every CPT code in APC cryopreserved, and commercially we will not create edits. We remind
0244, only the amniotic membrane marketed product used for ocular hospitals that they must report all of the
tissue. reconstruction that may be stocked and HCPCS codes that appropriately
In addition, several commenters were stored by hospitals. Unlike corneal describe the items used to provide
concerned that paying separately for tissue, we believe that amniotic tissue is services, regardless of whether the
corneal tissue and not for amniotic a supply with stable and predictable HCPCS codes are packaged or paid
membrane tissue could create a costs. We do not consider the separately.
competitive disadvantage and a circumstances of amniotic tissue to be After consideration of the public
financial disincentive for hospitals to like those of corneal tissue, and comments received, we are finalizing
treat ocular surface diseases using consider it appropriate to continue to our proposed CY 2008 payment
amniotic membrane tissue and package the payment for amniotic tissue policies, without modification, for
ultimately would impede beneficiary into payment for its related procedure HCPCS codes V2785 and V2790 as
access to this ocular reconstructive code. reflected in their status indicators, as
procedure. Some commenters indicated We examined CY 2008 proposed rule well as the proposed configuration of
that HCPCS code V2790 and its related claims, derived from CY 2006, for CPT APC 0244. We are also changing the
procedure code, specifically CPT code code 65780, with and without HCPCS APC title for APC 0244 from ‘‘Corneal
Transplant’’ to ‘‘Corneal and Amniotic Response: We agree with the c. Palatal Implant (APC 1510)
Membrane Transplant,’’ effective commenter that the procedure described In Addendum B to the CY 2008
January 1, 2008, to ensure that the title by CPT code 65770 requires the proposed rule (72 FR 43018), we
better describes all procedures assigned implantation of a device, and that a proposed to pay $850 for HCPCS code
to that APC. significant portion of the total cost of C9727 (Insertion of implants into the
keratoprosthesis implantation soft palate; minimum of three implants)
b. Keratoprosthesis (APC 0293)
procedures is likely to be attributable to through its assignment to New
CPT code 65570 (Keratoprosthesis) device costs. Currently CPT code 65570 Technology APC 1510 (New
describes the surgical procedure for is assigned to APC 0293 under the Technology—Level X ($800–$900)).
implantation of an artificial cornea, also OPPS, where it is the only procedure in This is the same APC assignment for the
known as a keratoprosthesis. In the CY the APC. There also are two device service as its CY 2007 placement.
2007 OPPS/ASC final rule with codes for reporting keratoprostheses, We received one comment on our CY
comment period, we indicated that we HCPCS code C1818 (Integrated 2008 payment proposal for HCPCS code
were implementing device edits in CY Keratoprosthesis) that describes the C9727. A summary of the comment and
2007 for CPT code 65770 to ensure that expired pass-through device category our response follow.
all claims for CPT code 65570 in CY that was created in CY 2003 and HCPCS Comment: One commenter considered
2007 and after include charges for a code L8609 (Artificial cornea) that was the proposed CY 2008 payment rate for
required device (71 FR 68053). For CY first available for reporting in CY 2007. HCPCS code C9727 to be inappropriate
2008, we proposed continued It is not possible to calculate a device based on the costs of the clinical staff,
assignment of CPT code 65570 to APC percentage for APC 0293 for CY 2008 supplies, equipment, and overhead
0293 (Level V Anterior Segment Eye that reflects the full costs of the devices required to perform the procedure. The
Procedures), with a proposed payment implanted in CY 2006 because there was commenter reported that, based on its
rate of approximately $5,290. The CY no device code that described all estimate that used the MPFS Practice
2007 payment rate for APC 0293 is possible devices that could be Expense Database as a reference, the
approximately $3,196. implanted in the procedure at that time. appropriate median cost for this
We received one public comment on procedure should be between $1,100
As we stated in the CY 2007 OPPS/
our CY 2008 proposal for CPT code and $1,200. The commenter submitted a
ASC final rule with comment period,
65770. A summary of the public categorized list of items involved in
when there are device HCPCS codes for
comment and our response follow. performing the procedure to CMS, along
all possible devices that could be used
Comment: One commenter expressed to perform a procedure that always with approximate costs for each
concern that the procedure described by requires a device and the APC is category. In addition, the commenter
CPT code 65570 required significant designated a device-dependent APC, we asked CMS to reassign HCPCS code
implantation of a costly device, but it commonly institute device edits that C9727 to New Technology APC 1514
was not assigned to a device-dependent prevent payment of claims that do not (New Technology—Level XV ($1200–
APC. The commenter stated that include both the procedure and an $1300)) for CY 2008 because the
assignment to a nondevice-dependent commenter believed that the payment
acceptable device code (71 FR 68053).
APC may result in inadequate payment for this APC would appropriately reflect
We implemented device edits in CY
rates in the ASC setting. The commenter the complexity and resource costs
2007 for APC 0293, the first year that
noted that the revised ASC payment associated with performing this
device HCPCS codes that describe all
methodology, which will be procedure.
possible devices that could be used to
implemented in CY 2008, includes an Response: We assign a new procedure
perform the procedure were available,
exception to the standard ratesetting to a New Technology APC when we do
and we agree with the commenter that
methodology for device-intensive not have adequate claims data upon
it would be most consistent with our
procedures that allows only the service which to determine the median cost of
established device editing policy to
portion of the procedure to be reduced performing a procedure and there is no
designate APC 0293 as device- appropriate clinical APC for its
by the ASC budget neutrality
adjustment to reflect the relatively dependent. However, we are unable to assignment based on clinical and
constant price of medical devices across consider only CY 2006 claims for CPT resource homogeneity considerations.
hospital outpatient and ASC settings of code 65570 that contain a device HCPCS We perform our own cost analysis and
care. Device-intensive procedures are code for CY 2008 ratesetting for the cost estimate, in addition to taking the
defined as those procedures assigned to APC. If we were to follow our usual project costs that may be submitted in
device-dependent APCs under the OPPS ratesetting methodology for device- a New Technology APC application into
for payment purposes, where the APC dependent APCs, we could be consideration. As we stated in our
device cost is greater than 50 percent of systematically and incorrectly excluding November 30, 2001 final rule (66 FR
the APC median cost. The commenter claims for CPT code 65570 that may 59900), concerning the placement of
pointed out that by assigning CPT code have been correctly coded at the time by new services into New Technology
65570 to a non-device-dependent APC hospitals implanting a two-part APCs in response to an application,
under the OPPS, the procedure did not keratoprosthesis not described by the ‘‘We will not limit our determination of
qualify as device intensive for ASC only available HCPCS code, specifically the cost of the procedure to information
payment purposes. The commenter C1818. submitted by the application. Our staff
concluded that the entire payment rate After consideration of the public will obtain information on cost from
for the procedure would be reduced by comments received, we are finalizing other appropriate sources before making
the ASC budget neutrality adjustment, our CY 2008 proposal, with a determination of the cost of the
rather than just the service portion, in modification. We are assigning CPT procedure to hospitals.’’ We received a
contrast to other procedures assigned to code 65570 to APC 0293 as proposed. In New Technology APC application from
APCs for which the device costs addition, we are designating APC 0293 the manufacturer of palatal implants
constitute a significant portion of the as a device-dependent APC, with a required for the Pillar Procedure.
total procedure costs. median cost of approximately $5,335. Consistent with our customary practice,
we compared the estimated hospital code C9727 to New Technology APC levels of resource utilization, for a total
resources, including procedure room 1510 with a payment rate of $850. of 9 new APCs for arthroscopy
time, personnel, device costs, and other procedures with recommended payment
7. Orthopedic Procedures
resources of the new procedure to ranging from $1,530 to $4,100.
various other OPPS procedures for a. Arthroscopic Procedures (APCs 0041 According to the commenter, these
which we have historical claims data. and 0042) clinical distinctions parallel the
We believed that, based on this analysis, For CY 2008, we proposed two distinctions CMS has created for other
a payment rate of $850 was appropriate primary APCs for arthroscopic classes of procedures, including other
based on all cost and utilization procedures, APC 0041 (Level I orthopedic procedures, and would more
information available to us regarding the Arthroscopy), comprised of 49 accurately and equitably reflect the
palatal implant procedure and other procedures with a CY 2008 proposed clinical characteristics and resource
services provided in the hospital payment rate of approximately $1,876, utilization of the services rendered.
outpatient setting. Consequently, we and APC 0042 (Level II Arthroscopy), Response: In response to the concerns
assigned HCPCS code C9727 to New comprised of 17 procedures with a raised by the commenter, we reviewed
Technology APC 1510, effective October proposed payment rate of approximately the clinical characteristics and hospital
1, 2006. $3,043. The CY 2007 payment rates for costs from CY 2006 claims data for all
Analysis of our hospital data for these APCs 0041 and 0042 are procedures proposed for CY 2008
claims submitted for CY 2006 indicates approximately $1,759 and $2,797, assignment to APCs 0041, 0042, and
that the palatal implant procedure was respectively. While we proposed to 0053. In considering the commenter’s
rarely performed on Medicare assign the majority of arthroscopic recommended APC configurations, we
beneficiaries in the last quarter of that procedures to these APCs for CY 2008, identified several procedures that were
year when specific OPPS payment was we also proposed to continue the assigned to APCs 0041 and 0053 with
first available. OPPS claims for services assignment of several arthroscopic median costs and clinical characteristics
between October 1, 2006, and December procedures to APC 0053 (Level I Hand that were more similar to procedures
1, 2006, show that there were only two Musculoskeletal Procedures), with a assigned to other clinical APCs than the
claims submitted for HCPCS code proposed CY 2008 payment rate of APCs to which we proposed their
C9727. We reexamined the service’s approximately $1,071. The CY 2007 assignment. Therefore, for CY 2008, we
proposed CY 2008 assignment in light of payment rate for APC 0053 is will reassign 11 arthroscopic procedures
all current information available to us approximately $993. that are currently in APC 0041 to APC
for this final rule with comment period, We received one public comment on 0042, and we will reassign 3
and we conclude that its proposed our CY 2008 proposed configuration of arthroscopic procedures that are
assignment to New Technology APC arthroscopy APCs. A summary of the currently in APC 0053 to 0041, as
1510 remains appropriate. We will public comment and our response reflected in Table 21 below. While we
reexamine the claims data for this follow. appreciate the commenter’s suggestion
procedure next year when we review its Comment: A commenter stated that for nine new APCs for arthroscopic
APC placement in preparation for the the current configuration of arthroscopic procedures, we believe that the existing
annual CY 2009 OPPS update. procedures assigned to APCs 0041, clinical APCs, with the modifications
Furthermore, the MPFS applies a very 0042, and 0053 fails to appropriately included in Table 21 that assign
different methodology for establishing recognize the distinct clinical and procedures to the larger groups in a way
the payment for the physician’s office resource features of the wide range of that is generally consistent with the
practice expenses associated with a arthroscopic procedures now being commenter’s more specific
procedure, specifically considering the provided to Medicare beneficiaries. The recommended groupings, sufficiently
individual costs of the inputs, whereas commenter requested that CMS create account for the different clinical and
the OPPS generally pays based on new arthroscopy APCs and reconfigure resource characteristics of these
relative payment weights calculated the current assignment of arthroscopic procedures. Furthermore, to reduce the
from hospitals’ costs as determined from procedures to ensure that the size of the APC payment groups and
claims data. Thus, comparisons between arthroscopy APCs are clinically establish new clinical APC payment
the MPFS and OPPS payments for homogenous and contain only those groups to pay more precisely would be
services are not appropriate. While the procedure that are similar in resource inconsistent with our overall strategy to
palatal implant procedure is a relatively utilization. Specifically, the commenter encourage hospitals to use resources
new service under the OPPS, the requested that CMS restructure the more efficiently by increasing the size of
procedure resembles other OPPS arthroscopy APCs to reflect the the payment bundles.
services for which cost data are following clinical categories: diagnostic After consideration of the public
currently available. arthroscopies, lower extremity versus comment received, we are modifying
Therefore, after consideration of all upper extremity arthroscopies, and our CY 2008 proposal and will reassign
the public comments received, we are arthroscopies with implants. The several arthroscopic procedures to APCs
finalizing our CY 2008 proposal, commenter suggested that each clinical 0041 and 0042, as displayed in Table 21
without modification, to assign HCPCS distinction be divided further into three below.
TABLE 21.—CY 2008 APC REASSIGNMENT OF ARTHROSCOPIC PROCEDURES

CY 2007 CY 2007 CY 2008 CY 2008
HCPCS
Short descriptor APC APC APC APC

code assignment median cost assignment median cost
29819 ....... Shoulder arthroscopy/surgery ................................................................... 0041 $1,749 0042 $2,876

29820 ....... Shoulder arthroscopy/surgery ................................................................... 0041 1,749 0042 2,876
TABLE 21.—CY 2008 APC REASSIGNMENT OF ARTHROSCOPIC PROCEDURES—Continued

CY 2007 CY 2007 CY 2008 CY 2008
HCPCS Short descriptor APC APC APC APC
code assignment median cost assignment median cost

29847 ....... Wrist arthroscopy/surgery ......................................................................... 0041 1,749 0042 2,876
29856 ....... Tibial arthroscopy/surgery ......................................................................... 0041 1,749 0042 2,876
29860 ....... Hip arthroscopy, dx ................................................................................... 0041 1,749 0042 2,876
29861 ....... Hip arthroscopy/surgery ............................................................................ 0041 1,749 0042 2,876
29891 ....... Ankle arthroscopy/surgery ......................................................................... 0041 1,749 0042 2,876
29892 ....... Ankle arthroscopy/surgery ......................................................................... 0041 1,749 0042 2,876
29900 ....... Mcp joint arthroscopy, dx .......................................................................... 0053 987 0041 1,811
29901 ....... Mcp joint arthroscopy, surg ....................................................................... 0053 987 0041 1,811
29902 ....... Mcp joint arthroscopy, surg ....................................................................... 0053 987 0041 1,811
b. Closed Fracture Treatment (APC We note that while there are about 150 necessary removal of bone or ligament
0043) procedures assigned to APC 0043, only for insertion and imaging guidance),
For CY 2008, we proposed to continue 13 procedures are significant procedures lumbar; single level); and 0172T
with the frequency necessary to assess (Insertion of posterior spinous process
the assignment of various CPT codes
the APC’s alignment with the 2 times distraction device (including necessary
that describe closed treatment of
rule. The remainder of the procedures removal of bone or ligament for
fractures of the fingers, toes, and trunk
are low volume and, therefore, not insertion and imaging guidance),
to APC 0043 (Closed Treatment Fracture
significant procedures in the APC for lumbar; each additional level) to APC
Finger/Toe/Trunk), with a proposed
purposes of evaluating the APC by 0050 (Level II Musculoskeletal
payment rate of about $119. We did not
applying the 2 times rule. The median Procedures Except Hand and Foot), with
propose any CPT code reassignment
costs of the significant procedures in a proposed payment rate of
changes for APC 0043.
APC 0043 for CY 2008 range from about approximately $1,868. These two codes
We received one public comment on $68 to $248. This particular APC has were new in CY 2007, where they were
our proposed CY 2008 configuration of been excepted from the 2 times rule for assigned to APC 0050 on an interim
APC 0043. A summary of the public the past 6 years under the OPPS, and we final basis. We created a new device
comment and our response follow. have not previously received public category, specifically, C1821
Comment: A commenter expressed comments regarding the structure of this (Interspinous process distraction device
concern about the wide variety of APC over the past several years. The (implantable)) for transitional pass-
procedures assigned to APC 0043, commenter did not make a specific through payment, effective January 1,
which the commenter claimed ranged recommendation regarding alternative 2007, which we expected to be reported
from $1 to $3,000 in cost. The APC configurations. Because APC 0043 with CPT codes 0171T and 0172T. This
commenter disapproved of CMS contains so many different fracture pass-through device category will
assigning one APC for various types of treatment procedures with low volume, continue to be paid at hospital charges
fracture treatments as the commenter we are concerned that any restructuring adjusted to cost for CY 2008, as
asserted that the costs associated with for CY 2008 without the benefit of discussed in section IV.A.1.b. of this
finger treatments, hip dislocations, and public comment could lead to APCs that final rule with comment period.
spinal fractures vary significantly. The do not reflect improved clinical and We received several public comments
commenter indicated specifically that resource homogeneity over the proposed on our CY 2008 proposed APC
the costs associated with spinal configuration; therefore, we will not assignments for CPT codes 0171T and
fractures are significantly greater than establish a different APC configuration 0172T. A summary of the public
the costs associated with finger or toe for CY 2008. However, we are comments and our response follow.
fractures. The commenter believed that specifically inviting public comment on Comment: Some commenters
grouping all of these procedures in one potential alternative APC configurations disagreed with our proposed APC
clinical APC violated the 2 times rule, for the services currently assigned to assignments for CPT codes 0171T and
and that continuing to except APC 0043 APC 0043 for the CY 2009 APC review 0172T, and indicated that these
from the 2 times rule was not process. We also plan to bring this APC procedures should be reassigned from
appropriate. To pay appropriately for issue to the attention of the APC Panel APC 0050 to APC 0208 (Laminotomies
these procedures under the current at its winter 2008 meeting and will and Laminectomies), which had a
OPPS, the commenter recommended request its input as to how to proposed payment rate of approximately
that CMS divide the procedures appropriately categorize the procedures $3,036 for CY 2008. The commenter
currently assigned to APC 0043 among in APC 0043. asserted that the spinous distraction
several APCs, because of the existing After consideration of the public device insertion is clinically different
large variations in resource costs for the comment received, we are finalizing, and involves greater hospital resources
procedures. without modification, our proposed than the other procedures assigned to
Response: We thank the commenter configuration of APC 0043, with a APC 0050. This commenter cited one
for bringing this concern to our median cost of about $111 for CY 2008. procedure in APC 0050, specifically
attention. We agree with the commenter vertebroplasty, claiming that its costs
that grouping all of the closed fracture c. Insertion of Posterior Spinous Process are significantly lower than the spinous
treatment procedures in one APC may Distraction Device (APC 0050) process distraction device procedure.
not most accurately distinguish the We proposed to assign CPT codes The commenter claimed that the
more expensive from the less resource- 0171T (Insertion of posterior spinous vertebroplasty procedure is one that
intensive fracture treatment procedures. process distraction device (including involves an injection procedure that is
performed in 30 minutes and does not fluoroscopic guidance; one or more methods. Based on our review of the
involve implanting a spinal device. additional levels (List separately in hospital outpatient claims from CY 2006
Alternatively, the commenter explained addition to code for primary procedure)) and CY 2005, percutaneous intradiscal
that inserting a spinous process to APC 0050 (Level II Musculoskeletal annuloplasty is performed infrequently
distraction device requires an hour in Procedures Except Hand and Foot), with in the hospital outpatient setting for the
the operating room and involves a proposed payment rate of Medicare population. Claims from CY
implanting a device in the spine. approximately $1,868 for CY 2008. 2006 show a median cost of
Several commenters reported that the These CPT codes were new for CY 2007, approximately $1,019 for CPT code
spinous process distraction device when they were first assigned to APC 0062T based on 44 single claims, and a
insertion is similar to a laminectomy 0050 under the OPPS on an interim median cost of approximately $2,034
procedure in that both procedures final basis. based on only 28 single claims for CY
involve the spinal processes and take We received several public comments 2005.
approximately 1 hour to perform. These on our CY 2008 proposed APC We believe, based on our review of
commenters requested that CMS assignments for CPT codes 22526 and the clinical characteristics and historical
reassign CPT codes 0171T and 0172T to 22527. A summary of the public hospital costs for percutaneous
APC 0208 based on clinical and cost comments and our response follow. intradiscal annuloplasty and other
considerations. Comment: Several commenters musculoskeletal procedures assigned to
Response: We carefully analyzed the disagreed with the proposed assignment APCs 0050 and 0051, that the most
CY 2006 claims data for other for CPT codes 22526 and 22527 and appropriate APC assignment for
musculoskeletal procedures under the recommended that these procedures be percutaneous intradiscal annuloplasty
OPPS, and we believe that CPT codes reassigned to APC 0051 (Level III procedures, whether electrothermal or
0171T and 0172T are appropriately Musculoskeletal Procedures Except non-electrothermal, is APC 0050.
assigned to APC 0050, based on both Hand and Foot), which had a proposed After considering the public
clinical and expected resource CY 2008 payment rate of approximately comments received, we are finalizing
considerations. We do not agree with $2,777. These commenters believed that our CY 2008 proposal, without
some commenters that these minimally the hospital costs associated with IDET modification, to assign CPT codes 22526
invasive procedures to insert a spinal are relatively higher than the payment and 22527 to APC 0050, with a median
device are similar to the procedures that associated with APC 0050. One cost of approximately $1,836.
are currently assigned to APC 0208, commenter who provided its price list
e. Kyphoplasty Procedures (APC 0052)
which are generally significant open reported that the cost of one disposable
surgical procedures on the spine. We catheter used in the procedure is For CY 2008, we proposed to assign
believe that the hospital’s nondevice approximately $1,800. The commenter CPT codes 22523 (Percutaneous
costs and the clinical characteristics of indicated that APC 0051 would more vertebral augmentation, including cavity
CPT codes 0171T and 0172T more accurately pay hospitals for the IDET creation (fracture reduction and bone
closely align with the less invasive procedure. Another commenter biopsy included when performed) using
musculoskeletal procedures presently indicated that the other procedures in mechanical device, one vertebral body,
assigned to APC 0050. APC 0051 are similar to the IDET unilateral or bilateral cannulation (eg,
We will continue pass-through procedure based on clinical kyphoplasty); thoracic), 22524
payment status, initially implemented homogeneity and resource costs. (Percutaneous vertebral augmentation,
in January 2007, for the spinous process Response: CPT codes 22526 and including cavity creation (fracture
distraction device (C1821) reported with 22527 were created effective January 1, reduction and bone biopsy included
CPT codes 0171T and 0172T through 2007. Prior to CY 2007, the IDET when performed) using mechanical
CY 2008. Separate payment for HCPCS procedure was described by CPT code device, one vertebral body, unilateral or
code C1821 will be made under the 0062T, which was implemented on bilateral cannulation (eg, kyphoplasty);
OPPS for at least 2 and not more than January 1, 2005. The initial code long lumbar), and 22525 (Percutaneous
3 years of pass-through payment. After descriptor for CPT code 0062T in CY vertebral augmentation, including cavity
that period, payment for the cost of the 2005 was ‘‘Percutaneous intradiscal creation (fracture reduction and bone
device will be packaged into the annuloplasty, any method, unilateral or biopsy included when performed) using
procedural payment for its bilateral including fluoroscopic mechanical device, one vertebral body,
implantation, specifically CPT codes guidance; single level.’’ However, in CY unilateral or bilateral cannulation (eg,
0171T and 0172T. 2007, the CPT Editorial Panel revised kyphoplasty); each additional thoracic
After consideration of the public this descriptor to ‘‘Percutaneous or lumbar vertebral body (List separately
comments received, we are finalizing intradiscal annuloplasty, any method in addition to code for primary
our CY 2008 proposal, without except electrothermal, unilateral or procedure)) to APC 0052 (Level IV
modification, to assign CPT codes bilateral including fluoroscopic Musculoskeletal Procedures Except
0171T and 0172T to APC 0050, with a guidance; single level’’ to appropriately Hand and Foot) with a proposed
median cost of approximately $1,836. differentiate between electrothermal and payment rate of approximately $5,010.
non-electrothermal methods. Following We received one public comment on
d. Intradiscal Annuloplasty (APC 0050) the descriptor revision, CPT codes our CY 2008 proposal for CPT codes
For CY 2008, we proposed to assign 22526 and 22527 described the 22523, 22524, and 22525. A summary of
the intradiscal electrothermal (IDET) electrothermal methodology for the public comment and our response
annuloplasty procedures, specifically percutaneous intradiscal annuloplasty, follow.
those described by CPT codes 22526 while CPT code 0062T described the Comment: Some commenters
(Percutaneous intradiscal electrothermal non-electrothermal methodology. expressed concern about the accuracy of
annuloplasty, unilateral or bilateral Since the code descriptor change did hospital charge data for these
including fluoroscopic guidance; single not occur until CY 2007, hospital procedures. Because of charge
level) and 22527 (Percutaneous outpatient claims from CY 2006 for CPT compression, the commenters believed
intradiscal electrothermal annuloplasty, code 0062T describe both that the current data collected from
unilateral or bilateral including electrothermal and non-electrothermal hospital charges do not accurately
reflect the true costs of the kyphoplasty code 36430, which is assigned to APC only one unit of CPT code 36430 on a
procedures. The commenters 0110, represents the costs of transfusion date of service. However, we remind
appreciated CMS’’ attention in of blood or blood products on the same hospitals that a claim for a single unit
reviewing and placing these procedures date of service, regardless of how many of CPT code 36430 should include
in an appropriate APC for CY 2008; units of products are transfused. In charges for all of the hospital resource
however, they believed that charge addition, for payment of the transfusion costs associated with the totality of
compression directly contributes to service, the OCE also requires the claim transfusion services furnished on the
inaccurate and reduced payment rates to contain a Level II HCPCS P-code for date of service, so that the payment for
for the services. One commenter a blood product on the same date of one unit of APC 0110 is based on the
explained that procedures that involve service as the transfusion procedure. costs of all transfusion services
the use of expensive medical devices, At its March 2007 meeting, the APC provided in a hospital outpatient
whereby hospitals apply smaller mark- Panel recommended that CMS encounter.
up rates to higher-cost medical devices investigate whether CPT code 36430 We received several public comments
than they do to lower-cost supplies used should identify when multiple units are on this proposal to maintain the current
in procedures, results in charge transfused and trigger a discounted payment policy for blood transfusion
compression. Because the current OPPS payment for the second and subsequent services. A summary of the public
payment methodology is to calculate the administration of additional units of comments and our response follow.
payment weight for an APC based on blood or blood components. The APC Comment: Several commenters
hospital charges adjusted to cost, the Panel indicated that the current requested that CMS reconsider the APC
commenters argued that charge payment for transfusion services does Panel’s recommendation to provide
compression results in the lowering of not adequately pay hospitals for the separate payment for the transfusion of
payment rates for procedures that costs of these complex services, and that each unit of blood or blood products, as
involve the use of expensive medical payment on a per unit basis rather than an alternative to CMS’ current,
devices. These commenters strongly on a per encounter basis would result in encounter-based payment policy. They
urged CMS to continue to consider more accurate and appropriate payment. stated that the current policy does not
future refinements to the OPPS payment We did not agree with the APC pay OPPS providers adequately for the
amounts for kyphoplasty procedures in Panel’s recommendation, and we additional resources required for
light of the effects of charge proposed to not accept this hospital outpatient visits involving
compression. recommendation for the CY 2008 OPPS. multiple transfusions. They suggested
Response: We thank the commenters As stated in the CY 2008 OPPS/ASC that hospitals could report the ‘‘59’’
for their suggestions and refer to section proposed rule (72 FR 42718), we believe modifier (distinct procedural service) or
II.A.3. of this final rule with comment that our current policy of providing a another appropriate modifier to indicate
period for further discussion on charge single payment for blood transfusion, that additional transfusions provided on
compression. Consistent with our regardless of the number of units the same day are distinct from the first
update process, we review hospital transfused, is most consistent with the transfusion. Some commenters argued
goals of a prospective payment system that this would not conflict with the
outpatient claims data and assign
to encourage and create incentives for descriptor for CPT code 36430, as
services and items to appropriate APCs
efficiency in providing services. hospitals would only report multiple
on an annual basis.
Payment for transfusion services on a units of the code when they have
After consideration of the public
per encounter basis encourages the performed more than one distinct
comments received, we are finalizing
transfusion of only those blood products transfusion. In contrast, another
our CY 2008 proposal, without
that are necessary for the beneficiary’s commenter noted that CPT guidelines
modification, to assign CPT codes
treatment during the hospital outpatient indicate that CPT code 36430 should be
22523, 22524, and 22525 to APC 0052,
encounter. Moreover, the current reported once per transfusion regardless
with a median cost of approximately
median cost for the transfusion service, of the number of units administered,
$4,997.
associated with the transfusion of all and supported CMS’ proposal to
8. Vascular Procedures blood products furnished on a date of continue provide one payment for blood
a. Blood Transfusion (APC 0110) service, has been set based on the transfusion services based on charges
historical reporting of all charges for for all services provided in a hospital
We have a longstanding policy under transfusion on the same date of service outpatient encounter.
the OPPS that blood transfusion services and, therefore, represents the full cost of One commenter also requested that
are billed and paid on a per encounter an episode of transfusion, rather than CMS clarify that hospitals should charge
basis and not by the number of units of the cost of transfusion of a single unit for blood transfusion and administration
blood products transfused (Internet of blood or blood product. Given our services the same way for both hospital
Only Manual 100–4, Chapter 4, Section proposed packaging approach for the CY inpatients and outpatients. Another
231.8). Under this policy, a transfusion 2008 OPPS, it would be inconsistent for commenter indicated that hospitals
APC payment is made to the OPPS us to revise our current transfusion should be able to base blood transfusion
provider for transfusing blood products payment policy to provide separate charges according to instructions
once per day, regardless of the number payment for each unit of blood product published when Medicare was first
of units or different types of blood transfused, thereby reducing the size of created. According to the commenter,
products transfused. The OCE ensures the current transfusion payment bundle blood transfusion services were charged
only one payment for APC 0110 (72 FR 42717 through 42718). and paid on a per unit basis at that time.
(Transfusion), regardless of the number Therefore, for CY 2008 we proposed Response: We believe that the current
of units of CPT code 36430 to maintain our current payment policy, payment policy for blood transfusion
(Transfusion, blood or blood which bases payment for transfusion on services provides adequate and
components) reported by the hospital on the costs of all transfusion services appropriate payment to OPPS providers
a single date of service. The CPT code furnished on a single date of service and for the additional resources required for
36430 descriptor does not include ‘‘per which examines hospital claims to hospital outpatient visits involving
unit.’’ Hence, the median cost for CPT ensure that payment is provided for multiple transfusions. As described in
the proposed rule (72 FR 42718), we encounter, we remind hospitals that a 37478 is quite close to the CY 2008
instruct hospitals to include charges for claim for a single unit of CPT code median cost of approximately $1,626 for
all of the hospital resource costs 36430 should include charges for all of APC 0092. We believe that CPT code
associated with the totality of the hospital resource costs associated 36478 is most appropriately assigned to
transfusion services furnished on a date with the totality of transfusion services APC 0092 based on clinical and
of service. While the CPT code furnished on the date of service. resource considerations.
descriptor would not preclude hospitals We remind hospitals that in a budget
b. Endovenous Ablation (APC 0092)
from reporting multiple units of the neutral environment, Medicare does not
code when they have performed more For CY 2008, we proposed to pay make payments that fully cover
than one distinct transfusion if they approximately $1,684 for CPT code hospitals’ costs, including those for the
were to consider each unit of blood 36478 (Endovenous ablation therapy of purchase and maintenance of capital
transfused to be a distinct transfusion, incompetent vein, extremity, inclusive equipment. We rely on hospitals to
CPT coding guidelines indicate that CPT of all imaging guidance and monitoring, make their business decisions regarding
code 36430 should be reported only percutaneous, laser; first vein treated) acquisition of expensive capital
once per transfusion, regardless of the through its proposed assignment to APC equipment taking into consideration
number of units administered. We 0092 (Level I Vascular Ligation). The their knowledge about their entire
believe that the median cost calculated proposed APC assignment for this patient base (Medicare beneficiaries
from our claims data for blood service is the same as its CY 2007 APC included) and an understanding of
transfusion services represents the full assignment. Medicare’s and other payers’ payment
cost of an episode of transfusion, rather We received several public comments
policies.
than the cost of the transfusion of a on the proposed CY 2008 payment for
CPT code 36478. A summary of the Furthermore, the MPFS applies a very
single unit of blood or blood product. different methodology for establishing
We also believe that our current policy public comments and our response
follow. the payment for the physician’s office
of providing a single payment for blood practice expenses associated with a
transfusion, regardless of the number of Comment: Several commenters
believed that the proposed payment rate procedure, specifically considering the
units transfused, is most consistent with individual costs of the inputs, whereas
the goals of a prospective payment for CPT code 36478 was considerably
inadequate in view of the expense the OPPS generally pays based on
system to encourage and create relative payment weights calculated
incentives for efficiency in providing associated with the capital equipment
required to perform this procedure. One from hospitals’ costs as determined from
services. Therefore, for CY 2008, we are claims data. The application of the
implementing our proposal to maintain commenter reported that, based on its
estimate that used the MPFS Practice different methodologies results in
our current payment policy, which
Expense Database as a reference, the different payment amounts in the two
bases payment for transfusion on the
appropriate placement for this settings. Therefore, comparisons
costs of all transfusion services
procedure, in comparison with the between the MPFS and OPPS payments
furnished on a single date of service and
practice expense of other endovenous for services are not appropriate.
which examines hospital claims to
ensure that payment is provided for procedures, would be APC 0091 (Level After consideration of the public
only one unit of CPT code 36430 on a II Vascular Ligation), which had a CY comments received, we are finalizing
date of service. 2008 proposed payment rate of our CY 2008 proposal, without
Hospital inpatient departments and approximately $2,781. Another modification, to assign CPT code 36478
HOPDs have very different reporting commenter asserted that the other to APC 0092, with a median cost of
structures that utilize different coding procedures assigned to APC 0092 bear about $1,626.
systems and vary in other significant little resemblance to the procedure c. Insertion of Central Venous Access
ways. Inpatient charges for blood described by CPT code 36478, and that Device (APC 0625)
transfusion services are not relevant to in terms of clinical homogeneity and
the OPPS. Hospitals are free to set their resource costs, endovenous ablation For the CY 2008 OPPS, we proposed
charges for all items and services based therapy of incompetent veins is very to assign CPT code 36566 (Insertion of
on their own judgment. As is the case similar to those procedures assigned to tunneled centrally inserted central
in other areas of CMS payment policy, APC 0091. The commenter requested venous access device, requiring two
reporting instructions for transfusion that CMS reassign CPT code 36478 from catheters via two separate venous access
services reflect our current payment APC 0092 to APC 0091 for CY 2008. sites; with subcutaneous port(s)) to APC
methodologies, which have evolved Response: We disagree with the 0625 (Level IV Vascular Access
over time, and may not be the same as commenters’ argument that CPT code Procedures), as the only code in that
instructions published in the past. 36478 is less clinically related to APC. The procedure is for the purpose
In summary, for CY 2008, after procedures in APC 0091 than to of implanting a vascular access device
consideration of the public comments procedures assigned to APC 0092. that is typically furnished to persons
received, we are finalizing our proposal, Procedures assigned to both APCs 0091 with end stage renal disease when there
without modification, to continue to pay and 0092 include a variety of surgical are no suitable access points for
hospitals for only one unit of CPT code procedures involving veins, and both hemodialysis. The device that is
36430 on a single date of service. We are APCs include endovenous ablation implanted is reported under HCPCS
not adopting the APC Panel’s March procedures using different technologies. code C1881 (Dialysis access system). For
2007 recommendation to provide a Analysis of our CY 2006 hospital claims CY 2008, we proposed a national
separate payment for each unit of blood data results in a median cost of unadjusted payment of approximately
or blood product transfused. Because approximately $2,681 for APC 0091, $5,562 for the service, compared to the
the payment for one unit of APC 0110, which is considerably higher than the CY 2007 national unadjusted payment
with a final CY 2008 median cost of HCPCS-specific median cost of of approximately $5,130. As proposed,
approximately $214, is based on the approximately $1,713 for CPT code the payment for the device is packaged
costs of all transfusion services 36478 based on 984 single claims. into the payment for APC 0625, a
provided in a hospital outpatient However, the median cost of CPT code device-dependent APC.
We received several public comments stabilize with additional claims virtually the same resource costs.
on the proposed CY 2008 payment for available for ratesetting. Specifically, the commenter explained
APC 0625. A summary of the public Comment: One commenter asked that that the equipment and software are
comments and our responses follow. CMS change the short descriptor for equivalent and have similar costs, and
Comment: Several commenters stated CPT code 36566 to read ‘‘Ins tunneled in some facilities, the same equipment
that the proposed CY 2008 payment for cath w/subq port’’ because the is used for the services in both APCs.
APC 0625 is excessive and commenter believed that it is confusing According to the commenter, the
recommended that the CY 2008 APC to have multiple CPT codes with the technicians performing the studies in
payment not exceed the CY 2007 same short descriptor. The commenter both APCs are of the same skill level
payment. The commenters also also asked that we revise the definition and the associated cost is the same. The
recommended that CMS use external for HCPCS code C1881 to read ‘‘Dialysis commenter claimed that the pay scale
data to establish an appropriate access system with subcutaneous port or that CMS uses for purposes of
benchmark cost for HCPCS code C1881. valve.’’ establishing the MPFS RVUs for the
The commenters asked that CMS Response: The CPT codes, including procedures differs by only 2 cents per
continue to require that hospitals must the short descriptors, are owned by the hour. The commenter asserted that the
report HCPCS code C1881 on claims on AMA and any change to them is outside time scheduled for the procedures is
which they report CPT code 36556. of the purview of CMS and should be virtually identical and that the supplies
They also asked that CMS establish a addressed to the AMA CPT Editorial are essentially the same for the services
payment for CPT code 36556 that is Board. HCPCS code C1881 describes the assigned to both APCs. Hence, the
more stable from year to year. The category of dialysis access devices, commenter concluded that there is no
commenters indicated that the low which is an existing pass-through basis for the differences in calculated
device category that expired from pass costs for the services under the OPPS
volume of these procedures may result
through status as of the CY 2003 OPPS. and recommended that CMS study this
in unstable payment rates over time and
As stated in the November 1, 2005 OPPS differential to provide insight into
that use of external data to provide a
final rule with comment period (70 FR situations where the OPPS CCR
benchmark for the cost of the device
68631), we revise a code that describes methodology to calculate costs does not
could help alleviate this problem. The
an existing category of devices (such as result in an accurate measure of relative
commenters claimed that the cost of the
C1881) only if such revision is resource utilization.
device reported by HCPCS code C1881
necessary to distinguish the existing Response: We agree that it appears
is approximately $3,500.
category from a new category of pass- that the resources required to perform
Response: For this final rule with through devices in instances in which the vascular ultrasound and
comment period, the median cost for we must create a new category to echocardiography services in these
APC 0625 is approximately $5,143, as describe a device that meets the criteria APCs appear, from a clinical
compared with the proposed rule for pass-through payment. Therefore, perspective, to be very similar. We
median cost of approximately $5,493. there is no basis in policy to revise the performed a limited initial examination
Both the proposed and final rule definition of HCPCS code C1881. of elements of the CY 2006 claims data
medians were calculated using only 8 After consideration of the public for these APCs to determine if we could
claims of 479 total bills for the proposed comments received, we are finalizing identify the reason for the difference in
rule and 535 total bills (of which 325 our CY 2008 proposal, without estimated median costs. We first looked
were potentially usable single bills) for modification, to pay for CPT code 36566 at the charges for the services in these
this final rule with comment period. through device-dependent APC 0625, APCs, because one of the most
This is, in part, because we used only with a median cost of approximately fundamental elements of the calculation
claims that contained the correct device $5,143. We will not change the short of estimated costs is hospitals’’ charges
code, no token charges for the device, descriptor for pass-through device for the services. The mean charge per
and no ‘‘FB’’ modifier. Procedure-to- category C1881. service for the 17 HCPCS codes assigned
device edits that return to providers to APC 0267 was approximately $786.
those claims for CPT code 36556 that do d. Noninvasive Vascular Studies (APC In contrast, the mean charge per service
not also contain HCPCS code C1881 did 0267) for the three procedure codes assigned
not go into place until January 1, 2007 For the CY 2008 OPPS, we proposed to APC 0269 was approximately $1,135.
and, therefore, were not in place for CY to pay approximately $158 for Clearly, on average hospitals charge
2006. We recognize that the small procedures assigned to APC 0267 much more for the services in APC 0269
number of claims that contain the (Noninvasive Vascular Studies). We also than for the services in APC 0267.
HCPCS C-code for the device without proposed to pay approximately $420 for However, while the proposed payment
which the procedure cannot be services assigned to APC 0269 (Level II for APC 0267 was 38 percent of the
performed may result in a median that Echocardiogram Except proposed payment for APC 0269, the
is more volatile than is desirable. Transesophageal). mean charge for APC 0267 based upon
However, given that the commenter We received one public comment on the final rule data was 64 percent of the
advises us that the cost of the device is our CY 2008 proposal. A summary of mean charge for APC 0269. Therefore,
approximately $3,500 and given that the the public comment and our response there is more of a disparity between the
median we calculated using final rule follow. payments (and hence, between the
data is approximately $5,143, we Comment: A commenter stated that median costs) than between the mean
believe that it is a reasonable estimate the vascular ultrasound procedures charges.
of the cost of the procedure, including included in APC 0267 are grossly We next looked at the total frequency
the packaged cost of the device. We underpaid and that the CY 2008 of services furnished in each APC and
expect that the data available for future payment for this APC should be similar found that the total frequency of
OPPS updates, beginning in CY 2009, to the payment for APC 0269, for which services was quite substantial in each
will include more claims that report the CMS proposed to pay approximately APC. Therefore, it is unlikely that the
device HCPCS code and, therefore, $417. The commenter indicated that the disparity between the median costs for
future median costs for APC 0625 may services in these two APCs require the two APCs is related to differences in
total volumes of services residing in new packaging due to our CY 2008 minute interval) for HBOT provided in
those APCs. APC 0267 had a total packaging approach. the hospital outpatient setting.
frequency of approximately 1.2 million We note we wish to investigate In the CY 2005 final rule with
claims and APC 0269 had a total further the specific packaging associated comment period (69 FR 65758 through
frequency of approximately 1 million with services assigned to both APCs, the 65759), we finalized a ‘‘per unit’’
claims in the final rule data from CY revenue codes under which the services median cost calculation for APC 0659
2006 claims. were charged, the revenue centers to (Hyperbaric Oxygen) using only claims
We then looked at single bills as a which these revenue codes mapped, and with multiple units or multiple
percentage of the total frequency and the CCRs that applied to the charges for occurrences of HCPCS code C1300
found that there is good representation these services. We intend to undertake because delivery of a typical HBOT
in the single bills. For APC 0267, we this further analysis and to discuss our service requires more than 30 minutes.
were able to use approximately 99 findings with the APC Panel at its We observed that claims with only a
percent of the total claims to set the winter 2008 meeting. single occurrence of the code were
median cost and for APC 0269, we were However, for CY 2008 we are basing anomalies, either because they reflected
able to use approximately 75 percent of payment for APCs 0267 and 0269 on the terminated sessions or because they
the total claims to set the median cost. median costs calculated from our claims were incorrectly coded with a single
Hence, the disparity is unlikely to be data according to our standard median unit. In the same rule, we also
related to the variability associated with cost calculation process because our established that HBOT would not
using a small percentage of total claims investigation of the data does not reveal generally be furnished with additional
to calculate the median costs. a problem with the methodology or with services that might be packaged under
We also looked at the number of the data. At this point, it appears that the standard OPPS APC median cost
providers that furnish the highest the median costs may be different methodology. This enabled us to use
volumes of services in each APC to see because of dissimilar packaging and claims with multiple units or multiple
if there were significantly different because hospitals charge significantly occurrences. Finally, we also used each
less for the services in APC 0267 than hospital’s overall CCR to estimate costs
counts of providers that might be a
they charge for the services in APC for HCPCS code C1300 from billed
factor in the differences in estimated
0269, where this significant difference charges rather than the CCR for the
costs. CPT code 93880 (Duplex scan of
in charges is not neutralized by the respiratory therapy cost center.
intracranial arteries; complete bilateral
application of the CCRs applicable to Comments on the CY 2005 proposed
study), assigned to APC 0267, was
these charges. Therefore, the median rule effectively demonstrated that
furnished by 3,119 hospitals and CPT
cost for APC 0267 is significantly lower hospitals report the costs and charges
code 93970 (Duplex scan of extremity
than the median cost for APC 0269. for HBOT in a wide variety of cost
veins including responses to
After consideration of the public centers. We used this methodology to
compression and other maneuvers,
comment received, we are finalizing our estimate payment for HBOT in CYs
complete bilateral study) was furnished 2005, 2006, and 2007. For CY 2008, we
by 3,160 hospitals in CY 2006. CY 2008 proposal, without
modification, to provide payment for proposed to continue using the same
Similarly, CPT code 93307 methodology to estimate a ‘‘per unit’’
(Echocardiography, transthoracic, real- APCs 0267 and 0269 based on costs
from claims, according to the standard median cost for HCPCS code C1300 of
time with imaging documentation (2D) approximately $99 using 60,775 claims
with or without M-mode recording; OPPS methodology, with median costs
of approximately $150 and $404, with multiple units or multiple
complete), assigned to APC 0269, was occurrences for the proposed rule.
furnished by 3,227 hospitals in CY respectively. We note that for CY 2008,
CY 2008 is the fourth year in which
2006. These are a large number of the APC 0269 will be paid specifically for
we will have a special methodology to
4,089 hospitals whose claims were used noncontrast echocardiography studies.
develop the median cost for HBOT
for the final rule median cost We plan to analyze these APCs further
services that removed obviously
calculations and, therefore, it is unlikely and discuss our findings with the APC
erroneous claims and deviated from our
that idiosyncratic data from a few Panel at its winter 2008 meeting.
standard methodology of using
providers could be causing the 9. Other Procedures departmental CCRs, when available, to
disparity. convert hospitals’’ charges to costs.
We note that the CY 2008 median cost a. Hyperbaric Oxygen Therapy (APC
Prior to CY 2005, our inclusion of
of APC 0267 was about the same as its 0659)
significant numbers of miscoded claims
CY 2007 median cost, whereas the When hyperbaric oxygen therapy in the median calculation for HBOT and
median cost of APC 0269 was almost (HBOT) is prescribed for promoting the our exclusion of the claims for multiple
double its CY 2007 median cost. We healing of chronic wounds, it typically units of treatment, the typical scenario,
believe the increased cost of APC 0269 is prescribed for 90 minutes and billed resulted in payment rates that were
for CY 2008 may be a result of the CY using multiple units of HBOT on a artificially elevated. As explained
2008 packaging approach for ancillary single line or multiple occurrences of earlier, beginning in CY 2005 and
and supportive services described in HBOT on a claim. In addition to the continuing through the present, we have
section II.A.4.c. of this final rule with therapeutic time spent at full hyperbaric adjusted the CCR used in the conversion
comment period. In particular, the oxygen pressure, treatment involves of charges to costs for these services so
packaging of payment for doppler additional time for achieving full that claims data would more accurately
echocardiography and color flow pressure (descent), providing air breaks reflect the relative costs of the services.
velocity mapping, which are frequently to prevent neurological and other The median costs of HBOT calculated
reported with the CPT codes assigned to complications from occurring during the using this methodology have been
APC 0269 and which have been paid course of treatment, and returning the reasonably stable for the last 4 years. As
separately under the OPPS prior to CY patient to atmospheric pressure (ascent). stated in the proposed rule (72 FR
2008, may have contributed to the The OPPS recognizes HCPCS code 42706), we believe that this adjustment
increased cost for APC 0269, whereas C1300 (Hyperbaric oxygen under through use of the hospitals’ overall
services assigned to APC 0267 had little pressure, full body chamber, per 30 CCRs is all that is necessary to yield a
valid median cost for establishing a 67,435 claims with multiple units or CY 2006. The CY 2007 skin repair APCs
scaled weight for HBOT services. multiple occurrences. are: APC 0024 (Level I Skin Repair);
Therefore, for CY 2008, we proposed to APC 0025 (Level II Skin Repair); APC
b. Skin Repair Procedures (APCs 0133,
continue to use the same methodology 0686 (Level III Skin Repair); and APC
0134, 0135, 0136, and 0137)
that we have used since CY 2005 to 0027 (Level IV Skin Repair). Based on
estimate payment for HBOT. For CY 2006, the AMA made CY 2006 data available for the proposed
We received one public comment on comprehensive changes, including code rule, the median costs for the APCs as
our proposal. A summary of the public additions, deletions, and revisions, configured for CY 2007 were
comment and our response follow. accompanied by new and revised approximately: $93 for APC 0024; $251
Comment: One commenter introductory language, parenthetical for APC 0025; $1,027 for APC 0686; and
commended CMS for applying a notes, subheadings and cross-references, $1,340 for APC 0027. Both APCs 0024
consistent methodology of utilizing an to the Integumentary, Repair (Closure) and 0025 had 2 times violations based
overall hospital CCR to yield a valid subsection of surgery in the CPT book on CY 2006 claims data. The HCPCS-
median cost for HBOT services. to facilitate more accurate reporting of specific median costs of significant
However, the commenter also skin grafts, skin replacements, skin procedures in APC 0024 ranged from
encouraged CMS to consider an substitutes, and local wound care. approximately $83 to $255. We noted
alternative methodology for calculating Specifically, the section of the CPT book that a number of the procedures
a median cost for HBOT. Specifically, previously titled ‘‘Free Skin Grafts’’ and currently assigned to APC 0024 were
the commenter stated that a contractor containing codes for skin repair very low volume, with few single claims
for a wound care association had procedures was renamed, reorganized, available for ratesetting. Similarly, the
established and reproduced an accurate and expanded. New and existing CPT median costs of the significant
CCR for HBOT and encouraged CMS to codes related to skin replacement procedures in APC 0025 ranged from a
consider this methodology for the near surgery and skin substitutes were low of about $119 to a high of about
future. organized into five subsections: Surgical $399. This APC also contained a
Response: We appreciate the Preparation, Autograft/Tissue Cultured number of low volume procedures, as
commenter’s support for our proposed Autograft, Acellular Dermal well as some new CY 2007 CPT codes
methodology for estimating a ‘‘per unit’’ Replacement, Allograft/Tissue Cultured without CY 2006 claims data. There was
median cost for HBOT. In response to Allogeneic Skin Substitute, and also some variation in the median costs
the comment urging us to utilize an Xenograft. of the HCPCS codes assigned to APCs
alternate calculation to estimate a As part of the CY 2006 CPT code 0686 and 0027, but there were no 2
median cost for HBOT services, we note, update in the newly named ‘‘Skin times violations in these two APCs.
as we did in our CY 2005 OPPS final Replacement Surgery and Skin At the March 2007 APC Panel
rule with comment period (69 FR Substitutes’’ section, certain codes were meeting, we discussed with the APC
65759), that we are not confident that deleted that previously described skin Panel one possible reconfiguration of
the external research produces a allograft and tissue cultured and the skin repair APCs in order to address
definitive CCR for HBOT. That final rule acellular skin substitute procedures, 37 the 2 times violations in APCs 0024 and
with comment period provided an new CPT codes were created in the 0025 for CY 2008 by improving the
extensive discussion of our concerns ‘‘Skin Replacement Surgery and Skin resource homogeneity of the APCs, as
about using survey findings to set, Substitutes’’ section, and these codes well as ensuring their clinical
rather than validate, APC medians. received interim final status indicators homogeneity. We reviewed with the
These concerns included a lack of and APC assignments in the CY 2006 APC Panel the potential results
subscripted cost centers in the OPPS final rule with comment period associated with adding an additional
electronic cost report database, the wide and were subject to comment. level in this APC series and reallocating
variability in observed CCRs, and the In considering the final CY 2007 APC all of the procedures in the original four
possibility of nonresponse bias. As also assignments of these 37 ‘‘Skin APCs among five new APCs, taking into
noted in the CY 2005 final rule with Replacement Surgery and Skin Repair’’ account the frequency, resource
comment period, we agree that the codes, we reviewed the utilization, and clinical characteristics
previous study definitively recommendations made by the APC of each procedure. We also gave
demonstrated great diversity among Panel at its March 2006 meeting; particular attention to CPT code families
hospitals in the subscripted location of presentations made to the APC Panel; in considering the clinical and resource
reported hyperbaric oxygen costs on the comments received on the CY 2007 homogeneity of each APC in the
cost report, which prompted us to use proposed rule; the CPT code reconfigured series. The new
the hospital’s overall CCR, rather than a descriptors, introductory explanations, configuration of APCs eliminated the 2
specific cost center CCR that would be cross-references, and parenthetical times violations that would have
used in our standard ratesetting notes; the clinical characteristics of the otherwise existed in APCs 0024 and
methodology. We continue to believe procedures; and the code-specific 0025. It also more accurately attributed
that the median cost for APC 0659 median costs for all related CPT codes higher cost procedures to the Levels IV
developed according to our established available from our CY 2005 claims data. and V APCs, which contain the surgical
‘‘per unit’’ median cost calculation for A discussion of the final CY 2007 APC procedures of the greatest intensity and
HBOT is an appropriate relative cost to assignments of these procedures can be resource requirements, leading to a
be used to set the payment weight upon found in the CY 2007 OPPS/ASC final more balanced distribution of APC
which the HBOT payment is based. rule with comment period (71 FR 68054 median costs across the five new APC
After consideration of the public through 68057). levels.
comment received, we are finalizing our In the CY 2008 OPPS/ASC proposed The APC Panel made a
CY 2008 proposal, without rule, we observed that we now have CY recommendation at its March 2007
modification, for estimating a ‘‘per unit’’ 2006 data for the surgical procedures meeting supporting the reorganization
median cost for HCPCS code C1300, assigned to the 4 CY 2007 skin repair by CMS of the skin repair APCs into five
assigned to APC 0659, with a median APCs, including the 37 codes levels. This recommendation also asked
cost of approximately $98 based on considered last year that were new for CMS to give special consideration to the
APC assignments of ‘‘add-on’’ codes; in procedures in conjunction with the CPT were new in CY 2006. As a third
the context of skin procedures, these are codes for wound site preparation and alternative, the commenter suggested
generally those CPT codes that report debridement (CPT codes 15002–15005). assigning all 16 skin repair CPT codes
treatment of an additional body area and The presenter stated that the CMS data discussed by the APC Panel last year to
that are reported along with a primary used in the proposed rule do not reflect a new and separate APC. (A complete
procedure for treatment of the first body the true costs of performing CPT codes listing and discussion of the codes and
area. In the proposed rule (72 FR 15340 or 15341 because hospitals have recommendations of the APC Panel for
42707), we stated that we accepted the been slow to adjust their charges based CY 2007 may be found in the CY 2007
APC Panel’s recommendation through on the coding changes. The APC Panel OPPS/ASC final rule with comment
this CY 2008 proposal to reconfigure the made no recommendation at the period (71 FR 68054 through 68057).)
skin APCs into five levels, and we September 2007 meeting related to the Finally, the commenter requested that
reexamined the placement of each of the presenter’s recommendations or to the CMS depart from CPT billing guidance
add-on codes within the framework of overall skin repair APC proposal. and allow hospitals to report CPT codes
the five APCs. We agreed with the APC We received numerous public for wound site preparation, such as CPT
Panel that, because these skin repair comments concerning our CY 2008 code 15002 (Surgical preparation or
APCs were assigned to status indicator proposals for these skin repair creation of recipient site by excision of
‘‘T’’ so that add-on codes would procedures. A summary of the public open wounds, burn eschar, or scar
typically be paid at 50 percent of their comments and our responses follow. (including subcutaneous tissues), or
APC payment rate, these add-on codes Comment: Many commenters incisional release of scar contracture,
warranted special examination with provided recommendations regarding trunk, arms, legs; first 100 sq cm or 1%
respect to their median costs and their the CY 2008 proposed treatment of of body area of infants and children), or
appropriate APC assignments. As a specific skin repair CPT codes. One create a new Level II HCPCS G-code,
result, several CPT code placements commenter suggested delaying the mapped APC 0135, to be used by
from the draft configuration discussed proposed reconfiguration from four skin hospitals to specifically report site
with the APC Panel were changed for repair APCs to five. Many commenters preparation performed in conjunction
the CY 2008 proposal. submitted similar letters requesting that with application of tissue cultured
In summary, for CY 2008 we proposed CPT codes 15340 and 15341 be moved allogeneic skin substitutes described by
to eliminate the four CY 2007 skin from the proposed APC 0134 to APC HPCS code J7340.
repair APCs and replace them with five 0135, expressing concern that their
new APCs titled: APC 0133 (Level I Skin placement in proposed APC 0134 did A few commenters also requested that
Repair); APC 0134 (Level II Skin not reflect the actual clinical resource the CPT skin repair codes related to
Repair); APC 0135 (Level III Skin use for the application of the single skin application of the single skin repair
Repair); APC 0136 (Level IV Skin repair biological product currently biological product currently described
Repair); and APC 0137 (Level V Skin described by HCPCS code J7340 (Dermal by HCPCS code J7342 (Dermal
Repair). We proposed to redistribute and epidermal, (substitute) tissue of (substitute) tissue of human origin, with
each of the procedures assigned to the human origin, with or without or without other bioengineered or
current four levels of skin repair APCs bioengineered or processed elements, processed elements, with metabolically
into the five proposed APCs, with one per square centimeter) because hospitals active elements, per square centimeter),
exception. Specifically, we proposed to have been confused about appropriate specifically CPT code 15365 (Tissue
reassign CPT code 15835 (Excision, billing for these surgical procedures. cultured allogeneic dermal substitute,
excessive skin and subcutaneous tissue The commenters expressed concern that face, scalp, eyelids, mouth, neck, ears,
(including lipectomy); buttock) to APC the proposed changes to the skin repair orbits, genitalia, hands, feet, and/or
0022 (Level IV, Excision/Biopsy), where APCs would negatively impact patient multiple digits; first 100 sq cm or less,
other CPT codes in its code family access to skin repair procedures, such as or 1% of body area of infants and
reside. The median costs of the five CPT codes 15340 and 15341. children) and CPT code 15366 (Tissue
proposed APCs were approximately $84 One commenter believed that the cultured allogeneic dermal substitute,
(APC 0133); $133 (APC 0134); $295 proposed payments for the proposed face, scalp, eyelids, mouth, neck, ears,
(APC 0135); $971 (APC 0136); and five level APC series would create an orbits, genitalia, hands, feet, and/or
$1,317 (APC 0137). The proposed inappropriate incentive to use specific multiple digits; first 100 sq cm or less,
configurations of these new APCs were competing skin replacement and skin or 1% of body area of infants and
listed in Table 30 of the proposed rule. substitute products, because in many children; each additional 100 sq cm, or
At the September 2007 meeting of the cases different biologicals used for skin each additional 1% of body area of
APC Panel, one presenter requested that repair are reported with different CPT infants and children, or part thereof
CPT codes 15340 (Tissue cultured codes that were, in turn, proposed for (List separately in addition to code for
allogeneic skin substitute; first 25 sq cm assignment to various APC levels. The primary procedure)) be moved from the
or less) and 15341 (Tissue cultured commenter requested that CMS move proposed APC 0134 to APC 0135. The
allogeneic skin substitute; each CPT codes 15340 and 15341 from the commenters stated that the storage and
additional 25 sq cm) be moved from the proposed APC 0134 to APC 0135 in handling of the product applied with
proposed APC 0134 (Level II Skin order to treat the application of J7340 these CPT codes is more resource-
Repair) to APC 0135 (Level III Skin similarly to other skin repair procedures intensive than other products whose
Repair). The presenter stated that the CY and to recognize the facility costs application procedures were proposed
2008 proposal to reassign the CPT codes associated with wound site preparation for assignment to APC 0135. They also
for the application of certain skin for J7340. Alternatively, the commenter explained that the claims data that CMS
products to different APCs is premature recommended that CMS delay used for APC placement do not
because hospitals have been confused restructuring the four CY 2007 APCs accurately reflect the costs associated
by the CY 2006 code descriptor changes and except APCs 0024 and 0025 (based with these procedures because the
made by the CPT Editorial Panel. on their CY 2007 structure) from the 2 product was not available on the market
Current CPT instructions state that times rule until another year of claims from CY 2006 through the beginning of
hospitals should not bill these two data are available for the CPT codes that CY 2007. In addition, they argued that
hospital confusion about skin repair (substitute) tissue of non-human origin, section V.B. of this final rule with
CPT coding changes has led to with or without other bioengineered or comment period, we believe that
inaccurate claims. processed with metabolically active hospitals include the costs of pharmacy
Response: We have examined CY elements, per square centimeter) whose overhead in their charges for drugs and
2006 claims data available for the CY is application is reported with CPT biologicals. Despite the commenter’s
2008 final rule with comment period, as codes 15430 (Acellular xenograft concern about the integrity of the data
well as each of the comments and the implant; first 100 sq cm or less, or 1% because it reported that there was
public presentation from the September of body area of infants and children) limited availability of the biological
2007 APC Panel meeting, and find that and 15431 (Acellular xenograft implant; described by HCPCS code J7342 in CY
the five level APC configuration we first 100 sq cm or less, or 1% of body 2006, our CY 2006 claims data include
proposed most appropriately allocates area of infants and children; each over 25,000 units of the product
the large number of skin repair and additional 100 sq cm, or each additional provided on almost 1,200 days of
replacement procedures based on the 1% of body area of infants and children, service under the OPPS. In summary,
frequency, resource utilization, and or part thereof (List separately in we are confident that our CY 2006
clinical characteristics of each addition to code for primary claims data for the procedures reported
procedure. The proposed configuration procedure)), is packaged for CY 2008 with CPT codes 15340, 15341, 15365,
eliminates the 2 times violations in because the mean per day cost of J7341 and 15365 accurately reflect the hospital
APCs 0024 and 0025 that would is less than the final $60 drug packaging costs of those procedures and that their
otherwise exist and more accurately threshold. Therefore, it is not surprising proposed APC assignments are
attributes higher cost procedure codes to that these two CPT codes have higher appropriate. We note that HCPCS codes
the proposed Levels IV and V APCs. median costs than CPT codes 15340, J7340 and J7342 for the associated
As for the specific CPT code 15341, 15365 and 15366 and were biologicals will be separately paid under
assignments raised by commenters (CPT proposed for assignment to the higher the CY 2008 OPPS at ASP+5 percent, as
codes 15340/15341 and 15365/15366), paying Level III APC 0135, rather than discussed in section V.B.3. of this final
these codes were all placed in the Level to APC 0134. rule with comment period.
II Skin Repair APC for CY 2007 and Further, we do not believe that it We do not move CPT codes to higher
were proposed to remain in the Level II would be appropriate to maintain our paying APCs in anticipation of future
Skin Repair APC for CY 2008. In CY 2007 structure for the skin repair changes in hospital billing practices, so
addition to these codes, the following APCs because we have significant we believe that it would be premature
skin repair codes that were new for CY claims data for the new CY 2006 CPT to reassign any of the four procedures of
2006 and discussed by the APC Panel in codes that capture the differential particular interest to commenters to
CY 2006 were also proposed to be hospital costs associated with the APC 0135 and unnecessary to create a
assigned to proposed new APC 0134: procedures. We have no reason to sixth APC specifically for the 16 skin
CPT codes 15170 (Acellular dermal except two of the four skin repair APCs substitute and skin replacement codes
replacement, truck, arms, legs; first 100 from the 2 times rule based on their CY mentioned by the commenter. We also
sq cm or less, or 1% of body area of 2007 structure when the five level believe that it would be inappropriate in
infants and children); CPT code 15171 configuration that we proposed and that this case to depart from CPT
(Acellular dermal replacement, truck, was supported by the APC Panel instructions by allowing hospitals to
arms, legs; first 100 sq cm or less, or 1% demonstrates clinical and resource separately report wound site
of body area of infants and children; homogeneity without 2 times violations. preparation and debridement when
each additional 100 sq cm, or each In particular, we have over 8,000 single services described by CPT codes 15340
additional 1% of body area of infants claims for CPT code 15340, so we are and 15341 are performed, whether using
and children, or part thereof (List confident that the procedure’s final the associated CPT codes or by creating
separately in addition to code for median cost of approximately $162 falls a G code. We generally advise hospitals
primary procedure)); CPT code 15360 within the range of costs for other to follow CPT billing guidance, and we
(Tissue cultured allogeneic dermal procedures also assigned to APC 0134, disagree with the commenter that the
substitute, trunk, arms, legs; first 100 sq and the APC’s median cost of CPT guidance does not adequately
cm or less, or 1% of body area of infants approximately $132. Similarly, CPT reflect the hospital facility component
and children): and CPT code 15361 code 15341 for the application of each of these services. CPT coding
(Tissue cultured allogeneic dermal additional area has a median cost of instructions package the wound site
substitute, trunk, arms, legs; first 100 sq approximately $100, so it would be preparation into the two codes for
cm or less, or 1% of body area of infants appropriately paid based on the 50 application of the biological, and
and children; each additional 100 sq percent multiple procedure reduction hospitals have been reporting the
cm, or each additional 1% of body area applicable to APC 0134. Likewise, we services since CY 2006 based on those
of infants and children, or part thereof have almost 200 claims for CPT code CPT instructions. Given our
(List separately in addition to code for 15365 from CY 2006, with a median cost commitment to greater packaging under
primary procedure). Therefore, we of approximately $147 that is consistent the OPPS, it would be inconsistent to
disagree with commenters who believe with the median costs of other adopt a policy for payment of these skin
that we have not treated CPT codes procedures also assigned to APC 0134. repair procedures that would move
15340, 15341, 15365 and 15366 We note one commenter requested that away from encounter-based payment by
similarly to other skin repair we provide higher payment for CPT unpackaging wound site preparation.
procedures. The other 10 skin repair codes 15365 and 15366 to apply J7342 After consideration of the public
and replacement codes proposed for because of the greater handling and comments received, we are finalizing
assignment to APC 0135 have storage costs of the particular biological. our CY 2008 proposed reconfiguration
significantly higher median costs than However, we pay for such pharmacy of the skin substitute and skin
the CPT codes discussed by the overhead through payment for the replacement APCs, without
commenters. We note, in particular, that biological, not the associated modification, as shown in Table 22
payment for HCPCS code J7341 (dermal procedures, because, as we describe in below.
TABLE 22.—CY 2008 SKIN REPAIR APC CONFIGURATION

CY 2008
HCPCS CY 2008
Short descriptor APC
code APC median cost
11950 ....... Therapy for contour defects ...................................................................................................................... 0133 $80

11951 ....... Therapy for contour defects.
12001 ....... Repair superficial wound(s).
12031 ....... Layer closure of wound(s).
15775 ....... Hair transplant punch grafts.
15776 ....... Hair transplant punch grafts.
11760 ....... Repair of nail bed ..................................................................................................................................... 0134 132
11920 ....... Correct skin color defects.
13120 ....... Repair of wound or lesion.
13122 ....... Repair wound/lesion add-on.
15040 ....... Harvest cultured skin graft.
15170 ....... Acell graft trunk/arms/legs.
15171 ....... Acell graft t/arm/leg add-on.
15340 ....... Apply cult skin substitute.
15341 ....... Apply cult skin sub add-on.
15360 ....... Apply cult derm sub, t/a/l.
15361 ....... Aply cult derm sub t/a/l add.
15365 ....... Apply cult derm sub f/n/hf/g.
15366 ....... Apply cult derm f/hf/g add.
15819 ....... Plastic surgery, neck.
12020 ....... Closure of split wound .............................................................................................................................. 0135 285
12021 ....... Closure of split wound.

15000 ....... Wound prep, 1st 100 sq cm.
15001 ....... Wound prep, addl 100 sq cm.
15002 ....... Wnd prep, ch/inf, trk/arm/lg.
TABLE 22.—CY 2008 SKIN REPAIR APC CONFIGURATION—Continued

CY 2008
HCPCS CY 2008
15003 ....... Wnd prep, ch/inf addl 100 cm.

15004 ....... Wnd prep ch/inf, f/n/hf/g.
15005 ....... Wnd prep, f/n/hf/g, addl cm.
15050 ....... Skin pinch graft.
15110 ....... Epidrm autogrft trnk/arm/leg.
15111 ....... Epidrm autogrft t/a/l add-on.
15115 ....... Epidrm a-grft face/nck/hf/g.
15116 ....... Epidrm a-grft f/n/hf/g addl.
15150 ....... Cult epiderm grft t/arm/leg.
15151 ....... Cult epiderm grft t/a/l addl.
15152 ....... Cult epiderm graft t/a/l +%.
15155 ....... Cult epiderm graft, f/n/hf/g.
15156 ....... Cult epidrm grft f/n/hfg add.
15157 ....... Cult epiderm grft f/n/hfg +%.
15175 ....... Acellular graft, f/n/hf/g.
15176 ....... Acell graft, f/n/hf/g add-on.
15221 ....... Skin full graft add-on.
15300 ....... Apply skinallogrft, t/arm/lg.
15301 ....... Apply sknallogrft t/a/l addl.
15320 ....... Apply skin allogrft f/n/hf/g.
15321 ....... Aply sknallogrft f/n/hfg add.
15330 ....... Aply acell alogrft t/arm/leg.
15331 ....... Aply acell grft t/a/l add-on.
15335 ....... Apply acell graft, f/n/hf/g.
15336 ....... Aply acell grft f/n/hf/g add.
15350 ....... Skin homograft.
15351 ....... Skin homograft add-on.
15400 ....... Apply skin xenograft, t/a/l.
15401 ....... Apply skn xenogrft t/a/l add.
15420 ....... Apply skin xgraft, f/n/hf/g.
15421 ....... Apply skn xgrft f/n/hf/g add.
15430 ....... Apply acellular xenograft.
15431 ....... Apply acellular xgraft add.
20926 ....... Removal of tissue for graft.
43887 ....... Remove gastric port, open.
11762 ....... Reconstruction of nail bed ........................................................................................................................ 0136 947
14000 ....... Skin tissue rearrangement.
15130 ....... Derm autograft, trnk/arm/leg.
15131 ....... Derm autograft t/a/l add-on.
15135 ....... Derm autograft face/nck/hf/g.
15136 ....... Derm autograft, f/n/hf/g add.
15200 ....... Skin full graft, trunk.
15201 ....... Skin full graft trunk add-on.
15220 ....... Skin full graft sclp/arm/leg.
15240 ....... Skin full grft face/genit/hf.
15260 ....... Skin full graft een & lips.
15740 ....... Island pedicle flap graft.
15936 ....... Remove sacrum pressure sore.
15952 ....... Remove thigh pressure sore.
20920 ....... Removal of fascia for graft.
20922 ....... Removal of fascia for graft.
23921 ....... Amputation follow-up surgery.

25929 ....... Amputation follow-up surgery.
33222 ....... Revise pocket, pacemaker.
33223 ....... Revise pocket, pacing-defib.
11960 ....... Insert tissue expander(s) .......................................................................................................................... 0137 1,271
13160 ....... Late closure of wound.
TABLE 22.—CY 2008 SKIN REPAIR APC CONFIGURATION—Continued

CY 2008
HCPCS CY 2008

15100 ....... Skin splt grft, trnk/arm/leg.
15101 ....... Skin splt grft t/a/l, add-on.
15120 ....... Skn splt a-grft fac/nck/hf/g.
15121 ....... Skn splt a-grft f/n/hf/g add.
15570 ....... Form skin pedicle flap.
15600 ....... Skin graft.
15610 ....... Skin graft.
15620 ....... Skin graft.
15630 ....... Skin graft.
15650 ....... Transfer skin pedicle flap.
15731 ....... Forehead flap w/vasc pedicle.
15732 ....... Muscle-skin graft, head/neck.
15734 ....... Muscle-skin graft, trunk.
15736 ....... Muscle-skin graft, arm.
15738 ....... Muscle-skin graft, leg.
15750 ....... Neurovascular pedicle graft.
15760 ....... Composite skin graft.
15770 ....... Derma-fat-fascia graft.
15820 ....... Revision of lower eyelid.
15821 ....... Revision of lower eyelid.
15822 ....... Revision of upper eyelid.
15823 ....... Revision of upper eyelid.
15824 ....... Removal of forehead wrinkles.
15825 ....... Removal of neck wrinkles.
15826 ....... Removal of brow wrinkles.
15828 ....... Removal of face wrinkles.
15829 ....... Removal of skin wrinkles.
15840 ....... Graft for face nerve palsy.
15841 ....... Graft for face nerve palsy.
15842 ....... Flap for face nerve palsy.
15845 ....... Skin and muscle repair, face.
15876 ....... Suction assisted lipectomy.
15922 ....... Removal of tail bone ulcer.
15944 ....... Remove hip pressure sore.
20101 ....... Explore wound, chest.
20102 ....... Explore wound, abdomen.
20910 ....... Remove cartilage for graft.
20912 ....... Remove cartilage for graft.
43886 ....... Revise gastric port, open.
43888 ....... Change gastric port, open.
44312 ....... Revision of ileostomy.
44340 ....... Revision of colostomy.
c. Stereotactic Radiosurgery (SRS) cerebral lesion(s) consisting of 1 fractions); and 77435 (Stereotactic body
Treatment Delivery Services (APCs session); multi-source Cobalt 60 based); radiation therapy, treatment
0065, 0066, and 0067) 77372 (Radiation treatment delivery, management, per treatment course, to
stereotactic radiosurgery (SRS) one or more lesions, including image
For CY 2007, the CPT Editorial Panel (complete course of treatment of guidance, entire course not to exceed 5
created four new SRS Category I CPT cerebral lesion(s) consisting of 1 fractions).
codes in the Radiation Oncology section session); linear accelerator based); Of the four CPT codes, CPT codes
of the 2007 CPT manual. Specifically, 77371 and 77435 were recognized under
77373 (Stereotactic body radiation
the CPT Editorial Panel created CPT the OPPS effective January 1, 2007,
therapy, treatment delivery, per fraction
codes 77371 (Radiation treatment while CPT codes 77372 and 77373 were
to 1 or more lesions, including image
delivery, stereotactic radiosurgery (SRS) not. CPT code 77371 was assigned to the
guidance, entire course not to exceed 5
(complete course of treatment of same APC and status indicator as its
predecessor code, HCPCS code G0243 radiosurgery, delivery including delivering these services. In response,
(Multi-source photon stereotactic collimator changes and custom for CY 2004 we modified the descriptor
radiosurgery, delivery including plugging, fractionated treatment, all for G0173 and also created two HCPCS
collimator changes and custom lesions, per session, maximum five G-codes, G0339 and G0340, to describe
plugging, complete course of treatment, sessions per course of treatment); G0339 complete and fractionated image-guided
all lesions). For CY 2007, CPT code (Image-guided robotic linear accelerator- robotic linear accelerator-based SRS
77371 was assigned to APC 0127 (Level based stereotactic radiosurgery, treatment. While all of these LINAC-
IV Stereostatic Radiosurgery) with a complete course of therapy in one based SRS procedures were originally
status indicator of ‘‘S.’’ Prior to CY session or first session of fractionated assigned to New Technology APCs
2007, CPT code 77435 was described treatment); and G0340 (Image-guided under the OPPS, we reassigned them to
under CPT code 0083T (Stereotactic robotic linear accelerator-based new clinical APCs for CY 2007 based on
body radiation therapy, treatment stereotactic radiosurgery, delivery 2 full years of hospital claims data
management, per day), which was including collimator changes and reflecting stable median costs based on
assigned to status indicator ‘‘N’’ in the custom plugging, fractionated treatment, significant volumes of single claims.
OPPS. The CPT Editorial Panel decided all lesions, per session, second through HCPCS codes G0173, G0251, G0339,
to delete CPT code 0083T on December fifth sessions, maximum five sessions and G0340 are more specific in their
31, 2006, and replaced it with CPT code per course of treatment). Because descriptors than either CPT code 77372
77435. Because the costs of SRS HCPCS codes G0251, G0339, and G0340 or 77373. As we discussed in the CY
treatment management were already were more specific in their descriptors 2008 proposed rule (72 FR 42717), their
packaged into the OPPS payment rates than CPT code 77373 and were also hospital claims data continued to reflect
for SRS treatment delivery, we assigned assigned to different clinical APCs for significantly different hospital resources
CPT code 77435 to status indicator ‘‘N’’ CY 2007, we decided to continue that would lead to violations of the 2
which was the same status indicator recognizing HCPCS codes G0251, times rule were we to reassign certain
that was assigned to its predecessor G0339, and G0340 under the OPPS for procedures to the same clinical APCs in
Category III CPT code (0083T), under CY 2007. Therefore, for CY 2007 we order to crosswalk the CY 2006
the OPPS, effective January 1, 2007. In assigned CPT code 77373 status historical claims data for the 4 G-codes
the CY 2008 OPPS/ASC proposed rule indicator ‘‘B’’ under the OPPS. to develop the median costs of the APCs
(72 FR 42716), we noted that the OPPS to which the 2 CPT codes would be
In the CY 2008 proposed rule (72 FR assigned if we were to recognize them.
treatment of these new CPT codes was 42716 through 42717), we explained
open to comment in the CY 2007 OPPS/ Therefore, we believed that we should
that while we had received requests continue to use the G-codes for
ASC final rule with comment period, from certain specialty societies and
and indicated that we would reporting LINAC-based SRS treatment
other stakeholders that we recognize delivery services for CY 2008 under the
specifically respond to those comments, CPT codes 77372 and 77373 under the
according to our usual practice, in this OPPS to ensure appropriate payment to
OPPS rather than continuing to use the hospitals for the different facility
final rule with comment period. current Level II HCPCS codes for resources associated with providing
As we explained in the CY 2007 hospital outpatient facility reporting of these complex services. That is, we
OPPS/ASC final rule with comment these procedures, we had also heard proposed to continue to assign HCPCS
period (71 FR 68025), we did not from others that continued use of the G- codes G0173 and G0339 to APC 0067
recognize CPT codes 77372 and 77373 codes under the OPPS would be the (Level III Stereotactic Radiosurgery,
because they did not accurately and most appropriate way to recognize the MRgFUS, and MEG), HCPCS code
specifically describe the HCPCS G-codes facility resource differences between G0251 to APC 0065 (Level I Stereotactic
that we used in prior years for linear different types of LINAC-based Radiosurgery, MRgFUS, and MEG), and
accelerator (LINAC)-based SRS procedures. For the past several years, HCPCS code G0340 to APC 0066 (Level
treatment delivery services under the we had collected information through II Stereotactic Radiosurgery, MRgFUS,
OPPS. During CY 2006, CPT code 77372 our claims data regarding the hospital and MEG) for CY 2008.
was reported under one of two HCPCS costs associated with the planning and Since we first established the full
codes, depending on the technology delivery of SRS services. As new group of SRS treatment delivery codes
used, specifically, G0173 (Linear technology emerged in the field of SRS in CY 2004, we note that we now have
accelerator based stereotactic several years ago, public commenters 3 years of hospital claims data reflecting
radiosurgery, complete course of urged CMS to recognize cost differences the costs of each of these services. Based
therapy in one session) and G0339 associated with the various methods of on the latest claims data from CY 2006
(Image-guided robotic linear accelerator- SRS planning and delivery. Beginning for the CY 2008 proposed rule, the
based stereotactic radiosurgery, in CY 2001, we established G-codes to proposed APC median cost for the
complete course of therapy in one capture any such cost variations complete course of therapy in one
session or first session of fractionated associated with the various methods of session or first fraction of image-guided,
treatment). Because HCPCS codes planning and delivery of SRS. Based on robotic LINAC-based SRS, as described
G0173 and G0339 were more specific in comments received on the CY 2004 by HCPCS codes G0173 and G0339
their descriptors than CPT code 77372, OPPS proposed rule regarding the G- respectively in APC 0067, was
we decided to continue using HCPCS codes used for SRS, we made some approximately $3,870 based on 1,946
codes G0173 and G0339 under the OPPS modifications to the coding for CY 2004 single claims available for ratesetting.
for CY 2007. For CY 2007, we assigned (68 FR 63431 and 63432). First, we The proposed CY 2008 APC median cost
CPT code 77372 status indicator ‘‘B’’ received comments regarding the for the second through fifth sessions of
under the OPPS. In addition, during CY descriptors for HCPCS codes G0173 and image-guided, robotic LINAC-based
2006, CPT code 77373 was reported G0251, indicating that these codes did fractionated SRS treatment, reported by
under one of three HCPCS codes not accurately distinguish image-guided HCPCS code G0340 in APC 0066, was
depending on the circumstances and robotic SRS systems from other forms of approximately $2,980 based on 5,209
technology used, specifically, G0251 linear accelerator-based SRS systems to single claims. The proposed CY 2008
(Linear accelerator-based stereotactic account for the cost variation in APC median cost for each fractionated
session of LINAC-based SRS, as ultrasound ablation of uterine past 4 years and, based on questions
described by HCPCS code G0251 in APC leiomyomata, including MR guidance; brought to our attention by hospitals, we
0065, was approximately $1,082 based total leiomyomata volume greater or have no reason to believe that hospitals
on 1,938 single claims. Therefore, for equal to 200 cc of tissue). Another are confused about the reporting of
CY 2008, we proposed to continue with commenter requested that HCPCS code these codes. In addition, we see
the CY 2007 HCPCS coding for LINAC- G0251 be reassigned from its proposed resource differences based on the
based SRS treatment delivery services APC 0065 to APC 0067. median costs for the four codes that are
under the OPPS. The LINAC based SRS Additionally, several commenters reasonably consistent with our
codes and their CY 2008 proposed APC disagreed with CMS’s proposal to assign expectations based on the current code
assignments were displayed in Table 36 both the MRgFUS and MEG procedures descriptors. We believe it would be
of the proposed rule (72 FR 42717). to APCs 0065, 0066, and 0067. These confusing to hospitals if we were to
We received several public comments commenters believed that MRgFUS and modify these code descriptors at this
concerning our treatment of new CPT MEG procedures did not share the same point in time and could lead to
codes for SRS treatment delivery clinical or resource characteristics as instability in our median costs and
discussed in the CY 2007 OPPS/ASC SRS procedures. They urged CMS to inaccurate payments for some services.
final rule with comment period and our reassign the MRgFUS and MEG Therefore, we believe that modifying the
CY 2008 proposal for these services. A procedures to other APCs that more G-code descriptors is not necessary for
summary of the public comments and accurately reflected their clinical us to continue to provide appropriate
our responses follow. characteristics and resource use. Some payment for the services they describe.
Comment: Several commenters agreed commenters recommended that the We disagree with the
with CMS’s proposed continued use of MEG procedures be placed in an APC recommendation of some commenters to
HCPCS codes G0173, G0251, G0339, that described nerve and muscle tests combine all of the SRS, MEG, and
and G0340 to report SRS services as rather than assigning them to an SRS MRgFUS procedures into one single
these codes were more specific in their APC. Other commenters did not clinical APC, when the median costs for
descriptors than either CPT code 77372 understand why CMS included the these services vary from approximately
or 77373. However, these commenters words ‘‘MRgFUS’’ and/or ‘‘MEG’’ in the $663 to $4,207. Such a single clinical
requested that CMS further clarify the APC titles for APCs 0065 and 0066 APC would violate the 2 times rule
descriptors of these G-codes to more when the proposed APCs did not based on the different hospital resources
specifically differentiate image-guided include one or both of these procedures. required for all of the services. With the
robotic SRS from other LINAC systems. Response: We appreciate the various respect to the proposed assignment of
Other commenters to the CY 2008 differences of opinion offered by MEG and MRgFUS services to APCs
proposed rule and the CY 2007 OPPS/ commenters on coding and payment for 0065 and 0067, we note that the APC
ASC final rule with comment period LINAC-based SRS treatment delivery Panel recommended at its March 2007
disagreed with the use of the G-codes services under the OPPS. We will not meeting that we assign both CPT codes
and requested that CMS recognize the recognize CPT codes 77372 and 77373 for MRgFUS procedures to APC 0067.
CPT codes for ease of billing. Some for CY 2008 because we continue to Although we have no single claims
commenters indicated that use of believe that they do not accurately and available for CPT codes 0071T and
different codes for the same service for specifically describe the HCPCS G-codes 0072T for CY 2008 ratesetting, we
different payers is not consistent with that we currently use for reporting continue to believe that these services
government and industry goals for data LINAC-based SRS treatment delivery share sufficient clinical and resource
uniformity and consistency, and is services under the OPPS. Hospital similarity to LINAC-based SRS
administratively burdensome for claims data from CY 2006 for the procedures based on their use of image-
hospitals. One commenter explained current G codes demonstrate significant guidance and focused energy for tissue
that not all payers recognize Medicare’s resource differences for the four ablation that they should be assigned to
temporary HCPCS codes. This different services, ranging from APC 0067 for CY 2008 as the APC Panel
commenter recommended that APCs approximately $994 to $3,620, and these recommended and as we proposed .
0065, 0066 and 0067 be combined into G-codes cannot be mapped in a one-to- With respect to MEG procedures, we
a single APC containing the following one relationship to the CPT codes. We also believe that, based on the clinical
codes: CPT codes 77372; 77373; 95966 remain unclear about how we could use characteristics of these services and the
(Magnetoencephalography (MEG), our historical hospital claims data as the procedures’ median costs from claims
recording and analysis; for spontaneous basis for establishing appropriate data, these three services should also be
brain magnetic activity (e.g., epileptic payment rates for CPT codes 77372 and assigned to APCs 0065 and 0067 as
cerebral cortex localization)); 95967 77373. We believe that our CY 2008 proposed.
(Magnetoencephalography (MEG), proposed APC assignments for the four In the case of the APC titles for APCs
recording and analysis; for evoked G-codes to APCs 0065, 0066, and 0067, 0065, 0066, and 0067, because the titles
magnetic fields, single modality (e.g., consistent with their CY 2007 specify three separate levels of the same
sensory, motor, language, or visual assignments, will provide the most series, we will follow our usual practice
cortex localization)); 95965 appropriate payment for the SRS of maintaining the same APC title for
(Magnetoencephalography (MEG), services described by these codes in CY each level for purposes of clarity and
recording and analysis; for evoked 2008. consistency, even if not all specific
magnetic fields, each additional We note that we intend to reevaluate services are assigned to every level.
modality (e.g., sensory, motor, language, the appropriateness of the use of the After consideration of the public
or visual cortex localization) (List HCPCS G-codes for LINAC-based SRS comments received, we are finalizing
separately in addition to code for services for the CY 2009 OPPS our CY 2008 proposal, without
primary procedure)); 0071T (Focused rulemaking cycle. With that planned modification, to continue the use of the
ultrasound ablation of uterine reevaluation in mind, we will not current HCPCS G-codes for LINAC-
leiomyomata, including MR guidance; modify the G-code descriptors for based SRS treatment delivery services,
total leiomyomata volume less than 200 LINAC based SRS treatment services. specifically, HCPCS G-codes G0173,
cc of tissue); and 0072T (Focused These codes have been in effect for the G0251, G0339, and G0340, under the
OPPS. We will not recognize CPT codes 2007 APCs for CY 2008, specifically, Table 23 displays the final APC median
77372 and 77373 under the CY 2008 APCs 0065, 0066, and 0067, with final costs for the SRS treatment delivery
OPPS. The HCPCS G-codes will APC median costs of approximately HCPCS G-codes.
continue to be assigned to the same CY $1,044, $2,835, and $3,882, respectively.
TABLE 23.—FINAL CY 2008 APC ASSIGNMENTS FOR LINAC-BASED SRS TREATMENT DELIVERY SERVICES
Final Final CY
CY CY 2007 Final CY
HCPCS CY 2007 CY 2008
Short descriptor 2007 APC me- 2008
code APC 2008 APC me-
SI dian cost APC final
SI dian cost
G0173 ...... Linear acc stereo radsur com ...................................................... S ....... 0067 $3,873 S ....... 0067 $3,882
G0251 ...... Linear acc based stero radio ....................................................... S ....... 0065 1,242 S ....... 0065 1,044
G0339 ...... Robot lin-radsurg com, first ......................................................... S ....... 0067 3,873 S ....... 0067 3,882
G0340 ...... Robt lin-radsurg fractx 2–5 .......................................................... S ....... 0066 2,630 S ....... 0066 2,835
10. Medical Services a proposed median cost of We received one public comment on
a. Single Allergy Tests (APC 0381) approximately $19 for APC 0381 for CY our CY 2008 proposed reassignment of
2008. We noted in the CY 2008 OPPS/ CPT code 95250 to APC 0097. A
We proposed to continue with our ASC proposed rule (72 FR 42713) that summary of the public comment and
methodology of differentiating single we will consider whether further our response follow.
allergy tests (‘‘per test’’) from multiple instructions to hospitals for reporting Comment: One commenter considered
allergy tests (‘‘per visit’’) by assigning these procedures would be beneficial, the proposal to reassign CPT code 95250
these services to two different APCs to because we are concerned that our to APC 0097 to be an apparent violation
provide accurate payments for these claims data for CY 2006 reflect no of the 2 times rule. The commenter
tests in CY 2008. Multiple allergy tests apparent change in hospitals’ billing further reported that placement of CPT
are currently assigned to APC 0370 practices following our January 2006 code 95250 in APC 0097 was
(Allergy Tests), with a median cost clarification. We remain hopeful that problematic with respect to ensuring
calculated based on the standard OPPS better and more accurate hospital resource comparability among all the
methodology. We provided billing reporting and charging practices for procedures assigned to the APC for CY
guidance in CY 2006 in Transmittal 804 these single allergy test CPT codes in 2008, because continuous glucose
(issued on January 3, 2006) specifically future years may allow us to calculate monitoring involves significant patient
clarifying that hospitals should report the median cost of APC 0381 using the training of 30 to 40 minutes, whereas
charges for the CPT codes that describe standard OPPS process for future OPPS there is minimal to no patient training
single allergy tests to reflect charges updates. associated with most of the other
‘‘per test’’ rather than ‘‘per visit’’ and We did not receive any public HCPCS codes in APC 0097. In addition,
should bill the appropriate number of comments on this proposal. Therefore, the commenter noted that the OPPS
units of these CPT codes to describe all we are finalizing our CY 2008 proposal, payment for CPT code 95250 should
of the tests provided. However, our CY without modification, to calculate a include payment for a sensor that costs
2006 claims data available for the CY ‘‘per unit’’ median cost for APC 0381 as approximately $35, which would
2008 proposed rule for APC 0381 described above. The CY 2008 median consume 53 percent of the proposed
(Single Allergy Tests) did not reflect cost of APC 0381 is approximately $17. payment for the service. The commenter
improved and more consistent hospital recommended that CMS not discontinue
billing practices of ‘‘per test’’ for single b. Continuous Glucose Monitoring (APC
APC 0421 and maintain CPT code 95250
allergy tests. The median cost of APC 0097)
in APC 0421 for CY 2008. Alternatively,
0381 calculated for the proposed rule For CY 2008, we proposed to reassign the commenter believed that CMS could
according to the standard single claims CPT code 95250 (Ambulatory split APC 0097 into two APCs for Level
OPPS methodology was approximately continuous glucose monitoring of I and Level II services, assigning CPT
$66, significantly higher than the CY interstitial fluid via a subcutaneous code 95250 to the higher paying Level
2007 median cost of APC 0381 sensor for up to 72 hours; sensor II APC. Another commenter also
calculated according to the ‘‘per unit’’ placement, hook-up; calibration of recommended that CMS maintain APC
methodology of approximately $16, and monitor, patient training, removal of 0421 on the basis that the lower
greater than we would expect for these sensor, and printout of recording) to payment rate of APC 0097 would
procedures that are to be reported ‘‘per APC 0097 (Prolonged Physiologic and potentially result in limiting patient
test’’ with the appropriate number of Ambulatory Monitoring), with a access to this monitoring approach for
units. Some claims for single allergy proposed payment rate of approximately patients with diabetes.
tests still appeared to provide charges $66. CPT code 95250 is assigned to APC Response: As described in section
that represent a ‘‘per visit’’ charge, 0421 (Prolonged Physiologic II.A.2. of this final rule with comment
rather than a ‘‘per test’’ charge. Monitoring) for CY 2007, with a period, for CY 2008 we proposed to
Therefore, consistent with our payment payment rate of approximately $100. We eliminate many APCs with low total
policy for CYs 2006 and 2007, we also proposed to discontinue APC 0421 claims volume in order to stabilize
calculated a ‘‘per unit’’ median cost for effective January 1, 2008. At the OPPS payments for these low volume
APC 0381, based upon 276 claims September 2007 APC Panel meeting, the services. We generally proposed to
containing multiple units or multiple APC Panel recommended that CMS reassign the services residing in these
occurrences of a single CPT code, where retain APC 0421 with its CY 2007 low volume APCs to other clinical
packaging on the claims is allocated composition, including maintaining APCs, along with services that share
equally to each unit of the CPT code. CPT code 95250 in that APC for CY clinical and resource characteristics. We
Using this methodology, we calculated 2008. note that APC 0421, as configured for
CY 2007 and where CPT code 95250 is reporting home INR test results, and CY 2007 and where HCPCS codes
currently assigned, is a low volume documentation of patient ability to G0248 and G0249 are currently
APC, which would have included only perform testing) and HCPCS code G0249 assigned, is a low volume APC, which
about 750 CY 2006 claims. We proposed (Provision of test materials and would have included only about 750 CY
to discontinue APC 0421 and reassign equipment for home INR monitoring to 2006 claims. We proposed to
CPT code 95250 to APC 0097. Proposed patient with mechanical heart valve(s) discontinue APC 0421 and reassign
APC 0097 consisted of 17 services, with who meets Medicare coverage criteria; HCPCS codes G0248 and G0249 to
approximately 487,000 CY 2006 claims includes provision of materials for use proposed APC 0097. Proposed APC
for those services. Low volume services, in the home and reporting of test results 0097 consisted of 17 services, with
including CPT code 95250, are not to physician; per 4 tests). Currently, approximately 487,000 CY 2006 claims
significant services in APCs and, HCPCS codes G0248 and G0249 are for those services.
therefore, do not result in violations of assigned to APC 0421 (Prolonged We agree with the commenter that
the 2 times rule. Physiologic Monitoring), with a HCPCS codes G0248 and G0249 should
We agree with the commenters that payment rate of approximately $100 for not be assigned to APC 0097, based on
CPT code 95250 should not be assigned CY 2007. As stated in section III.D.10.b. our reexamination of their clinical and
to APC 0097, based on our review of its of this final rule with comment period, resource characteristics. However, we
clinical and resource characteristics. we also proposed to discontinue APC will not maintain APC 0421 for CY
However, we will not maintain APC 0421 effective January 1, 2008. At the 2008, given our interest in eliminating
0421 for CY 2008, given our interest in September 2007 APC Panel meeting, the low volume APCs, and, therefore, we
eliminating low volume APCs, and, APC Panel recommended that CMS are not adopting the recommendation of
therefore, we are not adopting the retain APC 0421 with its CY 2007 the APC Panel. In addition, we will not
recommendation of the APC Panel. In composition, including maintaining create another new clinical APC
addition, we will not separate APC 0097 HCPCS codes G0248 and G0249 in that consisting of four of the higher cost
into two levels because we believe that APC for CY 2008. services proposed for CY 2008
an alternative assignment of CPT code We received one public comment on assignment to APC 0097 because we
95250 to another existing clinical APC our CY 2008 proposed reassignment of believe that alternative assignments of
would be more appropriate. Taking into HCPCS codes G0248 and G0249 to APC those codes to other existing clinical
consideration the patient training 0097. A summary of the public APCs are more appropriate. We discuss
required in association with CPT code comment and our response follow. the final CY 2008 reassignment of CPT
95250, we believe that it would be Comment: One commenter was code 95250 to APC 0607 (Level 4
appropriate to assign this service to APC concerned that CMS’s proposal to Hospital Clinic Visits) in section
0607 (Level 4 Hospital Clinic Visits), reassign HCPCS codes G0248 and G0249 III.D.10.b. of this final rule with
which has a CY 2008 final median cost from APC 0421 to APC 0097 would comment period. In addition, we are
of approximately $104. The median cost substantially reduce payments for these reassigning CPT code 93271, which has
of CPT code 95250 of approximately services and would make it financially a median cost of approximately $93 to
$100 is well within the range of impossible for hospitals to offer these APC 0663 (Level I Electronic Analysis of
approximately $99 to $122 for other services, thereby reducing patient access Devices), with a CY 2008 median cost of
significant procedures also assigned to to home INR monitoring. The approximately $96. Taking into
that APC for CY 2008. This final commenter urged CMS to maintain APC consideration the patient training
reassignment of CPT code 95250 to APC 0421 or, as an alternative, to create a required in association with HCPCS
0607 should resolve any concerns about new APC that would include HCPCS code G0248 in particular, we believe
violations of the 2 times rule and leads codes G0248 and G0249 and two other that it would be appropriate to assign
to appropriate grouping of the service higher cost procedures also proposed for both HCPCS codes G0248 and G0249 to
with other similar services that share CY 2008 assignment to APC 0097, APC 0607 (Level 4 Hospital Clinic
clinical and resource characteristics. specifically CPT code 93271 (Patient Visits), which has a CY 2008 final
After consideration of the public demand single or multiple event median cost of approximately $104. The
comment received, we are finalizing our recording with presymptom memory median costs of HCPCS codes G0248
CY 2008 proposal with modification. loop, 24-hour attended monitoring, per and G0249 are approximately $72 and
We are discontinuing APC 0421 and 30 day period of time; monitoring, $120, respectively, similar to the
reassigning CPT code 95250 to APC receipt of transmissions, and analysis) hospital costs for other services also
0607, with a CY 2008 median cost of and CPT code 95250 (Ambulatory assigned to that APC for CY 2008.
approximately $104, rather than to APC continuous glucose monitoring of After consideration of the public
0097 as proposed. interstitial fluid via a subcutaneous comment received, we are finalizing our
sensor for up to 72 hours; sensor CY 2008 proposal, with modification.
c. Home International Normalized Ratio placement, hook-up; calibration of We are discontinuing APC 0421 and
(INR) Monitoring (APC 0097) monitor, patient training, removal of reassigning HCPCS codes G0248 and
For CY 2008, we proposed to reassign sensor, and printout of recording). G0249 to APC 0607, with a CY 2008
the two following HCPCS codes to APC Response: As described in section median cost of approximately $104,
0097 (Prolonged Physiologic and II.A.2. of this final rule with comment rather than to APC 0097 as proposed.
Ambulatory Monitoring), with a period, for CY 2008 we proposed to
proposed payment rate of approximately eliminate many APCs with low total d. Mental Health Services (APCs 0322,
$66: G0248 (Demonstration at initial claims volume in order to stabilize 0323, 0324, and 0325)
use, of home INR monitoring for patient OPPS payments for these low volume For CY 2008, we did not propose any
with mechanical heart valve(s) who services. We generally proposed to policy changes to the range or
meets Medicare coverage criteria, under reassign the services residing in these composition of APCs that describe
the direction of a physician; includes: low volume APCs to other clinical psychotherapy services provided in
demonstrating use and care of the INR APCs, along with services that share HOPDs. These APCs include 0322 (Brief
monitor, obtaining at least one blood clinical and resource characteristics. We Individual Psychotherapy), which has a
sample, provision of instructions for note that APC 0421, as configured for CY 2008 median cost of approximately
$74; 0323 (Extended Individual the commenters noted, the median cost pay more for a day of individual mental
Psychotherapy), which has a CY 2008 for APC 0325 declined significantly in health services under the OPPS. We
median cost of approximately $101; CY 2007, and declined again for CY note that these commenters also
0324 (Family Psychotherapy), which 2008, using full year CY 2006 claims submitted comments requesting that the
has a CY 2008 median cost of data. We cannot speculate as to why this partial hospitalization payment rate
approximately $149; and 0325 (Group recent decline in the median cost of increase for CY 2008. The mental health
Psychotherapy), which has a CY 2008 group psychotherapy services has payment limitation will rise and fall in
median cost of approximately $62. occurred. We have robust claims data the same manner as payment for partial
Proposals related to partial for the CPT codes that map to APC hospitalization services.
hospitalization programs are discussed 0325. Specifically, we were able to use After consideration of the public
in section II.B. of this final rule with almost 80 percent of the 1.6 million comments received, we will ask the
comment period. claims submitted by hospitals to report APC Panel to provide advice at its next
We note that since the inception of group psychotherapy services. In meeting regarding the possible
the OPPS, CMS has limited the general, we set payment rates using our reconfiguration of APC 0323 to resolve
aggregate payment for specified less standard OPPS methodology based on a small 2 times violation for CY 2009.
intensive mental health services relative costs from hospital outpatient For CY 2008, we are modifying our
furnished on the same date to the claims. In this case, we have no reason proposal for two medication
payment for a day of partial to discount our claims data, and it management services and will reassign
hospitalization, which we considered to would appear that the relative cost of CPT code 90862 and HCPCS code
be the most intensive of all outpatient providing these mental health services M0064 from APC 0605 to APC 0606,
mental health treatment (65 FR 18455). in comparison with other HOPD with a median cost of approximately
The costs associated with administering services has decreased in recent years. $83.
a partial hospitalization program While reviewing the CY 2008 OPPS
IV. OPPS Payment for Devices
represent the most resource-intensive of proposal for mental health services, we
all outpatient mental health treatment, noted that CPT code 90862 A. Treatment of Device-Dependent APCs
and we do not believe that we should (Pharmacologic management, including
1. Background
pay more for a day of individual mental prescription, use, and review of
health services under the OPPS. medication with no more than minimal Device-dependent APCs are
We received several public comments psychotherapy) and HCPCS code M0064 populated by HCPCS codes that usually,
regarding our CY 2008 proposed (Brief office visit for the sole purpose of but not always, require that a device be
payment for APCs 0332, 0323, 0324, and monitoring or changing drug implanted or used to perform the
0325. A summary of the public prescriptions used in the treatment of procedure. For the CY 2002 OPPS, we
comments and our responses follow. mental psychoneurotic and personality used external data, in part, to establish
Comment: Several commenters noted disorders) were proposed to map to APC the device-dependent APC medians
that the payment rates associated with 0605 (Level 2 Hospital Clinic Visits) for used for weight setting. At that time,
APCs 0322, 0323, 0324, and 0325 have CY 2008, with a proposed payment of many devices were eligible for pass-
decreased in recent years. Specifically, approximately $64. These assignments through payment. For the CY 2002
the commenters stated that payment were proposed changes from their CY OPPS, we estimated that the total
associated with APC 0325 decreased by 2007 assignments to APC 0374 amount of pass-through payments
17 percent between CY 2006 and CY (Monitoring Psychiatric Drugs), which would far exceed the limit imposed by
2007 and was proposed to decline by an has a payment rate of approximately statute. To reduce the amount of a pro
additional 3 percent for CY 2008. These $70. We proposed to discontinue APC rata adjustment to all pass-through
commenters expressed concern that the 0374 for CY 2008. Based on our items, we packaged 75 percent of the
payment rates are insufficient to cover reexamination of the claims data for this cost of the devices, using external data
their costs for mental health services. final rule with comment period, furnished by commenters on the August
One commenter noted that it is more particularly the hospitals costs 24, 2001 proposed rule and information
cost-effective to treat Medicare associated with these visits, we are furnished on applications for pass-
beneficiaries in HOPDs, rather than reassigning HCPCS codes 90862 and through payment, into the median costs
costly partial hospitalization programs, M0064 to APC 0606 (Level 3 Hospital for the device-dependent APCs
and encouraged CMS to provide Clinic Visits) for CY 2008, with a associated with these pass-through
adequate payment rates to the less median cost of approximately $83. devices. The remaining 25 percent of
intensive programs. Comment: Several commenters the cost was considered to be pass-
Response: We carefully analyzed expressed concern that payment for through payment.
several years of resource cost data mental health services provided on one In the CY 2003 OPPS, we determined
associated with APCs 0322 through date is capped at the partial APC medians for device-dependent
0325. We note that the median costs of hospitalization payment rate. One APCs using a three-pronged approach.
APCs 0322, 0323, and 0324 have commenter noted that if an HOPD First, we used only claims with device
remained fairly constant in recent years. provides four particular mental health codes on the claim to set the medians
APC 0323 has a small 2 times rule services in one day, that department for these APCs. Second, we used
violation for CY 2008, and also had a would receive full payment for the first external data, in part, to set the medians
small violation in CY 2007, but it is not two services, partial payment for the for selected device-dependent APCs by
clear how to best resolve the violation, third service, and no payment for the blending that external data with claims
while ensuring the clinical and resource fourth service. data to establish the APC medians.
homogeneity of reconfigured APCs. For Response: We continue to believe that Finally, we also adjusted the median for
CY 2007 and CY 2008, APC 0323 is the costs associated with administering any APC (whether device-dependent or
excepted from the 2 times rule. We will a partial hospitalization program not) that declined more than 15 percent.
review APC 0323 at the next APC Panel represent the most resource intensive of In addition, in the CY 2003 OPPS we
meeting and seek its guidance in all outpatient mental health treatment, deleted the device codes (‘‘C’’ codes)
reconfiguring this APC for CY 2009. As and we do not believe that we should from the HCPCS file because we
believed that hospitals would include we stated in the CY 2006 OPPS final the provider, supplier, or practitioner,
the charges for the devices on their rule with comment period (70 FR or where a credit was received for a
claims, notwithstanding the absence of 68620), we believed that this policy replaced device (examples include, but
specific codes for devices used. provided a reasonable transition to full are not limited to, devices covered
In the CY 2004 OPPS, we used only use of claims data in CY 2007, which under warranty, devices replaced due to
claims containing device codes to set would include device coding and device defects, and free samples).
the medians for device-dependent APCs editing, while better moderating the As expected, the median costs
and again used external data in a 50/50 amount of decline from the CY 2005 calculated based upon single procedure
blend with claims data to adjust OPPS payment rates. bills that met all three criteria, that is,
medians for a few device-dependent For CY 2007, we based the device- correct devices, no token charges, and
codes when it appeared that the dependent APC medians on CY 2005 no ‘‘FB’’ modifier, were generally higher
adjustments were important to ensure claims, the most current data available than the median costs calculated using
access to care. However, hospital device at that time. In CY 2005 we reinstated all single bills. We believed that the
code reporting was optional. hospital reporting of device codes and claims that met these three criteria
In the CY 2005 OPPS, which was made the reporting of device codes (appropriate device codes, nontoken
based on CY 2003 claims data, there mandatory where an appropriate code device charges, and no ‘‘FB’’ modifier)
were no device codes on the claims and, exists to describe a device utilized. In reflected the best estimated costs for
therefore, we could not use device- CY 2005, we also implemented HCPCS these device-dependent APCs when the
coded claims in median calculations as code procedure-to-device edits to hospital pays the full cost of the device,
a proxy for completeness of the coding facilitate complete reporting of the and we proposed to base our CY 2008
and charges on the claims. For the CY charges for the devices used in the median costs on the medians calculated
2005 OPPS, we adjusted device- procedures assigned to the device- based upon these claims.
dependent APC medians for those dependent APCs. For CY 2007 As a result of the effects of the
device dependent APCs for which the ratesetting, we excluded claims for proposed CY 2008 packaging approach
CY 2005 OPPS payment median was which the charge for a device was less discussed in detail in section II.A.4. of
less than 95 percent of the CY 2004 than $1.01, in part to recognize hospital the proposed rule on median costs, we
OPPS payment median. In these cases, charging practices due to a recall of proposed to make some changes to CY
the CY 2005 OPPS payment median was cardioverter-defibrillator and pacemaker 2007 device-dependent APCs for CY
adjusted to 95 percent of the CY 2004 pulse generators in CY 2005 for which 2008. Specifically, we proposed to
OPPS payment median. We also the manufacturers provided delete APC 0081 (Noncoronary
reinstated the device codes and made replacement devices without cost to the Angioplasty or Atherectomy); APC 0087
the use of the device codes mandatory beneficiary or hospital. We also found (Cardiac Electrophysiologic Recording/
where an appropriate code exists to that there were other devices for which Mapping); and APC 0670 (Level II
describe a device utilized in a the token charge was less than $1.01, Intravascular and Intracardiac
procedure. In addition, we implemented and we removed those claims from the Ultrasound and Flow Reserve) due to
HCPCS code edits to facilitate complete set used to calculate the median costs of the migration of HCPCS codes to other
reporting of the charges for the devices device-dependent APCs. In summary, APCs. Some of the HCPCS codes
used in the procedures assigned to the for the CY 2007 OPPS we set the median assigned to these APCs in CY 2007
device dependent APCs. costs for device-dependent APCs using would be unconditionally packaged for
In the CY 2006 OPPS, which was only claims that passed the device edits CY 2008. The median costs of the
based on CY 2004 claims data, we set and did not contain token charges for remaining HCPCS codes proposed for
the median costs for device-dependent the devices. Therefore, the median costs separate payment in CY 2008 were
APCs for CY 2006 at the highest of: (1) for these APCs for CY 2007 were significantly different than CY 2007 due
The median cost of all single bills; (2) determined from claims data that to the proposed packaging of additional
the median cost calculated using only generally represented the full cost of the services. We believed that
claims that contained pertinent device required device. reconfiguration of the APCs was
codes and for which the device cost was necessary to ensure that the HCPCS
greater than $1; or (3) 90 percent of the 2. Payment Under the CY 2008 OPPS codes that would be separately paid in
payment median that was used to set For CY 2008, we proposed to CY 2008 and that are assigned to these
the CY 2005 payment rates. We set 90 calculate the median costs for device- APCs in CY 2007 would be assigned to
percent of the CY 2005 payment median dependent APCs using three different APCs that are homogeneous with regard
as a floor rather than 85 percent as sets of CY 2006 claims (72 FR 42719). to clinical characteristics and resource
proposed, in consideration of public We first calculated a median cost using use in CY 2008. The APCs we proposed
comments that stated that a 15 percent all single procedure claims that for deletion ceased to be appropriate as
reduction from the CY 2005 payment contained appropriate device codes a result of the reassignment of the
median was too large of a transitional (where there are edits) for the procedure HCPCS codes that we proposed for
step. We noted in our CY 2006 proposed codes in those APCs. We then continued separate payment in CY 2008.
rule that we viewed our proposed 85 calculated a second median cost using As proposed, the following seven
percent payment adjustment as a only claims that contain allowed device APCs remained device-dependent APCs
transitional step from the adjusted HCPCS codes with charges for all device for CY 2008, but we proposed to
medians of past years to the use of codes that were in excess of $1.00 reassign certain HCPCS codes mapped
unadjusted medians based solely on (nontoken charge device claims). Third, to these APCs for CY 2007 either to
hospital claims data with device codes we calculated the APC median cost other APCs or among these APCs for CY
in future years (70 FR 42714). We also based only upon nontoken charge 2008 to ensure that, in view of the
incorporated, as part of our CY 2006 device claims with correct devices that median costs that resulted from the
methodology, the recommendation of did not also contain the HCPCS proposed CY 2008 packaging approach,
commenters to base payment on modifier ‘‘FB,’’ reported in CY 2005 to the HCPCS codes would be assigned to
medians that were calculated using only identify that a procedure was performed APCs that were homogeneous with
claims that passed the device edits. As using an item provided without cost to regard to clinical characteristics and
resource use for CY 2008: APC 0082 the without cost/full credit modifier using edits). In general, however, we
(Coronary Atherectomy); APC 0083 ‘‘FB’’), and urged CMS to continue to limit edits to the services, items, and
(Coronary Angioplasty and use device edits to ensure that hospitals procedures we believe require extra
Percutaneous Valvuloplasty); APC 0085 bill Level II HCPCS device codes in vigilance to capture all associated
(Level II Electrophysiologic Evaluation); addition to CPT codes for device- charges in recognition of the additional
APC 0086 (Ablate Heart Dysrhythm dependent procedures. Commenters administrative burden these edits create
Focus); APC 0115 (Cannula/Access also suggested certain refinements to for hospitals, and the inherent
Device Procedures); APC 0427 (Level III CMS’ ratesetting methodology for complexity of ensuring that the edits we
Tube Changes and Repositioning); and device-dependent APCs. One do implement appropriately anticipate
APC 0623 (Level III Vascular Access commenter asked for implementation of all clinical circumstances. Particularly
Procedures). We also proposed to the March 2007 APC Panel’s for packaged items and services
consider APC 0084 (Level I recommendation to edit and return for including expensive devices, we believe
Electrophysiologic Procedures) to be a correction all claims that contain an these edits ensure that high cost items
device-dependent APC for CY 2008 HCPCS code for a separately payable are reported on appropriate claims, so
because we proposed to reassign many device but do not contain a CPT code that the procedural payment rates fully
of the HCPCS codes that were assigned to a procedural APC. Another incorporate the costs of the items that
previously in APCs 0086 and 0087 to commenter requested that at least 2 full are required for the procedures. For
APC 0084. years of data be used to set rates for other items, services, and procedures,
As a result of the proposed APC device-dependent APCs, as it may take we believe that hospitals have strong
reconfigurations resulting from HCPCS hospitals several months before they bill incentives to report charges accurately
code migration, we noted that it was not new Level II HCPCS device codes to Medicare and all other payers, and
appropriate to compare the proposed CY correctly, and also asked that we that these charges are sufficient to
2008 OPPS median costs for these eight implement a payment floor to prevent provide accurate data. Another
APCs to the CY 2007 OPPS final rule large decreases in payment and promote important component of ensuring we
median costs that were the basis for the stability in payment rates from year to use the most accurate data available for
CY 2007 OPPS payment rates. When we year. Another commenter asked CMS to OPPS device-dependent APC ratesetting
compared the median costs for the other redefine ‘‘token charge’’ for cochlear is using the most current claims data
device-dependent APCs with stable implants to mean any amount lower and cost reports. Therefore, we believe
proposed CY 2008 configurations in than the amount the commenter that it would be inconsistent to wait
comparison with CY 2007, the median specified should be charged. until we have 2 full years of claims data
costs for 26 APCs increased, some of Response: We agree that it is before we update payment rates.
them by significant amounts, and the appropriate to base the median costs for
median costs for 5 APCs decreased. We device-dependent APCs on claims that We also do not believe it is necessary
believed that these median costs contain the correct devices, do not to adjust our standard device-dependent
represented valid estimates of the contain token charges, and do not ratesetting methodology for CY 2008 by
relative costs of the services in these contain the ‘‘FB’’ modifier. However, we implementing a payment floor to ensure
APCs, both with regard to the increases do not believe that it would be beneficiary access. The only decline of
and the decreases that appeared when appropriate to define ‘‘token charge’’ at more than 10 percent between the CY
the proposed CY 2008 median costs particular amounts for particular 2008 final rule APC medians and the CY
were compared to the CY 2007 median devices based on external data or 2007 final rule medians is found in APC
costs on which the payment rates for otherwise because hospitals are free to 0418 (Insertion of Left Ventricular
these APCs were based. set their charges for all items and Pacing Electrode). As discussed in the
Therefore, we proposed to base the services based on their own judgment. proposed rule (72 FR 42720), we believe
payment rates for CY 2008 for all We encourage hospitals to develop their that this decline and variation in the
device-dependent APCs on their median charges, revenue centers, and internal median cost for APC 0418 was the result
costs calculated using only single bills processes as they find appropriate. We of improvements in provider billing and
that meet the three selection criteria have no reason to believe, in any given a relatively small number of single bills
discussed in detail above. We did not case other than a token charge reported from a small number of providers
believe that any special payment according to CMS’ instructions, that the furnishing the service. We believe that
policies were needed, as we believed charge on a claim is not an appropriate the median cost we calculated from the
that the claims data we proposed to use charge by a hospital established for that CY 2006 data is a reasonable estimate of
for ratesetting would ensure that the specific service. the cost of the insertion of the left
costs of the implantable devices were We agree that claims processing edits ventricular lead. Furthermore, the
adequately and appropriately reflected for services and items integral to the fluctuation of payment rates is to a
in the median costs for these device- performance of certain OPPS procedures certain degree inherent and expected in
dependent APCs. paid under the OPPS are an important a prospective payment system (see
We received a number of public element of our ratesetting methodology section II.A of this final rule with
comments on our CY 2008 proposed and, therefore, we will continue to comment period for a broader
payment methodology for device- require that correct devices be billed discussion of the variation in APC
dependent APCs. A summary of the with certain HCPCS procedure codes for payment rates from year to year). We
public comments and our responses services that require devices. Moreover, note that we have put into place reverse
follow. we have expanded their use within and device edits for CY 2007 that will
Comment: Commenters supported the beyond device-dependent APCs (see continue in CY 2008, where we require
proposal to set the median costs for sections II.A.2. and II.A.4.c.(5) of this hospitals reporting certain implantable
device-dependent APCs using only final rule with comment period for a device HCPCS codes, such as ICDs, to
claims that meet the three selection discussion of the March 2007 APC report an appropriate procedure for the
criteria described in the proposed rule Panel’s recommendation and measures device’s use. We do not believe it is
(that is, pass the device edits, do not we are taking to improve claims data for necessary to implement a payment floor
contain token charges, and do not have diagnostic radiopharmaceuticals by for this procedure, or any other device-
dependent procedure, to prevent large CMS redefine the token charge criteria item does not exceed an established
decreases in payment. and adjust payment for cochlear threshold such as the manufacturer’s
Comment: One commenter suggested implants to reflect the device’s estimated cost of the item.
that CMS should consider creation of estimated hospital invoice price). After considering the public
composite APCs for device-dependent According to commenters, external data comments received on this proposal, we
procedures, such as ICD implantation, could be used to rectify the effects of are finalizing our proposed payment
where the device costs can vary charge compression, without policies for device-dependent APCs,
significantly based on the type of device committing CMS to reliance on any without modification, for CY 2008. The
used. The commenter suggested that particular data source. In addition, CY 2008 payment rates for device-
payment for these composite APCs commenters requested that CMS protect dependent APCs are based on their
would be based on the combination of the confidentiality of any external data median costs calculated from CY 2006
the device implantation CPT code and used in ratesetting, because claims and the most recent cost report
the existing Level II HCPCS code for the manufacturers and hospitals may be data, using only claims that pass the
particular device. According to the unwilling to release proprietary device edits, do not contain token
commenter, this would minimize information without assurances that charges for devices, and do not have a
administrative burden for providers, CMS would not release that information modifier signifying that the device was
allow coding to remain consistent across to the public. furnished without cost or with full
payers, and enable more appropriate Response: We review all information credit. We do not think it is necessary
payment for procedures with varying that is brought to our attention by or appropriate to apply a maximum
device costs. payment reduction floor. Consistent
stakeholders as part of the public
Response: Composite APCs provide a with data from the proposed rule,
comment process, and we have a
single payment for two or more major payment rates based on final rule data
procedures that are commonly general policy that all data we consider
in ratesetting, whether internal or show increases for the majority of APCs
performed together, in order to promote
external, will be made available to the for which comparison to CY 2007
efficiency by increasing the size of the
public, including any personally payment rates is appropriate. As
payment bundle. We do not agree that
identifiable or confidential business discussed in the proposed rule (72 FR
the payment methodology outlined by
information (for example, see the 42720 through 42721), we found these
this commenter, to base payment on the
discussion of Inspection of Public differences in payment rates from CY
combination of the device implantation
Comments in the CY 2008 OPPS/ASC 2007 to CY 2008 to be attributable to a
CPT code and the existing device code,
proposed rule (72 FR 42628)). We have variety of factors, including the
is consistent with the concept of
not systematically used external data to availability of more complete claims
composite APCs as described in the
proposed rule and as finalized in validate the median costs derived from data for CY 2008 and the packaging
section II.A.4.d. of this final rule with claims data, because external data approach that is new for CY 2008.
comment period. The scenario typically are furnished by parties with Furthermore, as we have stated in the
described by the commenter largely special interest in a particular item or past, some variation in relative costs
describes the current packaging of service. The foundation of a system of from year to year is be expected in a
device payment into the payment for the relative weights is the relativity of the prospective payment system,
procedure, except that we generally base costs of all services to one another, as particularly for low volume device
payment on all of the devices associated derived from a standardized system that dependent APCs such as APC O681
with a procedure as a mechanism to uses standardized inputs and a (Knee Arthroplasty), which increases 37
promote the efficient utilization of consistent methodology. One of the percent from CY 2007 to CY 2008.
resources. The recommended approach principles behind the use of median However, even in the case of these low
could actually reduce packaging under costs for weight setting in a budget volume device dependent APCs, we
the OPPS by creating small and more neutral payment system like the OPPS continue to believe that the median
specific payment bundles, rather than is to allow fair and equitable costs calculated from the single bills
increasing the size of the payment distribution of payment among that meet the three criteria represent the
bundles to provide hospitals with the hospitals, based on their mix of services most valid estimated relative costs of
flexibility to manage their resources as provided to Medicare beneficiaries, by these services to hospitals when they
they control costs. To establish a determining the appropriate relativity in incur the full cost of the devices
separate APC for each combination of a resource use among services. The required to perform the procedures. In
procedure and a particular device used, median costs are estimated relative costs addition, we note that we will maintain
as described by the commenter, would that are converted to relative weights, established device edits for procedures
create incentives for the use of the most scaled for budget neutrality, and then previously assigned to device-
expensive device rather than creating multiplied by a conversion factor to dependent APCs that were packaged or
incentives for efficiency and therefore is derive a payment under a prospective moved to APCs that are not device-
contrary to the principles of a payment system that is not intended to dependent for CY 2008, in order to
prospective payment system. pay reasonable costs. For these reasons, ensure that the full costs associated with
Comment: Several commenters we believe that it is not appropriate to these services continue to be
requested that CMS use external data for use external pricing information in represented adequately in claims data.
ratesetting. While some commenters place of the costs derived from the Discussions of HCPCS code and APC-
called for the broad-scale use of external claims and Medicare cost report data, specific issues for device-dependent
data to identify and adjust payment for because we believe that to do so would APCs are found in section III.D. of this
technologies they perceived to be distort the relativity that is so preamble, where other APC-specific
underpaid both in the past and under fundamental to the integrity of the policies are also discussed. As
the current proposal, other commenters OPPS. Similarly, we do not believe that discussed in detail in section III.D.6.b.
focused on the use of external data in it is reasonable or appropriate to of this final rue with comment period,
ratesetting for particular APCs (for exclude specific claims from ratesetting we are adding APC 0293 (Level V
example, several commenters asked that if the hospital charge for a particular Anterior Segment Eye Procedures) to the
list of device-dependent APCs for CY

2008, as reflected in Table 24 below.
TABLE 24.—CY 2008 MEDIAN COSTS FOR DEVICE-DEPENDENT APCS

[Note that N/A indicates APCs for which the CY 2007 OPPS medians are not comparable to the CY 2008 medians, due to HCPCS code
migration for CY 2008.]
CY 2007 CY 2008 CY 2008 Count of

final rule final rule final rule providers
APC SI APC title pass edit, pass edit, pass edit, billing in the
nontoken nontoken nontoken final CY
median cost median cost frequency 2008 data
0039 .... S .......... Level I Implantation of Neurostimulator ........................................ $11,451 $11,732 2,950 653
0040 .... S .......... Percutaneous Implantation of Neurostimulator Electrodes, Ex- $3,457 $4,013 5,177 1,040
cluding Cranial Nerve.
0061 .... S .......... Laminectomy or Incision for Implantation of Neurostimulator $5,145 $5,213 1,413 462
Electrodes, Excluding Cranial Nerve.
0082 .... T .......... Coronary or Non Coronary Atherectomy ...................................... N/A $5,506 4,758 962
0083 .... T .......... Coronary or Non Coronary Angioplasty and Percutaneous N/A $2,855 41,944 1,728
Valvuloplasty.
0084 .... S .......... Level I Electrophysiologic Procedures ......................................... N/A $603 7,381 616
0085 .... T .......... Level II Electrophysiologic Evaluation .......................................... N/A $2,976 4,291 719
0086 .... T .......... Level III Electrophysiologic Procedures ....................................... N/A $5,842 420 164
0089 .... T .......... Insertion/Replacement of Permanent Pacemaker and Elec- $7,557 $7,654 668 370
trodes.
0090 .... T .......... Insertion/Replacement of Pacemaker Pulse Generator ............... $6,007 $6,344 584 334
0104 .... T .......... Transcatheter Placement of Intracoronary Stents ........................ $5,360 $5,600 674 233
0106 .... T .......... Insertion/Replacement of Pacemaker Leads and/or Electrodes .. $3,138 $4,374 406 281
0107 .... T .......... Insertion of Cardioverter-Defibrillator ............................................ $18,607 $21,001 501 228
0108 .... T .......... Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads $23,205 $25,471 3,719 616
0115 .... T .......... Cannula/Access Device Procedures ............................................ N/A $1,868 1,398 705
0202 .... T .......... Level VII Female Reproductive Proc ............................................ $2,627 $2,687 10,851 1,895
0222 .... S .......... Implantation of Neurological Device ............................................. $11,099 $15,150 1,465 612
0225 .... S .......... Implantation of Neurostimulator Electrodes, Cranial Nerve ......... $13,514 $13,889 254 168
0227 .... T .......... Implantation of Drug Infusion Device ........................................... $10,658 $11,569 1,117 477
0229 .... T .......... Transcatheter Placement of Intravascular Shunts ....................... $4,184 $5,570 8,004 1,256
0259 .... T .......... Level VI ENT Procedures ............................................................. $25,351 $24,739 868 174
0293 .... T .......... Level V Anterior Segment Eye Procedures ................................. N/A $5,335* N/A N/A
0315 .... S .......... Level II Implantation of Neurostimulator ....................................... $14,846 $16,988 691 203
0384 .... T .......... GI Procedures with Stents ............................................................ $1,402 $1,572 7,484 1,464
0385 .... S .......... Level I Prosthetic Urological Procedures ..................................... $4,840 $5,262 648 340
0386 .... S .......... Level II Prosthetic Urological Procedures .................................... $8,396 $9,067 3,683 887
0418 .... T .......... Insertion of Left Ventricular Pacing Elect ..................................... $18,778 $16,342 219 152
0425 .... T .......... Level II Arthroplasty with Prosthesis ............................................ $6,551 $7,688 441 278
0427 .... T .......... Level III Tube Changes and Repositioning .................................. N/A $966 13,556 1,293
0622 .... T .......... Level II Vascular Access Procedures ........................................... $1,385 $1,517 36,920 2,408
0623 .... T .......... Level III Vascular Access Procedures .......................................... N/A $1,817 54,632 2,746
0625 .... T .......... Level IV Vascular Access Procedures ......................................... $5,100 $5,143 8 7
0648 .... T .......... Level IV Breast Surgery ............................................................... $3,130 $3,560 503 321
0652 .... T .......... Insertion of Intraperitoneal and Pleural Catheters ....................... $1,805 $1,932 3,801 1,099
0653 .... T .......... Vascular Reconstruction/Fistula Repair with Device .................... $1,979 $2,546 1,700 713
0654 .... T .......... Insertion/Replacement of a permanent dual chamber pace- $6,891 $6,876 1,896 634
maker.
0655 .... T .......... Insertion/Replacement/Conversion of a permanent dual cham- $9,328 $8,810 2,169 554
ber pacemaker.
0656 .... T .......... Transcatheter Placement of Intracoronary Drug-Eluting Stents .. $6,618 $7,451 3,486 399
0674 .... T .......... Prostate Cryoablation ................................................................... $6,646 $7,720 2,222 383
0680 .... S .......... Insertion of Patient Activated Event Recorders ........................... $4,437 $4,442 1,577 718
0681 .... T .......... Knee Arthroplasty ......................................................................... $12,569 $17,281 317 59
* In CY 2006, there were not HCPCS codes to describe all devices that could be used in this procedure.
3. Payment When Devices Are Replaced order to ensure that the payment we device was replaced without cost or
With Partial Credit to the Hospital proposed for CY 2008 pays hospitals with a full credit for the cost of the
appropriately when they incur the full device being replaced. Similarly, to
In recent years there have been cost of the device, we calculated the CY ensure equitable payment when the
several field actions and recalls as a 2008 median costs for device dependent hospital receives a device without cost
result of implantable device failures. In APCs using only claims that contain the or receives a full credit for the cost of
many of these cases, the manufacturers correct device code for the procedure. the device being replaced, for CY 2007
have offered replacement devices We also did not use claims that contain we implemented a payment policy that
without cost to the hospital or credit for token charges for these expensive reduces the payment for selected
the device being replaced if the patient devices or that contain the ‘‘FB’’ device-dependent APCs when the
required a more expensive device. In modifier, which would signify that the hospital receives certain replacement
devices without cost or receives a full requires an implantable device that is In addition to our concern over the
credit for the device being replaced (71 reported, the proposed CY 2008 APC replacement of implantable devices at
FR 68077). device offset percent was greater than 40 no cost to hospitals due to device
The CY 2007 final payment policy percent, and the device is of a type that recalls, device failure, or other clinical
when devices are replaced without cost is surgically implanted in the patient, situations, we believed that it is equally
or when a full credit for a replaced where it remains at least temporarily. as important that timely information be
device is furnished to the hospital Furthermore, costly devices described reported and analyzed regarding the
applies to those APCs that meet three by device code C1881 are implanted in performance and longevity of devices
criteria as described in the CY 2007 the procedure assigned to APC 0625. We replaced in partial credit situations.
OPPS/ASC final rule with comment also found that APC 0229 (Transcatheter This issue is particularly timely due to
period (71 FR 68072 through 68077). Placement of Intravascular Shunts) the recent recall of 73,000 ICDs and
Specifically, all procedures assigned to ceased to meet the criteria because the cardiac resynchronization therapy
the selected APCs must require device offset percent for this APC, when defibrillators (CRT-Ds) because of a
implantable devices that would be calculated from proposed rule data, was faulty capacitor that can cause the
reported if device replacement less than 40 percent. Moreover, we batteries to deplete sooner than
procedures were performed, the believed that the devices that would be expected. In some cases, patients will
required devices must be surgically implanted in the procedures assigned to require more frequent monitoring of
inserted or implanted devices that this APC are not of a type that would their device function and early device
remain in the patient’s body after the be amenable to removal and replacement. (We refer readers to the
conclusion of the procedures (at least replacement in a device recall or Web site: http://www.fda.gov/cdrh/news
temporarily), and the device offset warranty situation. Therefore, we for Questions and Answers posted April
amount must be significant, which for proposed to remove APC 0229 from the 20, 2007 on this recall.) Therefore, we
purposes of this policy is defined as list of APCs to which the no cost or full believed that hospitals should report
exceeding 40 percent of the APC cost. credit and proposed partial credit occurrences of devices being replaced
We also restricted the devices to which reduction policies would be applicable under warranty or otherwise with a
the APC payment adjustment would for CY 2008. Table 38 of the proposed partial credit granted to the hospital so
apply to a specific set of costly devices rule (42 CFR 42727) contained the that we could identify systematic
to ensure that the adjustment would not device offset amounts that we proposed failures of devices or device problems
be triggered by the replacement of an to apply to the specified APCs in cases through claims analysis and so that we
inexpensive device whose cost would of no cost or full or partial credit for could make appropriate payment
not constitute a significant proportion of replaced devices for the CY 2008 OPPS. adjustments in these cases. Collecting
the total payment rate for an APC. data on a wider set of device
As discussed in the CY 2008 proposed As discussed in the proposed rule (72
FR 42724), subsequent to the issuance of replacements under full and partial
rule (72 FR 42726), we examined the
the CY 2007 OPPS/ASC final rule with credit situations would assist in
offset amounts calculated from the CY
comment period, we had many inquiries developing comprehensive summary
2008 proposed rule data and the clinical
from hospitals that asked whether the data, not just a subset of data related to
characteristics of APCs to determine
reduction would also apply in cases in devices replaced without cost or with a
whether the APCs to which the no cost
which there was a partial credit for the full credit to the hospital. In the
or full credit replacement policy applies
cost of a device that failed or was proposed rule, we explained that we are
in CY 2007 continue to meet the criteria
otherwise covered under a manufacturer mindful of the need to use our claims
for CY 2008 and to determine whether
warranty. Those inquiring explained history, where possible, to promote
other APCs to which the policy does not
apply in CY 2007 would meet the that cases of partial credit are the vast early awareness of problems with
criteria for CY 2008. Based on data majority of cases involving devices that implantable medical devices and to
available for the proposed rule, we have failed or otherwise must be promote high quality medical care with
concluded that one additional APC met replaced under warranty. They regard to the devices and the services in
the criteria for inclusion under this indicated that in some cases the devices which they are used.
policy and that one APC currently on failed, and in other situations the We also are concerned with the issue
the list ceases to meet the criteria. patient’s energy needs exceeded the of the increased Medicare and
Specifically, we proposed to add APC capacity of the device and thus the beneficiary liability for the monitoring
0625 (Level IV Vascular Access device ceased to be useful before the costs that are required as a result of the
Procedures) to the list of APCs to be end of the warranty period. They told us worldwide recall of these 73,000
adjusted in cases of full or partial credit that a typical industry practice for some devices. Specifically, the manufacturer
for replaced devices (as discussed types of devices was to provide a 50 of the devices that have been most
below) and to add the device described percent credit in cases of device failure recently recalled recommends that
by device code C1881 (Dialysis access (including battery depletion) under patients with the recalled device consult
system (implantable)) that is implanted warranty if a device failed at 3 years of with their physician in each case and,
in a procedure assigned to APC 0625 to use (failure during the first 3 years in some cases, begin a routine of
the list of devices to which this policy would result in a full device credit). The monthly evaluations. We would expect
applies. We proposed to add APC 0625 credit would be prorated further over that not only could extra visits to
and device code C1881 for CY 2008 time between 3 and 5 years after the physicians’ offices or HOPDs be
because they met the criteria for initial device implantation, as the useful necessary, but additional diagnostic
inclusion in this policy. In particular, life of the device declined. As tests may also be needed to care for the
the single surgical procedure (CPT code promulgated in the CY 2007 OPPS/ASC beneficiaries who have the recalled
36566 (Insertion of tunneled centrally final rule with comment period and devices. Thus, even when the device
inserted central venous access device, codified at § 419.45, the CY 2007 does not immediately require
requiring two catheters via two separate reduction policy does not apply to cases replacement, we are concerned that the
venous access sites; with subcutaneous in which there is a partial credit toward potential greater costs to Medicare and
port(s)) assigned to APC 0625 always the replacement of the device. to the beneficiary or his or her
secondary payor for these unforeseen payment for the APC into which the amount of payment for the device
extra services may be substantial and device cost is packaged by one half of dependent APC by half of the estimated
burdensome. We will be actively the amount of the offset amount that cost of the device packaging represents
assessing how we can identify would apply if the device were being a reasonable and equitable reduction in
additional health care costs and replaced without cost or with full credit, these cases.
Medicare expenditures associated with but only where the amount of the device In the proposed rule (72 FR 42725),
device recall actions and exploring what credit is greater than or equal to 20 we also considered whether to propose
actions could be appropriate in the case percent of the cost of the new to require hospitals to reduce their
of these additional monitoring and replacement device being implanted. charges in proportion to the partial
related expenses. In the proposed rule, We also proposed to base the credit they receive for the device so that,
we specifically invited public comment beneficiary’s copayment on the reduced in future years, we would have cost data
on this issue to inform our future review APC payment rate so that the reported consistently on which we
and analyses (72 FR 42724). beneficiary shares in the hospital’s could consider basing the amount of
Moreover, the payment rates for the reduced costs. We believed that it reduction to the payment for the
APCs into which the costs of the most would be inequitable to set the payment procedure in cases of a partial device
expensive devices are packaged are set rates for the procedures into which credit. However, we were concerned
based on the assumption that the payment for these devices is packaged that such a requirement could impose
hospital incurs the full cost of the on the assumption that the hospital an administrative burden on hospitals
device. To continue to pay the full APC always incurs the full cost for these that would outweigh the potential
rate when the hospital receives a partial expensive devices but to not adjust the benefit of a more accurate reduction to
credit toward the cost of a very payment when the hospital receives a payment in these cases. Therefore, we
expensive device would result in partial credit for a failed or otherwise specifically requested comments on the
excessive and inappropriate payment replaced device. Accordingly, we extent to which any administrative
for the procedure and its packaged believed that it would be appropriate to burden would be balanced or
costs. Some hospitals have told us that make an equitable adjustment to the compensated for by the potential
they do not reduce their charges for the APC payment to ensure that the payment accuracy benefit of an
device being implanted or used in the Medicare program payment made for empirically based reduction to payment
procedure in cases in which they the service and the beneficiary’s liability in these cases (72 FR 42725).
receive a partial credit for the device, are appropriate in these cases in which In addition, we proposed to take this
even in cases in which the credit is for the hospital’s device costs are reduction only when the credit is for 20
as much as 50 percent of the cost of an significantly reduced. We proposed percent or more of the cost of the new
expensive device. replacement device, so that the
changes to § 419.45(a) and (b) to reflect
For CY 2008, we proposed to create reduction would not be taken in cases
our proposed policy of reducing the
an HCPCS modifier that would be in which more than 80 percent of the
OPPS payment when partial credit for
reported in all cases in which the cost of the replacement device has been
the device cost is received by the
hospital receives a partial credit toward incurred by the hospital. We were
hospital for a failed or otherwise
the replacement of a medical device concerned that the burden to hospitals
replaced device.
listed in Table 39 of the proposed rule of requiring that they report cases in
(72 FR 42727). These devices are the Due to the absence of current which the partial credit for the device
same devices to which our policy reporting of the cases in which hospitals being replaced is less than 20 percent of
governing payment when the device is receive a partial credit for replaced the cost of the new replacement device
furnished to the provider without cost devices and to our belief, based on would be greater than the benefit to the
or with full credit would apply for CY conversations with hospital staff, that Medicare program and the beneficiary.
2008. As we discussed in the CY 2007 hospitals do not reduce their device In addition, if the partial credit is less
OPPS/ASC final rule with comment charges to reflect the credits, we had no than 20 percent of the cost of the new
period (71 FR 68071), we selected these data to determine empirically by how replacement device, then reducing the
devices because they have substantial much we should reduce the payment for APC payment for the device
device costs and because the device is the procedural APC into which the costs implantation procedure by 50 percent of
implanted in the beneficiary at least of these devices are packaged. However, the packaged device cost would provide
temporarily and, therefore, can be device manufacturers and hospitals too low a payment to hospitals
associated with an individual have told us that a common scenario is providing the necessary device
beneficiary. This proposed partial credit that, if a device fails 3 years after replacement procedures. Therefore, we
policy would enhance our ability to implantation, the hospital would proposed that the new HCPCS partial
track the replacement of these receive a 50 percent credit towards a credit modifier would be reported and
implantable medical devices and may replacement device. Therefore, we the partial credit reduction would be
permit us to identify trends in device proposed to reduce the payment for taken only in cases in which the credit
failure or limited longevity. Moreover, it these device-dependent APCs by half of is equal to or greater than 20 percent of
would enable us to reduce the APC the reduction that would apply when the cost of the new replacement device.
payment in cases in which the hospital the hospital receives a device without As discussed in the proposed rule (72
receives a partial credit towards the cost cost or receives a full credit for a device FR 42725), even in the absence of
of the replacement device being being replaced. That is, we proposed to specific instructions to reduce the
implanted. We believed that this reduce the payment for the APC by half device charges in partial credit cases,
proposal was a logical extension of our of the offset amount that represents the we could monitor the charges that are
policy regarding reduction of the APC cost of the device packaged into the submitted for devices reported with the
payment in cases in which the provider APC payment. In the absence of claims proposed partial credit modifier to see
furnishes the device without cost or data on which to base a reduction factor, if hospitals appear to be reflecting
with a full credit to the hospital. but taking into consideration what we partial device credits in their charges for
Specifically, as discussed in more have been told is common industry these implantable devices. We believed
detail below, we proposed to reduce the practice, we believed that reducing the that we could use pattern analysis to
determine if a hospital that is reporting charges to reflect partial credits for the partial credit reduction policy will
the device with the partial credit replaced devices and that a payment apply to cases involving a credit of 50
modifier is charging at a lower rate for adjustment in such cases was not percent or more toward the total cost of
the same device when the modifier necessary, because payment rates the replacement device. Commenters
appears with the procedure in which calculated according to the standard expressed significant concerns about
the device is used than in cases without OPPS ratesetting methodology for potential administrative and operational
reporting of the modifier. As proposed, device-dependent APCs already reflect burdens associated with partial credits
if we found that hospitals were such occurrences. Those opposed to the for small percentages of device costs,
adjusting their charges to reflect the proposed policy in its entirety also and we agree that the partial credit
reduced costs of these devices, we noted that it would be operationally and adjustment policy should not apply if
would explore whether revising the administratively difficult to implement only a nominal portion of the cost of the
amount of the reduction could be and that it would result in insufficient device is at issue. We also agree that
appropriate. payment to hospitals. consistency in payment policies across
In summary, we proposed the Most commenters that agreed with the hospital inpatient and outpatient
following: (1) To create a HCPCS premise behind the proposed policy to payment systems is important and
modifier to be reported on a procedure reduce Medicare payment for devices should be maintained whenever
code listed in Table 38 of the proposed replaced with partial credit supported appropriate, as is true in this case.
rule if a device listed in Table 39 of that implementation of the proposed policy, Raising the partial credit threshold to
rule is replaced with partial credit from but requested modifications or a delay which this policy will apply also
the manufacturer that is greater than or in implementation of the policy. The addresses concerns that the 50 percent
equal to 20 percent of the cost of the majority of these commenters argued reduction to Medicare payment for the
replacement device; and (2) to reduce that CMS should raise the partial credit replaced device would be more than the
the payment for the procedure by 50 threshold to which this policy would partial credit received in some cases.
percent of the amount of the estimated apply to 50 percent of the cost of the We disagree with assertions that
packaged cost of the device being replacement device, consistent with the OPPS payment for device-dependent
replaced when the modifier is reported policy CMS recently implemented for APCs already reflects partial credits to
with a procedure code that is assigned devices replaced with partial credit for hospitals for replaced devices. We go to
to an APC in Table 38. We believed that services paid under the FY 2008 IPPS. great lengths to ensure that payment
this policy is necessary to pay equitably Commenters stated that consistency in rates for device-dependent APCs reflect
for these services when the hospital policies across hospital inpatient and the full costs of devices by excluding
receives a partial credit for the cost of outpatient payment systems would claims that contain token charges and/
the device being implanted. reduce confusion, promote compliance, or the ‘‘FB’’ modifier. We continue to
At the September 2007 meeting of the and decrease the administrative burden believe that in most cases, hospitals
APC Panel, the Panel recommended that for hospitals. The commenters also charge the full amount for the replaced
CMS explore whether hospitals could argued that a threshold as low as a 20 device, although they may have
report a modifier to reflect the amount percent credit toward the cost of the incurred much less than the full cost of
of a partial credit for a device as a replacement device would not justify the device. While it may be true that
percentage of the cost of the the operational and administrative some hospitals adjust their charges to
replacement device. According to the burdens of returning the replaced reflect the partial credits they receive for
Panel, this approach could signify that devices to manufacturers for evaluation replaced devices, we believe this is a
there was a partial credit and provide and applying manual billing small minority. Therefore, we believe
data for use in determining the amount adjustments. They were concerned that our ratesetting methodology generally
of reduction that could be taken in because of these administrative burdens, results in median costs that reflect the
future years. hospitals may not return the failed full costs of these devices. We also
We received many public comments devices to manufacturers at all, thereby continue to believe that it is likely the
on our proposal to reduce the APC interfering with manufacturers’ quality reduced hospital costs associated with
payment for certain implantation surveillance programs and preventing steady, low volume warranty
procedures when specific devices are the type of data collection the proposed replacements of implantable devices
replaced with a partial credit to the policy is meant to promote. According may never be reflected in the CCRs used
hospital. A summary of the public to commenters, a threshold of 50 to adjust charges to costs for devices,
comments and our responses follow. percent would ensure that hospitals do because those CCRs are overwhelmed by
Comment: The majority of not have to deal with these the volume of other items attributed to
commenters agreed that neither administrative burdens when the credit the cost centers. Therefore, our median
Medicare nor beneficiaries should have is nominal or relatively inconsequential costs for device-dependent APCs would
to pay based on a device’s full cost relative to the overall procedure not reflect the reduced hospital costs
when the hospital receives a substantial payment and unlikely to result in associated with partial credit device
credit from the manufacturer for that significant savings to the Medicare replacement procedures.
device, and supported the premise program. Some commenters noted that a As discussed in the proposed rule (72
underpinning the proposed policy that partial credit threshold of 20 percent, FR 42725 through 42726), we also do
hospitals’’ charges and OPPS payment with a payment reduction of 50 percent, not agree that hospitals would refrain
rates based on those charges currently would result in inadequate payment to from returning a device removed from a
do not reflect partial credits for replaced hospitals when the credit received was patient to a manufacturer in order to
devices. Some commenters argued, anywhere between 20 percent and 50 justify not reporting the partial credit
however, that all manufacturer rebates, percent of the cost of the device. modifier to Medicare. We continue to
from volume discounts to partial credits Response: We agree with the believe that hospitals have a strong
for replaced devices, are applied to commenters’ concerns regarding the interest in ensuring that manufacturers
hospitals’ cost reports, and as such are threshold percentage to which a partial know as soon as possible when there are
reflected in hospitals’ CCRs. Others said credit adjustment would be applied. We problems with the devices provided to
that hospitals often do adjust their are increasing the threshold to which their patients, whether the result would
be a full or partial credit for the failed in proportion to the partial credit they assigned is one of the APCs listed in
device. In addition, we believe that receive for a replaced device. They Table 25 below, the fiscal intermediary
hospitals, key participants in the encouraged CMS to work with providers or MAC will reduce the unadjusted
broader healthcare system, are to develop the least burdensome payment rate for the procedure by an
concerned with device performance, approach to incorporate payment amount equal to the percent in Table 26
patient health, and health care quality reductions for devices replaced with for partial credit device replacement
from the broader public health partial credit based on empirical data. multiplied by the unadjusted payment
perspective and are committed to Response: In order to report that they rate (if the ‘‘FC’’ modifier is assigned to
appropriate reporting to improve the received a partial credit of 50 percent or a procedure code that is not in Table 26,
quality of future health care that leads more of the cost of a replacement then no adjustment will be taken). The
to better health outcomes for patients. device, hospitals will have the option of adjustment amounts for no cost, full
Moreover, we do not believe that either: (1) Submitting the claims credit, and partial credit cases are
hospitals would intentionally fail to immediately without the HCPCS included in Table 25 below.
report to Medicare the service furnished modifier signifying partial credit for a We believe that it is appropriate to
correctly and completely with the replacement device and submitting a treat the services subject to the APC
partial credit modifier when the claim adjustment with the HCPCS payment reduction in cases of devices
modifier applies, because the hospital modifier at a later date once the credit replaced with partial credit like any
would then knowingly submit incorrect determination is made; or (2) holding other service, and to apply the standard
information on the claim. the claim until a determination is made reduction policies. Therefore, the partial
Comment: Many commenters urged on the level of credit. We understand credit adjustment will occur before
OPPS adoption of the same billing commenters’ concerns about potential wage adjustment and before the
options for hospitals as are available delays that could occur while a returned assessment to determine if the
under the IPPS for billing devices device is being evaluated to determine reductions for multiple procedures
replaced with partial credit. whether and by how much a credit will (signified by the presence of more than
Specifically, they requested hospitals be be applied. We agree that hospitals one procedure on the claim with status
allowed to: (1) Submit the claims for should have the same billing options, indicator ‘‘T’’), discontinued services
replacement devices immediately when appropriate, under the OPPS as (signified by modifier 73) or reduced
without the HCPCS modifier signifying are available under the IPPS. As services (signified by modifier 52)
partial credit for a replacement device described in the FY 2008 IPPS final rule apply, similar to what occurs when a
and later, if a credit is ultimately issued, (72 FR 47250), we believe that these device is replaced at full credit or with
submit a claim adjustment with the billing options will facilitate more no cost to the hospital (see 71 FR 68076
appropriate coding; or (2) hold the claim efficient administration of the policy by for more discussion).
until a credit determination is made. allowing the hospital to gather and Comment: Some commenters
According to the commenters, credits report all of the information it needs to requested that we provide clarification
are determined after a case-by-case be paid correctly by Medicare, without of key elements of the proposal, stating
review by the manufacturer following the need to suspend claims or delay that it was unclear what ‘‘cost’’ should
explant and replacement of the device, payment. be considered when determining the
which can take 8 weeks or longer. We share commenters’ concerns about situations to which the partial credit
During this time, hospitals often do not the administrative and coding burdens policy should apply, and what
know whether or how much credit the that could be associated with the constitutes a ‘‘replacement’’ device. For
manufacturer will provide and cannot September 2007 APC Panel’s example, some commenters pointed out
submit a bill for the replacement device recommendation to report a modifier to that volume discounts can result in
implantation procedure, creating reflect the amount of a partial credit for reduced costs for hospitals, and that at
substantial payment delays. In addition, a device as a percentage of the cost of times devices are replaced at full cost
commenters were concerned about the the replacement device so we are not when a new, improved technology
administrative burden of providing adopting that recommendation for CY becomes available. Some commenters
paper invoices or other information to 2008. We also note that the claims also expressed interest in any OPPS data
their fiscal intermediary or MAC processing system for Part B hospital we may have about the number of cases
indicating the hospital’s normal cost of outpatient bills does not have the to which this policy would apply.
the device or the amount of the credit capacity to accommodate non-uniform Response: The partial credit policy
received. HCPCS modifiers. Instead, CMS will only applies when hospitals receive
Several commenters referenced the recognize a new ‘‘FC’’ modifier, partial credit for the cost of a device that
September 2007 meeting of the APC effective January 1, 2008, that reads: is replaced due to failure or other
Panel, where the Panel recommended ‘‘Partial credit received for replaced problems while the device is still under
that CMS explore whether hospitals device.’’ Hospitals will be instructed to warranty, or when there is a recall or
could report a modifier to reflect the append the modifier to the HCPCS code field action. The policy does not apply
amount of a partial credit for a device for the procedure in which the device when hospitals receive routine rebates
as a percentage of the amount of the was inserted on claims when the device such as volume discounts. Hospitals
replacement device. While one that was replaced with partial credit should continue to incorporate these
commenter supported this approach, under warranty, recall, or field action is other types of rebates into their cost
other commenters expressed concerns one of the devices in Table 26 below reports so that these savings will be
about the administrative burden (hospitals should not append the reflected in the hospitals’ CCRs. Neither
associated with this alternative. They modifier to the HCPCS procedure code the partial credit payment reduction for
stated that constructing a modifier in if the device is not listed in Table 26). replaced devices, nor the payment
this way may be too easily confused Claims containing the ‘‘FC’’ modifier reduction for devices replaced with full
with existing numeric modifiers used in will not be accepted unless the modifier credit or at no cost, apply if the hospital
conjunction with CPT coding. is on a procedure code with status pays the full price for the device.
Commenters also shared CMS’ concerns indicator ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X.’’ If the We acknowledge the interest
about hospitals reducing their charges APC to which the procedure code is providers have in the data resulting
from our reporting requirements for another from clinical and resource specifically reflects the amount of a
devices replaced at no cost or with full perspectives as evidenced by the CY partial credit for a device as a
or partial credit. We will consider what 2008 median costs of approximately percentage of the cost of the
types of information could be of value $5,262 and $9,067 for APCs 0385 and replacement device. Accordingly, we
to hospitals as we continue to analyze 0386, respectively, and because the are implementing the proposed changes
claims-based reporting of full and distinct HCPCS device codes allowed in to §§ 419.45(a) and (b) with
partial device credit cases, particularly the procedure-to-device-edits for the modification to reflect the 50 percent
when CY 2007 claims data become various services assigned to the two partial device credit threshold to which
available. APCs are different, we would expect the policy will apply. Beneficiary
Comment: One commenter objected to that their device offset percentages also copayment will be based on the reduced
the application of a different offset would differ. Therefore, we conclude payment amount. We will continue to
percentage to APC 0385 (Level I that the device cost in APC 0386 is evaluate how we might refine our
Prosthetic Urological Procedures) than higher than the device cost in APC methodology for reducing the payment
to APC 0386 (Level II Prosthetic 0385, and that neither device offset for the procedural APCs into which the
Urological Procedures) for purposes of percentage should be equal to 80 costs of the devices in 25 below are
the adjustment when a device is percent. packaged based on the claims data we
replaced in cases of no cost or full or After consideration of the public receive as this policy is implemented.
partial credit. The commenter stated comments received, we are finalizing a We also will continue to monitor
that the ratio of device costs to overall modified policy for certain procedures charges that are submitted for devices
procedure costs is identical in APCs involving partial credit for a reported with the partial credit modifier
0385 and 0386, and that the device replacement device. Specifically, we ‘‘FC’’ to see if hospitals appear to be
offset percentage should be at least 80 will reduce the payment for an reflecting partial device credits in their
percent for both APCs. implantation procedure assigned to charges for these implantable devices.
Response: Our hospital claims data APCs listed in Table 25, below, by one We also are implementing our
and cost reports indicate the device half of the device offset that would be proposals to add APC 0625 to the list of
offset percentage for APC 0385 is 52 applied if a replacement device were APCs to be adjusted in cases of no cost
percent, and the device offset provided at no cost or with full credit, or full or partial credit for replaced
percentage for APC 0386 is 64 percent, if the credit is 50 percent or more of the devices, to remove APC 0229 from that
calculated according to our standard replacement device cost. We will list, and to add the device described by
methodology for establishing the device recognize the new modifier ‘‘FC’’ for device code C1881 that is implanted in
offset percentage (71 FR 68073). Because reporting these cases, and we are not a procedure assigned to APC 0625 to the
the surgical procedures assigned to adopting the recommendation of the list of devices to which this policy
these two APCs are different from one APC Panel to utilize a modifier that applies.
TABLE 25.—ADJUSTMENTS TO APCS IN CASES OF NO COST OR FULL OR PARTIAL CREDIT FOR REPLACED DEVICES
CY 2007 re- CY 2008 re- CY 2008 re- CY 2008 CY 2008
duction for duction for duction for CY 2008 adjusted adjusted
APC SI APC title full credit full credit partial credit payment payment for payment for
case case case rate full credit partial credit
(percent) (percent) (percent) case case
0039 .... S .......... Level I Implantation of 78.85 82.73 41.37 $11,877 $2,051 $6,964
Neurostimulator.
0040 .... S .......... Percutaneous Implantation of 54.06 56.27 28.14 4,063 1,777 2,920
Neurostimulator Electrodes, Ex-
cluding Cranial Nerve.
0061 .... S .......... Laminectomy or Incision for Im- 60.06 60.60 30.30 5,278 2,079 3,679
plantation of Neurostimulator
Electrodes, Excluding Cranial
Nerve.
0089 .... T .......... Insertion/Replacement of Perma- 77.11 72.99 36.50 7,748 2,093 4,921
nent Pacemaker and Electrodes.
0090 .... T .......... Insertion/Replacement of Pace- 74.74 76.01 38.01 6,423 1,541 3,982
maker Pulse Generator.
0106 .... T .......... Insertion/Replacement/Repair of 41.88 56.25 28.13 4,428 1,937 3,183
Pacemaker and/or Electrodes.
0107 .... T .......... Insertion of Cardioverter- 90.44 89.11 44.56 21,262 2,315 11,789
Defibrillator.
0108 .... T .......... Insertion/Replacement/Repair of 89.40 89.24 44.62 25,787 2,775 14,281
Cardioverter-Defibrillator Leads.
0222 .... S .......... Implantation of Neurological De- 77.65 84.86 42.43 15,337 2,322 8,830
vice.
0225 .... S .......... Implantation of Neurostimulator 79.04 80.57 40.29 14,061 2,732 8,397
Electrodes, Cranial Nerve.
0227 .... T .......... Implantation of Drug Infusion De- 80.27 80.73 40.37 11,713 2,257 6,985
vice.
0259 .... T .......... Level VI ENT Procedures ............. 84.61 82.94 41.47 25,046 4,273 14,659
0315 .... S .......... Level II Implantation of 76.03 86.15 43.08 17,199 2,382 9,790
Neurostimulator.
0385 .... S .......... Level I Prosthetic Urological Pro- 83.19 51.56 25.78 5,327 2,580 3,954
cedures.
TABLE 25.—ADJUSTMENTS TO APCS IN CASES OF NO COST OR FULL OR PARTIAL CREDIT FOR REPLACED DEVICES—
Continued
CY 2007 re- CY 2008 re- CY 2008 re- CY 2008 CY 2008
duction for duction for duction for CY 2008 adjusted adjusted
APC SI APC title full credit full credit partial credit payment payment for payment for
case case case rate full credit partial credit
(percent) (percent) (percent) case case
0386 .... S .......... Level II Prosthetic Urological Pro- 61.16 63.53 31.77 9,180 3,348 6,264
cedures.
0418 .... T .......... Insertion of Left Ventricular Pac- 87.32 82.52 41.26 16,544 2,892 9,718
ing Elect.
0625 .... T .......... Level IV Vascular Access Proce- N/A 58.88 29.44 5,207 2,141 3,674
dures.
0654 .... T .......... Insertion/Replacement of a per- 77.35 77.13 38.57 6,961 1,592 4,276
manent dual chamber pace-
maker.
0655 .... T .......... Insertion/Replacement/Conversion 76.59 74.62 37.31 8,919 2,264 5,591
of a permanent dual chamber
pacemaker.
0680 .... S .......... Insertion of Patient Activated 76.40 73.15 36.58 4,497 1,208 2,852
Event Recorders.
0681 .... T .......... Knee Arthroplasty ......................... 73.37 82.86 41.43 17,495 2,993 10,244
TABLE 26.—DEVICES FOR WHICH THE B. Pass-Through Payments for Devices 68078), we finalized our proposal to
‘‘FB’’ OR ‘‘FC’’ MODIFIER MUST BE expire device category C1820 from pass-
1. Expiration of Transitional Pass-
REPORTED WITH THE PROCEDURE through device payment after December
Through Payments for Certain Devices
CODE WHEN FURNISHED WITHOUT 31, 2007.
a. Background In the November 1, 2002 OPPS final
COST/FULL CREDIT OR PARTIAL
CREDIT FOR A REPLACED DEVICE Section 1833(t)(6)(B)(iii) of the Act rule, we established a policy for
requires that, under the OPPS, a payment of devices included in pass-
Device category of devices be eligible for through categories that are due to expire
HCPCS Short descriptor transitional pass-through payments for (67 FR 66763). For CY 2003 through CY
code at least 2, but not more than 3, years. 2007, we packaged the costs of the
This period begins with the first date on devices no longer eligible for pass-
C1721 ...... AICD, dual chamber. which a transitional pass-through through payments into the costs of the
C1722 ...... AICD, single chamber. payment is made for any medical device procedures with which the devices were
C1764 ...... Event recorder, cardiac. that is described by the category. The reported in the claims data used to set
C1767 ...... Generator, neurostim, imp. device category codes became effective the payment rates for those years.
C1771 ...... Rep dev, urinary, w/sling. April 1, 2001, under the provisions of Brachytherapy sources, which are now
C1772 ...... Infusion pump, programmable. separately paid in accordance with
the BIPA. Prior to pass-through device
C1776 ...... Joint device (implantable). section 1833(t)(2)(H) of the Act, are an
categories, Medicare payments for pass-
C1777 ...... Lead, AICD, endo single coil. exception to this established policy
through devices under the OPPS were
C1778 ...... Lead, neurostimulator. (with the exception of brachytherapy
made on a brand-specific basis. All of
C1779 ...... Lead, pmkr, transvenous VDD. sources for prostate brachytherapy,
the initial 97 category codes that were
C1785 ...... Pmkr, dual, rate-resp.
established as of April 1, 2001, have which were packaged in the CY 2003
C1786 ...... Pmkr, single, rate-resp.
expired; 95 categories expired after CY OPPS only).
C1813 ...... Prosthesis, penile, inflatab.
C1815 ...... Pros, urinary sph, imp.
2002, and 2 categories expired after CY b. Final Policy
C1820 ...... Generator, neuro rechg bat sys.
2003. In addition, nine new categories
C1881 ...... Dialysis access system. have expired since their creation. The In the CY 2008 OPPS/ASC proposed
C1882 ...... AICD, other than sing/dual. three categories listed in Table 40 of the rule, we stated that we were
C1891 ...... Infusion pump, non-prog, perm. CY 2008 OPPS/ASC proposed rule, implementing in CY 2008 the final
C1895 ...... Lead, AICD, endo dual coil. along with their expected expiration decision that we discussed in the CY
C1896 ...... Lead, AICD, non sing/dual. dates, were established for pass-through 2007 OPPS/ASC final rule with
C1897 ...... Lead, neurostim, test kit. payment in CY 2006 or CY 2007, as comment period that finalized the
C1898 ...... Lead, pmkr, other than trans. noted. Under our established policy, we expiration date of pass-through status
C1899 ...... Lead, pmkr/AICD combination. base the expiration dates for the for device category C1820 (71 FR
C1900 ...... Lead coronary venous. category codes on the date on which a 68078). Therefore, as of January 1, 2008,
C2619 ...... Pmkr, dual, non rate-resp. category was first eligible for pass- we will discontinue pass-through
C2620 ...... Pmkr, single, non rate-resp. through payment. payment for device category code
C2621 ...... Pmkr, other than sing/dual. Of these 3 device categories, there is C1820. In accordance with our
C2622 ...... Prosthesis, penile, non-inf. 1 that would be eligible for pass-through established policy, we will package the
C2626 ...... Infusion pump, non-prog, temp. payment for at least 2 years as of costs of the device assigned to this
C2631 ...... Rep dev, urinary, w/o sling. December 31, 2007; that is, device device category into the costs of the
L8614 ....... Cochlear device/system. category code C1820 (Generator, procedures with which the device was
neurostimulator (implantable), with billed in CY 2006, the year of hospital
rechargeable battery and charging claims data used for this OPPS update.
system). In the CY 2007 OPPS/ASC final See section III.D.8. of this final rule with
rule with comment period (71 FR comment period for a discussion of our
final CY 2008 payment for the implant, temporal bone, with we believe that our CY 2007 data for
implantation of neurostimulators. percutaneous attachment to external implantation of osseointegrated device
The 2 device categories that were speech processor/cochlear stimulator; procedures should be sufficient to allow
established for pass-through payment as with mastoidectomy) demonstrated accurate ratesetting for CY 2009 when
of January 1, 2007, HCPCS code C1821 wide variation in hospital costs, from the device cost would be packaged, so
(Interspinous process distraction device $5,200 through $9,200, and this cost there would be no reason to continue
(implantable)) and HCPCS code L8690 variation also pointed to current the pass-through status of L8690 beyond
(Auditory osseointegrated device, insufficient data for the procedures to the 2 year period that ends as of
includes all internal and external implant osseointegrated devices. One December 31, 2008. Moreover, as to the
components), will be active categories commenter recommended that we commenter who requested pass-through
for pass-through payment for 2 years as extend pass-through status for L8690 status for L8690 through CY 2010, we
of December 31, 2008. Therefore, we through CY 2010. note that the statute at section
proposed that these categories expire Response: Several commenters 1833(t)(6)(C) precludes pass-through
from pass through device payment as of reported that the procedures in which payments for a category of devices for
December 31, 2008. L8690 was implanted were low volume more than 3 years.
We received a number of public Comment: A commenter stated that
OPPS procedures. We agree that these
comments concerning this proposal. A we should extend pass-through payment
procedures were low volume in CY
summary of the public comments and for HCPCS code C1821 (Interspinous
2006, with only 255 total claims under
our responses follow. process distraction device
Comment: A number of commenters the OPPS. However, we would not
(implantable)), presumably for the
objected to our proposal to expire expect that these procedures would ever
additional year allowed under the
device category L8690 from pass- be commonly performed in the
statute.
through payment after December 31, Medicare population because the Response: The commenter stated that
2008 and recommended that we specific clinical indications for we should continue pass-through
maintain category code L8690 on pass- implantation of osseointegrated payment for the spinous process
through status until the end of CY 2009, implants are most frequently found in distraction device reported with C1821
allowing a third year of pass-through younger populations. Therefore, the but provided no explicit rationale for
payment. These commenters claimed osseointegrated implant procedures this recommendation or for how much
that one year of claims data, that is, CY would likely continue to exhibit low longer than the 2 years we proposed for
2007 (which would be used to develop claim volumes relative to many other the pass-through payment for C1821.
the CY 2009 payment rates for the procedures paid under the OPPS. In We expect that there would be sufficient
associated implantation procedures) fact, the projected utilization of 525 CY 2007 claims data that reflected the
would be insufficient to establish an devices by one commenter for CY 2006 cost of the interspinous distraction
accurate procedure payment rate that would also be considered low volume device for the CY 2009 OPPS update, so
reflected the costs of implanting the for the OPPS, but we regularly pay that the device cost could be
device. They based this prospectively for many services where appropriately packaged into the APC
recommendation on several reasons. there are fewer than several hundred payment for the associated implantation
They claimed that there were low OPPS services performed each year. We procedures with which the device was
volumes of charges by hospitals to believe that several hundred reported. During CYs 2007 and 2008,
Medicare for HCPCS code L8690. One of implantation procedure claims from CY hospitals have a strong financial
the commenters, the applicant to 2007 should be sufficient for CY 2009 incentive to report appropriate charges
establish the pass-through category, ratesetting, when we would first for the device’s use, because they are
projected utilization of 525 devices in package payment for the device cost of paid separately for the device, based on
the first year of device pass-through osseointegrated devices that no longer charges adjusted to cost during the
payment at the time of the application, had pass-through status. During CYs device’s pass-through payment period.
but stated that CMS CY 2006 claims 2007 and 2008, hospitals have a strong The associated procedure codes,
data for the proposed rule included only financial incentive to report appropriate specifically CPT codes 0171T (Insertion
230 total claims for procedures to charges for the device’s use, because of posterior spinous process distraction
implant the device. The commenter they are paid separately for the device, device (including necessary removal of
indicated that it did not expect the based on charges adjusted to cost during bone or ligament for insertion and
number of implantation procedures to the device’s pass-through payment imaging guidance), lumbar; single level)
increase substantially in CYs 2007 and period. We note that while there are and 0172T (Insertion of posterior
2008. Commenters also claimed that four CPT codes for the osseointegrated spinous process distraction device
given the history of hospital billing device implantation procedures, the (including necessary removal of bone or
problems for implantable devices, the vast majority of CY 2006 claims were for ligament for insertion and imaging
new code L8690 was generally CPT code 69714, for which we had 240 guidance), lumbar; each additional level
unknown in CY 2006 and some data total claims. The majority of these (List separately in addition to code for
might not have been accurately claims were single claims that would be primary procedure)) were new for CY
reported. Several commenters explained available for use in establishing the 2006, where they were assigned to APC
that the four different procedure codes procedure’s median cost. While the 0050 (Level II Musculoskeletal
associated with implantation of other three procedures had only a few Procedures Except Hand and Foot) on
osseointegrated devices, CPT codes CY 2006 claims each and displayed the an interim final basis. See section
69714 (Implantation, osseointegrated variable costs that commonly result III.D.8. of this final rule with comment
implant, temporal bone, with from a small number of claims, we period for a discussion of the final CY
percutaneous attachment to external believe that they are similar to CPT code 2008 APC assignments of these
speech processor/cochlear stimulator; 69714 from both clinical and resource procedures to APC 0050. After CY 2008,
without mastoidectomy) through 69718 perspectives and note that all four HCPCS code C1821 would have had 2
(Replacement (including removal of procedures require the implantable full years of pass-through payment, and
existing device), osseointegrated device for their performance. Therefore, we believe that it would be appropriate
to package the costs of C1821 into packaging that was developed from the codes in CY 2004 on a voluntary basis.
payment for the implantation claims with device codes also reported We reviewed our CY 2004 data and
procedures with which the device was enabled us to determine the percentage found that the numbers of claims for
billed, according to our standard of the median APC cost that was services in many of the APCs for which
methodology, for CY 2009. We see no attributable to the associated pass- we calculated device percentages using
reason to extend the period of pass through devices. By applying those CY 2004 data were quite small. We also
through payment for C1821 beyond percentages to the APC payment rates, found that many of these APCs already
December 31, 2008. we determined the applicable amount to had relatively few single claims
After consideration of the public be deducted from the pass-through available for median calculations
comments received, we are finalizing payment, the ‘‘offset’’ amount. We compared with the total bill frequencies,
our proposal, without modification, to created an offset list comprised of any because of our inability to use many
expire device categories L8690 and APC for which the device cost was at multiple bills in establishing median
C1821 from transitional pass-through least 1 percent of the APC’s cost. costs for all APCs. In addition, we found
payment after December 31, 2008. The offset list that we published for that our claims demonstrated that
CY 2002 through CY 2004 was a list of relatively few hospitals specifically
2. Provisions for Reducing Transitional offset amounts associated with those coded for devices utilized in CY 2004.
Pass Through Payments to Offset Costs APCs with identified offset amounts Thus, we were not confident that CY
Packaged Into APC Groups developed using the methodology 2004 claims reporting device HCPCS
a. Background described above. As a rule, we do not codes represented the typical costs of all
know in advance which procedures hospitals providing the services.
In the November 30, 2001 OPPS final
residing in certain APCs may be billed Therefore, we did not use CY 2004
rule, we explained the methodology we
with new device categories. Therefore, claims with device codes to calculate
used to estimate the portion of each
an offset amount was applied only when CY 2006 device offset amounts. In
APC payment rate that could reasonably
a new device category was billed with addition, we did not use the CY 2005
be attributed to the cost of the
a HCPCS procedure code that was methodology, for which we utilized the
associated devices that are eligible for assigned to an APC appearing on the
pass-through payments (66 FR 59904). device percentages as developed for CY
offset list. 2004. Two years had passed since we
Beginning with the implementation of For CY 2004, we modified our policy
the CY 2002 OPPS quarterly update developed the device offsets for CY
for applying offsets to device pass- 2004, and the device offsets originally
(April 1, 2002), we deducted from the through payments. Specifically, we
pass-through payments for the calculated from CY 2002 hospital claims
indicated that we would apply an offset data may either have overestimated or
identified devices an amount that to a new device category only when we
reflected the portion of the APC underestimated the contributions of
could determine that an APC contains
payment amount that we determined device costs to total procedural costs in
costs associated with the device. We
was associated with the cost of the the outpatient hospital environment of
continued our existing methodology for
device, as required by section CY 2006. In addition, a number of the
determining the offset amount,
1833(t)(6)(D)(ii) of the Act. In the APCs on the CY 2004 and CY 2005
described earlier. We were able to use
November 1, 2002 interim final rule device offset percent lists were either no
this methodology to establish the device
with comment period, we published the longer in existence or were so
offset amounts for CY 2004 because
applicable offset amounts for CY 2003 significantly reconfigured that the past
providers reported device codes
(67 FR 66801). device offsets likely did not apply.
(generally C-codes) on the CY 2002
For the CY 2002 and CY 2003 OPPS claims used for the CY 2004 OPPS For CY 2006, we reviewed the single
updates, to estimate the portion of each update. For the CY 2005 update to the new device category established, C1820,
APC payment rate that could reasonably OPPS, our data consisted of CY 2003 to determine whether device costs
be attributed to the cost of an associated claims that did not contain device codes associated with the new category were
device eligible for pass-through and, therefore, for CY 2005, we utilized packaged into the existing APC
payment, we used claims data from the the device percentages as developed for structure based on partial CY 2005
period used for recalibration of the APC CY 2004. In the CY 2004 OPPS update, claims data. Under our established
rates. That is, for CY 2002 OPPS we reviewed the device categories policy, if we determine that the device
updating, we used CY 2000 claims data, eligible for continuing pass-through costs associated with the new category
and for CY 2003 OPPS updating, we payment in CY 2004 to determine are closely identifiable to device costs
used CY 2001 claims data. For CY 2002, whether the costs associated with the packaged into existing APCs, we set the
we used median cost claims data based device categories were packaged into offset amount for the new category to an
on specific revenue centers used for the existing APCs. Based on our review amount greater than $0. Our review of
device related costs because device C- of the data for the device categories the service indicated that the median
code cost data were not available until existing in CY 2004, we determined that cost for the applicable APC 0222
CY 2003. For CY 2003, we calculated a there were no close or identifiable costs (Implantation of Neurological Device)
median cost for every APC based on associated with the devices relating to contained costs for neurostimulators
single claims with device codes but the respective APCs that were normally that were similar to neurostimulators
without packaging the costs of billed with them. Therefore, for those described by the new device category
associated C-codes for device categories device categories, we set the offset C1820. Therefore, we determined that a
that were billed with the APC. We then amount to $0 for CY 2004. We device offset would be appropriate. We
calculated a median cost for every APC continued this policy of setting the announced a CY 2006 offset amount for
based on single claims with the costs of offset amount to $0 for the device that category in Program Transmittal
the associated device category C-codes categories that continued to receive No. 804, dated January 3, 2006. (We
that were billed with the APC packaged pass-through payment in CY 2005. subsequently were informed that some
into the median. Comparing the median For the CY 2006 OPPS update, CY rechargeable neurostimulators described
APC cost without device packaging to 2004 hospital claims were available for by device category C1820 may also be
the median APC cost including device analysis. Hospitals billed device C- used and billed with a CPT code that
maps to APC 0039 (Level I Implantation described earlier and first used for the CY 2008, corresponding to newly
of Neurostimulator). We announced an CY 2003 OPPS to determine an created categories or existing categories
offset amount for device category C1820 appropriate device offset percent for eligible for pass-through payment,
when billed with a procedure code that those APCs with which the new respectively.
maps to APC 0039 in Program category would be reported. We received no public comments on
Transmittal No. 1209, dated March 21, our proposed continuation of our
b. Final Policy current policy to establish offset
2007.)
For CY 2006, we used available For CY 2008, we proposed to continue amounts for new device categories
partial year CY 2005 hospital claims to review each new device category on eligible for pass-through payments, and,
data to calculate device percentages and a case-by-case basis as we have done therefore, we are adopting our proposed
potential offsets for CY 2006 since CY 2004, to determine whether policy stated above as final for CY 2008.
applications for new device categories. device costs associated with the new
category were packaged into the existing V. OPPS Payment Changes for Drugs,
Effective January 1, 2005, we require
APC structure. If we determined that, Biologicals, and Radiopharmaceuticals
hospitals to report device HCPCS codes
and their charges when hospitals bill for for any new device category, no device A. Transitional Pass-Through Payment
services that utilize devices described costs associated with the new category for Additional Costs of Drugs and
by the existing device category codes. In were packaged into existing APCs, we Biologicals
addition, during CY 2005 we proposed to continue our current policy
of setting the offset amount for the new 1. Background
implemented device edits for many
services that require devices and for category to $0 for CY 2008. There are Section 1833(t)(6) of the Act provides
which appropriate device category currently two new device categories that for temporary additional payments or
HCPCS codes exist. Therefore, we will continue for pass through payment ‘‘transitional pass-through payments’’
expected that the number of claims that in CY 2008. These categories, described for certain drugs and biological agents.
included device codes and their by HCPCS codes L8690 and C1821, As originally enacted by the Medicare,
respective costs to be much more robust currently have an offset amount equal to Medicaid, and SCHIP Balanced Budget
and representative for CY 2005 than for $0 because we could not identify device Refinement Act (BBRA) of 1999 (Pub. L.
CY 2004. related costs in the procedural APCs we 106–113), this provision requires the
For CY 2007, we reviewed the two expect would be billed with either of Secretary to make additional payments
new device categories, C1821 and the two categories L8690 or C1821, that to hospitals for current orphan drugs, as
L8690, to determine whether device is, in APC 0256 or APC 0050, designated under section 526 of the
costs associated with the new categories respectively. We proposed that the Federal Food, Drug, and Cosmetic Act
were packaged into the existing APC offsets for CY 2008 for L8690 and C1821 (Pub. L. 107–186); current drugs and
structure based on CY 2005 claims data. remain set to $0, because we could not biological agents and brachytherapy
As indicated earlier, under our identify device costs packaged in the sources used for the treatment of cancer;
established policy, if we determine that related procedural APCs that were and current radiopharmaceutical drugs
the device costs associated with a new closely identifiable with these device and biological products. For those drugs
category are closely identifiable to categories, based on the claims data for and biological agents referred to as
device costs packaged into existing CY 2006, the claims data year for our CY ‘‘current,’’ the transitional pass-through
APCs, we set the offset amount for the 2008 OPPS update. payment began on the first date the
new category to an amount greater than We proposed to continue our existing hospital OPPS was implemented (before
$0. Our review of the related services policy of establishing new categories in enactment of the Medicare, Medicaid,
indicated that the median costs for the any quarter when we determined that and SCHIP Benefits Improvement and
applicable APC 0256 (Level V ENT the criteria for granting pass through Protection Act (BIPA) of 2000 (Pub. L.
Procedures (for L8690)) and APC 0050 status for a device category were met. If 106–554), on December 21, 2000).
(Level II Musculoskeletal Procedures we created a new device category and Transitional pass-through payments
Except Hand and Foot (for C1821)) did determined that our CY 2006 claims are also provided for certain ‘‘new’’
not contain costs for devices that were data contained a sufficient number of drugs and biological agents that were
similar to those described by the new claims with identifiable costs associated not being paid for as an HOPD service
device categories. Therefore, we set the with the new category of devices in any as of December 31, 1996, and whose
respective offsets to $0. APC with which it is billed, we cost is ‘‘not insignificant’’ in relation to
We believed that use of the most proposed to establish an offset amount the OPPS payments for the procedures
current claims data to establish offset greater than $0 and to reduce the or services associated with the new drug
amounts when they are needed to transitional pass through payment for or biological. For pass-through payment
ensure appropriate payment was the device by the related procedural purposes, radiopharmaceuticals are
consistent with our stated policy; APC offset amount. If we determined included as ‘‘drugs.’’ Under the statute,
therefore, we proposed to continue to do that a device offset amount greater than transitional pass-through payments can
so for the CY 2008 OPPS. Specifically, $0 was appropriate for any new category be made for at least 2 years but not more
if we created a new device category for that we created, we proposed to than 3 years. CY 2008 pass-through
payment in CY 2008, to calculate announce the offset amount in the drugs and biologicals are assigned status
potential offsets we proposed to program transmittal that announced the indicator ‘‘G’’ as indicated in Addenda
examine the most current available new category. A and B to the CY 2008 OPPS/ASC
claims data, including device costs, to In summary, for CY 2008, we proposed rule and this final rule with
determine whether device costs proposed to use CY 2006 hospital comment period.
associated with the new category were claims data to calculate device Section 1833(t)(6)(D)(i) of the Act
already packaged into the existing APC percentages and potential offsets for specifies that the pass-through payment
structure, as indicated earlier. If we new device categories established in CY amount, in the case of a drug or
concluded that some related device 2008. We also proposed to publish biological, is the amount by which the
costs were packaged into existing APCs, through program transmittals any new amount determined under section
we proposed to use the methodology or updated offsets that we calculated for 1842(o) of the Act (or, if the drug or
biological is covered under a http://www.cms.hhs.gov/ OPPS did not begin until the drug
competitive acquisition contract under CompetitiveAcquisforBios. resumed marketing in June 2006 or until
section 1847B of the Act, an amount For CYs 2005, 2006, and 2007, we the manufacturer again began shipping
determined by the Secretary equal to the estimated the OPPS pass-through the drug to providers in July 2006. The
average price for the drug or biological payment amount for drugs and commenters noted that, under these
for all competitive acquisition areas and biologicals to be zero based on our circumstances, pass-through payment
year established under such section as interpretation that the ‘‘otherwise had not been made for the 2 year pass-
calculated and adjusted by the applicable Medicare OPD fee schedule’’ through minimum. Therefore, they
Secretary) for the drug or biological amount was equivalent to the amount to believed that pass-through status should
exceeds the portion of the otherwise be paid for pass-through drugs and continue through CY 2008.
applicable Medicare OPD fee schedule biologicals under section 1842(o) of the Response: According to our
that the Secretary determines is Act (or section 1847B of the Act, if the regulations at 42 CFR 419.64, pass-
associated with the drug or biological. drug or biological is covered under a through status begins on the date that
competitive acquisition contract). We CMS makes its first pass-through
This methodology for determining the
concluded for those years that the payment for the drug or biological. As
pass-through payment amount is set
resulting difference between these two the commenters noted, HCPCS code
forth in § 419.64 of the regulations,
rates would be zero. OPPS pass-through Q4079 was approved for OPPS pass-
which specifies that the pass-through payment estimates for drugs and
payment equals the amount determined through status beginning in April 2005.
biologicals in CY 2008 can be found in However, the manufacturer of the
under section 1842(o) of the Act minus section VI. of this final rule with
the portion of the APC payment that product voluntary suspended marketing
comment period. of the product 2 months prior to April
CMS determines is associated with the The pass through application and
drug or biological. Section 1847A of the 2005. Therefore, in order to determine
review process is explained on the CMS
Act, as added by section 303(c) of Pub. when pass-through payments were first
Web site at: http://www.cms.hhs.gov
L. 108–173, establishes the use of the made for this product, we examined
/HospitalOutpatientPPS/
average sales price (ASP) methodology OPPS claims data for HCPCS code
04_passthrough_payment.asp.
as the basis for payment for drugs and Q4079 for the second, third and fourth
biologicals described in section 2. Drugs and Biologicals With Expiring quarters of CY 2005. While we found a
1842(o)(1)(C) of the Act that are Pass-Through Status in CY 2007 few claims from this time period from
furnished on or after January 1, 2005. Section 1833(t)(6)(C)(i) of the Act several different hospitals, we believe
The ASP methodology uses several specifies that the duration of that these claims were incorrectly
sources of data as a basis for payment, transitional pass through payments for coded. The typical dose of HCPCS code
including ASP, wholesale acquisition drugs and biologicals must be no less Q4079 is 300 mg infused every 4 weeks.
than 2 years and no longer than 3 years. The hospital claims billed during these
cost (WAC), and average wholesale
In Table 41 of the CY 2008 OPPS/ASC three quarters of 2005 reported a median
price (AWP). In this final rule with
proposed rule (72 FR 42730), we of only one unit per day, although the
comment period, the term ‘‘ASP
proposed to allow the expiration of the descriptor of HCPCS code Q4079
methodology’’ and ‘‘ASP-based’’ are
pass-through status for seven drugs and specifies ‘‘per 1 mg.’’ In comparison,
inclusive of all data sources and
biologicals on December 31, 2007. hospital claims show a median of 300
methodologies described therein.
While it is standard OPPS practice to units per day billed after this product
Additional information on the ASP
delete temporary C-codes if an alternate resumed marketing in July 2006. In
methodology can be found on the CMS
permanent HCPCS code becomes addition, while there were a few
Web site at: http://www.cms.hhs.gov/
available for purposes of OPPS billing hospital claims for HCPCS code Q4079
McrPartBDrugAvgSalesPrice/
and payment, there were no temporary submitted in CY 2005, we received no
01_overview.asp#TopOfPage. claims for HCPCS code Q4079 during
C-codes used to identify the seven pass-
As noted above, section through drugs that were proposed for the first two quarters of CY 2006.
1833(t)(6)(D)(i) of the Act also states that expiring pass-through status on Therefore, we believe that the CY 2005
if a drug or biological is covered under December 31, 2007. Table 27 below claims were miscoded, so that the first
a competitive acquisition contract under includes the CY 2008 permanent HCPCS pass-through payment for a correctly
section 1847B of the Act, the payment codes of drugs and biologicals with coded use for HCPCS code Q4079 was
rate is equal to the average price for the expiring pass-through status as of actually not made until July 2006. As a
drug or biological for all competitive December 31, 2007. drug that began pass-through status in
acquisition areas and the year We received several public comments July 2006 would continue with pass-
established as calculated and adjusted regarding a drug proposed to expire through status in CY 2008, we are
by the Secretary. Section 1847B of the from pass-through status at the end of continuing pass-through status in CY
Act, as added by section 303(d) of Pub. CY 2007. A summary of the comments 2008 for HCPCS code Q4079.
L. 108–173, establishes the payment and our responses follow. In addition, in accordance with our
methodology for Medicare Part B drugs Comment: A few commenters standard practice to replace temporary
and biologicals under the competitive requested that CMS continue pass- HCPCS codes with permanent ones
acquisition program (CAP). The Part B through status for HCPCS code Q4079 when a permanent HCPCS code
drug CAP was implemented July 1, (Injection, Natalizumab, 1 mg) for an becomes available, we are deleting
2006, and includes approximately 180 additional year. The commenters stated HCPCS code Q4079 (Injection,
of the most common Part B drugs that, while HCPCS code Q4079 was Natalizumab, per 1 mg), effective
provided in the physician’s office granted pass-through status beginning December 31, 2007, and replacing it
setting. The list of drugs and biologicals April 2005, the manufacturer of this with HCPCS code J2323 (Injection,
covered under the Part B drug CAP, drug voluntarily suspended sales of the Natalizumab, 1 mg), effective January 1,
their associated payment rates, and the drug prior to that date in February 2005. 2008. We have identified this drug in
Part B drug CAP pricing methodology Therefore, the commenters believed that Table 27 below and in Addendum B of
can be found on the CMS Web site at: the period of pass-through under the this final rule with comment period
using HCPCS code J2323 and assigned biologicals whose pass-through status in CY 2008. In Table 27 below, we list
it status indicator ‘‘G.’’ expires on December 31, 2007, with the six drugs and biologicals whose
After consideration of the public modification so that pass-through status pass-through status will expire on
comments received, we are finalizing for HCPCS code Q4079 (HCPCS code December 31, 2007.
our proposed listing of drugs and J2323 beginning in CY 2008) continues
TABLE 27.—DRUGS AND BIOLOGICALS FOR WHICH PASS-THROUGH STATUS EXPIRES DECEMBER 31, 2007
CY 2008 CY 2007 CY 2008 CY 2008
CY 2008 Descriptor
HCPCS HCPCS SI APC
J2278 ....... J2278 ....... Ziconotide injection ................................................................................................................ K .............. 1694

J2503 ....... J2503* ..... Pegaptanib sodium injection ................................................................................................. K .............. 1697
J7311 ....... J7311 ....... Fluocinolone acetonide implt ................................................................................................. K .............. 9225
J8501 ....... J8501 ....... Oral aprepitant ....................................................................................................................... K .............. 0868
J9027 ....... J9027 ....... Clofarabine injection .............................................................................................................. K .............. 1710
J9264 ....... J9264* ..... Paclitaxel protein bound ........................................................................................................ K .............. 1712
* Indicates that the drug was paid at a rate determined by the Part B drug CAP methodology while identified as pass-through under the OPPS.
3. Drugs and Biologicals With Pass- through payment amount for these HCPCS code C9235 (Injection,
Through Status in CY 2008 drugs and biologicals. Thus, for CY panitumumab, 10 mg) is deleted and
In the CY 2008 OPPS/ASC proposed 2008, we proposed to pay for pass- replaced with HCPCS code J9303
rule (72 FR 42731), we proposed to through drugs and biologicals that are (Injection, panitumumab, 10 mg).
continue pass through status in CY 2008 not part of the Part B drug CAP at In addition, in order to be consistent
for 13 drugs and biologicals. These ASP+6 percent, equivalent to the rate with the naming conventions of the
items, which were approved for pass- these drugs and biologicals would CMS HCPCS Workgroup, we have
through status between April 1, 2006 receive in the physician’s office setting deleted HCPCS code C9350
and July 1, 2007, were listed in Table 42 in CY 2008. (Microporous collagen tube of non-
of the proposed rule. The APCs and Section 1842(o) of the Act also states human origin, per centimeter length),
HCPCS codes for these drugs and that if a drug or biological is covered and replaced this code with HCPCS
biologicals listed in Table 42 were under a CAP under section 1847B of the codes C9352 (Microporous collagen
assigned status indicator ‘‘G’’ in Act, the payment rate is equal to the implantable tube (Neuragen Nerve
Addenda A and B to the proposed rule. average price for the drug or biological Guide), per centimeter length) and
Section 1833(t)(6)(D)(i) of the Act sets for all competitive acquisition areas and C9353 (Microporous collagen
the amount of pass-through payment for year established as calculated and implantable slit tube (NeuraWrap Nerve
pass-through drugs and biologicals (the adjusted by the Secretary. For CY 2008, Protector), per centimeter length) in
pass-through payment amount) as the we proposed to provide payment for order to more accurately identify the
difference between the amount drugs and biologicals with pass-through two products that were previously
authorized under section 1842(o) of the status that are offered under the Part B described by HCPCS code C9350.
Act (or, if the drug or biological is drug CAP at a rate equal to the Part B Similarly, we have deleted HCPCS code
covered under a CAP under section drug CAP rate. Therefore, considering C9351 (Acellular dermal tissue matrix of
1847B of the Act, an amount determined ASP+5 percent to be the otherwise nonhuman origin, per square centimeter
by the Secretary equal to the average applicable fee schedule portion (Do not report C9351 in conjunction
price for the drug or biological for all associated with these drugs or with J7345)) for CY 2008 and replaced
competitive acquisition areas and year biologicals, the difference between the it with HCPCS codes J7348 (Dermal
established under such section as Part B drug CAP rate and ASP+5 percent (substitute) tissue of nonhuman origin,
calculated and adjusted by the would be the pass-through payment with or without other bioengineered or
Secretary) and the portion of the amount for these drugs and biologicals. processed elements, without
otherwise applicable fee schedule HCPCS codes that are offered under the metabolically active elements
amount that the Secretary determines is CAP program as of April 1, 2007, are (Tissuemend) per square centimeter)
associated with the drug or biological. identified in Table 28 below with an and J7349 (Dermal (substitute) tissue of
Given our CY 2008 proposal to provide asterisk. nonhuman origin, with or without other
payment for nonpass-through separately In the CY 2008 OPPS/ASC proposed bioengineered or processed elements,
payable drugs and biologicals at ASP+5 rule, we proposed to continue pass- without metabolically active elements
percent as described further in section through status for 13 drugs and (Primatrix) per square centimeter).
V.B.3 of this final rule with comment biologicals. As stated previously, it is We received several public comments
period, in the proposed rule we stated standard OPPS practice to delete regarding our proposal to continue the
our belief that it would be most temporary C-codes if an alternate pass-through status of certain drugs and
consistent with the statute to provide permanent HCPCS code becomes biologicals for CY 2008. A summary of
payment for drugs and biologicals with available for purposes of OPPS billing the comments and our responses follow.
pass through status that are not part of and payment. For CY 2008, HCPCS code Comment: Several commenters noted
the Part B drug CAP at a rate of ASP+6 C9232 (Injection, idursulfase, 1 mg) is support for specific drugs and
percent, compared to ASP+5 percent as deleted and replaced with HCPCS code biologicals proposed for pass-through
the otherwise applicable fee schedule J1743 (Injection, idursulfase, 1 mg); status in CY 2008 and urged CMS to
portion associated with the drug or HCPCS code C9233 (Injection, finalize the proposal for these items.
biological. The difference between ranibizumab, 0.5 mg) is deleted and The commenters also commended CMS
ASP+6 percent and ASP+5 percent, replaced with HCPCS code J2778 for proposing to provide payment for
therefore, would be the CY 2008 pass- (Injection, ranibizumab, 0.1 mg); and pass-through drugs and biologicals at a
rate equal to the rate these drugs and on the CMS Web site at: http:// setting, effective October 1, 2007) in
biologicals would receive under the Part www.cms.hhs.gov/ budget neutrality estimates, impact
B drug CAP program or in the HospitalOutpatientPPS/ analyses, and completion of Addenda A
physician’s office setting. 04_passthrough_payment.asp. Based on and B to this final rule with comment
Response: We appreciate the these criteria, we reviewed the period. In addition, we are finalizing
commenters’ support for our proposed application submitted to us for HCPCS our proposal to update these pass-
policy. We are finalizing our proposal to code J3473 and approved pass-through through payment rates on a quarterly
provide pass-through payments in CY status beginning on January 1, 2007. We basis on our Web site during CY 2008
2008 for the drugs listed in Table 28 do not agree with the commenter that if later quarter ASP submissions (or
below. This table includes the our decision was in error. The drug met more recent WAC or AWP data, as
continuation of pass-through status for all criteria established for pass through applicable) indicate that adjustments to
HCPCS code Q4079, as discussed payment for drugs and biologicals. the payment rates for these pass-through
previously, and accounts for the coding Therefore, as this drug has not met the drugs and biologicals are necessary.
changes presented above. 2-year minimum pass-through time Although there are no pass-through
Comment: One commenter disagreed requirement, we are adopting our radiopharmaceuticals at this time for CY
with the decision to grant pass-through proposal to continue pass-through status 2008, the payment rate for a
status to HCPCS code J3473 (Injection, for HCPCS code J3473 for CY 2008. radiopharmaceutical with pass-through
hyaluronidase, recombinant, 1 USP Comment: One commenter requested status would also be adjusted
unit) beginning in January 2007 and to that CMS clarify how payment would be accordingly.
continue this drug in pass-through made for radiopharmaceutical products
status through CY 2008. The commenter As proposed, if a drug that has been
that are granted pass-through status granted pass-through status for CY 2008
believed that the product described by during CY 2008.
HCPCS code J3473 fails to meet the becomes covered under the Part B drug
Response: Currently, there are no CAP, we will make the appropriate
pass-through criteria of newness and radiopharmaceuticals that would have
‘‘not insignificant costs.’’ The adjustments to the payment rates for
pass-through status in CY 2008. these drugs and biologicals on a
commenter claimed that hyaluronidase
Consistent with OPPS payment for quarterly basis. For drugs and
was available prior to December 31,
drugs, biologicals, and biologicals that are currently covered
1996, and was captured in the initial
radiopharmaceuticals without HCPCS under the CAP, we proposed to use the
OPPS payment rates and, therefore
codes, in CY 2008, payment for payment rates calculated under that
should not be considered new. In
radiopharmaceuticals that are granted program that are in effect as of April 1,
addition, the commenter explained that
pass-through status would be based on 2007, which is the most recent update
the FDA approval of this product was
the ASP methodology. As stated above, of these payment rates. We proposed to
made based on the section 505(b)(2)
for purposes of pass-through payment, update these payment rates if the rates
criteria, meaning that the product
we consider radiopharmaceuticals to be change in the future.
claimed to be identical to products
already approved by the FDA. This drugs under the OPPS. Therefore, if a
radiopharmaceutical receives pass After consideration of the public
commenter also noted that the comments received, we are finalizing
administration of HCPCS code J3473 is through status during CY 2008, we will
follow the standard ASP methodology to our CY 2008 proposal, without
typically billed with ophthalmic modification, to make separate payment
procedures, not drug administration determine its pass-through payment rate
under the OPPS. Because ASP data are in CY 2008 for new drugs and
procedures. The commenter asserted biologicals with a HCPCS code,
that when the cost significance test is not available for radiopharmaceuticals,
we will base the pass-through payment consistent with the provisions of section
performed with APCs more likely to 1842(o) of the Act, at a rate that is
reflect ophthalmic procedures, such as on the product’s WAC. If WAC data are
also not available, we will then provide equivalent to the payment they would
APC 0246 (Cataract Procedures with IOL receive in a physician’s office setting (or
Insert), the cost significance test for drug payment for the pass-through
radiopharmaceutical at 95 percent of its under section 1847B of the Act, if the
and biological pass-through status is not drug or biological is covered under a
met. most recent AWP.
In the OPPS/ASC CY 2008 proposed CAP) only if we receive a pass-through
The commenter further noted that, as
rule, we used payment rates for drugs application for the drug or biological
a result of this drug being granted pass
with pass-through status based on the and pass-through status is subsequently
through status, CMS created a market
ASP data from the fourth quarter of CY granted. Otherwise, we will pay ASP+5
bias towards the use of this product, as
2006 for budget neutrality estimates, percent for these products in CY 2008.
all other hyaluronidase products are
impact analyses, and completion of New radiopharmaceuticals with pass-
currently packaged. The commenter
Addenda A and B to the proposed rule through status will be paid based on
argued that this apparent market bias
because these were the most recent data WAC or, if WAC is not available, based
would be further exacerbated as a result
available to us at that time. These on 95 percent of the product’s most
of the revised ASC payment system
policy of providing separate payment payment rates were the basis for drug recent AWP. We will update the
for OPPS separately payable drugs that payments in the physician’s office payment rates for pass-through drugs
are provided in the ASC setting setting, effective April 1, 2007. As and biologicals quarterly, as new data
beginning in CY 2008, because the proposed, we used updated data in the become available.
majority of procedures that would be development of this final rule with The drugs and biologicals that are
likely to use HCPCS code J3473 are comment period. That is, we used the continuing pass-through status or have
frequently performed in ASCs. ASP data from the second quarter of CY been granted pass-through status as of
Response: Our criteria for reviewing 2007 (which are the basis for drug January 2008 for CY 2008 are included
pass-through applications are available payments in the physician’s office in Table 28 below.
TABLE 28.—DRUGS AND BIOLOGICALS WITH PASS-THROUGH STATUS IN CY 2008

CY 2007 CY 2008 CY 2008 CY 2008
CY 2008 Descriptor
HCPCS HCPCS SI APC
C9239 ...... Inj, temsirolimus ..................................................................................................................... G .............. 1168

C9350 ...... C9352 ...... Neuragen nerve guide, per cm ............................................................................................. G .............. 9350
C9350 ...... C9353 ...... Neurawrap nerve protector, cm ............................................................................................. G .............. 1169
J0129 ....... J0129 ....... Abatacept injection ................................................................................................................ G .............. 9230
J0348 ....... J0348 ....... Anadulafungin injection ......................................................................................................... G .............. 0760
J0894* ...... J0894* ..... Decitabine injection ............................................................................................................... G .............. 9231
C9236 ...... J1300 ....... Eculizumab injection .............................................................................................................. G .............. 9236
J1740 ....... J1740 ....... Ibandronate sodium injection ................................................................................................ G .............. 9229
C9232 ...... J1743 ....... Idursulfase injection ............................................................................................................... G .............. 9232
J2248 ....... J2248 ....... Micafungin sodium injection .................................................................................................. G .............. 9227
Q4079 ...... J2323 ....... Natalizumab injection ............................................................................................................ G .............. 9126
C9233 ...... J2778 ....... Ranibizumab injection ........................................................................................................... G .............. 9233
J3243 ....... J3243 ....... Tigecycline injection .............................................................................................................. G .............. 9228
J3473 ....... J3473 ....... Hyaluronidase recombinant ................................................................................................... G .............. 0806
Q4095 ...... J3488 ....... Reclast injection .................................................................................................................... G .............. 0951
C9351 ...... J7348 ....... Tissuemend tissue ................................................................................................................. G .............. 9351
C9351 ...... J7349 ....... Primatrix tissue ...................................................................................................................... G .............. 1141
J9261 ....... J9261 ....... Nelarabine injection ............................................................................................................... G .............. 0825
C9235 ...... J9303 ....... Panitumumab injection .......................................................................................................... G .............. 9235
* Indicates that the drug was paid at a rate determined by the Part B drug CAP methodology while identified as pass-through under the
OPPS.
B. Payment for Drugs, Biologicals, and also enables hospitals to manage their fourth quarter moving average Producer
Radiopharmaceuticals Without Pass resources with maximum flexibility. Price Index (PPI) levels for prescription
Through Status Section 1833(t)(16)(B) of the Act, as preparations to trend the $50 threshold
added by section 621(a)(2) of Pub. L. forward from the third quarter of CY
1. Background 108–173, sets the threshold for 2005 (when the Pub. L. 108–173
Under the CY 2007 OPPS, we establishing separate APCs for drugs mandated threshold became effective) to
currently pay for drugs, biologicals, and and biologicals at $50 per the third quarter of CY 2007. We then
radiopharmaceuticals that do not have administration for CYs 2005 and 2006. rounded the resulting dollar amount to
pass-through status in one of two ways: Therefore, for CYs 2005 and 2006, we the nearest $5 increment in order to
packaged payment within the payment paid separately for drugs, biologicals, determine the CY 2007 threshold
for the associated service or separate and radiopharmaceuticals whose per adjustment amount of $55.
payment (individual APCs). We day cost exceeded $50 and packaged the
costs of drugs, biologicals, and Following the CY 2007 methodology
explained in the April 7, 2000 OPPS (which is discussed in more detail in
final rule with comment period (65 FR radiopharmaceuticals whose per day
cost was equal to or less than $50 into the CY 2007 OPPS/ASC final rule with
18450) that we generally package the comment period (71 FR 68085 through
cost of drugs and radiopharmaceuticals the procedures with which they were
billed. For CY 2007, the packaging 68086)), as proposed, we used updated
into the APC payment rate for the fourth quarter moving average PPI levels
procedure or treatment with which the threshold for drugs, biologicals, and
radiopharmaceuticals that are not new to trend the $50 threshold forward from
products are usually furnished. the third quarter of CY 2005 to the third
Hospitals do not receive separate and do not have pass-through status was
established at $55. The methodology quarter of CY 2008 and again rounded
payment from Medicare for packaged the resulting dollar amount ($57.78) to
items and supplies, and hospitals may used to establish the $55 threshold for
CY 2007 and our proposed approach for the nearest $5 increment, which yielded
not bill beneficiaries separately for any a figure of $60. In performing this
packaged items and supplies whose future years are discussed in more detail
in section V.B.2. of this final rule with calculation, we used the most up-to-date
costs are recognized and paid within the forecasted, quarterly PPI estimates from
national OPPS payment rate for the comment period.
In addition, for CY 2005 to CY 2007, CMS’ Office of the Actuary (OACT). As
associated procedure or service. actual inflation for past quarters
we have provided an exemption to this
(Program Memorandum Transmittal A– replaced forecasted amounts, the PPI
packaging determination for oral and
01–133, issued on November 20, 2001, estimates for prior quarters were revised
injectable 5HT3 forms of anti–emetic
explains in greater detail the rules (compared with those used in the CY
products. We discuss in section V.B.2.
regarding separate payment for 2007 OPPS/ASC final rule with
of this final rule with comment period
packaged services.) comment period) and were incorporated
our final CY 2008 payment policy for
Packaging costs into a single aggregate these anti–emetic products. into our calculation. Based on the
payment for a service, procedure, or calculations described above, we
episode of care is a fundamental 2. Criteria for Packaging Payment for proposed a packaging threshold for CY
principle that distinguishes a Drugs and Biologicals 2008 of $60. As stated in the CY 2007
prospective payment system from a fee As indicated above, in accordance OPPS/ASC final rule with comment
schedule. In general, packaging the costs with section 1833(t)(16)(B) of the Act, period (71 FR 68086), we believe that
of items and services into the payment the threshold for establishing separate packaging certain items is a
for the primary procedure or service APCs for drugs and biologicals was set fundamental component of a
with which they are associated to $50 per administration during CYs prospective payment system, that
encourages hospital efficiencies and 2005 and 2006. In CY 2007, we used the packaging these items does not lead to
beneficiary access issues and does not understanding that chemotherapy is prescription drugs. Therefore, we
create a problematic site of service very difficult for many patients to continue to believe that our update
differential, that the packaging tolerate, as the side effects are often methodology is aligned closely with
threshold is reasonable based on the debilitating. In order for Medicare national industry figures and standards.
initial establishment in law of a $50 beneficiaries to achieve the maximum We agree with some commenters that
threshold for the CY 2005 OPPS, that therapeutic benefit from chemotherapy an increased packaging threshold would
updating the $50 threshold is consistent and other therapies with side effects of be supportive of our overall increased
with industry and government practices, nausea and vomiting, anti-emetic use is packaging efforts to increase the size of
and that the PPI is an appropriate often an integral part of the treatment the OPPS payment bundles. As stated
mechanism to gauge Part B drug regiment. In the proposed rule, we above, we believe that there are many
inflation. As indicated in the proposed stated our belief that we should benefits of increasing the drug
rule, we did not propose for CY 2008 to continue to ensure that Medicare packaging threshold beyond the current
change this established approach to payment rules do not impede a level, one benefit being that items
establishing the general packaging beneficiary’s access to the particular within a group of drugs would
threshold for drugs, biologicals, and anti-emetic that is most effective for him potentially be paid according to a
radiopharmaceuticals, in view of our or her, as determined by the beneficiary similar methodology. During the
proposed packaging approach for the CY and the treating physician. September 2007 APC Panel meeting, the
2008 OPPS as outlined in section II.A.4. Comment: A few commenters Panel engaged in a discussion regarding
of that proposed rule and our desire to disagreed with the proposed increase of a higher drug packaging threshold for
move the OPPS toward a more the packaging threshold to $60 and the OPPS, and while this discussion did
encounter-based and episode-based asked CMS to retain the $55 threshold not yield a recommendation, the Panel
payment in the future. However, as for CY 2008. The commenters noted that expressed interest in the idea of an
noted in the proposed rule, we will the threshold has experienced a 20 increased drug packaging threshold.
consider expanded packaging of percent increase over 2 years, and that While we understand that there may be
payment for drugs, biologicals, and an increased threshold threatens benefits to hospitals when the drug
radiopharmaceuticals for a future OPPS hospitals’ ability to provide quality care packaging threshold is relatively low
update (72 FR 42732). We believe that without compromising the range of because they would be paid separately
consideration of expanded packaging for services they offer. One commenter for many drugs, we believe that a higher
drugs and biologicals is particularly suggested that CMS implement a packaging threshold could encourage
important, given the substantial increase contingency that would limit increases efficiencies and provide hospitals more
that has occurred in recent years in the to the drug packaging amount to the rate flexibility in managing their resources
proportion of HCPCS codes for drugs, of increase in the ASP amount. Other associated with drug administration
biologicals, and radiopharmaceuticals commenters suggested increasing the services.
OPPS drug packaging threshold either In addition, while we are unsure how
that are paid separately, from 30 percent
for a subset of items, or for all drugs, a drug packaging threshold based on
in CY 2003 to 50 percent in CY 2007.
biologicals, and radiopharmaceuticals. relative drug costs in comparison to the
We proposed for CY 2008 to expand the
Another commenter recommended that associated procedure costs would
packaging of certain drugs and
CMS consider a drug packaging operate in a hospital outpatient setting,
radiopharmaceuticals, specifically
methodology based on the relative cost we believe that further investigation of
contrast agents and diagnostic
of a drug in comparison with the such a methodology could be warranted.
radiopharmaceuticals as discussed in
associated procedure, instead of Therefore, in an effort to gain more
detail in section II.A.4.c.(5) and (6) of information that may help us determine
continuing the absolute cost
this final rule with comment period. the potential effects of an increased drug
methodology, proposed for CY 2008 at
However, we continue to believe that packaging threshold based on either an
$60.
increased packaging of payment for Response: We continue to believe that absolute dollar amount or on a relative
drugs, biologicals, and our approach of applying an annual dollar amount, we are again specifically
radiopharmaceuticals more generally inflation adjustment factor to update the requesting comments from hospital
under the OPPS could provide packaging threshold is consistent with stakeholders and interested individuals
significant incentives for hospital the practices of many health care on the impact that such a change would
efficiency in adopting the most cost- payment policy areas, and many other have on hospitals, and how such a
effective approaches to patient care, areas of government policy, that methodology could be developed,
while providing hospitals with acknowledge real costs by using an implemented, and updated.
maximum flexibility in managing their inflation adjustment factor instead of Comment: Several commenters
resources. Therefore, in the proposed static dollar values. We continue to be requested that CMS eliminate the drug
rule, we specifically solicited public concerned that, absent a mechanism to packaging threshold and provide
comment regarding recommended update the threshold, current relatively separate payment for all Part B drugs.
approaches to increase packaging of inexpensive drugs would begin to The commenters noted that this would
these products under the OPPS and receive separate payment over time. eliminate payment disparities between
issues we should consider as we While we understand the commenters’ the OPPS and the physician’s office
evaluate alternative methodologies for concerns that substantial increases in setting, so there would be no site-of-
the future (72 FR 42732). the threshold over a short period of time service differential in providing drug
For the third year, we proposed to may be undesirable, we do not believe therapies.
continue exempting the oral and that the changes we have implemented Response: We continue to believe that
injectable forms of 5HT3 anti-emetics over the past 2 years have jeopardized unpackaging payment for all drugs,
products from packaging, thereby hospitals’ ability to provide quality biologicals, and radiopharmaceuticals is
making separate payment for all of these patient care. In addition, we again note inconsistent with the concept of a
products. As we stated in the CY 2005 that the updates to the OPPS drug prospective payment system and that
OPPS final rule with comment period packaging threshold have been such a change could create an
(69 FR 65779 through 65780), it is our predicated on relevant inflation rates for additional reporting burden for
hospitals. The OPPS and the MPFS that consider additional options for proposed to use the methodology that
apply to physician’s office services are packaging in the future. If we were to was described in detail in the CY 2006
fundamentally different payment increase the OPPS drug packaging OPPS proposed rule (70 FR 42723
systems with essential differences in threshold, we might no longer require a through 42724) and finalized in the CY
their payment policies. Specifically, the special exemption for these products 2006 OPPS final rule with comment
OPPS is a prospective payment system, because all these products might be period (70 FR 68636 through 70 FR
based on the concept of paying for packaged under such an approach. 68638). To calculate the proposed CY
groups of services that share clinical Similarly, a higher drug packaging 2008 per day costs, we used an
and resource characteristics. Payment is threshold could eliminate existing estimated payment rate for each drug
made under the OPPS according to disparities in payment methodologies and biological of ASP+5 percent (which
prospectively established payment rates for other drug groups and provide is the payment rate we proposed for
that are related to the relative costs of similar methods of payment across separately payable drugs and biologicals
hospital resources for services. The items in a group. Nevertheless, while we in CY 2008, as discussed in more detail
MPFS is a fee schedule that generally may be interested in alternative subsequently). As noted in the CY 2008
provides payment for each individual threshold methodologies for future OPPS/ASC proposed rule (72 FR 42733),
component of a service. Consistent with ratesetting purposes, we realize that we used the manufacturer submitted
the MPFS approach, separate payment there are existing situations where drugs ASP data from the fourth quarter of CY
is made for each drug provided in the in a particular category vary in their 2006 (rates that were used for payment
physician’s office, but the OPPS payment treatment under the OPPS, purposes in the physician’s office
packages payment for certain drugs into with some drugs packaged and other setting, effective April 1, 2007) to
the associated procedure payments for separately paid. We believe the determine the proposed per day cost.
the APC group. Because of the different challenges associated with categorizing For items that did not have an ASP
payment policies, differences in the drugs to assess them for disparities are based payment rate, we used their mean
degrees of packaged payment and significant, and we are not convinced unit cost derived from the CY 2006
separate payment between these two that ensuring the same payment hospital claims data to determine their
systems are only to be expected. In treatment for other drug categories is per day cost. As described in the
general, we do not believe that our essential at this time, beyond the proposed rule, we packaged items with
packaging methodology under the OPPS proposal we made for 5HT3 anti- a per day cost less than or equal to $60
results in limited beneficiary access to emetics. Therefore, we do not believe and identified items with a per day cost
drug administration services. that it would be appropriate for CY 2008 greater than $60 as separately payable.
We note that, in CYs 2005 and 2006, to take any additional steps to ensure Consistent with our past practice, we
the statutorily mandated drug packaging that all drugs in a specific category are crosswalked historical OPPS claims data
threshold was set at $50, and we believe either separately paid or packaged, as from the CY 2006 HCPCS codes that
it is currently appropriate to continue a requested by some commenters. were reported to the CY 2007 HCPCS
modest drug packaging threshold for the After considering the public codes that we displayed in Addendum
CY 2008 OPPS. Therefore, because of comments received, we are finalizing B to the proposed rule for payment in
our continued belief that packaging is a our CY 2008 proposal, without CY 2008.
fundamental component of a modification, to again exempt the oral Our policy during previous cycles of
prospective payment system that and injectable forms of 5HT3 anti- the OPPS has been to use updated data
contributes to important flexibility and emetic products listed in Table 29 to establish final determinations of the
efficiency in the delivery of high quality below from our packaging methodology packaging status of drugs, biologicals,
outpatient hospital services, we are not for CY 2008. and radiopharmaceuticals. We note that
adopting the recommendation to pay it is also our policy to make an annual
separately for all drugs, biologicals, and TABLE 29.—ANTI-EMETICS EXEMPTED packaging determination only when we
radiopharmaceuticals for CY 2008. FROM CY 2008$60 PACKAGING develop the OPPS/ASC final rule for the
Comment: Several commenters THRESHOLD update year. As indicated in the
supported the proposal to continue to proposed rule (72 FR 42733), only items
exempt the oral and injectable forms of HCPCS that are identified as separately payable
Short descriptor
5HT3 anti-emetic products (that were code in this final rule with comment period
listed in Table 43 of the proposed rule will be subject to quarterly updates. As
that is reprinted as Table 29 below) from J1260 ....... Dolasetron mesylate proposed, for our calculation of per day
packaging, thereby making separate J1626 ....... Granisetron HCl injection
J2405 ....... Ondansetron hcl injection
costs of drugs, biologicals, and
payment for all of the 5HT3 anti-emetic J2469 ....... Palonosetron HCl radiopharmaceuticals in this final rule
products. In addition, a few commenters Q0166 ...... Granisetron HCl 1 mg oral with comment period, we used ASP
requested that CMS apply the same Q0179 ...... Ondansetron HCl 8 mg oral data from the first quarter of CY 2007,
principle to other groups of drugs in Q0180 ...... Dolasetron mesylate oral which is the basis for calculating
order to equalize payment payment rates for drugs and biologicals
methodologies across drugs in the same For CY 2008, we proposed to in the physician’s office setting using
clinical group. One commenter calculate the per day cost of all drugs, the ASP methodology, effective July 1,
recommended that payment for all biologicals, and radiopharmaceuticals 2007, along with updated hospital
hyaluronidase products be packaged. that had a HCPCS code in CY 2006 and claims data from CY 2006.
Response: We appreciate the support were paid (via packaged or separate Consequently, the packaging status for
of our proposal to continue exempting payment) under the OPPS using claims drugs, biologicals, and
the 5HT3 anti-emetic products from our data from January 1, 2006, to December radiopharmaceuticals in this final rule
packaging determination. However, as 31, 2006, to determine their CY 2008 with comment period using the updated
discussed in the CY 2008 OPPS/ASC packaging status. In order to calculate data may be different from their
proposed rule, as we consider moving to the per day costs for drugs, biologicals, packaged status determined based on
additional encounter based and episode- and radiopharmaceuticals to determine the data used for the proposed rule.
based payment in future years, we may their packaging status in CY 2008, we Under such circumstances, we have
applied the following policies to these TABLE 30.—DRUGS AND BIOLOGICALS 3. Payment for Drugs and Biologicals
drugs, biologicals, and PROPOSED AS PACKAGED BUT WITH Without Pass-Through Status That Are
radiopharmaceuticals whose FINAL PER DAY COSTS ABOVE $60, Not Packaged
relationship to the $60 threshold FOR WHICH SEPARATE PAYMENT a. Payment for Specified Covered
changes based on the final updated data: WILL BE MADE IN CY 2008 Outpatient Drugs
• Drugs, biologicals, and (1) Background
radiopharmaceuticals that were paid HCPCS Description
separately in CY 2007 and that were Section 1833(t)(14) of the Act, as
proposed for separate payment in CY J0190 ....... Inj biperiden lactate/5 mg added by section 621(a)(1) of Pub. L.
2008, and then have per day costs equal J0600 ....... Edetate calcium disodium inj 108–173, requires special classification
J1595 ....... Injection glatiramer acetate of certain separately paid
to or less than $60, based on the
J2730 ....... Pralidoxime chloride inj radiopharmaceuticals, drugs, and
updated ASPs and hospital claims data
J9270 ....... Plicamycin (mithramycin) inj biologicals and mandates specific
used for the CY 2008 final rule with payments for these items. Under section
comment period, would continue to 1833(t)(14)(B)(i) of the Act, a ‘‘specified
receive separate payment in CY 2008. Also, according to our packaging
policy described above, two drugs, covered outpatient drug’’ is a covered
• Drugs, biologicals, and specifically HCPCS codes J0520 outpatient drug, as defined in section
radiopharmaceuticals that were (injection, bethanechol chloride, 1927(k)(2) of the Act, for which a
packaged in CY 2007 and that were myotonachol or urecholine, up to 5 mg) separate APC has been established and
proposed for separate payment in CY that either is a radiopharmaceutical
and J3364 (injection, urokinase, 5000 iu
2008, and then have per day costs equal agent or is a drug or biological for which
vial), were packaged in CY 2007,
to or less than $60, based on the payment was made on a pass-through
proposed for separate payment in CY basis on or before December 31, 2002.
updated ASPs and hospital claims data 2008, but had final per day costs equal
used for the CY 2008 final rule with Under section 1833(t)(14)(B)(ii) of the
to or less than $60 based on the updated Act, certain drugs and biologicals are
comment period, would remain ASPs and hospital claims data used for
packaged in CY 2008. designated as exceptions and are not
the CY 2008 final rule with comment included in the definition of ‘‘specified
• Drugs, biologicals, and period. Therefore, in accordance with covered outpatient drugs,’’ known as
radiopharmaceuticals for which we our methodology, these two drugs will SCODs. These exceptions are—
proposed packaged payment in CY 2008 continue to be packaged in CY 2008. • A drug or biological for which
but then have per day costs greater than In sections II.A.4.c.(5) and (6) of the payment is first made on or after
$60, based on the updated ASPs and CY 2008 OPPS/ASC proposed rule, we January 1, 2003, under the transitional
hospital claims data used for the CY proposed to package payment for all pass-through payment provision in
2008 final rule with comment period, diagnostic radiopharmaceuticals and section 1833(t)(6) of the Act.
would receive separate payment in CY contrast agents that would not otherwise • A drug or biological for which a
2008. be packaged according to the proposed temporary HCPCS code has not been
We note that HCPCS code J0594 CY 2008 packaging threshold for drugs, assigned.
(Injection, busulfan, 1 mg) was paid biologicals and radiopharmaceuticals. • During CYs 2004 and 2005, an
separately in CY 2007 and was proposed orphan drug (as designated by the
Tables 17 and 19 in sections II.A.4.c.(5)
for separate payment in CY 2008, but Secretary).
and (6) of that proposed rule (72 FR
had a final per day cost of Section 1833(t)(14)(A)(iii) of the Act,
42671 and 42673 through 42674) listed as added by section 621(a)(1) of Pub. L.
approximately $37, which is less than the diagnostic radiopharmaceuticals and 108–173, requires that payment for
the $60 threshold, based on the updated contrast agents, respectively, that we SCODs in CY 2006 and subsequent
ASPs and hospital claims data used for proposed to package in CY 2008. In years be equal to the average acquisition
this CY 2008 final rule with comment section V.B.3.a.(4) of this final rule with cost for the drug for that year as
period. HCPCS code J0594 will continue comment period, we discuss our CY determined by the Secretary, subject to
to receive separate payment in CY 2008 2008 policies for providing payment for any adjustment for overhead costs and
according to the established diagnostic and therapeutic taking into account the hospital
methodology set forth above. radiopharmaceuticals. acquisition cost survey data collected by
In addition, there were several drugs We note that HCPCS code A9568 the Government Accountability Office
and biologicals that we proposed to (Technetium Tc-99 arcitumomab, (GAO) in CYs 2004 and 2005. If hospital
package in the proposed rule and that diagnostic, per study dose, up to 45 acquisition cost data are not available,
now have per day costs greater than $60 millicuries) replaced HCPCS code the law requires that payment be equal
using updated ASPs and all of the A9549 (Technetium Tc-99 arcitumomab, to payment rates established under the
hospital claims data from CY 2006 used diagnostic, per study dose, up to 25 methodology described in section
for this final rule with comment period. millicuries) beginning January 1, 2007. 1842(o), section 1847A, or section
In accordance with our established 1847B of the Act, as calculated and
Our CY 2006 claims data indicate that
policy for such cases, for CY 2008 we adjusted by the Secretary as necessary.
HCPCS code A9549 was billed an
will pay for these drugs and biologicals In establishing the CY 2006 payment
average of one time per day. As we did rates, we evaluated the three data
separately. Table 30 lists the drugs and not have claims data available for sources that were available to us for
biologicals that were proposed as
ratesetting purposes for HCPCS code setting the CY 2006 payment rates for
packaged, but that will be paid A9568, we estimated the number of drugs and biologicals. As described in
separately in CY 2008. units per day to also be one. the CY 2006 OPPS final rule with
comment period (70 FR 68639 through
68644), these data sources were the
GAO reported average purchase prices
for 55 SCOD categories for the period with reporting pharmacy overhead with concern about the additional
July 1, 2003, to June 30, 2004, collected these special HCPCS codes (70 FR administrative burden on staff and
via a survey of 1,400 acute care 68657 through 68665). coders that this methodology might
Medicare-certified hospitals; ASP data; cause.
(2) Final Payment Policy The second option we presented in
and mean costs derived from CY 2004
hospital claims data. For the CY 2006 The provision in section the proposed rule was to continue our
OPPS final rule with comment period, 1833(t)(14)(A)(iii) of the Act, as CY 2007 methodology of providing a
we used ASP data from the second described above, continues to be single bundled payment representing
quarter of CY 2005, which were used to applicable to determining payments for average hospital acquisition costs and
set payment rates for drugs and SCODs for CY 2008. This provision associated pharmacy overhead costs. As
biologicals in the physician’s office requires that, in CY 2008, payment for stated previously, we believe that
setting effective October 1, 2005, and SCODs be equal to the average hospitals are including pharmacy
updated claims data. acquisition cost for the drug for that overhead costs in their charges for
In our data analysis for the CY 2006 year as determined by the Secretary, drugs, consistent with MedPAC’s
OPPS final rule with comment period, subject to any adjustment for overhead findings. While we continue to believe
we compared the payment rates for costs and taking into account the that a combined payment amount for
drugs and biologicals using data from all hospital acquisition cost survey data drug acquisition costs and pharmacy
three sources described above. We collected by the GAO in CYs 2004 and overhead based on our claims data is a
estimated aggregate expenditures for all 2005. If hospital acquisition cost data reasonable methodology, adequately
drugs and biologicals that would be are not available, the law requires that accounts for acquisition costs and
separately payable in CY 2006 and for payment be equal to payment rates overhead, and is consistent with our
the 55 drugs and biologicals reported by established under the methodology broader packaging efforts, we proposed
the GAO using mean costs from the described in section 1842(o), section a slight variant of this approach for CY
claims data, the GAO mean purchase 1847A, or section 1847B of the Act, as 2008 instead.
prices, and the ASP-based payment calculated and adjusted by the Secretary For CY 2008, we proposed to continue
amounts (ASP+6 percent in most cases), as necessary. In addition, section our methodology of providing a
and then calculated the equivalent 1833(t)(14)(E)(ii) authorizes the combined payment rate for drug and
average ASP-based payment rate under Secretary to adjust APC weights for biological acquisition costs and
each of the three payment SCODs to take into account the MedPAC pharmacy overhead. However, in
methodologies. We excluded report relating to overhead and related addition, we proposed to instruct
radiopharmaceuticals in our analysis expenses, such as pharmacy services hospitals to remove the pharmacy
because they were paid at hospital and handling costs. overhead charge from the charge for the
charges reduced to cost during CY 2006. We considered several options for drug or biological and instead report the
The results based on updated ASP and payment for drug acquisition costs and pharmacy overhead charge on an
claims data were published in Table 24 pharmacy overhead for CY 2008 (72 FR uncoded revenue code line on the claim
of the CY 2006 OPPS final rule with 42735). First, we considered proposing beginning in CY 2008. We believed that
comment period. For a full discussion of again the methodology we had proposed this proposed change, from a CY 2007
our reasons for using these data, we for CY 2006, which involved the policy where hospitals include
refer readers to section V.B.3.a. of the establishment of three drug overhead pharmacy overhead in their charges for
CY 2006 OPPS final rule with comment categories that hospitals would use to the drug or biological to a CY 2008
period (70 FR 68639 through 68644). report pharmacy overhead charges policy of including the pharmacy
As we noted in the CY 2006 OPPS associated with a drug provided in the overhead charges on an uncoded
final rule with comment period, HOPD. Until such data were available revenue code line, would allow us to
findings from a MedPAC survey of for ratesetting purposes, we considered package pharmacy overhead costs for
hospital charging practices indicated continuing our CY 2007 methodology of drugs and biologicals into payment for
that hospitals set charges for drugs, bundling average hospital acquisition the associated procedure, likely a drug
biologicals, and radiopharmaceuticals and pharmacy overhead payments. administration procedure, in future
high enough to reflect their pharmacy While this approach has the advantage years when the CY 2008 claims data
handling costs as well as their of not paying separately for pharmacy become available for ratesetting. We
acquisition costs. In consideration of overhead until we would have claims proposed to apply this policy to the
this information, we stated in the CY data on which to establish separate reporting of charges for all drugs and
2006 OPPS final rule with comment payment rates for drug acquisition costs biologicals, including contrast agents,
period that payment rates derived from and pharmacy overhead, its goal would irrespective of the item’s packaged or
hospital claims data also included still be to ultimately unpackage OPPS separately payable status for the CY
acquisition and pharmacy handling payment for pharmacy overhead. We 2008 OPPS. We did not propose to
costs because they are derived directly decided not to propose this option apply this policy to the reporting of
from hospital charges (70 FR 68642). In because we believed and continue to overhead charges for
CYs 2006 and 2007, we finalized a believe that it is undesirable to take radiopharmaceuticals, given the explicit
policy of providing payment to HOPDs steps that would ultimately lead to instructions we gave hospitals
for drugs, biologicals, and associated pharmacy overhead being unpackaged beginning in CY 2006 to include the
pharmacy handling costs at a rate of at the same time that we have proposed charges for radiopharmaceutical
ASP+6 percent. In addition, in CY 2006 measures to expand packaging under overhead and handling in the charges
we had proposed to collect pharmacy the OPPS and have considered moving for the radiopharmaceutical product.
overhead charge data via special toward more episode-based and We note that, in the case of current
pharmacy overhead HCPCS codes that encounter-based payment. Furthermore, OPPS payment for packaged drugs,
hospitals would report. We did not we note that as we considered this payment for both the drugs and their
finalize this proposal for CY 2006 approach, we were mindful of the associated pharmacy overhead costs is
because of hospital concerns regarding comments we received in response to already packaged into payment for the
the administrative burden associated our CY 2006 proposed rule expressing associated separately payable
procedures, including drug pharmacy overhead costs in a manner adoption of median costs from hospital
administration services as discussed in that is simple to implement at the claims data as long as prospective
detail in section II.A.1.b.(2) of this final organizational level, similar to the three- payments based on claims data were not
rule with comment period. In addition, phase approach recommended by the implemented prematurely.
this methodology is consistent with the Panel during the March 2007 meeting. One commenter suggested a
increased packaging efforts discussed We discuss our responses to these modification to the current hospital cost
earlier in section II.A.4. of this final rule recommendations below. report by splitting the ‘‘Pharmacy’’ and
with comment period. Because we We received many public comments ‘‘Drugs Sold to Patient’’ cost centers into
would not expect to have claims data on our CY 2008 proposal to have two lines each—one for drug acquisition
reflecting these reporting changes until hospitals report charges for pharmacy costs and the other for drug-related
CY 2010, we proposed to continue to overhead on uncoded revenue code line. pharmacy and overhead costs. The
provide a combined payment rate for A summary of the public comments and commenters stated that providers would
acquisition costs and pharmacy our responses follow. then apportion their drug charges
overhead for separately payable drugs Comment: MedPAC supported the between these two lines, and CMS
and biologicals in CY 2008, similar to proposal to collect pharmacy overhead would use the cost report to determine
the combined payment rate provided in data via uncoded revenue code lines the relative cost of pharmacy overhead
CYs 2006 and 2007 that represents the because it would allow hospitals to be to total drug costs.
average hospital acquisition cost and paid more accurately for the variation in Other commenters suggested that
pharmacy overhead cost. pharmacy overhead costs when CMS conduct hospital surveys, gather
During the March 2007 APC Panel payment for those costs would be information through the fiscal
meeting, the APC Panel recommended packaged into the costs of the associated intermediaries, or attach an additional
that CMS implement a three-phase plan independent services. However, the vast worksheet to the hospital cost report.
to address OPPS payment for pharmacy majority of commenters echoed the APC
Several commenters requested that, if
overhead costs. The first phase of the Panel’s recommendation to not require
CMS were to finalize this proposal, CMS
recommended plan involves CMS hospitals to separately report charges for
should limit the reporting requirement
working with interested stakeholders to pharmacy overhead and handling and
to drugs with significant pharmacy
develop a system of defining pharmacy the Panel’s further recommendation that
overhead and administrative costs.
overhead categories for outpatient drugs pharmacy overhead and handling costs
be recognized within drug charges and In addition to these suggested
that require different levels of pharmacy
be paid through the packaged or methodologies, several commenters
resources. In addition, this phase
separate drug payment (as appropriate expressed confusion regarding the
includes a provision recommending that
based on the drug packaging threshold). phrases ‘‘uncoded revenue code line’’
CMS provide payment for pharmacy
In general, the commenters cited and ‘‘overhead and handling costs’’ and
overhead costs by setting payment rates
for the developed categories through overwhelming implementation issues, requested clarification, while others
New Technology APCs, presumably including administrative reporting requested that, if CMS finalized the
while collecting hospital cost data on burdens, challenges involved with proposed policy for pharmacy overhead
these services. The second phase of the identifying and splitting current charges services, CMS should delay the
recommended plan calls for CMS to for drugs and biologicals into implementation date and provide
review estimates of pharmacy overhead acquisition costs and overhead, hospitals additional time to update their
costs as identified by the GAO and inflexible hospital accounting systems systems.
MedPAC, and to consider external that are unable to combine and Response: We appreciate the
survey data from stakeholders. The third differentiate charges depending on the commenters’ many suggestions on ways
and final phase of the recommended insurer, complexity requiring manual to collect hospital pharmacy data and
plan calls for specific billing of changes to individual claims, and the commenters’ concerns regarding our
pharmacy overhead costs using HCPCS beneficiary confusion regarding these proposal. While we considered the APC
codes (corresponding to the categories charges on their bills. In addition, some Panel’s March 2007 recommendation, as
developed in phase one, with payment commenters were concerned that well as similar suggestions from other
rates resulting from submitted hospital secondary private insurers may not stakeholders, we did not propose to
claims data) on the same claim as a drug accept the charges when the claim is adopt this recommendation (nor are we
administration service. The APC Panel submitted after being processed by adopting this recommendation in this
recommended that the overhead Medicare. The commenters noted that, final rule with comment period) to
payments be made in addition to the due to these complex issues and the implement a three-phase plan to address
current 2007 ASP+6 percent payment relatively short timeframe in which OPPS payment for pharmacy overhead
rates for separately payable drugs and hospitals would have to make these costs. For CY 2008, we proposed to
biologicals that do not have pass- changes, data obtained through this expand packaging under the OPPS by
through status. proposal are likely to be unreliable. packaging payment for certain ancillary
During the September 2007 APC A few commenters expressed and supportive services as discussed in
Panel meeting, the Panel recommended disappointment that CMS did not section II.A.4.c. of this final rule with
that hospitals not be required to propose to adopt various methodologies comment period. Given our belief that
separately report charges for pharmacy they shared with CMS for capturing packaging can be helpful in promoting
overhead and handling, and that pharmacy overhead data. Several hospital efficiency and long-term cost
pharmacy overhead and handling costs commenters reiterated their proposals containment and our belief that
be recognized within drug charges and for a three-phase system, similar to the pharmacy handling is ancillary and
paid through the packaged or separate three-phase plan recommended by the supportive to the administration of
drug payment (as appropriate based on APC Panel and discussed above. The drugs and biologicals in the HOPD, we
the drug packaging threshold). In commenters also suggested that this do not believe it would be desirable to
addition, the Panel recommended that plan could be altered, and that the take steps that would ultimately lead to
we continue to evaluate alternative survey contained in the second phase payment for pharmacy overhead costs
methods to standardize the capture of survey could be replaced with direct being unpackaged under the OPPS.
As noted in the proposed rule (72 FR variable pharmacy overhead costs pharmacy overhead in developing and
42734 through 42735), the APC Panel associated with different types of drugs, reporting their charges for drugs and
recommended that CMS establish we are concerned about the operational biologicals, maintaining their current
separate payment amounts for pharmacy challenges and administrative burdens practice.
overhead in addition to the current CY that hospitals would face in reporting For the CY 2008 OPPS/ASC proposed
2007 combined payment for drug drugs provided in the HOPD. Therefore, rule, we evaluated two data sources that
acquisition costs and pharmacy we are not finalizing our proposal to we have available to us for setting the
overhead of ASP+6 percent. As we require hospitals to remove pharmacy CY 2008 payment rates for drugs and
discussed in the CY 2006 OPPS final overhead costs from drug acquisition biologicals. The first source of drug
rule with comment period (70 FR costs and to report pharmacy overhead pricing information that we have is the
68657) and in the CY 2007 OPPS/ASC costs in an uncoded revenue code line. ASP data from the fourth quarter of CY
final rule with comment period (71 FR We appreciate the suggestions to 2006, which were used to set payment
68089 through 68092), findings from a implement a hospital survey or to rates for drugs and biologicals in the
MedPAC survey of hospital charging include a pharmacy overhead worksheet physician’s office setting, effective April
practices indicated that hospitals set on the hospital cost report. However, we 1, 2007. We have ASP-based prices for
charges for drugs, biologicals, and do not believe that it would be approximately 500 drugs and biologicals
radiopharmaceuticals high enough to administratively feasible or reasonable (including contrast agents) payable
reflect their pharmacy handling costs as from a resource perspective to develop under the OPPS. However, we currently
well as their acquisition costs. We and update information regarding do not have any ASP data on
continue to believe that our payment pharmacy overhead costs through either radiopharmaceuticals.
rates for drug acquisition costs and of these methodologies. Presumably the The second source of cost data that
pharmacy overhead should be commenters believe that, by collecting we have for drugs, biologicals, and
determined based on the costs reflected these data, we would provide additional radiopharmaceuticals is the mean and
in our claims data, as these costs reflect separate payments to hospitals for median costs derived from the CY 2006
both acquisition costs and overhead pharmacy overhead services. As hospital claims data. As section
costs. We also believe that establishing explained above, separate payment for 1833(t)(14)(A)(iii) of the Act clearly
additional payment for pharmacy pharmacy overhead would decrease the specifies that payment for SCODs in CY
overhead beyond our proposed payment current size of the drug payment 2008 be equal to the ‘‘average’’
rates based on claims data would distort bundles and would not be aligned with acquisition cost for the drug, we limited
the relative relationship of costs across the additional packaging we have
our analysis to the mean costs of drugs
HOPD services, which is the basis of the implemented in this final rule with
determined using the hospital claims
OPPS. As we do consider the Panel’s comment period.
In addition, several commenters data, instead of using median costs.
March 2007 recommendation to be In our data analysis, we compared the
expressed their preference to retain the
aligned with the current OPPS trend payment rates for drugs and biologicals
pharmacy overhead payment packaged
towards increasing the size of payment using data from both sources described
with the payment for the drug, stating
bundles, we are accepting the Panel’s above. After determining the proposed
that this is the most logical and
September 2007 recommendation to CY 2008 packaging status of drugs and
appropriate grouping for payment
continue to evaluate alternate methods biologicals, we estimated aggregate
purposes. We agree with these
to standardize the capture of pharmacy expenditures for all drugs and
commenters and believe that a single
overhead costs in a manner that is biologicals (excluding
OPPS payment that represents both drug
simple to implement at the acquisition and associated pharmacy radiopharmaceuticals) that would be
organizational level. As such, we are overhead costs is the most reasonable separately payable in CY 2008 using
interested in continuing our dialogue and logical method of payment for these mean costs from the hospital claims
with hospital stakeholders regarding the services. Therefore, we are adopting the data and the ASP-based payment
issue of pharmacy overhead. We September 2007 recommendation of the amounts, and calculated the equivalent
generally accept requests from APC Panel that pharmacy overhead and average ASP-based payment amount
interested organizations to discuss their handling costs be recognized within under both payment methodologies.
views about OPPS payment policy drug charges and be paid through the The results of our proposed rule data
issues, including pharmacy handling packaged or separate drug payment (as analysis for the proposed rule indicated
issues. In addition, we establish the appropriate based on the drug packaging that using mean unit cost to set the
OPPS rates through regulations and, as threshold). We do not believe that we payment rates for the drugs and
such, consider the timely comments of need to provide specific guidance on the biologicals that would be separately
interested organizations, establish the elements of pharmacy handling and payable in CY 2008 would be equivalent
payment policies for the forthcoming overhead that hospitals should consider to basing their payment rates, on
year, and respond to the timely in setting their charges for drugs, average, at ASP+5 percent. Therefore,
comments of all public commenters in because, as MedPAC found and many we proposed to continue to provide a
the final rule in which we establish the commenters confirmed, hospitals are bundled payment for the acquisition
payment for the forthcoming year. currently including the costs of costs of drugs and biologicals and the
After reviewing the public comments pharmacy overhead in their charges for associated pharmacy overhead in CY
we received on the CY 2008 proposal, drugs and biologicals. 2008 at ASP+5 percent, where the ASP
we have a better understanding of the After consideration of the public add-on percent was calculated based on
scope of our proposal and the burden comments received, we are finalizing mean costs from hospital claims data. In
that it would have on hospitals. While our proposal to provide a single addition, as described in section
we continue to believe that packaging bundled payment for separately payable II.A.4.c.(6) of this final rule with
pharmacy overhead costs into the drugs and biologicals, inclusive of both comment period, for contrast agents, we
associated independent procedures for drug acquisition and pharmacy proposed a supplemental approach that
administration of the drugs could pay overhead costs. Hospitals should would package payment for all contrast
hospitals more appropriately for the continue to consider the costs of media under the CY 2008 OPPS.
During the September 2007 meeting of the full CY 2006 year and updated CCRs results of the use of both inpatient and
the APC Panel, the Panel recommended is that the equivalent average ASP-based outpatient charges across all payers to
that we continue to provide payment for payment amount for separately payable reestimate regression-based CCRs.
separately payable drugs at a rate of drugs and biologicals, including After a period of continuing ASP+6
ASP+6 percent for CY 2008. We discuss pharmacy handling costs, is equal to percent payment in CY 2007 while we
our response to this recommendation ASP+3 percent for CY 2008. Therefore, gathered additional information
below. according to our CY 2008 proposal for regarding pharmacy overhead costs, we
We received many public comments payment of separately payable drugs believe that it is most appropriate at this
on our proposal to pay for separately and biologicals which includes point to continue to pay for drugs and
payable drugs and biologicals and their pharmacy overhead payment, based on biologicals and their associated
pharmacy overhead at ASP+5 percent in mean costs from CY 2006 hospital pharmacy overhead costs using an ASP-
CY 2008. A summary of the public claims, the OPPS payment rate for based system, but to determine the
comments and our responses follow. separately payable drugs and biologicals relative ASP percent based on mean
Comment: Many commenters agreed would be ASP+3 percent. costs from claims rather than continue
with the Panel’s recommendation to We acknowledge that different to use ASP+6 percent. Therefore, we are
continue providing payment for payment rates for drugs and biologicals not accepting the recommendation of
separately payable drugs, including provided in the physician’s office and the APC Panel to continue to pay for
several specific groups of drugs such as HOPD settings are of concern to some separately payable drugs and biologicals
blood clotting factors and IVIG, at commenters. However, the OPPS, the at ASP+6 percent for CY 2008. After
ASP+6 percent. Some commenters MPFS physician’s office payments for reviewing the commenters’ responses to
noted that this would eliminate a site- services and physician’s office our CY 2008 proposal, we are reassured
of-service differential that would payments for Part B drugs are based on that hospitals currently capture
otherwise exist between the hospital very different payment methodologies. pharmacy overhead costs in their
outpatient and physicians’ office In particular, the OPPS relies upon costs charges for drugs, and we have clear
settings if HOPDs were paid at ASP+5 from the most updated claims and guidance from the APC Panel and some
percent while physicians’ offices were Medicare cost report data to develop commenters that pharmacy overhead
paid at ASP+6 percent. The commenters payment rates. On the other hand, the and handling costs should continue to
also cited issues of charge compression. MPFS pays for services based on be recognized within drug charges and
Specifically, the commenters explained estimates of input costs and pays for paid through the drug payment.
that many lower cost packaged drugs drugs and biologicals at ASP+6 percent, Our claims data for the CY 2007 and
have a higher markup and the relative as required by statute. Therefore, it is CY 2008 final rules consistently have
ASP number is not inclusive of this not surprising to us that the estimated shown equivalent average ASP-based
pricing practice because only separately costs of drug and biologicals and their amounts for separately payable drugs
payable drugs are used in the associated pharmacy overhead, like and biologicals that are lower than
comparison. A few commenters also many other OPPS services, could be ASP+6 percent, specifically ASP+4
noted that CMS has not demonstrated different in the HOPD than in the percent and APC+3 percent,
that concerns that led to a continuation physician’s office, resulting in different respectively. However, because we have
of the ASP+6 percent methodology in payments in the two settings. We do not been paying ASP+6 percent for
CY 2007, such as a limited believe that different payment rates for separately payable drugs and biologicals
understanding of pharmacy overhead drugs and biologicals in the HOPD or under the OPPS for the last 2 years, we
costs and their relationship to hospital physician’s office settings will create believe it is appropriate to transition to
outpatient drugs, have been resolved. problems for beneficiaries regarding the use of hospital claims data as the
Finally, some commenters expressed access to drug administration services basis for the relative ASP percent.
concern that, even at ASP+6 percent, because we have not seen problems Therefore, we will provide a 2-year
hospitals may not be receiving adequate with access in the two settings for other transition, with a one year transitional
payments to account for both types of services, including diagnostic payment rate in CY 2008, and pay for
acquisition costs and overhead costs. studies, surgical procedures, and visits, separately payable drugs and biologicals
Furthermore, some of these commenters which generally have different payment and associated pharmacy overhead
requested payment increases for certain rates under the two payment systems based on a 50/50 blend of their CY 2007
groups of drugs, such as IVIG and blood (unless there is an applicable externally payment rate of ASP+6 percent and
products. applied statutory cap to payment, such their final CY 2008 equivalent average
Response: In analyzing data for the as the cap on payment for imaging ASP-based payment amount of ASP+3
CY 2008 final rule with comment services provided in the physician’s percent. This blend results in a payment
period, we again performed the analysis office based on the OPPS rates). amount of ASP+4.5 percent. However,
described in the CY 2008 proposed rule In response to the commenters’ because we pay based on whole
by comparing aggregate expenditures for concerns regarding the effects of charge percentages in relation to ASP, we are
separately payable drugs and biologicals compression on drug payment, as rounding the blend to ASP+5 percent
to the ASP-based payment rates, described further in section II.A.1.c. of for CY 2008. In summary, we will
weighting these HCPCS codes by their this final rule with comment period, we provide a transitional payment of
OPPS volumes, and calculating an have contracted with RTI to estimate ASP+5 percent for separately payable
equivalent average ASP-based payment regression-based CCRs using charge data drugs and biologicals and associated
rate for drugs and biologicals provided from both inpatient and outpatient pharmacy overhead in CY 2008 as we
in HOPDs for CY 2008. As we did for claims for hospital ancillary move toward a relative ASP percent
our final rule analysis to determine the departments. We will consider whether based on mean costs from claims for CY
final packaging status for each drug, we it would be appropriate to adopt 2009.
used updated CY 2006 mean unit costs regression-based CCRs for the OPPS in Comment: Several commenters
and drug volumes and updated ASP the future after we receive RTI’s disagreed with our calculation of an
data. The result of our final analysis comprehensive review of the OPPS cost average ASP-based payment amount for
using updated hospital claims data for estimation methodology and review the drugs and biologicals and associated
pharmacy overhead costs based on hospital purchasing prices than hospital commenters that because the costs of
aggregate costs from claims. One claims data. Furthermore, comparison of packaged drugs, including their
commenter stated that instead of an the ASP data to our hospital claims data pharmacy overhead costs, are packaged
aggregate amount across all drugs, each serves to ensure that we are paying for into the payments for the procedures in
drug should be individually examined drugs in the OPPS in general at rates which they are administered, the OPPS
in order to determine average hospital that are reflective of hospitals’ costs for provides payment for both the drugs
acquisition cost. This commenter noted acquisition and overhead. While we and the associated pharmacy overhead
that, by aggregating drug costs across all understand that, by aggregating the costs costs through the applicable procedural
separately paid drugs to determine the of separately payable drugs and APC payments.
equivalent average ASP-based payment biologicals prior to developing an As noted in the CY 2007 OPPS final
rate, some drugs could be underpaid equivalent average ASP-based payment rule with comment period, the ASP
while others could be overpaid. Other rate, the result could be that some drugs methodology has been established
commenters suggested that CMS include could be relatively underpaid in a given through rulemaking, and specific
relatively inexpensive drugs, including clinical scenario while others could be requests regarding methodological
drugs that are usually packaged as well relatively overpaid, we continue to changes to this established system are
as drugs that may not have their own believe that ASP data are our best proxy outside the scope of this final rule with
HCPCS codes but are reported with for average hospital acquisition costs comment period. We believe that
charges on uncoded revenue code lines. under the OPPS and that the calculation updating drug payment rates quarterly
The commenters noted that, because of should be performed using aggregated based on the most currently available
charge compression and hospital billing drug costs. Given the information ASP, given that ASP data include sales
practices, these drugs typically receive provided by commenters regarding to hospitals in addition to others,
the highest markups because they are hospitals’ diverse charging practices and provides the most up-to-date payment
relatively inexpensive. Other the differential inclusion of pharmacy possible that is reflective of
commenters recommended that CMS overhead costs in charges for low and contemporary market trends and
include packaged drugs with HCPCS high cost drugs, we do not believe that hospital acquisition costs.
codes that are currently packaged in it would be reasonable to conduct this Comment: One commenter requested
determining the average ASP-based comparison on a drug-specific level to that CMS create a HCPCS J-code for
amount. The commenters noted that if calculate a distinct equivalent ASP- tositumomab, currently provided under
all drugs were paid separately in the based payment for each drug under the a radioimmunotherapy regimen and
HOPD, there would be better OPPS that would reflect the acquisition billed as part of HCPCS code G3001
representation of pharmacy overhead and overhead costs of that particular (Administration and supply of
tositumomab, 450 mg). The commenter
costs associated with lower cost drugs drug. Instead, we continue to believe
argued that because tositumomab is
in the average ASP-based amount that it is more appropriate to develop an
listed in compendia, is approved by the
calculated. The commenters explained equivalent average ASP-based payment
FDA as part of the BEXXAR regimen,
that hospitals often attribute higher rate that determines the ASP add-on
and has its own National Drug Code
markups to lower cost drugs and lower percent based on the aggregated hospital
(NDC) number, it should be recognized
markups to higher cost drugs, an issue costs of separately payable drugs and
as a drug and, therefore, paid as other
known as charge compression. By biologicals calculated from claims data,
drugs are paid under the OPPS
providing separate payment for all recognizing that the OPPS is a system
methodology instead of having a
drugs, the OPPS would then consider based on the averaging of costs for
payment rate determined by hospital
the full set of Part B drugs and their services.
claims data. The commenter suggested
associated overhead as part of the In addition, we do not include that a payment rate could be established
average ASP-based amount, rather than packaged drugs and biologicals in this using the ASP methodology.
relying on only separately paid, and analysis because cost data for these Response: As we have noted in the
therefore more expensive, drugs to items are already accounted for within November 10, 2005 final rule with
perform this calculation. The the APC ratesetting process through the comment period for CY 2006 (70 FR
commenters claimed that this change median cost calculation methodology 68654) and the November 7, 2003 final
would more accurately account for the discussed in section II.A.2. of this final rule with comment period for CY 2004
actual pharmacy overhead charges that rule with comment period. To include (68 FR 63443), unlabeled tositumomab
hospitals have built into their the costs of packaged drugs in both our is not approved as either a drug or a
accounting systems, and, as a result, the APC ratesetting process (for associated radiopharmaceutical, but it is a supply
equivalent average ASP-based amount procedures present on the same claim) that is required as part of the
would be higher. A few commenters and in our ratesetting process to radioimmunotherapy treatment
expressed concern that ASP reflects establish a relative ASP-based payment regiment. We do not make separate
prices and discounts not passed along to amount for drugs and biologicals would payment for supplies used in services
providers and that ASP is a measure of give these data disproportionate provided under the OPPS. Payments for
sales to all entities, not just hospitals. emphasis in the OPPS system by necessary supplies are packaged into
Other commenters noted that the two skewing our analyses, as the costs of payments for the separately payable
quarter lag in updated ASP data is these packaged items would be, in services provided by the hospital.
problematic for hospitals that effect, counted twice. Accordingly, we Specifically, administration of
experience varying purchasing are not implementing the suggestion unlabeled tositumomab is a complete
conditions from quarter to quarter. from commenters that we include all service that qualifies for separate
Response: We continue to believe that packaged and separately payable drugs payment under its own clinical APC.
use of ASP as a payment methodology and biologicals when establishing an This complete service is currently
is appropriate under the OPPS because average ASP-based rate to provide described by HCPCS code G3001.
these rates are updated quarterly and are payment for the hospital acquisition and Therefore, we do not agree with the
therefore more reflective of current pharmacy handling costs of drugs and commenter’s recommendation that we
market conditions that influence biologicals. However, we remind should assign a separate HCPCS code to
the supply of unlabeled tositumomab. applicable CPI, and the updated finalizing the proposal, without
Rather, we will continue to make furnishing fee calculated based on that modification, and in future years we
separate payment for the administration figure, in the associated final rule. Given will announce the updated blood
of tositumomab, and payment for the the timing of the availability of the clotting factor furnishing fee using
supply of unlabeled tositumomab is applicable data and our timeframe for applicable program instructions and
packaged into the administration preparing proposed rules, this process is posting on the CMS Web site. (We refer
payment. unavoidable and likely to remain readers to the CY 2008 MPFS final rule
After consideration of the public unchanged in the future. We believed for further discussion of this issue.)
comments received, we are finalizing that including a discussion of the
our CY 2008 proposal with a furnishing fee update in annual (4) Payment for Radiopharmaceuticals
modification to provide a 2-year rulemaking does not provide an (a) Background
transition for payment for separately advantage over other means of Section 303(h) of Pub. L. 108–173
payable drugs and biologicals under the announcing this information, so long as exempted radiopharmaceuticals from
OPPS based on the equivalent average the current statutory update ASP pricing in the physician’s office
ASP-based payment amount calculated methodology continues in effect. We setting. Beginning in the CY 2005 OPPS
from aggregate costs from hospitals believed that the public’s need for final rule with comment period, we
claims. While the payment amount information and adequate notice have exempted radiopharmaceutical
without a transition would be ASP+3 regarding the updated furnishing fee manufacturers from reporting ASP data
percent for CY 2008, we will be could be better met by issuing program for payment purposes under the OPPS
providing a transitional payment of instructions which would eliminate the (for more information, we refer readers
ASP+5 percent for these products in CY discussion of the furnishing fee update to the CY 2005 OPPS final rule with
2008. annually in rulemaking. In addition, by
comment period and the CY 2006 OPPS
(3) Payment for Blood Clotting Factors communicating the updated furnishing
final rule with comment period, 69 FR
fee in program instructions, the actual
For CY 2007, we are providing 65811 and 70 FR 68655, respectively).
figure for the percent change in the
payment for blood clotting factors under Consequently, we did not have ASP
applicable CPI and the updated
the OPPS at ASP+6 percent, plus an data for radiopharmaceuticals for
furnishing fee calculated based on that
additional payment for the furnishing consideration for CY 2008 OPPS
figure could be announced more timely
fee that is also a part of the payment for ratesetting. In accordance with section
than when included as part of the
blood clotting factors furnished in 1833(t)(14)(B)(i)(I) of the Act, we have
annual rulemaking process. Because the
physicians’ offices under Medicare Part classified radiopharmaceuticals under
furnishing fee update process is
B. The CY 2007 updated furnishing fee statutorily determined and is based on the OPPS as SCODs. As such, we have
is $0.152 per unit. an index that is not affected by paid for radiopharmaceuticals at average
For the CY 2008 OPPS, we proposed administrative discretion or public acquisition cost as determined by the
to pay for blood clotting factors at comment, we do not believe our Secretary and subject to any adjustment
ASP+5 percent and to continue our proposed means of communicating the for overhead costs.
policy for payment of the furnishing fee update would adversely affect Radiopharmaceuticals are also subject to
using the updated amount for CY 2008. stakeholders or the public. Therefore, the policies affecting all similarly
For CY 2008, the furnishing fee for CY 2009 and thereafter, until such classified OPPS drugs and biologicals,
increases by 4.0 percent to $0.158. time as the update methodology may be such as pass-through payments and
As indicated in the CY 2008 modified, we proposed to announce the packaging determinations, discussed
OPPS/ASC proposed rule (72 FR 42736), blood clotting factor furnishing fee earlier in this final rule with comment
we have consistently noted that we using applicable program instructions period.
would update the payment amount for and posting on the CMS Web site. For CYs 2006 and 2007, we used
the furnishing fee each year (based on We received a few public comments mean unit cost data from hospital
the Consumer Price Index (CPI)) so that on our proposal for the blood clotting claims to determine each
the payment amount for the furnishing factor furnishing fee. A summary of the radiopharmaceutical’s packaging status
fee is equal to the furnishing fee public comments and our responses and implemented a temporary policy to
payment amount noted in the MPFS follow. pay for separately payable
final rule. As discussed in greater detail Comment: Several commenters radiopharmaceuticals based on the
in the CY 2008 MPFS proposed rule (72 supported our proposal to announce the hospital’s charge for each
FR 38152), the CPI data for the 12- blood clotting factor furnishing fee radiopharmaceutical adjusted to cost
month period ending in June 2007 were using program instructions. The using the hospital’s overall CCR. This
not available when we developed the commenters agreed that, by methodology was finalized as an interim
OPPS and the MPFS proposed rules. communicating the updated furnishing proxy for average acquisition cost
Because the furnishing fee update is fee in program instructions, the actual because of the unique circumstances
based on the percentage increase in the figure for the percent change in the associated with providing
CPI for medical care for the 12-month applicable CPI and the updated radiopharmaceutical products to
period ending with June of the previous furnishing fee calculated based on that Medicare beneficiaries. The single OPPS
year and the Bureau of Labor Statistics figure could be announced more timely. payment represented Medicare payment
releases the applicable CPI data after the To that end, the commenters also for both the acquisition cost of the
OPPS and MPFS proposed rules are suggested that CMS post this radiopharmaceutical and its associated
published, we have not been able to information on the CMS Web site. pharmacy overhead costs. We clearly
include the actual updated furnishing Response: We appreciate the support stated in both the CY 2006 and CY 2007
fee in the CY 2006 through CY 2008 of these commenters for our proposal. OPPS/ASC final rules with comment
OPPS and MPFS proposed rules. Rather, We believe that program instructions period that we did not intend to
we announced in these proposed rules allow additional flexibility regarding the maintain this methodology permanently
that we intended to include the actual announcement of the blood clotting (70 FR 68656 and 71 FR 68096,
figure for the percent change in the factor furnishing fee. Therefore, we are respectively), and that we would
continue to actively seek other contrast agents with per day costs of $55 is different from many other SCODs, for
methodologies for setting payments for or less. However, our proposal for CY example, therapeutic
radiopharmaceuticals in future years. 2008 also included packaging payment radiopharmaceuticals, where the
During the CY 2006 and CY 2007 for all diagnostic radiopharmaceuticals therapeutic radiopharmaceutical itself is
rulemaking processes, we encouraged and contrast agents, regardless of their the primary therapeutic modality. Given
hospitals and the radiopharmaceutical per day cost. Packaging costs into a the inherent function of contrast agents
stakeholders to assist us in developing single aggregate payment for a service, and diagnostic radiopharmaceuticals as
a viable long-term prospective payment encounter, or episode of care is a supportive to the performance of an
methodology for these products under fundamental principle that independent procedure, we view the
the OPPS. As discussed in the CY 2008 distinguishes a prospective payment packaging of payment for contrast
proposed rule, we are pleased to note system from a fee schedule. In general, agents and diagnostic
that we have had many discussions over packaging the costs of items and radiopharmaceuticals as a logical initial
this past year with interested parties services into the payment for the step to expand packaging for SCODs. As
regarding the availability and primary procedure or service with we consider moving to additional
limitations of radiopharmaceutical cost which they are associated encourages encounter-based and episode-based
data. In addition, we have received hospital efficiencies and also enables payment in future years, we may
several suggestions from interested hospitals to manage their resources with consider additional options for
parties on how to structure future maximum flexibility. The proportion of packaging more SCODs in the future.
payment methodologies. Many of the drugs, biologicals, and Third, section 1833(t)(14)(A)(iii) of
proposals we have received have radiopharmaceuticals that are separately the Act requires that payment for
suggested that we consider paid has increased in recent years, from SCODs be set prospectively based on a
differentiating radiopharmaceutical 30 percent of HCPCS codes for these measure of average hospital acquisition
products into two different categories by products in CY 2003 to 50 percent in CY cost. While we have ASP data for
cost, at least in part because 2007, a pattern that has been noted contrast agents, the lack of ASP data as
stakeholders have speculated that previously for procedural services as a source of average acquisition cost for
charge compression leads to well. Our proposal to package payment radiopharmaceuticals and the varying
inappropriately low calculated costs for for diagnostic radiopharmaceuticals and inclusion of overhead and handling
expensive radiopharmaceuticals. For CY contrast agents regardless of per day costs in the charge for a
2008, we made separate payment cost furthers the fundamental principles radiopharmaceutical resulted in
proposals for diagnostic of a prospective payment system. payment for radiopharmaceuticals at
radiopharmaceuticals and therapeutic In the proposed rule, we stated our charges reduced to cost on a temporary
radiopharmaceuticals. While we have belief that our proposed treatment of basis for CYs 2006 and 2007.
not grouped radiopharmaceuticals based diagnostic radiopharmaceuticals and We now believe our claims data offer
on cost, we note that the therapeutic contrast agents differently from other an acceptable proxy for average hospital
radiopharmaceuticals typically are more SCODs was appropriate for several acquisition cost and associated handling
expensive than the diagnostic reasons. First, the statutory requirement and preparation costs for
radiopharmaceuticals. We identified all that we must pay separately for drugs radiopharmaceuticals. We believe that
diagnostic radiopharmaceuticals and biologicals for which the per day hospitals have adapted to the CY 2006
specifically as those Level II HCPCS cost exceeds $50 under section coding changes for
codes that include the term ‘‘diagnostic’’ 1833(t)(16)(B) of the Act has expired. radiopharmaceuticals and responded to
along with a radiopharmaceutical in Therefore, we are not restricted to the our instructions to include charges for
their long code descriptors. Therefore, extent to which we can package radiopharmaceutical handling in their
we were able to distinguish therapeutic payment for SCODs and other drugs, nor charges for the radiopharmaceutical
radiopharmaceuticals from diagnostic are we required to treat all classes of products. We have relied on mean unit
radiopharmaceuticals as those Level II drugs in the same manner with regard costs derived from our claims data as
HCPCS codes that have the term to whether they are packaged or one proxy for average acquisition cost
‘‘therapeutic’’ along with a separately paid. We have used this and pharmacy overhead, and we use
radiopharmaceutical in their long code flexibility to make different packaging these data to determine the packaging
descriptors. We note that all determinations for several years with status for SCODs. However, in light of
radiopharmaceutical products fall into regard to specific anti-emetic drugs. improved data for radiopharmaceuticals
one category or the other; their use as While we proposed to continue to in the CY 2006 claims, we believed that
a diagnostic radiopharmaceutical or establish an updated cost threshold for the line-item estimated cost for a
therapeutic radiopharmaceutical is packaging drugs, biologicals, and diagnostic radiopharmaceutical in our
mutually exclusive. radiopharmaceuticals, we also proposed claims data is a reasonable
an approach specific to diagnostic approximation of average acquisition
(b) Payment for Diagnostic and preparation and handling costs for
radiopharmaceuticals and contrast
Radiopharmaceuticals diagnostic radiopharmaceuticals.
agents that would otherwise be
As discussed in section II.A.4.c.(5) separately paid. Further, because the standard OPPS
and (6) of the CY 2008 OPPS/ASC Second, diagnostic packaging methodology packages the
proposed rule, we proposed to package radiopharmaceuticals and contrast total estimated cost for each
payment for diagnostic agents function effectively as supplies radiopharmaceutical on each claim
radiopharmaceuticals and contrast that enable the provision of an (including the full range of costs
agents with per day costs over $60 as independent service. More specifically, observed on the claims) with the cost of
part of our packaging proposal for CY contrast agents are always provided in associated nuclear medicine procedures
2008. Radiopharmaceuticals and support of a diagnostic or therapeutic for ratesetting, this packaging approach
contrast agents currently are included as procedure that involves imaging, and is consistent with considering the
SCODs in section 1833(t)(14)(B) of the diagnostic radiopharmaceuticals are average cost for radiopharmaceuticals,
Act, and we currently package payment always provided in support of a rather than the median. We also noted
for diagnostic radiopharmaceuticals and diagnostic nuclear medicine scan. This our belief that our improved claims data
could support the establishment of would experience should we require agents differently from other SCODs
separate, prospective payment rates for such precise reporting. We also solicited upon our reasoning that the statutorily
diagnostic radiopharmaceuticals with comment specifically on the importance required OPPS drug packaging
per day costs exceeding our general of such a requirement in light of our threshold has expired and our view that
packaging threshold (analogous to our discussion in the proposed rule on the diagnostic radiopharmaceuticals and
proposal for therapeutic representation of radiopharmaceuticals contrast agents function effectively as
radiopharmaceuticals). However, we in the single claims for diagnostic supplies that enable the provision of an
proposed to package all diagnostic nuclear medicine procedures, the independent service, rather than serving
radiopharmaceuticals because we presence of uncoded revenue code themselves as the therapeutic modality.
believed additional packaging of charges specific to diagnostic We sought to package their payment as
payment for supportive and ancillary radiopharmaceuticals on claims without ancillary and supportive services in
services, including diagnostic a coded radiopharmaceutical, and our order to provide incentives for greater
radiopharmaceuticals, would provide proposal to package payment for all efficiency and to provide hospitals with
additional incentives for efficiency and diagnostic radiopharmaceuticals for CY additional flexibility in managing their
greater flexibility for hospitals to 2008. A summary of the public resources. We note that we currently
manage their resources. comments we received on this issue, our classify different groups of drugs for
In the case of contrast agents, while responses, and our response to the APC specific payment purposes, as
we have ASP data that can be a proxy Panel recommendation can be found in evidenced by our policy regarding the
for average hospital acquisition cost and section II.A.4.c.(5) of this final rule with oral and injectable forms of the 5HT3
associated handling and preparation comment period. anti-emetics and our fixed price drug
costs, payment for almost all contrast We received many comments on our packaging threshold.
agents would be packaged under the proposal to package payment for all Although our final CY 2008 policy, as
OPPS for CY 2008 based on the $60 per diagnostic radiopharmaceuticals and described in section II.A.4.c.(5) and (6)
day packaging threshold. Therefore, as contrast agents for CY 2008. A summary of this final rule with comment period,
discussed in more detail in section of the public comments and our packages payment for all diagnostic
V.B.3.a.(4) of this final rule with responses follow. radiopharmaceuticals and contrast
comment period, we believed it would Comment: A number of commenters agents into the payment for their
be most appropriate to package payment stated that diagnostic associated procedures, we will continue
for all contrast agents for CY 2008, to radiopharmaceuticals and contrast to provide payment for these items in
better provide for accurate payment for agents with per day costs over the CY 2008 based on a proxy for average
the associated tests and procedures that proposed OPPS drug packaging acquisition cost. We believe that the
promotes hospital efficiency. threshold are defined as SCODs and, line-item estimated cost for a diagnostic
In summary, in the context of our CY therefore, should be assigned separate radiopharmaceutical in our claims data
2008 proposal, we viewed diagnostic APC payments. In particular, the is a reasonable approximation of average
radiopharmaceuticals and contrast commenters questioned CMS’s authority acquisition and preparation and
agents as ancillary and supportive of the to classify groups of drugs, such as handling costs for diagnostic
diagnostic tests and therapeutic diagnostic radiopharmaceuticals and radiopharmaceuticals. Further, because
procedures in which they are used. In contrast agents, and implement the standard OPPS packaging
light of our authority to make different packaging and payment policies that do methodology packages the total
packaging determinations, and the not reflect their status as SCODs. In estimated cost for each
improved reporting of hospital charges addition, the commenters objected to radiopharmaceutical on each claim
for radiopharmaceutical handling in the the proposal to package payment for (including the full range of costs
CY 2006 claims data, we proposed to diagnostic radiopharmaceuticals and observed on the claims) with the cost of
package payment for contrast agents and contrast agents because, as SCODs, the associated nuclear medicine procedures
diagnostic radiopharmaceuticals for CY commenters believed these products for rate setting, this packaging approach
2008. were required by statute to be paid at is consistent with considering the
For more information on how rates average acquisition cost. The average cost for radiopharmaceuticals,
were set for procedures in which commenters explained that, when rather than the median cost.
diagnostic radiopharmaceuticals or several different diagnostic We further note that these drugs,
contrast agents are used, and for a radiopharmaceuticals or contrast agents biologicals, or radiopharmaceuticals for
further discussion regarding our final may be used for a particular procedure, which we have not established a
packaging methodology for CY 2008, we the costs of these diagnostic separate APC and, therefore, for which
refer readers to section II.B. of this final radiopharmaceuticals or contrast agents payment would be packaged rather than
rule with comment period. are averaged together and added to the separately provided under the OPPS,
During its March 2007 meeting, the amount for the procedure in order to could be considered to not be SCODs.
APC Panel made a recommendation that determine the payment rate for the Similarly, drugs, biologicals, and
CMS work with stakeholders on issues associated procedural APC. Therefore, therapeutic radiopharmaceuticals with
related to payment for the commenters argued that the amount mean per day costs of less than $60 that
radiopharmaceuticals, including added to the procedure cost through are packaged and for which a separate
evaluating claims data for different packaging, representing the cost of the APC has not been established would
classes of radiopharmaceuticals and diagnostic radiopharmaceutical or also not be SCODs. This reading is
ensuring that a nuclear medicine contrast agent, does not reflect the consistent with our final payment
procedure claim always includes at least average acquisition cost of any one policy whereby we package payment for
one reported radiopharmaceutical agent. particular item but, rather, reflects the diagnostic radiopharmaceuticals and
As discussed in section II.A.4.c.(5) of average cost of whatever items may be contrast agents and provide payment for
the proposed rule, we proposed to used with that particular procedure. these products through payment for
accept the APC Panel’s Response: As discussed above, we their associated procedures.
recommendation, and we welcomed based our proposal to treat diagnostic Comment: A few commenters
public comment on the burden hospitals radiopharmaceuticals and contrast suggested that CMS misclassified
HCPCS codes A9542 (Indium In-111 determine the correct code descriptor applicable HCPCS codes in order to
ibritumomab tiuxetan, diagnostic, per units for each radiopharmaceutical, determine the appropriate units to be
study dose, up to 5 millicuries) and including HCPCS code A9524. As stated reported.
A9544 (Iodine I–131 tositumomab, in the proposed rule (72 FR 42741), we After consideration of the public
diagnostic, per study dose) as appreciate the APC Panel’s comments received, we are finalizing
‘‘diagnostic’’ radiopharmaceuticals. The recommendation. We are always open to our proposal, without modification, to
commenters explained that these are meeting with interested stakeholders identify diagnostic
radiopharmaceutical products that are and examining any data they may radiopharmaceuticals as those
used as part of a therapeutic regimen provide to us. However, we were unable radiopharmaceuticals with the term
and, therefore, should be considered to accept the APC Panel’s ‘‘diagnostic’’ in their long code
therapeutic for OPPS payment purposes. recommendation concerning the
Response: As discussed above, for the descriptors and therapeutic
development of specific code radiopharmaceuticals as those
proposed rule, we classified each descriptors because decisions regarding
radiopharmaceutical into one of two radiopharmaceuticals with the term
the creation of permanent Level II ‘‘therapeutic’’ in their long code
groups according to whether its long HCPCS codes, including code
descriptor contained the term descriptors. Our final payment policy
descriptors, are coordinated by the CMS
‘‘diagnostic’’ or ‘‘therapeutic.’’ HCPCS packages payment for all diagnostic
HCPCS Workgroup and are outside the
codes A9542 and A9544 both contain radiopharmaceuticals in CY 2008. The
scope of the OPPS. For further
the term ‘‘diagnostic’’ in their long code related public comments and our
information on the HCPCS coding
descriptors. Therefore, according to this responses to the proposed payment
process, we refer readers to the CMS
methodology, we classified them as methodology for diagnostic
Web site at: http://www.cms.hhs.gov/
diagnostic for the purposes of OPPS radiopharmaceuticals are presented in
MedHCPCSGenInfo/
payment. While we understand that section II.A.4.c.(5) of this final rule with
01_Overview.asp#TopOfPage. We
these items are provided in conjunction comment period.
encouraged interested parties to submit
with additional supplies, imaging tests, requests for revisions of code In the case of contrast agents, while
and therapeutic radiopharmaceuticals descriptors to the CMS HCPCS we have ASP data that can be a proxy
for patients already diagnosed with Workgroup for its consideration. for average hospital acquisition cost and
cancer, we continue to believe that the associated handling and preparation
We have learned that the commenter
purpose of HCPCS codes A9542 and costs, payment for almost all contrast
A9544 is diagnostic in nature. While the requested the CMS HCPCS Workgroup
to change the descriptor for HCPCS code agents is packaged under the OPPS for
group of services may be considered a CY 2008 based on the $60 per day
therapeutic regimen by the commenters, A9524 to more accurately reflect the
dosing of this product. However, the packaging threshold. Therefore, as
HCPCS codes A9542 and A9544 are discussed in the proposed rule, we
provided in conjunction with a series of CMS HCPCS Workgroup, under its
authority and responsibility to create believed that it is most appropriate to
imaging scans. Many nuclear medicine package payment for all contrast agents
studies using diagnostic and maintain Level II HCPCS codes and
their descriptors, has decided to retain for CY 2008 to better provide for
radiopharmaceuticals are provided to payment for the associated tests and
patients who already have an the current descriptor that includes the
‘‘per 5 microcuries’’ dosage descriptor. procedures that promotes hospital
established diagnosis. We would not efficiency. Our final policy to package
consider HCPCS codes A9542 and Therefore, hospitals are reminded to
ensure that units of drugs, biologicals, payment for all contrast agents in CY
A9544 to be therapeutic because these 2008, and the related public comments
items are provided immediately prior to and radiopharmaceuticals administered
to patients are accurately reported in and our responses to the proposed
the furnishing of a diagnostic imaging payment methodology, is presented in
procedure, and are used to identify the terms of the dosage specified in the full
HCPCS code descriptor. That is, units section II.A.4.c.(6) of this final rule with
proper dose of the therapeutic agent at comment period.
a later date. should be reported in multiples of the
Comment: One commenter requested units included in the HCPCS descriptor. In summary, we view diagnostic
that CMS reassign the dosage descriptor For example, if the descriptor of the radiopharmaceuticals and contrast
for HCPCS code A9524 (Iodine I–131 drug code includes 5 mg, and 5 mg of agents as ancillary and supportive to the
iodinated serum albumin, diagnostic, the drug was administered to the diagnostic tests and therapeutic
per 5 microcuries) to reflect the usual patient, the units billed should be 1. If procedures in which they are used. In
package size of this item. The the descriptor of the drug code includes light of our authority to make different
commenter noted that there is only one 5 mg, but 25 mg of the drug was packaging determinations for groups of
manufacturer for this product, and it is administered to the patient, the units items, and the improved reporting of
only available in a single-unit, single- billed should be 5. Hospitals should not hospital charges for
use, calibrated dose of 25 microcuries. bill the units for HCCPS codes based on radiopharmaceutical handling in the CY
The commenter claimed that many the way the drug, biological, or 2006 claims data, we are finalizing our
hospitals have been mistakenly billing radiopharmaceutical is packaged, proposal, without modification, to
one unit for this product, instead of stored, or stocked. HCPCS short package payment for contrast agents and
correctly billing five units. Therefore, descriptors are limited to 28 characters, diagnostic radiopharmaceuticals for CY
the commenter requested that the including spaces, so short descriptors 2008. Additional discussion of our
dosage descriptor reflect the single-unit, do not always capture the complete rationale and further response to public
single-use, calibrated 25 microcurie description of the products. Therefore, comments received and the APC Panel
dose. before submitting Medicare claims for recommendations regarding our

Response: As we discussed in the CY drugs, biologicals, and proposal to package payment for
2008 proposed rule, at its March 2007 radiopharmaceuticals, we remind diagnostic radiopharmaceuticals and
meeting, the APC Panel recommended commenters that it is extremely contrast agents appears in sections
that we consider the use of external data important for hospitals to review the II.A.4.c.(5) and II.A.4.c.(6), respectively,
and work with stakeholders to complete long descriptors for the of this final rule with comment period.
(c) Payment for Therapeutic to have relatively predictable and HCPCS coding changes for some
Radiopharmaceuticals consistent acquisition and handling radiopharmaceuticals and responded to
For CY 2008, we proposed to continue costs across individual clinical cases our instructions to include their charges
separate payment for therapeutic and hospitals. In addition, we have for radiopharmaceutical handling in
radiopharmaceuticals that have a mean stated that we believe using hospitals’ their charges for the
per day cost of more than $60, overall CCRs to determine payments radiopharmaceutical products so these
consistent with the packaging could result in an overstatement of costs would be reflected in the CY 2008
methodology applied to other nonpass- radiopharmaceutical costs, which are ratesetting process. This continues to be
through drugs and biologicals. We likely reported in several cost centers, our expectation, and, as discussed in the
believed that therapeutic such as diagnostic radiology, that have CY 2008 OPPS/ASC proposed rule, we
radiopharmaceuticals are distinct from lower CCRs than hospitals’ overall CCRs believed that the CY 2006 claims data
diagnostic radiopharmaceuticals (71 FR 68095). For these reasons, we did that we are using to set the proposed CY
not propose to use this methodology to 2008 OPPS payment rates reflect both
because the primary purpose of
set their payment rates for CY 2008. the radiopharmaceutical charge and
providing a therapeutic
The second option we considered, associated overhead charges. As
radiopharmaceutical is the and proposed, as a methodology for
radiopharmaceutical treatment itself, discussed at the March 2007 APC Panel
providing payment for therapeutic meeting, our CY 2006 claims data show
whereas a diagnostic radiopharmaceuticals in CY 2008, is to
radiopharmaceutical is administered in that a greater proportion of
establish prospective payment rates for radiopharmaceuticals experienced an
support of the performance of a separately payable therapeutic
diagnostic nuclear medicine study that increase in their median costs from CY
radiopharmaceuticals using mean costs 2005 to CY 2006 than experienced a
is the primary service. For separately derived from the CY 2006 claims data,
payable therapeutic decrease. We indicated that this trend is
where the costs are determined using consistent with the agency’s
radiopharmaceuticals, we proposed to our standard methodology of applying
establish CY 2008 payment rates based expectations that hospitals would
hospital-specific departmental CCRs to comply with our instructions to include
on their mean unit costs from our CY radiopharmaceutical charges, defaulting
2006 OPPS claims data. charges for radiopharmaceutical
to hospital-specific overall CCRs only if handling in their charges for the
In the CY 2007 OPPS/ASC final rule appropriate departmental CCRs are
with comment period (71 FR 68095), we radiopharmaceutical products for CY
unavailable. As we stated in the CY 2006. Therefore, we believed that setting
again reiterated our intent to develop a 2007 OPPS/ASC proposed rule, we
suitable prospective payment CY 2008 prospective payment rates
believe this methodology provides us based on CY 2006 hospital claims data
methodology for radiopharmaceutical with the most consistent, accurate, and
products paid under the OPPS in future as described above serves as an
efficient methodology for prospectively acceptable combined proxy for average
years, beginning in CY 2008. Since the establishing payment rates for
start of the temporary cost-based hospital acquisition costs and
separately payable therapeutic radiopharmaceutical handling.
payment methodology for radiopharmaceuticals (71 FR 49587). As
radiopharmaceuticals in CY 2006, we discussed in the CY 2008 OPPS/ASC As we discussed in the CY 2008
have met with several interested parties proposed rule, we believe that adopting OPPS/ASC proposed rule, during
on this topic and have received several prospective payment based on historical meetings with external stakeholders
suggestions from these stakeholders hospital claims data is appropriate over the past year, we have been
regarding payment methodologies that because it serves as our most accurate presented with several other suggestions
we could employ for future use under available proxy for the average hospital regarding OPPS payment for therapeutic
the OPPS. acquisition cost of separately payable radiopharmaceuticals in CY 2008. One
In considering payment options for therapeutic radiopharmaceutical of these options included a suggestion
therapeutic radiopharmaceuticals for CY products (72 FR 42739). In addition, we that we employ alternative trimming
2008, we examined several alternatives. have found that our general prospective methodologies in order to produce a
First, we considered retaining the CY payment methodology based on claims-based mean cost that would
2007 methodology of providing historical hospital claims data results in more accurately reflect hospital
payment for therapeutic more consistent, predictable, and purchase prices for these products. We
radiopharmaceuticals at a hospital’s equitable payment amounts across did not propose a methodology based on
charges reduced to cost using the hospitals and likely provides incentives special OPPS data trimming for CY 2008
hospital’s overall CCR. While this to hospitals for efficiently and for the following reasons. First, the
option would provide consistency in the economically providing these outpatient OPPS has a standard data trimming
payment methodology from year to year, services. Therefore, we expect that the methodology to calculate drug,
we have noted on several occasions, hospital-specific payment variability biological, and radiopharmaceutical per
including in the CY 2007 OPPS/ASC found under a charges-reduced-to-cost day costs from hospital claims data.
final rule with comment period and in methodology would no longer affect This includes both a specific trim on
various public forums such as the APC these products under our CY 2008 units for drugs, biologicals, and
Panel meetings, that this methodology proposal. radiopharmaceuticals that is ±3
was not intended to be the basis of Although we received public standard deviations from the geometric
providing payment to hospitals for these comments on our CY 2007 proposed mean, and a standard trim of any line-
products beyond CY 2007. Payment on rule indicating that CY 2005 claims data item with a cost per unit that is ±3
a claim-specific cost basis is not used for that update did not incorporate standard deviations from the geometric
consistent with the payment of items associated overhead charges into the mean that is applied across all items
and services on a prospective basis radiopharmaceutical charge, in the CY and services. Both trims are conducted
under the OPPS and may lead to 2007 OPPS/ASC final rule with on the transformed variable, taking the
extremely high or low payments to comment period (71 FR 68095), we natural log of both units and cost per
hospitals for radiopharmaceuticals, even stated that we expected that hospitals unit, in order to trim evenly relative to
when those products would be expected would have adapted to the CY 2006 the center of the distribution. Both units
and costs per unit are never negative, radiopharmaceutical products for CY for CY 2007, there was sufficient reason
and there are some therapeutic 2008. to extend the temporary policy of
radiopharmaceuticals with very high Recommendations other than paying for radiopharmaceuticals at
units and high costs per unit in our trimming centered around providing charges reduced to cost for one
hospital claims data. These trims are CMS with external data on additional year. We noted that it was
conservative and typically eliminate radiopharmaceutical costs. One specific still our intention to move toward a
only the most egregious observations, recommendation that we received from prospective payment methodology for
ones that could be due to erroneous interested stakeholders suggested that radiopharmaceuticals in the OPPS (71
reporting. For therapeutic we allow hospitals to submit their FR 68095). In the CY 2008 OPPS/ASC
radiopharmaceuticals at the time of the invoices to CMS. With the invoice proposed rule, we again noted our
proposed rule, the unit trim alone information, CMS could establish a intent to move to a prospective payment
removed all items that would have been prospective payment rate for for therapeutic radiopharmaceuticals
eliminated under the cost trim, and with radiopharmaceuticals that would be under the OPPS and did not propose to
the exception of HCPCS code A9563 calculated taking into consideration the continue providing payment for
(Sodium phosphate P-32, therapeutic, total amount invoiced for the therapeutic radiopharmaceuticals at
per millicurie), this trim removed radiopharmaceutical, transportation hospital charges reduced to cost using
observations with unit costs below the costs, and applicable rebates. While this the hospital’s overall CCR for the
mean unit cost. That is, overall, the payment rate would not include reasons cited previously. In particular,
result of applying our systematic payment for certain payment on a claim-specific cost basis
trimming methodology increased the radiopharmaceutical overhead and is not consistent with the payment of
mean unit cost reported in Table 44 of handling costs, stakeholders suggested items and services on a prospective
the proposed rule (72 FR 42740). that costs could be packaged into the basis under the OPPS and may lead to
associated procedure payment for the extremely high or low payments to
As a payment system based on
radiopharmaceutical. Stakeholders also hospitals for radiopharmaceuticals, even
relative payment weights, altering the
generally recommended that we could when those products would be expected
trimming methodology for a particular
collect external data from various to have relatively predictable and
set of services could unduly influence
sources (such as manufacturers, nuclear consistent acquisition and handling
the relativity of the resulting payment
pharmacies, and others) to use for costs across individual clinical cases
weights for those particular services and therapeutic radiopharmaceuticals. and hospitals.
could inappropriately redistribute At its September 2007 meeting, the Comment: Several commenters
payments in a budget neutral OPPS. We Panel recommended that CMS create a requested that CMS implement a policy
have no reason to believe that hospitals composite for BEXXAR or related that would accept external data
report costs differently for therapies and present it for the Panel’s submissions from various groups,
radiopharmaceuticals than they do for consideration at the next APC Panel including nuclear pharmacies,
other items. As we discussed further in meeting. We are accepting this hospitals, and manufacturers. The
section II.A.1. of this final rule with recommendation and will provide commenters recommended that CMS
comment period, what is important for information and analyses regarding collect Estimated Average Acquisition
setting appropriate payment rates for commonly observed combinations of Cost (EAAC), Calculated Pharmacy
most services under a prospective services provided with Sales Price (CPSP), or average selling
payment system is accuracy in radioimmunotherapy treatments to the nuclear pharmacy price (ADNPP) data
estimating the relative costliness of APC Panel at its 2008 winter meeting. through this process. In addition, the
services, and not the nominal value of We received many public comments commenters suggested that CMS could
the observed cost. Second, we are not on our CY 2008 proposal to establish collect hospital invoice data to establish
convinced that employing an alternative payments for separately payable a prospective payment rate for
overall trimming methodology would therapeutic radiopharmaceuticals based radiopharmaceuticals that would be
result in the most appropriate cost on their mean unit costs from hospitals calculated, taking into consideration the
estimates for therapeutic claims. A summary of the public total amount invoiced for the
radiopharmaceuticals. We have noted comments and our responses follow. radiopharmaceutical, transportation
our belief that because hospitals were Comment: Many commenters asked costs, and applicable rebates.
paid in CY 2006 for each therapeutic CMS to continue the CY 2007 CCR Some commenters also recommended
radiopharmaceutical they reported methodology for payments for all that, as CMS proposed the reporting of
according to a claim-specific charge that radiopharmaceutical products in CY pharmacy overhead charges for drugs
was reduced to cost for payment, 2008. The commenters cited inaccurate and biologicals on uncoded revenue
hospitals had an incentive to accurately and incomplete data from hospitals as a code lines for CY 2008, CMS should
account for the full costs of these reason to continue this methodology. change its instructions for reporting
products in establishing their charges. Response: For the CY 2007 radiopharmaceutical handling charges.
In addition, we have no way of knowing rulemaking cycle, we also received Some commenters suggested that the
the specific clinical scenario that many comments that we should not radiopharmaceutical handling charges
resulted in any given claim with certain proceed with our CY 2007 proposal to be reported separately on uncoded
reported units and charges for a establish a prospective payment revenue code lines instead of being
therapeutic radiopharmaceutical. methodology for radiopharmaceuticals. included in the charge for the
Therefore, we did not believe it would At that time, the commenters were radiopharmaceutical under current CMS
be appropriate to utilize a ratesetting concerned that hospital claims data may instructions. The commenters believed
methodology that could disregard be inaccurate due to hospitals slow this would allow the costs of
correctly coded claims. While we adoption of our billing guidance to radiopharmaceutical handling to be
appreciated this recommendation, we include radiopharmaceutical pharmacy packaged into payment for the
did not propose a payment methodology overhead charges in the charge for the associated procedure, such as a
that included additional trimming of radiopharmaceutical. Because of these radiopharmaceutical administration
hospital claims data for therapeutic and other concerns, we concluded that, procedure, in future years when CY
2008 claims data become available for and are not finalizing a policy to collect For the past 2 years, hospitals have been
ratesetting. hospital invoices or otherwise rely on paid on a CCR methodology for
Response: We did not propose a external data in order to establish separately payable therapeutic
therapeutic radiopharmaceutical prospective payment rates for radiopharmaceuticals. Therefore,
payment methodology using external therapeutic radiopharmaceuticals for CY hospitals had every incentive to submit
data for CY 2008 for the following 2008. a charge representative of their
reasons. First, any approach relying on We are not adopting our proposal to acquisition cost and associated handling
external data has the disadvantage of have hospitals separately report charges costs for these radiopharmaceuticals. To
differentially influencing the relativity for pharmacy overhead associated with that extent, we believe that the hospital
of payment weights for drugs and biologicals on uncoded claims data that we have available for
radiopharmaceuticals in the budget revenue code lines, as discussed earlier. ratesetting purposes in CY 2008 are
neutral OPPS payment system where we Therefore, we also do not believe it reliable and accurate.
utilize a standard ratesetting would be appropriate to provide We note that, for CY 2008, separately
methodology for other services. In instructions to hospitals to separately payable therapeutic
addition, it is not clear that invoice report their radiopharmaceutical radiopharmaceuticals meet the
information from hospitals or cost handling charges in addition to the definition of SCODs and therefore are to
information from nuclear pharmacies or charge for the radiopharmaceutical. be paid at average acquisition cost.
manufacturers would be more accurate Hospitals have recently become While we are implementing a policy to
accustomed to our CY 2006 guidance provide payment for therapeutic
than hospitals’ costs for
that they should consider all handling radiopharmaceuticals through the
radiopharmaceuticals that we currently
costs in setting their charges for standard OPPS methodology relying on
calculate based on hospitals’ charges
radiopharmaceuticals, and we see no hospital claims data for CY 2008 as a
reduced to cost by application of a CCR,
reason for them to change this practice. proxy for average acquisition cost as
and such external information would
We will continue to provide payment described below, we note that there is
generally exclude the costs of the
for the handling costs of an established process already in place
hospital’s handling of the
radiopharmaceuticals through the for submitting pricing data for other
radiopharmaceuticals. However, as
packaged or separate payment for the SCODs to be used for payment
noted in the CY 2008 OPPS/ASC
products in CY 2008, just as we will for purposes. While we understand that the
proposed rule (72 FR 42740), we do not the pharmacy handling costs of drugs standard ASP methodology may not
currently identify separate costs for this and biologicals. work for all therapeutic
radiopharmaceutical handling that we Comment: Many commenters radiopharmaceuticals, we received
could then package into the costs of the expressed concern over the proposed comments that this approach would
associated diagnostic nuclear medicine payment rates for very high cost work for certain products. Therefore, to
studies and treatment procedures. therapeutic radiopharmaceuticals. The the extent that manufacturers or
Moreover, hospitals currently have the commenters stated that the proposed stakeholders believe that the ASP
flexibility to set their charges for payment rates are inadequate to cover methodology that we currently use for
therapeutic radiopharmaceuticals, the cost of the therapeutic the payment of separately payable drugs
taking into account a variety of factors, radiopharmaceutical itself, let alone the and biologicals under the OPPS is
including acquisition costs and added costs of handling, shipping, and appropriate for their particular product,
transportation costs. Therefore, we compounding. The commenters noted we seek comments on that approach and
believed, and continue to believe, it is that inadequate payment rates may lead comments on how radiopharmaceutical
likely that hospitals are already taking to beneficiary access issues. Some ASP information could be used in future
this information into consideration commenters suggested that systematic ratesetting.
when establishing their charges. special trimming of claims data should As we discussed in the proposed rule
Further, we have already instructed be considered in order to products costs (72 FR 42739), we do not agree with the
hospitals to include overhead charges that reflect actual hospital purchase suggestion of some commenters that
for radiopharmaceuticals in the charge prices for radiopharmaceuticals. A few special trimming methodologies should
for the radiopharmaceutical product. commenters recommended using ASP be applied to develop claims-based
We have received several reports that as an alternative payment methodology means costs for therapeutic
hospitals have made these changes, for the very costly therapeutic radiopharmaceuticals. No commenters
when necessary, and that other changes radiopharmaceuticals or other provided specific approaches for our
are in process to conform to our methodologies based on external data. consideration. We believe the standard
instructions. A ratesetting approach One commenter noted its intent to OPPS data trimming methodology is
based on external data could be submit ASP information for an appropriate for establishing the payment
inconsistent with the charging practices expensive therapeutic rates for therapeutic
of those hospitals that have been radiopharmaceutical so that CMS would radiopharmaceuticals. Altering the
working over the past 2 years to align have an alternative methodology with systematic trimming methodology for
their charging practices with our stated which to price the product. these products in particular could
instructions. Moreover, adoption of any Response: While we understand the inappropriately redistribute payments
methodology systematically relying on commenters’ concerns regarding the in the budget neutral OPPS, and we
external data also would be unique circumstances associated with have no reason to believe that hospitals
administratively burdensome for us radiopharmaceutical products, report costs differently for
because we would need to collect, especially very high cost therapeutic radiopharmaceuticals than they do for
process, and review external radiopharmaceuticals, for the majority other items. We continue to believe that
information to ensure that it was valid, of services under the OPPS, payment is because hospitals were paid in CY 2006
reliable, and representative of a diverse made according to prospectively for each therapeutic
group of hospitals so that it could be established payment rates that are radiopharmaceutical according to a
used to establish rates for all hospitals. related to hospitals’ costs for those claim-specific charge that was adjusted
For these reasons, we did not propose services as calculated from claims data. to cost for payment, hospitals had an
incentive to accurately account for the the specialized nature of these because we believe that hospitals have
full costs of these products in radioimmunotherapy agents, we believe set their charges for these products
establishing their charges. that these claims were incorrectly coded while taking into account a variety of
We examined the final rule claims based on their extremely low costs. factors, including acquisition and
data for the eight therapeutic Therefore, these claims from the several transportation costs. We believe this
radiopharmaceuticals that we proposed providers with very low costs are highly methodology provides us with the most
for separate payment in CY 2008 after unlikely to represent claims for consistent, accurate, and efficient
we applied the standard OPPS data treatment with the products described methodology for prospectively
trimming methodology of ± 3 standard by HCPCS codes A9543 and A9545. establishing payment rates for
deviations from the geometric mean. After removing these likely incorrectly separately payable therapeutic
The standard trim removes data outliers, coded claims in the ratesetting process, radiopharmaceuticals. The adoption of
which are rare observations with we were left with 360 line-item charges prospective payment based on historical
extremely different units and costs from on 359 days for HCPCS code A9543 (354 hospital claims data is appropriate
most occurrences in the distribution. units) and 237 line-item charges on 326 because it currently serves as our most
Our analysis showed that in the case of days for HCPCS code A9545 (238 units). accurate available proxy for the average
HCPCS code A9543 (Yttrium Y–90 These very low cost claims constituted hospital acquisition cost of separately
ibritumomab tiuxetan, therapeutic, per between one quarter and one third of payable therapeutic
treatment dose, up to 40 millicuries) the units for HCPCS codes A9543 and radiopharmaceutical products. In
and A9545 (Iodine I–131 tositumomab, A9545, contributing significantly to the addition, in the cases of HCPCS codes
therapeutic, per treatment dose), there calculation of the products’ mean unit A9543 and A9445, we have specifically
were one and three providers, costs. While the mean per unit cost was removed the likely incorrectly coded
respectively, who consistently (more approximately $11,926 for HCPCS code claims from several providers before
than 2 times) reported charges in the CY A9543 based on all claims, when the applying our standard ratesetting
2006 claims data that were less than repetitive claims from one provider with methodology to calculating their mean
$100 when converted to costs as part of very low costs were removed, the mean costs from CY 2006 claims.
the usual ratesetting process. In per day cost was approximately After consideration of the public
addition, we had relatively few claims $15,024. Similarly, while the mean per comments received, we are finalizing
overall for these two products from CY unit cost was approximately $7,844 for our CY 2008 proposal, with
2006, only 456 line-item charges on 455 HCPCS code A9545 based on all claims, modification to eliminate likely
days for HCPCS code A9543 (458 units) when the repetitive claims from three incorrectly coded claims from several
and 262 line-item charges on 261 days providers with very low costs were providers for HCPCS codes A9543 and
for HCPCS code A9545 (342 units). The removed, the mean per day cost was A9545 as described above, to provide
numerous repetitive claims with approximately $11,264. We continue to payment for separately payable
exceptionally low costs had not been believe that providing prospective therapeutic radiopharmaceuticals based
removed in the standard OPPS mean payment for the costs of the eight on their mean unit costs from CY 2007
cost calculation because the significant separately payable therapeutic claims. These therapeutic
number of these aberrant claims radiopharmaceuticals and their radiopharmaceuticals and their final CY
increased the standard deviation and handling is the most appropriate 2008 payment rates are shown in Table
were not rare observations. In light of payment methodology for CY 2008, 31 below.
TABLE 31.—CY 2008 SEPARATELY PAYABLE THERAPEUTIC RADIOPHARMACEUTICALS

HCPCS Final CY Final CY Final CY 2008
Short descriptor
Code 2008 APC 2008 SI payment rate
A9517 ...... I131 iodide cap, rx ........................................................................................................... 1064 K .............. $15.24

A9530 ...... I131 iodide sol, rx ............................................................................................................ 1150 K .............. 11.22
A9543 ...... Y90 ibritumomab, rx ........................................................................................................ 1643 K .............. 15,023.91
A9545 ...... I131 tositumomab, rx ....................................................................................................... 1645 K .............. 11,264.25
A9563 ...... P32 Na phosphate ........................................................................................................... 1675 K .............. 113.60
A9564 ...... P32 chromic phosphate ................................................................................................... 1676 K .............. 119.18
A9600 ...... Sr89 strontium ................................................................................................................. 0701 K .............. 612.06
A9605 ...... Sm 153 lexidronm ............................................................................................................ 0702 K .............. 1,361.07
Comment: Several commenters stated contract with RTI, we are currently outpatient charges across all payers to
that charge compression may be examining an all-charges model that reestimate regression-based CCRs.
adversely affecting estimates of the would compare variation in CCRs with b. Payment for Nonpass-Through
mean cost for expensive variation in charges to establish Drugs, Biologicals, and
radiopharmaceuticals. regression-adjusted CCRs that could be Radiopharmaceuticals with HCPCS
Response: As discussed in more detail applied to both inpatient and outpatient Codes, but without OPPS Hospital
in section II.A.1.c. of this final rule with charges. We will consider whether it Claims Data
comment period, while we did not would be appropriate to adopt Pub. L. 108–173 does not address the
propose to implement adjustments for regression-based CCRs for the OPPS in OPPS payment in CY 2005 and after for
charge compression for CY 2008 based the future after we receive RTI’s drugs, biologicals, and
on the RTI report for inpatient services, comprehensive review of the OPPS cost radiopharmaceuticals that have assigned
which focused only on inpatient estimation methodology and review the HCPCS codes, but that do not have a
charges, we planned steps to explore results of the use of both inpatient and reference AWP or approval for payment
this issue further for the future. Under as pass-through drugs or biologicals.
Because there is no statutory provision and biologicals with HCPCS codes as of the OPPS will be adjusted so that the
that dictated payment for such drugs January 1, 2008, but which do not have rates are based on the ASP methodology
and biologicals in CY 2005, and because pass through status and are without and set to ASP+5 percent.
we had no hospital claims data to use OPPS hospital claims data, at ASP+5 For CY 2008, we also proposed to
in establishing a payment rate for them, percent, consistent with our final base payment for new therapeutic
we investigated several payment options payment methodology for other radiopharmaceuticals with HCPCS
for CY 2005 and discussed them in separately payable nonpass-through codes as of January 1, 2008, but which
detail in the CY 2005 OPPS final rule drugs and biologicals. This policy do not have pass-through status, on the
with comment period (69 FR 65797 ensures that new nonpass-through drugs WACs for these products as ASP data
through 65799). and biologicals are treated like other for radiopharmaceuticals are not
For CYs 2005, 2006, and 2007, we drugs and biologicals under the OPPS, available. As proposed, if the WACs are
finalized our policy to provide separate unless they are granted pass-through also unavailable, we would make
payment for new drugs, biologicals, and status. Only pass through drugs and payment for the therapeutic
radiopharmaceuticals with HCPCS biologicals receive a different payment radiopharmaceuticals at 95 percent of
codes, but which did not have pass for CY 2008, generally equivalent to the their most recent AWPs. Analogous to
through status at a rate that was payment these drugs and biologicals new drugs and biologicals, we proposed
equivalent to the payment they received receive in the physician’s office setting, to assign status indicator ‘‘K’’ to HCPCS
in the physician’s office setting, consistent with the requirements of the codes for new therapeutic
established in accordance with the ASP statute. Payment for all new nonpass radiopharmaceuticals for which we
methodology. through diagnostic have not received a pass-through
As discussed in the CY 2005 OPPS radiopharmaceuticals will be packaged. application. We received no comments
final rule with comment period (69 FR In accordance with the ASP and are finalizing this proposal without
65797), and the CY 2006 OPPS final rule methodology, in the absence of ASP modification.
with comment period (70 FR 68666), data, we proposed, for CY 2008, to Consistent with other ASP-based
new drugs, biologicals, and continue the policy we implemented payments, for CY 2008, we proposed to
radiopharmaceuticals may be expensive, during CYs 2005, 2006, and 2007 of make any appropriate adjustments to
and we are concerned that packaging using the WAC for the product to the payment amounts for drugs and
these new items might jeopardize establish the initial payment rate for biologicals in this final rule with
beneficiary access to them. In addition, new nonpass through drugs, and comment period and also on a quarterly
we do not want to delay separate biologicals with HCPCS codes, but basis on our Web site during CY 2008
payment for these items solely because which are without OPPS claims data. As if later quarter ASP submissions (or
a pass-through application was not discussed in the proposed rule (72 FR more recent WACs or AWPs) indicate
submitted. However, for CY 2008 we 42741), if the WAC is also unavailable, that adjustments to the payment rates
proposed to explicitly account for the we would make payment at 95 percent for these drugs and biologicals are
pass-through payment amount of the product’s most recent AWP. We necessary. As proposed, the payment
associated with pass-through drugs and received no comments on this proposal rates for new therapeutic
biologicals, in the context of our CY and are finalizing it without radiopharmaceuticals would also be
2008 proposal for the payment of modification. adjusted accordingly. We also proposed
separately payable nonpass-through We also proposed to assign status to make appropriate adjustments to the
drugs and biologicals at ASP+5 percent. indicator ‘‘K’’ to HCPCS codes for new payment rates for new drugs and
We did not receive any public drugs and biologicals for which we have biologicals in the event that they
comments explicitly on the topic of our not received a pass-through application. become covered under the CAP in the
proposed payment methodology for Again, we received no comments and future. As noted in the proposed rule
nonpass-though drugs, biolgicals, and we are finalizing this proposal without (72 FR 42741), the new CY 2008 HCPCS
radiopharmaceuticals with HCPCS modification. We further note that with codes for drugs, biologicals, and
codes, but without OPPS hospital respect to new items for which we do therapeutic radiopharmaceuticals were
claims data. Therefore, we are finalizing not have ASP data, once their ASP data not available at the time we developed
our proposal, without modification, to become available in later quarter the proposed rule. We have included
provide payment for these new drugs submissions, their payment rates under these changes in Table 32 below.
TABLE 32.—NEW CY 2008 HCPCS CODES FOR DRUGS, BIOLOGICALS, AND RADIOPHARMACEUTICALS
CY 2008 SI
CY 2007 for CY 2007 CY 2008 CY 2008 CY 2008 CY 2008 long descriptor
HCPCS HCPCS HCPCS SI APC
code
A9565 ....... D A9572 N — Indium IN–111 pentetreotide, diagnostic, per study dose, up to 6 millicuries.
C9232 ...... D J1743 G 9232 Injection, idursulfase, 1mg.
C9233 ...... D J2778 G 9233 Injection, ranibizumab, 0.1 mg.
C9234 ...... D J0220 K 9234 Injection, aglucosidase alfa, 10 mg.
C9235 ...... D J9303 G 9235 Injection, panitumumab, 10 mg.
C9236 ...... D J1300 G 9236 Injection, eculizumab, 10 mg.
C9350 ...... D C9352 G 9350 Microporous collagen implantable tube (Neuragen Nerve Guide), per centi-
meter length.
C9350 ...... D C9353 G 1169 Microporous collagen implantable slit tube (NeuraWrap Nerve Protector), per
centimeter length.
C9351 ...... D J7348 G 9351 Dermal (substitute) tissue of nonhuman origin, with or without other bioengi-
neered or processed elements, without metabolically active elements
(TissueMend) per square centimeter.
TABLE 32.—NEW CY 2008 HCPCS CODES FOR DRUGS, BIOLOGICALS, AND RADIOPHARMACEUTICALS—Continued
CY 2008 SI
CY 2007 for CY 2007 CY 2008 CY 2008 CY 2008 CY 2008 long descriptor
HCPCS HCPCS HCPCS SI APC
code
C9351 ...... D J7349 G 1141 Dermal (substitute) tissue of nonhuman origin, with or without other bioengi-
(PriMatrix) per square centimeter.
J1567 ....... D J1561 K 0948 Injection, immune globulin, (Gamunex), intravenous, non-lyophilized (e.g. liq-
uid), 500 mg.
J1567 ....... D J1568 K 0943 Injection, immune globulin, (Octagam), intravenous, non-lyophilized, (e.g. liq-
uid), 500 mg.
J1567 ....... D J1569 K 0944 Injection, immune globulin, (Gammagard Liquid), intravenous, non-
lyophilized, (e.g. liquid), 500 mg.
J1567 ....... D J1572 K 0947 Injection, immune globulin, (Flebogamma), intravenous, non-lyophilized (e.g.
liquid), 500 mg.
J7319 ....... D J7321 K 0873 Hyaluronan or derivative, Hyalgan or Supartz, for intra-articular injection, per
dose.
J7319 ....... D J7322 K 0874 Hyaluronan or derivative, Synvisc, for intra-articular injection, per dose.
J7319 ....... D J7323 K 0875 Hyaluronan or derivative, Euflexxa, for intra-articular injection, per dose.
J7319 ....... D J7324 K 0877 Hyaluronan or derivative, Orthovisc, for intra-articular injection, per dose.
J7345 ....... D J7348 G 9351 Dermal (substitute) tissue of nonhuman origin, with or without other bioengi-
(Tissuemend) per square centimeter.
J7345 ....... D J7349 G 1141 Dermal (substitute) tissue of nonhuman origin, with or without other bioengi-
(Primatrix) per square centimeter.
Q4079 ...... D J2323 G 9126 Injection, natalizumab, 1 mg.
Q4083 ...... D J7321 K 0873 Hyaluronan or derivative, Hyalgan or Supartz, for intra-articular injection, per
dose.
Q4084 ...... D J7322 K 0874 Hyaluronan or derivative, Synvisc, for intra-articular injection, per dose.
Q4085 ...... D J7323 K 0875 Hyaluronan or derivative, Euflexxa, for intra-articular injection, per dose.
Q4086 ...... D J7324 K 0877 Hyaluronan or derivative, Orthovisc, for intra-articular injection, per dose.
Q4087 ...... D J1568 K 0943 Injection, immune globulin, (Octagam), intravenous, non-lyophilized, (e.g. liq-
uid), 500 mg.
Q4088 ...... D J1569 K 0944 Injection, immune globulin, (Gammagard Liquid), intravenous, non-
lyophilized, (e.g. liquid), 500 mg.
Q4089 ...... D J2791 K 0945 Injection, rho(d) immune globulin (human), (Rhophylac), intravenous, 100 iu.
Q4090 ...... D J1571 K 0946 Injection, hepatitis b immune globulin (Hepagam B), intramuscular, 0.5 ml.
Q4091 ...... D J1572 K 0947 Injection, immune globulin, (Flebogamma), intravenous, non-lyophilized (e.g.
liquid), 500 mg.
Q4092 ...... D J1561 K 0948 Injection, immune globulin, (Gamunex), intravenous, non-lyophilized (e.g. liq-
uid), 500 mg.
Q4095 ...... D J3488 G 0951 Injection, zoledronic acid (Reclast), 1 mg.
Q9945 ...... D Q9965 N ................ Low osmolar contrast material, 100–199 mg/ml iodine concentration, per ml.
Q9952 ...... D A9579 N ................ Injection, gadolinium-based magnetic resonance contrast agent, not other-
wise specified (nos), per ml.
A9501 N ................ Technetium TC–99M teboroxime, diagnostic, per study dose.
A9509 N ................ Iodine I–123 sodium iodide, diagnostic, per millicurie.
A9569 N ................ Technetium TC–99M exametazime labeled autologous white blood cells, di-
agnostic, per study dose.
A9570 N ................ Indium IN–111 labeled autologous white blood cells, diagnostic, per study
dose.
A9571 N ................ Indium IN–111 labeled autologous platelets, diagnostic, per study dose.
A9576 N ................ Injection, gadoteridol, (ProHance Multipack), per ml.
A9577 N ................ Injection, gadobenate dimeglumine (MultiHance), per ml.
A9578 N ................ Injection, gadobenate dimeglumine (MultiHance Multipack), per ml.
C9238 K 9238 Injection, levetiracetam, 10 mg.
C9239 G 1168 Injection, temsirolimus, 1 mg.
J0400 K 1165 Injection, aripiprazole, intramuscular, 0.25 mg.
J1573 K 1138 Injection, hepatitis b immune globulin (Hepagam B), intravenous, 0.5 ml.
J2724 K 1139 Injection, protein c concentrate, intravenous, human, 10 iu.
J9226 K 1142 Histrelin implant (Supprelin LA), 50 mg.
There are several nonpass-through we do not have any CY 2006 hospital 42762). In order to determine the
drugs and biologicals that were payable claims data. These items were shown in packaging status of these items for CY
in CY 2006 and/or CY 2007 for which Table 45A of the proposed rule (72 FR 2008, we calculated an estimate of the
per day cost of each of these items by general packaging threshold that we product to establish the initial payment
multiplying the payment rate for each proposed for drugs, biologicals, and rate. However, we note that if the WAC
product based on ASP+5 percent, radiopharmaceuticals in CY 2008. We is also unavailable, we would make
similar to other nonpass-through drugs proposed that the CY 2008 payment for payment at 95 percent of the most
and biologicals paid separately under separately payable items without CY recent AWP available.
the OPPS, by an estimated average 2006 claims data would be based on We did not receive any public
number of units of each product that ASP+5 percent, similar to other comments on this proposal and,
would typically be furnished to a separately payable nonpass-through therefore, are finalizing the proposal
patient during one administration in the drugs and biologicals under the OPPS. without modification. Table 33 lists all
hospital outpatient setting. We proposed In accordance with the ASP of the nonpass-through drugs and
to package items for which we estimate methodology used in the physician’s biologicals without available CY 2006
the per administration cost to be less office setting, in the absence of ASP claims data to which these final policies
than or equal to $60, which is the data, we would use the WAC for the would apply in CY 2008.
TABLE 33.—DRUGS AND BIOLOGICALS WITHOUT CY 2006 CLAIMS DATA

ASP- Estimated aver-
HCPCS based age number of Final CY CY 2008
Short descriptor
code payment units per admin- 2008 SI APC
rate istration
J0288 ....... Ampho b cholesteryl sulfate .......................................................................... $11.89 35 K 0735

J0364 ....... Apomorphine hydrochloride ........................................................................... ................ 6 N
J1324 ....... Enfuvirtide injection ........................................................................................ $0.40 180 K 0767
J2170 ....... Mecasermin injection ..................................................................................... $15.62 15.6 K 0805
J2315 ....... Naltrexone, depot form .................................................................................. $1.87 380 K 0759
J3355 ....... Urofollitropin, 75 iu ......................................................................................... $50.22 2 K 1741
J8650 ....... Nabilone oral .................................................................................................. $16.80 6 K 0808
During the March 2007 APC Panel regardless of the unit determination in for hospitals to report certain HCPCS
meeting, the APC Panel reiterated its the HCPCS code descriptor, beginning codes instead of others. In our analysis
August 2006 recommendation to allow in CY 2008. Stakeholders have told us for the proposed rule, we also estimated
hospitals to report all HCPCS codes for that this policy would reduce the the packaging status of these currently
drugs. In general, OPPS recognizes the administrative burden associated with unrecognized HCPCS codes by adjusting
lowest available administrative dose of our current requirement that hospitals the calculated average number of units
a drug if multiple HCPCS codes exist for report drugs using only the HCPCS per day for the associated recognized
the drug; for the remainder of the doses, codes with the lowest increments in HCPCS code with claims data to
we assign a status indicator ‘‘B’’ their code descriptors. Whenever account for the different dosage
indicating that another code exists for possible, we seek to reduce hospitals’ descriptors. We then multiplied this
OPPS purposes. For example, if drug X administrative burden in submitting adjusted average number of units per
has 2 HCPCS codes, 1 for a 1 ml dose claims for payment under the OPPS, day value by the most recent ASP data
and a second for a 5 ml dose, the OPPS and we appreciate the APC Panel’s available for the unrecognized HCPCS
would assign a payable status indicator recommendation in this area. code (listed in Table 45B of the
to the 1 ml dose and status indicator As these HCPCS codes were proposed rule). As noted in the
‘‘B’’ to the 5 ml dose. Hospitals would previously unrecognized in the OPPS, proposed rule (72 FR 42742), this
then need to bill the appropriate we do not have claims data to determine methodology yielded the same
number of units for the 1 ml dose in the appropriate packaging status. packaging determinations and resulting
order to receive payment under the Therefore, we proposed to assign these status indicators for the currently
OPPS. While we were not prepared to HCPCS codes the same status indicator unrecognized HCPCS codes for CY 2008
accept this recommendation when we as the associated recognized HCPCS as for the recognized HCPCS code for
developed the CY 2007 OPP/ASC final code (that is, the lowest dose), as shown the same drug.
rule with comment period, we indicated in Table 45B of the proposed rule (72 FR
in that rule that we would continue to 42743). We believed that this approach We received a number of public
consider the APC Panel’s is the most appropriate and reasonable comments on our proposal to recognize
recommendation for future OPPS way to implement this proposed change all HCPCS codes Part B drugs for
updates (71 FR 68083 through 68084). without impacting payment. However, payment under the OPPS. A summary of
After further consideration of this once claims data are available for these the public comments and our responses
issue, we stated in the CY 2008 OPPS/ previously unrecognized HCPCS codes, follow.
ASC proposed rule that we are now we will determine the packaging status Comment: Many commenters
accepting the APC Panel’s and resulting status indicator for each supported the proposal to allow
recommendation because we have HCPCS code according to the general hospitals to submit claims by reporting
concluded that recognizing all of these code-specific methodology for any HCPCS code for a Part B drug that
HCPCS codes for payment under the determining a code’s packaging status is covered under the OPPS, regardless of
OPPS should not have a significant for a given update year. We plan to the unit determination in the HCPCS
effect on our payment methodology for closely follow our claims data to ensure code descriptor, beginning in CY 2008.
drugs (72 FR 42742). We proposed to that our annual packaging Some commenters supported this
allow hospitals to submit claims by determinations for the different HCPCS proposal so long as it was not
reporting any HCPCS code for a Part B codes describing the same drug do not mandatory to report all HCPCS codes.
drug that is covered under the OPPS, create inappropriate payment incentives One commenter disagreed with our
proposal and expressed concern that is covered under the OPPS, regardless of billing practices, but hospitals that
this would increase hospital burden. the unit determination in the HCPCS would like additional flexibility when
Response: We appreciate the general code descriptor. Hospitals that may be billing for drugs with multiple HCPCS
support of our proposal to allow burdened by reporting multiple HCPCS dosages may implement these changes
hospitals to submit claims by reporting codes need not change their current beginning in CY 2008.
any HCPCS code for a Part B drug that
TABLE 34.—PREVIOUSLY UNRECOGNIZED HCPCS CODES AND STATUS INDICATORS FOR CY 2008
HCPCS Associated
codes HCPCS
CY 2007 Final CY
newly rec- Long descriptor Code recog-
SI 2008 SI
ognized in nized in CY
CY 2008 2007
J1470 ....... B Injection, gamma globulin, intramuscular, 2 cc ......................................................................... J1460 K

J1480 ....... B Injection, gamma globulin, intramuscular, 3 cc ......................................................................... .................... K
J1550 ....... B Injection, gamma globulin, intramuscular, 10 cc ....................................................................... .................... K
J1560 ....... B Injection, gamma globulin, intramuscular, over 10 cc ............................................................... .................... K
J8521 ....... B Capecitabine, oral, 500 mg ....................................................................................................... J8520 K
J9094 ....... B Cyclophosphamide lyophilized, 200 mg .................................................................................... J9093 N
J9095 ....... B Cyclophosphamide lyophilized, 500 mg .................................................................................... .................... N
J9096 ....... B Cyclophosphamide lyophilized, 1g ............................................................................................ .................... N
J9097 ....... B Cyclophosphamide lyophilized, 2g ............................................................................................ .................... N
J9140 ....... B Dacarbazine, 200 mg ................................................................................................................ J9130 N
J9290 ....... B Mitomycin, 20 mg ...................................................................................................................... J9280 K
J9291 ....... B Mitomycin, 40 mg ...................................................................................................................... .................... K
J9062 ....... B Cisplatin, 50 mg ......................................................................................................................... J9060 N
J9080 ....... B Cyclophosphamide, 200 mg ...................................................................................................... J9070 N
J9090 ....... B Cyclophosphamide, 500 mg ...................................................................................................... .................... N
J9091 ....... B Cyclophosphamide, 1g .............................................................................................................. .................... N
J9092 ....... B Cyclophosphamide, 2 g ............................................................................................................. .................... N
J9110 ....... B Cytarabine, 500 mg ................................................................................................................... J9100 N
J9182 ....... B Etoposide, 100 mg ..................................................................................................................... J9181 N
J9260 ....... B Methotrexate sodium, 50 mg ..................................................................................................... J9250 N
J9375 ....... B Vincristine sulfate, 2 mg ............................................................................................................ J9370 N
J9380 ....... B Vincristine sulfate, 5 mg ............................................................................................................ .................... N
Finally, in Table 45C of the proposed methodology to the seven drugs HCPCS code J0200 indicate that there
rule (72 FR 42743), we proposed to included in the proposed rule. As stated were a total of 100 units billed over 1
package seven drugs and biologicals that elsewhere in this rule, it is our policy day, with a mean cost of $0.16 per unit.
were payable in CY 2006 because we to use updated claims data to inform our Therefore, the average per day cost
lacked CY 2006 claims data and any final rule. Since the time of the estimate of HCPCS code J0200 is
other data related to the ASP proposed rule, we have received approximately $16. As this cost is below
methodology and, therefore, we were hospital claims data for HCPCS code the $60 packaging threshold, its status is
unable to determine the per day cost of J0200 (Injection, alatrofloxacin packaged for CY 2008, according to the
these products. As in previous years of mesylate, 100 mg). Therefore, as we now standard OPPS packaging methodology
the OPPS, when we are unable to have payment information for HCPCS
for drugs and biologicals.
determine a drug’s packaging status and code J0200, we have determined its final
payment rate due to the unavailability CY 2008 packaging status based on Therefore, we are finalizing our
of hospital claims data and payment hospital claims data and we will not proposal, with modification to exclude
information at the time of the final rule, finalize our proposal to package this HCPCS code J0200, to package payment
we package payment for those drugs. drug for CY 2008 because of the lack of for the drugs and biologicals listed in
We did not receive any public hospital claims data and payment rate Table 35 below, due to missing data
comments on our proposal to apply this information. Hospital claims data for critical to calculating a per day cost.
TABLE 35.—DRUGS AND BIOLOGICALS WITHOUT INFORMATION ON PER DAY COST THAT ARE PACKAGED IN CY 2008
HCPCS Final CY
Short descriptor
code 2008 SI
90393 ....... Vaccina ig, im ........................................................................................................................................................................ N

90477 ....... Adenovirus vaccine, type 7 ................................................................................................................................................... N
90581 ....... Anthrax vaccine, sc ............................................................................................................................................................... N
90727 ....... Plague vaccine, im ................................................................................................................................................................ N
J0395 ....... Arbutamine HCl injection ....................................................................................................................................................... N
TABLE 35.—DRUGS AND BIOLOGICALS WITHOUT INFORMATION ON PER DAY COST THAT ARE PACKAGED IN CY 2008—
Continued
HCPCS Final CY
Short descriptor
code 2008 SI
J1452 ....... Intraocular Fomivirsen na ...................................................................................................................................................... N
VI. Estimate of OPPS Transitional Pass- pass-through payment amount for drugs applicable percentage limit at 2.0
Through Spending for Drugs, and biologicals eligible for pass-through percent of the total OPPS projected
Biologicals, Radiopharmaceuticals, and payment as the amount by which the payments for CY 2008, consistent with
Devices amount authorized under section our OPPS policy from CY 2004 through
1842(o) of the Act (or, if the drug or CY 2007.
A. Total Allowed Pass-Through
biological is covered under a
Spending As we discuss in section IV.B. of this
competitive acquisition contract under
Section 1833(t)(6)(E) of the Act limits section 1847B of the Act, an amount final rule with comment period, there
the total projected amount of determined by the Secretary equal to the are two device categories receiving pass-
transitional pass-through payments for average price for the drug or biological through payment in CY 2007 that will
drugs, biologicals, for all competitive acquisition areas and continue for payment during CY 2008.
radiopharmaceuticals, and categories of year established under such section as In accordance with the methodology we
devices for a given year to an calculated and adjusted by the have used to make estimates in previous
‘‘applicable percentage’’ of projected Secretary) exceeds the portion of the years, in cases where we have relevant
total Medicare and beneficiary otherwise applicable fee schedule claims data for the procedures
payments under the hospital OPPS. For amount that the Secretary determines is associated with a device category, we
a year before CY 2004, the applicable associated with the drug or biological. proposed to project these data forward
percentage was 2.5 percent; for CY 2004 Because we are finalizing our CY 2008 using inflation and utilization factors
and subsequent years, we specify the proposal to pay for nonpass-through based on total growth in OPPS services
applicable percentage up to 2.0 percent. separately payable drugs and biologicals as projected by CMS’ Office of the
If we estimate before the beginning of under the CY 2008 OPPS at ASP+5 Actuary (OACT) to estimate the
the calendar year that the total amount percent, which represents the otherwise upcoming year’s pass through spending
of pass-through payments in that year applicable fee schedule amount
would exceed the applicable percentage, for this first group of device categories.
associated with a pass-through drug or As we stated in the CY 2007 OPPS/ASC
section 1833(t)(6)(E)(iii) of the Act biological, while we would pay for pass-
requires a uniform reduction in the final rule with comment period (71 FR
through drugs and biologicals at ASP+6
amount of each of the transitional pass- 68101), we may use an alternate growth
percent or the Part B drug CAP rate, if
through payments made in that year to applicable, our estimate of drug and factor for any specific device category
ensure that the limit is not exceeded. biological pass-through payment for CY based on our claims data or the device’s
We make an estimate of pass-through 2008 is not zero. Similar to estimates for clinical characteristics, or both. We
spending to determine not only whether devices, the first group of drugs and developed estimated OPPS utilization of
payments exceed the applicable biologicals requiring a pass-through the procedures and costs associated
percentage, but also to determine the payment estimate consists of those with the two device categories
appropriate reduction to the conversion products that were eligible for pass- continuing for pass-through payment
factor for the projected level of pass- through payment in CY 2006 or CY into CY 2008, based upon examination
through spending in the following year. 2007, or both years, and that would of our historical claims data,
For devices, developing an estimate of continue to be eligible for pass-through information provided in the pass-
pass-through spending in CY 2008 payment in CY 2008. The second group through device category applications,
entails estimating spending for two contains drugs and biologicals that we and the devices’ clinical characteristics.
groups of items. The first group of items know are newly eligible, or project Based on these analyses, our final
consists of those device categories that would be newly eligible, beginning in estimate of pass-through spending
were eligible for pass-through payment CY 2008. The sum of the CY 2008 pass- attributable to the first group (that is, the
in CY 2006 or CY 2007, or both years, through estimates for these two groups two device categories continuing in CY
and that would continue to be eligible of drugs and biologicals would equal the 2008) described above is $18.1 million
for pass-through payment in CY 2008. total CY 2008 pass-through spending for CY 2008. The two device categories
The second group contains items that estimate for drugs and biologicals with
we know are newly eligible, or project continuing in CY 2008, which are
pass-through status.
would be newly eligible, for device reflected in this $18.1 million estimate
pass-through payment in the remainder B. Estimate of CY 2008 Pass-Through for CY 2008 pass-through spending, are
of CY 2007 or beginning in CY 2008. Spending listed in Table 36 below.
For drugs and biologicals, section As we proposed, in this final rule
1833(t)(6)(D)(i) of the Act establishes the with comment period, we are setting the
TABLE 36.—CY 2008 DEVICES WITH CURRENT PASS-THROUGH CATEGORIES CONTINUING INTO CY 2008
HCPCS APC Current pass-through device category

code
C1821 ...... 1821 Interspinous process distraction device (implantable).

L8690 ....... 1032 Auditory osseointegrated device, includes all internal and external components.
In estimating CY 2008 pass-through analyses, we estimated pass-through were not included in the category of
spending for device categories in the spending attributable to the first group drugs paid under the OPPS, and,
second group (that is, device categories (that is, the drugs and biological therefore, were not eligible for pass-
that we know at the time of the continuing with pass-through eligibility through status.) There are no
development of this final rule with in CY 2008) described above to be about radiopharmaceuticals that are eligible
comment period will be newly eligible $1.2 million for CY 2008. This $1.2 for pass-through payment at the time of
for pass-through payment in CY 2008 (of million estimate of CY 2008 pass publication of this final rule with
which there are none)) and contingent through spending for the first group of comment period. In addition, we have
projections for new categories in the pass-through drugs reflects the current no information identifying new
second through fourth quarters of CY pass-through drugs that are continuing radiopharmaceuticals to which a HCPCS
2008, we used the general methodology on pass-through status into CY 2008, code might be assigned on or after
as described above, while also taking which are displayed in Table 27 in January 1, 2008, for which pass through
into account recent OPPS experience in section V.A.3. of this final rule with payment status would be sought. We
approving new pass through device comment period. also have no historical data regarding
categories. The final estimate of CY To estimate CY 2008 pass-through payment for new radiopharmaceuticals
2008 pass-through spending for this spending for drugs and biologicals in with pass-through status under the
second group is $7.5 million. Employing the second group (that is, drugs and methodology that we specified for the
our proposed methodology that the biologicals that we know at the time of CY 2005 OPPS or the CY 2008
estimate of pass through device development of this final rule with methodology that we describe in section
spending in CY 2008 incorporates CY comment period are newly eligible for V.A.3. of this final rule with comment
2008 estimates of pass through spending pass-through payment as of January 1, period. However, we do not believe that
for device categories continuing in CY 2008, and projections for new drugs and pass through spending for new
2008, those first effective January 1, biologicals that could be initially radiopharmaceuticals in CY 2008 will
2008, and those device categories eligible for pass-through payment in the be significant enough to materially
projected to be approved during second through fourth quarters of CY affect our estimate of total pass-through
subsequent quarters of CY 2007 and CY 2008), we used utilization estimates spending in CY 2008. Therefore, we are
2008, our total pass-through estimate for from applicants, pharmaceutical not including radiopharmaceuticals in
device categories for CY 2008 is $25.6 industry data, and clinical information our final estimate of pass through
million. as the basis for pass through spending spending for CY 2008. We discuss the
We did not receive any public estimates for these drugs and biologicals methodology for determining the CY
comments on our proposed for CY 2008, while also considering the 2008 payment amount for new
methodology to estimate transitional most recent OPPS experience in radiopharmaceuticals without pass
pass-through spending for device approving new pass through drugs and through status in section V.B.3.b. of this
categories in CY 2008. Therefore, we are biologicals. Based on these analyses, we final rule with comment period.
finalizing our methodology for estimate pass-through spending
We did not receive any public
estimating pass-through spending for attributable to this second group of
comments on our proposal to estimate
categories of devices in CY 2008 as drugs and biologicals will be $5.4
that pass-through spending for
proposed, without modification, million for CY 2008.
In the CY 2008 OPPS/ASC proposed radiopharmaceuticals in CY 2008 will
resulting in a total pass-through
rule, we proposed that the estimate of be zero. Therefore, we are finalizing our
spending estimate of $25.6 million for
pass through drug and biological methodology for estimating pass-
device categories in CY 2008.
In accordance with the methodology spending in CY 2008 incorporate CY through spending for
we proposed in the CY 2008 OPPS/ASC 2008 estimates of pass-through spending radiopharmaceuticals in CY 2008 as
proposed rule, to estimate CY 2008 for drugs and biologicals with pass- proposed, without modification,
pass-through spending for drugs and through status in CY 2007 that would resulting in a total pass-through
biologicals in the first group, continue for CY 2008, those first spending estimate of zero for
specifically those drugs and biologicals effective January 1, 2008, and those radiopharmaceuticals in CY 2008.
initially eligible for pass-through status drugs and biologicals projected to be In accordance with the
in CY 2006 or CY 2007 and proposed for approved during subsequent quarters of comprehensive methodology described
continuation of pass-through payment CY 2008. above, we estimate that total pass
in CY 2008, we utilized the most recent We did not receive any public through spending for the two device
Medicare physician’s office data comments on our proposed categories and the drugs and biologicals
regarding their utilization, information methodology to estimate pass-through that are continuing for pass-through
provided in the respective pass-through spending for drugs and biologicals in payment into CY 2008 and those
applications, historical hospital claims CY 2008. Therefore, we are finalizing devices, drugs, biologicals, and
data, pharmaceutical industry our methodology for estimating pass- radiopharmaceuticals that first become
information, and clinical information through spending for drugs and eligible for pass-through status during
regarding the drugs or biologicals, in biologicals in CY 2008 as proposed, CY 2008 will approximate $32.2
order to project the CY 2008 OPPS without modification, resulting in a million, which represents 0.09 percent
utilization of the products. For the total pass-through spending estimate of of total OPPS projected payments for CY
known drugs and biologicals that will $6.6 million for drugs and biologicals in 2008.
continue on pass-through status in CY CY 2008. Because we estimate that pass-
2008, we then estimated the total pass In the CY 2005 OPPS final rule with through spending in CY 2008 will not
through payment amount as the comment period (69 FR 65810), we amount to 2.0 percent of total projected
difference between ASP+6 percent or indicated that we are accepting pass- OPPS CY 2008 spending, we will return
the Part B drug CAP rate, as applicable, through applications for new 1.91 percent of the pass-through pool to
and ASP+5 percent, aggregated across radiopharmaceuticals that are assigned a adjust the conversion factor, as we
the projected CY 2008 OPPS utilization HCPCS code on or after January 1, 2005. discuss in section II.C. of this final rule
of these products. Based on these (Prior to this date, radiopharmaceuticals with comment period.
Accordingly, we are finalizing our Section 621(b)(3) of Pub. L. 108–173 external data and other relevant
proposed methodology for estimating required the GAO to conduct a study to information regarding the expected
CY 2008 OPPS pass-through spending determine appropriate payment costs of the sources to hospitals (71 FR
for drugs, biologicals, amounts for devices of brachytherapy, 68112). We changed the definition of
radiopharmaceuticals, and categories of and to submit a report on its study to status indicator ‘‘K’’ to ensure that ‘‘K’’
devices. Our final total pass-through the Congress and the Secretary, appropriately described brachytherapy
estimate for CY 2008 is $32.2 million. including recommendations on the sources to accommodate the use of ‘‘K’’
appropriate payments for such devices. for prospective payment for
VII. OPPS Payment for Brachytherapy This report was due to Congress and to brachytherapy sources (71 FR 68110).
Sources the Secretary no later than January 1, Subsequent to publication of the CY
A. Background 2005. The GAO’s final report, ‘‘Medicare 2007 OPPS/ASC final rule with
Outpatient Payments: Rates for Certain comment period, section 107(a) of the
Section 1833(t)(2)(H) of the Act, as Radioactive Sources Used in MIEA–TRHCA amended section
added by section 621(b)(2)(C) of Pub. L. Brachytherapy Could Be Set 1833(t)(16)(C) of the Act by extending
108–173, mandated the creation of Prospectively’’ (GAO–06–635), was the payment period for brachytherapy
separate groups of covered OPD services published on July 24, 2006. We sources based on a hospital’s charges
that classify brachytherapy devices summarized and discussed the report’s adjusted to cost for one additional year.
separately from other services or groups findings and recommendations in the This requirement for cost-based
of services. The additional groups must CY 2007 OPPS/ASC final rule with payment ends after December 31, 2007.
reflect the number, isotope, and comment period (71 FR 68103 through Therefore, we were required to continue
radioactive intensity of the devices of 68105). The GAO report principally payment for sources based on charges
brachytherapy furnished, including recommended that we use OPPS adjusted to cost through CY 2007. We
separate groups for palladium-103 and historical claims data to determine also have continued using status
iodine-125 devices. prospective payment rates for two of the indicator ‘‘H’’ to denote nonpass
Section 1833(t)(16)(C) of the Act, as most frequently used brachytherapy through brachytherapy sources paid on
added by section 621(b)(1) of Pub. L. sources, iodine-125 and palladium-103, a cost basis as a result of enactment of
108–173, established payment for and also recommended that we consider this provision rather than using status
devices of brachytherapy consisting of a using claims data for the third source indicator ‘‘K’’ to denote prospective
seed or seeds (or radioactive source) studied, high dose rate (HDR) iridium- payment for nonpass-through
based on a hospital’s charges for the 192. brachytherapy sources, as finalized in
service, adjusted to cost. The period of The GAO report concluded that CMS the CY 2007 OPPS/ASC final rule with
payment under this provision is for could set prospective payment rates comment period.
brachytherapy sources furnished from based on claims data for iodine and Section 107(b)(1) of the MIEA–
January 1, 2004, through December 31, palladium sources, because the sources’ TRHCA also amended section
2006. Under section 1833(t)(16)(C) of unit costs are generally stable, both 1833(t)(2)(H) of the Act by adding a
the Act, charges for the brachytherapy sources have identifiable unit costs that requirement for the establishment of
devices may not be used in determining do not vary substantially and separate payment groups for ‘‘stranded
any outlier payments under the OPPS unpredictably over time, and reasonably and non-stranded’’ brachytherapy
for that period of payment. Consistent accurate claims data are available. On devices beginning July 1, 2007. Section
with our practice under the OPPS to the other hand, the GAO report 107(b)(2) of the MIEA–TRHCA
exclude items paid at cost from budget explained that it was not able to authorized the Secretary to implement
neutrality consideration, these items determine a suitable methodology for this new requirement by ‘‘program
were excluded from budget neutrality paying separately for HDR iridium. The instruction or otherwise.’’ This new
for that time period as well. report noted that iridium is reused requirement is in addition to the
across multiple patients, making its unit requirement for separate payment
In the OPPS interim final rule with groups based on the number, isotope,
cost more difficult to determine.
comment period published on January and radioactive intensity of
However, the report also indicated that
6, 2004 (69 FR 827), we implemented brachytherapy devices that was
CMS has outpatient claims data from all
sections 621(b)(1) and (b)(2)(C) of Pub. hospitals that have used iridium and previously established by section
L. 108–173. In that rule, we stated that that in order to identify a suitable 1833(t)(2)(H) of the Act. We note that
we would pay for the brachytherapy methodology for separate payment, CMS commenters on the CY 2007 proposed
sources (that is, brachytherapy devices) would be able to use these data to rule asserted that stranded sources,
listed in Table 4 of the interim final rule establish an average cost and evaluate which they described as embedded into
with comment period (69 FR 828) on a whether that cost varies substantially the stranded suture material and
cost basis, as required by the statute. and unpredictably. separated within the strand by material
Since January 1, 2004, we have used In our CY 2007 annual OPPS of an absorbable nature at specified
status indicator ‘‘H’’ to denote nonpass rulemaking, we proposed and finalized intervals, had greater production costs
through brachytherapy sources paid on a policy of prospective payment based than non-stranded sources (71 FR 68113
a cost basis, a policy that we finalized on median costs for the 11 through 68114).
in the CY 2005 final rule with comment brachytherapy sources for which we had As a result of the statutory
period (69 FR 65838). claims data. We based the prospective requirement to create separate groups
Furthermore, we adopted a standard rates on median costs for each source for stranded and non-stranded sources
policy for brachytherapy code from our CY 2005 claims data (71 FR as of July 1, 2007, we established several
descriptors, beginning January 1, 2005. 68102 through 71 FR 68114). We also coding changes via program transmittal,
We included ‘‘per source’’ in the HCPCS indicated that we would assign future effective July 1, 2007 (Program
code descriptors for all those new HCPCS codes for new Transmittal No. 1259, dated June 1,
brachytherapy source descriptors for brachytherapy sources to their own 2007). As indicated in the CY 2008
which units of payment were not APCs, with prospective payment rates proposed rule, based upon comments to
already delineated. set based on our consideration of our CY 2007 proposed rule and industry
input, we are presently aware of three source) for stranded NOS sources, or B. Payment for Brachytherapy Sources
sources that are currently available in C2699 (Brachytherapy source, non- As indicated above, the provision to
stranded and non-stranded forms: stranded, not otherwise specified, per pay for brachytherapy sources at charges
iodine-125; palladium-103; and cesium- source) for non-stranded NOS sources, adjusted to cost expires after December
131 (72 FR 42746). which are also listed in Table 37 below. 31, 2007, in accordance with section
Therefore, in Program Transmittal No. For example, if a new FDA-approved 1833(t)(16)(C) of the Act, as amended by
1259, we created six new HCPCS codes stranded source comes onto the market section 107(a) of the MIEA–TRHCA.
to differentiate the stranded and non- and there is currently only a billing However, under section 1833(t)(2)(H) of
stranded versions of these three sources. code for the non-stranded source, the the Act, we are still required to create
These six new HCPCS codes replaced hospital should bill the stranded source APC groupings that classify devices of
the three prior brachytherapy source under C2698 (stranded NOS source) brachytherapy separately from other
HCPCS codes for iodine, palladium and until a specific stranded billing code for services or groups of services in a
cesium (C1718, C1720, and C2633, all of the source is established. manner reflecting the number, isotope,
which were deleted as of July 1, 2007), In Program Transmittal No. 1259, we and radioactive intensity of the devices
respectively, effective July 1, 2007. In reiterated our longstanding policy that of brachytherapy furnished. In addition,
this program transmittal, we also hospitals and other parties are invited to
provided specific billing instructions to section 1833(t)(2)(H) of the Act, as
submit recommendations to us for new amended by section 107(b)(1) of the
hospitals on how to report stranded HCPCS codes to describe new sources
sources. We instructed providers, when MIEA–TRHCA, requires separate
consisting of a radioactive isotope, payment groups based on stranded and
billing for stranded sources, to bill the including a detailed rationale to support
number of units of the appropriate non-stranded brachytherapy devices on
recommended new sources. We will or after July 1, 2007.
source HCPCS C-code according to the continue our endeavor to add new In the CY 2008 proposed rule, we
number of brachytherapy sources in the brachytherapy source codes and
strands and specifically not to bill as proposed to pay separately for each of
descriptors to our systems for payment the sources listed in Table 48 of that
one unit per strand. If a hospital applies on a quarterly basis. Such
both stranded and non-stranded sources rule on a prospective basis for CY 2008,
recommendations should be directed to with payment rates to be determined
to a patient in a single treatment, the the Division of Outpatient Care, Mail
hospital should bill the stranded and using the CY 2006 claims-based median
Stop C4–05–17, Centers for Medicare cost per source for each brachytherapy
non-stranded sources separately, and Medicaid Services, 7500 Security
according to the differentiated HCPCS device. Consistent with our policy
Boulevard, Baltimore, MD 21244. regarding APC payments made on a
codes listed in the table found in that
program transmittal and included in Finally, we noted that in the CY 2007 prospective basis, we proposed that the
Table 48 of the proposed rule. We OPPS/ASC final rule with comment cost of brachytherapy sources be subject
expected that these instructions would period, we established a definition for to the outlier provision of section
clearly indicate how hospitals should brachytherapy source for which separate 1833(t)(5) of the Act. As indicated in
bill for stranded and non-stranded payment under section 1833(t)(2)(H) of section II.A.2. of the proposed rule, for
brachytherapy sources, and that hospital the Act is required (71 FR 68113). We CY 2008 we proposed specific
reporting of sources according to these considered the definition of prospective payment rates for
instructions would promote accurate ‘‘brachytherapy source’’ in the context brachytherapy sources, which would be
claims data for the various source codes of current medical practice and in subject to scaling for budget neutrality.
in the future. In Program Transmittal regard to the language in section We stated that we believe that
No. 1259, we also added the term ‘‘non- 1833(t)(2)(H) of the Act, which refers to adopting prospective payment for
stranded’’ to the descriptors for all brachytherapy sources as ‘‘a seed or brachytherapy sources would be
sources that currently have only non- seeds (or radioactive source).’’ We appropriate for a number of reasons.
stranded versions of a source. believed that this provision of the Act The general OPPS payment
In Program Transmittal No. 1259, we mandating separate payment refers to methodology is a prospective payment
indicated that if we receive information sources that are themselves radioactive, system using median costs based on
that any of the other sources now meaning that the source contains a claims data. This prospective payment
designated as non-stranded are radioactive isotope. Furthermore, we methodology results in more consistent,
marketed as a stranded source, we indicated that the statutory language is predictable, and equitable payment
would create a code for the stranded likewise clear that devices of amounts per source across hospitals,
source. We also established two ‘‘Not brachytherapy paid separately must and it prevents some of the extremely
Otherwise Specified’’ (NOS) codes for reflect the number, isotope, and high and low payment amounts found
billing stranded and non-stranded radioactive intensity of such devices under a charges adjusted to cost
sources that are not yet known to us and furnished. Accordingly, we further methodology. The proposed prospective
for which we do not have source- believed that section 1833(t)(2)(H) of the payment would also provide hospitals
specific codes. If a hospital purchases Act applies only to radioactive devices with incentives for efficiency in the
an FDA-approved and marketed of brachytherapy. In the CY 2007 OPPS/ provision of brachytherapy services to
radioactive source consisting of a ASC final rule with comment period, we Medicare beneficiaries. Moreover, the
radioactive isotope (consistent with our also stated that we would not consider proposed approach is consistent with
definition of a brachytherapy source specific devices, beams of radiation, or our payment methodology for the vast
eligible for separate payment as equipment that do not constitute majority of items and services paid
discussed below), for which we do not separate sources that utilize radioactive under the OPPS. Indeed, section
yet have a separate source code isotopes to deliver radiation to be 1833(t)(2)(C) of the Act requires us to
established, it should bill such sources brachytherapy sources for separate establish prospective payment rates for
using the appropriate NOS code listed payment, as such items do not meet the the OPPS system based on median costs
in Program Transmittal No. 1259, that statutory requirements provided in (or mean costs if elected by the
is, C2698 (Brachytherapy source, section 1833(t)(2)(H) of the Act (71 FR Secretary). As of CY 2007, only pass-
stranded, not otherwise specified, per 68113). through devices, radiopharmaceuticals,
and brachytherapy sources were paid at stranded payment rates for these three proposed rule because that addendum
charges adjusted to cost. Based on the sources, we proposed to make the was based on HCPCS codes effective as
proposals in the CY 2008 proposed rule, following assumptions in our of April 2007. As explained earlier,
only pass-through devices would calculation of their median costs. there are some brachytherapy source
continue to be paid at charges adjusted Assuming that the reportedly lower cost HCPCS codes that were added as of July
to cost for CY 2008. As noted earlier, non-stranded sources would be unlikely 1, 2007. While these HCPCS codes were
section 107(a) of the MIEA–TRHCA to be in the top 20 percent of the cost not shown in Addendum B, the
specifically extended the payment distribution in our aggregate (stranded proposed payment rates for all
period for brachytherapy sources based and non-stranded) CY 2006 claims data, brachytherapy sources were shown in
on a hospital’s charges adjusted to cost we proposed to calculate the median Table 48 of the proposed rule.
for only one additional year, CY 2007. cost for these 3 non-stranded sources We invited public comment on all
As explained in the proposed rule, the based on the bottom 80 percent of the aspects of our proposed brachytherapy
proposal to adopt prospective payment cost distribution in our aggregate claims source payment for CY 2008. We
for brachytherapy sources provides data for each source. Likewise, particularly encouraged public
opportunities for hospitals to receive assuming that the reportedly higher cost comment on our proposed median costs
additional payments under certain stranded sources would be unlikely to estimates for stranded and non-stranded
circumstances through the outlier be in the bottom 20 percent of the cost iodine-125, palladium-103, and cesium-
provisions and the 7.1 percent rural distribution in our aggregate CY 2006 131 sources, including the submission
SCH adjustment (72 FR 42748). claims data, we proposed to calculate of any available information or data on
Consistent with our policy regarding the median cost for these 3 stranded cost differences between stranded and
APC payments made on a prospective sources based on the top 80 percent of non stranded sources. We also indicated
basis, we proposed that the cost of the cost distribution for our aggregate in the proposed rule that we were
brachytherapy sources be subject to the data. This approach to calculating interested in receiving information
outlier provision of section 1833(t)(5) of median costs for stranded and non- regarding the historical and current
the Act. Therefore, sources could stranded iodine-125, palladium-103, relative market share for stranded versus
receive outlier payments if the costs of and cesium-131 sources resulted in non-stranded sources, particularly as
furnishing brachytherapy sources proposed Medicare payment rates based used in the care of Medicare
exceed the outlier threshold. Also, as on the 60th percentile of our aggregate beneficiaries and with respect to
discussed in section II.F. of the data for stranded sources and the 40th brachytherapy treatments for different
proposed rule, as a result of our CY percentile of our aggregate data for non- clinical conditions (72 FR 42749).
2008 proposal to pay prospectively for stranded sources, which, after Comment: A number of commenters
brachytherapy sources, we also examining the range of our cost data for recommended that CMS continue
proposed to include brachytherapy these sources, appeared to provide a payment for brachytherapy sources
sources in the group of services eligible reasonable cost differential between using the charges adjusted to cost
for the 7.1 percent payment increase for stranded and non-stranded sources until methodology for CYs 2008 and 2009.
rural SCHs, including EACHs. such time when we have claims data Some commenters claimed that
We proposed a payment methodology reported separately for stranded and establishing a single prospective
for separately paid brachytherapy non-stranded sources. payment rate per source would not
sources for CY 2008 based upon their We proposed this approach for account for the variable costs associated
median unit costs calculated using CY stranded and non-stranded iodine-125, with the different sources used in
2006 claims data. Because we are palladium-103, and cesium-131 sources brachytherapy. A commenter claimed
required to create separate APC groups as a transitional measure, until we have that, based upon historical hospital
for stranded and non-stranded sources sufficient claims data for separately claims data, it does not appear that
and because our CY 2006 billing codes coded stranded and non-stranded hospitals are charging enough to recover
do not differentiate stranded and non- sources upon which to calculate the their acquisition costs for expensive
stranded sources, we proposed to make median costs for these sources products in particular. Some
certain assumptions when we estimate specifically. (The first partial year commenters stated that some products
the median costs for stranded and non- claims data for separately coded have low volumes of claims from small
stranded (low activity) iodine-125, stranded and non-stranded sources will numbers of hospitals, based on recent
palladium-103, and cesium-131 sources be available in CY 2007 claims data for claims analyses. They explained their
based on our CY 2006 aggregate claims ratesetting in CY 2009.) This belief that the low volume of claims for
data. As stated earlier, commenters to methodology has the benefits of a certain sources and the wide variation
our CY 2007 proposed rule explained prospective payment methodology as in submitted charges for most sources
that the costs of stranded iodine, discussed above and complies with the demonstrate that equitable payment
palladium and cesium sources are requirements of the MIEA–TRHCA to rates that approximate true acquisition
higher than non-stranded versions of provide separate payment for stranded costs for brachytherapy sources cannot
these sources but provided no data and non-stranded sources. be established using Medicare claims.
regarding the relative cost relationships. Table 48 of the proposed rule (72 FR Several commenters asserted that CMS’
Given the reported cost differences 42750) included a complete listing of brachytherapy source claims data have
between stranded and non-stranded the HCPCS codes, long descriptors, and unresolved problems, such as: (a) The
sources and the statutory requirement APC assignments that we currently use cost of renewable high dose rate (HDR)
that we establish separate payment for brachytherapy sources paid under iridium, which may be used to treat a
groups for stranded and non-stranded the OPPS as of July 1, 2007, and the number of people, is difficult to
sources, we believed it would be status indicators, estimated median estimate, because the cost per source
appropriate to establish different costs, and payment rates that we depends on the number of patients
stranded and non stranded payment proposed for CY 2008. We noted that treated; (b) a lack of meaningful data to
rates for iodine-125, palladium-103, and some of the HCPCS codes for which we establish payment rates for stranded
cesium-131 sources. However, in order proposed payment rates for CY 2008 brachytherapy sources; (c) large
to establish separate stranded and non- were not shown in Addendum B of the variations in per unit costs across
sources; (d) a lack of sufficient claims to treated by a hospital during this period. same measure of central tendency
establish rates in the cases of 6 sources: Thus, they concluded there would be (median cost) from claims be used to
ytterbium-169 (C2637), linear palladium great variability in the cost of HDR establish the payment weights for all
(C2636), iodine-125 solution (C2632 iridium treatment so CMS should OPPS services in order to provide
correctly—coded in CY 2007 as A9527), continue to pay for this source based on appropriate payment for all of these
gold-198 (C1716), cesium-131 (C2633), the charges adjusted to cost payment services. The inflation rate of medical
and non-HDR iridium (C1719); (e) two- methodology. services is taken into consideration
thirds of the current sources have Response: We believe that median through the conversion factor, which is
proposed payment rates based on claims costs based on our hospital claims data updated annually to account for
from a small number (for example, for brachytherapy sources have inflation and used to calculate payment
fewer than 50 or 66) hospitals; and (f) produced reasonably consistent per rates from the relative payment weights
a rank order anomaly exists between the source cost estimates over the past based on median costs.
proposed median costs of iodine-125 several years, comparable to the patterns When the statutory requirement for
($37.71) and high activity I-125 ($29.56), we have observed for many other OPPS payment of brachytherapy sources at
with the high activity source appearing services whose payments are set based charges adjusted to cost ends on
to cost less than the low activity source, upon relative payment weights from December 31, 2007, prospective
when high activity sources are claims data. Concerning the claim that payment for brachytherapy sources
reportedly more expensive. The a single prospective payment per source based on their median costs would
commenters also explained that while would not account for the variable costs make the source payment an integral
claims data may be improving over across sources used, we believe that our part of the OPPS, rather than a separate
time, the majority of hospitals still do per source payment methodology cost-based payment methodology within
not include a brachytherapy source code specific to each source’s radioisotope, the OPPS. We believe that consistent
on brachytherapy treatment claims, radioactive intensity, and stranded or and predictable prospectively
even though a source is required, non-stranded configuration, established payment rates under the
claiming that only about 31 percent of supplemented by payment based on the OPPS for brachytherapy sources are
the claims for APC 0312 (Radioelement number of sources used in a specific appropriate because we do not believe
Applications), 73 percent of the claims clinical case, adequately accounts for that the hospital resource costs
for APC 0313 (Brachytherapy), and 36 the major expected sources of variability associated with specific brachytherapy
percent of the claims for APC 0651 across treatments. sources would vary greatly across
(Complex Interstitial Source As a prospective payment system, the hospitals or clinical conditions under
Application) include a brachytherapy OPPS relies on the concept of averaging, treatment, other than through
source code. where the payment may be more or less differences in the numbers of source
Some commenters supported the than the estimated costs of providing a utilized which would be accounted for
proposal to establish prospective service for a particular patient, but with in the standard OPPS payment
payment rates for brachytherapy in CY the exception of outlier cases, it is methodology as proposed. We
2008 using costs derived from CY 2006 adequate to ensure access to appropriate particularly note that, under the final
claims data, rather than through cost- care. In the case of brachytherapy CY 2008 payment policies for all OPPS
based reimbursement. A commenter sources for which the law requires services, only a few pass-through
supported the development of separate payment groups, without devices that we have determined result
prospective payment rates for packaging, the costs of these individual in significant clinical improvement
brachytherapy sources based on CMS’ items could be expected to show greater would continue to be paid based on
claims data but was concerned that the variation than some other APCs under charges adjusted to cost, as required
2-year time lag between the hospital the OPPS because higher variability in under section 1833(t)(6)(D)(ii) of the Act
claims data used to establish the costs for some component items and for these items.
proposed payment rates for services is not balanced with lower Sources of brachytherapy have been
brachytherapy sources and the payment variability for others and because separately paid for virtually all of the 7
year of the proposed update would lead relative weights are typically estimated year history of the OPPS, and hospitals
to CY 2008 payments that would not using a smaller set of claims. have now had 7 years of experience in
reflect the actual CY 2008 costs of Nevertheless, we believe that reporting the sources separately to
brachytherapy sources. The commenters prospective payment for brachytherapy receive payment for these relatively
recommended the use of historical sources based on median costs from costly items. Therefore, hospitals
claims data, in addition to an annual claims calculated according to the historically have had a strong incentive
inflation rate, to determine the standard OPPS methodology is to bill for sources at charges that
prospective payment rates. appropriate at this point in time and reflected the costs of the sources,
Regarding specific brachytherapy would provide hospitals with the leading to CY 2006 data that are
sources, a commenter claimed that the greatest incentives for efficiency in sufficient to provide the basis for
proposed payment rate of $11,944 per providing brachytherapy treatment. prospective payment. Evolution of
source for yttrium-90 is below the Under the budget neutral OPPS, it is the brachytherapy source technology, just
acquisition cost and provides no relativity of costs of services, not their like advances in the provision of other
compensation to providers for storage, absolute costs, that is important, and we OPPS services, would be reflected in
handling and disposal costs. Two believe that brachytherapy sources can updated cost data for those sources over
commenters indicated that setting a now be appropriately paid according to time, and those updated costs would be
fixed payment rate for High Dose Rate the standard OPPS payment approach. considered each year in the annual
(HDR) iridium-192 is problematic, All services are similarly subjected to update cycle for the OPPS. We do not
because the source can be used to treat the same 2-year lag in costs from claims believe that special accommodation to
multiple patients during its 90-day data available for ratesetting, so we support brachytherapy source
period of decay. They pointed out that believe the relative costs of OPPS innovation is necessary. We believe that
the cost per use of the source, therefore, services should generally be hospitals and physicians regularly
depends on the number of patients appropriate. It is important that the balance the additional benefits to
patients of improved products with the simultaneously eliminates the influence merely guesswork. Therefore, these
additional costs, if any, of those of not only the highest but also the commenters recommended that CMS
products. One of the functions of a lowest values in the array. If the use of not establish prospective payment rates
prospective payment system is to currently low volume sources increases for stranded and non-stranded
encourage wise purchasing while in succeeding years or expands to other configurations, especially when
simultaneously making appropriate hospitals, these additional claims would appropriate specific codes are now in
payments for the services being be represented in our claims data in place to collect data on these sources.
furnished. We believe that payments future years, leading to more robust The commenters also doubted that the
based on the median unit costs of claims data for each such source. assumptions CMS made should apply
brachytherapy sources support this goal. Comment: One commenter claimed equally to the three isotopes with
Because HDR iridium has a fixed that CMS’ claims data for the cesium- stranded and non-stranded
active life and must be replaced every 131 source show significant variation in configurations (iodine, palladium, and
90 days, we agree with commenters that per unit costs reported on claims across cesium). Those commenters
hospitals’ costs for the source will be hospitals. In addition, the commenter recommended that CMS continue to pay
highly dependent on the number of believed that the number of claims and for stranded and non-stranded sources
treatments provided by a hospital the number of hospitals submitting data based on charges adjusted to cost until
during that time period. The source cost for cesium-131 sources are too low to be accurate data are collected and available
must be amortized over the life of the the basis of appropriate payment rates for ratesetting.
sources so, in establishing their charges for CY 2008. The commenter also Several commenters specifically
for the HDR iridium source, we expect indicated that it has submitted a request urged CMS not to modify the proposed
that hospitals would project the number for a new code for high activity cesium- payment rates based on ‘‘anecdotal
of treatments that would be provided 131 to be effective for separate payment comments that the Agency may receive’’
over the life of the source and establish as of January 1, 2008. regarding stranded versus non-stranded
their charges accordingly. For most such Response: We disagree that the sources. They believed that CMS should
OPPS services, our practice is to number of cesium claims is too low and wait until a ‘‘comprehensive database’’
establish prospective payment rates the variability is too high to proceed of accurate data is available. Many of
based on the median hospital costs as with prospective payment for cesium these commenters generally
calculated form claims data, to provide sources. Our CY 2006 claims data used recommended that not only should CMS
incentives for efficient and cost-effective for the proposed rule included 7,435 pay for stranded and non-stranded
delivery of these services. Under a sources and our final rule claims data brachytherapy sources based on charges
prospective payment system include 8,652 cesium sources. The adjusted to cost until robust data on the
methodology, payments generally modest variability of costs observed on different costs of these sources are
account for the average costs of services claims for cesium-131 is similar to the available, but that CMS should provide
and do not specifically account for variability we observe for other items payment for all brachytherapy sources
varying circumstances. We believe that and services under the OPPS. We expect using the same cost-based methodology
hospitals understand this prospective that some of the cost differences in CY 2008.
payment methodology and should associated with claims for the single One commenter claimed that CMS
recognize that a prospective payment HCPCS code for cesium-131 sources does not have meaningful data for
system could pay more or less than the reported in CY 2006 may be associated stranded and high activity cesium-131
cost of delivering a specific service in an with the use of stranded versus non- to establish prospective payment levels.
individual case. We have no reason to stranded sources, and we have The commenter also stated that the
believe that a CY 2008 payment based accounted for that potential variation stranded versus non-stranded cost
on the median unit cost for HDR iridium through our proposal to utilize the 40th estimate for cesium does not reflect the
would place continued access to this and 60th percentiles of aggregate cost fact that this cost differential can vary
source at risk. Furthermore, as data for the single source code for significantly based on the radioactive
discussed earlier in this section and in ratesetting for non-stranded and half-life of the source, which is
section II.F. of this final rule with stranded sources, respectively. significant for cesium-131. In addition,
comment period, prospective payment We note that we have received a the commenter explained that cesium
for brachytherapy sources means that request for a new code for separate decays at the rate of 7 percent per day
there would be opportunities for payment of high activity cesium-131 and thus the cost differential between
hospitals to receive additional payments sources and are currently evaluating its loose seed and stranded seed
under the outlier provisions and the that request. configurations would not be consistent
rural adjustment. Comment: A number of comments with the cost differential for stranded
We disagree that we are not able to set expressed varying opinions concerning and non-stranded iodine and palladium
equitable rates per source because of the proposed payment methodology for sources, which also have different decay
low volumes for some sources and stranded versus non-stranded sources rates. The commenter believed that
variability of source costs in our claims for iodine-125, palladium-103, and using the same cost assumptions for all
data. The prospective rates we proposed cesium-131 sources. Some commenters sources would have a significant
and are finalizing would be applied explained that the CY 2006 claims data negative impact on the payment for
equitably to all sources of the same type do not distinguish between stranded brachytherapy sources and argued that
(for example, all non-stranded iodine- and non-stranded devices, and that no the impact on cesium sources would be
125 sources, all stranded iodine-125 meaningful data exist to support CMS’ disproportionate in comparison to other
sources, and so on). The nature of assumptions underpinning the payment sources, due to the radioactive isotope
basing payment weights on median proposal for stranded and non-stranded half-life alone.
costs is that the volume of services, by sources. They asserted that CMS’ This commenter offered information
definition, controls the median cost reasoning that these assumptions appear as to the actual cost differential between
because the median is the 50th to provide a reasonable cost differential stranded and non-stranded sources, a
percentile of the array of data. However, between stranded and non-stranded specific request that was made of the
use of the median cost also sources is not supported by data and is public in the proposed rule. This
commenter stated that the cost of non- non-stranded sources in previous median cost for each APC from
stranded cesium sources was $61 to $75 comments or correspondence. We note historical hospital claims, with
per source, and of stranded cesium that the median cost based on the 40th trimming of claims data only at those
sources, $82 to $94 per source, in percentile for non-stranded cesium extremes to eliminate those claims of
comparison with proposed payment sources for this final rule with comment exceptionally high or low cost from
rates of approximately $51 and $97, period is $63, increased from the contributing to APC median cost
respectively. Therefore, the commenter proposed $51 based on proposed rule development. The statute requires us to
concluded that the proposed payment data, while the final rule 60th percentile pay for stranded and non-stranded
rates would provide a disincentive to for stranded cesium sources is $97, sources through different payment
utilize non-stranded cesium relative to consistent with both the proposed and groups. As stated earlier, our proposal to
stranded cesium sources, encouraging a final rule data. Therefore, for the only pay at the 40th and 60th cost percentiles
shift of usage to stranded cesium case in which we received information of aggregate data for the predecessor
sources. The commenter believed that from the public regarding the costs of HCPCS codes for the three products
CMS should not rush to establish stranded and non-stranded sources, the with two clinical configurations is a
prospective payment rates for stranded final rule 40th and 60th percentiles of temporary payment methodology that
and non stranded cesium sources, aggregate source data are aligned with would provide appropriate prospective
especially when newly established the cost information provided by the payment for these sources until more
specific source codes are now available. commenter for the two source specific claims data are available. We
Response: We agree with the configurations. While this limited note that partial year data will be
commenters that our CY 2006 claims comparison with external data does not available for CY 2009 ratesetting
data do not differentiate between allow us to draw definitive conclusions, purposes. Information on the costs of
stranded and non-stranded sources, as it provides validation of our proposal to stranded and non-stranded
we explained in the proposed rule. We base the payment for stranded versus configurations of one source is
proposed to apply certain assumptions non-stranded cesium sources on the consistent with our proposed costs for
that would allow us to make prospective 60th versus 40th cost percentile from the two configurations. Therefore, we
payment for these sources while our the source’s aggregate CY 2006 claims believe that our proposed assumptions
newly established codes (as of July 1, data. about the distribution of non-stranded
2007) would allow us to collect specific Comment: Other commenters were
and stranded source costs in the CY
stranded and non-stranded cost data. In generally supportive of prospective
2006 aggregate data are reasonable and
the CY 2008 OPPS/ASC proposed rule, payment of stranded and non-stranded
consistent with the standard OPPS
we reiterated our intent that the iodine, palladium, and cesium sources,
as well as other brachytherapy sources. ratesetting methodology, until more
proposed payment methodology for
Some of these commenters believed, specific data become available. We do
stranded and non-stranded sources
however, that the payment differential not believe, based on our claims data
would be a temporary payment
for stranded versus non-stranded and review of public comments, that
methodology, and that we would use
sources that resulted from our delaying implementation of prospective
the newly established codes to collect
methodology to use the 60th percentile payment for any brachytherapy sources
differential cost data for stranded and
cost for stranded and the 40th percentile while we are waiting for more detailed
non-stranded sources for future use.
While some commenters urged us not cost for non-stranded sources was too cost information is reasonable. Coding
to modify the proposed payment levels great. The likely result, one commenter changes occur on a regular basis, and we
based on ‘‘anecdotal comments that the explained, was to encourage the use of routinely account for them by
Agency may receive,’’ many of those stranded sources for financial rather crosswalking historical claims data from
same commenters provided only than clinical reasons. One commenter predecessor HCPCS codes to the newly
anecdotal claims that the proposed pointed out that while the payment available codes for purposes of
payment levels are inappropriate and differential might not appear to be payment.
not based on meaningful data. significant on a per source basis, when After consideration of the public
Additionally, such commenters did not the number of sources per procedure is comments received, we are finalizing
specifically define what they would considered (for example, 50–100 our proposal, without modification, to
consider to be a comprehensive sources), the cost difference to providers pay brachytherapy sources
database. Of note, for many of the would be significant. Another prospectively for CY 2008, based on
brachytherapy sources without stranded commenter asserted that all seed-type median costs from our CY 2006 claims
configurations, we have a significant sources are essentially the same and that data. For stranded sources, that median
volume of claims that have any price differential between stranded cost is set at the 60th percentile of the
demonstrated consistent hospital costs and non-stranded sources is a result of aggregate claims data for the
over the last several years, and our a successful marketing strategy by predecessor code for this source, and for
claims data for these sources is directly stranded source manufacturers, creating non-stranded sources, that median cost
applicable to the currently reported a price differential between stranded is set at the 40th percentile of the
HCPCS codes. and non stranded sources as a result of aggregate claims data for the
We thank the commenter for reporting customer loyalty to specific products predecessor code for this source. The
invoice cost data on stranded versus with certain features that were initially final brachytherapy source HCPCS
non-stranded cesium sources. We have provided at no additional cost. codes, APC assignments, status
received no information on the cost Response: Prospective payment rates indicators, and median costs are
differential between stranded versus under the OPPS are based on the displayed in Table 37 below.
TABLE 37.—SEPARATELY PAYABLE BRACHYTHERAPY SOURCES

CY 2008
HCPCS CY 2008
Long descriptor APC status indi-
code median cost cator
A9527 ...... Iodine I–125, sodium iodide solution, therapeutic, per millicurie .............................................. 2632 $27 K
C1716 ...... Brachytherapy source, non-stranded, Gold–198, per source ................................................... 1716 33 K
C1717 ...... Brachytherapy source, non-stranded, High Dose Rate Iridium-192, per source ...................... 1717 173 K
C1719 ...... Brachytherapy source, non-stranded, Non-High Dose Rate Iridium-192, per source .............. 1719 64 K
C2616 ...... Brachytherapy source, non-stranded, Yttrium-90, per source .................................................. 2616 11,621 K
C2634 ...... Brachytherapy source, non-stranded, High Activity, Iodine-125, greater than 1.01 mCi 2634 31 K
(NIST), per source.
C2635 ...... Brachytherapy source, non-stranded, High Activity, Palladium-103, greater than 2.2 mCi 2635 46 K
(NIST), per source.
C2636 ...... Brachytherapy linear source, non-stranded, Palladium-103, per 1MM ..................................... 2636 42 K
C2637 ...... Brachytherapy source, non-stranded, Ytterbium-169, per source ............................................ 2637 N/A B
C2638 ...... Brachytherapy source, stranded, Iodine-125, per source ......................................................... 2638 *45 K
C2639 ...... Brachytherapy source, non-stranded,Iodine-125, per source ................................................... 2639 **32 K
C2640 ...... Brachytherapy source, stranded,Palladium-103, per source .................................................... 2640 *65 K
C2641 ...... Brachytherapy source, non-stranded,Palladium-103, per source ............................................. 2641 **51 K
C2642 ...... Brachytherapy source, stranded,Cesium-131, per source ........................................................ 2642 *97 K
C2643 ...... Brachytherapy source, non-stranded,Cesium-131, per source ................................................. 2643 **63 K
C2698 ...... Brachytherapy source, stranded, not otherwise specified, per source ..................................... 2698 45 K
C2699 ...... Brachytherapy source, non-stranded, not otherwise specified, per source .............................. 2699 31 K
* Estimated median cost for stranded version is based on the 60th percentile of the aggregate (stranded and non-stranded) claims data for this
source.
** Estimated median cost for non-stranded version is based on the 40th percentile of the aggregate (stranded and non-stranded) claims data
for this source.
Furthermore, we proposed to pay the reporting of new sources. No charges adjusted to cost after December
two NOS codes, C2698 and C2699, commenters recommended an 31, 2007, we proposed to discontinue
based on a rate equal to the lowest alternative prospective payment our use of payment status indicator ‘‘H’’
stranded or non-stranded prospective methodology for NOS source codes. It is for APCs assigned to brachytherapy
payment rate for such sources, most consistent with our payment sources. For CY 2008, we proposed to
respectively, on a per source basis (as policy for other NOS services under the use status indicator ‘‘K’’ for all
opposed, for example, to per mci). This OPPS to pay for NOS brachytherapy brachytherapy source APCs. As
proposed payment methodology for source codes at the same payment rate described earlier, the definition of status
NOS sources would provide payment to as the lowest level clinically related indicator ‘‘K’’ was changed for CY 2007
a hospital for new sources, while APC. In the case of these NOS sources to accommodate prospective payment
encouraging interested parties to that would be paid through their own for brachytherapy sources.
quickly bring new sources to our APCs, we continue to believe it is most
We received no comments specific to
attention so specific coding and appropriate to pay for them at the
the proposal to change the status
payment could be established. As lowest stranded or non-stranded
indicator for brachytherapy source
explained earlier, we may establish new brachytherapy source payment rate, as
APCs. Therefore, we are finalizing our
brachytherapy source codes on a applicable to each NOS code. This
proposal, without modification, to use
quarterly basis. payment policy should encourage
status indicator ‘‘K’’ for all
Comment: Some commenters prompt requests for more specific Level
brachytherapy source APCs for CY 2008.
recommended that CMS pay for all II HCPCS codes for new brachytherapy
brachytherapy sources at charges sources to ensure more accurate For CY 2008, we also proposed to
adjusted to cost, including new sources. payment for those new sources. implement the policy we established in
One commenter commended CMS for After consideration of the public the CY 2007 OPPS/ASC final rule with
establishing two NOS codes for billing comments received, we are finalizing comment period (which was superseded
stranded and non-stranded sources, our proposal, without modification, to by section 107 of the MIEA–TRHCA)
C2698 and C2699, until specific coding pay for the two NOS codes, C2698 and regarding payment for new
for new sources can be established. C2699, based on a rate equal to the brachytherapy sources for which we
Response: As discussed earlier in this lowest stranded or non-stranded have no claims data. As discussed
final rule with comment period, we are prospective payment rate for such earlier, we proposed to assign future
finalizing our proposal to pay for sources, respectively, on a per source new HCPCS codes for new
specific brachytherapy sources basis. For CY 2008, C2698 for brachytherapy sources to their own
prospectively based on median costs unspecified stranded sources will be APCs, with prospective payment rates
from claims. We also believe it is most paid at the same rate as C2638 set based on our consideration of
appropriate to pay for new (Brachytherapy source, stranded, external data and other relevant
brachytherapy sources based on specific Iodine-125, per source) and C2699 will information regarding the expected
codes that reflect the number, be paid at the same rate as C2634 costs of the sources to hospitals.
radioisotope, radioactive intensity, and (Brachytherapy source, non-stranded, Because we proposed to pay
stranded or non-stranded configurations High Activity, Iodine-125, greater than prospectively for brachytherapy sources
of those sources. Furthermore, we may 1.01 mci (NIST), per source). beginning in CY 2008, we proposed to
establish new source codes on a Because brachytherapy sources will implement this policy beginning in CY
quarterly basis to permit separate no longer be paid on the basis of their 2008.
In the CY 2008 proposed rule (72 FR for new brachytherapy sources (as well Response: We note that brachytherapy
42749), we pointed out that there is as established sources when there are no treatment services are paid separately
currently one brachytherapy source, reliable claims-based cost data) at from brachytherapy sources and do not
ytterbium-169 (HCPCS code C2637, charges adjusted to cost, rather than have the costs of the brachytherapy
Brachytherapy source, ytterbium-169, adopting the proposed methodology of sources packaged into the payment for
per source), which has its own HCPCS using external data and other relevant the associated treatment services. While
code, but for which we believed we cost data on the expected cost to we encourage hospitals to code correctly
lacked claims data on its costs. In the hospitals. in accordance with all CPT, CMS, and
CY 2007 OPPS/ASC proposed rule (71 Response: As with other local contractor guidance, in general we
FR 49598 through 49599), we explained brachytherapy sources and other have historically implemented claims
that it was our understanding that services under the OPPS, the processing edits under the OPPS when
ytterbium-169 had not yet been development of cost data for new we believe that these edits help ensure
marketed, and furthermore that we had services through our claims data is an complete claims data for ratesetting. In
no CY 2005 claims data, external data, ongoing process. We regularly price new the case of OCE edits for drugs and
or other information on its pricing on services, placing them in what we devices, including brachytherapy
which to base its payment rate for CY consider to be appropriate New sources, which are separately paid, it is
2007. In response to the CY 2007 Technology or clinical APCs. We make unclear to us that these edits would
proposed rule, we received no cost data ongoing adjustments to their improve our claims data for median cost
or other information that we could use assignments as necessary, depending on calculation because the items receive
to establish an informed prospective information and data we develop or separate payment and do not result in
payment rate for ytterbium-169. receive from interested stakeholders. We multiple procedure claims when they
Therefore, in the CY 2007 OPPS/ASC do not feel that initially having no or are reported. We also understand that
final rule with comment period (71 FR small amounts of Medicare claims data there may be some clinical or
68112), we finalized a policy of for new brachytherapy sources or operational circumstances that could
assigning HCPCS code C2637 the established sources with lower volumes result in a hospital submitting an OPPS
nonpayable status indicator ‘‘B’’ and than other sources in our claims data is claim that only reported a separately
indicated that if we later received a compelling argument to deviate from paid drug or device, and we would not
relevant information, we could establish our prospective payment methodology want to delay a hospital’s ability to
a payable status indicator and and pay for some sources at charges submit a claim timely because of claims
appropriate payment rate for the adjusted to cost while others would be edits that do not have the potential to
ytterbium source in a future OPPS paid prospectively based on their improve the accuracy of OPPS
quarterly update. This policy was median cost. We note that we had no ratesetting. Therefore, we are not
superseded by section 107(a) of the additional claims for ytterbium-169 for adopting this APC Panel
MIEA–TRHCA, which required payment this final rule with comment period, recommendation for broad claims
for brachytherapy sources in CY 2007 beyond the three likely incorrectly processing edits.
based on charges adjusted to cost. For coded CY 2006 claims discussed in the
Comment: A few commenters
the CY 2008 proposed rule, we believed proposed rule.
After consideration of the public recommended that CMS revise the
that we continued to lack claims data or definition of brachytherapy sources to
comments received, we are finalizing
other information on the costs of include all ‘‘brachytherapy sources,’’
our proposal, without modification, to
ytteribium-169 on which to base an without limitation to a device of
assign future new HCPCS codes for new
informed prospective payment rate. We brachytherapy sources to their own brachytherapy.
noted that our CY 2006 claims data APCs, with prospective payment rates Response: We finalized our definition
showed three claims for HCPCS code set based on our consideration of of a source of brachytherapy in the CY
C2637. We believed these three CY 2006 external data and other relevant 2007 final rule with comment period (71
claims may have been incorrectly coded information regarding the expected FR 68113) in the context of current
claims that did not represent claims for costs of the sources to hospitals. This medical practice and with regard to the
ytterbium, as its manufacturer policy will apply to the existing HCPCS statutory language. We considered all
commented on the CY 2007 OPPS code C2637 for the ytterbium-169 comments, including some of the same
proposed rule that ytterbium-169 would source, as well, which is assigned status arguments presented in comments to the
first become available for market in CY indicator ‘‘B’’ in Addendum B to this CY 2008 proposed rule. We made no
2007. Consequently, for CY 2008 we final rule with comment period. We proposal to change this definition in our
again proposed to not recognize HCPCS received no additional information on CY 2008 proposed rule and are not
code C2637 and to assign it status this source in comments to the CY 2008 considering any changes to the
indicator ‘‘B’’ under the OPPS. proposed rule. In the event that we established definition at this time.
However, as indicated in the proposed receive information regarding the costs Comment: One commenter opposed
rule, if in public comments to the and current marketing of HCPCS code the proposal to include the costs of
proposed rule or later in CYs 2007 or C2637, we will consider changing its brachytherapy sources in the budget
2008, we would receive relevant and status indicator to ‘‘K’’ in a quarterly neutrality formula, if CMS adopted the
reliable information on the hospital cost OPPS update and setting a prospective proposal to pay for the sources on a
for ytterbium-169 and information that payment rate for this source. prospective basis. The commenter
this source is being marketed, we could Comment: Several commenters believed that brachytherapy treatment is
establish a prospective payment rate for requested that CMS implement the APC very costly and inclusion of the costs
the source in the CY 2008 final rule Panel’s March 2007 recommendation to would decrease the payment for other
with comment period or in a quarterly edit and return for correction claims OPPS services. The commenter also
OPPS update, respectively (72 FR that contain a HCPCS code for a claimed that CMS has not factored into
42749). separately paid drug or device without payment for brachytherapy treatment
Comment: A few commenters a HCPCS code assigned to a procedural the special handling costs of radioactive
recommended that CMS continue to pay APC. materials.
Response: We take into account the In CY 2005, in response to the the hospital community and the APC
estimated costs of brachytherapy recommendations made by commenters Panel, we implemented the full set of
sources under the methodology of and the hospital industry, OPPS CPT codes, including the concepts of
charges adjusted to cost in calculating transitioned to the use of CPT codes for initial, sequential and concurrent. In
budget neutrality for the OPPS and have drug administration services. These CPT addition, the CY 2007 update process
continued to do so under the codes allowed for more specific offered us the first opportunity to
prospective payment methodology for reporting of services, especially consider data gathered from the use of
the sources that we are finalizing for CY regarding the number of hours for an CY 2005 CPT codes for purposes of
2008. The costs related to supervision, infusion, and provided consistency in ratesetting. For CY 2007, we used CY
handling, and loading of brachytherapy coding between Medicare and other 2005 claims data to implement a six-
sources are, in fact, also considered payers. However, at that time, we did level APC structure for drug
under the OPPS. As we have previously not have any data to revise the CY 2005 administration services. We assigned all
instructed, these costs are to be per-visit APC payment structure for CY 2007 HCPCS codes for drug
included by hospitals on claims in one infusion services. In order to collect administration services to six new drug
of two ways, either reported as a data for future ratesetting purposes, we administration APCs (as listed in Table
separate charge using CPT code 77790 implemented claims processing logic 34 of the CY 2007 OPPS/ASC final rule
(Supervision, handling, loading of that collapsed payments for drug with comment period), with payment
radiation source) or included in the administration services and paid a rates based on median costs for the
charge reported with the HCPCS single APC amount for those services for APCs as calculated from CY 2005 claims
procedure code(s) for application of the each visit, unless a modifier was used data. In that final rule with comment
radiation source. Reporting in either of to identify drug administration services period, we provided a crosswalk that
these ways results in the costs of special provided in a separate encounter on the illustrated how we performed our
handling being packaged into payments same day. Hospitals were instructed to annual payment rate update
for brachytherapy treatment procedures. bill all applicable CPT codes for drug methodology for these services using CY
administration services provided in a 2005 data.
VIII. OPPS Drug Administration Coding HOPD, without regard to whether or not As indicated in the CY 2007 OPPS/
and Payment the CPT code would receive a separate ASC final rule with comment period (71
A. Background APC payment during OPPS claims FR 68122), because the newly
processing. recognized CPT codes discriminated
From the start of the OPPS until the While hospitals just began adopting among services more specifically than
end of CY 2004, three HCPCS codes CPT codes for outpatient drug the CY 2006 C-codes, as was the case
were used to bill drug administration administration services in CY 2005, when the OPPS transitioned from more
services provided in the hospital physicians paid under the MPFS were general Q-codes to more specific CPT
outpatient department (HOPD): using HCPCS G-codes in CY 2005 to codes for the reporting of drug
• Q0081 (Infusion therapy, using report office-based drug administration administration services in CY 2005, for
other than chemotherapeutic drugs, per services. These G-codes were developed a period of 2 years drug administration
visit) in anticipation of substantial revisions services were paid based on the costs of
• Q0083 (Chemotherapy to the drug administration CPT codes by their predecessor HCPCS codes until
administration by other than infusion the CPT Editorial Panel that were updated data were available for review.
technique only, (EG subcutaneous, expected for CY 2006.
In CY 2006, as anticipated, the CPT B. Coding and Payment for Drug
Intramuscular, Push), per visit) Administration Services
Editorial Panel revised its coding
• Q0084 (Chemotherapy During the March 2007 APC Panel
structure for drug administration
administration by infusion technique meeting, the APC Panel recommended
services, incorporating new concepts
only, per visit). that CMS pay separately for CPT code
such as initial, sequential, and
A fourth OPPS drug administration concurrent services into a structure that 90768 (Intravenous infusion, for
HCPCS code, Q0085 (Administration of previously distinguished services based therapy, prophylaxis, or diagnosis
chemotherapy by both infusion and on type of administration (specify substance or drug); concurrent
another route, per visit), was active from (chemotherapy/nonchemotherapy), infusion (list separately in addition to
the beginning of the OPPS through the method of administration (injection/ code for primary procedure)) at the
end of CY 2003. infusion/push), and for infusion same rate as CPT code 90767
Each of these four HCPCS codes services, first hour and additional hours. (Intravenous infusion, for therapy,
mapped to an APC (that is, Q0081 For CY 2006, we implemented 20 of the prophylaxis, or diagnosis (specify
mapped to APC 0120, Q0083 mapped to 33 CY 2006 drug administration CPT substance or drug); additional
APC 0116, Q0084 mapped to APC 0117, codes that did not reflect the concepts sequential infusion, up to 1 hour (list
and Q0085 mapped to APC 0118), and of initial, sequential, and concurrent separately in addition to code for
the APC payment rates for these codes services, and we created 6 new HCPCS primary procedure)). We proposed to
were made on a per-visit basis. The per- C-codes that generally paralleled the CY continue to package payment for CPT
visit payment included payment for all 2005 CPT codes for the same services. code 90768 for CY 2008.
hospital resources (except separately We chose not to implement the full set Comment: In addition to the APC
payable drugs) associated with the drug of CY 2006 CPT codes because of our Panel’s recommendation to unpackage
administration procedures. For CY concerns regarding the interface CPT code 90768, a few commenters also
2004, we discontinued using HCPCS between the complex claims processing requested that CMS provide separate
code Q0085 to identify drug logic required for correct payments and payment for it in CY 2008.
administration services and moved to a hospitals’ challenges in correctly coding Response: As we discuss in section
combination of HCPCS codes Q0083 their claims to receive accurate II.A.4.e. of this final rule with comment
and Q0084 that allowed more accurate payments for these services. period, in deciding whether to package
calculations when determining OPPS For CY 2007, as a result of comments a service or pay for it separately, we
payment rates. to our proposed rule and feedback from consider a variety of factors, including
whether the service is normally with comment period.) For this CY 2008 to refine the codes used and ensure their
provided separately or in conjunction OPPS/ASC final rule with comment accurate reporting have led to a robust
with other services; how likely it is for period, this 2 times violation continues dataset that accurately reflects hospital
the costs of the packaged code to be to exist based upon updated data. The outpatient costs for these common
appropriately mapped to the separately violation is related to the comparatively services and results in appropriate
payable codes with which it was low median cost of CPT code 90773 payment. We understand that it requires
performed; and whether the expected (Therapeutic, prophylactic or diagnostic significant hospital resources to ensure
cost of the service is relatively low. CPT injection (specify substance or drug); proper coding for drug administration
code 90768, by definition, is always intra-arterial) for which we have a services, and hospitals have worked
provided in association with other significantly greater number of CY 2006 diligently over the past several years to
intravenous infusions. As we discussed single claims available for ratesetting ensure that CMS’ data appropriately
in the CY 2007 OPPS/ASC final rule than in previous years. The CY 2005 reflect drug administration services
with comment period (71 FR 68122), predecessor code for this service, CPT provided in the HOPD. While we
CPT code 90768 was first introduced in code 90783 (Therapeutic, prophylactic recognize the continued efforts that are
the CY 2007 OPPS and, consistent with or diagnostic injection (specify material necessary to accurately document and
our established ratesetting methodology, injected); intra-arterial), had a higher report drug administration services
we do not anticipate OPPS hospital median cost that was more similar to the using CPT codes, we believe that
claims data from CY 2007 to be costs of other services also assigned to hospitals have had sufficient experience
available for ratesetting purposes until APC 0438. We continue to believe that with these codes, first for non Medicare
CY 2009. In addition, as noted in the CY this intra arterial injection procedure is insurers in CY 2006 and then for the
2008 OPPS/ASC proposed rule (72 FR similar from both clinical and hospital Medicare OPPS in CY 2007, that the
42751), because the services identified resource perspectives to the related initial confusion corresponding to the
with CPT code 90768 were provided in intravenous push injection procedures new concepts of ‘‘initial,’’ ‘‘sequential,’’
previous years, we determined that that are assigned to the same clinical and ‘‘concurrent’’ has subsided.
these costs are already represented in APC and, therefore, we proposed to We agree with the commenter that a
our currently available hospital claims except APC 0438 from the 2 times rule return to a single episode-of-care
data. Payment for these services was for CY 2008. payment could align with the OPPS
provided in previous years through the We did not receive any public shift toward larger payment bundles,
billing of more general drug comments on this proposal. Therefore, but we believe that a change in our
administration codes. Although more for CY 2008, we are finalizing our
approach toward drug administration
exhaustive codes for drug proposed exception to the 2 times rule
payment would be premature at this
administration services are now for APC 0438, without modification.
In the proposed rule, we also time. While additional packaging for
available, all of these services were paid drug administration services could be
under the OPPS in previous years. continued to ask hospitals to report all
CPT drug administration codes, and warranted in a prospective payment
As data are not available for all
indicated that we expect hospitals to system such as the OPPS in a movement
current CPT codes for drug
report CPT codes consistently with CPT toward encounter-based or episode-
administration services for purposes of
coding guidelines and applicable based payment, hospital stakeholders
CY 2008 ratesetting, and as we believe
instructions. continue to express their preference for
that the costs for the drug
administration services identified by Comment: Several commenters a single set of drug administration codes
CPT code 90768 are included in our expressed appreciation for CMS’ for use by all insurers. Currently, the
hospital claims data used for ratesetting proposal to continue the CPT coding CPT drug administration codes
purposes, we are not accepting the APC structure for drug administration sufficiently meet the needs of non-
Panel’s recommendation nor the services for CY 2008. These commenters Medicare insurers and Medicare. We do
commenters’ request to provide a noted that the changes made to coding not have any reason to believe that
separate APC payment for this service. and payment for these services in past hospitals generally would want to
Furthermore, we describe in section years has put a burden on hospitals to implement a per-episode-of-care set of
II.A.4. of this final rule with comment train staff on frequent changes. Other drug administration codes for use only
period our CY 2008 packaging approach commenters expressed frustration over under the OPPS, nor do we have an
for certain (non-drug administration) complex CPT coding for drug operational need for such codes.
services. We believe that continuing to administration services, noting that Therefore, we are finalizing our
package payment for CPT code 90768 is reporting requirements placed an proposal, without modification, to
consistent with these broader efforts. unreasonable burden on hospitals to recognize all active CY 2008 CPT codes
Therefore, we are finalizing our code correctly and increased hospital for drug administration services under
proposal to assign status indicator ‘‘N’’ staffing needs. One commenter the CY 2008 OPPS.
to CPT code 90768 for CY 2008. suggested that CMS return to simpler Comment: One commenter requested
For CY 2008, we examined CY 2006 coding, such as the historical single per- that CMS review payment
claims data available for the proposed episode-of-care code to report a methodologies for drug administration
rule and continued to believe the CY ‘‘nonchemotherapy infusion.’’ The services across the hospital outpatient
2007 drug administration APC commenter noted that this methodology and physician’s office settings. This
configuration reflects clinical and aligns with CMS’ efforts to increase commenter suggested that the OPPS
resource homogeneous groupings of packaging for services and simplifies consider implementing a methodology
procedures. We noted in the proposed hospital coding requirements. similar to the physician’s office
rule (72 FR 42751) that there is a Response: We appreciate hospitals’ payment methodology, basing payment
violation of the 2 times rule in APC continuing efforts to work with us to rates on the time and resource
0438 (Level III Drug Administration) as implement changes to drug utilization required by the service. The
proposed for CY 2008. (For additional administration coding and payment commenter believed that standardizing
information on the 2 times rule, we refer over the past few years. We believe that payment rates across sites of care would
readers to section III.B. of this final rule our individual and collaborative efforts eliminate site of service differentials
and allow beneficiaries the option of actively contribute on an ongoing basis OPPS-specific Level II HCPCS codes
receiving care in either setting. to the ratesetting process through its that could be more specifically
Response: We understand that the annual updates and to influence future developed for certain services. In
commenter is concerned about payment rates for services by submitting addition, in view of the shift toward
differences in payment methodologies correctly coded and accurately priced larger payment bundles under the
and rates across ambulatory settings claims for the services they provide. OPPS, we do not believe it would be
when some of the same services are Comment: A few commenters appropriate to create even more specific
provided to Medicare beneficiaries. recommended that CMS create two new coding for drug administration services
Even though both settings use the Level II HCPCS codes for IVIG infusion than is available through the codeset
standard CPT codeset for drug services, one for the first hour and the developed by the CPT Editorial Panel.
administration services, the costs of other for additional hours of infusion. As stated earlier, after consideration
providing these services in one setting The commenter cited additional of the public comment received, we are
may not be the same as the costs in complexities associated with IVIG finalizing our proposal, without
another setting. The OPPS and the infusion and increased chances of modification, to recognize all active CY
MPFS are fundamentally different adverse events that are not fully 2008 CPT codes for drug administration
payment systems with essential captured in the CPT codes currently services under the OPPS for CY 2008. In
differences in their payment policies. reported by hospitals for these addition, we are finalizing our proposal,
Specifically, the OPPS is a prospective infusions. without modification, to assign status
payment system, based on the concept Response: While we acknowledge indicator ‘‘N’’ to CPT code 90768 for CY
of paying for groups of services that these concerns regarding IVIG 2008.
share clinical and resource administration, we believe that the IX. Hospital Coding and Payments for
characteristics. Payment is made under current CPT coding structure and OPPS Visits
the OPPS according to prospectively payment rates adequately provide for
established payment rates that are the possible complexities associated A. Background
related to the relative costs of hospital with IVIG administration services. Currently, CMS instructs hospitals to
resources for services, as calculated Hospital costs for IVIG administration use the CY 2007 CPT codes, as well as
from claims data and Medicare cost are taken into account during the six HCPCS codes that became effective
reports. The MPFS is a fee schedule that ratesetting process, as claims for IVIG January 1, 2007, to report clinic and
generally provides separate payment for administration are used in that process emergency department visits, and
each individual component of a service, for the pertinent CPT codes. Hospitals critical care services on claims paid
reflecting the expected typical inputs continue to note their strong preference under the OPPS. The codes are listed
into these services. The OPPS for reporting CPT codes for drug below in Table 38. These codes are
methodology allows hospitals to administration services, as opposed to unchanged for CY 2008.
TABLE 38.—CY 2007 CPT EVALUATION AND MANAGEMENT (E/M) AND LEVEL II HCPCS CODES USED TO REPORT
CLINIC AND EMERGENCY DEPARTMENT VISITS
HCPCS code Descriptor
Clinic Visit HCPCS Codes
99201 .............................................. Office or other outpatient visit for the evaluation and management of a new patient (Level 1).
99211 .............................................. Office or other outpatient visit for the evaluation and management of an established patient (Level 1).
99241 .............................................. Office consultation for a new or established patient (Level 1).
Emergency Department Visit HCPCS Codes
99281 .............................................. Emergency department visit for the evaluation and management of a patient (Level 1).
G0380 ............................................. Type B emergency department visit (Level 1).

TABLE 38.—CY 2007 CPT EVALUATION AND MANAGEMENT (E/M) AND LEVEL II HCPCS CODES USED TO REPORT
CLINIC AND EMERGENCY DEPARTMENT VISITS—Continued
HCPCS code Descriptor
Critical Care Services HCPCS Codes
99291 .............................................. Critical care, evaluation and management of the critically ill or critically injured patient; first 30–74 minutes.
99292 .............................................. Each additional 30 minutes.
G0390 ............................................. Trauma response associated with hospital critical care services.
Presently, there are three types of visit encounters. In the April 7, 2000 OPPS proposed to establish five new codes to
codes to describe three types of services: final rule with comment period (65 FR replace hospitals’ reporting of the CPT
clinic visits, emergency department 18434), we instructed hospitals to report clinic visit E/M codes for new and
visits, and critical care services. CPT facility resources for clinic and established patients listed earlier in
indicates that office or other outpatient emergency department visits using CPT Table 38. In the CY 2007 OPPS/ASC
visit codes are used to report E/M E/M codes, and to develop internal final rule with comment period (71 FR
services provided in the physician’s hospital guidelines to determine what 68127 through 68128), we specified that
office or in an outpatient or other level of visit to report for each patient. we would not create new codes to
ambulatory facility. For OPPS purposes, While awaiting the development of a replace existing CPT E/M codes for
we refer to these as clinic visit codes. national set of facility-specific codes reporting hospital visits until national
CPT also indicates that emergency and guidelines, we have advised guidelines were developed, in response
department visit codes are used to hospitals that each hospital’s internal to commenters who were concerned
report E/M services provided in the guidelines should follow the intent of about implementing hospital-specific
emergency department, defined as an the CPT code descriptors, in that the Level II HCPCS codes without national
‘‘organized hospital-based facility for guidelines should be designed to guidelines. We also discussed our
the provision of unscheduled episodic reasonably relate the intensity of intention to reconsider whether G-codes
services to patients who present for hospital resources to the different levels would be appropriate for the OPPS once
immediate medical attention. The of effort represented by the codes. national guidelines were established.
facility must be available 24 hours a Critical care services are considered to In that same CY 2007 final rule with
day.’’ For OPPS purposes, we refer to be outpatient visits, and our current comment period (71 FR 68138), we
these as emergency department visit payment policy for trauma activation finalized our proposal to make payment
codes that specifically apply to the ties separate payment to the reporting of for clinic visits at five payment rates,
reporting of visits to Type A emergency hospital critical care services. In the CY rather than three payment rates. Prior to
departments on or after January 1, 2007, 2008 OPPS/ASC proposed rule, we did CY 2007, under the OPPS, outpatient
as discussed in further detail later in not propose to change our OPPS visits provided by hospitals were paid at
this section. We established five new payment policy for critical care services three payment levels for clinic visits,
Level II HCPCS codes to report visits to for CY 2008. Our CY 2008 proposed and even though hospitals reported five
Type B emergency departments final policies for payment for trauma resource-based coding levels of clinic
beginning in CY 2007 because there activation are described in section visits using CPT E/M codes. Because the
were no CPT codes at that time that II.A.4. of this final rule with comment three payment rates for clinic visits
fully described services provided in this period. were based on five levels of CPT codes,
type of facility. CPT defines critical care in general the two lowest levels of CPT
services as the ‘‘direct delivery by a B. Policies for Hospital Outpatient Visits codes (Levels 1 and 2) were assigned to
physician(s) of medical care for a the low-level visit APC and the two
1. Clinic Visits: New and Established
critically ill or critically injured highest levels of CPT codes (Levels 4
Patient Visits and Consultations
patient.’’ It also states that ‘‘critical care and 5) were assigned to the high-level
is usually, but not always, given in a As discussed earlier, the majority of visit APC. The single middle level CPT
critical care area, such as . . . the all CPT code descriptors are applicable code (Level 3) was assigned to the mid-
emergency care facility.’’ In addition to to both physician and facility resources level visit APC. Historical hospital
reporting critical care services, hospitals associated with specific services. claims data have generally reflected
may utilize G0390 (Trauma response However, we believe that CPT E/M significantly different median costs for
team associated with hospital critical codes were defined to reflect the the two levels of services assigned to the
care service) for the reporting of a activities of physicians, and do not fully low- and high-level visit APCs. We
trauma response in association with describe the range and mix of services noted that payment at only three levels
critical care services. provided by hospitals during visits of might not be the most accurate method
The majority of CPT code descriptors clinic and emergency department of payment for those very common
are applicable to both physician and patients. While awaiting the hospital levels of visits that clearly
facility resources associated with development of a national set of demonstrate differential hospital
specific services. However, we have guidelines, we have advised hospitals resources. Consequently, for the CY
acknowledged from the beginning of the that each hospital’s internal guidelines 2007 OPPS, we mapped the data from
OPPS that we believe that CPT E/M should follow the intent of the CPT code the CY 2005 CPT E/M codes and other
codes were defined to reflect the descriptors, in that the guidelines HCPCS codes assigned previously to the
activities of physicians and do not should be designed to reasonably relate three clinic visit APCs to five new clinic
necessarily fully describe the range and the intensity of hospital resources to the visit APCs to develop median costs for
mix of services provided by hospitals different levels of effort represented by these APCs. We mapped the CPT E/M
during visits of clinic and emergency the codes. In the CY 2007 OPPS/ASC codes and other HCPCS codes to the
department patients and critical care proposed rule (71 FR 49607), we clinic visit APCs based on their median
costs and clinical homogeneity the median costs based on CY 2006 median costs at the five payment levels
considerations. Table 50 of the CY 2008 claims data processed through that we proposed for the CY 2008 OPPS.
OPPS/ASC proposed rule, which is December 31, 2006, and displays the
reprinted below as Table 39, includes proposed HCPCS codes and APC
TABLE 39.—PROPOSED RULE ASSIGNMENT OF CLAIMS DATA FROM CY 2006 CPT E/MLEVEL II HCPCS CODES TO VISIT
APCS FOR CY 2008
APC
Proposed service
CY 2008 CY 2008 HCPCS
CY 2008 APC title frequency Short descriptor
APC APC code
(in
median millions)
Level 1 Hospital Clinic Visits .......................... 0604 $52.72 3.8 92012 Eye exam established pat.
99201 Office/outpatient visit, new (Level 1).
99211 Office/outpatient visit, est (Level 1).
99241 Office consultation (Level 1).
G0101 CA screen; pelvic/breast exam.
G0245 Initial foot exam pt lops.
G0379 Direct admit hospital observ.
Level 2 Hospital Clinic Visits .......................... 0605 63.01 7.3 90862 Medication management.
92002 Eye exam, new patient
92014 Eye exam and treatment.
99242 Office Consultation (Level 2).
99243 Office Consultation (Level 3).
99431 Initial care, normal newborn.
G0246 Followup eval of foot pt lop.
G0344 Initial preventive exam.
M0064 Visit for drug monitoring.
Level 3 Hospital Clinic Visits .......................... 0606 85.96 2.9 92004 Eye exam, new patient.
Level 4 Hospital Clinic Visits .......................... 0607 108.08 .8 99204 Office/outpatient visit, new (Level 4).
Level 5 Hospital Clinic Visits .......................... 0608 138.88 .08 99205 Office/outpatient visit, new (Level 5).
G0175 OPPS service, sched team conf.
In the CY 2007 OPPS/ASC proposed could be ‘‘new’’ to the physician but an patient visits increases as the visit level
rule (71 FR 49617), we solicited ‘‘established’’ patient to the hospital. increases.
comment as to whether a distinction The opposite could be true if the Some commenters who responded to
between new and established visits was physician has a longstanding prior OPPS rules have stated that the
necessary because we were planning to relationship with the patient, in which hospital resources used for new and
transition to G-codes and did not want case the patient would be an established patients to provide a
to unnecessarily create codes for both ‘‘established’’ patient with respect to the specific level of service are very similar,
new and established patients. The AMA physician and a ‘‘new’’ patient with and that it is unnecessary and
defines an established patient as ‘‘one respect to the hospital. burdensome from a coding perspective
who has received professional services During CY 2006 and earlier, there was to distinguish between the two types of
from the physician or another physician no payment difference between new and visits. On the other hand, other
of the same specialty who belongs to the established patient visits of the same commenters have noted, and CY 2005
same group practice, within the past 3 and CY 2006 claims data have shown,
level because both were always mapped
years.’’ To apply this definition to that it may be appropriate to continue
to the same clinical APC. However,
hospital visits, we stated in the April 7, using different codes for new and
hospital claims data regarding the
2000 OPPS final rule with comment established patients because of the
median costs of the specific CPT clinic
period (65 FR 18451) that the meanings observed median cost differences in the
visit E/M codes consistently indicated
of ‘‘new’’ and ‘‘established’’ pertain to claims data. During the March 2007
that new patients were more resource-
whether or not the patient already has APC Panel meeting, the Observation and
a hospital medical record number. If the intensive than established patients
Visit Subcommittee of the APC Panel
patient has a hospital medical record across all visit levels. The CY 2006
discussed whether the coding
that was created within the past 3 years, claims data available for the CY 2008 distinction between new and
that patient is considered an established rulemaking confirmed that the cost established patient visits was necessary.
patient to the hospital. The same patient difference between new and established Ultimately, the APC Panel
recommended that CMS eliminate the mapping the Level 3 patient visit to the 2007 OPPS/ASC final rule with
‘‘new’’ and ‘‘established’’ patient Level 3 Clinic Visit APC. In the CY 2008 comment period. For CY 2008, because
distinctions in the reporting of hospital proposed clinic visit APC configuration, hospitals would be reporting CPT E/M
clinic visits. During its discussion, the as indicated in Table 50 of the CY 2008 codes which distinguish between new
APC Panel suggested that hospitals bill OPPS/ASC proposed rule (72 FR 42753), and established patients for clinic visits
the appropriate level clinic visit code the APC level assignment did not and because we saw meaningful and
according to the resources expended always correspond to the visit level consistent cost differences between
while treating the beneficiary based on described by each code. For example, visits for new and established patients,
each hospital’s internal guidelines. The CPT code 99213 is a Level 3 clinic visit we proposed to continue to recognize
APC Panel also suggested that each code for an established patient, which the CPT codes for new and established
hospital’s internal guidelines reflect would seem to logically map to the patient clinic visits under the OPPS,
resource cost differences (if a difference Level 3 Clinic Visit APC. However, consistent with their CPT code
exists) between new and established because CPT code 99213 had a proposed descriptors. Further, we did not propose
patients. For example, a visit that rule median cost of $65, we proposed to to adopt the recommendation of the
involves certain interventions may be map this code to the Level 2 Clinic Visit APC Panel to eliminate this
coded as Level 3 for a new patient and APC, which had a median cost of $63. differentiation for the reasons noted. We
Level 2 for an established patient. The The APC Panel indicated that its proposed to reexamine whether the
APC Panel also made another recommendation would ensure that coding distinction between new and
recommendation, which was contingent each visit level would receive its own established patient visits was necessary
upon CMS adopting its recommendation payment rate, rather than both the Level as we further considered national
to eliminate the new and established 2 and 3 patient visit codes receiving the guidelines. We continued to encourage
patient distinction reporting same payment rate. public comment about hospitals’
requirement. The APC Panel In both the CY 2007 OPPS/ASC experiences with assigning visit levels
recommended that CMS map each of the proposed and final rules (71 FR 49617 to new and established patients
five levels of outpatient clinic visit and 71 FR 68128, respectively), we according to their own internal
codes (which do not distinguish solicited public comment on the guidelines.
between new and established patients) potential differences in hospital clinic Table 51 of the CY 2008 OPPS/ASC
to five separate APCs, thereby paying at resource consumption between new and proposed rule, which is reprinted below
five payment rates. For example, the established patient visits. We received as Table 40, lists the CY 2008 proposed
APC Panel recommended mapping the only a few comments related to this median costs of new and established
Level 1 patient visit to the Level 1 Clinic distinction in response to the CY 2007 patient clinic visit codes, which were
Visit APC, mapping the Level 2 patient OPPS/ASC proposed rule and even based on CY 2006 claims data processed
visit to the Level 2 Clinic Visit APC, and fewer comments in response to the CY through December 31, 2006.
TABLE 40.—CY 2008 PROPOSED MEDIAN COSTS OF NEW AND ESTABLISHED PATIENT VISIT CPT CODES
CY 2008 es-
CY 2008 new tablished pa-
patient visit
Clinic visit level tient visit pro-
proposed me- posed median
dian cost cost
Level 1 ..................................................................................................................................................................... $56.08 $50.70

Level 2 ..................................................................................................................................................................... 63.18 58.84
Level 3 ..................................................................................................................................................................... 74.99 64.73
Level 4 ..................................................................................................................................................................... 109.12 84.17
Level 5 ..................................................................................................................................................................... 138.06 102.89
Comment: Most commenters on the rates. One commenter requested that continue to observe significant cost
proposals requested that CMS eliminate both the new and established patient differences between new and
the need for hospitals to distinguish visit codes remain payable, but that the established patient visits of the same
between new and established patient OPPS pay the same rate for the new and level, we will continue to recognize new
visits because they found it cumbersome established patient visit, at each level, and established patient visit codes
to bill a different code for each type of an approach which would remove any under the CY 2008 OPPS, consistent
visit. Specifically, the commenters financial incentive for reporting one with their CPT code descriptors. We
asked CMS not to implement new and code instead of another. Several agree with the commenters that it could
established patient visit codes. The commenters supported the proposal to be simpler and less burdensome from a
commenters suggested that hospitals bill continue requiring hospitals to coding perspective if hospitals only
the appropriate code, based on the distinguish between new and needed to report one set of codes and
resources expended in the visit. Several established patient visits. Some of the could report code levels that reflected
commenters suggested that CMS require commenters suggested that the AMA their resources used, rather than
hospitals to bill the established patient create hospital-specific Category I CPT distinguishing between new and
visit code exclusively and change the visit codes that do not distinguish established patient visits. However, in
status of the new patient visit codes to between new and established patient the absence of hospital-specific CPT
nonpayable. The commenters suggested visits, as appropriate for reporting codes for the reporting of visits in the
setting the payment rate for the hospital resource use. HOPD, hospitals should continue to
established patient visit code at a blend Response: Because hospitals will be distinguish between new and
of the new and established patient visit reporting CPT codes for CY 2008 and we established patient visits, consistent
with their CPT code descriptors. We their experiences with assigning visit patient visit to the Level 3 Clinic Visit
will reexamine whether the coding levels to new and established patients APC, and the Level 5 established patient
distinction between new and according to their own internal visit to the Level 4 Clinic Visit APC. The
established patient visits is necessary as guidelines. In addition, as noted above, only CPT E/M code that we proposed to
we continue to explore national we are specifically soliciting comment map to the Level 5 Clinic Visit APC for
guidelines. on the definitions of new and CY 2008 payment was the Level 5 new
Comment: Several commenters established patient visits in the HOPD. patient visit. These APC assignments
requested that CMS define a new patient As noted above, the APC Panel also which were proposed for CY 2008
as a patient who does not have a recommended that CMS map each level consistent with their CY 2007 APC
hospital medical record, rather than a of patient visits to its corresponding assignments, were determined for each
patient who does not have a medical APC, thereby paying at five payment HCPCS code based on CY 2006 claims
record that was created within the past levels. The APC Panel members noted data available for CY 2008 ratesetting
3 years. The commenters cited the that this mapping system would and clinical considerations. In the CY
definitions of new and established eliminate any payment incentive to 2008 OPPS/ASC proposed rule, we
patients that we discussed in the CY distinguish between new and indicated that we were not persuaded
2007 OPPS/ASC final rule with established patients, but would ensure by the APC Panel’s recommendation,
comment period (71 FR 68128) where five payment levels. which would have required us to ignore
CMS stated that if the patient had a In the CY 2008 OPPS/ASC proposed significant cost differences based on
hospital medical record that was created rule, we proposed to maintain the CY resource data that were clinically
within the past 3 years, that patient 2007 mapping for the clinic visit codes consistent and, therefore, we did not
would be considered an established for established patients. As indicated in propose to map each code to its
patient to the hospital. Several of the Table 50 of the proposed rule, which is corresponding level APC.
commenters believed that the ‘‘new’’ reprinted earlier as Table 39 in this final In the proposed rule, we noted that
patient definition described in the April rule with comment period, we proposed historical cost data for these frequently
7, 2000 OPPS final rule with comment to map the Level 1 established patient provided services were extremely
period (65 FR 18451) did not require visit to the Level 1 Clinic Visit APC, consistent. In addition, from a clinical
hospitals to determine if a medical which resulted in the Level 1 Clinic perspective, we believed that in some
record had been created for the patient Visit APC containing both the Level 1 cases, in the context of a five-level
within the past 3 years. new and established patient visit codes, structure for visit reporting, the hospital
Response: We note that we neither in accordance with the APC Panel’s resources required for a given visit level
proposed a change to the definitions of recommendation. Similarly, we might only be slightly different from
new and established patient visits in the proposed to map both the Level 2 new those used for a visit that was one level
CY 2008 OPPS/ASC proposed rule nor and established patient visit codes to higher or lower. For example, it was not
solicited comment on the definitions of the Level 2 Clinic Visit APC. However, surprising that particularly among visits
new and established patient visits. we also proposed to map the Level 3 for established patients in the middle of
While several commenters asked us to established patient visit code to the the range, such as a Level 2 established
revise these definitions, we are reluctant Level 2 Clinic Visit APC because our patient visit and a Level 3 established
to make these changes without hearing cost data indicated that the costs patient visit, the hospital resource costs
additional perspectives from the larger associated with a Level 3 established calculated from claims data were similar
hospital community. Therefore, we are patient visit most closely resembled the because these patients would often
specifically soliciting comment on the costs associated with the Level 2 Clinic utilize reasonably comparable hospital
definitions of new and established Visit APC and the Level 2 new and resources.
patient visits in the HOPD. established patient visits. If CPT code In the proposed rule, we performed
For CY 2008, we are finalizing our 99213 for an established Level 3 clinic data analyses using proposed rule data
proposal, without modification, to visit were mapped to the Level 3 Clinic to determine how the median costs of
continue to recognize the CPT codes for Visit APC, which had a proposed the clinic visit APCs would have
new and established patient clinic visits median cost of approximately $86, we changed if we fully adopted the APC
under the OPPS, consistent with their would significantly overpay CPT code Panel’s recommendation, and mapped
CPT code descriptors. Further, we are 99213 every time it was billed. all of the new and established patient
not adopting the recommendation of the Therefore, we proposed to map the visit codes to the corresponding level of
APC Panel to eliminate this Level 3 new patient visit to the Level 3 clinic visit APC. Our results were
differentiation for the reasons noted Clinic Visit APC, consistent with the shown in Table 52 of the CY 2008
above. We continue to encourage APC Panel’s recommendation. We also OPPS/ASC proposed rule, which is
hospitals to submit comments regarding proposed to map the Level 4 established reprinted below as Table 41.
TABLE 41.—CY 2008 MEDIAN COST COMPARISON OF CLINIC VISIT APCS IN TWO DIFFERENT CONFIGURATIONS USING
CY 2006 PROPOSED RULE DATA
APC Median APC Median
cost in the cost in the
APC proposed CY recommended
2008 APC panel
configuration configuration
Level 1 Clinic Visit ................................................................................................................................................... $53 $53

Level 2 Clinic Visit ................................................................................................................................................... 63 60
In the CY 2008 OPPS/ASC proposed code mapped to its corresponding APC the complexity and resources used for
rule, we concluded that the APC median level, we did not receive any compelling these outpatient visits.
cost distribution did not improve when reasons to ignore significant cost CPT defines a consultation as ‘‘a type
each new and established patient visit differences based on robust resource of service provided by a physician
code was mapped to its corresponding data that are clinically consistent. We whose opinion or advice regarding
level of APC. In fact, the APC Panel’s note that we will not be adopting the evaluation and/or management of a
recommended configuration resulted in APC Panel’s recommendation that each
specific problem is requested by another
lower payment rates for the Levels 2 code map to its corresponding APC
physician or other appropriate source.’’
through 5 Clinic Visit APCs, and an level for CY 2008.
We are finalizing the proposed Clinic CPT recognizes two subcategories of
identical payment rate for the Level 1
Clinic Visit APC because our proposed Visit APC configuration, with minor consultations, specifically office or
mapping and the APC Panel’s modification for CY 2008. Specifically, other outpatient and inpatient
recommendation for this APC were the we are mapping the CPT E/M codes and consultations, although only the office
same. In general, under the OPPS, we other Level II HCPCS to the appropriate consultations would be applicable
rely on resource cost data calculated Clinic Visit APCs, based on resource under the OPPS. As we observed in the
from hospital claims data to determine costs. Several HCPCS codes more CY 2008 OPPS/ASC proposed rule, the
appropriate APC mapping of HCPCS appropriately map to different Clinic differentiation of consultations from
codes, and to set payment rates. While Visit APCs than proposed in Table 50 as new and established patient clinic visits
we acknowledged in the proposed rule a result of analyzing the full year final would appear to be clinically
that it might be more predictable for rule resource cost data. In addition, unnecessary under the OPPS in order to
hospitals to receive the same payment several other HCPCS codes for services provide proper OPPS payment for
rate for new and established patients of resembling visits have been assigned to hospital outpatient visits.
the same visit level, robust cost data the Clinic Visit APCs for CY 2008. We In the CY 2007 OPPS/ASC final rule
clearly indicated that this would not be refer readers to Addendum B to this with comment period (71 FR 68128), we
the most accurate payment method. final rule with comment period for the stated our belief that it might be
Historical hospital cost data complete listing of visit codes and their unnecessary for hospitals to report
demonstrated that new patient visits placements for CY 2008. Furthermore, consultation CPT codes if either a new
were more costly than established as discussed in detail in section or established patient visit code
patient visits of the same level, a finding II.A.4.c.(7) of this final rule with accurately described the service
that was consistent with the perspective comment period, in some cases when provided. We stated that we were
of our medical advisors. Because we high-level visits are reported with a new particularly interested in hearing
proposed that hospitals continue to use or established patient Level 5 CPT E/M whether consultation codes were a
CPT E/M codes to report clinic visits for code, a Level 4 or 5 emergency useful measure of hospital resource use
CY 2008, including separate codes for department visit CPT code, a critical under the OPPS, and how consultation
new and established patients, we saw care CPT code, or direct admission to
visits were different, from a hospital
no reason to adjust the clinic visit APC observation HCPCS code in association
resource perspective, from new patient
configurations. Therefore, for CY 2008, with 8 or more hours of nonsurgical
visits and established patient visits. We
we proposed to map the CPT E/M codes observation services, we will provide a
observed that we did not want to create
and other Level II HCPCS codes to the single payment in CY 2008 for the
encounter through one of two new an incentive for hospitals to bill a
Clinic Visit APCs as configured in Table
composite APCs, specifically APCs 8002 consultation code instead of a new or
50 of the proposed rule, and not fully
(Level I Extended Assessment and established patient code because we did
adopt the APC Panel’s recommendation
Management) and 8003 (Level II not believe that consultation codes
to map each code to its corresponding
APC level. We indicated that we would Extended Assessment and necessarily reflected different resource
re-examine this issue using the claims Management). utilization than either new or
data for CY 2009 OPPS ratesetting, and The APC Panel also recommended established patient codes (71 FR 68138).
would also reconsider whether this that CMS not recognize the CPT Therefore, for CY 2007, we finalized a
mapping is appropriate in the future as consultation codes: CPT code 99241 payment policy that assigned the
we continue to work on developing (Office consultation for a new or consultation code to the same clinical
national guidelines. established patient (Level 1)), CPT code APC as the established patient visit code
Comment: A few commenters 99242 (Office consultation for a new or for each level of service. For example,
opposed the proposal to map the CPT established patient (Level 2)), CPT code CPT code 99242, the Level 2
E/M codes and other Level II HCPCS 99243 (Office consultation for a new or consultation code, was mapped to APC
codes to the Clinic Visit APCs based on established patient (Level 3)), CPT code 0605 (Level 2 Clinic Visits), which was
resource cost and clinical homogeneity 99244 (Office consultation for a new or where CPT code 99212, the Level 2
and stated that it made sense for each established patient (Level 4)), and CPT established patient code, was also
code to map to the corresponding APC code 99245 (Office consultation for a assigned for CY 2007. Moving the
level. For example, the commenters new or established patient (Level 5)). consultation codes to the same APCs as
requested that the Level 3 new and The APC Panel recommended that CMS the corresponding established patient
established patient visit codes both map instruct hospitals to build consultation visit codes eliminated any incentive for
to the Level 3 Visits APC. services into their internal hospital hospitals to bill a consultation code
Response: While we understand that guidelines related to reporting instead of a new or established patient
it would be more straightforward if each outpatient clinic visit levels based on code.
TABLE 42.—CY 2008 MEDIAN COSTS AND FREQUENCIES OF CPT CONSULTATION VISIT CODES USING CY 2006
PROPOSED RULE DATA
Code descriptor Median cost Frequency
Level 1 Consultation ................................................................................................................................................ $66.48 62,000

Level 2 Consultation ................................................................................................................................................ 65.78 73,000
Consultation services were provided patient visits. The commenters stated available 24 hours a day.’’ Prior to CY
with much less frequency than all levels that the cognitive intensity and the time 2007, under the OPPS we restricted the
of established patient visits and low- to fully establish a diagnosis and a billing of emergency department CPT
level new patient visits in CY 2006 but treatment plan for consultation types of codes to services furnished at facilities
were provided more frequently than visits are much greater than that of that met this CPT definition. Facilities
high-level new patient visits. The established patient visits. open less than 24 hours a day should
median costs for consultation codes Response: We agree with the not have reported the emergency
were generally similar to, or slightly commenters who requested that we department CPT codes.
higher than, the corresponding median finalize our proposal not to recognize Sections 1866(a)(1)(I), 1866(a)(1)(N),
costs of the same level of new patient consultation codes under the OPPS for and 1867 of the Act impose specific
visits. CY 2008. As described above, we do not obligations on Medicare-participating
Aside from the APC Panel’s believe consultation codes are a useful hospitals and CAHs that offer
recommendation, we received a few or necessary indicator of hospital emergency services. These obligations
public comments on the CY 2007 OPPS/ resource use under the OPPS. The concern individuals who come to a
ASC final rule related to this issue. In commenters who requested that CMS hospital’s dedicated emergency
the CY 2008 OPPS/ASC proposed rule, continue to recognize consultation department and request examination or
we noted our continued belief that codes may have been measuring treatment for medical conditions, and
consultation codes were unnecessary physician resource use, rather than apply to all of these individuals,
and superfluous in the hospital hospital resource use. In addition, if regardless of whether or not they are
outpatient setting because hospitals consultation services are more resource- beneficiaries of any program under the
could appropriately bill either a new or intensive than established patient visits Act. Section 1867(h) of the Act
established patient visit code, instead of of the same level, our proposal would specifically prohibits a delay in
a consultation code, as appropriate in permit hospitals to factor this into their providing required screening or
these cases. In the interest of internal hospital guidelines that would stabilization services in order to inquire
simplifying billing, for CY 2008, we determine the appropriate level of about the individual’s payment method
proposed to assign status indicator ‘‘B’’ established patient visit to report. or insurance status. Section 1867(d) of
to the consultation codes (that is, not In summary, we are finalizing our CY the Act provides for the imposition of
paid under the OPPS), and instructed 2008 proposal, without modification, civil monetary penalties on hospitals
hospitals to bill a new or established that hospitals continue to use CPT codes and physicians responsible for failing to
visit code instead of an office to bill for clinic visits, and to meet the provisions listed above. These
consultation code, thereby adopting the distinguish between new and provisions, taken together, are
APC Panel’s recommendation not to established patient visits. For CY 2008, frequently referred to as the Emergency
recognize these consultation codes. As the CPT codes for new and established Medical Treatment and Labor Act
appropriate, hospitals could build visits will continue to be payable under (EMTALA). EMTALA was passed in
consultation services into their internal the OPPS, but we will reconsider in the 1986 as part of the Consolidated
hospital guidelines related to reporting future whether there should be a Omnibus Budget Reconciliation Act of
clinic visit levels, based on the distinction between new and 1985 (COBRA), Pub. L. 99–272.
complexity and resources used for these established patient visits as we continue Section 489.24 of the EMTALA
visits. to work on developing national regulations defines ‘‘dedicated
Comment: Many commenters guidelines. In the meantime, we will emergency department’’ as any
supported the proposal to change the assign these clinic visits to different department or facility of the hospital,
status of the consultation codes so that levels of Clinic Visit APCs based on the regardless of whether it is located on or
they are no longer recognized under the costs we observe from historical off the main hospital campus, that meets
OPPS. The commenters stated that this hospital claims data. For CY 2008, we at least one of the following
would simplify outpatient hospital are also finalizing our proposal, without requirements: (1) It is licensed by the
billing, and remove the option of modification, to change the status of the State in which it is located under
reporting unnecessary codes. A few consultation codes so that these codes applicable State law as an emergency
commenters requested that the are no longer recognized for payment room or emergency department; (2) It is
consultation codes continue to be under the OPPS. held out to the public (by name, posted
recognized under the OPPS because of signs, advertising, or other means) as a
the administrative burden involved with 2. Emergency Department Visits place that provides care for emergency
analyzing each consultation to As described above, CPT defines an medical conditions on an urgent basis
determine if the visit should be new or emergency department as ‘‘an organized without requiring a previously
established. In addition, the hospital based facility for the provision scheduled appointment; or (3) During
commenters noted that there is a of unscheduled episodic services to the calendar year immediately
resource cost difference between patients who present for immediate preceding the calendar year in which a
consultations and new and established medical attention. The facility must be determination under the regulations is
being made, based on a representative emergency department from the costs of or facilities that were available 24 hours
sample of patient visits that occurred clinic visits. a day, and that fully met the CPT
during that calendar year, it provides at Prior to CY 2007, some hospitals definition.
least one-third of all of its outpatient requested that they be permitted to bill To determine whether visits to
visits for the treatment of emergency emergency department visit codes under
emergency departments or facilities
medical conditions on an urgent basis the OPPS for services furnished in a
(referred to as Type B emergency
without requiring a previously facility that met the CPT definition for
departments) that incur EMTALA
scheduled appointment. reporting emergency department visit
obligations, but do not meet more
In the CY 2008 OPPS/ASC proposed E/M codes, except that they were not
prescriptive expectations that are
rule, we reiterated our belief that every available 24 hours a day. These
emergency department that meets the hospitals believed that their resource consistent with the CPT definition of an
CPT definition of emergency costs were more similar to those of emergency department (referred to as
department also qualifies as a dedicated emergency departments that met the Type A emergency departments), have
emergency department under EMTALA. CPT definition than they were to the different resource costs than visits to
However, we indicated that we were resource costs of clinics. either clinics or Type A emergency
aware that there are some departments Representatives of such facilities argued departments, in the CY 2007 OPPS/ASC
or facilities of hospitals that meet the that emergency department visit final rule with comment period (71 FR
definition of a dedicated emergency payments would be more appropriate, 68132), we finalized a set of five G-
department under the EMTALA on the grounds that their facilities codes for use by hospitals to report
regulations, but that do not meet the treated patients with emergency visits to all entities that meet the
more restrictive CPT definition of an conditions whose costs exceeded the definition of a dedicated emergency
emergency department. For example, a resources reflected in the clinic visit department under the EMTALA
hospital department or facility that APC payments, even though these regulations in § 489.24, but that are not
meets the definition of a dedicated emergency departments were not Type A emergency departments, as
emergency department may not be available 24 hours per day. In addition, described in Table 43 below. These
available 24 hours a day, 7 days a week. these hospital representatives indicated codes are called ‘‘Type B emergency
Nevertheless, hospitals with such that their facilities had EMTALA department visit codes.’’ We believed
departments or facilities incur EMTALA obligations and should, therefore, be the creation of G-codes for Type B
obligations with respect to an individual able to receive emergency department emergency departments was necessary
who presents to the department and visit payments. While these emergency because there were no CPT codes that
requests, or has requested on his or her departments may have provided a fully described this type of facility. If we
behalf, examination or treatment for an broader range and intensity of hospital were to continue instructing Type B
emergency medical condition. However, services, and required significant emergency departments to bill clinic
because they did not meet the CPT resources to assure their availability and visit codes, we would have no way to
requirements for reporting emergency capabilities in comparison with typical track resource costs for Type B
visit E/M codes, prior to CY 2007, these hospital outpatient clinics, the fact that emergency department visits as distinct
facilities were required to bill clinic they did not operate with all capabilities from clinic visits. In that final rule, we
visit codes for the services they full-time suggested that hospital explained that these new G-codes would
furnished under the OPPS. We had no resources associated with visits to serve as a vehicle to capture median
way to distinguish in our hospital emergency departments or facilities cost and resource differences among
claims data the costs of visits provided available less than 24 hours a day might visits provided by Type A emergency
in dedicated emergency departments not be as great as the resources departments, Type B emergency
that did not meet the CPT definition of associated with emergency departments departments, and clinics (71 FR 68132).
TABLE 43.—CY 2007 FINAL LEVEL II HCPCS CODES TO BE USED TO REPORT EMERGENCY DEPARTMENT VISITS
PROVIDED IN TYPE B EMERGENCY DEPARTMENTS
HCPCS Short Long descriptor
code descriptor
G0380 ...... Lev 1 hosp Level 1 hospital emergency department visit provided in a Type B emergency department. (The ED must meet at
type B ED least one of the following requirements: (1) It is licensed by the State in which it is located under applicable
visit. State law as an emergency room or emergency department; (2) It is held out to the public (by name, posted
signs, advertising, or other means) as a place that provides care for emergency medical conditions on an urgent
basis without requiring a previously scheduled appointment; or (3) During the calendar year immediately pre-
ceding the calendar year in which a determination under this section is being made, based on a representative
sample of patient visits that occurred during that calendar year, it provides at least one-third of all of its out-
patient visits for the treatment of emergency medical conditions on an urgent basis without requiring a previously
scheduled appointment).
PROVIDED IN TYPE B EMERGENCY DEPARTMENTS—Continued
code descriptor
For CY 2007, we assigned the five the OPPS rulemaking cycle for CY 2009 new Type A emergency department visit
new Type B emergency department visit would be the first year that we would codes. In the CY 2007 OPPS/ASC final
codes for services provided in a Type B have cost data for these new Type B rule with comment period (71 FR
emergency department to the five emergency department HCPCS codes 68132), we postponed finalizing G codes
newly-established Clinic Visit APCs, available for analysis. to replace CPT codes for Type A
0604, 0605, 0606, 0607, and 0608 (71 FR In the CY 2007 OPPS/ASC proposed emergency department visits until
68140). This payment policy for Type B rule (71 FR 49609), we proposed to national guidelines are established, and
emergency department visits was create five G codes to be reported by the stated that we would again consider
similar to our previous policy, which subset of provider-based emergency their possible utility once national
required services furnished in departments or facilities of the hospital, guidelines are adopted. However, for CY
emergency departments that had an called Type A emergency departments, 2007, we finalized the definition of
EMTALA obligation, but did not meet that are available to provide services 24 Type A emergency departments to
the CPT definition of emergency hours a day, 7 days per week, and meet distinguish them from Type B
department to be reported using CPT one or both of the following emergency departments. For CY 2007
clinic visit E/M codes, resulting in requirements related to the EMTALA (71 FR 68140), we assigned the five CPT
payments based upon clinic visit APCs. definition of a dedicated emergency E/M emergency department visit codes
As mentioned above, CPT and CMS department, specifically: (1) It is for services provided in Type A
required an emergency department to be licensed by the State in which it is emergency departments to the five
open 24 hours per day in order for it to located under the applicable State law newly-created Emergency Department
be eligible to bill emergency department as an emergency room or emergency Visit APCs, 0609, 0613, 0614, 0615, and
E/M codes. While maintaining the same department; or (2) It is held out to the 0616.
payment policy for Type B emergency public (by name, posted signs, We believed that our distinction
department visits in CY 2007, we advertising, or other means) as a place between Type A and Type B emergency
believed the reporting of specific G- that provides care for emergency departments refined and clarified the
codes for emergency department visits medical conditions on an urgent basis CPT definition of ‘‘emergency
provided in Type B emergency without requiring a previously department’’ for use in the hospital
departments would permit us to scheduled appointment. These codes context. As we have previously noted,
specifically collect, and analyze the were called ‘‘Type A emergency visit the CPT codes are defined to reflect the
hospital resource costs of visits to these codes’’ and were proposed to replace activities of physicians, and do not
facilities in order to determine if in the hospitals’’ reporting of the CPT always fully describe the range and mix
future a proposal for an alternative emergency department visit E/M codes. of services provided by hospitals during
payment policy might be warranted. We Our intention was to allow hospital- visits of emergency department patients.
expected hospitals to adjust their based emergency departments or For example, one feature that
charges appropriately to reflect facilities that were historically distinguishes Type A hospital
differences in Type A and Type B appropriately reporting CPT emergency emergency departments from other
emergency departments. We noted that department visit E/M codes to bill these departments of the hospital is that Type
A emergency departments do not CMS Web site a ‘‘Frequently Asked constant the definitions that were
generally provide scheduled care, but Questions’’ list that described various developed for CY 2007 and described
rather regularly operate to provide examples of treating an emergency above. We did not believe a policy
immediately available unscheduled department as either a Type A change in the reporting of these Type A
services. emergency department or a Type B and Type B emergency department
We were pleased that the majority of emergency department. In each case, the codes would be appropriate for CY
commenters to the CY 2007 OPPS/ASC posted answer stated that hospitals 2008, in light of our desire to capture
proposed rule agreed with our general should contact their fiscal intermediary consistent and accurate hospital cost
distinction between Type A and Type B to ensure that the fiscal intermediary data by HCPCS code for consideration
emergency departments. We noted that and the hospital are in agreement for the CY 2009 OPPS. For CY 2008, we
after the publication of the CY 2007 regarding the emergency room status as proposed that Type A emergency
OPPS/ASC final rule with comment either Type A or Type B. The response department visits would continue to be
period, numerous readers requested to the posted examples has been paid based on the five Emergency
clarification about one paragraph that positive, and the number of inquiries we Department Visit APCs, while Type B
appeared in that final rule. The are receiving has subsided. emergency department visits would
paragraph is reprinted below (71 FR Notwithstanding our subsequent continue to be paid based on the five
68132). clarification, we did not propose to Clinic Visit APCs.
‘‘We are aware that hospitals operate many
modify the definitions of Type A or Comment: Many commenters
types of facilities which they view in Type B emergency departments for CY requested that CMS adjust the policy to
aggregate as an integrated healthcare system. 2008 because we believed that our broaden the definition of Type A
For purposes of determining EMTALA current definition accurately emergency departments, specifically to
obligations, under § 489.24(b) of the distinguished between these two types revise the rule that hospitals must carve
regulations, each hospital is evaluated of emergency departments. While we out portions of the emergency
individually to determine its own particular would not know definitively until CY department that are not available 24
obligations. As we have discussed 2009 how the costs of services provided hours a day. The commenters
previously, hospital facilities or departments in Type A emergency departments specifically requested that the definition
of the hospital that meet the definition of a differed from the costs of services be adjusted so that a ‘‘fast track’’ area of
dedicated emergency department consistent
with the EMTALA regulations may bill Type
provided in Type B emergency an emergency department, located
A emergency department codes (CPT departments, we believed that our within the same building as a Type A
emergency department visit codes) or Type B current distinction between Type A and emergency department, would be
emergency department codes (HCPCS G- Type B emergency departments was considered Type A, regardless of its
codes), depending on whether or not the appropriate, and was most likely to hours of operation, if it provides
dedicated emergency department meets the capture any resource cost differences unscheduled emergency services and
definition of a Type A emergency between the two types of emergency shares a common patient registration
department, which includes operating 24 departments. However, we specifically system with the Type A emergency
hours per day, 7 days a week. For purposes solicited public comment regarding any department. Many of the commenters
of determining whether to bill Type A or additional operational clarifications that expressed concern that hospitals are
Type B emergency department codes, each
hospital must be evaluated individually and
we could provide to assist hospitals in currently overcrowded, and payment at
should make a decision specific to each area determining whether an emergency clinic visit rates may cause hospitals to
of the hospital to determine which codes department is considered to be Type A shut down their ‘‘fast track’’ or other
would be appropriate. Where a hospital or Type B. areas of the hospital that deliver
maintains a separately identifiable area or We specifically indicated for CY 2007 expedited care, yet are open less than 24
part of a facility which does not operate on that hospitals should individually hours a day. The commenters noted that
the same schedule (that is, 24 hours per day, consider separately identifiable areas or if these areas of the hospital were
7 days a week) as its emergency department, parts of facilities that did not operate on closed, emergency department
that area or facility would not be considered the same schedule as the main overcrowding would be exacerbated.
an integral part of the emergency department emergency department that was open 24 Other commenters requested that we
that operates 24 hours per day, 7 days a week
hours a day, 7 days per week to allow hospitals to operate in the most
for purposes of determining its emergency
department type for reporting emergency determine the appropriate codes for efficient manner and not penalize them
visit services. Instead, the facility or area reporting services provided in those for creating efficiencies. Several
would be evaluated separately to determine separately identifiable areas. Because commenters requested additional
whether it is a Type A emergency we considered the main distinguishing clarification regarding the difference
department, Type B emergency department, feature between Type A and Type B between Type A and Type B emergency
or clinic. We would expect the hospital emergency departments to be the full- departments, but did not specifically
providing services in such facilities or areas time versus part-time availability of describe which part of the policy was
to evaluate the status of those areas and bill staffed areas for emergency medical unclear. Several commenters noted that
accordingly. In general, it is not appropriate care, not the process of care or the site five payment levels for emergency
to consider a satellite emergency department
of care (on the hospital’s main campus department visits was appropriate and
or an area of the emergency department as if
it were available 24 hours a day simply or offsite), our final CY 2007 policy would continue to support a stable
because the main emergency department is explained that hospitals needed to distribution of visit levels.
available 24 hours a day. It may be assess separately identifiable areas Response: As noted above, we
appropriate for a Type A emergency individually for their status as Type A consider the main distinguishing feature
department to ‘carve out’ portions of the or Type B emergency departments. In between Type A and Type B emergency
emergency department that are not available the CY 2008 OPPS/ASC proposed rule, departments to be the full-time versus
24 hours a day, where visits would be more we specifically solicited comments that part-time availability of staffed areas for
appropriately billed with Type B emergency described how this policy could be emergency medical care, not the process
department codes.’’ further clarified in light of hospitals’ of care or the site of care (on the
In response to the questions we operational responsibility to efficiently hospital’s main campus or offsite). We
received, in CY 2007 we posted on the provide emergency services, holding continue to believe that emergency
departments or areas of the emergency addition, if our Type A emergency departments to contact their local fiscal
department that are available less than department payments provide support intermediaries.
24 hours a day may have lower resource for 24 hour a day availability of services, In response to several questions, we
costs than emergency departments or then services provided in areas of the are slightly modifying the long
areas of the emergency department that hospital that are not staffed 24 hours a descriptors of HCPCS codes G0380,
are available 24 hours a day. We do not day could be overpaid. This could also G0381, G0382, G0383, and G0384 by
believe a policy change in the reporting have the effect of diluting, and replacing the words ‘‘this section’’ with
of these Type A and Type B emergency ultimately decreasing, the median ‘‘42 CFR § 489.24’’ in order to clarify the
department codes would be appropriate resource costs associated with Type A reference. The short descriptors remain
for CY 2008, in light of our desire to emergency departments. We encourage unchanged for CY 2008. Table 44 lists
capture consistent and accurate hospital hospitals that need more specific the CY 2008 short and long descriptors
cost data by HCPCS code for information related to the distinction for the Type B emergency department
consideration for the CY 2009 OPPS. In between Type A and Type B emergency Visit HCPCS codes.
PROVIDED IN TYPE B EMERGENCY DEPARTMENTS
code descriptor
ceding the calendar year in which a determination under 42 CFR § 489.24 is being made, based on a represent-
ative sample of patient visits that occurred during that calendar year, it provides at least one-third of all of its
outpatient visits for the treatment of emergency medical conditions on an urgent basis without requiring a pre-
viously scheduled appointment).
In summary, we did not receive any constant the definitions that were while Type B emergency department
public comments that described how developed for CY 2007. Therefore, we visits will continue to be paid based on
the payment policy could be further are finalizing our CY 2008 proposal, the five Clinic Visit APCs. We are also
clarified in light of hospitals’ without modification, to pay for Type A slightly modifying the long descriptors
operational responsibility to efficiently emergency department visits at the five of HCPCS codes G0380 through G0384
provide emergency services, holding Emergency Department Visit APC rates, for clarification.
C. Visit Reporting Guidelines American Hospital Association (AHA) raised during the public comment
and the American Health Information period’’ (AHA/AHIMA guidelines
1. Background
Management Association (AHIMA) had report, page 9). The AHA and AHIMA
As described in section IX.A. of this such expertise and would be capable of indicated that the guidelines were field-
final rule with comment period, since creating hospital visit guidelines and tested several times by panel members
April 7, 2000, we have instructed providing ongoing provider education. at different stages of their development.
hospitals to report facility resources for We also articulated a set of principles The guidelines are based on an
clinic and emergency department that any national guidelines for facility intervention model, where the levels are
hospital outpatient visits using the CPT visit coding should satisfy, including determined by the numbers and types of
E/M codes and to develop internal that coding guidelines should be based interventions performed by nursing or
hospital guidelines for reporting the on facility resources, should be clear to ancillary hospital staff. Higher levels of
appropriate visit level. facilitate accurate payments and be services are reported as the number and/
During the January 2002 APC Panel usable for compliance purposes and or complexity of staff interventions
meeting, the APC Panel recommended audits, should meet HIPAA increase.
that CMS adopt the American College of requirements, should only require Although we did not publish the
Emergency Physicians’ (ACEP) documentation that is clinically guidelines, the AHA and AHIMA
intervention-based guidelines for necessary for patient care, and should released the guidelines through their
facility coding of emergency department not facilitate upcoding or gaming. We Web sites. Consequently, in CY 2003 we
visits and develop guidelines for clinic stated that the distribution of codes received numerous comments from
visits that are modeled on the ACEP reported for each type of hospital providers and associations, some in
guidelines. outpatient visit (clinic or emergency favor and some opposed to the
In the August 9, 2002 OPPS proposed guidelines. We undertook a critical
department) should result in a normal
rule (67 FR 52133), we proposed 10 new review of the recommendations from the
curve. We concluded that we believed
G-codes (Levels 1–5 Facility Emergency AHA and AHIMA and made some
the most appropriate forum for
Services and Levels 1–5 Facility Clinic modifications to the guidelines based on
Services) for use in the OPPS to report development of code definitions and
guidelines was an independent expert comments we received from other
hospital visits, with the goal of hospitals and associations on the AHA/
ultimately applying national guidelines panel that would make
recommendations to CMS. AHIMA guidelines, clinical review, and
to these codes and discontinuing the use changing payment policies under the
of CPT E/M codes under the OPPS. We The AHA and AHIMA originally OPPS regarding some separately payable
also solicited public comments supported the ACEP model for services.
regarding national guidelines for emergency department visit coding. In an attempt to validate the modified
hospital coding of emergency However, we expressed concern that the AHA/AHIMA guidelines and examine
department and clinic visits. We ACEP guidelines allowed counting of the distribution of services that would
discussed different types of models, separately payable services in result from their application to hospital
reflecting on the advantages and determining a service level, which clinic and emergency department visits
disadvantages of each. We reviewed in could result in the double counting of paid under the OPPS, we contracted for
detail the considerations around various hospital resources in establishing visit a study that began in September 2004
discrete types of specific guidelines, payment rates and payment rates for and concluded in September 2005 to
including guidelines based on staff those separately payable services. retrospectively code, under the
interventions, based upon staff time Subsequently, on their own initiative, modified AHA/AHIMA guidelines,
spent with the patient, based on the AHA and AHIMA formed an hospital visits by reviewing hospital
resource intensity point scoring, and independent expert panel, the Hospital visit medical chart documentation
based on severity acuity point scoring Evaluation and Management Coding gathered through Comprehensive Error
related to patient complexity. In that Panel, comprised of members with Rate Testing (CERT) work. While a
proposed rule, we also stated that we coding, health information management, review of documentation and
were concerned about counting documentation, billing, nursing, assignment of visit levels based on the
separately paid services (for example, finance, auditing, and medical modified AHA/AHIMA guidelines to
intravenous infusions, x rays, experience. This panel included 12,500 clinic and emergency
electrocardiograms, and laboratory tests) representatives from the AHA, AHIMA, department visits was initially planned,
as ‘‘interventions,’’ or including their ACEP, Emergency Nurses Association, the study was terminated after a pilot
associated ‘‘staff time’’ in determining and American Organization of Nurse review of only 750 visits. The contractor
the level of service. We believed that the Executives. CMS and AMA identified a number of elements in the
level of service should be determined by representatives observed the meetings. guidelines that were difficult for coders
resource consumption that is not On June 24, 2003, the AHA and AHIMA to interpret, poorly defined, nonspecific,
otherwise captured in payments for submitted their recommended or regularly unavailable in the medical
other separately payable services. guidelines, hereafter referred to as the records. The contractor’s coders were
In response to comments, in the AHA/AHIMA guidelines, for reporting unable to determine any level for about
November 1, 2002 OPPS final rule (67 three levels of hospital clinic and 25 percent of the clinic cases and about
FR 66793), we stated that we would not emergency department visits and a 20 percent of the emergency department
create new codes to replace existing single level of critical care services to cases reviewed. The only agreement
CPT E/M codes for reporting hospital CMS, with the hope that CMS would observed between the levels reported on
visits until national guidelines are publish the guidelines in the CY 2004 the claims and levels according to the
developed. We noted that an OPPS proposed rule. The AHA and modified AHA/AHIMA guidelines was
independent panel of experts would be AHIMA acknowledged that ‘‘continued the classification of Level 1 services,
an appropriate forum to develop codes refinement will be required as in all where the review supported the level on
and guidelines that are simple to coding systems. The Panel * * * looks the claims 54 to 70 percent of the time.
understand and implement. We forward to working with CMS to In addition, the vast majority of the
explained that organizations such as the incorporate any recommendations clinic and emergency department visits
reviewed were assigned to Level 1 successfully utilizing the AHA/AHIMA would support certain interventions;
during the review. Based on these guidelines to report levels of hospital reconsideration of the inclusion of
findings, we believed that it was not visits. However, other organizations had separately payable services as proxies
necessary to review additional records expressed concern that the AHA/ for hospital resources used in visits;
after the initial sample. The contractor AHIMA guidelines might result in a examination of the valuing of certain
advised that multiple terms in the significant redistribution of hospital interventions; assessment of the need
guidelines required clearer definition visits to higher levels, reducing the for modifications to address the
and believed that more examples would ability of the OPPS to discriminate different clinical characteristics of
be helpful. Although we believed that among the hospital resources required specialty clinic visits; consistency with
all of the visit documentation for each for various different levels of visits. We, the Americans with Disabilities Act; re-
case was available for the contractor’s too, remained concerned about the evaluation of the way in which
review, we were unable to determine potential redistributive effect on OPPS additional hospital resources required
definitively that this was the case. Thus, payments for other services or among for the treatment of new patients were
there was some possibility that the levels of hospital visits when national captured; and recommendations for
contractor’s assignments would have guidelines for outpatient visit coding are guidelines for the reporting of visits to
differed if additional documentation adopted. As we explained in the CY Type B emergency departments.
from the medical records were available 2008 OPPS/ASC proposed rule (72 FR In CY 2007, we had a number of
for the visits. In summary, while testing 42761), we recognized that there could meetings and discussions with
of the modified AHA/AHIMA be difficulty crosswalking historical interested stakeholders regarding the
guidelines was helpful in illuminating hospital claims data from current CPT AHA/AHIMA guidelines, the CMS
areas of the guidelines that would E/M codes reported based on individual modified draft version, the contractor
benefit from refinement, we were unable internal hospital guidelines to payments pilot work to test the guidelines, the
to draw conclusions about the for any new coding system developed, concerns we identified in the CY 2007
relationship between the distribution of in order to provide appropriate payment OPPS/ASC final rule with comment
hospital reporting of visits using CPT E/ levels for hospital visits reported based period, and alternative guidelines. In
M codes that were assigned according to on national guidelines in the future. the CY 2008 OPPS/ASC proposed rule
each hospital’s internal guidelines and In the CY 2008 OPPS/ASC proposed
(72 FR 42761), we indicated our
the distribution of codes under the rule (72 FR 42761), we noted that there
awareness that the AHA and AHIMA
AHA/AHIMA guidelines, nor were we were several types of concerns with the
AHA/AHIMA guidelines that had been were conducting an ongoing dialogue
able to demonstrate a normal with members of their Hospital
distribution of visit levels under the identified based upon extensive staff
review and contractor use of the Evaluation and Management Coding
modified AHA/AHIMA guidelines. In Panel and reviewing their previously
CY 2007, we posted to the CMS Web guidelines during the validation study.
We believed that the AHA/AHIMA recommended model guidelines as well
site a summary of the contractor’s as other models currently in use. We
report. guidelines would require refinement
prior to their adoption by the OPPS, as had not received any additional
Despite the inconclusive findings well as continued refinement over time suggestions or modifications from the
from the validation study, after after their implementation. Our AHA and AHIMA at the time of the
reviewing the AHA/AHIMA guidelines, modified version of the AHA/AHIMA development of the CY 2008 proposed
as well as approximately a dozen other guidelines provided some possibilities rule. We had received a number of new
guidelines for outpatient visits for addressing certain issues. We suggestions for guidelines from other
submitted by various hospitals and reviewed our eight general areas of stakeholders, including individual
hospital associations, we stated in the concern regarding the AHA/AHIMA hospitals and associations, that had
CY 2007 OPPS/ASC final rule with model as outlined below. In addition, engaged in a variety of data collection
comment period (71 FR 68141) that we we posted on the CMS Web site both the and pilot application activities in
believed that the AHA/AHIMA original AHA/AHIMA guidelines and preparing their recommendations. For
guidelines were the most appropriate our modified draft version. example, one wound care organization
and well-developed guidelines for use In the CY 2008 OPPS/ASC proposed created and presented an independent
in the OPPS of which we were aware. rule (72 FR 42761), we reiterated our model that could apply to certain
Our particular interest in these commitment to provide a minimum of specialty clinics. The organization
guidelines was based upon the broad- 6 to 12 months notice to hospitals prior claimed that several hospital outpatient
based input into their development, the to implementation of national specialty clinics had already
desire for CMS to move to promulgate guidelines to provide sufficient time for successfully implemented these as their
national hospital outpatient visit coding providers to make the necessary systems internal guidelines, but requested that
guidelines in the near future, and full changes and educate their staff. CMS designate them as the national
consideration of the characteristics of wound care clinic guidelines. One
alternative types of guidelines. We also 2. CY 2007 Work on Visit Guidelines provider group tested several sets of
believed that hospitals would react There were several areas of the AHA/ guidelines that resembled the ACEP
favorably to guidelines developed and AHIMA guidelines that we identified in model and compared the results across
supported by the AHA and AHIMA, the CY 2007 OPPS/ASC final rule with a set of hospitals. This provider group
national organizations that have great comment period that would require believed that an ACEP-type model
interest in hospital coding and payment refinement and further input from the would be the most successful type of
issues, and possess significant medical, public prior to implementation as national guidelines, assuming that the
technical and practical expertise due to national guidelines. These areas include guidelines were flexible in serving as a
their broad membership, which the need for five rather than three levels guide to visit level reporting. While
includes hospitals and health of codes for clinic and emergency using several varieties of ACEP-type
information management professionals. department visits to accommodate the guidelines in different hospitals, the
Anecdotally, we noted that we had been CY 2007 five levels of OPPS payment; group noted that across hospitals a
told that a number of hospitals were clarification of documentation that specific intervention was almost always
assigned to the same clinic visit level. experiences and the insightful responses various classes of hospitals. We
The group concluded that this by the public to our concerns about the analyzed frequency data from claims
demonstrated that the ACEP model and AHA/AHIMA model. We reiterated that with dates of service from March 1,
its variations could likely be we were actively engaged in evaluating 2002 through December 31, 2006,
successfully implemented as national and comparing various guideline including those claims that were
guidelines. Another association models and suggestions that had been processed through December 31, 2006.
reviewed and tested the CMS modified provided to us, and that we continued To determine the national clinic visit
AHA/AHIMA guidelines that were to welcome additional public input on distribution, we reviewed frequency
posted on the CMS Web site. This this important and complex area of the data for each level of new patient visits,
association found it cumbersome to OPPS. The public input we had established patient visits, and
assign the Level 2 and Level 4 clinic received continued to reflect a wide consultation codes. To determine the
visit codes because those levels could variety of perspectives on the types and national emergency department visit
only be assigned when a certain number content of the guidelines different
distribution, we reviewed frequency
of interventions and/or contributory commenters recommended that we
data for the five CPT emergency
factors were performed. The association should implement nationally for the
department visit codes. We did not
suggested changes to the CMS modified OPPS, and no single approach appeared
AHA/AHIMA guidelines for ease of use to be broadly endorsed by the include the five G-codes that describe
and application to specialty clinics, stakeholder community. In addition, we Type B emergency departments because
particularly oncology clinics. One explained that commenters had they became effective January 1, 2007,
developer of national clinic and described the successful application of and we do not yet have a full year of
emergency department visit guidelines many types of internal hospital frequency data for those codes.
noted that many hospitals had guidelines with diverse characteristics The clinic visit data, displayed below
successfully used the presenting for the reporting of hospital clinic and in Figure 1 that is reprinted from the CY
problem-based guidelines that it had emergency department visit levels that 2008 OPPS/ASC proposed rule, revealed
created. The developer noted that its they believed accurately captured the a fairly normal national distribution of
system was easy to use, produced required hospital resources. clinic visits, with the curve somewhat
consistent coding decisions resulting in skewed to the left, consistent with our
3. Visit Guidelines
a normal distribution of visits, and even previous analysis of these data in CY
served as a tool to track effectiveness In preparation for the CY 2008 OPPS/ 2002 (67 FR 66791). In addition, we
and efficiency. ASC proposed rule, we performed data noted that the visit distributions had
In the CY 2008 OPPS/ASC proposed analyses with the goal of studying the been quite stable over the past 5 years.
rule (72 FR 42761), we expressed our current and historical distribution of
appreciation of the thoughtful each level of clinic and emergency Figure 1.—Frequency Distribution of
information that had been provided to department visit codes billed nationally, New and Established Patient Clinic
us up to that time regarding hospitals’ as well as the distribution among Visits, by Level of Code
The graph shown in Figure 1 Some patients may receive minor 1 established patient visits available for
indicated that hospitals, on average, services during low-level visits that are the CY 2008 OPPS/ASC proposed rule
were billing all five levels of visit codes not described by more specific HCPCS were single claims.
with varying frequency, in a consistent codes. We noted that, in general, billing In the CY 2008 OPPS/ASC proposed
pattern over time. It was striking to note a visit in addition to another service rule (72 FR 42761), we also examined
how similar the annual distributions merely because the patient interacted the billing patterns for various classes of
appeared from CY 2002 through CY with hospital staff or spent time in a hospitals, grouped by the hospital
2006. We were not surprised that room for that service would be categories shown in the impact table
hospitals reported a relatively high inappropriate. If a visit and another (Table 61) in section XXIV.B. of this
proportion of low-level visits, given the service were both billed, such as final rule with comment period, to see
typical clinical care provided in HOPDs chemotherapy, a diagnostic test, or a how the clinic visit distributions of
during these visits. Many Medicare surgical procedure, the visit should be levels reported for these various
patients are evaluated regularly in separately identifiable from the other categories compared to the national
clinics by hospitals’ clinical staff to service because the resources used to distribution of clinic visit levels. For
determine the status of their chronic provide nonvisit services, including these subcategories, we specifically
medical conditions and to make staff time, equipment, and supplies, focused on the number of established
adjustments to treatment plans, and among others, were captured in the line patient visits billed at each level.
those visits may frequently be reported item for that service. We believed that Generally, the distribution for major
as a low-level visit if that is consistent hospitals by and large were abiding by teaching hospitals, minor teaching
with the hospital’s internal guidelines this guidance because more than 90 hospitals, and nonteaching hospitals
ER27NO07.002</GPH>
and fiscal intermediary instructions. percent of the CY 2006 claims for Level looked remarkably similar to the
national distribution of established patient case-mix of large teaching The national emergency department
patient visits. Nonteaching hospitals hospitals, which tend to treat a higher visit data, displayed below in Figure 2
tended to bill a greater proportion of proportion of very sick patients than that is reprinted from the CY 2008
Level 1 and 2 patient visits as compared nonteaching hospitals. The distributions OPPS/ASC proposed rule, similarly
to major teaching hospitals, as would be for urban and rural hospitals also revealed a normal national distribution
expected if their general patient acuity closely resembled the national of emergency department visit levels
was slightly lower. Nonteaching distribution, including the rural SCH that was even more symmetrical than
hospitals include many community visit level distribution. The smallest the national clinic visit distribution.
hospitals that treat a wide variety of rural hospitals predictably reported a The national distributions were stable
patients, likely including a larger higher proportion of Level 1 and 2 visit over the past 5 years as well.
proportion of patients with minor
codes and a lower proportion of higher
ailments. Major teaching hospitals Figure 2.—Frequency Distribution of
level visit codes, as compared to the
reported a slightly higher proportion of Emergency Department Visits, by Level
Level 4 and 5 visits. This too correlated national average, consistent with their
of Code
positively with our knowledge of the generally lower case-mix severity.
In the CY 2008 OPPS/ASC proposed see how the emergency department visit visit distributions for major teaching
rule (72 FR 42761), we also looked at distributions of levels billed by hospitals, minor teaching hospitals, and
various classes of hospitals, grouped by hospitals in each of these various nonteaching hospitals were almost
the hospital categories that we show in categories compared to the national identical to the national distribution of
the impact table in section XXIV.B. of distribution of emergency department emergency department visits. No
this final rule with comment period, to visit levels. The emergency department significant differences were noted. The
ER27NO07.003</GPH>
emergency department visit addition, the stable distribution of clinic was reasonable to elaborate upon the
distributions for urban and rural and emergency department visits standards for hospitals’ internal
hospitals also closely resembled the reported under the OPPS over the past guidelines that we proposed to apply in
national distribution of emergency several years indicated that hospitals, CY 2008, based on our knowledge of
department visits. Rural hospitals in the both nationally in the aggregate and hospitals’ experiences to date with
aggregate reported slightly higher grouped by specific hospital classes, guidelines for visits.
proportions of Level 2 and 3 emergency were generally billing in an appropriate (7) The coding guidelines should be
department visits than the national and consistent manner as we would written or recorded, well-documented,
average, and slightly fewer Level 4 and expect in a system that accurately and provide the basis for selection of a
5 visits. When subdividing rural distinguished among different levels of specific code.
hospitals into groupings based on size, service based on the associated hospital (8) The coding guidelines should be
the distribution for small, medium, and resources. applied consistently across patients in
large rural hospitals closely mirrored Therefore, while we explained in the the clinic or emergency department to
the national average distribution. Large CY 2008 OPPS/ASC proposed rule that which they apply.
rural hospitals tended to report higher we would continue to evaluate the (9) The coding guidelines should not
level emergency department visits than information and input we had received change with great frequency.
smaller rural hospitals. All of these from the public during CY 2007, as well (10) The coding guidelines should be
observations regarding the patterns of as comments on the CY 2008 OPPS/ASC readily available for fiscal intermediary
reporting for rural hospitals were proposed rule, regarding the necessity (or, if applicable, MAC) review.
consistent with our expectations for care and feasibility of implementing different (11) The coding guidelines should
delivery at those hospitals. types of national guidelines, we did not result in coding decisions that could be
Overall, both the clinic and propose to implement national visit verified by other hospital staff, as well
emergency department visit guidelines for clinic or emergency as outside sources.
distributions indicated that hospitals In the CY 2008 OPPS/ASC proposed
department visits for CY 2008. Instead,
were billing consistently over time and rule, we invited public comment on
hospitals would continue to report visits
in a manner that distinguished between these principles, specifically, whether
during CY 2008 according to their own
visit levels, resulting in relatively hospitals’ guidelines currently met these
internal hospital guidelines.
normal distributions nationally for the principles, how difficult it would be for
In the absence of national guidelines,
OPPS, as well as for smaller classes of hospitals’ guidelines to meet these
we will continue to regularly reevaluate
hospitals. These proposed rule analyses principles if they did not meet them
patterns of hospital outpatient visit
were generally consistent with our already, and whether hospitals believed
reporting at varying levels of
understanding of the clinical and that certain standards should be added
disaggregation below the national level
resource characteristics of different or removed. We considered stating that
to ensure that hospitals continued to bill
levels of hospital outpatient clinic and a hospital must use one set of
appropriately and differentially for
emergency department visits. emergency department visit guidelines
these services. In addition, we note our
In the CY 2008 OPPS/ASC proposed for all emergency departments in the
expectation that hospitals’ internal
rule, we specifically invited public hospital but thought that some
guidelines would comport with the
comment as to whether a pressing need departments that might be considered
principles listed below.
for national guidelines continued at this (1) The coding guidelines should emergency departments, such as the
point in the maturation of the OPPS, or follow the intent of the CPT code obstetrics department, might find it
if the current system where hospitals descriptor in that the guidelines should more practical and appropriate to use a
create and apply their own internal be designed to reasonably relate the different set of guidelines than the
guidelines to report visits was currently intensity of hospital resources to the general emergency department.
more practical and appropriately different levels of effort represented by Similarly, we believed that it was
flexible for hospitals. We explained that the code (65 FR 18451). possible that various specialty clinics in
although we have reiterated our goal (2) The coding guidelines should be a hospital could have their own set of
since CY 2000 to create national based on hospital facility resources. The guidelines, specific to the services
guidelines, this complex undertaking for guidelines should not be based on offered in those specialty clinics.
these important and common hospital physician resources (67 FR 66792). However, if different guidelines were
services was proving more challenging (3) The coding guidelines should be implemented for different clinics, we
than we initially thought as we received clear to facilitate accurate payments and stated that hospitals should ensure that
new and expanded information from the be usable for compliance purposes and these guidelines reflected comparable
public on current hospital reporting audits (67 FR 66792). resource use at each level to the other
practices that led to appropriate (4) The coding guidelines should meet clinic guidelines that the hospital might
payment for the hospital resources the HIPAA requirements (67 FR 66792). apply.
associated with clinic and emergency (5) The coding guidelines should only Comment: A number of commenters
department visits. We believed that require documentation that is clinically were divided as to whether there is a
many hospitals had worked diligently necessary for patient care (67 FR 66792). need for national guidelines. The
and carefully to develop and implement (6) The coding guidelines should not majority of the commenters requested
their own internal guidelines that facilitate upcoding or gaming (67 FR that CMS continue work on national
reflected the scope and types of services 66792). guidelines to ensure consistent
they provided throughout the hospital We also proposed the following five reporting of hospital visits. Some of the
outpatient system. Based on public additional principles for application to commenters requested that the
comments, as well as our own hospital-specific guidelines, based on guidelines be implemented as soon as
knowledge of how clinics operate, it our evolving understanding of the possible, ensuring 6 to 12 months of
seemed unlikely that one set of important issues addressed by many advance notice. Other commenters
straightforward national guidelines hospitals in developing their internal suggested that guidelines would be
could apply to the reporting of visits in guidelines that now have been used for helpful, but that it was preferable to
all hospitals and specialty clinics. In a number of years. We believed that it invest significant time reviewing and
perfecting guidelines rather than to hospitals and associations to help create E/M codes for consideration regarding
quickly implement guidelines that guidelines. We acknowledge that it physician visit reporting.
could later prove to be problematic. would be desirable to many hospitals to Regarding principle 8, a hospital with
Several commenters requested that CMS have one set of national guidelines. multiple clinics (for example, primary
create national guidelines and then However, we also understand that it care, oncology, wound care, etc.) may
request the development of CPT codes would be disruptive to other hospitals have different coding guidelines for
specific to hospital visits. Several that have successfully adopted internal each clinic, but the guidelines must be
commenters offered their assistance in guidelines to implement any new set of applied uniformly within each separate
creating specialty clinic guidelines, national guidelines, while we address clinic. We note that the hospital’s
reviewing guidelines, or helping in the problems that would be inevitable in assorted set of internal guidelines must
other ways, with the ultimate goal of the case of any new set of guidelines measure resource use in a relative
creating national guidelines. One that would be applied by thousands of manner, in relation to each other. For
commenter believed it is absolutely hospitals. Creating national guidelines example, the hospital resources required
necessary to create national guidelines, has proven more difficult than initially for a Level 3 established patient visit
particularly because CMS is moving anticipated, as detailed above, and some under one set of guidelines should be
toward greater packaging. hospitals have expressed significant comparable to the resources required for
Other commenters stated that the concerns about virtually all of the a Level 3 established patient visit under
principles that were included in the CY models we have discussed. all other sets of clinic visit guidelines
2008 OPPS/ASC proposed rule were Based on our analyses for the CY 2008 used by the hospital.
appropriate, reasonable, and sufficient, proposed rule, both clinic and Regarding principle 9, we would
and that it was unnecessary to emergency department national visit generally expect hospitals to adjust their
implement national guidelines. The distributions appear normal and guidelines less frequently than every
commenters stated that hospital specific relatively stable over time, indicating few months, and we believe it would be
guidelines are practical and that hospitals as a whole are billing the reasonable for hospitals to adjust their
appropriately flexible. Several of the full range of visit codes in an guidelines annually, if necessary.
commenters noted that their own appropriate manner, a reassuring Regarding principle 10, hospitals
internal guidelines already met all of the finding. We noted similar distributions should use their judgment to ensure that
principles, or that the internal for subclasses of hospitals, as well. We coding guidelines are readily available,
guidelines used by member hospitals or will continue to work on national in an appropriate and reasonable format.
their associations likely already comply guidelines, and we continue to We would encourage fiscal
with these principles. Other encourage comments and submission of intermediaries and MACs to review a
commenters requested that the AMA successful models. In the meantime, hospital’s internal guidelines when an
include these principles in the CPT before national guidelines are audit occurs.
book to clarify that the CPT E/M code implemented, we will require each Regarding principle 11, hospitals
descriptors do not fully describe hospital’s internal guidelines to meet should use their judgment to ensure that
hospital resources, and that it is the principles stated above. We agree their coding guidelines can produce
appropriate for hospitals to use their with commenters that it could be useful results that are reproducible by others.
internal guidelines to code hospital for the AMA to publish these principles In the absence of national visit
outpatient visits. in order to clarify that it is appropriate guidelines, hospitals have the flexibility
Several commenters asked for for hospitals to apply different to determine whether or not to include
clarification of details related to the guidelines than physicians’ guidelines separately payable services as a proxy to
principles, such as how often the to report visits provided in HOPDs. We measure hospital resource use that is
guidelines should be updated, how encourage interested parties to contact not associated with those separately
‘‘readily available’’ is defined, and the AMA to determine whether there is payable services. The costs of hospital
whether hospitals can use physician an appropriate forum to publish these resource use associated with those
guidelines to report hospital visits. principles, so that they are broadly separately payable services would be
Some commenters believed the distributed and readily available. paid through separate OPPS payment
principles were too vague and strongly We will elaborate on the principles for the other services. We encourage
encouraged the creation of national that were commented on by several hospitals with more specific questions
guidelines. Several commenters commenters. The second principle related to the creation of internal
requested that CMS inform the fiscal states that the guidelines should not be guidelines to contact their local fiscal
intermediaries and MACs that they based on physician resources. Hospitals intermediary or MAC.
should use each hospital’s internal are responsible for reporting the CPT Comment: Many commenters
guidelines as a reference when auditing E/M visit code that appropriately requested that CMS allow hospitals to
hospital records, rather than using only represents the resources utilized by the bill critical care without a minimum
the fiscal intermediary’s own set of hospital, rather than the resources time requirement or with a time
guidelines. One commenter requested utilized by the physician. This does not requirement of 15 minutes. The
clarification related to how a hospital preclude a hospital from using or commenters noted that the hospital may
could create several sets of guidelines adapting the physician guidelines if the have its greatest resource use in the first
for various areas of the hospital. Many hospital believes that such guidelines 10 minutes of critical care, much earlier
commenters requested clarification adequately describe hospital resources. than the 30-minute minimum required
about whether separately payable We note that the first principle states in the code descriptor.
services could be included in internal that coding guidelines should follow the Response: The CPT instructions for
guidelines, in the absence of national intent of the CPT code descriptor to reporting of critical care services with
guidelines. relate the intensity of resources to CPT code 99291 (Critical care,
Response: We appreciate all the different levels of effort represented by evaluation and management of the
thoughtful comments that we received the code, not that the hospital’s critically ill or critically injured patient;
related to the creation of national guidelines need to specifically consider first 30–74 minutes) and the CPT code
guidelines, as well as offers from the three factors included in the CPT descriptor specify that the code can only
be billed if 30 minutes or more of or hospital-specific visit guidelines homogeneity or whose product specific
critical care services are provided. continue to facilitate consistent and median costs may not have been similar.
Because hospitals will be reporting CPT accurate reporting of hospital outpatient Some of the blood product HCPCS
codes for critical care services for CY visits in a manner that is resource-based codes were reassigned to the new APCs
2008, they must continue to provide a and supportive of appropriate OPPS (Table 34 of the November 15, 2004
minimum of 30 minutes of critical care payments for the efficient and effective final rule with comment period (69 FR
services in order to bill CPT code 99291, provision of visits in hospital outpatient 65819)).
according to the CPT code descriptor settings. We also noted in the November 15,
and CPT instructions. We note that 2004 final rule with comment period
hospitals can report the appropriate X. OPPS Payment for Blood and Blood that public comments on previous OPPS
clinic or emergency department visit Products rules had stated that the CCRs that were
code consistent with their internal A. Background used to adjust charges to costs for blood
guidelines if fewer than 30 minutes of products in past years were too low.
Since the implementation of the OPPS
critical care is provided. Past commenters indicated that this
in August 2000, separate payments have
We appreciate all of the comments we approach resulted in an
been made for blood and blood products
have received in the past from the underestimation of the true hospital
public on visit guidelines, and we through APCs rather than packaging costs for blood and blood products. In
encourage at any time continued them into payments for the procedures response to these comments and the
submission of comments that will assist with which they were administered. APC Panel recommendations from its
us and other stakeholders interested in Hospital payments for the costs of blood February 2004 and September 2004
the development of national guidelines. and blood products, as well as the costs meetings, we conducted a thorough
Until national guidelines are of collecting, processing, and storing analysis of the CY 2003 claims (used to
established, hospitals should continue blood and blood products, are made calculate the CY 2005 APC payment
using their own internal guidelines to through the OPPS payments for specific rates) to compare CCRs between those
determine the appropriate reporting of blood product APCs. On April 12, 2001, hospitals reporting a blood-specific cost
different levels of clinic and emergency CMS issued the original billing center and those hospitals defaulting to
department visits. We would not expect guidance for blood products to hospitals the overall hospital CCR in the
individual hospitals to necessarily (Program Transmittal A–01–50). In conversion of their blood product
experience a normal distribution of visit response to requests for clarification of charges to costs. As a result of this
levels across their claims, although we these instructions, CMS issued Program analysis, we observed a significant
would expect a normal distribution Transmittal 496 on March 4, 2005. The difference in CCRs utilized for
across all hospitals as currently comprehensive billing guidelines in conversion of blood product charges to
observed and as we would also expect Program Transmittal 496 also addressed costs for those hospitals with and
if national guidelines were specific concerns and issues related to without blood-specific cost centers. The
implemented. We understand that, billing for blood-related services, which median hospital blood-specific CCR was
based on different patterns of care, we the public had brought to our attention. almost two times the median overall
could expect that a small community In the CY 2000 OPPS, payments for hospital CCR. As discussed in the
hospital might provide a greater blood and blood products were November 15, 2004 final rule with
percentage of low-level services than established based on external data comment period, we applied a special
high-level services, while an academic provided by commenters due to limited methodology for hospitals not reporting
medical center or trauma center might Medicare claims data. From the CY 2000 a blood-specific cost center, which
provide a greater percentage of high- OPPS to the CY 2002 OPPS, payment simulated a blood-specific CCR for each
level services than low-level services. rates for blood and blood products were hospital that we then used to convert
We would also expect national updated for inflation. For the CY 2003 charges to costs for blood products.
guidelines to provide for five levels of OPPS, as described in the November 1, Thus, we developed simulated medians
coding, to parallel the five payment 2002 final rule with comment period (67 for all blood and blood products based
levels that currently exist. FR 66773), we applied a special on CY 2003 hospital claims data (69 FR
In addition, we are adopting our CY adjustment methodology to blood and 65816).
2008 proposal, without modification, blood products that had significant For the CY 2005 OPPS, we also
that all hospital-specific guidelines for reductions in payment rates from the CY identified a subset of blood products
reporting visits should meet the 11 2002 OPPS to the CY 2003 OPPS, when that had less than 1,000 units billed in
guideline principles listed earlier in this median costs were first calculated from CY 2003. For these low-volume blood
final rule with comment period. hospital claims. Using the adjustment products, we based the CY 2005 OPPS
While we understand the interest of methodology, we limited the decrease in payment rate on a 50/50 blend of the CY
some hospitals in our moving quickly to payment rates for blood and blood 2004 OPPS product-specific OPPS
promulgate national guidelines that will products to approximately 15 percent. median costs and the CY 2005 OPPS
ensure standardized reporting of For the CY 2004 OPPS, as recommended simulated medians based on the
hospital outpatient visit levels, we by the APC Panel, we froze payment application of blood-specific CCRs to all
believe that the issues and concerns rates for blood and blood products at CY claims. We were concerned that, given
identified both by us and others that 2003 levels as we studied concerns the low frequency in which these
may arise are important and require raised by commenters and presenters at products were billed, a few occurrences
serious consideration prior to the the August 2003 and February 2004 of coding or billing errors may have led
implementation of national guidelines. APC Panel meetings. to significant variability in the median
Because of our commitment to provide For the CY 2005 OPPS, we established calculation. The claims data may not
hospitals with 6 to 12 months notice new APCs that allowed each blood have captured the complete costs of
prior to implementation of national product to be assigned to its own these products to hospitals as fully as
guidelines, we would not implement separate APC, as several of the previous possible. This low-volume adjustment
national guidelines prior to CY 2009. blood product APCs contained multiple methodology also allowed us to further
Our goal is to ensure that OPPS national blood products with no clinical study the issues raised by commenters
and by presenters at the September 2004 is based for CY 2007. Of the 34 blood hospital charges for blood and blood
APC Panel meeting, without putting and blood products, the proposed products to costs, noting that this
beneficiary access to these low volume median costs increased for 24 products methodology is consistent with the
blood products at risk. We have adopted and declined for 10 products compared principles of a prospective payment
the use of this modified CCR process for to the adjusted medians on which system.
calculating unadjusted median costs for payment is based in CY 2007. Products Other commenters, however, stated
blood and blood products each year with the largest proposed declines were, that the payment rates for many blood
since the CY 2005 OPPS. like the products with the greatest and blood products do not adequately
Overall, median costs from CY 2003 increases, mostly those products with reflect their acquisition, management,
(used for the CY 2005 OPPS) to CY 2004 low volume use in the hospital and processing costs. They noted that
(used for the CY 2006 OPPS) were outpatient setting. The products whose the costs of blood and blood products
relatively stable, with a few significant proposed costs declined more than 5 continue to increase due to safety
increases and decreases from the CY percent account for less than 1 percent requirements, technological advances,
2005 adjusted median costs for some of the total volume of blood and blood and donor recruitment and retention
specific blood products. For the CY products in the claims used to calculate challenges, and that the 2-year lag
2006 OPPS, we adopted a payment the proposed rates. No product’s median inherent in OPPS ratesetting would not
adjustment policy that limited cost declined by more than 18 percent allow these costs to be captured.
significant decreases in APC payment in the proposed rule data. The products In particular, these commenters were
rates for blood and blood products from whose proposed median costs increased concerned that the median unit cost
the CY 2005 OPPS to the CY 2006 OPPS account for 79 percent of the total published in the proposed rule for the
to not more than 5 percent. We applied volume of blood and blood products in blood product with the highest
this adjustment to 11 blood and blood the claims used to calculate the Medicare volume, leukocyte-reduced
product APCs for the CY 2006 OPPS, proposed rates. red blood cells, is less than the
which we identified in Table 33 of the As we indicated in the CY 2007 acquisition cost of the product and
CY 2006 OPPS final rule with comment OPPS/ASC final rule with comment would fail to pay hospitals for overhead
period (70 FR 68687). period (71 FR 68147), we believe that costs (for example, storage, handling,
In the CY 2007 OPPS, we established the simulated CCR methodology results inventory management). One
payment rates for blood and blood in accurate reflections of the relative commenter referred to data submitted
products by using the same simulation estimated costs of these products for by 1,600 hospitals in response to a
methodology described in the November hospitals without blood cost centers survey of 2004 blood costs that was
15, 2004 final rule with comment period and, therefore, for these products in conducted by the Department of Health
(69 FR 65816), which utilizes hospital- general. Our 1-year adjustment to the and Human Services under a contract
specific actual or simulated CCRs for median costs for CY 2007, where the with the American Association of Blood
blood cost centers to convert hospital median costs for blood and blood Banks (AABB). According to the AABB
charges for blood and blood products to products decreased by more than 25 survey, the proposed CY 2008 payment
costs. However, we provided a payment percent from the CY 2006 adjusted for leukocyte reduced red blood cells is
transition for those blood products for median costs, was intended to provide less than what hospitals paid for this
which the difference between their CY a reasonable transition to use of the product in 2004.
2006 adjusted median cost and their CY simulated median costs for payment of Response: The median costs for blood
2007 simulated median cost was greater blood and blood products under the and blood products in this final rule
than 25 percent. Specifically, we set the OPPS without further adjustment. The with comment period are derived from
CY 2007 median costs upon which medians that result from the use of the the CY 2006 hospital outpatient claims
payments for blood and blood products simulated CCR process and the CY 2006 data and have the benefit of reflecting
are based at the higher of the CY 2007 claims available for the proposed rule the reporting clarifications that were
unadjusted simulated median cost or 75 generally result in median costs that we provided through CMS Program
percent of the CY 2006 adjusted median believe provide an appropriate basis for Transmittal 496, dated March 4, 2005.
cost on which the CY 2006 payment was the relative weights on which the CY This instruction articulated and
based. 2008 payments for blood and blood clarified many questions that had been
products would be based. Therefore, we raised by hospitals and others about
B. Payment for Blood and Blood how hospitals should report charges for
Products proposed to use the median costs
derived from the application of blood blood and blood products. CY 2006
In the CY 2008 OPPS/ASC proposed cost center CCRs for those hospitals that claims are the first OPPS claims that
rule (72 FR 42766 through 42767), we have blood cost centers or simulated represent a full year of hospitals’
proposed to set the payment rates for blood cost center CCRs for those reporting consistent with our detailed
blood and blood products for CY 2008 hospitals that do not have blood cost blood billing guidelines issued in CY
at the unadjusted median cost for these centers as the basis for the CY 2008 2005. Thus, we expect that the reporting
products, calculated using the hospital- payments for blood and blood products, of charges and units for blood and blood
specific simulated blood CCR for each without further adjustment. products in CY 2006 has improved over
hospital that does not have a blood cost We received several public comments past years, especially with respect to
center. For the proposed rule, we regarding this proposal. A summary of hospitals’ inclusion of all charges
calculated median costs for blood and the comments and our responses related to acquisition, processing, and
blood products using claims for services follows. handling of blood and blood products as
furnished on or after January 1, 2006, Comment: Some commenters specifically described in each of the
and before January 1, 2007, using the supported CMS’ proposal to increase the relevant HCPCS P-code descriptors. As
actual or simulated CCRs from the most APC payment rates for many blood such, we believe that the median costs
recently available hospital cost reports. products. One commenter expressed for blood and blood products from the
The median costs derived from this data support for our methodology of utilizing CY 2006 claims data reflect this
process were relatively stable compared hospital-specific actual or simulated improved reporting of charges and units
to the median costs on which payment CCRs for blood cost centers to convert for these products, particularly with
regard to the most commonly furnished are finalizing, without modification, our when additional data are considered for
blood and blood products, such as proposal to establish payment rates for the final rule.
leukocyte-reduced red blood cells. We blood and blood products by using the As has been the case in the past, the
do not believe it is necessary or same simulation methodology described low-volume products (which we have
appropriate to incorporate external data in the November 15, 2004 final rule historically defined as fewer than 1,000
such as the AABB survey into our with comment period (69 FR 65816), units per year) show the most volatility,
ratesetting process for blood and blood which utilizes hospital-specific actual with medians increasing as much as 84
products because in a relative weight or simulated CCRs for blood cost centers percent compared to CY 2007 adjusted
system, it is the relativity of costs to one to convert hospital charges for blood simulated median costs. Overall, of the
another, rather than absolute cost, that and blood products to costs. We 11 low-volume products, 7 products
is most important. External data lack continue to believe that using blood- show increases in their median unit
relativity to the estimated costs derived specific CCRs applied to hospital claims costs compared to their CY 2007
from the claims and cost report data and data will result in payments that more
adjusted simulated median unit costs,
generally are not appropriate for fully reflect hospitals’ true costs of
and 4 products show decreases in their
determining relative weights that result providing blood and blood products
median unit costs compared to their CY
in payment rates. than our general methodology of
2007 adjusted simulated median unit
Comment: One commenter noted that defaulting to the overall hospital CCR
costs. The 4 low-volume products for
charges billed under revenue code 0391 when more specific CCRs are
which the median costs decline
are mapped to the blood bank cost unavailable.
Table 45 below reflects the final compared to their CY 2007 adjusted
center under cost reporting rules and in
median unit costs developed using the simulated median unit costs represent
the revenue code to cost center
methodology described above and only 0.18 percent of the total units of
crosswalk that we use to reduce charges
compares the difference between the CY blood products furnished in the CY
to estimated costs. According to the
2008 simulated CCR median unit costs 2006 OPPS claims data.
commenter, blood transfusion or blood
administration services billed under this and the CY 2007 adjusted simulated In summary, we are setting the final
revenue code represent charges for CCR median unit costs. Of the 34 blood payment rates for blood and blood
nursing costs to administer the blood products, median costs per unit products for CY 2008 based on the
products, rather than blood bank costs (calculated using the simulated blood- unadjusted medians for blood and blood
for the products themselves. The specific CCR methodology) for CY 2008 products (calculated using the
commenter stated that the CCR used by rise for 19 of them compared to their CY simulated blood-specific CCR
CMS to calculate median unit costs for 2007 adjusted simulated median unit methodology) that are derived from CY
blood is lowered as a result of revenue costs. These 19 products account for 2006 claims data as we have described.
code 0391 mapping to the blood bank about 77 percent of all units of blood We are reassured by the relatively stable
cost center, because charges associated and blood products furnished to or slightly increasing median costs from
with blood administration are included Medicare beneficiaries in the HOPD as CY 2005 to CY 2006 claims data for
in the divisor for the blood bank CCR. reflected in our CY 2006 claims data. most blood products, a pattern that we
Accordingly, the commenter requested The median costs decline for 15 believe may reflect more accurate and
that CMS not map charges billed under products, which constitute complete hospital reporting and
0391 to the blood bank cost center. approximately 23 percent of all units of charging practices for these products.
Response: Revenue code 0391 maps to blood and blood products furnished to Consistent with our billing guidelines,
cost report center 4700, Blood Storing, Medicare beneficiaries in the HOPD in hospitals may now be taking into
Processing, and Transfusing. Because CY 2006. Unlike in previous years, none consideration all appropriate costs
this cost center includes transfusion of the high-volume products experience associated with providing blood and
services in its title, it is appropriate for decreases of more than 25 percent. blood products when charging for those
hospitals to report charges under While it is true that more blood and products under the OPPS. Unlike in
revenue code 0391 for nursing costs to blood products experienced a decline previous years, we do not believe it is
administer blood products, as well as compared to CY 2007 adjusted necessary to provide a transitional
for blood storage and processing, and for simulated median costs using final rule payment adjustment. Under this final
revenue code 0391 to map to this cost data compared with proposed rule data, policy, we expect that payments would
center. We do not agree that we should these changes are relatively minor and increase for approximately 77 percent of
change our revenue code to cost center consistent with normal fluctuations due blood and blood product units if
crosswalk. to CCR changes and inclusion of claims patterns of furnishing blood products in
After consideration of the public from additional providers that are CY 2008 remain similar to those in CY
comments received on this proposal, we commonly observed for OPPS services 2006.
TABLE 45.—CY 2008 MEDIAN COSTS FOR BLOOD AND BLOOD PRODUCTS
CY 2007 Pay-
ment median:
Higher of CY
2007 simu- CY 2008 simu-
lated CCR me-
HCPCS code* Short descriptor CY 2008 units lated CCR me-
dian unit cost dian unit cost
or 75% of CY
2006 adjusted
median unit
cost
P9010 ...................................... Whole blood for transfusion ................................................... 2,687 $131 $252
P9011 ...................................... Blood split unit ........................................................................ 330 136 147
P9012 ...................................... Cryoprecipitate each unit ....................................................... 5,811 48 41
TABLE 45.—CY 2008 MEDIAN COSTS FOR BLOOD AND BLOOD PRODUCTS—Continued
CY 2007 Pay-
ment median:
Higher of CY
2007 simu- CY 2008 simu-
lated CCR me-
HCPCS code* Short descriptor CY 2008 units lated CCR me-
dian unit cost dian unit cost
or 75% of CY
2006 adjusted
median unit
cost
P9016 ...................................... RBC leukocytes reduced ........................................................ 624,120 175 183

P9017 ...................................... Plasma 1 donor frz w/in 8 hr .................................................. 47,159 70 66
P9019 ...................................... Platelets, each unit ................................................................. 21,160 59 69
P9020* .................................... Plaelet rich plasma unit .......................................................... 791 208 359
P9021 ...................................... Red blood cells unit ................................................................ 155,886 129 128
P9022 ...................................... Washed red blood cells unit ................................................... 2,473 210 274
P9023* .................................... Frozen plasma, pooled, sd ..................................................... 376 57 73
P9031 ...................................... Platelets leukocytes reduced ................................................. 18,608 95 106
P9032 ...................................... Platelets, irradiated ................................................................. 10,940 129 120
P9033 ...................................... Platelets leukoreduced irrad ................................................... 4,970 125 138
P9034 ...................................... Platelets, pheresis .................................................................. 9,858 450 436
P9035 ...................................... Platelet pheres leukoreduced ................................................. 51,624 486 493
P9036 ...................................... Platelet pheresis irradiated ..................................................... 1,437 416 413
P9037 ...................................... Plate pheres leukoredu irrad .................................................. 26,026 614 622
P9038 ...................................... RBC irradiated ........................................................................ 6,091 196 193
P9039 ...................................... RBC deglycerolized ................................................................ 908 356 343
P9040 ...................................... RBC leukoreduced irradiated ................................................. 79,642 216 237
P9043* .................................... Plasma protein fract, 5%, 50ml .............................................. 24 51 93
P9044 ...................................... Cryoprecipitate reduced plasma ............................................ 5,437 82 83
P9048* .................................... Plasmaprotein fract, 5%, 250ml ............................................. 624 237 213
P9050* .................................... Granulocytes, pheresis unit .................................................... 13 746 1,371
P9051* .................................... Blood, l/r, cmv-neg ................................................................. 3,831 156 146
P9052 ...................................... Platelets, hla-m, l/r, unit ......................................................... 1,723 668 638
P9053 ...................................... Plt, pher, l/r cmv-neg, irr ........................................................ 1,627 701 678
P9054 ...................................... Blood, l/r, froz/degly/wash ...................................................... 668 210 216
P9055* .................................... Plt, aph/pher, l/r, cmv-neg ...................................................... 922 395 483
P9056 ...................................... Blood, l/r, irradiated ................................................................ 3,986 143 145
P9057 ...................................... RBC, frz/deg/wsh, l/r, irrad ..................................................... 156 493 369
P9058 ...................................... RBC, l/r, cmv-neg, irrad ......................................................... 3,552 261 260
P9059 ...................................... Plasma, frz between 8–24hour .............................................. 3,480 74 77
P9060 ...................................... Fr frz plasma donor retested .................................................. 319 74 52
* Indicates CY 2007 payment at 75 percent of CY 2006 adjusted median cost.
XI. OPPS Payment for Observation observation APC for an episode of diagnostic testing requirements for
Services observation care has been provided in separately payable observation (67 FR
limited circumstances. Effective for 66794, 69 FR 65828, and 70 FR 68688).
A. Observation Services (HCPCS code
services furnished on or after April 1, Throughout this time period, we
G0378)
2002, separate payment for observation maintained separate payment for
Observation care is a well-defined set was made if the beneficiary had chest observation care only for the three
of specific, clinically appropriate pain, asthma, or congestive heart failure specified medical conditions, and OPPS
services that include ongoing short-term and met additional criteria for payment for observation for all other
treatment, assessment, and reassessment diagnostic testing, minimum and clinical conditions remained packaged.
before a decision can be made regarding maximum limits to observation care Since January 1, 2006, hospitals have
whether patients will require further time, physician care, and reported observation services based on
treatment as hospital inpatients or if documentation in the medical record an hourly unit of care using HCPCS
they are able to be discharged from the (66 FR 59879). Payment for observation code G0378 (Hospital observation
hospital. Observation status is care that did not meet these specified services, per hour). This code has a
commonly assigned to patients with criteria was packaged. Between CY 2003 status indicator of ‘‘Q’’ under the CY
unexpectedly prolonged recovery after and CY 2006, several more changes 2007 OPPS, meaning that the OPPS
surgery and to patients who present to were made to the OPPS policy regarding claims processing logic determines
the emergency department and who separate payment for observation care, whether the observation is packaged or
then require a significant period of such as: clarification that observation is separately payable. The OCE’s current
treatment or monitoring before a not separately payable when billed with logic determines whether observation
decision is made concerning their next ‘‘T’’ status procedures on the day of or services billed under HCPCS code
placement. day before observation care; G0378 is separately payable through
Payment for all observation care development of specific Level II HCPCS APC 0339 (Observation), or whether
under the OPPS was packaged prior to codes for hospital observation care and payment for observation services will be
CY 2002. Since CY 2002, separate direct admission to observation care; packaged into the payment for other
payment of a single unit of an and removal of the initially established separately payable services provided by
the hospital in the same encounter observation services. The additional indicator ‘‘T,’’ for example, insertion of
based on criteria discussed below. Also services listed below must have a line a bladder catheter or laceration repair,
since January 1, 2006, hospitals have item date of service on the same day or are reported on the same claim with an
reported HCPCS code G0379 (Direct the day before the date reported for emergency department visit and
admission of patient for hospital observation: observation care, and all other criteria
observation care) for a direct admission • An emergency department visit for separate observation payment (for
of a patient to observation care. The (APC 0609, 0613, 0614, 0615, or 0616); example, qualifying diagnosis code,
OPPS pays separately for that direct or number of hours) are met. The Panel
admission reported under HCPCS code • A clinic visit (APC 0604, 0605, also voted to change the name of the
G0379 in situations where payment for 0606, 0607, or 0608); or Observation Subcommittee to the
the actual observation services reported • Critical care (APC 0617); or Observation and Visit Subcommittee,
under HCPCS G0378 are packaged and • Direct admission to observation based on the Panel’s interest in
where the direct admission meets reported with HCPCS code G0379 (APC expanding the scope of the
certain other criteria. The OCE logic 0604). subcommittee’s work.
determines when HCPCS code G0379 is 2. No procedure with a ‘‘T’’ status In response to the August 2006 APC
separately payable under the OPPS. indicator can be reported on the same Panel recommendations and public
For CY 2007, we continued to apply day or day before observation care is comments on the CY 2007 OPPS/ASC
the criteria for separate payment for provided. proposed rule, we stated in the CY 2007
observation care and the coding and D. Physician Evaluation OPPS/ASC final rule with comment
payment methodology for observation period that we intended to perform a
1. The beneficiary must be in the care series of analyses over the upcoming
care that were implemented in CY 2006.
of a physician during the period of year to explore the potential effects of
Observation care is reported using
observation, as documented in the adding syncope and dehydration as
HCPCS code G0378 and observation that
medical record by admission, discharge, qualifying diagnoses for separately
meets the criteria for separate payment
and other appropriate progress notes payable observation care, as well as the
maps to APC 0339 (Observation). The
that are timed, written, and signed by possibility of allowing separate
current criteria for separate payment for
the physician. observation payment for claims for
observation (APC 0339) are:
2. The medical record must include observation care that also included
A. Diagnosis Requirements documentation that the physician specific minor or routine procedures
1. The beneficiary must have one of explicitly assessed patient risk to that have ‘‘T’’ status indicators (71 FR
three medical conditions: congestive determine that the beneficiary would 68150).
heart failure (CHF), chest pain, or benefit from observation care. At the March 2007 APC Panel
asthma. The CY 2007 list of diagnoses eligible meeting, we discussed with the
2. Qualifying ICD–9–CM diagnosis as a criterion for separate payment for Observation and Visit Subcommittee
codes must be reported in Form Locator observation services may be found in and the full Panel the results of the
(FL) 76, Patient Reason for Visit, or FL Table 44 of the CY 2007 OPPS/ASC requested data analyses regarding
67, principal diagnosis, or both in order final rule with comment period (71 FR syncope and dehydration, as well as the
for the hospital to receive separate 68152). occurrences of claims for observation
payment for APC 0339. If a qualifying For CY 2007, we made one minor care that also include specific minor or
ICD–9–CM diagnosis code(s) is reported change in payment for direct admission routine procedures that have ‘‘T’’ status
in the secondary diagnosis field, but is to observation. As part of the changes in indicators. With respect to the diagnosis
not reported in either the Patient Reason APC assignments and payments for analyses, the data presented to the
for Visit field (FL 76) or in the principal clinic and emergency department visits, Subcommittee and Panel (consisting of
diagnosis field (FL 67), separate low level clinic visits were moved from partial year 2006 claims data that were
payment for APC 0339 is not allowed. APC 0600 (Low Level Clinic Visits) to less complete than the claims data
APC 0604 (Level 1 Clinic Visits), with available for the proposed rule) showed
B. Observation Time a CY 2007 payment rate of that there were 136,977 claims for
1. Observation time must be approximately $51. Under the separately payable observation services
documented in the medical record. circumstances where direct admission for the currently eligible conditions of
2. A beneficiary’s time in observation to observation is separately payable, we chest pain, asthma, and congestive heart
(and hospital billing) begins with the finalized our CY 2007 assignment of failure, with a median cost of $453. The
beneficiary’s admission to an HCPCS code G0379 to APC 0604, frequency of claims for observation
observation bed. consistent with its CY 2006 placement services for the diagnoses of syncope
3. A beneficiary’s time in observation in the APC for Low Level Clinic Visits. and dehydration, when all other criteria
(and hospital billing) ends when all During the APC Panel’s August 2006 for separate payment of observation
clinical or medical interventions have meeting, the Observation Subcommittee services (other than diagnosis) were
been completed, including followup made several recommendations met, was 46,961 claims, with a
care furnished by hospital staff and regarding observation services. The first somewhat lower median cost of $416.
physicians that may take place after a recommendation was that CMS consider The effect of adding both syncope and
physician has ordered the patient to be adding syncope and dehydration to the dehydration to the current diagnoses
released or admitted as an inpatient. list of diagnoses for which observation eligible for separate payment would be
4. The number of units reported with services would qualify for separate to lower the median cost for APC 0339
HCPCS code G0378 must equal or payment. Second, the Observation slightly to $443, based on the early
exceed 8 hours. Subcommittee recommended that CMS partial 2006 data presented to the
perform claims analyses and present Subcommittee and Panel. For the study
C. Additional Hospital Services data that would allow CMS to consider of ‘‘T’’ status procedures in relation to
1. The claim for observation services revising criteria for separately payable observation, we identified relatively few
must include one of the following observation care when certain instances (5,162) where observation met
services in addition to the reported procedures that are assigned status all of the criteria for separate payment,
including the current three conditions observation services, we did not conditions, we indicated that we would
of CHF, asthma, chest pain, except for propose to adopt the Panel’s retain as general reporting requirements
the presence of a ‘‘T’’ status procedure. recommendation to study claims data the criteria related to physician
Of these claims, very few had any for separately payable observation care evaluation, documentation and
significant frequency. The most (including claims for observation for observation beginning and ending time
common procedures were those relating syncope and dehydration) that also because those are more general
to heart catheterization, angioplasty include specific minor or routine requirements that help to ensure proper
procedures, and endoscopies. As we procedures that have ‘‘T’’ status reporting of observation on hospital
have stated in the past, we believe that indicators. We agreed with the APC claims. The criteria for reporting of
the observation services in these cases Panel and the IOM that there is observation services under HCPCS code
may be related to these procedures, and currently no compelling rationale for a G0378 that we proposed to retain are:
we have no way of discerning from our different OPPS payment approach for
A. Observation Time
data whether the procedure happened observation care for only three specific
before or after the observation services. clinical conditions. We recognized that 1. Observation time must be
The APC Panel made three observation care may play an important documented in the medical record.
recommendations related to these role in the treatment of many Medicare 2. A beneficiary’s time in observation
topics. First, the Panel recommended beneficiaries in the HOPD, decreasing (and hospital billing) begins with the
that CMS add syncope and dehydration the need for short inpatient admissions beneficiary’s admission to an
to the list of clinical conditions eligible and ensuring safe discharges of patients observation bed.
for separate observation payment. to their homes. Therefore, we stated that 3. A beneficiary’s time in observation
However, the Panel requested that, if we believe that the proposed CY 2008 (and hospital billing) ends when all
CMS added syncope and dehydration to payment policy that would package clinical or medical interventions have
the list of conditions eligible for payment for all observation services been completed, including followup
separate observation payment, CMS consistently for Medicare beneficiaries care furnished by hospital staff and
reexamine the claims data once CMS regardless of their diagnoses is the most physicians that may take place after a
collects a year of observation claims appropriate approach in every case of physician has ordered the patient to be
data, including the additional observation care. We stated in the released or admitted as an inpatient.
conditions, so the Panel could proposed rule that the proposed B. Physician Evaluation
reconsider this recommendation at a methodology encourages hospital
future meeting. Second, the Panel efficiency and provides a consistent 1. The beneficiary must be in the care
recommended that CMS continue to payment policy that allows hospitals to of a physician during the period of
evaluate the types of diagnostic thoughtfully plan for the role of observation, as documented in the
conditions that might qualify for observation services in the emergency medical record by admission, discharge,
separate observation payment in the and postsurgical care of patients with and other appropriate progress notes
future. Third, the Panel recommended many different clinical conditions. that are timed, written, and signed by
that CMS make no changes to the As discussed in section II.A.4.c. of the the physician.
criteria for separate observation CY 2008 OPPS/ASC proposed rule (and 2. The medical record must include
payment related to the performance of discussed in the same section of this documentation that the physician
‘‘T’’ status procedures. final rule with comment period), explicitly assessed patient risk to
We have also taken into consideration observation care is one of seven determine that the beneficiary would
the June 2006 IOM Report entitled, categories of services for which we benefit from observation care.
‘‘Hospital-Based Emergency Care: At the proposed to make packaged payment in At the September 2007 APC Panel
Breaking Point.’’ This report encourages CY 2008. In view of the recent rapid meeting, the Observation and Visit
hospitals to apply tools to improve the growth in HOPD services, we proposed Subcommittee and the full Panel
flow of patients through emergency to move toward larger payment recommended that the work of the
departments, especially through the use packages and bundles under the OPPS subcommittee continue. After two
of observation units (clinical decision because we believe that packaging presentations and robust discussion of
units). The IOM report also recommends creates incentives for providers to the proposal to package observation
that separate OPPS payment be made for furnish services in the most efficient services, the Panel made two additional
all conditions for which observation is way by maximizing their flexibility to recommendations. First, the Panel
indicated. manage their resources, thereby recommended that CMS not finalize the
In the CY 2008 OPPS/ASC proposed encouraging cost containment. proposal to implement observation
rule, we indicated that, in light of the We proposed to package observation services packaging for CY 2008, stating
broader CY 2008 OPPS proposal to care reported with HCPCS code G0378 that it would be detrimental for patients
move toward expanded packaging of for CY 2008 because of our belief that receiving medically necessary services
payment for supportive, dependent the facility portion of observation care is and would increase costs. The Panel
HOPD services, we were not accepting supportive and ancillary to other also requested that CMS provide
the Panel’s recommendation related to primary services being furnished in the specific data on observation in order to
adding syncope and dehydration to the HOPD. Payment for observation would understand trends and utilization for
list of diagnoses eligible for separate be made as part of the payment for the review at the 2008 winter meeting of the
payment or to consider other clinical separately payable independent services Panel. This includes data related to
conditions for separate payment for with which it is billed. We indicated in inappropriate reporting or
observation care. Instead, we proposed the CY 2008 OPPS/ASC proposed rule overutilization of observation services;
to package all observation services that, as part of this proposal, we would frequency and utilization data for the
(reported with HCPCS code G0378) as change the status indicator for HCPCS three conditions for which observation
part of the proposed changes to code G0378 from ‘‘Q’’ to ‘‘N.’’ Although services are now separately payable;
packaged services discussed in section we would discontinue recognizing the association of observation services with
II.A.4. of the proposed rule. Because we criteria for separate payment related to emergency department and clinic visits;
proposed to package payment for all hospital visits and qualifying analysis of the frequency of claims for
observation services compared with the addition, we no longer require a payment policy to pay for extended
inpatient error rate; and a frequency qualifying diagnosis but, for the assessment and management services
distribution showing length of stay data purposes of composite APC payment, that involve lengthy observation
for observation services. will retain all other criteria required in through composite APCs should pay
Second, the Panel recommended that, CY 2007 for separate observation care hospitals appropriately for the services
if CMS finalizes the packaging of payment, including: a minimum they provide as they are caring for
observation services, CMS should create number of 8 hours; a qualifying visit, patients until a decision about inpatient
a composite emergency department/ direct admission to observation care, or admission or safe discharge can be
clinic and observation APC (or a group critical care; and no ‘‘T’’ status made.
of composite APCs) that is only paid procedure reported on the day before or We will work to further educate
when both services are provided. The day of observation services. hospitals, physicians, and all Medicare
Panel added that, if the composite APC Additionally, we are retaining the contractors on appropriate billing for
is paid, neither the clinic nor emergency general reporting requirements for all observation services. We also will
department visit would be paid observation services. These are the analyze the effects of our final CY 2008
separately. Also, coding and service requirements related to the physician OPPS payment policy for observation
requirements currently applicable to order and evaluation, documentation, services over time on patterns of
separately payable observation would and observation beginning and ending Medicare beneficiary inpatient
remain the same, with the exception times. They are more general criteria admissions, high level clinic and ED
that there would be no clinical that ensure the proper reporting of visits, and observation care.
condition restriction on payment for the observation care on correctly coded Comment: Several commenters
composite APC and payment rates for hospital claims that reflect the charges discussed the typical length of
this composite APC would need to be associated with all hospital resources observation stays as support for separate
adjusted based on readily available utilized to provide the reported services. payment of observation care. The stays
historical data. Finally, the Panel Comment: Many commenters, as well in the comments ranged from 12 to 16
recommended that CMS evaluate any as the APC Panel, urged CMS to hours (in reference to patients with
potential negative impact that the CY consider the inpatient error rate as well chest pain) to 23 hours (in reference to
2008 packaging proposal and the as QIO review practices before patients in dedicated observation units
component specifically concerning packaging observation services. Many versus 2 to 3 day stays for inpatient
observation would have on Medicare commenters pointed to a decrease in care). The topic was also discussed by
beneficiaries. We accept the Panel’s inpatient admissions as evidence of the the APC Panel, which requested that
request that CMS provide the Panel with impact of separate payment for CMS provide a frequency distribution of
further data related to observation observation services on the decrease in observation lengths of stay at the next
services at the next meeting of the APC hospital admissions. In addition, several APC Panel meeting.
Panel. commenters were concerned about Response: We have stated in past
After considering the APC Panel pressure to bill 1 to 2 day stays as rules and in the Internet Only Manual
presentations, the Panel outpatient claims with observation, (IOM) that, ‘‘in only rare and
recommendations, and the public resulting in confusion as to the exceptional cases do reasonable and
comments we received, we will neither appropriate billing for observation necessary outpatient observation
maintain the current CY 2007 payment services. For example, one commenter services span more than 48 hours. In the
methodology for observation services stated that care provided during majority of cases, the decision whether
nor implement the packaging proposal outpatient observation is no different to discharge the patient from the
as proposed. Instead, we are accepting than the care and monitoring provided hospital * * * or to admit the patient as
the recommendation of the APC Panel to an inpatient, often because patients in an inpatient can be made in less than 48
and the commenters to package observation may be placed in a bed hours, usually in less than 24 hours.’’
observation services and provide within the inpatient setting. One We refer readers to the Medicare Claims
payment through a composite APC commenter requested that CMS review Processing Manual, Pub. 100–4, Chapter
methodology when the specified criteria 1 to 2 day inpatient QIO denials for 4, Section 290.1 for more information.
apply, as discussed in detail in section accuracy of observation status We will conduct a study of observation
II.A.4.c.(7) of this final rule with utilization and denial appropriateness. lengths of stay for the next APC Panel
comment period. We note that this Response: We appreciate the meeting. However, preliminary analyses
payment methodology will require no commenters’ thoughts regarding the of CY 2006 claims for observation show
changes to the reporting practices of impact of our OPPS payment policy to that, of all observation claims (packaged
hospitals, so there should be no pay separately for observation care for and paid separately), 43 percent lasted
associated administrative burden on three clinical conditions on brief 13 to 24 hours (about 358,600 claims),
hospitals. The OCE will determine the inpatient admissions. We continue to 37 percent lasted 24 to 48 hours (about
payment for observation as packaged believe that observation care is a 303,000 claims), and 3 percent lasted
into a composite APC payment or clinically appropriate hospital more than 48 hours (about 26,000
packaged into payment for other outpatient service that includes ongoing claims). Less than 10 percent of claims
separately payable services provided in short-term treatment, assessment, and were for observation lasting less than 8
the encounter. reassessment before a decision can be hours, and about 8 percent of claims
As discussed earlier in section made regarding whether patients will were for stays of 8 to 12 hours. With
II.A.4.c.(7) of this final rule with require further treatment as hospital respect to separately payable
comment period, HCPCS code G0378 is inpatients, or if they are able to be observation, the numbers were very
assigned a status indicator ‘‘N,’’ discharged from the hospital. We expect similar: 45 percent lasted 13 to 24 hours
meaning that its payment will always be that Medicare beneficiaries who require (133,000 claims), 38 percent lasted 24 to
packaged, either into one of the two an inpatient level of care will be 48 hours (112,000 claims), and 3 percent
composite APCs or, when the composite admitted to the hospital as inpatients by lasted more than 48 hours (8,600
criteria are not met, into the payment for the physicians who care for them. We claims). The mean and median number
the major services on the claim. In also believe that our final CY 2008 of hours were the same for packaged
and separately payable observation resulting APC payments for a specific approximately $53. We proposed to
services: a mean of 25 hours and a set of services are less under the continue the current coding and
median of 22 hours. packaging approach we have adopted payment methodology for direct
We are concerned about the for CY 2008, as many commenters have admission to observation, with the
significant number of beneficiaries who indicated they would be, beneficiary exception of the prior requirement that
are receiving observation services for copayment could be reduced. HCPCS code G0379 is only eligible for
more than 24 hours, especially the Additionally, the length of stay may separate payment if observation care
26,000 with stays of more than 48 hours. greatly impact beneficiary OPPS reported with HCPCS code G0378 does
This finding seems to indicate that the copayment as the number of diagnostic not qualify for separate payment. That
latter stays are not as rare and tests and services provided may requirement would no longer be
exceptional as we have stated they increase as the stay lengthens. Also, applicable, given our CY 2008 proposal
should be in the context of self-administered drugs are excluded to provide packaged payment for all
contemporary hospital outpatient from Part B payment by statute, whereas observation care. Hospitals report
clinical practice. As we stated earlier in payment for those costs would be HCPCS code G0379 when a patient is
section II.A.4.c.(7) of this final rule with included in an inpatient DRG payment. admitted directly to observation care
comment period, we do not expect to Therefore, a beneficiary placed in after being seen by a physician in the
see an increase in claims for high level observation care for an extended period community. Thus, for CY 2008, we
visits as a result of the new composite could have a greater or lesser out-of- proposed that in order to receive
APCs adopted for CY 2008. We also do pocket expense than for an inpatient separate payment for a direct admission
not expect to see a large increase in the stay, once all direct beneficiary into observation (APC 0604), the claim
number of claims or lengths of stay for expenses are included. must show:
observation care. Depending on our In summary, we are adopting our 1. Both HCPCS codes G0378 (Hospital
future claims data, we may choose to proposal to package payment for observation services, per hr) and G0379
modify the composite APCs that we are observation care reported with HCPCS (Direct admission of patient for hospital
adopting for CY 2008, or to move to code G0378 for CY 2008, with a observation care) with the same date of
packaging observation services more modification to establish two new service.
broadly into payment for all other composite APCs for extended 2. That no services with a status
associated services as we originally assessment and management. For CY indicator ‘‘T’’ or ‘‘V’’ or Critical Care
proposed, if we see that observation care 2008, payment for observation services (APC 0617) were provided on the same
is being provided to many more patients reported with HCPCS code G0378 will day of service as HCPCS code G0379.
than reflected in our current data. Since remain packaged with status indicator Even though we proposed to package
we first established HCPCS code G0378 ‘‘N.’’ We are creating two composite payment for all observation services
as an hourly code for hospitals to report APCs for extended assessment and reported by HCPCS code G0378, we
observation services beginning in CY management, of which observation care indicated in the proposed rule that we
2006, in accordance with our reporting is a component. In addition, we will not believe it is necessary to continue the
instructions, hospitals have been asked require a qualifying diagnosis for OCE claims processing logic in order to
to report all observation services composite APC payment, but for the make appropriate payment for direct
provided with HCPCS code G0378. purposes of composite APC payment, admission.
Comment: Several commenters stated will retain all other criteria, including a We did not receive any public
that providing care through outpatient minimum number of eight hours; a comments specific to our proposed
observation versus inpatient admission qualifying visit, direct admission, or payment policy for HCPCS code G0379.
saves beneficiary inpatient benefit days critical care; and no ‘‘T’’ status As explained in section II.A.4.c.(7) of
and decreases beneficiary expenses for procedure reported on the day before or this final rule with comment period,
the inpatient deductible and day of observation services. payment for direct admission to
coinsurance. The APC Panel also Additionally, we are retaining the observation will be made either under
recommended that we evaluate the general reporting requirements for all composite APC 8002 (Level I Prolonged
effect of packaging on beneficiaries. observation services, whether fully Assessment and Management
Response: We intend to evaluate the packaged or included in the composite Composite) or under APC 0604. The
effects of packaging payment for APC payment. These are criteria related composite APC will apply, regardless of
services, including observation care, on to the physician order and evaluation, the patient’s particular clinical
Medicare beneficiaries, but note that it documentation, and observation condition, if the hours of observation
is not clear whether care provided beginning and ending times. These are services (HCPCS code G0378) are greater
through a hospital outpatient the more general requirements that than or equal to eight and billed on the
observation stay would increase or ensure the proper reporting of same date as HCPCS code G0378 and
decrease a beneficiary’s expenditures in observation care on correctly coded there is not a ‘‘T’’ status procedure on
comparison with an inpatient hospital claims that reflect the charges the same date or day before the date of
admission. In addition, as stated earlier, associated with all hospital resources HCPCS code G0378. If the composite is
we do not consider observation services utilized to provide the reported services. not applicable, payment for HCPCS
and inpatient care to be the same level code G0379 may be made under APC
of care and, therefore, they would not be B. Direct Admission to Observation 0604. In general, this would occur when
interchangeable and appropriate for the (HCPCS code G0379) the units of observation reported under
same clinical scenario. Under the OPPS, For CY 2007, direct admission to HCPCS code G0378 are less than eight
the beneficiary copayment increases as observation (HCPCS code G0379 (Direct and no services with a status indicator
the number and payment amount of admission of patient for hospital ‘‘T’’ or ‘‘V’’ or Critical Care (APC 0617)
separately payable services on the claim observation care)) is assigned to APC were provided on the same day of
increase. The OPPS beneficiary 0604 (Level 1 Hospital Clinic Visits) service as HCPCS code G0379. The final
copayment is 20 to 40 percent, when the criteria are met for separate median cost of APC 0604 for CY 2008
depending on the service provided. payment. For CY 2008, the proposed is approximately $53. The criteria for
Therefore, to the extent that the median cost of APC 0604 was payment of HCPCS code G0379 under
APC 0604 will be the same as in CY removing the physician order • Most outpatient departments are
2007: requirement. The IOM will be revised to equipped to provide the services to the
1. Both HCPCS codes G0378 (Hospital reflect the payment changes finalized in Medicare population.
observation services, per hr) and G0379 this final rule with comment period. We • The simplest procedure described
(Direct admission of patient for hospital will revise all sections for consistency by the code may be performed in most
observation care) with the same date of and accuracy, but we also remind outpatient departments.
service. hospitals that Section 290 of the Claims • The procedure is related to codes
2. No service with a status indicator Processing Manual should be read in its that we have already removed from the
of ‘‘T’’ or ‘‘V’’ or Critical Care (APC totality. inpatient list.
0617) is provided on the same day of In the November 1, 2002 final rule
service as HCPCS code G0379. In summary, CY 2008 payment for with comment period (67 FR 66741), we
If either of the above criteria is not HCPCS code G0379, direct admission added the following criteria for use in
met, HCPCS code G0379 will be for hospital observation care, will be reviewing procedures to determine
assigned status indicator ‘‘N.’’ made either through composite APC whether they should be removed from
Comment: One commenter asked 8002 (Level I Extended Assessment and the inpatient list and assigned to an
CMS to clarify whether there is a Management Composite) or APC 0604 APC group for payment under the
discrepancy between language (Level 1 Hospital Clinic Visits). In cases OPPS:
describing observation time in the where the criteria for payment under • We have determined that the
current CY 2007 criteria for separate either APC are not met, HCPCS code procedure is being performed in
payment of observation services through G0379 is assigned status indicator ‘‘N.’’ numerous hospitals on an outpatient
APC 0339, listed on page 42768 of the basis; or
CY 2008 OPPS/ASC proposed rule (72 XII. Procedures That Will Be Paid Only • We have determined that the
FR 42628) and language in the Medicare as Inpatient Procedures procedure can be appropriately and
Claims Processing Manual, Pub. 100–4, A. Background safely performed in an ASC and is on
Chapter 4, Section 290.2.2. The the list of approved ASC procedures or
commenter requested clarification as to Section 1833(t)(1)(B)(i) of the Act has been proposed by us for addition to
whether a physician order is still gives the Secretary broad authority to the ASC list.
required for observation. determine the services to be covered We believe that these additional
Response: The language cited in the and paid for under the OPPS. Before criteria help us to identify procedures
CY 2008 OPPS/ASC proposed rule and implementation of the OPPS in August that are appropriate for removal from
earlier in this section is also located in 2000, Medicare paid reasonable costs for the inpatient list.
the Medicare Claims Processing Manual, services provided in the outpatient B. Changes to the Inpatient List
Pub. 100–4, Chapter 4, section 290.4.3 department. The claims submitted were
‘‘Separate and Packaged Payment for subject to medical review by the fiscal For the CY 2008 OPPS, we used the
Observation.’’ Sections 290.2.2 and intermediaries to determine the same methodology as described in the
290.4.3 do not conflict, although the appropriateness of providing certain November 15, 2004 final rule with
language is not identical. Section services in the outpatient setting. We comment period (69 FR 65835) to
290.2.2 is overarching guidance for the did not specify in regulations those identify a subset of procedures currently
reporting of observation services that services that were appropriate to on the inpatient list that are being
supports and explains section 290.4.3. provide only in the inpatient setting and widely performed on an outpatient
In regard to the requirement of a that, therefore, should be payable only basis. These procedures were then
physician order, although the words when provided in that setting. clinically reviewed for possible removal
‘‘physician order’’ are not written in from the inpatient list. We solicited
section 290.4.3, a physician order is In the April 7, 2000 final rule with input from the APC Panel on the
clearly contemplated, as the language in comment period, we identified appropriateness of removing 14
criterion number 4, Physician procedures that are typically provided procedures from the OPPS inpatient list
Evaluation, states, ‘‘1. The beneficiary only in an inpatient setting and, at its March 2007 meeting. Prior to
must be in the care of a physician therefore, would not be paid by publishing the CY 2008 OPPS/ASC
during the period of observation, as Medicare under the OPPS (65 FR proposed rule, we received one other
documented in the medical record by 18455). These procedures comprise candidate HCPCS code for removal from
admission, discharge, and other what is referred to as the ‘‘inpatient the OPPS inpatient list based on a
appropriate progress notes that are list.’’ The inpatient list specifies those recommendation from the public that
timed, written, and signed by the services that are only paid when was presented to the APC Panel during
physician. 2. The medical record must provided in an inpatient setting because its meeting on March 8, 2007. The APC
include documentation that the of the nature of the procedure, the need Panel recommended that 13 of the 14
physician explicitly assessed patient for at least 24 hours of postoperative procedures that CMS identified for
risk to determine that the beneficiary recovery time or monitoring before the possible removal be removed from the
would benefit from observation care.’’ patient can be safely discharged, or the OPPS inpatient list. It also
This criterion will be retained under the underlying physical condition of the recommended that CMS obtain
new payment methodology, as we patient. As we discussed in the April 7, additional utilization data about 1 of the
proposed. Additionally, section 290.1 2000 final rule with comment period (65 14 procedures identified for possible
‘‘Observation Services Overview’’ FR 18455) and the November 30, 2001 removal from the OPPS inpatient list,
explicitly states that ‘‘Observation final rule (66 FR 59856), we may use specifically CPT code 64818
services are only covered when any of the following criteria when (Sympathectomy, lumbar); and for
provided by the order of a physician or reviewing procedures to determine another procedure presented for
another individual authorized by State whether or not they should be moved possible removal from the OPPS
licensure law and hospital staff bylaws from the inpatient list and assigned to inpatient list by the public, specifically,
to admit patients to the hospital or to an APC group for payment under the CPT code 20660 (Application of cranial
order outpatient services.’’ We are not OPPS: tongs caliper, or stereotactic frame,
including removal (separate We received several comments in Response: We appreciate the

procedure)). The APC Panel requested response to our proposal for the CY commenters’ support and will review
that CMS provide that additional 2008 OPPS inpatient list. A summary of the APC assignment for CPT code
information to the APC Panel at its next the comments and our responses 61770, and all other procedures payable
meeting. follows. under the OPPS, when updating the
Therefore, in the CY 2008 OPPS/ASC Comment: A few commenters OPPS for CY 2009, in order to maintain
proposed rule (72 FR 42771), we supported the proposal to remove the 13 clinical and resource homogeneity
proposed to accept the APC Panel’s codes listed in Table 56 of the proposed within APCs.
recommendation to remove the 13 rule from the inpatient list for CY 2008. After consideration of the public
procedures from the OPPS inpatient list One commenter requested that, for CY comments received, we are finalizing
for CY 2008 and to assign them to 2009, CMS reassess the APC assignment our proposal, without modification, to
clinically appropriate APCs as shown in for CPT code 61770 (Stereotactic remove 13 procedures from the OPPS
Table 56 of the proposed rule and localization, including burr hole(s), with inpatient list for CY 2008 and to assign
republished in this final rule with insertion of catheter(s) or probe(s) for them to clinically appropriate APCs as
comment period as Table 46. In the placement of radiation source). The shown in Table 46 below. Also, as
proposed rule, we indicated that we also commenter supported the proposed CY stated earlier, we will present data
are accepting the recommendation from 2008 assignment of CPT code 61770 to regarding CPT codes 20660 and 64818
the APC Panel to gather additional APC 0221 (Level II Nerve Procedures) to the APC Panel at its winter 2008
utilization information for CPT codes but asked CMS to ensure that, as data meeting. We note that we did not have
20660 and 64818, which we would become available, CMS makes additional new data available for CPT
provide to the APC Panel at its next appropriate adjustments to the APC code 20660 for the APC Panel to
meeting. assignment for this CPT code. consider at its September 2007 meeting.
TABLE 46.—HCPCS CODES FOR REMOVAL FROM INPATIENT LIST AND THEIR APC ASSIGNMENTS FOR CY 2008
CY 2008 CY 2008
HCPCS code Long descriptor APC SI
21360 ........... Open treatment of depressed malar fracture, including zygomatic arch and malar tripod ............. 0254 T
21365 ........... Open treatment of complicated (e.g., comminuted or involving cranial nerve foramina) frac- 0256 T
ture(s) of malar area, including zygomatic arch and malar tripod; with internal fixation and
multiple surgical approaches.
21385 ........... Open treatment of orbital floor blowout fracture; transantral approach (Caldwell-Luc type oper- 0256 T
ation).
25931 ........... Transmetacarpal amputation; re-amputation ................................................................................... 0049 T
27006 ........... Tenotomy, abductors and/or extensor(s) of hip, open (separate procedure) ................................. 0050 T
27720 ........... Repair of nonunion or malunion, tibia; without graft, (eg, compression technique) ........................ 0063 T
27722 ........... Repair of nonunion or malunion, tibia; with sliding graft ................................................................. 0064 T
50580 ........... Renal endoscopy through nephrotomy or pyelotomy, with or without irrigation, instillation or 0161 T
ureteropyelography, exclusive of radiologic service; with removal of foreign body or calculus.
51535 ........... Cystotomy for excision, incision, or repair of ureterocele ............................................................... 0162 T
58805 ........... Drainage of ovarian cyst(s), unilateral or bilateral, (separate procedure); abdominal approach .... 0195 T
60271 ........... Thyroidectomy, including substernal thyroid; cervical approach ..................................................... 0256 T
61770 ........... Stereotactic localization, including burr hole(s), with insertion of catheter(s) or probe(s) for 0221 T
placement of radiation source.
69970 ........... Removal of tumor, temporal bone ................................................................................................... 0256 T
Comment: Several commenters procedure is, or is not, on the inpatient procedure was on the inpatient list and
submitted recommendations for list. The commenter believed that would not be paid by Medicare if
improving the effectiveness of the inclusion of the long descriptors would performed in the hospital outpatient
inpatient list. One commenter stated make the CMS inpatient list a more setting. The commenter suggested that
that although CMS believes that the useful and readily available tool that the physician could then be held
inpatient list is serving a protective could be used during outpatient accountable for those cases, and
purpose, the payment policy and the scheduling. Further, the commenter Medicare could track physicians who
format for the list limit its effectiveness. believed that easier access to the long repeatedly chose inappropriate
The commenter recommended a number descriptors would assist hospital staff in admission status for procedures on the
of steps that CMS could take to improve scheduling, promote appropriate inpatient list. Further, the commenter
the usefulness of the inpatient list. The physician planning, and provide time to recommended that CMS implement
first of these recommendations was for notify any affected beneficiary of his or financial disincentives for physicians’
CMS to provide the CPT code long her liability if an inpatient list performance of the inpatient list
descriptors for the procedures on the procedure is to be performed in the procedures in the HOPD through
inpatient list instead of listing the OPD. proposed professional payment
procedures’ CPT code short descriptors. In addition, the commenter reductions and/or practice audits of
The commenter stated that the short recommended that CMS consider physicians who repeatedly perform
descriptors do not provide enough developing a code that would enable these procedures in inappropriate
information for hospital staff and hospitals to indicate to Medicare those settings.
physicians to readily determine in a cases in which the physician failed, or The commenter also recommended
specific clinical case whether a planned refused, to notify the patient that the that CMS consider expanding the ability
of hospital staff and utilization review that only are covered during an abductors and/or extensor(s) of hip,
committees to overturn outpatient status inpatient stay. open (separate procedure), and 27720
orders when procedures on the We will explore the feasibility of the (Repair of nonunion or malunion, tibia;
inpatient list are performed, but the commenter’s recommendation that CMS without graft, (eg, compression
services are either not reported timely could assist hospitals in this effort by technique)).
by the attending physician or are not providing the CPT code long descriptors The other commenter requested that
revised upon notification of the status for the inpatient list (Addendum E to CMS remove the following four
conflict. this final rule with comment period). additional CPT codes from the inpatient
Finally, the commenter recommended CMS’ use of CPT code short and long list: 20660 (Application of cranial tongs,
that if CMS is not willing to refocus the descriptors is governed by its agreement caliper, or stereotactic frame, including
payment policy associated with the with the AMA, the owner and removal), 27886 (Amputation, leg,
inpatient list to address physician maintainer of the CPT codeset. If we are through tibia and fibula; reamputation),
behavior, it should drop the inpatient able to provide a listing of long 43420 (Closure of esophagostomy or
list altogether because the list presents descriptors for the inpatient list fistula; cervical approach) and 50727
a financial burden that beneficiaries and procedures, we will post that (Revision of urinary-cutaneous
hospitals are no longer willing to bear information to the CMS Web site as anastomosis (any type urostomy)).
on behalf of noncompliant and soon as it is available. We believe that Response: As discussed earlier in this
noncooperative physicians. enhanced information regarding specific section, we are finalizing our proposal
A number of other commenters also procedures may foster increased to remove CPT codes 25931, 27006, and
recommended that CMS discontinue use understanding by physicians about the 27720 from the OPPS inpatient list for
of the inpatient list. They stated that the status of the inpatient list procedures CY 2008.
continuing problem associated with the and the payment implications for We appreciate the additional
list is that the list is not binding on beneficiaries and hospitals when the recommendations for procedures to be
physicians and that, therefore, efforts by procedures are performed on removed from the inpatient list. We note
hospitals to educate them are useless. beneficiaries who are not admitted to that CPT code 20660 was discussed at
Response: We appreciate the the hospital. the APC Panel’s March 2007 meeting
recommendations for improving the Comment: Several commenters and, in accordance with the APC Panel’s
effectiveness of the inpatient list. We recommended that if CMS does not recommendation, we will provide
continue to believe that the inpatient eliminate the inpatient list, it should utilization information regarding this
list serves an important purpose in consider developing an appeals process service at the APC Panel’s winter 2008
identifying those procedures that cannot to address those circumstances in which meeting for its consideration. We will
be safely and effectively provided to payment for a service is denied because undertake a clinical review of the
Medicare beneficiaries in the HOPD. We it is on the inpatient list. One additional procedures requested for
are concerned that elimination of the commenter asserted that the process removal from the inpatient list for CY
inpatient list could result in unsafe or would provide an opportunity for the 2008. However, we will not remove
uncomfortable care for Medicare hospital to submit documentation to those procedures from the inpatient list
beneficiaries and, therefore, we will not appeal the denial, such as physician without obtaining additional input from
discontinue our use of the inpatient list intent, patient clinical condition, and the APC Panel. We will provide
at this time. While we are aware that the circumstances that allowed the appropriate information on CPT codes
there are ongoing hospital concerns patient to be sent home safely without 27886, 43420, and 50727 to the APC for
related to inpatient procedures being an inpatient admission. its review of these procedures at the
performed inappropriately for Response: We appreciate these
APC Panel’s winter 2008 meeting, along
beneficiaries who are not inpatients and comments and suggestions. As we stated
with other procedures that we may
that, as a result, beneficiaries may be in the immediately preceding response,
identify as candidates for proposed
liable for the charges for the services, we continue to believe that the inpatient
removal from the inpatient list for CY
among the potential results of list is a valuable tool that is appropriate
2009.
eliminating the list are long observation for the OPPS, and we will not eliminate
stays after some procedures and it at this time. We intend to continue to XIII. Nonrecurring Technical and
imposition of OPPS copayments that encourage physicians’ awareness of the Policy Changes
could differ significantly from a implications for beneficiaries of
beneficiary’s inpatient cost-sharing performing the inpatient list procedures A. Outpatient Hospital Services and
responsibilities. on beneficiaries who are not inpatients. Supplies Incident to a Physician Service
In addition, we have no current plans We do not plan to adopt a specific In the CY 2008 OPPS/ASC proposed
to develop coding that would permit us appeals process for claims related to rule (72 FR 42771), we proposed to
to identify cases of the outpatient inpatient list procedures performed in make a technical change to
performance of inpatient listed the HOPD, as recommended by some § 410.27(a)(1)(iii) and (f) of the
procedures on Medicare beneficiaries commenters, at this time. However, the regulations relating to outpatient
because information on such existing established processes for a hospital services and supplies incident
occurrences is currently available in our beneficiary or provider to appeal a to a physician service to remove an
OPPS claims data. Payment for specific claim remain in effect. outdated reference to ‘‘designation of a
physicians’ services and monitoring of Comment: Two commenters requested department of a provider’’ by CMS and
physicians’ practice patterns are outside that CMS remove certain procedures replace it with language that conforms
of the scope of this OPPS/ASC final rule from the inpatient list. One commenter to current policy under the provider-
with comment period. We continue to requested that CMS remove the based rules as stated in § 413.65 of the
believe that it is very important for following three CPT codes that were regulations. We proposed to remove
hospitals to educate physicians on proposed for removal from the inpatient from both paragraphs (a)(1)(iii) and (f)
Medicare services covered under the list in the CY 2008 proposed rule: 25931 the phrase ‘‘at a location (other than an
OPPS to avoid inadvertently providing (Transmetacarpal amputation; re- RHC or an FQHC) that CMS designates
services in a hospital outpatient setting amputation), 27006 (Tenotomy, as a department of a provider under
§ 413.65 of this chapter’’ and replace it efforts to the extent that they comply limited to, the Stark law and other anti-
with ‘‘at a department of a provider, as with all applicable laws and regulations, kickback laws.
defined in § 413.65(a)(2) of this including, but not limited to, the Stark After consideration of the public
subchapter, that has provider-based law and other anti-kickback laws. comment received, we are finalizing our
status in relation to a hospital under Recently, we have received an CY 2008 proposal, without
§ 413.65 of this subchapter.’’ increasing number of questions about a modification, to remove from both
Section 410.27 was codified in the number of hypothetical business paragraphs (a)(1)(iii) and (f) of § 410.27
April 7, 2000 OPPS final rule with arrangements between hospitals and the phrase ‘‘at a location (other than an
comment period. The provider-based other entities, including ASCs. We RHC or an FQHC) that CMS designates
rules at § 413.65 were also codified in remind hospitals contemplating various as a department of a provider under
the April 7, 2000 rule, but were business models that involve ‘‘incident § 413.65 of this chapter.’’ In place of the
subsequently amended in the August 1, to’’ services provided to hospital deleted phrase, we are inserting the
2002 IPPS final rule (67 FR 50078 outpatients to consider the requirements phrase ‘‘at a department of a provider,
through 50096 and 50114 through of § 410.27. Under § 410.27, ‘‘incident as defined in § 413.65(a)(2) of this
50118). The proposed deletion of the to’’ services that are provided to subchapter, that has provider-based
reference in § 410.27(a)(1)(iii) and (f) to hospital outpatients must be furnished status in relation to a hospital under
CMS ‘‘designating’’ a department of a in the hospital or at a department of a § 413.65 of this subchapter.’’ This
provider under § 413.65 would make provider as described in more detail finalized technical change removes an
those sections consistent with the 2002 earlier in our proposed technical update outdated reference to ‘‘designation of a
amendments to the provider-based to § 410.27(a)(1)(iii) and (f). department of a provider’’ by CMS and
rules, in that under the amended With regard to the potential for ASCs replaces it with language that conforms
provider-based rules, a main provider is to provide ‘‘incident to’’ services under to current policy under the provider-
no longer required to ask CMS to make arrangements with HOPDs, in the based rules specified in § 413.65 of the
a determination that a facility or proposed rule, we noted that the regulations.
organization is provider-based before provider-based rules set forth at § 413.65 B. Interrupted Procedures
the main provider can bill for services do not apply to ASCs. In addition, our
of the facility as if the facility were Currently, when a procedure is
longstanding policy codified at interrupted after its initiation or the
provider-based, or before the main § 416.30(f) for ASCs operated by
provider can include the costs of those administration of anesthesia, hospitals
hospitals requires that ‘‘the ASC append modifier 74 (Discontinued
services in its cost report. participates and is paid only as an ASC,
In the proposed rule, we also outpatient procedure after anesthesia
without the option of converting to or administration) to the interrupted
reminded hospitals of the requirements
being paid as a hospital outpatient procedure, and the full OPPS payment
of § 410.27 concerning services and
department, unless CMS determines for the procedure is made. In addition,
supplies furnished incident to a
there is good cause to do otherwise.’’ In when a procedure requiring anesthesia
physician’s service to hospital
outpatients. Section 410.27 applies to the proposed rule, we indicated that we is discontinued after the beneficiary is
all ‘‘incident to’’ services covered under did not believe good cause exists such prepared for the procedure and taken to
section 1861(s)(2)(B) of the Act. This that a Medicare-certified ASC would be the room where the procedure is to be
provision does not apply to services able to provide ‘‘incident to’’ services performed, but before the
covered under other benefit categories, under arrangement to hospital administration of anesthesia, hospitals
such as clinical diagnostic laboratory outpatients under § 410.27. Section currently append modifier 73
services covered under section 410.27 contains longstanding policy (Discontinued outpatient procedure
1833(h)(1) of the Act or diagnostic codified in the CY 2000 OPPS final rule prior to anesthesia administration) to
services covered under section with comment period and applies to all the discontinued procedure and receive
1861(s)(2)(C) of the Act. Section ‘‘incident to’’ services covered under 50-percent of the OPPS payment for the
410.27(a)(1) currently states that section 1861(s)(2)(B) of the Act. While planned procedure. Hospitals also
Medicare Part B pays for hospital the hypothetical example we discussed report modifier 52 to signify that a
services and supplies furnished incident above involves ASCs providing services service that did not require anesthesia
to a physician service to outpatients, under arrangement to an HOPD, the was partially reduced or discontinued at
including drugs and biologicals that provision of § 410.27 applies more the physician’s discretion. Modifier 52
cannot be self-administered, if they are broadly to all ‘‘incident to’’ services is reported under the OPPS for a variety
furnished by or under arrangements provided either directly or under of types of interrupted services, such as
made by a participating hospital, except arrangements made by the hospital with radiology services. Under the OPPS, we
in the case of a resident of a skilled another entity. apply a 50-percent reduction to the
nursing facility as provided in Comment: One commenter generally facility payment for interrupted
§ 411.15(p); as an integral though supported the proposed technical procedures and services reported with
incidental part of a physician’s services; change to § 410.27(a)(1)(iii) and (f), but modifier 52.
and in the hospital or at a location cautioned CMS against precluding a In the CY 2008 OPPS/ASC proposed
(other than a rural health clinic or a hospital’s ability to offer the best patient rule (72 FR 42772), we proposed to
Federally qualified health center) that care by limiting physician and hospital amend § 419.44 (Payment reductions for
CMS designates as a department of a relationships. surgical procedures) to more accurately
provider under § 413.65. Response: We appreciate the reflect the current OPPS payment policy
As discussed in the CY 2008 OPPS/ commenter’s support for the proposed for interrupted procedures. First, we
ASC proposed rule, we recognize that technical change. We do support proposed to make a technical
hospitals consider a variety of business hospitals’ efforts to develop business conforming change to the title of
models in their efforts to supply models that lead to the provision of high § 419.44 by removing the word
efficient and high quality health care quality patient care to the extent that ‘‘surgical,’’ in order to encompass all the
services to Medicare beneficiaries and these models comply with all applicable procedures performed in HOPDs.
the general public, and we support such laws and regulations, including, but not Second, we proposed to change the
heading of § 419.44(b) from We provide this list of therapy codes services described by CPT codes 97597,
‘‘Terminated procedures’’ to along with their respective designation 97598, 97602, 97605, and 97606 that are
‘‘Interrupted procedures.’’ We proposed in the Medicare Claims Processing furnished to hospital outpatients by
to make further technical conforming Manual Pub. 100–04, Chapter 5, section individuals independent of a therapy
changes to paragraphs (b)(1) and (b)(2) 20. Two of the designations that we use plan of care. In contrast, when such
by removing the words ‘‘surgical’’ to in that manual denote whether the services are performed by a qualified
encompass all the procedures performed listed therapy code is an ‘‘always therapist under a certified therapy plan
in HOPDs. Finally, we proposed to add therapy’’ service or a ‘‘sometimes of care, providers should attach an
a new paragraph (b)(3) to reflect the therapy’’ service. We define an ‘‘always appropriate therapy modifier (that is, GP
current policy of the application of a 50- therapy’’ service as a service that must for physical therapy, GO for
percent reduction to the OPPS payment be performed by a qualified therapist occupational therapy, and GN for
when a hospital reports modifier 52 for under a certified therapy plan of care, speech language pathology) or report
interrupted or discontinued services and a ‘‘sometimes therapy’’ service as a their charges under a therapy revenue
that do not require anesthesia. service that may be performed by an code (that is, 0420, 0430, or 0440), or
Comment: One comment supported individual outside of a certified therapy both, to receive payment under the
our proposed changes to § 419.44. plan of care. MPFS. The OCE logic assigns these
Response: We appreciate the In the CY 2006 OPPS final rule with services to the appropriate APC for
commenter’s support of our proposed comment period (70 FR 68617), we payment under the OPPS if the services
changes. stated that the following CPT codes are not provided under a certified
After consideration of the public therapy plan of care or directs
were classified as ‘‘sometimes therapy’’
comment received, we are finalizing the contractors to the MPFS established
services that may be appropriately
proposed changes to § 419.44, as payment rates if the services are
provided under either a certified
described above, without modification. identified on hospital claims with a
therapy plan of care or without a
C. Transitional Adjustments—Hold certified therapy plan of care: 97597 therapy modifier or therapy revenue
Harmless Provisions (Removal of devitalized tissue from code as therapy services.
Section 419.70(d) of the regulations wound(s), selective debridement, In the CY 2008 OPPS/ASC proposed
relating to transitional adjustments to without anesthesia (e.g., high pressure rule (72 FR 42772), we proposed to
payments for covered outpatient waterjet with/without suction, sharp revise the list of therapy revenue codes
services furnished by small rural selective debridement with scissors, that may be reported with CPT codes
hospitals and SCHs located in rural scalpel and forceps) with or without 97597, 97598, 97602, 97605, and 97606
areas contains two outdated cross- topical application(s) for ongoing care, to designate them as services that are
references to § 412.63(b) (the definition may include use of a whirlpool, per performed by a qualified therapist under
of a hospital located in a ‘‘rural area’’). session; total wound(s) surface area less a certified therapy plan of care, and thus
Several years ago, we made § 412.63 than or equal to 20 square centimeters); payable under the MPFS, to be
applicable from FY 1984 through FY 97598 (Removal of devitalized tissue consistent with the current billing
2004 and established a new § 412.64, from wound(s), selective debridement, practices of hospitals and to ensure that
effective for FY 2005 and subsequent without anesthesia (e.g., high pressure we are making separate payment under
fiscal years, to incorporate provisions to waterjet with/without suction, sharp the OPPS only in appropriate situations.
reflect our adoption of OMB’s revised selective debridement with scissors, We proposed to revise the list of therapy
CBSAs as geographic area applicable scalpel and forceps) with or without revenue codes for reporting these five
under Medicare. In the CY 2008 OPPS/ topical application(s) for ongoing care, CPT wound care codes as therapy
ASC proposed rule (72 FR 42772), we may include use of a whirlpool, per services to include all revenue codes in
proposed to make a technical correction session; total wound(s) surface area the 042X series, which incorporates all
to the regulations by replacing the cross- greater than 20 square centimeters); revenue codes that begin with 042, such
reference to § 412.63(b) in 97602 (Removal of revitalized tissue as 0420, 0421, 0422, 0423, 0424, and
§§ 419.70(d)(1)(i), (d)(2)(i), and (d)(4)(ii) from wound(s), non-selective 0429; the 043X series, which includes
with the more current applicable cross- debridement, without anesthesia (e.g., all revenue codes that begin with 043,
reference to § 412.64(b). wet-to-moist dressings, enzymatic, such as 0430, 0431, 0432, 0434, and
We did not receive any public abrasion) including topical 0439; and the 044X series, which
comments on our proposal. Therefore, application(s), wound assessment, and includes all revenue codes that begin
we are finalizing the proposed technical instruction(s) for ongoing care, per with 044, such as 0440, 0441, 0442,
correction, without modification, for CY session), 97605 (Negative pressure 0443, 0444, and 0449. Therefore, for CY
2008. wound therapy (e.g., vacuum assisted 2008, we proposed that when services
drainage collection), including topical reported with CPT codes 97597, 97598,
D. Reporting of Wound Care Services application(s), wound assessment, and 97602, 97605, and 97606 are performed
Section 1834(k) of the Act, as added instruction(s) for ongoing care, per by a qualified therapist under a certified
by section 4541 of the BBA, requires session; total wound(s) surface area less therapy plan of care, providers should
payment under a prospective payment than or equal to 50 square centimeters); attach an appropriate therapy modifier
system for all outpatient therapy and 97606 (Negative pressure wound (that is, GP for physical therapy, GO for
services, that is, physical therapy therapy (e.g., vacuum assisted drainage occupational therapy, and GN for
services, speech-language pathology collection), including topical speech-language pathology) or report
services, and occupational therapy application(s), wound assessment, and their charge under a therapy revenue
services. As provided under section instruction(s) for ongoing care, per code (that is, 042X,043X, or 044X), or
1834(k)(5) of the Act, we created a session; total wound(s) surface area both, to receive payment under the
therapy code list based on a uniform greater than 50 square centimeters). We MPFS. Under other circumstances, we
coding system (that is, the HCPCS) to further stated that hospitals would proposed that hospitals would receive
identify and track these outpatient receive separate payment under the separate payment under the OPPS when
therapy services paid under the MPFS. OPPS when they bill for wound care they bill for wound care services
described by CPT codes 97597, 97598, E. Reporting of Cardiac Rehabilitation services under the OPPS. A summary of
97602, 97605, and 97606 that are Services the public comments and our responses
furnished to hospital outpatients by Since the initiation of the OPPS, follow.
individuals independent of a certified Comment: Some commenters
Medicare has paid for cardiac
therapy plan of care. supported the proposal to use G-codes
rehabilitation services in HOPDs using
for the reporting of cardiac
We received several comments on our CPT code 93797 (Physician services for
rehabilitation services under the CY
proposal to modify the list of therapy outpatient cardiac rehabilitation,
2008 OPPS. They believed that this
revenue codes that are reported with without continuous ECG monitoring
proposed coding change would allow
certain wound care services to signify (per session)) and CPT code 93798
for more appropriate coding and
that those services were provided by a (Physician services for outpatient
payment for cardiac rehabilitation
qualified therapist under a certified cardiac rehabilitation, with continuous
services in those cases where intensive
therapy plan of care. ECG monitoring (per session)). Both
programs provide multiple sessions
codes are assigned status indicator ‘‘S’’ each day. The commenters argued that
Comment: Several commenters
and are currently mapped to APC 0095 appropriate payment for these programs
supported the proposal to modify the
(Cardiac Rehabilitation) for payment. was particularly important because of
revenue code list to conform to hospital In the CY 2008 OPPS/ASC proposed
billing practices. One commenter their success in improving the health
rule (72 FR 42773), for CY 2008, we
opposed the proposal; the commenter and health outcomes of patients through
proposed to discontinue recognizing the secondary prevention. In addition, the
stated that changing CPT codes 97597, current CPT codes for cardiac
97598, 97602, 97605, and 97606 to commenters requested that CMS
rehabilitation services and to establish explicitly state that multiple sessions of
‘‘always therapy’’ codes and revising the two new Level II HCPCS codes that we
list of revenue codes that may be cardiac rehabilitation can be paid for the
believed would be more appropriate for same date of service when modifier 59
reported with these wound care codes specifically reporting cardiac
would unreasonably restrict the use of is reported. They also requested that
rehabilitation services under the OPPS. CMS crosswalk the payments for both of
the codes to a limited group of health The proposed HCPCS codes were:
care providers, thereby limiting the proposed G-codes to the higher cost
GXXX1 (Physician services for CPT code 93798 to ensure that the full
beneficiaries’ access to care. outpatient cardiac rehabilitation; range of modalities provided in certain
Response: We appreciate the without continuous ECG monitoring intensive cardiac rehabilitation
commenters’ support for our proposal. (per hour)) and GXXX2 (Physician programs are available.
We believe the commenter who services for outpatient cardiac Many commenters opposed the
expressed concern about the proposal rehabilitation; with continuous ECG proposed change to G-codes under the
has misunderstood our explanation of monitoring (per hour)). In contrast with OPPS for several reasons. First, they
the proposal. We did not propose to the current CPT codes, we indicated stated that the proposed change would
change the five CPT codes for wound that we believed the descriptors of these pose an administrative burden on
care from ‘‘sometimes therapy’’ to proposed G-codes more specifically hospitals, which would have to report
‘‘always therapy’’ codes. Hospitals will reflect the way cardiac rehabilitation G-codes on Medicare claims and CPT
be paid for these wound care codes services are provided in HOPDs so that codes on claims to all other payers.
under either the OPPS or the MPFS in reporting would be more Although the commenters asserted that
CY 2008, just as they have been since straightforward for hospitals and would most cardiac rehabilitation sessions last
CY 2006. When hospital outpatients result in more accurate data for OPPS for approximately 1 hour, they
receive wound care services by ratesetting in 2 years. Consistent with explained that it would be difficult to
individuals outside of a certified the current APC assignments of the accurately crosswalk codes reported for
therapy plan of care, the hospital reports cardiac rehabilitation CPT codes, we each hour of service to codes reported
the appropriate CPT code and proposed to assign these new HCPCS for each session, in order to ensure that
nontherapy revenue code and is paid codes to APC 0095 for CY 2008, with a Medicare and other payers were charged
under the OPPS. When these services status indicator of ‘‘S.’’ Accordingly, we the same for like services. Second, some
are provided to hospital outpatients by proposed to change the status indicators commenters argued that CMS would
a qualified therapist under a therapy for CPT codes 93797 and 93798 from gather no new useful data with the
plan of care and reported using either ‘‘S’’ to ‘‘B’’ to indicate that alternative reporting of ‘‘per hour’’ codes because
one of the appropriate therapy codes (GXXX1 and GXXX2) for cardiac over 90 percent of cardiac rehabilitation
modifiers, the therapy revenue code rehabilitation services would be programs provide sessions lasting about
series (42X, 43X, or 44X), or both, recognized for payment under the 1 hour (specifically 45 minutes to 11⁄2
OPPS. hours), and costs from historical
hospitals are paid based on the MPFS.
At the September 2007 meeting of the hospital claims data and payment rates
We proposed to make this minor
APC Panel, after a public presentation for the ‘‘per session’’ CPT codes have
conforming change to make our billing
pertaining to the proposed coding been stable for years. A few commenters
policy consistent with the current
change, the Panel recommended that also stated that this proposal conflicts
billing practices of hospitals. Therefore,
CMS continue to use the existing CPT with the National Coverage
we do not expect the change to affect codes for cardiac rehabilitation services Determination (NCD) for cardiac
Medicare beneficiaries’ access to wound (CPT codes 93797 and 93798) and not rehabilitation, which describes cardiac
care services provided by hospitals. replace them with the proposed per rehabilitation coverage in terms of
After consideration of the public hour HCPCS G-codes, GXXX1 and sessions. They also stated that the
comments received, we are finalizing GXXX2. proposal does not comport with CMS’
our CY 2008 proposal, without We received many public comments CY 2008 proposed packaging approach
modification, to pay for certain wound on our CY 2008 proposal to adopt two and CMS’ stated goal of using CPT
care services as therapy services when new G-codes, rather than continue to codes and CPT coding guidelines.
they are reported with any revenue code use the two available CPT codes, for the Almost all of the commenters, both
in the 42X, 43X, or 44X series. reporting of cardiac rehabilitation supporting and opposing the proposal,
were concerned that the use of the term Regarding intensity, we expect the changes to the NCD and, therefore, are
‘‘physician services’’ in the G-code intensity of cardiac rehabilitation outside of the scope of the OPPS and
descriptors could be misinterpreted by programs to vary by patient and by this final rule with comment period.
Medicare contractors as requiring a program. After consideration of the public
physician to directly deliver the care or We believe that it is important that comments received, we are not
be in attendance during each service our CY 2008 OPPS payment policy finalizing our proposal to establish two
episode. provide appropriate payment for cardiac new G-codes for reporting cardiac
Some commenters who recommended rehabilitation services. In order to rehabilitation services. Instead, we will
the adoption of the proposed G-codes minimize the administrative burden on continue to use CPT codes 93797 and
requested that CMS provide additional hospitals related to our proposal but 93798 to report cardiac rehabilitation
guidance related to reporting of the permit accurate reporting and payment services under the CY 2008 OPPS. CPT
cardiac rehabilitation G-codes, such as: for cardiac rehabilitation programs that codes 93797 and 93798 are assigned to
(1) Explaining that it is likely to be provide more than one session per day, APC 0095 (Cardiac Rehabilitation), with
reasonable and necessary to cover 72 we believe that continuing the use of a CY 2008 median cost of approximately
cardiac rehab sessions when multiple CPT codes 93797 and 93798 and $36 and status indicator ‘‘S.’’ Beginning
sessions are provided in one day; (2) allowing hospitals to bill more than one in CY 2008, we will allow hospitals to
encouraging contractors to factor the session per day under some report more than one unit of service per
‘‘proven results’’ of a program into circumstances would be the most day if more than one cardiac
coverage decisions and that 72 sessions appropriate course. Therefore, for CY rehabilitation session lasting at least 1
should be ‘‘presumptively covered’’ 2008, we will allow hospitals to report hour each is provided on the same day,
when they are furnished by a certain more than one unit for a date of service but will monitor the claims data to
intensive cardiac rehabilitation if more than one cardiac rehabilitation ensure that utilization of cardiac
program; and (3) providing further session lasting at least 1 hour each is rehabilitation services remains
clarification and expansion of provided on the same day. We will appropriate.
nutritional counseling by registered provide a separate APC payment for
F. Reporting of Bone Marrow and Stem
dieticians, indicating that they could each reported session.
We note that the concern of some Cell Processing Services
independently bill for nutritional
counseling within cardiac rehabilitation commenters regarding crosswalking of The OPPS has historically recognized
programs using the medical nutrition payment for the two proposed ‘‘per HCPCS code G0267 (Bone marrow or
therapy codes because the NCD does not hour’’ G-codes to CPT code 93798 is not peripheral stem cell harvest,
specifically mention these services. an issue under the OPPS because we modification or treatment to eliminate
Response: We understand hospitals’ will be continuing to use both CPT cell type(s)) for depletion services for
concerns related to the administrative codes that map to the same clinical APC hematopoietic progenitor cells, instead
burden associated with reporting for payment in CY 2008. With respect to of the more specific CPT codes that
cardiac rehabilitation services for the commenters’ concerns about the use describe these services, including CPT
Medicare differently from other payers of the term ‘‘physician services’’ in the codes 38210 (Transplant preparation of
and related to the potential reporting proposed G-code descriptors, we note hematopoietic progenitor cells; specific
confusion that could be caused by that these codes were proposed to be cell depletion within harvest, T-cell
moving to G-codes for the many parallel to the descriptors of the CPT depletion); 38211 (Transplant
hospitals whose program sessions last codes for cardiac rehabilitation sessions preparation of hematopoietic progenitor
about 1 hour per day. However, we also that contain the term ‘‘physician cells; tumor cell depletion); 38212
are aware of several intensive cardiac services’’ in their descriptors. We are (Transplant preparation of
rehabilitation programs that provide not aware that hospitals have problems hematopoietic progenitor cells; red
multiple sessions in a day, lasting with Medicare contractors’ blood cell removal); 38213 (Transplant
several hours total. Current OPPS interpretation of the CPT codes, which preparation of hematopoietic progenitor
payment policy would provide payment we will continue to use for CY 2008. cells; platelet depletion); 38214
for only one session per day for cardiac This approach adopts the (Transplant preparation of
rehabilitation. The NCD for cardiac recommendation of the APC Panel and hematopoietic progenitor cells; plasma
rehabilitation currently states that many commenters, as well as addresses (volume) depletion); and 38215
cardiac rehabilitation programs are some commenters’ concerns about (Transplant preparation of
covered for certain categories of patients payment for appropriate cardiac hematopoietic progenitor cells; cell
and they must be comprehensive. To be rehabilitation services. We expect that concentration in plasma, mononuclear,
comprehensive, the programs must most cardiac rehabilitation programs of buffy coat layer). These six CPT codes
include a medical evaluation, a program will continue to provide approximately are currently assigned to status indicator
to modify cardiac risk factors (for 1 hour long session per date of service. ‘‘B,’’ while HCPCS code G0267 is
example, nutritional counseling), We will monitor the trends in our assigned to APC 0110 (Transfusion) for
prescribed exercise, education, and claims data to ensure that reporting of payment, with a status indicator of ‘‘S.’’
counseling. The NCD does not cardiac rehabilitation remains In the CY 2008 OPPS/ASC proposed
distinguish between different consistent with expected patterns of rule (72 FR 42774), we proposed to
approaches to the delivery of cardiac utilization. We will provide coding and discontinue recognizing HCPCS code
rehabilitation services, whether the payment instructions for cardiac G0267, assign it status indicator ‘‘B,’’
more common practice of two sessions rehabilitation services in the program and recognize the six more specific CPT
per week or the more intensive instructions implementing the January codes, which we proposed to assign to
programs of several sessions per day. 2008 OPPS update. We will not provide APC 0110 with a status indicator of ‘‘S.’’
We have not been prescriptive regarding the additional coverage-related guidance We also proposed to continue to assign
the precise amount of time that must be requested by some commenters, such as the historical claims data for HCPCS
spent on each component of the presumptive coverage and independent code G0267 to APC 0110. Historically,
program to allow for flexibility and billing for registered dieticians. These under the OPPS, we recognized the
tailoring based on patient needs. recommendations effectively request single G-code rather than the CPT codes
for the individual transplant cell claims data for HCPCS codes G0265 and A few commenters also disagreed
preparation services because we G0266, which would have been with the proposed assignments of CPT
believed that the services would be assigned to the same clinical APC if codes 38210 through 38215 to APC
uncommonly provided to Medicare they were to be paid under the OPPS. 0110. They argued that the APC is
beneficiaries in the outpatient setting Although HCPCS codes G0265 and populated mainly by transfusion
and would likely require similar G0266 have not historically been paid procedures that do not resemble the
resources, so that distinguishing among under the OPPS, we have a small bone marrow and stem cell depletion
the services would not be necessary to number of HOPD single claims from CY services either from the clinical or
ensure appropriate OPPS payment. 2006 for these two predecessor HCPCS hospital resource perspective. The
Stakeholders have brought to our codes (when they were paid off the commenters also believed that, of the
attention that the current hospital CLFS), respectively, and similar few single claims for G0267 that were
resources associated with the six laboratory tissue cryopreservation and available for ratesetting, most of those
different bone marrow and stem cell thawing services also were proposed for claims were for the lower cost depletion
processing procedures described by assignment to APC 0344 under the CY services instead of the much more
these CPT codes may vary widely. 2008 OPPS. We indicated in the CY uncommon and costly services reported
While we recognize that the services 2008 OPPS/ASC proposed rule that we with CPT codes 38210, for T-cell
currently reported with G0267 under believe this proposal would allow us to depletion, and 38211, for tumor cell
the OPPS are not common HOPD pay appropriately for all of these bone depletion. Based on external cost data
procedures, the total volume of these marrow and stem cell processing they collected from hospital transplant
procedures has been increasing over the services and to collect more specific centers performing specialized bone
past several years. Therefore, we stated hospital resource data. marrow and stem cell processing
that we believe that, by recognizing the At the September 2007 meeting of the services, the commenters presented two
six CPT codes for bone marrow and APC Panel, following a public options for CPT codes 38210 and 38211:
stem cell processing services, we would presentation regarding these bone (1) Place them in APC 0112 (Apheresis
obtain more specific claims data for marrow and stem cell processing and Stem Cell procedures); or (2) pay for
ratesetting that would enable us to pay services, the APC Panel recommended them based on the hospital’s charges
more appropriately for these services in that CMS reevaluate its decision to adjusted to cost using the hospital’s
the future. Consistent with our general place CPT codes 38210, 38211, 38212, overall CCR, similar to the payment
OPPS practice, we proposed to assign 38213, 38214 and 38215 in APC 0110 methodology for pass-through devices.
the newly recognized CPT codes to the and also to reevaluate its decision to The commenters recommended that the
clinical APC that is most appropriate place CPT codes 38207, 38208, and remaining CPT codes, 38212 through
based on historical claims data for the 38209 in APC 0344. 38215, be placed in a separate APC as
We received several public comments an interim step, using the median cost
predecessor HCPCS code until we have
on our proposal to recognize the nine data for the predecessor HCPCS code
more specific hospital resource data
CPT codes for bone marrow and stem G0267 to establish the APC payment
available to assess the specific CPT
cell processing services under the CY rate.
codes for possible reassignment.
2008, as well on their proposed APC Response: We appreciate the support
In addition, in the CY 2008 OPPS/ assignments. A summary of the of commenters and the APC Panel for
ASC proposed rule (72 FR 42774), we comments and our response follows. our proposal to discontinue use of the
proposed to discontinue recognition of Comment: Commenters universally three G-codes currently used to report
HCPCS code G0265 (Cryopreservation, supported the proposal to discontinue bone marrow and stem cell processing
freezing and storage of cells for using HCPCS codes G0265, G0266, and services and recognize CPT codes 38207
therapeutic use) and G0266 (Thawing G0267) and to recognize the nine through 38215 instead. We agree with
and expansion of frozen cells for existing CPT codes for bone marrow and the commenters that using the most
therapeutic use), currently assigned stem cell processing services. Several specific CPT codes for reporting these
status indicator ‘‘A’’ under the OPPS commenters also urged reconsideration bone marrow and stem cell processing
and paid according to the Medicare of the proposed APC assignments of the services would reduce the
Clinical Laboratory Fee Schedule CPT codes. Some commenters objected administrative reporting burden for
(CLFS), by assigning them status to the placement of CPT codes 38207 hospitals and provide more specific
indicator ‘‘B’’ for CY 2008. We proposed through 38209, for cryopreservation and claims-based costs for future ratesetting.
to recognize, instead, CPT codes 38207 thawing, in APC 0344 because they We also accept the APC Panel’s
(Transplant preparation of believed that the bone marrow and stem recommendations to reconsider our
hematopoietic progenitor cells; cell cryopreservation and thawing proposed placements of these bone
cryopreservation and storage); 38208 services require much greater hospital marrow and stem cell processing codes.
(Transplant preparation of resources than the preparation of We have reviewed available claims data
hematopoietic progenitor cells; thawing laboratory tissue specimens. Instead, in view of the comments, as discussed
of previously frozen harvest, without they recommended that CMS place below.
washing); and 38209 (Transplant these codes in APC 0111 (Blood Product After reviewing our claims data
preparation of hematopoietic progenitor Exchange) because the proposed available for this final rule with
cells; thawing of previously frozen payment rate of approximately $777 for comment period, we agree with the
harvest, with washing) for payment that APC would pay an average amount commenters that, in order to ensure
under the OPPS. We believed these for the services as a whole, paying less clinical and resource homogeneity, it
services were similar to blood than the commenters’ estimated costs of would be preferable to group CPT codes
processing services that are currently freezing and storing the products based 38207 through 38209 for
paid under the OPPS. We proposed to upon their survey data from hospital cryopreservation, thawing, and washing
assign CPT codes 38207 through 38209 centers that perform bone marrow procedures with other services that
to APC 0344 (Level IV Pathology) based transplantation services and involve the handling of blood products,
on their clinical characteristics and substantially more than their average rather than to APC 0344, where most
resource costs from historical hospital estimated cost of thawing the material. procedures involve the processing of
tissue specimens for laboratory analysis. consistent with the principles of a requirements for coverage under section
However, we disagree with the prospective payment system that 1862(a)(1)(A) of the Act. Screening
commenters that APC 0111, with a provides prospectively established services are not covered by Medicare
median cost of approximately $724 for payment for services. The cost-based without specific statutory authority,
apheresis and autologous progenitor cell payment methodology is statutorily such as has been provided for
harvesting services, is an appropriate required for payment of pass-through mammography, diabetes, and colorectal
assignment. We do not believe that CPT devices. As we stated in the proposed cancer screening. Accordingly, we will
codes 38207 through 38209 are rule, it is consistent with our general not recognize these CPT codes that
clinically similar to apheresis services. practice under the OPPS to make incorporate screening for payment
We note that the limited claims data we payment based on historical claims data under the OPPS.
have for the predecessor codes, for the predecessor HCPCS code until
specifically HCPCS codes G0265 and we have more specific hospital resource Therefore, for CY 2008, we have
G0266, reveal median costs of data available to assess the specific CPT created two parallel G-codes to allow for
approximately $118 and $244 based on codes for possible reassignment. appropriate Medicare reporting and
23 and 548 single claims, respectively. After consideration of the public payment for alcohol and substance
Even though these services were comments received and the abuse assessment and intervention
previously paid in the HOPD through recommendations of the APC Panel, we services that are not provided as
the CLFS, CY 2006 claims data are are finalizing our proposal, without screening services, but that are
available for OPPS ratesetting. Instead, modification, to discontinue use of performed in the context of the
we believe that CPT codes 38207 HCPCS codes G0265, G0266, and G0267 diagnosis or treatment of illness or
through 38209 should be assigned, and recognize CPT codes 38207 through injury. The codes are HCPCS code
along with other procedures involving 38215 to report bone marrow and stem G0396 (Alcohol and/or substance (other
blood products, to APC 0110 with a cell processing services under the OPPS. than tobacco) abuse structured
status indicator of ‘‘S’’ and an APC However, we are not finalizing the APC assessment (e.g., AUDIT, DAST) and
median cost of approximately $214. assignments of these services as brief intervention, 15 to 30 minutes);
This is consistent with the historical proposed. Instead, we are assigning CPT and HCPCS code G0397 (Alcohol and/
hospital costs for the cryopreservation codes 38207, 38208 and 38209 for or substance (other than tobacco) abuse
and thawing services as reported under cryopreserving, thawing and washing structured assessment (e.g,. AUDIT,
the G-codes. bone marrow and stem cells to APC DAST) and intervention, greater than 30
Additionally, we are assigning CPT 0110, with a median cost of
minutes). We will instruct Medicare
codes 38210 through 38215, reported for approximately $214 and a status
contractors to pay for these codes only
bone marrow and stem cell depletion indicator of ‘‘S.’’ In addition, we are
services, to APC 0393 with other assigning CPT codes 38210 through when considered reasonable and
services that involve red blood cells and 38215, reported for depletion services of necessary. We will also provide coding
plasma. We are renaming APC 0393 bone marrow and stem cells, to APC and payment instructions for these
‘‘Hematologic Processing and Studies’’ 0393, which is renamed ‘‘Hematologic assessment and intervention services in
so that the title more accurately Processing and Studies,’’ with a median the program instructions implementing
describes all the services assigned to the cost of approximately $358 and a status the January 2008 OPPS update.
APC. We are maintaining a status indicator of ‘‘S.’’ CPT codes 99408 and 99409 are
indicator of ‘‘S.’’ for APC 0393. The assigned status indicator ‘‘E’’ for CY
G. Reporting of Alcohol and/or
median cost of APC 0393 is 2008 on an interim final basis under the
Substance Abuse Assessment and
approximately $358, the same median OPPS, meaning that they will not be
Intervention Services
cost as HCPCS code G0267, the recognized for payment under the OPPS
predecessor code recognized under the For CY 2008, the CPT Editorial Panel or any other Medicare payment system.
OPPS. We agree with the commenters has created two new Category I CPT HCPCS codes G0396 and G0397 are
that, based on our proposed assignment codes for reporting alcohol and/or assigned status indicator ‘‘S.’’ They are
of the depletion services to APC 0110 substance abuse screening. They are
assigned, on an interim final basis, with
according to the data for their CPT code 99408 (Alcohol and/or
other health and behavioral assessment
predecessor code, while there was no substance (other than tobacco) abuse
and intervention services to APC 0432
violation of the 2 times rule, HCPCS structured screening (e.g., AUDIT,
DAST), and brief intervention (SBI) (Health and Behavioral Services). We
code G0267 had a high median cost believe that HCPCS codes G0396 and
compared to the proposed median cost services; 15 to 30 minutes); and CPT
code 99409 (Alcohol and/or substance G0397 share significant clinical and
of approximately $220 for that APC. Our
(other than tobacco) abuse structured resources characteristics with other
reassignment of CPT codes 38210
screening (e.g., AUDIT, DAST), and services also assigned to APC 0432 for
through 38215 to APC 0393 will pay
appropriately for these CPT codes while brief intervention (SBI) services; greater CY 2008, thereby ensuring the clinical
we collect more specific data on their than 30 minutes). and resource homogeneity of the APC.
individual resource costs. The code descriptions for these CPT The final CY 2008 median cost of APC
We do not agree with the commenters codes suggest that these CPT codes may 0432 is approximately $20. Because
that the two specific services for T-cell describe services that include screening these CPT and Level II HCPCS codes
or tumor depletion, which that they services. For Medicare purposes, were not available for the CY 2008
believe are particularly costly, would be screening services are typically OPPS/ASC proposed rule, we have
appropriately paid through APC 0112, considered to be provided to flagged them with comment indicator
which contains procedures for beneficiaries in the absence of signs or ‘‘NI’’ in Addendum B of this OPPS final
extracorporeal adsorption of cells symptoms of illness or injury; therefore, rule with comment period to signify that
during apheresis and reinfusion into the to the extent that services described by their interim payment status is subject
patient. Furthermore, we believe that a these two CPT codes have a screening to public comment following
cost-based methodology for payment of element, the screening component publication of the final rule that
these procedures would not be would not meet the statutory implements the annual OPPS update.
XIV. OPPS Payment Status and service represented by a HCPCS code is proposed in the CY 2008 OPPS/ASC
Comment Indicators payable under the OPPS or another proposed rule, in this final rule with
payment system and also whether comment period we are using the status
A. Payment Status Indicator Definitions indicators and definitions that are listed
particular OPPS policies apply to the
The OPPS payment status indicators code. Our final CY 2008 status indicator in Addendum D1, which we discuss
(SIs) that we assign to HCPCS codes and assignments for APCs and HCPCS codes below in greater detail.
APCs play an important role in are shown in Addendum A and 1. Payment Status Indicators To
determining payment for services under Addendum B, respectively, to this final Designate Services That Are Paid Under
the OPPS. They indicate whether a rule with comment period. As we the OPPS
Indicator Item/code/service OPPS payment status
G ................... Pass-Through Drugs and Biologicals ......................................... (1) Paid under OPPS; separate APC payment.
H ................... Pass-Through Device Categories ............................................... Separate cost-based pass-through payment; not subject to co-
payment.
K ................... (1) Non-Pass-Through Drugs and Biologicals ............................ (1) Paid under OPPS; separate APC payment.
(2) Therapeutic Radiopharmaceuticals ....................................... (2) Paid under OPPS; separate APC payment.
(3) Brachytherapy Sources ......................................................... (3) Paid under OPPS; separate APC payment.
(4) Blood and Blood Products .................................................... (4) Paid under OPPS; separate APC payment.
N ................... Items and Services Packaged into APC Rates .......................... Paid under OPPS; payment is packaged into payment for
other services, including outliers. Therefore, there is no sep-
arate APC payment.
P ................... Partial Hospitalization ................................................................. Paid under OPPS; per diem APC payment.
Q ................... Packaged Services Subject to Separate Payment under OPPS Paid under OPPS; Addendum B displays APC assignments
Payment Criteria. when services are separately payable.
(1) Separate APC payment based on OPPS payment criteria.
(2) If criteria are not met, payment is packaged into payment
for other services, including outliers. Therefore, there is no
separate APC payment.
S ................... Significant Procedure, Not Discounted when Multiple ............... Paid under OPPS; separate APC payment.
T .................... Significant Procedure, Multiple Reduction Applies ..................... Paid under OPPS; separate APC payment.
V ................... Clinic or Emergency Department Visit ........................................ Paid under OPPS; separate APC payment.
X ................... Ancillary Services ........................................................................ Paid under OPPS; separate APC payment.
As discussed in section VII.A. of the As discussed in detail in section service on the claim for the same date
proposed rule and this final rule with V.B.3.a.(4)(c) of this final rule with with status indicator ‘‘X,’’ ‘‘V,’’ ‘‘S,’’ or
comment period, subsequent to the comment period, we are implementing ‘‘T.’’ The commenter believed that CMS
publication of the CY 2007 OPPS/ASC prospective payment for therapeutic should assign a status indicator other
final rule with comment period, section radiopharmaceuticals separately paid than ‘‘Q’’ to services that may be subject
107(a) of the MIEA–TRHCA extended under the OPPS in CY 2008. In to a composite APC methodology, where
the payment period for brachytherapy accordance with this final policy, as the service would be paid through the
sources paid under the OPPS based on proposed, we also are discontinuing our composite APC payment for two or
a hospital’s charges adjusted to cost use of payment status indicator ‘‘H’’ for more services on the same date.
under section 1833(t)(16)(C) of the Act APCs assigned to therapeutic Response: We appreciate the
for one additional year. This radiopharmaceuticals. Similar to the commenter’s interest in refining the use
requirement for cost-based payment identification of other non-pass-through of status indicator ‘‘Q’’ under the OPPS.
ends after December 31, 2007. drugs and biologicals, for CY 2008, we However, we are adopting our proposal,
Therefore, we continued the OPPS cost- are using payment status indicator ‘‘K’’ without modification, to identify
based payment for brachytherapy to designate all therapeutic HCPCS codes that are members of
sources through CY 2007, and are using radiopharmaceutical APCs that will be composite APCs with status indicator
status indicator ‘‘H’’ during CY 2007 to paid under the OPPS. ‘‘Q’’ for CY 2008, because we believe the
designate non-pass-through We received several public comments definition of this status indicator
brachytherapy sources paid on a cost regarding the appropriateness of the appropriately describes the payment
basis. status indicator assignments for specific policy for these codes as well as special
However, as discussed in detail in HCPCS codes that are discussed in the packaged codes, specifically that
section VII.A. of this final rule with sections of this final rule with comment separate payment is only made if certain
comment period, we are implementing period that are specific to those topics. criteria are met. As we continue to
prospective payment for brachytherapy There were also recommendations about explore the possibilities of greater
sources paid under the OPPS in CY specific payment policies for certain packaging and encounter- and episode-
2008. In accordance with this final items and services and recommended based payment under the OPPS, we will
policy, as proposed we also are status indicators that are discussed consider how to further refine the OPPS
discontinuing our use of payment status elsewhere in this final rule with status indicators to provide the most
indicator ‘‘H’’ for APCs assigned to comment period. relevant information concerning
brachytherapy sources. As indicated in Comment: One commenter believed payment of OPPS services.
section VII.A. of this final rule with that composite APCs differ significantly After considering the public
comment period, for CY 2008 we are from the conditional packaging comments received concerning the
using payment status indicator ‘‘K’’ to methodology for special packaged proposed use of status indicators for
designate all brachytherapy source codes, where CMS provides a payment services that are paid under the OPPS,
APCs that will be paid under the OPPS. for a service only if there is no other we are adopting as final, without
modification, the status indicators for 2. Payment Status Indicators To

payable OPPS services for CY 2008 as Designate Services That Are Paid Under
displayed in the table above. a Payment System Other Than the OPPS
A ................... Services furnished to a hospital outpatient that are paid under Not paid under OPPS. Paid by fiscal intermediaries/MACs
a fee schedule or payment system other than OPPS, for ex- under a fee schedule or payment system other than OPPS.
ample:
• Ambulance Services.
• Clinical Diagnostic Laboratory Services .......................... Not subject to deductible or coinsurance.
• Non-Implantable Prosthetic and Orthotic Devices.
• EPO for ESRD Patients.
• Physical, Occupational, and Speech Therapy.
• Routine Dialysis Services for ESRD Patients Provided
in a Certified Dialysis Unit of a Hospital.
• Diagnostic Mammography.
• Screening Mammography ................................................ Not subject to deductible.
C ................... Inpatient Procedures ................................................................... Not paid under OPPS. Admit patient. Bill as inpatient.
F .................... Corneal Tissue Acquisition; Certain CRNA Services; and Hep- Not paid under OPPS. Paid at reasonable cost.
atitis B Vaccines.
L .................... Influenza Vaccine; Pneumococcal Pneumonia Vaccine ............ Not paid under OPPS. Paid at reasonable cost; not subject to
deductible or coinsurance.
M ................... Items and Services Not Billable to the Fiscal Intermediary/MAC Not paid under OPPS.
Y ................... Non-Implantable Durable Medical Equipment ............................ Not paid under OPPS. All institutional providers other than
home health agencies bill to DMERC.
We did not receive any public CY 2008 proposal, without 3. Payment Status Indicators To
comments regarding the status modification. The final status indicators Designate Services That Are Not
indicators to designate services paid are displayed in the table above. Recognized Under the OPPS But That
under a payment system other than the May Be Recognized by Other
OPPS. Therefore, we are finalizing our Institutional Providers
B ................... Codes that are not recognized by OPPS when submitted on Not paid under OPPS.
an outpatient hospital Part B bill type (12x and13x).
• May be paid by intermediaries/MACs when submitted on a
different bill type, for example, 75x (CORF), but not paid
under OPPS.
• An alternate code that is recognized by OPPS when sub-
mitted on an outpatient hospital Part B bill type (12x and
13x) may be available.
We did not receive any public providers. Therefore, we are finalizing 4. Payment Status Indicators to
comments regarding the status our CY 2008 proposal, without Designate Services That Are Not Payable
indicators to designate services that are modification. The final status indicators by Medicare
not recognized under the OPPS but that are displayed in the table above.
may be recognized by other institutional
D ................... Discontinued Codes .................................................................... Not paid under OPPS or any other Medicare payment system.
E ................... Items, Codes, and Services: Not paid under OPPS or any other Medicare payment system.
• That are not covered by Medicare based on statutory
exclusion.
• That are not covered by Medicare for reasons other
than statutory exclusion.
• That are not recognized by Medicare but for which an
alternate code for the same item or service may be
available.
• For which separate payment is not provided by Medi-
care.
We did not receive any public status indicator and/or APC assignment the statute, MedPAC submits reports to
comments regarding the status for HCPCS codes in Addendum B of the Congress in March and June of each year
indicators to designate services that are CY 2006 final rule with comment that present its payment policy
not payable by Medicare. Therefore, we period. We also stated that codes flagged recommendations. The March 2007
are finalizing our CY 2008 proposal, with the ‘‘CH’’ indicator in that final MedPAC report, ‘‘Report to the
without modification. The final status rule would not be open to comment Congress: Medicare Payment Policy,’’
indicators are displayed in the table because the changes generally were included the following recommendation
above. previously subject to comment during relating specifically to the hospital
To address providers’ broader the proposed rule comment period. In OPPS:
interests and to make the published the CY 2008 OPPS/ASC proposed rule, Recommendation 2A–1: The Congress
Addendum B more convenient for for CY 2008, we proposed to continue should increase payment rates for the
public use, we are displaying in that policy which we are now adopting * * * outpatient prospective payment
Addendum B to this final rule with in this CY 2008 OPPS/ASC final rule system in 2008 by the projected rate-of-
comment period all active HCPCS codes with comment period. When used in increase in the hospital market basket
for CY 2008 and currently active HCPCS this OPPS/ASC final rule with comment index, concurrent with the
codes that will be discontinued at the period, the ‘‘CH’’ indicator is only implementation of a quality incentive
end of CY 2007 that describe items or intended to facilitate the public’s review payment program.
services that are: (1) Payable under the of changes made from one calendar year CMS Response: As proposed in the
OPPS; (2) paid under a payment system to another. CY 2008 OPPS/ASC proposed rule, in
other than the OPPS; (3) not recognized Only HCPCS codes with comment this final rule with comment period, we
under the OPPS but that may be indicator ‘‘NI’’ in this CY 2008 OPPS/ are increasing the payment rates for the
recognized by other institutional ASC final rule with comment period are CY 2008 OPPS by the projected rate-of-
providers; and (4) not payable by subject to comment during the comment increase in the hospital market basket
Medicare. The universe of CY 2008 period for this final rule with comment index (as discussed in section II.C. of
status indicators that we proposed for period. this final rule with comment period).
these items and services and are We are using the ‘‘CH’’ indicator in We are also implementing, effective for
adopting as final without modification this final rule with comment period to CY 2009, the reduction in the annual
in this final rule with comment period call attention to changes in the payment update factor by 2.0 percentage points
are listed in the tables above. status indicator and/or APC assignment for hospitals that are defined under
A complete listing of HCPCS codes for HCPCS codes for CY 2008 compared section 1886(d)(1)(B) of the Act and that
with payment status indicators and APC to their assignment as of December 31, do not meet the hospital outpatient
assignments for CY 2008 is also 2007 and to identify HCPCS codes that quality data reporting required by
available electronically on the CMS Web will be discontinued at the end of CY section 1833(t)(17) of the Act, as added
site at http://www.cms.hhs.gov/ 2007. The use of the comment indicator by section 109(a) of the MIEA–TRHCA.
HospitalOutpatientPPS/HORD/ ‘‘CH’’ in association with a composite Our adoption and implementation of
list.asp#TopOfPage. APC in this final rule with comment hospital quality measure reporting for
B. Comment Indicator Definitions period indicates that the configuration the CY 2008 OPPS are discussed in
of the composite APC is changed from detail in section XVII. of this final rule
In the November 15, 2004 final rule CY 2007. We believe that using the with comment period.
with comment period (69 FR 65827 and ‘‘CH’’ indicator in this final rule with
65828), we made final our policy to use In its June 2007 ‘‘Report to the
comment period will facilitate the Congress: Promoting Greater Efficiency
two comment indicators to identify in public’s review of the changes that we
an OPPS final rule the assignment status in Medicare,’’ MedPAC did not make
are making final for CY 2008. any recommendations specific to the
of a specific HCPCS code to an APC and As we proposed, we are terminating
the timeframe when comments on the OPPS for CY 2008. As noted in the FY
comment indicator ‘‘NF’’ because we 2008 IPPS final rule with comment
HCPCS APC assignment would be believe its use is not relevant in the final
accepted. These two comment period (72 FR 47344), the June 2007
rule. MedPAC report includes analysis and
indicators are listed below. We did not receive any public
• ‘‘NF’’—New code, final APC recommendations on alternatives to the
comments regarding the CY 2008 method to compute the IPPS wage index
assignment; Comments were accepted proposed OPPS comment indicators.
on a proposed APC assignment in the for FY 2009. (See chapter 6 of the June
Therefore, we are finalizing our 2007 MedPAC report to Congress.)
Proposed Rule; APC assignment is no proposed use of comment indicators for
longer open to comment. Under our current policy, we adopt the
the CY 2008 OPPS/ASC final rule with same wage index for the OPPS as the
• ‘‘NI’’—New code, interim APC comment period, without modification.
assignment; Comments will be accepted IPPS, and, therefore, such analysis and
The two comment indicators, ‘‘NI’’ and recommendations may have possible
on the interim APC assignment for the ‘‘CH,’’ that are finalized for continued
new code. implications for the CY 2009 OPPS. As
use in CY 2008 and their definitions are indicated in the FY 2008 IPPS final rule
In the November 10, 2005 final rule
listed in Addendum D2 to this final rule with comment period (72 FR 47344), we
with comment period (70 FR 68702 and
with comment period. will consider MedPAC’s
68703), we adopted a new comment
indicator: XV. OPPS Policy and Payment recommendations and analysis in
• ‘‘CH’’—Active HCPCS codes in Recommendations making a proposal (or proposals) to
current and next calendar year; status revise the IPPS wage index in the FY
indicator and/or APC assignment have A. MedPAC Recommendations 2009 IPPS proposed rule, as required by
changed or active HCPCS code that will MedPAC is an independent Federal section 106(b)(2) of the MIEA–TRHCA.
be discontinued at the end of the commission established under section The full report can be downloaded from
current calendar year. 1805 of the Act to advise the U.S. MedPAC’s Web site at: http://
We implemented comment indicator Congress on issues affecting the www.medpac.gov/document/Jun07_
‘‘CH’’ to designate a change in payment Medicare program. As required under EntireReport.pdf.
MedPAC submitted comments to CMS June 12, 1998 proposed rule (63 FR new paragraph (7)(A), which provides
on the CY 2008 OPPS/ASC proposed 32291). that the Secretary may reduce the
rule. We have responded to these Section 141(b) of the Social Security annual ASC update by 2 percentage
comments in each relevant section of Act Amendments of 1994, Pub. L. 103– points if an ASC fails to submit data as
this final rule with comment period. 432, requires us to establish a process required by the Secretary on selected
for reviewing the appropriateness of the measures of quality of care, including
B. APC Panel Recommendations payment amount provided under medication errors. Section 109(b) of the
Recommendations made by the APC section 1833(i)(2)(A)(iii) of the Act for MIEA–TRCHA requires that certain
Panel at its March 2007 meeting are intraocular lenses (IOLs) that belong to quality of care reporting requirements
discussed in sections of this final rule a class of new technology intraocular mandated for hospitals paid under the
with comment period that correspond to lenses (NTIOLs). That process was the OPPS by section 109(a) of the MIEA–
topics addressed by the APC Panel. The subject of a separate final rule entitled TRCHA be applied in a similar manner
report and recommendations from the ‘‘Adjustment in Payment Amounts for to ASCs unless otherwise specified by
APC Panel’s March 7–8, 2007 meeting New Technology Intraocular Lenses the Secretary. We refer readers to
are available on the CMS Web site at: Furnished by Ambulatory Surgical sections XVII.A. and H. of this final rule
http://www.cms.hhs.gov/FACA/05 Centers,’’ published on June 16, 1999, in with comment period for further
_AdvisoryPanelonAmbulatory the Federal Register (64 FR 32198). discussion of this provision and our
PaymentClassificationGroups.asp. Section 626(b) of the Medicare plans for future ASC implementation.
Recommendations made by the APC Prescription Drug, Improvement, and
Modernization Act of 2003, Pub. L. 108– B. Rulemaking for the Revised ASC
Panel at its September 2007 meeting,
173, (MMA) repealed the requirement Payment System
when it met to discuss the CY 2008
OPPS/ASC proposed rule and to hear formerly found in section 1833(i)(2)(A) On August 2, 2007, we published in
testimony from concerned members of of the Act that the Secretary conduct a the Federal Register (72 FR 42470) the
the public, are also discussed in survey of ASC costs for purposes of final rule for the revised ASC payment
sections of this final rule with comment updating ASC payment rates and system, effective January 1, 2008. In that
period that correspond to topics required the Secretary to implement a final rule, we established that we would
addressed by the APC Panel. The report revised ASC payment system, to be address two components of the ASC
and recommendations of the APC effective not later than January 1, 2008. payment system annually as part of the
Panel’s September 5–6, 2007 meeting Section 626(c) of the MMA amended OPPS rulemaking cycle. Section
are also available on the CMS Web site section 1833(a)(1) of the Act to require 1833(i)(1) of the Act requires us to
at: http://www.cms.hhs.gov/FACA/05 that beginning with implementation of specify, in consultation with
_AdvisoryPanelonAmbulatory the revised ASC payment system, appropriate medical organizations,
PaymentClassificationGroups.asp. payment for surgical procedures surgical procedures that are
furnished in ASCs shall be 80 percent appropriately performed on an inpatient
XVI. Update of the Revised Ambulatory of the lesser of the actual charge for the basis in a hospital but that can be safely
Surgical Center Payment System services or the amount determined by performed in an ASC, CAH, or an HOPD
A. Legislative and Regulatory Authority the Secretary under the revised payment and to review and update the list of ASC
for the ASC Payment System system. procedures at least every 2 years.
Section 5103 of the Deficit Reduction In the August 2, 2007 revised ASC
Section 1832(a)(2)(F)(i) of the Act Act of 2005, Pub. L. 109–171 (DRA), payment system final rule, we also
provides that benefits under the amended section 1833(i)(2) of the Act by adopted the method we will use to set
Medicare Part B include payment for adding a new subparagraph (E) to place payment rates for ASC services
facility services furnished in connection a limitation on payments for surgical furnished in association with covered
with surgical procedures specified by procedures in ASCs. The amended surgical procedures beginning in CY
the Secretary that are performed in an language provides that if the standard 2008. Updating covered surgical
ASC. To participate in the Medicare overhead amount under section procedures and covered ancillary
program as an ASC, a facility must meet 1833(i)(2)(A) of the Act for an ASC services, as well as their payment rates,
the standards specified in section facility service for such surgical in association with the annual OPPS
1832(a)(2)(F)(i) of the Act, which are procedures, without application of any rulemaking cycle is particularly
implemented in 42 CFR part 416, geographic adjustment, exceeds the important because the OPPS relative
subpart B and subpart C of our Medicare payment amount under the payment weights and rates will be used
regulations. The regulations at 42 CFR hospital OPPS for the service for that as the basis for the payment of most
416, subpart B set forth general year, without application of any covered surgical procedures and
conditions and requirements for ASCs, geographic adjustment, the Secretary covered ancillary services under the
and the regulations at subpart C provide shall substitute the OPPS payment revised ASC payment system. This joint
specific conditions for coverage for amount for the ASC standard overhead update process will ensure that the ASC
ASCs. amount. This provision applies to updates occur in a regular, predictable,
To establish the reasonable estimated surgical procedures furnished in ASCs and timely manner. The final rule
allowances for ASC facility services, on or after January 1, 2007, and before included applicable regulatory changes
section 1833(i)(2)(A)(i) of the Act the effective date of the revised ASC to 42 CFR Parts 410 and 416.
required us to take into account the payment system (that is, January 1, On August 2, 2007, we published in
audited costs incurred by ASCs to 2008). the Federal Register (72 FR 42778) a
perform a procedure, in accordance Section 109(b) of the Medicare proposed rule which proposed to
with a survey. The ASC services benefit Improvements and Extension Act of update the revised ASC payment
was enacted by Congress through the 2006 of the Tax Relief and Health Care system, along with the OPPS. We also
Omnibus Reconciliation Act of 1980 Act of 2006, Pub. L. 109–432 (MIEA– proposed to revise the ASC regulations
(Pub. L. 96–499). For a detailed TRHCA), amended section 1833(i) of the to provide practice expense payments to
discussion of the legislative history Act, in part, by adding new clause (iv) physicians who perform noncovered
related to ASCs, we refer readers to the to paragraph (2)(D) and by also adding ASC procedures in ASCs based on the
facility practice expense (PE) relative for ASC payment excludes those relative payment weights for that
value units (RVUs) and to exclude surgical procedures that are on the calendar year, as well as the practice
covered ancillary radiology services and OPPS inpatient list, procedures that are expense payment amounts under the
covered ancillary drugs and biologicals packaged under the OPPS, CPT unlisted MPFS schedule for that calendar year,
from the categories of designated health surgical procedure codes, and surgical because some covered office-based
services (DHS) that are subject to the procedures that are not recognized for surgical procedures and covered
physician self-referral prohibition. We payment under the OPPS. Further, we ancillary services will be paid according
note that the reference throughout the exclude from ASC payment any to MPFS amounts if those amounts are
August 2, 2007 OPPS/ASC proposed procedure for which standard medical less than the rates calculated under the
rule to the final rule for the CY 2008 practice dictates that the beneficiary standard methodology of the revised
revised ASC payment system would typically be expected to require ASC payment system.
erroneously cited that final rule as the active medical monitoring and care at Just as we scale the OPPS relative
July 2007 final rule. midnight following the procedure payment weights each year to ensure
In this CY 2008 OPPS/ASC final rule (overnight stay), and all surgical that the OPPS is budget neutral from
with comment period, we are procedures that could pose a significant one year to the next, we will rescale
performing our annual update of the safety risk to Medicare beneficiaries. relative weights each year for the
revised ASC payment system for CY The criteria used under the revised ASC revised ASC payment system, beginning
2008. payment system to identify procedures with the CY 2009 payment year. The
that could pose a significant safety risk purpose of scaling the relative weights
C. Revisions to the ASC Payment System
when performed in an ASC include is to ensure that the estimated aggregate
Effective January 1, 2008
those procedures that: Generally result payments under the ASC payment
1. Covered Surgical Procedures Under in extensive blood loss; require major or system for an upcoming year will be
the Revised ASC Payment System prolonged invasion of body cavities; neither greater than nor less than the
a. Definition of Surgical Procedure directly involve major blood vessels; are aggregate payments that would be made
emergent or life-threatening in nature; in the prior year, taking into
In order to delineate the scope of consideration any changes or
procedures that constitute ‘‘outpatient or commonly require systemic
thrombolytic therapy. These criteria for recalibrations for the upcoming year.
surgical procedures’’ for payment under Rescaling enables us to compensate for
the revised ASC payment system, in the evaluating surgical procedures are set
forth in § 416.166(c). the effects of changes in the OPPS
August 2, 2007 revised ASC payment relative payment weights from year to
system final rule, we clarified what we The list of surgical procedures that we
have excluded from payment in ASCs year for services that are not performed
consider to be a ‘‘surgical’’ procedure. in ASCs (for example, due to sudden
Under the ASC payment system existing may be found in Addendum EE posted
on the CMS Web site at: http:// increases or decreases in the costs of
through CY 2007, we define a surgical hospital outpatient emergency
procedure as any procedure described www.cms.hhs./ASCPayment. As
discussed above, the surgical department visits) that could
within the range of Category I CPT inappropriately cause the estimated
codes that the CPT Editorial Panel of the procedures on that exclusionary list are
those that are on the OPPS inpatient list, ASC expenditures to increase or
AMA defines as ‘‘surgery’’ (CPT codes decrease as a function of those changes.
10000 through 69999). Under the CPT unlisted codes, surgical procedures
To establish the budget neutrality
revised payment system, we continue to that are not recognized for payment
adjustment for the revised ASC payment
define ‘‘surgery’’ using that standard. under Medicare, and those that our
system, we used a model that accounts
We also include within the scope of clinical staff determined are not safe for
for the migration of surgical procedures
surgical procedures payable in an ASC Medicare beneficiaries or would be
between ASCs, physicians’ offices, and
those procedures that are described by expected to require an overnight stay
HOPDs, as discussed in the August 2,
Level II HCPCS codes or by Category III when provided in ASCs.
2007 revised ASC payment system final
CPT codes that directly crosswalk or are c. Payment for Covered Surgical rule (72 FR 42470). The budget
clinically similar to procedures in the Procedures under the Revised ASC neutrality adjustment for CY 2008 is
CPT surgical range that we have Payment System based on updated CY 2008 OPPS and
determined do not pose a significant MPFS rates, along with updated
(1) General Policies
safety risk and that we would not expect utilization data. The ASC CY 2008
to require an overnight stay when To make payment for most covered budget neutrality adjustment is
performed in an ASC. Having surgical procedures, beginning in CY multiplied by the OPPS conversion
established what we consider to be a 2008, we utilize the OPPS APCs as a factor to establish the ASC conversion
‘‘surgical procedure,’’ we defined ‘‘grouper’’ and the APC relative factor. The standard ASC payment for
criteria that enable us to identify payment weights as the basis for ASC most of the covered surgical procedures
procedures that could pose a significant relative payment weights and for displayed in Addendum AA of this final
safety risk when performed in an ASC calculating ASC payment rates under rule with comment period is calculated
or that we expect would require an the revised payment system, by as the product of that ASC conversion
overnight stay within the bounds of applying a uniform ASC conversion factor multiplied by the OPPS relative
prevailing medical practice. factor to the ASC payment weights. For payment weight for each separately
this first year of the revised ASC payable procedure. A more detailed
b. Identification of Surgical Procedures payment system, we adopted the OPPS discussion of the methodology is
Eligible for Payment under the Revised relative payment weights as the ASC provided in section XVI.L. of this final
ASC Payment System relative payment weights for most rule with comment period.
ASC ‘‘covered surgical procedures’’ covered surgical procedures. Beginning in CY 2010, we will update
are those surgical procedures for which For CY 2009 and beyond, according to the ASC conversion factor for the
payment is made under the revised ASC our established methodology, we will revised ASC payment system by the
payment system. Our final policy for update the ASC relative payment percentage increase in the CPI–U (U.S.
identifying surgical procedures eligible weights annually using the OPPS city average), as estimated for the 12-
month period ending with the midpoint payment based on OPPS relative unadjusted payment to determine the
of the year involved (72 FR 42519). payment weight); ‘‘P3’’ (Office based device cost included in the OPPS
surgical procedure added to ASC list in payment rate for a device-intensive ASC
(2) Office-Based Procedures
CY 2008 or later with MPFS nonfacility covered surgical procedure, which we
Among the procedures newly PE RVUs; payment based on MPFS then set as equal to the device portion
identified as covered surgical nonfacility PE RVUs); and ‘‘R2’’ (Office- of the national unadjusted ASC payment
procedures for payment in ASCs based surgical procedure added to ASC rate for the procedure. We then
beginning in CY 2008 are many list in CY 2008 or later without MPFS calculate the service portion of the ASC
procedures that are performed most of nonfacility PE RVUs; payment based on payment for device-intensive
the time in physicians’ offices. These OPPS relative payment weight). Those procedures by applying the uniform
procedures neither pose a significant procedures for which the payment ASC conversion factor to the service
safety risk nor are they expected to indicator designation as office-based is (nondevice) portion of the OPPS relative
require an overnight stay when temporary for CY 2008 are identified in payment weight for the device-intensive
performed in ASCs, and they generally Addendum AA by an asterisk. We use procedure. Finally, we sum the ASC
require a lower level of resource the temporary designation to indicate device portion and ASC service portion
intensity than do most other ASC that the office-based payment indicator to establish the full payment for the
covered surgical procedures. For those (‘‘P2,’’ ‘‘P3,’’ or ‘‘R2’’) assigned to the device intensive procedure under the
reasons, in the August 2, 2007 revised procedure is subject to change because revised ASC payment system. For
ASC payment system final rule, we the HCPCS code is new and we believe example, if the OPPS device offset
adopted a policy to include them as we have insufficient data upon which to percentage for the procedure is 80
covered surgical procedures but to base a final decision regarding the percent and the OPPS national
ensure that payment for the facility code’s office-based status. We will unadjusted payment is $100, the device
resources associated with the reevaluate the procedure during the cost included in that payment is $80.
procedures identified as ‘‘office-based’’ next annual rulemaking cycle, and Under the revised ASC payment system,
would not be greater when provided in when there are data upon which to base we also pay $80 for the device portion
ASCs than when furnished in a proposal for a final payment indicator, of the procedure but the service portion
physicians’ offices (72 FR 42509). we will include that in our proposed of the OPPS payment, $20, is adjusted
Under the August 2, 2007 revised rule. The remainder of the office-based by the budget neutrality adjustment (for
ASC payment system final rule, we procedure designations that are not example, using the final ASC budget
finalized our policy to cap payment for identified as temporary were either neutrality adjustment, the calculation is
office-based surgical procedures for already finalized in the August 2, 2007 $20 × 0.65 = $13) and, if it is subject to
which ASC payment would first be revised ASC payment system final rule the transition (as set forth in section
allowed beginning in CY 2008 or later or are being finalized in this CY 2008 XVI.C.1.c.(5) of this final rule with
years at the lesser of the MPFS OPPS/ASC final rule with comment comment period), it is also adjusted
nonfacility PE RVU amount or the ASC period. accordingly. If the procedure in the
rate developed according to the example is not subject to the transition,
standard methodology of the revised (3) Device-Intensive Procedures
its CY 2008 payment is equal to
ASC payment system. For those office- Under the payment policy finalized in approximately $93 ($80 + $13). This
based procedures for which there is no the revised ASC payment system final example illustrates the contributions of
available MPFS nonfacility PE RVU rule, we use a modified payment the device and service payment
amount, we will implement the cap, as methodology to establish the ASC amounts to the national unadjusted ASC
appropriate, once a MPFS nonfacility PE payment rates for device-intensive payment rate; payment to an ASC for
RVU amount is available. When procedures (72 FR 42503). We identify the device-intensive service is subject to
procedures are finalized as being office device-intensive procedures under the the 50 percent geographic adjustment.
based procedures, they remain revised ASC payment system as covered We also reduce the amount of
designated as office-based in future surgical procedures that, under the payment made to ASCs for device-
updates. We may propose that OPPS, are assigned to those device- intensive procedures assigned to certain
additional HCPCS codes be classified as dependent APCs for which the ‘‘device OPPS APCs in those cases in which the
office-based in a proposed rule for an offset percentage’’ is greater than 50 necessary device is furnished without
annual ASC update after review of the percent of the APC’s median cost. The cost to the ASC or the beneficiary, or
most recently available utilization data. device offset percentage is our best with a full credit for the cost of the
We consider for additional designation estimate of the percentage of device cost device being replaced. A full discussion
as office-based those procedures newly that is included in an APC payment of that policy may be found in section
paid in ASCs in CY 2008 or later years under the OPPS. The CY 2008 OPPS XVI.F. of this final rule with comment
that our review concludes are performed final device-dependent APCs and device period.
predominantly (more than 50 percent of offset percentages are discussed in
the time) in physicians’ offices, based section IV.A. of this final rule with (4) Multiple and Interrupted Procedure
on our consideration of volume and site comment period. Discounting
of service utilization data for the According to the final ASC policy, Under the revised ASC payment
procedures, as well as clinical payment for implantable devices is system, we discount payment for certain
information and comparable data for packaged into payment for the covered multiple and interrupted procedures
related procedures, if appropriate. surgical procedures, but we utilize a performed in ASCs. While most covered
Procedures designated as office-based modified ASC methodology based on surgical procedures are subject to a 50
for CY 2008 are identified in Addendum OPPS data to establish payment rates for percent reduction in ASC payment for
AA to this final rule with comment the device-intensive procedures under the lower-paying procedure when more
period and assigned payment indicators the revised ASC payment system. than one procedure is performed in a
‘‘P2’’ (Office-based surgical procedures According to that modified payment single operative session, those covered
added to ASC list in CY 2008 or later methodology, we apply the OPPS device surgical procedures that are exempt
with MPFS nonfacility PE RVUs; offset percentage to the OPPS national from the multiple procedure reduction
in ASCs because they are not subject to Addendum AA to this final rule with policies in that final rule would need to
this reduction under the OPPS, are comment period that are not subject to be subjected to the notice and comment
identified in Addendum AA to this final the transition are assigned payment rulemaking procedures through
rule with comment period with an ‘‘N’’ indicators ‘‘G2’’ (Nonoffice-based issuance of a proposed rule before any
in the column labeled ‘‘Subject to surgical procedure added to ASC list in such changes could be finalized.
multiple procedure discounting.’’ CY 2008 or later; payment based on Comment: Several commenters
Procedures requiring anesthesia that are OPPS relative payment weight); ‘‘J8’’ recommended that CMS establish an
terminated after the patient has been (Device-intensive procedure added to advisory group of clinically-trained ASC
prepared for surgery and taken to the ASC list in CY 2008 or later; paid at experts to work with CMS staff prior to
operating room but before the adjusted rate); ‘‘P2’’ (Office-based release of the annual proposed rule to
administration of anesthesia are surgical procedure added to ASC list in review and provide clinical safety and
reported with modifier 73, and the ASC CY 2008 or later with MPFS nonfacility procedure-specific data on procedures
payment for the covered surgical PE RVUs; payment based on OPPS that CMS may initially deem a safety
procedure is reduced by 50 percent. relative payment weight); ‘‘P3’’ (Office- risk.
Procedures requiring anesthesia that are based surgical procedure added to ASC Response: We appreciate the
terminated after administration of list in CY 2008 or later with MPFS commenters’ suggestion. However, we
anesthesia or initiation of the procedure nonfacility PE RVUs; payment based on believe that the current process for
are reported with modifier 74, and the MPFS nonfacility PE RVUs); and ‘‘R2’’ identifying procedures for exclusion
ASC payment for the covered surgical (Office-based surgical procedure added from the list of covered procedures is
procedure is made at 100 percent of the to ASC list in CY 2008 or later without sufficient. The process we have
established payment rate. Procedures MPFS nonfacility PE RVUs; payment established allows for clinical review by
and services not requiring anesthesia based on OPPS relative payment our medical staff and expert advisors, as
that are partially reduced or weight). well as comments from the public on an
discontinued at the physician’s We received many public comments annual basis prior to making final
discretion are reported with modifier on the final payment policies for decisions regarding surgical procedures
52, and the ASC payment for the covered surgical procedures under the for exclusion from the list of ASC
covered surgical procedure or covered revised ASC payment system. A covered surgical procedures. Further, in
ancillary service is reduced by 50 summary of the public comments and contrast to the biennial process to
percent. our responses follow. update the ASC list under the existing
Comment: A number of commenters ASC payment system in effect through
(5) Transition to Revised ASC Payment suggested that CMS: (1) Alter the CY 2007, the process for updating the
Rates definition for surgical procedures and list annually under the revised payment
Under the revised ASC payment the criteria for evaluating procedures for system increases opportunities for the
system, we are providing a payment exclusion from the list of covered public to comment on our proposed
transition over 4 years for all services on procedures; (2) not implement the changes to the list and other aspects of
the CY 2007 ASC list of covered surgical office-based designations for the payment system that may be
procedures (72 FR 42519). Beginning in procedures; (3) use a lower threshold to included in the proposed rule.
CY 2008, the contribution of CY 2007 designate which procedures are eligible Comment: One commenter suggested
ASC payment rates to the blended for payment as device-intensive; (4) CMS should develop and implement
transitional rates will decrease by 25 allow procedures with high supply costs modifiers for hospitals and ASCs to use
percentage point increments each year to go to fully implemented revised to monitor beneficiaries who, after
of transitional payment, until CY 2011, payment system rates rather than being undergoing procedures in ASCs, are
when we will fully implement the paid at the transitional rates during the discharged to hospitals. The commenter
revised ASC payment rates calculated first 3 years under the revised system; stated that, with the greatly expanded
under the final methodology of the and (5) use either a higher budget list of covered surgical procedures in
revised payment system. While we do neutrality adjustment or differential place, ASCs will be prone to provide
not subject the device payment portion adjustments for high and low volume services that are beyond their
of the total ASC payment for a device- procedures. Within those topics, the capabilities. The commenter believed
intensive procedure to the transition commenters made a range of that ASCs may underestimate the
policy, we transition the service recommendations for changes to our severity of certain types of patients or
payment portion of the total ASC final policies. cases, or both, and that as a result,
payment for the procedure over the 4 Response: We appreciate the beneficiaries requiring continued care
year phase-in period. Procedures new to commenters’ suggestions. However, the will be transferred to the hospital. The
ASC payment for CY 2008 or later payment policies for the revised ASC commenter argued that this would
calendar years receive payments payment system that are addressed by result in increased health care costs.
determined according to the final the commenters were finalized in the The commenter believed that, in this
methodology of the revised ASC August 2, 2007 revised ASC payment way, the revised ASC payment system
payment system, without a transition. system final rule after we received and may introduce payment inequities
ASC covered surgical procedures addressed public comments. Therefore, whereby hospitals lose money by caring
listed in Addendum AA to this final we are not addressing these comments for patients transferred from ASCs,
rule with comment period that are in this final rule with comment period. many times for hospital outpatient
subject to the transition are assigned Only the comments we received during services that would not be paid by
payment indicators ‘‘A2’’ (Surgical the comment period related to the Medicare under existing OPPS payment
procedure on ASC list in CY 2007; proposed annual update of the revised policy. Further, the commenter was
payment based on OPPS relative ASC payment system that were concerned that transferred beneficiaries
payment weight) and ‘‘H8’’ (Device- included in the August 2, 2007 OPPS/ also may be exposed to increased
intensive procedure on ASC list in CY ASC proposed rule are addressed in this financial liability for hospital services
2007; paid at adjusted rate). ASC final rule with comment period. Any not covered by Medicare under the
covered surgical procedures listed in additional changes to the payment OPPS and that the quality of care would
suffer due to the transfer, which would certain implantable items that have separately for covered ancillary services
require the involvement of multiple pass-through status under the OPPS; in order to align the ASC payment
providers. For those reasons, the certain items and services that we bundles with the OPPS. However,
commenter suggested that CMS develop designate as contractor-priced (payment MedPAC was concerned that separate
and implement a method to monitor rate is determined by the Medicare payment for these services for which
ASC-to-hospital transfer activity. contractor) including, but not limited to, payment is currently packaged under
Response: We do not anticipate a the procurement of corneal tissue; the existing ASC payment system may
significant influx of transfers from ASCs certain drugs and biologicals for which lead to growth of the covered ancillary
to hospitals to accompany separate payment is allowed under the services in ASCs. MedPAC
implementation of the revised payment OPPS; and certain radiology services for
recommended that CMS pursue broader
system. As discussed above, we have an which separate payment is allowed
packaging policies for both ASCs and
established review policy to identify under the OPPS.
Under the revised ASC payment the OPPS to promote efficient resource
and exclude from ASC payment those
system, we designate specific services use in both settings.
procedures that could pose a significant
safety risk to beneficiaries when that are separately payable under the Response: We appreciate this
performed in the ASC setting or that are OPPS as ‘‘covered ancillary services’’ comment from MedPAC, and as
expected to require an overnight stay. and make separate payment to ASCs evidenced by the packaging approach
We have expanded the ASC list of when any of the services so designated that we are finalizing for the CY 2008
covered surgical procedures in order to are provided on the same day as integral OPPS, as described in section II.A.4.c. of
increase physicians’ choices when to a covered surgical procedure this final rule with comment period, we
selecting the most appropriate place of provided in the ASC (72 FR 42477). are expanding the packaging of ancillary
care for beneficiaries. To this end, the Payment for ancillary services that are services to increase the size of the
implementation of the revised packaged under the OPPS also is payment bundles in both the OPPS and
ratesetting methodology removes site-of- packaged under the revised ASC
ASC settings. In particular, there are a
service payment differentials that may payment system (and those services are
number of radiology services, including
have affected physicians’ decisions in not considered to be ASC covered
ancillary services). Furthermore, only guidance procedures, that are newly
the past. We believe that, under the packaged under the OPPS, but which
revised payment system, physicians will the ASC can receive payment for the
facility resources required to provide otherwise would have been paid
choose the setting for a procedure that separately in the ASC setting as covered
best suits the needs of the individual the covered ancillary radiology or other
covered ancillary services, and ASCs are ancillary services. We do not expect
beneficiary, and that beneficiaries will
no longer able to bill as independent significant growth of separately payable
benefit from expanded access to surgical
diagnostic testing facility (IDTF) covered ancillary services in ASCs as a
services in the most efficient and
appropriate setting available. suppliers to receive payment for direct result of providing separate
Thus, although we are sensitive to the ancillary radiology services that are payment for these services beginning in
commenter’s concerns, we see no reason integral to the performance of a covered CY 2008 because, to be paid, these
to implement modifiers as suggested by surgical procedure for which the ASC is services must always be provided
the commenter at this time. We will billing Medicare. integral to covered surgical procedures
We continue to consider to be outside in ASCs.
continue to analyze claims and other
the scope of ASC services, as set forth
available data during our annual As discussed above, we have revised
in § 416.164(c), the following items and
rulemaking cycle to assess the the ASC payment system to more
services, including, but not limited to:
effectiveness of our policies and to make appropriately pay for surgical
physicians’ services (including surgical
our annual updates. procedures that are covered in that
procedures and all preoperative and
2. Covered Ancillary Services Under the postoperative services that are setting; that is, those procedures we
Revised ASC Payment System performed by a physician); anesthetists’ have determined do not pose a
services; radiology services (other than significant risk to beneficiary safety and
a. General Policies
those integral to performance of a would not be expected to require an
As described in § 416.163, payment is covered surgical procedure); diagnostic overnight stay. Because we are paying
made under the revised ASC payment procedures (other than those directly for these surgical procedures using the
system for ASC services furnished in related to performance of a covered OPPS APCs as the grouper, we believe
connection with covered surgical surgical procedure); ambulance services; it is most appropriate to align the
procedures. As set forth in § 416.2, ASC leg arm, back, and neck braces other payment bundles under the OPPS and
services include both facility services, than those that serve the function of a the revised ASC payment system.
which are defined as services that are cast or splint; artificial limbs; and Increased packaging under the OPPS
furnished in connection with a covered nonimplantable prosthetic devices and that alters the OPPS payment bundles
surgical procedure performed in an ASC DME. will also occur under the revised ASC
and for which payment is packaged into We received one public comment payment system. We believe that the
the ASC payment for the covered specific to our general final payment
changes to the ASC payment system
surgical procedure, and covered policy for separate payment of covered
ancillary services, which are defined as will allow beneficiaries to receive the
ancillary services in ASCs under the
those items and services that are integral revised ASC payment system. A care they require in the most
to a covered surgical procedure summary of the public comment and appropriate setting and ASCs to be
performed in an ASC, for which our response follow. appropriately paid for that care. We
separate payment is made under the Comment: MedPAC expressed have no reason to believe that increased
revised ASC payment system. concern regarding our final payment service growth for covered ancillary
‘‘Covered ancillary services’’ include policy under the revised ASC payment services provided in ASCs will be more
the following, as specified in system for covered ancillary services. likely than growth for those services
§ 416.164(b): brachytherapy sources; The revised ASC payment system pays provided in other settings.
b. Payment Policies for Specific Items Ancillary radiology services include separate payment groups for
and Services all Category I CPT codes in the brachytherapy sources related to their
(1) Radiology Services radiology range established by CPT, number, radioisotope, and radioactive
from 70000 to 79999, and Category III intensity, as well as for stranded and
Under the revised ASC payment CPT codes and Level II HCPCS codes non-stranded sources as of July 1, 2007.
system, we designate as ‘‘covered that describe radiology services that OPPS procedure payments specifically
ancillary services’’ those ancillary crosswalk or are clinically similar to do not include payment for
radiology services that are separately procedures in the radiology range brachytherapy sources. The ASC
payable under the OPPS. Thus, ASCs established by CPT. This revised ASC brachytherapy source payment rate for a
receive a separate payment for a covered payment system policy for each given calendar year is the same as the
ancillary radiology service which, by calendar year applies to all radiology OPPS payment rate for that year,
definition, is provided in the ASC services that are separately payable without application of the ASC budget
integral to the performance of a covered under the OPPS in that same calendar
surgical procedure. ASC payment for neutrality adjustment or, if specific
year. A list that includes all covered OPPS prospective payment rates are
those covered ancillary services is at the ancillary radiology services may be
lower of the rate developed according to unavailable, ASC payments for
found in Addendum BB to this final brachytherapy sources are contractor-
the standard methodology of the revised rule with comment period. Covered
ASC payment system or the MPFS priced. In addition, consistent with the
ancillary radiology services are assigned payment of brachytherapy sources
nonfacility PE RVU amount (specifically payment indicator ‘‘Z2’’ (Radiology
for the technical component (TC) if the under the OPPS, the ASC payment rates
service paid separately when provided for brachytherapy sources are not
service is assigned a TC under the integral to a surgical procedure on ASC
MPFS). No separate payment is made adjusted for geographic wage
list; payment based on OPPS relative
for ancillary services that are designated differences. The Level II HCPCS codes
payment weight) or ‘‘Z3’’ (Radiology
as packaged under the OPPS. We for brachytherapy sources and their
service paid separately when provided
specify that a covered ancillary payment rates under the CY 2008
integral to a surgical procedure on ASC
radiology service is integral to the revised ASC payment system, the same
list; payment based on MPFS nonfacility
performance of a covered surgical as those finalized for the CY 2008 OPPS,
PE RVUs). Payment for ancillary
procedure if it is required for the are included in Addendum BB to this
radiology services that are packaged
successful performance of the surgery final rule with comment period.
under the OPPS is packaged under the
and is performed in the ASC revised ASC payment system, and those Brachytherapy sources are assigned
immediately preceding, during, or services are identified in Addendum BB payment indicator ‘‘H2’’ (Brachytherapy
immediately following the covered to this final rule with comment period source paid separately when provided
surgical procedure. Payment under the with payment indicator ‘‘N1’’ (Packaged integral to a surgical procedure on ASC
revised ASC payment system for service/item; no separate payment list; payment based on OPPS rate). We
covered ancillary radiology services is made). ASC payment for covered note that we are finalizing our proposal
subject to geographic adjustment, like ancillary radiology services is not to change the brachytherapy source
payment for ASC surgical procedures. subject to the 4-year transition. payment indicator from ‘‘H4,’’ defined
Only the ASC can receive payment for as ‘‘Brachytherapy source paid
the facility resources required to (2) Brachytherapy Sources separately when provided integral to a
provide the covered ancillary radiology Under the revised ASC payment surgical procedure on ASC list; payment
services, and ASCs are no longer able to system, we designate as ‘‘covered contractor-priced’’ to ‘‘H2,’’ in order to
bill as independent diagnostic testing ancillary services’’ those brachytherapy be consistent with the final CY 2008
facility (IDTF) suppliers to receive sources that are separately payable OPPS policy for payment of
payment for any ancillary radiology under the OPPS. Thus, ASCs receive brachytherapy sources, as described in
services that are integral to the separate payment for those covered section VII. of this final rule with
performance of a covered surgical ancillary brachytherapy sources that are comment period. For CY 2008, we are
procedure for which the ASC is billing implanted in conjunction with covered paying under the OPPS at prospective
Medicare. Because the packaging status surgical procedures billed by ASCs. The rates calculated from historical claims
of radiology services under the revised application of the brachytherapy data and, therefore, the ASC payment
ASC payment system parallels the sources is integrally related to the for brachytherapy sources will be at
OPPS, any changes to the packaging of covered surgical procedures for those same rates. The HCPCS codes for
radiology services under the OPPS will insertion of brachytherapy needles and all brachytherapy sources and their ASC
also occur under the revised ASC catheters. There is a statutory payment amounts and ASC payment
payment system. requirement that the OPPS establish indicators are listed in Table 47 below.
TABLE 47.—CY 2008 PAYMENTS FOR BRACHYTHERAPY SOURCES IMPLANTED IN ASCS

ASC pay- CY 2008 ASC
HCPCS code Short descriptor ment indi- payment rate
cator
A9527 .......... Iodine I-125 sodium iodide ............................................................................................................... H2 ................ $27.55

C1716 .......... Brachytx, non-str, Gold-198 ............................................................................................................. H2 ................ 33.30
C1717 .......... Brachytx, non-str, HDR Ir-192 .......................................................................................................... H2 ................ 175.19
C1719 .......... Brachytx, NS, Non-HDRIr-192 ......................................................................................................... H2 ............... 65.13

C2616 .......... Brachytx, non-str,Yttrium-90 ............................................................................................................. H2 ................ 11,764.95
C2634 .......... Brachytx, non-str, HA, I-125 ............................................................................................................. H2 ................ 30.94
C2635 .......... Brachytx, non-str, HA, P-103 ........................................................................................................... H2 ................ 46.92
C2636 .......... Brachy linear, non-str, P-103 ........................................................................................................... H2 ................ 42.04
C2638 .......... Brachytx, stranded, I-125 ................................................................................................................. H2 ................ 45.31
TABLE 47.—CY 2008 PAYMENTS FOR BRACHYTHERAPY SOURCES IMPLANTED IN ASCS—Continued

ASC pay- CY 2008 ASC
HCPCS code Short descriptor ment indi- payment rate
cator
C2639 .......... Brachytx, non-stranded, I-125 .......................................................................................................... H2 ................ 32.10

C2640 .......... Brachytx, stranded, P-103 ................................................................................................................ H2 ............... 65.66
C2641 .......... Brachytx, non-stranded, P-103 ........................................................................................................ H2 ................ 51.45
C2642 .......... Brachytx, stranded, C-131 ............................................................................................................... H2 ............... 97.72
C2643 .......... Brachytx, non-stranded, C-131 ........................................................................................................ H2 ................ 64.08
C2698 .......... Brachytx, stranded, NOS ................................................................................................................. H2 ................ 45.31
C2699 .......... Brachytx, non-stranded, NOS .......................................................................................................... H2 ............... 30.94
(3) Drugs and Biologicals contractor-priced rates for devices that The associated nondevice facility
Under the revised ASC payment are included in device categories with resources for the device implantation
system, we designate as ‘‘covered pass through status under the OPPS procedures are paid through the ASC
ancillary services’’ all drugs and when the devices are an integral part of surgical procedure service payment,
biologicals that are separately paid a covered surgical procedure. As we based upon the payment weight for the
under the OPPS. Thus, ASCs receive have specified for other services nondevice portion of the related OPPS
separate payment for those covered designated as covered ancillary services, APC payment weight.
ancillary drugs and biologicals which, a pass-through device would be
(5) Corneal Tissue Acquisition
by definition, are provided integral to a considered integral to the covered
surgical procedure when it is required Under the revised ASC payment
covered surgical procedure performed
for the successful performance of the system, we pay separately for corneal
in an ASC. We specify that a drug or
procedure; is provided in the ASC tissue procurement provided integral to
biological is integral to a covered
immediately before, during, or the performance of an ASC covered
surgical procedure if it is required for
immediately following the covered surgical procedure based on invoice
the successful performance of the
surgical procedure; and is billed by the costs. The HCPCS code for corneal
surgery and is provided to the
ASC on the same day as the covered tissue acquisition, V2785 (Processing,
beneficiary in the ASC immediately
surgical procedure. preserving and transporting corneal
preceding, during, or immediately
In the future, new device categories tissue), is listed in Addendum BB to this
following the covered surgical
may be established that will have OPPS final rule with comment period rule,
procedure. Payments for covered
pass through status during all or a and it is assigned payment indicator
ancillary drugs and biologicals under
portion of any calendar year. For CY ‘‘F4’’ (Corneal tissue processing; paid at
the revised ASC payment system for a
2008, there are two device categories reasonable cost).
calendar year are equal to the OPPS
payment rates for those drugs and with OPPS pass-through status that are 3. General Payment Policies
biologicals that same year, without continuing in that status under the
OPPS for CY 2008, specifically HCPCS a. Adjustment for Geographic Wage
application of the ASC budget neutrality Differences
adjustment. In addition, consistent with code C1821 (Interspinous process
the payment of drugs and biologicals distraction device (implantable)) and Under the revised ASC payment
under the OPPS, the ASC payment rates HCPCS code L8690 (Auditory system policy, we utilize 50 percent as
for these items are not adjusted for osseointegrated device, includes all the labor related share to adjust national
geographic wage differences. internal and external components). We ASC payment rates for geographic wage
A list of the covered ancillary drugs note that only the surgical procedures differences. Fifty percent is significantly
and biologicals under the CY 2008 associated with the implantation of higher than the labor-related share used
revised ASC payment system and their HCPCS code L8690 are ASC covered for the ASC payment system through CY
payment rates are included in surgical procedures for CY 2008. As 2007 (34.45 percent) but is also lower
Addendum BB to this final rule with under the OPPS, ASC payment for than the OPPS labor-related share of 60
comment period. Covered ancillary covered ancillary services, including percent, a differential we believe is
drugs and biologicals are assigned pass-through devices, is not subject to appropriate given the broader range of
payment indicator ‘‘K2’’ (Drugs and the geographic wage adjustment. labor-intensive services provided in the
biologicals paid separately when The pass-through device category HOPD setting.
provided integral to a surgical HCPCS codes are included in We apply to ASC payments the IPPS
procedure on ASC list; payment based Addendum BB to this final rule with pre-reclassification wage index values
on OPPS rate). Ancillary drugs and comment period and are assigned associated with the June 2003 OMB
biologicals for which payment is payment indicator ‘‘J7’’ (OPPS pass geographic localities, as recognized
packaged into the ASC payment for the through device paid separately when under the IPPS and OPPS, in order to
covered surgical procedure in CY 2008 provided integral to a surgical adjust the labor-related portion of the
are also listed in Addendum BB, and are procedure on ASC list; payment national ASC payment rates for
assigned payment indicator ‘‘N1’’ contractor-priced). Implantable devices geographic wage differences. b.
(Packaged service/item; no separate that receive packaged payment because Beneficiary Coinsurance
payment made). they do not have OPPS pass-through Under the revised ASC payment
status are also listed in Addendum BB system, beneficiary coinsurance remains
(4) Implantable Devices With Pass- to this final rule with comment period, at 20 percent for ASC services, except
Through Status Under the OPPS where they are assigned payment for screening flexible sigmoidoscopy
Under the revised ASC payment indicator ‘‘N1’’ (Packaged service/item; and screening colonoscopy procedures.
system, we provide separate payment at no separate payment made). The coinsurance for screening
colonoscopies and screening flexible D. Treatment of New HCPCS Codes office-based after taking into account the
sigmoidoscopies is 25 percent, as volume and utilization data for the
1. Treatment of New CY 2008 Category
required by section 1834(d) of the Act, procedure code and/or, if appropriate,
I and III CPT Codes and Level II HCPCS
with no deductible for those services the clinical characteristics, utilization,
Codes
under the revised ASC payment system. and volume of related codes, the code
Comment: Several commenters We finalized a policy in the August 2, will be assigned permanently to the list
suggested that CMS limit the beneficiary 2007 revised ASC payment system final of office-based procedures subject to the
coinsurance amount for ASC services to rule to evaluate each year all new ASC payment limitation, as discussed in
the Medicare Part A hospital deductible, HCPCS codes that describe surgical section XVI.C.1.c.(2) of this final rule
as occurs under the OPPS. The procedures to make preliminary with comment period.
commenters stated that the potential for determinations in the annual OPPS/ASC New HCPCS codes for ASC
higher coinsurance in the ASC setting final rule with comment period implementation on January 1, 2008 are
could have a negative financial impact regarding whether or not they meet the designated in Addenda AA and BB to
on beneficiaries. criteria for payment in the ASC setting this OPPS/ASC final rule with comment
and, if so, whether they are office-based period with comment indicator ‘‘NI.’’
Response: Although this comment is
procedures. These interim The ‘‘NI’’ comment indicator is used to
outside of the scope for this final rule
determinations must be made in the identify those HCPCS codes for which
with comment period, we are
OPPS/ASC final rule with comment the assigned ASC payment indicator is
responding in order to provide further
period because the new HCPCS codes subject to public comment. (We refer
clarification to interested stakeholders.
and their descriptors for the upcoming readers to section XVI.J. of this final rule
The revised ASC payment system
calendar year are not available at the with comment period for a discussion of
results in many different payment rates
time of development of the OPPS/ASC the ASC payment and comment
effective January 1, 2008, some lower
proposed rule. In the absence of claims indicators.)
than under the existing system and
data that indicate where procedures
some higher. The final beneficiary described by new codes are being 2. Treatment of New Mid-Year Category
coinsurance policy may be found in the performed and reflect the facility III CPT Codes
August 2, 2007 revised ASC payment resources required to perform them, we Twice each year, the AMA issues
system final rule (72 FR 42519). For the use other available information to make Category III CPT codes, which the AMA
first year of the revised payment system interim decisions regarding assignment defines as temporary codes for emerging
in CY 2008, there are 171 procedures of payment indicators for the new technology, services, and procedures.
with payment rates higher than $1,339, codes. The other sources available to us The AMA established Category III CPT
the highest rate under the existing ASC include our clinical advisors’ judgment, codes to allow collection of data specific
payment system. That means that data regarding predecessor and related to the service described by the code
beneficiary liability for those procedures HCPCS codes, information submitted by which otherwise only could be reported
will be greater under the revised representatives of specialty societies using a Category I CPT unlisted code.
payment system than under the existing and professional associations, and The AMA releases Category III CPT
ASC payment system. Of those information submitted by commenters codes in January, for implementation
procedures, 27 will result in beneficiary during the public comment period beginning the following July, and in
liability that is greater than the CY 2008 following publication of the final rule July, for implementation beginning the
Medicare Part A hospital deductible with comment period in the Federal following January.
amount of $1,024. Register. Each year, we will publish in CMS provides predictable quarterly
While we have statutory authority to the annual OPPS/ASC payment update updates for the OPPS throughout each
limit beneficiary copayments under the final rule the interim ASC calendar year (January, April, July, and
OPPS to no more than the Medicare Part determinations for the new codes to be October), and the final payment policies
A deductible for the year, Medicare effective January 1 of the update year. of the revised ASC payment system
program payments to ASCs are required The interim payment indicators parallel, in many cases, the OPPS
by section 1833(a)(1)(G) of the Act to be assigned to new codes under the revised treatment of HCPCS codes. As discussed
80 percent of the lesser of the payment ASC payment system will be subject to in the August 2, 2007 revised ASC
amount or actual ASC charges, and comment on that final rule. We will payment system final rule, we also
beneficiaries are responsible for the respond to those comments in the provide quarterly ASC updates for each
remaining 20 percent. We have no OPPS/ASC update final rule for the calendar quarter to recognize newly
authority to revise those policies. following calendar year, just as we created HCPCS codes for ASC payment
However, we point out that the currently respond to comments about and to update the payment rates for
coinsurance amounts under the revised APC and status indicator assignments separately paid drugs and biologicals
ASC payment system are limited to 20 for new procedure codes in the OPPS based on the most recently submitted
percent of the payment rate and, as update final rule for the year following ASP data.
such, other than for the 27 procedures publication of the code’s interim OPPS Under the OPPS and MPFS, CMS
noted above, are almost without treatment. allows Category III CPT codes that are
exception lower than the copayment After our review of public comments released by the AMA in January to be
amounts under the OPPS because most and in the absence of physicians’’ effective beginning July of the same
of the ASC rates are lower than OPPS claims data, our determination that a calendar year in which they are issued,
rates and because beneficiary new code is an office based procedure rather than deferring implementation of
copayments vary from 20 to 40 percent and is, thereby, subject to the payment those codes to the following calendar
under the OPPS. We note that, just like limitation, will remain temporary and year update of the payment systems, as
under the OPPS, the ASC coinsurance subject to review, until there are is the case for the CPT Category I and
amounts are applied to each separate adequate data available to assess the Category III codes that are released in
payment made for covered surgical procedure’s predominant sites of July by the AMA for implementation in
procedures and covered ancillary service. Using those data, if we confirm January of the upcoming calendar year.
services. our determination that the new code is Thus, new Category III CPT codes are
made effective under the MPFS and electronic brachytherapy, per fraction), HCPCS codes for ASC payment and to
OPPS biannually. In order to be and we proposed to assign it to the list update the payment rates for separately
consistent in this regard across the three of covered ancillary services with paid drugs and biologicals based on the
payment systems, in the CY 2008 OPPS/ payment indicator ‘‘Z2’’ for payment in most recently submitted ASP data.
ASC proposed rule (72 FR 42783), we ASCs beginning January 1, 2008. This In the CY 2008 OPPS/ASC proposed
proposed to adopt that same policy service has no MPFS nonfacility PE rule, we also proposed to update the
under the revised ASC payment system. RVUs assigned to it. Therefore, we lists of covered surgical procedures and
Some of the new Category III CPT proposed that its CY 2008 ASC payment ancillary services that qualify for
codes may describe services that our be calculated according to the standard
separate payment in ASCs in CY 2008
clinical advisors determine directly ASC payment system methodology,
by adding eight new CY 2007 Level II
crosswalk or are clinically similar to based on the code’s OPPS relative
HCPCS codes that were implemented in
HCPCS codes that describe ASC covered payment weight.
We do not believe that any of the the OPPS in July 2007. Because of the
surgical procedures. In those instances, timing of the proposed rule, the new
we may allow ASC payment for new other Category III CPT codes released in
January 2007 for implementation in July Level II HCPCS codes implemented
Category III CPT codes as covered through the July 2007 OPPS update
surgical procedures. Similarly, a new 2007 meet the criteria for inclusion on
the ASC list of covered surgical were not included in Addendum BB to
code may represent an ancillary service the proposed rule.
that directly crosswalks or is clinically procedures or covered ancillary services
similar to an ancillary service for which because they do not directly crosswalk We did not receive any comments
separate ASC payment is allowed when and are not clinically similar to regarding the proposed payment
it is performed integral to an ASC established covered ASC services. indicators for the eight new CY 2007
covered surgical procedure, and, as We did not receive any public Level II HCPCS codes that were
such, the new code also may be comments about our proposed implemented in the OPPS in July 2007.
determined to be eligible for ASC assignment of ASC payment indicator Therefore, we are finalizing our
payment as a covered ancillary service. ‘‘Z2’’ to CPT code 0182T. Therefore, we payment for them in the ASC setting, as
We did not receive any public are finalizing our assignment of ASC proposed. The eight codes are listed in
comments regarding our proposal to payment indicator ‘‘Z2’’ to CPT code Table 48 below, as well as in
0182T for CY 2008. Addendum BB to this final rule with
recognize for ASC payment new CPT
Category III codes, as appropriate, in 3. Treatment of Level II HCPCS Codes comment. Beginning in CY 2008, with
July of each year as we do under the Released on a Quarterly Basis implementation of the revised ASC
OPPS and MPFS. Therefore, beginning payment system, the Level II HCPCS
In addition to the Category III CPT codes describing new procedures, drugs,
in CY 2008, we are including in the July codes that are released twice each year,
quarterly update to the ASC payment and biologicals will be payable in ASCs
new Level II HCPCS codes may be in the same calendar quarter as they are
system, the ASC payment indicators for created more frequently and are
new Category III CPT codes that the initially paid under the OPPS.
implemented for the MPFS and OPPS
AMA releases in January, and that we on a quarterly basis. Level II HCPCS We assigned payment indicator ‘‘K2’’
determine are appropriate ASC covered codes are most commonly created for to seven of the eight new codes for
surgical procedures or covered ancillary the purpose of reporting new drugs and drugs to indicate that separate payment
services for implementation, as payable biologicals but also are created for will be made for those drugs when they
in ASCs beginning in July of the same reporting some surgical procedures and are provided to beneficiaries in ASCs
year. Likewise, as described above, we other services for which payment may integral to covered surgical procedures.
will implement annually for payment in be made under the revised ASC Level II HCPCS code C9728 (Placement
the January update of the ASC payment payment system, as it is under the of interstitial device(s) for radiation/
system any of the Category III CPT codes OPPS. surgery guidance (e.g., fiducial markers,
that the AMA released the previous We base the ASC payment policies for dosimeter), other than prostate (any
July, along with new Category I CPT covered surgical procedures, drugs, approach), single or multiple) is a
codes that are determined to be biologicals, and certain other covered covered surgical procedure with
appropriate for ASC payment. Interim ancillary services integral to ASC payment indicator ‘‘R2’’ because it is
ASC payment indicators will be covered surgical procedures on the clinically similar to CPT code 55876
assigned to those new mid-year OPPS. Therefore, we proposed to update (Placement of interstitial device(s) for
Category III CPT codes that are released the coding and payment for the services radiation therapy guidance (e.g., fiducial
in January for implementation in July of in ASCs at the same time that the OPPS markers, dosimeter), prostate (via
a given calendar year, and the interim is updated. We proposed to recognize needle, any approach), single or
ASC indicators will be open to comment newly created Level II HCPCS codes multiple) that we have included on the
in the OPPS/ASC proposed rule for the under the revised ASC payment system list of covered surgical procedures with
following calendar year and their status for payment on a quarterly basis, a payment indicator of ‘‘P3.’’ While we
will be made final in the update year’s consistent with the quarterly updates to believe both procedures are office-
final rule. the OPPS. Just as we provide a based, there are currently no MPFS
Of the Category III CPT codes the predictable quarterly update for the nonfacility PE RVUs available for the
AMA released January 1, 2007, we have OPPS occurring throughout each Level II HCPCS code C9728, which was
determined that only one is appropriate calendar year (January, April, July, and initially established in response to a
for payment in ASCs as a covered October), we also would provide New Technology APC application under
ancillary radiology service. The new predictable quarterly updates for ASCs the OPPS, and, therefore, its payment
CPT code is 0182T (High dose rate to recognize newly created Level II indicator is ‘‘R2.’’
TABLE 48.—LEVEL II HCPCS CODES IMPLEMENTED UNDER THE OPPS IN JULY 2007 THAT WILL BE PAID IN CY 2008 IN
ASCS
CY 2008
CY 2007 CY 2008 ASC pay-
Descriptor
HCPCS code HCPCS code ment indi-
cator
C9728 .......... C9728 .......... Placement of interstitial device(s) for radiation therapy/surgery guidance (e.g., fiducial markers, R2
dosimeter), other than prostate (any approach), single or multiple.
Q4087 .......... J1568 .......... Injection, immune globulin, (Octagam), intravenous, non-lyophilized, (e.g. liquid), 500 mg ............. K2
Q4088 .......... J1569 .......... Injection, immune globulin, (Gammagard Liquid), intravenous, non-lyophilized, (e.g. liquid), 500 K2
mg.
Q4089 .......... J2791 .......... Injection, rho(d) immune globulin (human), (Rhophylac), intravenous, 100 iu .................................. K2
Q4090 .......... J1571 .......... Injection, hepatitis b immune globulin (Hepagam B), intramuscular, 0.5 ml ..................................... K2
Q4091 .......... J1572 .......... Injection, immune globulin, (Flebogamma), intravenous, non-lyophilized (e.g. liquid), 500 mg ........ K2
Q4092 .......... J1561 .......... Injection, immune globulin, (Gamunex), intravenous, non-lyophilized (e.g. liquid), 500 mg ............. K2
Q4095 .......... J3488 .......... Injection, zoledronic acid (Reclast), 1 mg .......................................................................................... K2
We did not receive any public CPT codes in the surgical range from We did not receive any public
comments regarding our proposal to 10000 through 69999 except unlisted comments about our proposal to
implement new Level II HCPCS codes procedure codes, as well as those designate CPT codes 25931, 50580, and
for ASC payment on a quarterly basis Category III CPT codes and Level II 58805 as payable in ASCs as covered
each year and new Category III CPT HCPCS codes that crosswalk or are surgical procedures beginning CY 2008.
codes on a semiannual basis, to parallel clinically similar to ASC covered Therefore, we are finalizing our
the policies under the MPFS and OPPS surgical procedures. proposal to designate the three
for the recognition of those codes. Section 1833(i)(1) of the Act requires procedures as payable in ASCs as
Therefore, beginning in CY 2008 with us to review and update the list of ASC
covered surgical procedures, assigning
implementation of the revised ASC procedures at least every 2 years. We
them payment indicator ‘‘G2,’’
payment system, we are implementing finalized our policy to update the ASC
list of covered surgical procedures beginning in CY 2008.
new Level II HCPCS codes for ASC
payment on a quarterly basis each year annually, in conjunction with annual In the CY 2008 OPPS/ASC proposed
and new Category III CPT codes on a proposed and final rulemaking to rule, we also solicited comments and
semiannual basis, to parallel the update the OPPS and ASC payment recommendations regarding additional
policies under the MPFS and OPPS for systems. Each year we undertake a surgical procedures that commenters
the recognition of those codes. Also, review of excluded procedures, new believe should not be excluded from
consistent with the MPFS and OPPS procedures, and procedures for which ASC payment beginning in CY 2008. We
policies, our final policy with regard to there is revised coding to identify any specifically encouraged commenters to
HCPCS codes implemented on January that we believe are appropriate for provide evidence, to the extent possible,
1 of a calendar year is to publish the coverage in ASCs because they do not to support their recommendations
new codes and interim payment pose significant risks to beneficiary regarding procedures and services they
indicators annually in the OPPS/ASC safety and would not be expected to believe should not be excluded from
final rule with comment period. require overnight stays.
ASC payment.
In the August 2, 2007 revised ASC
E. Updates to Covered Surgical payment system final rule, we finalized We received many public comments
Procedures and Covered Ancillary the addition of approximately 790 new from individuals and organizations
Services covered surgical procedures for requesting that specific procedures be
1. Identification of Covered Surgical payment under the revised ASC added or removed from the CY 2008
Procedures payment system beginning in CY 2008. proposed list of ASC covered surgical
In the CY 2008 OPPS/ASC proposed procedures. A summary of the public
a. General Policies rule, we proposed to remove 13 comments and our responses follow.
We published Addendum AA to the procedures from the OPPS inpatient list
Comment: Some commenters stated
August 2, 2007 revised ASC payment and, of those 13, we believe that 3 are
that certain procedures CMS had
system final rule as an illustrative list of safe for performance in ASCs. Therefore,
proposed to exclude from coverage as
covered surgical procedures and we proposed to add the following three
payment rates for the revised ASC additional surgical procedures to the payable in ASCs do not pose a risk to
payment system to be implemented ASC list of covered surgical procedures beneficiary safety and are not expected
January 1, 2008. The final rule eligible for Medicare ASC payment in to require an overnight stay, and as
established our policies for determining CY 2008: CPT codes 25931 such, should not be excluded from the
which procedures are eligible to be (Amputation, forearm, through radius ASC list. Table 49 below includes a list
considered ASC covered surgical and ulna; re-amputation); 50580 (Renal of all procedures for which the
procedures and, of those, which are endoscopy through nephrotomy or commenters requested designation as
excluded from ASC payment because pyelotomy, with or without irrigation, covered surgical procedures in ASCs.
they pose a significant risk to instillation, or uteropyelography,

beneficiary safety or would be expected exclusive of radiologic service; with
to require an overnight stay. We adopted removal of foreign body or calculus);
a definition of surgical procedure for the and 58805 (Drainage of ovarian cyst(s),
revised ASC payment system as those unilateral or bilateral, (separate
procedures described by all Category I procedure); abdominal approach).
TABLE 49.—SPECIFIC PROCEDURES TABLE 49.—SPECIFIC PROCEDURES that we determined are appropriate for
THAT COMMENTERS REQUESTED THAT COMMENTERS REQUESTED payment in an ASC and their final CY
NOT BE EXCLUDED FROM ASC PAY- NOT BE EXCLUDED FROM ASC PAY- 2008 payment indicators are displayed
MENT IN CY 2008 MENT IN CY 2008—Continued in Table 50.
HCPCS HCPCS TABLE 50.—SPECIFIC PROCEDURES

Short descriptor Short descriptor
code code NEWLY DESIGNATED AS COVERED
ASC SURGICAL PROCEDURES FOR
0088T ... Rf tongue base vol reduxn G0289 .. Arthro, loose body + chondro.
0135T ... Perq cryoablate renal tumor. 0171T ... Lumbar spine process distract. CY 2008
0137T ... Prostate saturation sampling. 0172T ... Lumbar spine process addl.
0170T ... Anorectal fistula plug rpr. CY 2008
HCPCS Short descriptor payment
0184T ... Transanal resect rectal tumor. Response: In response to the public code indicator
0186T ... Suprachoroidal drug delivery. comments received, our clinical
15170 ... Acell graft trunk/arms/legs. advisors evaluated each of the 0088T ... Rf tongue vol reduxn G2
15171 ... Acell graft t/arm/leg add-on. procedures listed in Table 49 to 0137T ... Prostate saturation G2
15175 ... Acellular graft, f/n/hf/g.
determine whether it poses a significant sampling.
15176 ... Acell graft, f/n/hf/g add-on. 0170T ... Anorectal fistula plug G2
21360 ... Treat cheek bone fracture. safety risk to beneficiaries or would be
expected to require an overnight stay. rpr.
21365 ... Treat cheek bone fracture. 0186T ... Suprachoroidal drug G2
21385 ... Treat eye socket fracture. Several of those procedures, specifically
delivery.
21386 ... Treat eye socket fracture. CPT codes 27093 (Injection procedure
21360 ... Treat cheek bone frac- G2
21387 ... Treat eye socket fracture. for hip arthrography); 62290 (Injection ture.
22526 ... Idet, single level. procedure for discography, each level; 22526 ... Idet, single level ......... G2
22527 ... Idet, 1 or more levels. lumbar) 62291 (Injection procedure for 22527 ... Idet, 1 or more levels G2
27093 ... Injection for hip x-ray. discography, each level; cervical or 29866 ... Autgrt implnt, knee w/ G2
27096 ... Inject sacroiliac joint. thoracic); and G0289 (Arthroscopy, scope.
29866 ... Autgrft implnt, knee w/scope.
knee, surgical, for removal of loose 32998 ... Perq rf ablate tx, pul G2
29867 ... Allgrft implnt, knee w/scope. tumor.
29868 ... Meniscal trnspl, knee w/scpe. body, foreign body, debridement/
shaving of articular cartilage 44500 ... Intro, gastrointestinal G2
32998 ... Perq rf ablate tx, pul tumor. tube.
35470 ... Repair arterial blockage. (chondroplasty) at the time of other
64910 ... Nerve repair w/ G2
35471 ... Repair arterial blockage. surgical knee arthroscopy in a different
allograft.
35472 ... Repair arterial blockage. compartment of the same knee), are
35490 ... Atherectomy, percutaneous. packaged procedures under the OPPS
35491 ... Atherectomy, percutaneous. and, therefore, are not eligible for We determined that each of the
35493 ... Atherectomy, percutaneous. designation as separately payable remaining 57 procedures (those not
35494 ... Atherectomy, percutaneous. procedures under the revised ASC packaged or listed in Table 50)
35495 ... Atherectomy, percutaneous. requested by the commenters and listed
37182 ... Insert hepatic shunt (tips).
payment system. However, we note that
these packaged procedures are also not in Table 49 would pose a significant risk
37182 ... Remove hepatic shunt (tips). to beneficiary safety or be expected to
37201 ... Transcatheter therapy infuse. excluded from Medicare payment when
37202 ... Transcatheter therapy infuse. performed in the ASC setting. Their require an overnight stay, so they will
37204 ... Transcatheter occlusion. payment will be packaged into payment continue to be excluded from the list of
37205 ... Transcath iv stent, precut. for the ASC covered surgical procedure ASC covered surgical procedures for CY
37206 ... Transcath iv stent/perc addl. performed in the ASC. 2008. A complete list of surgical
37209 ... Change iv cath at thromb tx. As a result of our review of the other procedures that are excluded from
37210 ... Embolization uterine fibroid. procedures listed in Table 49 that would Medicare payment when provided in
37620 ... Revision of major vein. be candidates for separate ASC payment ASCs may be found in Addendum EE
44300 ... Open bowel to skin. posted on the CMS Web site at: http://
44500 ... Intro, gastrointestinal tube.
according to their OPPS payment
policies, we are not excluding 11 www.cms.hhs.gov/ASCPayment.
44901 ... Drain app abscess, precut.
47011 ... Percut drain, liver lesion. additional procedures from Medicare Comment: Several commenters
47490 ... Incision of gallbladder. payment when performed in the ASC requested that specific procedures be
48511 ... Drain pancreatic pseudocyst. setting in CY 2008. In making our removed from the ASC list of covered
49021 ... Drain abdominal abscess. determinations, even where procedures procedures in order to enhance the
49041 ... Drain, percut, abdom abscess. had high inpatient utilization due to safety and quality of care that is
49061 ... Drain, percut, retroper absc. their frequent performance on hospital delivered by ASCs. The commenters
50021 ... Renal abscess, percut drain. inpatients, we considered the clinical stated that CMS should exercise caution
50080 ... Removal of kidney stone.
50081 ... Removal of kidney stone.
characteristics of the surgical procedure in granting patients and physicians the
58823 ... Drain pelvic abscess, precut. itself. As we stated in the August 2, flexibility to determine appropriate sites
62290 ... Inject for spine disk x-ray. 2007 revised ASC payment system final of care, particularly for procedures that
62291 ... Inject for spine disk x-ray. rule, we examine all the clinical could have catastrophic outcomes if the
63020 ... Neck spine disk surgery. information regarding the surgical appropriate emergent care equipment
63030 ... Low back disk surgery. procedure, including its inpatient and training are not available in the site
63035 ... Spinal disk surgery add-on. utilization, to determine whether or not where care is delivered. Specifically, the
63040 ... Laminotomy, single cervical. a procedure would pose a significant commenters requested removal of
63042 ... Laminotomy, single lumbar. risk to beneficiary safety or would be percutaneous transluminal angioplasty
63044 ... Laminotomy, add’l lumbar.
63047 ... Removal of spinal lamina.
expected to require an overnight stay if procedures, transvenous electrode
63056 ... Decompress spinal cord. performed in an ASC (72 FR 42482). Of procedures, and certain cardiac
64448 ... N block inj fem, cont inf. the procedures that commenters electrophysiology procedures, as well as
64449 ... N block inj, lumbar plexus. requested not be excluded from the list palatal surgical procedures. Table 51
64910 ... Nerve repair w/allograft. of covered surgical procedures, those below lists the procedures for which the
commenters requested removal from the Medicare has included them on the list 35476 on the CY 2008 ASC list of
ASC list of covered surgical procedures. of ASC covered surgical procedures. covered surgical procedures. However,
With respect to the pacemaker and we have determined that CPT code
TABLE 51.—PROCEDURES REC- ICD lead placement, repositioning, and 35474 would pose a significant safety
OMMENDED BY COMMENTERS FOR removal procedures, we proposed a risk to beneficiaries when performed in
REMOVAL FROM THE ASC LIST OF number of these procedures for addition an ASC. Therefore, we are excluding
COVERED SURGICAL PROCEDURES to the ASC list for CY 2008 in the CPT code 35474 from the CY 2008 ASC
August 23, 2006 proposed rule for the list of covered surgical procedures.
HCPCS revised ASC payment system. We In summary, as a result of our review
Short descriptor received a number of comments on the of the procedures the commenters
code
proposed rule regarding these requested that we remove from the
33206 ... Insertion of heart pacemaker. procedures, as well as related surgical proposed CY 2008 ASC list of covered
33207 ... Insertion of heart pacemaker. procedures, which we carefully surgical procedures, we are retaining all
33208 ... Insertion of heart pacemaker. reviewed prior to placing them on the of the procedures in Table 51 on the
33214 ... Upgrade of pacemaker system.
ASC list of covered surgical procedures final CY 2008 list of ASC covered
33215 ... Reposition pacing-defib lead.
33216 ... Insert lead pace-defib, one. in the August 2, 2007 revised ASC surgical procedures except CPT code
33217 ... Insert lead pace-defib, dual. payment system final rule. We have 35474. The full CY 2008 list of ASC
33218 ... Repair lead pace-defib, one. once again examined these procedures covered surgical procedures is included
33220 ... Repair lead pace-defib, dual. in light of comments received on the CY in Addendum AA to this final rule with
33224 ... Insert pacing lead & connect. 2008 OPPS/ASC proposed rule and, we comment period.
33225 ... L ventric pacing lead add-on. believe, under the safety and overnight
33226 ... Reposition l ventric lead. b. Change in Designation of Covered
stay criteria that were adopted to
33234 ... Removal of pacemaker system. Surgical Procedures as Office-Based
exclude procedures from ASC payment,
33235 ... Removal pacemaker electrode. all of these procedures are appropriate According to our final policy for the
33249 ... Eltrd/insert pace-defib. revised ASC payment system, we
for ASC performance. In particular, we
35473 ... Repair arterial blockage. designate as office-based procedures
35474 ... Repair arterial blockage. do not believe they pose a significant
safety risk, nor would be expected to those that are added to the ASC list of
35476 ... Repair venous blockage.
35492 ... Atherectomy, percutaneous. require an overnight stay when covered surgical procedures in CY 2008
42200 ... Reconstruct cleft palate. provided in ASCs. or later years and that we determine are
42205 ... Reconstruct cleft palate. We also closely reexamined the predominantly performed in physicians’
42210 ... Reconstruct cleft palate. transluminal balloon angioplasty offices based on consideration of the
42215 ... Reconstruct cleft palate. services described by CPT codes 35473 most recent available volume and
42220 ... Reconstruct cleft palate. (Transluminal balloon angioplasty, utilization data for each individual
percutaneous; iliac); 35474 procedure code and/or, if appropriate,
Response: In response to the public (Transluminal balloon angioplasty, the clinical characteristics, utilization,
comments received, our clinical percutaneous; femoral-popliteal); and and volume of related codes.
advisors reevaluated each of the 35476 (Transluminal balloon The list of codes that we identified as
procedures listed in Table 51 to angioplasty, percutaneous; venous). All office-based in the August 2, 2007
determine whether it poses a significant three of these procedures were proposed revised ASC payment system final rule
safety risk to beneficiaries or would be for addition to the ASC list for CY 2008 took into account the most recently
expected to require an overnight stay. in the August 23, 2006 OPPS/ASC available CY 2005 volume and
We note that while CPT codes 42200 proposed rule. We received requests to utilization data for each individual
(Palatoplasty for left palate, soft and/or add CPT code 36476 to the ASC list for procedure code or related codes. In that
hard palate only); 42205 (Palatoplasty CY 2007, but we did not add this code rule, we finalized our policy to apply
for cleft palate, with closure of alveolar at that point, based on the evaluation the office-based designation only to
ridge; soft tissue only); 42210 criteria for the existing ASC payment procedures that would no longer be
(Palatoplasty for cleft palate; with system. We then added all three codes excluded from ASC payment beginning
closure of alveolar ridge; with bone graft to the CY 2008 ASC list in the August in CY 2008 or later years and to exempt
to alveolar ridge (includes obtaining 2, 2007 revised ASC payment system all procedures on the CY 2007 ASC list
graft)); 42215 (Palatoplasty for cleft final rule after evaluating the public from application of the office-based
palate; major revision); and 42220 comments and concluding that the classification. We believe that the
(Palatoplasty for cleft palate; attachment procedures should not be excluded from resulting list accurately reflected
pharyngeal flap) were eligible for ASC performance, consistent with the Medicare practice patterns and was
payment when performed in the ASC in final exclusion criteria for the revised clinically consistent. In Addendum AA
CY 2007, the remainder of the codes system. In response to the comments on to the August 2, 2007 revised ASC
listed in Table 51 were added to the the CY 2008 OPPS/ASC proposed rule payment system final rule, each of the
ASC list of covered surgical procedures that reflected the commenters’ ongoing office-based procedures was identified
in the August 2, 2007 revised ASC concerns about the safety of these by payment indicator ‘‘P2,’’ ‘‘P3,’’ or
payment system final rule for CY 2008. procedures in ASCs, our clinical ‘‘R2,’’ depending on whether we
We continue to believe that these advisors engaged in a comprehensive estimated it would be paid according to
palatoplasty procedures that have been assessment of their safety based on the standard ASC payment methodology
on the ASC list of covered surgical current clinical practice patterns and based on its OPPS relative payment
procedures for more than 5 years do not the contemporary medical literature. We weight or at the MPFS nonfacility PE
pose a significant risk to beneficiary have concluded that CPT codes 35473 RVU amount.
safety in the ASC setting, nor would and 35476 do not pose a significant Consistent with our final ASC policy
they be expected to require an overnight safety risk to beneficiaries nor would to review and update annually the
stay. We are not aware of any safety either procedure be expected to require surgical procedures for which ASC
problems regarding the performance of an overnight stay in ASCs. Therefore, payment is made and to identify new
these procedures in ASCs over the years we are including CPT codes 35473 and procedures that may be appropriate for
ASC payment, in developing the CY performed in conjunction with those codes the commenters
2008 OPPS/ASC proposed rule, we colposcopy), in accordance with the CY recommended not be designated as
reviewed the CY 2006 utilization data 2008 OPPS proposal to package its office-based is marked by a plus (+) in
for all those surgical procedures newly payment, we also proposed to package Table 52 below.
added for ASC payment in CY 2008 that payment for that procedure under the Several commenters recommended
were assigned payment indicator ‘‘G2’’ ASC payment system and assign it that CMS not finalize the proposal to
as nonoffice-based additions in the payment indicator ‘‘N1.’’ designate CPT code 28890
August 2, 2007 revised ASC payment We proposed to maintain the (Extracorporeal shock wave, high
system final rule. We based our temporary office-based payment energy, performed by a physician,
evaluation of the potential designation indicator assignments for the other three requiring anesthesia other than local,
of a procedure as office-based on the procedures. We have only a few claims including ultrasound guidance,
most recent available volume and for CPT code 0099T (Implantation of involving the plantar fascia) as office-
utilization data for each individual intrastromal corneal ring segments) and based because they believe the CMS
procedure code and/or, as appropriate, no claims for CPT code 0124T data that indicate the procedure’s
the clinical characteristics, utilization, (Conjunctival incision with posterior performance in physicians’ offices more
and volume of related codes. As a result juxtascleral placement of than 50 percent of the time are
of that review, we identified 19 pharmacological agent (does not include erroneous. The commenters stated that
procedures that were assigned payment supply of medication)) or CPT code CMS assigned payment indicator ‘‘G2’’
indicator ‘‘G2’’ in the August 2, 2007 55876 (Placement of interstitial to three high energy extracorporeal
revised ASC payment system final rule device(s) for radiation therapy guidance shock wave therapy (ESWT) procedures,
that we proposed to assign to the office- (e.g., fiduciary markers, dosimeter), CPT codes 28890, 0101T (Extracorporeal
based procedure list, effective January 1, prostate (via needle, any approach), shock wave involving musculoskeletal
2008, with payment indicator ‘‘P2,’’ single or multiple). We continue to system, not otherwise specified, high
‘‘P3,’’ or ‘‘R2,’’ as appropriate. We refer believe these procedures are energy); and 0102T (Extracorporeal
readers to Addendum DD1 to this final predominantly office-based. Therefore, shock wave, high energy, performed by
rule with comment period for the we proposed not to make any change to a physician, requiring anesthesia other
definitions of the ASC payment the temporary office-based designation than local, involving lateral humeral
indicators. of these procedures at that time. epicondyle) in the August 2, 2007
In the CY 2008 OPPS/ASC proposed We received many public comments revised ASC payment system final rule
rule, we indicated that we would on our general payment policy for but then proposed to designate only
consider comments submitted timely on office-based surgical procedures under CPT code 28890 as office-based in the
the proposed designation of these 19 the revised ASC payment system and on CY 2008 OPPS/ASC proposed rule.
new procedures as office-based for CY our proposal to add 19 additional They stated that CMS provided no
2008. For example, in the August 2, procedures to the office-based list for explanation for the proposed change to
2007 revised ASC payment system final CY 2008. A summary of the public the payment indicator of CPT code
rule, payment indicator ‘‘G2’’ was comments and our responses follow. 28890. Furthermore, the commenters
assigned to CPT code 64650 Comment: Many commenters opposed argued that the procedure is most
(Chemodenervation of eccrine glands; the policies related to the designation of appropriately provided in a facility
both axillae). After reviewing more procedures as office-based and the setting and that the proposed ASC
recent CY 2006 data, we discovered that subsequent payment limitations for payment for the procedure would be
the procedure is performed procedures that are so designated. Some limited to the MPFS nonfacility PE RVU
predominantly in physicians’ offices commenters recommended that, if CMS amount, which is too low to cover the
and we believed the procedure should is going to maintain a list of office-based costs associated with providing the
be designated as an office-based procedures, it should restrict the criteria procedure. The commenters
procedure. Therefore, we proposed to used to make office-based recommended that, because the CPT
assign payment indicator ‘‘P3’’ to CPT determinations. They stated that code was new for CY 2006, CMS should
code 64650, effective for CY 2008. In the designation of a procedure as office- wait until sufficient time has passed to
proposed rule, we proposed to assign an based should be made either based on collect and review adequate Medicare
office based payment indicator for CPT utilization data for multiple years or on data for its decision-making.
code 64650 and 18 other procedures. the frequency of performance of the Another commenter requested that
We also reviewed the five procedures procedure in the HOPD or ASC settings. CMS not designate CPT codes 64650
that were assigned temporary office- The commenters stated that CMS’s (Chemodenervation of eccrine glands;
based payment indicators in the August consideration of clinical information both axillae) and 64653
2, 2007 revised ASC payment system and utilization data for related (Chemodenervation of eccrine glands;
final rule. Using CY 2006 data, we procedures is not transparent, making it other area(s) (e.g., scalp, face, neck), per
believed there were adequate claims impossible for the public to assess day) as office-based procedures because
data for two of those procedures upon whether its determinations are rational the codes were new for CY 2006 and
which to base assignment of permanent and fair. there are not yet adequate data on which
payment indicators. Therefore, we Several commenters specifically to base that determination.
proposed to assign CPT code 36598 requested that one or more of the 19 Response: While we appreciate the
(Contrast injection(s) for radiologic additional procedures proposed for concerns of commenters regarding the
evaluation of existing central venous designation as office-based not receive limitation on payment for office-based
access device, including fluoroscopy, that designation. The commenters procedures under the revised ASC
image documentation and report) recommended that CMS not finalize the payment system, we note that we
permanently to the office-based list, proposal to designate 15 of the 19 finalized that payment policy in the
with payment indicator ‘‘P3’’ for CY procedures as office-based because August 2, 2007 revised ASC payment
2008. In the case of the second commenters believe they are not system final rule that set forth the final
procedure, CPT code 58110 performed in physicians’ offices 50 policies for the revised system after
(Endometrial sampling (biopsy) percent or more of the time. Each of receiving and responding to public
comments (72 FR 42486). In that rule, 46505 in the August 2, 2007 revised utilization of CPT code 28890 for
we also finalized the evaluation criteria ASC payment system final rule for CY another year, we will maintain the
for the designation of surgical 2008. office-based designation of this
procedures as office-based (72 FR In the case of CPT code 28890, procedure as temporary to allow for the
42512). Therefore, the evaluation although Medicare utilization data show possibility that coding for high energy
criteria and payment policy for office- that over 70 percent of CY 2006 ESWT for the plantar fascia will
based procedures were not open to utilization occurred in the physician’s improve as providers gain more
comment in the CY 2008 OPPS/ASC office, we are persuaded by commenters experience with the CPT code. This
proposed rule and we are not addressing that this code was new for CY 2006 and designation is indicated with an asterisk
additional comments in this final rule some providers may have confused this in Table 52 below. When we have
with comment period. service with the performance of low sufficient data, we will either propose to
Based on the public comments we energy ESWT procedures. Stakeholders finalize the office-based designation of
received, we reexamined the relevant have explained to us that, although the the service or propose to change its
data and clinical characteristics for each physician utilization data may reflect payment indicator to ‘‘G2’’ as a
of the 15 procedures for which we that the service is performed mainly in nonoffice-based procedure.
received comments. Although, as the the physician’s office, this finding could
commenters asserted, many of the 15 be due to miscoding of low energy While we are aware of the existence
procedures are performed in physicians’ procedures that use only local of CPT codes 0101T and 0102T for high
offices somewhat less than 50 percent of anesthesia, rather than correct use of the energy ESWT for body areas other than
the time, our final policy for designating CPT code 28890 to report high energy treatment of the plantar fascia,
ASC procedures as office-based allows procedures that require anesthesia other utilization data available for the
us to take into account the clinical than local. Nevertheless, we do not proposed rule did not support a
characteristics, volume, and utilization believe it would be appropriate to proposal to designate those codes as
data of related HCPCS codes to consider CPT code 28890 to be office-based for CY 2008. Furthermore,
supplement our consideration of data nonoffice-based for CY 2008 based on these services have no MPFS nonfacility
specific to the codes of interest (72 FR the significant utilization reported for PE RVUs at this time. Therefore, a
42512). Our review of the clinical the physician’s office setting. Under the payment limitation based on the MPFS
characteristics of the 15 procedures and MPFS, this service has been priced nonfacility PE RVUs could not be
volume and utilization data for them specifically for performance in the applied. We will review their utilization
and for similar procedures convinced us office; therefore, we believe it can be data for the next ASC annual update.
that our proposed designations are appropriately performed in the The procedures proposed for
correct for all but 1 of the procedures. physician’s office. Furthermore, we note designation as office-based and their
We are not finalizing our proposal to that there is an existing Category III CPT final CY 2008 payment indicators are
designate CPT code 46505 code for reporting the low energy listed in Table 52 below. All office-
(Chemodenervation of internal anal services, specifically CPT code 0019T based designations are final, with the
sphincter) as an office-based procedure. (Extracorporeal shock wave involving exception of the designation of CPT
After reviewing the currently available musculoskeletal system, not otherwise code 28890 as office-based, which will
utilization data for this code and related specified, low energy), for which the remain temporary until we have
codes, we believe this procedure is not facility resources would be expected to adequate utilization data to support a
predominantly performed in physicians’ differ. Nevertheless, given the concerns proposal to remove it from the office-
offices and should maintain the ‘‘G2’’ over the utilization data in the code’s based list or finalize the office-based
payment indicator assigned to CPT code first year of use, while we follow the designation.
TABLE 52.—CY 2008 FINAL NEW DESIGNATIONS OF ASC COVERED SURGICAL PROCEDURES PROPOSED AS OFFICE-
BASED
HCPCS code (+ Final CY
indicates proce- 2008 pay-
Proposed CY
dures comment indi-
2008 pay-
menters rec- Short descriptor cator (* if
ment indi-
ommended not designation
cator
be designated is temporary
as office-based) for CY 2008)
24640+ .............. Treat elbow dislocation ................................................................................................................. P3 ................ P3

26641+ .............. Treat thumb dislocation ................................................................................................................. P2 ................ P2
26670+ .............. Treat hand dislocation ................................................................................................................... P2 ................ P2
26700+ .............. Treat knuckle dislocation ............................................................................................................... P2 ................ P2
26775+ .............. Treat finger dislocation .................................................................................................................. P3 ................ P3
28630+ .............. Treat toe dislocation ...................................................................................................................... P3 ................ P3
28660+ .............. Treat toe dislocation ...................................................................................................................... P3 ................ P3
28890+ .............. High energy eswt, plantar fascia ................................................................................................... P3 ................ P3*
29035 ................ Application of body cast ................................................................................................................ P2 ................ P2
29305 ................ Application of hip cast ................................................................................................................... P2 ................ P2
29325 ................ Application of hip casts ................................................................................................................. P2 ................ P2
29505+ .............. Application, long leg splint ............................................................................................................ P3 ................ P3

29515+ .............. Application lower leg splint ............................................................................................................ P3 ................ P3
36469+ .............. Injection(s), spider veins ............................................................................................................... R2 ................ R2
46505+ .............. Chemodenervation anal misc ........................................................................................................ P3 ................ G2
62292 ................ Injection into disk lesion ................................................................................................................ R2 ................ R2
64447+ .............. Nblock inj fem, single .................................................................................................................... R2 ................ R2
64650+ .............. Chemodenerv, eccrine glands ...................................................................................................... P3 ................ P3
TABLE 52.—CY 2008 FINAL NEW DESIGNATIONS OF ASC COVERED SURGICAL PROCEDURES PROPOSED AS OFFICE-
BASED—Continued
HCPCS code (+ Final CY
indicates proce- 2008 pay-
Proposed CY
dures comment indi-
2008 pay-
menters rec- Short descriptor cator (* if
ment indi-
ommended not designation
cator
be designated is temporary
as office-based) for CY 2008)
64653+ .............. Chemodenerv, eccrine glands ...................................................................................................... P3 ................ P3
We did not receive any public fluoroscopy, image documentation and based designation of CPT code 36598,
comments regarding our proposal to report) as office-based. Although we and the packaged status of CPT code
maintain as temporary the office-based received public comments about the 58110. The procedures and the final
designation for CPT codes 0099T proposed policy to package more payment indicators for CY 2008 are
(Implantation of intrastromal corneal procedures for CY 2008 under the displayed below in Table 53.
ring segments); 0124T (Conjunctival OPPS, we did not receive any specific
Displayed in Table 53 are the new CY
incision with posterior juxtascleral public comments regarding the
placement of pharmacological agent designation of CPT code 58110 2008 HCPCS codes (excluding
(does not include supply of medication); (Endometrial sampling (biopsy) with or renumbered codes) to which we have
and 55876 (Placement of interstitial without endocervical sampling (biopsy), assigned temporary office-based
device(s) for radiation therapy guidance without cervical dilation, any method payment indicators. Those designations
(e.g., fiducial markers, dosimeter), (separate procedure)) as packaged for are temporary and are open to comment
prostate (via needle, any approach), CY 2008. during the 60-day comment period for
single or multiple) or our proposal to Therefore, we are finalizing our CY this final rule with comment period. We
make permanent the designation of CPT 2008 proposals, without modification, will respond to public comments on
code 36598 (Contrast injection(s) for to maintain the temporary office-based those designations in the OPPS/ASC
radiologic evaluation of existing central designations of CPT codes 0099T, final rule with comment period for CY
venous access device, including 0124T, and 55876, the permanent office- 2009.
TABLE 53.—CY 2008 PAYMENT INDICATORS FOR PROCEDURES ASSIGNED TEMPORARY OFFICE-BASED PAYMENT
INDICATORS IN THE AUGUST 2, 2007 REVISED ASC PAYMENT SYSTEM FINAL RULE
Final CY 2008
ASC payment
HCPCS indicator (* if
Short descriptor
code designation is
temporary for
CY 2008)
0099T ....... Implant corneal ring ..................................................................................................................................................... R2*

0124T ....... Conjunctival drug placement ....................................................................................................................................... R2*
36598 ....... Inj w/fluor, eval cv device ............................................................................................................................................ P3
55876 ....... Place rt device/marker, pros ........................................................................................................................................ P3*
58110 ....... Bx done w/colposcopy add-on .................................................................................................................................... N1
TABLE 54.—CY 2008 PAYMENT INDICATORS FOR NEW CY 2008 ASC COVERED SURGICAL PROCEDURES ASSIGNED
TEMPORARY OFFICE-BASED PAYMENT INDICATORS ON AN INTERIM FINAL BASIS
Final CY 2008
ASC payment
HCPCS indicator (* if
Short descriptor
code designation is
temporary for
CY 2008)
21073 ....... Mnpj of tmj w/anesth ................................................................................................................................................... P3*

67229 ....... Tr retinal les preterm inf .............................................................................................................................................. R2*
68816 ....... Probe nl duct w/balloon ............................................................................................................................................... P3*
c. Changes in Designation of Covered procedures that are assigned to the implantable devices used in those
Surgical Procedures as Device-Intensive subset of device-dependent APCs under procedures. In the August 2, 2007
the OPPS with a device offset revised ASC payment system final rule,
As explained in section XVI.C.1.c.(3) percentage greater than 50 percent we identified 24 procedures that were
of this final rule with comment period, under the OPPS to ensure that payment on the CY 2007 ASC list of covered
we adopted a modified payment for the procedure is adequate to provide surgical procedures that would be
methodology for calculating the ASC packaged payment for the high-cost subject to this policy, as well as 15 new
payment rates for ASC covered surgical
ASC covered surgical procedures for CY We received a number of public be less than the 50 percent threshold.
2008, to which we expected the final comments on our proposal for payment Specifically, some of the commenters
policy to apply. of device-intensive procedures in ASCs requested that the ASC payment rates
As a result of the proposed CY 2008 for CY 2008. A summary of the public for the CPT codes listed in Table 55 of
reconfiguration of several device- comments and our responses follow. this final rule with comment period be
dependent APCs under the OPPS and Comment: Most commenters were calculated as device-intensive
the proposed updated APC device offset generally pleased with the final procedure rates, that they be allowed to
percentages in the CY 2008 OPPS/ASC payment policy, but several commenters be paid at revised ASC rates without
proposed rule, we proposed to designate requested that CMS apply the device-
being subject to the transitional ASC
as device-intensive for ASC payment in intensive payment methodology to
rates for CYs 2008, 2009, and 2010 or
CY 2008 an additional 10 ASC covered either all ASC covered procedures
surgical procedures. We also proposed assigned to device-dependent APCs or that the device cost be added to the CY
to remove 4 procedures from their to those assigned to APCs with a lower 2007 ASC rate which would be used to
estimated designation as device- offset percentage threshold than 50 calculate the transitional rate. The
intensive because we proposed to percent so that more ASC covered commenters stated that the payment
recognize CPT codes instead of Level II surgical procedure rates would be rates during the transition period for
HCPCS codes for ICD implantation calculated using the device-intensive procedures like these, that require high
procedures as discussed in section methodology. Many commenters cost implantable products, are too low
III.D.1.c. of this final rule with comment requested that covered procedures for for ASCs to be able to continue to
period. We proposed to assign payment which ASCs billed separately for provide the services. The commenters
indicators ‘‘H8’’ or ‘‘J8,’’ as appropriate, implantable prosthetic devices under advised CMS to monitor the migration
to the covered surgical procedures the CY 2007 payment system also be of these procedures, and others like
identified as device-intensive so that treated like those procedures CMS has them, into the higher cost HOPD setting
payment would be made consistent with identified as device-intensive, even during the first years under the revised
our final revised ASC payment system though the device offset percentage ASC payment system.
payment policy. under the OPPS for the procedures may
TABLE 55.—SPECIFIC PROCEDURES FOR WHICH COMMENTERS REQUESTED CY 2008 PAYMENT RATES THAT FULLY
RECOGNIZE THE COSTS OF IMPLANTABLE DEVICES
Final CY 2008
HCPCS Long descriptor payment indi-
code cator
51715 ....... Endoscopic injection of implant material into the submucosal tissues of the urethra and/or bladder neck ............... A2
57288 ....... Sling operation for stress incontinence (e.g., fascia or synthetic) .............................................................................. A2
65105 ....... Enucleation of eye; within implant, muscles attached to implant ................................................................................ A2
65140 ....... Insertion of ocular implant secondary; after enucleation, muscles attached to implant ............................................. A2
65155 ....... Reinsertion of ocular implant; with use of foreign material for reinforcement and/or attachment of muscles to im- A2
plant.
65770 ....... Keratoprosthesis .......................................................................................................................................................... A2
66180 ....... Aqueous shunt to extraocular reservoir (e.g., Molteno, Schocket, Denver-Krupin) .................................................... A2
67912 ....... Correction of lagophthalmos, with implantation of upper eyelid lid load (e.g., gold weight) ...................................... A2
Response: We appreciate the special payment for new technologies, transition at all because it was not
information shared by the commenters procedures on the CY 2007 ASC list of performed in ASCs prior to CY 2008,
and their suggestions for payment covered procedures that never were even though it was included on the ASC
policies for ASC procedures included provided in ASCs, and previous pass- list of covered surgical procedures
on the CY 2007 ASC list for which through devices. The commenters were beginning in CY 2005.
separate payment is currently made for concerned about procedures included The commenter who suggested
implantable prosthetic devices. on the CY 2007 ASC list that are not additional policies for new technology
Nonetheless, the policy for payment of currently provided in ASCs. They stated and pass through payments under the
these procedures was made final in the that the very low payment amounts ASC payment system stated that
August 2, 2007 revised ASC payment under the existing system precluded the adequate payment for newer advanced
system final rule after we received and performance of those procedures and, technologies in the most appropriate
addressed public comments (72 FR therefore, the procedures should not be setting would ensure beneficiary access
42503). Only two of the procedures subject to the transitional payment rates. to optimum care.
cited by the commenter, CPT codes In effect, the commenters explained, Response: The payment policies for
57288 and 65770, are assigned to those procedures are new to the ASC list the revised ASC payment system to be
device-dependent APCs under the for CY 2008 and as such, they should be implemented January 1, 2008 were
OPPS, and neither APC has a device allowed to bypass the transition to be finalized in the August 2, 2007 revised
offset percentage above 50 percent. paid at the revised ASC rates in CY ASC payment system final rule after we
Payment will be made for all of these 2008. For example, one commenter received and addressed public
services at the transitional rates for CY suggested that CPT code 55873 comments (72 FR 42493). With respect
2008, based on their status as (Cryosurgical ablation of the prostate to device-intensive procedures such as
nondevice-intensive procedures. (includes ultrasonic guidance for CPT codes 55873 that were on the CY
Comment: Several commenters interstitial cryosurgical probe 2008 ASC list, the device portion of the
suggested that CMS should create placement)), a device-intensive payment is not subject to the transition,
additional payment policies to provide procedure, should not be subject to the while the payment portion will receive
transitional payment. The final policies CPT codes or Level II HCPCS codes that listed in Table 56 as device-intensive
do not incorporate a methodology to crosswalk directly or are clinically ASC covered surgical procedures for CY
exclude from the transitional payment similar to established procedures 2008, based on their CY 2008 final
any procedures on the CY 2007 ASC already on the ASC list of covered assignments to APCs under the OPPS
list. We will not consider any changes surgical procedures. In this way, we that are device-dependent and which
to those policies in this final rule with believe these policies will serve to have device offset percentages greater
comment period. appropriately incorporate payment for than 50 percent. We are not making any
The final policies for the revised ASC new technologies under the revised ASC changes to our final ASC policies
payment system will pay separately for payment system. related to the designation of device-
those implantable devices with pass- In summary, after consideration of the intensive procedures, transitional
through status under the OPPS and will public comments received, we are payment for procedures covered in the
pay for new technology surgical implementing, without modification, ASC setting in CY 2007, or payment for
procedures described by Category III the proposal to designate the procedures new technologies.
TABLE 56.—ASC COVERED SURGICAL PROCEDURES DESIGNATED AS DEVICE-INTENSIVE FOR CY 2008

CY 2008 de-
CY 2008 vice-depend-
HCPCS code Short descriptor OPPS APC ent APC offset
percentage
33206 ................ Insertion of heart pacemaker .................................................................................................... 0089 72.99

33210 ................ Insertion of heart electrode ....................................................................................................... 0106 56.25
33211 ................ Insertion of heart electrode ....................................................................................................... 0106 56.25
33212 ................ Insertion of pulse generator ...................................................................................................... 0090 76.01
33213 ................ Insertion of pulse generator ...................................................................................................... 0654 77.13
33214 ................ Upgrade of pacemaker system ................................................................................................ 0655 74.62
33216 ................ Insert lead pace-defib, one ....................................................................................................... 0106 56.25
33217 ................ Insert lead pace-defib, dual ...................................................................................................... 0106 56.25
33224 ................ Insert pacing lead & connect .................................................................................................... 0418 82.52
33225 ................ Lventric pacing lead add-on ..................................................................................................... 0418 82.52
33240 ................ Insert pulse generator ............................................................................................................... 0107 89.11
33249 ................ Eltrd/insert pace-defib ............................................................................................................... 0108 89.24
33282 ................ Implant pat-active ht record ...................................................................................................... 0680 73.15
36566 ................ Insert tunneled cv cath ............................................................................................................. 0625 58.88
53440 ................ Male sling procedure ................................................................................................................ 0385 51.56
53444 ................ Insert tandem cuff ..................................................................................................................... 0385 51.56
53445 ................ Insert uro/ves nck sphincter ..................................................................................................... 0386 63.53
53447 ................ Remove/replace ur sphincter .................................................................................................... 0386 63.53
54400 ................ Insert semi-rigid prosthesis ....................................................................................................... 0385 51.56
54401 ................ Insert self-contd prosthesis ....................................................................................................... 0386 63.53
54405 ................ Insert multi-comp penis pros .................................................................................................... 0386 63.53
54410 ................ Remove/replace penis prosth ................................................................................................... 0386 63.53
54416 ................ Remv/repl penis contain pros ................................................................................................... 0386 63.53
55873 ................ Cryoablate prostate .................................................................................................................. 0674 60.27
61885 ................ Insrt/redo neurostim 1 array ..................................................................................................... 0039 82.73
61886 ................ Implant neurostim arrays .......................................................................................................... 0315 86.15
62361 ................ Implant spine infusion pump ..................................................................................................... 0227 80.73
62362 ................ Implant spine infusion pump ..................................................................................................... 0227 80.73
63650 ................ Implant neuroelectrodes ........................................................................................................... 0040 56.27
63685 ................ Insrt/redo spine n generator ..................................................................................................... 0222 84.86
64590 ................ Insrt/redo pn/gastr stimul .......................................................................................................... 0222 84.86
69930 ................ Implant cochlear device ............................................................................................................ 0259 82.94
2. Changes for Identification of Covered payments for certain ancillary services, ASC payment system, we exclude from
Ancillary Services for which separate payment is made the scope of ASC facility services, for
In the August 2, 2007 revised ASC under the OPPS, when they are which payment is packaged into the
payment system final rule, we set forth provided integral to ASC covered ASC payment for the covered surgical
our policy to make separate ASC surgical procedures. Under the revised procedure, the following ancillary
services that are integral to a covered and rates. The differences in the of procedures that are ‘‘equipment-
surgical procedure: brachytherapy payment rates for covered surgical intensive’’ for which an alternate
sources; certain implantable items that procedures with ‘‘G2’’ and ‘‘A2’’ payment methodology similar to that for
have pass-through status under the payment indicators, reflected in ‘‘device-intensive’’ procedures could be
OPPS; certain items and services that Addendum AA to the proposed rule, used to set rates, to address their
we designate as contractor-priced, compared with the August 2, 2007 concern that payments, even at the
including, but not limited to, revised ASC payment system final rule, revised ASC rates, would be inadequate
procurement of corneal tissue; certain were due to our use of updated CY 2006 for procedures like lithotripsy (CPT
drugs and biologicals for which separate utilization data, proposed payment code 50590 (Lithotripsy, extracorporeal
payment is allowed under the OPPS; policy changes for the CY 2008 OPPS, shock wave)), which requires equipment
and certain radiology services for which including APC reassignments and that costs the same wherever the
separate payment is allowed under the changes to packaged services, and the procedure is performed. Other
OPPS. These covered ancillary services proposed OPPS update factor. commenters suggested that procedures
are specified in § 416.164(b) and fall We also proposed to update the that include use of expensive single-use
within the scope of ASC services, so payment amounts for the office-based supplies be paid at the fully
they are eligible for separate ASC procedures in the CY 2008 OPPS/ASC implemented rate beginning in CY 2008.
payment. proposed rule. Using the most recent Response: We appreciate the
In the CY 2008 OPPS/ASC proposed available MPFS and OPPS data, commenters’ concerns. However, the
rule (72 FR 42788), we proposed to including the proposed CY 2008 rates, payment methodologies for the revised
make changes to the list of covered we compared the estimated CY 2008 ASC payment system were made final in
ancillary services eligible for separate rate for each of the office-based the revised ASC payment system final
ASC payment, as proposed in procedures calculated according to the rule published on August 2, 2007 after
Addendum BB to that proposed rule, to standard methodology of the revised we received and addressed public
comport with their proposed treatment ASC payment system and to the MPFS comments. As explained in that final
under the OPPS according to the final nonfacility PE RVUs to determine which rule (72 FR 42503), we believe that it
payment policies of the revised ASC is the lower payment amount that, would not be appropriate to provide
payment system, and to add new therefore, is the rate we proposed for separate payment for aspects of
Category III CPT code 0182T (High dose payment of the procedure according to procedures (for example, implantable
rate electronic brachytherapy, per the final policy of the revised ASC prosthetics or equipment) that are
fraction), as discussed in section payment system. The proposed update packaged into the ASC payment rates
XVI.D.2. of this final rule with comment to the rates resulted in changes to the for the procedures under the revised
period. Accordingly, we are finalizing payment indicators, as well as the rates, payment system.
changes to the list of covered ancillary for several of the office-based
procedures. For example, a procedure Comment: None of the commenters
services eligible for ASC payment in
with payment indicator ‘‘P2’’ in the opposed updating the payment rates for
Addendum BB of this final rule with
August 2, 2007 revised ASC payment covered surgical procedures by using
comment period to reflect the policies
system final rule may have been the most recent available MPFS and
finalized for the CY 2008 OPPS and to
assigned payment indicator ‘‘P3’’ in the OPPS data. However, several
add Category III CPT code 0182T to the
CY 2008 OPPS/ASC proposed rule, commenters asked that CMS review the
list of covered ancillary services.
depending on the outcome of that rate proposed payment rate for CPT code
F. Payment for Covered Surgical comparison. 64517 (Injection, anesthetic agent;
Procedures and Covered Ancillary In addition, we proposed to update superior hypogastric plexus) because
Services the payment amounts for the device they believed that the proposed CY 2008
intensive procedures in the proposed rate included in Addendum AA to the
1. Payment for Covered Surgical
rule, based on the CY 2008 OPPS proposed rule might be erroneous.
Procedures
proposal and updated OPPS claims Response: We reviewed the proposed
a. Update to Payment Rates rate for CPT code 64517, which is
data.
Our final payment policy for covered We received many public comments assigned payment indicator ‘‘A2,’’ and
surgical procedures under the revised on the proposed CY 2008 payment rates found that the rate for CY 2008
ASC payment system is described in for covered surgical procedures. A displayed in Addendum AA of the
section XVI.C. of this final rule with summary of the public comments and proposed rule was correct. The method
comment period. In the CY 2008 OPPS/ our responses follow. for calculating the rate for procedures
ASC proposed rule (72 FR 42788), for Comment: Many commenters were with ‘‘A2’’ payment indicator, like CPT
CY 2008, we proposed to update concerned that the proposed ASC rates code 64517, is displayed in Table 57. As
payment for procedures with payment for covered surgical procedures that can be seen in the table, the proposed
indicators ‘‘G2’’ and ‘‘A2,’’ using CY require expensive equipment and rate of $178.12 for CPT code 64517
2006 utilization data. We did not single-use, disposable supplies would included in the CY 2008 OPPS/ASC
propose to make any changes to the not be adequate to cover the costs, proposed rule Addendum AA was
final policies established in the August especially during the first 3 years of the correct. We believe the example
2, 2007 revised ASC payment system revised payment system. The presented is helpful in understanding
final rule related to the methodology for commenters offered a number of the transitional payment rate
developing the relative payment weights suggestions, such as establishing a class calculations.
TABLE 57.—SAMPLE CALCULATION OF YEAR ONE (CY 2008) NATIONAL UNADJUSTED TRANSITIONAL PAYMENT RATE FOR
COVERED SURGICAL PROCEDURES ASSIGNED PAYMENT INDICATOR ‘‘A2’’
Steps in calcula-
tion of year one CY 2008 rate calculation for procedures with payment indi-
(CY 2008) tran- CY 2008 proposed rule calculation for CPT code 64517
cator ‘‘A2’’
sitional ASC
payment rate
Step 1 ............... Multiply transition year one CY 2007 ASC portion of blended 0.75 x $139 = $104.25.
rate by the CY 2007 ASC rate.
Step 2 ............... Calculate CY 2008 fully implemented ASC rate by multiplying 7.1370 x $41.400 = $295.4718.
ASC relative weight by ASC conversion factor.
Step 3 ............... Multiply transition year one CY 2008 portion of blended rate 0.25 x $295.4718 = $73.86795.
by the fully implemented ASC rate.
Step 4 ............... Add the 75 percent and 25 percent amounts of the blended $104.25 + $73.86795 = $178.11795 which rounds to $178.12.
rate to equal the year one (CY 2008) transitional rate;
round to two decimal places.
Therefore, after consideration of all case involves implantation of a no cost We have no OPPS data to empirically
public comments received, we are or full credit device listed in Table 59, determine by how much we should
implementing our policy to update the the ASC must report the HCPCS ‘‘FB’’ reduce the payment for ASC surgical
CY 2008 ASC rates using the most modifier on the line with the covered procedures into which the costs of these
recently available OPPS and MPFS data. surgical procedure code to indicate that devices are packaged. Device
The ASC national unadjusted rates for an implantable device in Table 59 was manufacturers and hospitals have told
all covered surgical procedures are furnished without cost. The devices us that a common scenario is that, if a
displayed in Addendum AA to this final listed in Table 59 are the same devices device fails 3 years after implantation,
rule with comment period. to which the policy applies under the the hospital would receive a 50 percent
OPPS, and the procedures listed in credit towards a replacement device. We
b. Payment Policies When Devices Are do not believe that hospitals reduce
Table 58 are those ASC covered surgical
Replaced at No Cost or With Credit their device charges to reflect the credits
procedures assigned to APCs under the
(1) Policy When Devices Are Replaced OPPS to which the policy applies. that may have been received, so the
at No Cost or With Full Credit lower facility costs associated with the
As finalized in the August 2, 2007
partial credit scenarios would likely not
Our final ASC policy with regard to revised ASC payment system final rule
be reflected in our proposed OPPS rates
payment for costly devices implanted in (72 FR 42506), when the ‘‘FB’’ modifier
for these device-dependent procedures.
ASCs is fully consistent with the current is reported with a procedure code that Therefore, we proposed under the OPPS
OPPS policy. The ASC policy includes is listed in Table 58, the contractor to reduce the payment for the relevant
adoption of the OPPS policy for reduces the ASC payment by the device dependent APCs and, under the
payment to providers when a device is amount of payment that we attributed to revised ASC payment system, to reduce
replaced without cost or with full credit the device when the ASC payment rate the payment for those ASC covered
for the cost of the device being replaced, was calculated. The reduction of ASC surgical procedures assigned to those
for those ASC covered surgical payment in this circumstance is APCs under the OPPS by half of the
procedures that are assigned to APCs necessary to pay appropriately for the reduction that applies when the hospital
under the OPPS to which this policy covered surgical procedure being or ASC receives a device without cost or
applies. In the case of no cost or full furnished by the ASC. receives a full credit for a device being
credit cases under the OPPS, we reduce (2) Policy When Implantable Devices replaced. That is, we proposed to reduce
the APC payment to the hospital by the Are Replaced with Partial Credit the payments by half of the offset
device offset amount that we estimate amount that represents the cost of the
represents the cost of the device. Consistent with our CY 2008 OPPS device packaged into the procedure
Therefore, in accordance with the OPPS proposal discussed in section IV.A.3. of payment. In the absence of OPPS claims
policy implemented in CY 2007, and the this final rule with comment period, we data on which to base a reduction factor,
ASC policy as finalized in the August 2, proposed to reduce the ASC payment by but taking into consideration what we
2007 revised ASC payment system final one half of the device offset amount for have been told is common industry
rule, beginning in CY 2008, we reduce certain surgical procedures into which practice, we believe that reducing the
the amount of payment made to ASCs the device cost is packaged, when an amount of payment for the device
for certain covered surgical procedures ASC receives a partial credit toward dependent APC and the related ASC
when the necessary device is furnished replacement of an implantable device covered surgical procedure by half of
without cost to the ASC or the (72 FR 42788). We proposed that the the estimated cost of the device
beneficiary or with a full credit for the partial payment reduction would apply packaging represents a reasonable
cost of the device being replaced. We to covered surgical procedures in which reduction in these cases. We listed the
provide the same amount of payment the amount of the device credit is ASC procedures to which this proposed
reduction based on the device offset greater than or equal to 20 percent of the policy would apply in Table 64 of the
amount in ASCs that would apply under cost of the new replacement device CY 2008 OPPS/ASC proposed rule (72
the OPPS for performance of those being implanted. We also proposed to FR 42790).
procedures under the same base the beneficiary’s coinsurance on Moreover, we proposed to take this
circumstances. Specifically, when a the reduced ASC payment rate so that reduction only when the credit is for 20
procedure that is listed in Table 58 the beneficiary shares the benefit of the percent or more of the cost of the new
below is performed in an ASC and the ASC’s reduced costs. replacement device, so that the
reduction is not taken in cases in which of the replacement device. Principally, was inserted on claims when the device
more than 80 percent of the cost of the the commenters agreed that neither that was replaced with partial credit
replacement device has been incurred Medicare nor beneficiaries should have under warranty, recall, or field action is
by the facility. If the partial credit is less to pay based on a device’s full cost one of the devices in Table 59 below
than 20 percent of the cost of the new when the hospital receives a substantial (ASCs should not append the modifier
replacement device, we believe that credit from the manufacturer for that to the HCPCS procedure code if the
reducing the payment for the device device and supported the premise device is not listed in Table 59 below).
implantation procedure by 50 percent of underpinning the proposed policy that The partial credit adjustment will be
the packaged device cost would provide hospitals’ charges and the payment rates made to the national unadjusted rate,
too low a payment for necessary device based on those charges currently do not similar to what occurs when a device is
replacement procedures. Accordingly, reflect partial credits for replaced replaced at full credit or with no cost,
we proposed that the new HCPCS devices. However, the commenters and beneficiary coinsurance will be
partial credit modifier must be reported argued that CMS should raise the partial adjusted to reflect the reduced payment
for cases in which the device credit is credit threshold to which this policy amount.
equal to or greater than 20 percent of the would apply to 50 percent of the cost of As discussed in section IV.A.3. of this
cost of the new replacement device if the replacement device, consistent with final rule with comment period, we
the device was listed in Table 65 of the the policy CMS recently implemented understand commenters’ concerns about
CY 2008 OPPS/ASC proposed rule with for devices replaced with partial credit potential delays that could occur while
comment period (72 FR 42790). We for services paid under the FY 2008 a returned device is being evaluated to
selected these devices because they IPPS. Many commenters also urged determine whether and by how much a
have substantial costs and because each adoption of the same billing options that credit will be applied. In order to report
device is implanted in one beneficiary are available under the IPPS for billing that they received a partial credit of 50
at least temporarily and, therefore, can devices replaced with partial credit. percent or more of the cost of a
be associated with an individual Specifically, they requested that replacement device, ASCs will have the
beneficiary. hospitals and ASCs be allowed to: (1) option of either: (1) Submitting the
The proposed policy related to partial Submit the claims for replacement claim for the device replacement
device credits applies to the same devices immediately without the procedure to their Medicare contractor
devices and procedures to which our HCPCS modifier signifying partial credit after the procedure’s performance but
policy governing payment when the for a replacement device and later, if a prior to manufacturer acknowledgment
device is furnished to the ASC without credit is ultimately issued, submit a of credit for a replacement device, and
cost or with full credit applies. We claim adjustment with the appropriate subsequently contacting the contractor
believe that this policy is a logical coding; or (2) hold the claim until a regarding a claims adjustment once the
extension of our established policy credit determination is made. We refer credit determination is made; or (2)
regarding reduction of the ASC payment readers to section IV.A.3. of this final holding the claim for the device
in cases in which the facility furnishes rule with comment period for a more replacement procedure until a
the device without cost or with a full detailed summary of the comments we determination is made by the
credit to the ASC and ensures that received on this proposal. manufacturer on the partial credit and
beneficiary and Medicare payments are Response: After consideration of the submitting the claim with the ‘‘FC’’
appropriate and consistent with costs public comments received, we are modifier appended to the implantation
incurred by ASCs. adopting a modified policy for certain procedure HCPCS code if the partial
This partial device credit policy that procedures involving partial credit for a credit is 50 percent or more of the cost
we proposed would enhance our ability replacement device. Consistent with the of the replacement device. If choosing
to track the replacement of these final CY 2008 OPPS policy described in the first billing option, to request a
implantable medical devices and may detail in section IV.A.3. of this final rule claim adjustment once the credit
enable us to identify patterns of device with comment period, and the recently determination is made, ASCs should
failure or limited longevity early in their implemented FY 2008 IPPS policy, we keep in mind that the initial Medicare
natural history so that appropriate will reduce the ASC payment for payment for the procedure involving the
strategies to reduce future problems for implantation procedures listed in Table replacement device is conditional and
our beneficiaries may be developed. We 58 below by one half of the device offset subject to adjustment. These billing
also are mindful of the opportunity to that would be applied if a replacement instructions are consistent with
use our claims history data to promote device were provided at no cost or with instructions issued for billing under the
high quality medical care with regard to full credit, if the credit is 50 percent or IPPS and OPPS. We will issue
the devices and the services in which more of the replacement device cost, additional billing instructions in a
they are used. Collecting data on a rather than the proposed 20 percent. We separate transmittal after publication of
wider set of device replacements under believe that payment policies across this final rule with comment period.
full and partial credit situations in all hospital payment systems, including the In summary, after consideration of the
sites of outpatient surgery, including OPPS, the IPPS, and the revised ASC public comments received, we are
ASCs, would assist in developing payment system, should align whenever finalizing a modified policy for certain
comprehensive summary data, not just a possible and appropriate, as is true in procedures involving partial credit for a
subset of data related to devices this case. We refer readers to section replacement device. Specifically, we
replaced without cost or with a full IV.A.3. of this final rule with comment will reduce the payment for
credit to facilities. period for a more detailed discussion of implantation procedures listed in Table
Comment: As described in section our decision to implement a 50 percent 58 below by one half of the device offset
IV.A.3. of this final rule with comment rather than 20 percent threshold to that would be applied if a replacement
period, we received several public which the partial credit policy will device were provided at no cost or with
comments on our proposal to reduce apply. full credit, if the credit is 50 percent or
payment if an expensive implantable ASCs will be instructed to append the more of the replacement device cost. In
device is replaced and the facility new ‘‘FC’’ modifier to the HCPCS code order to implement this policy, we will
receives a partial credit toward the cost for the procedure in which the device require ASCs to report the new modifier
‘‘FC’’ in all cases in which the ASC option of either: (1) Submitting the replacement procedure until a
receives a partial credit toward the claim for the device replacement determination is made by the
replacement of a medical device listed procedure to their Medicare contractor manufacturer on the partial credit and
in Table 59 below when used in a after the procedure’s performance but submitting the claim with the ‘‘FC’’
surgical procedure listed in Table 58 for prior to manufacturer acknowledgment modifier appended to the implantation
which the ASC received at least a 50 of credit for a replacement device, and procedure HCPCS code if the partial
percent credit. In order to report that subsequently contacting the contractor credit is 50 percent or more of the cost
they received a partial credit of 50 regarding a claims adjustment once the of the replacement device. Beneficiary
percent or more of the cost of a credit determination is made; or (2) coinsurance will be based on the
replacement device, ASCs will have the holding the claim for the device reduced payment amount.
TABLE 58.—ADJUSTMENTS TO PAYMENTS FOR ASC COVERED SURGICAL PROCEDURES IN CY 2008 IN CASES OF
DEVICES REPORTED WITHOUT COST OR FOR WHICH FULL OR PARTIAL CREDIT IS RECEIVED
50 percent
CY 2008
HCPCS CY 2008 of CY 2008
Short descriptor APC title OPPS offset
code OPPS APC OPPS offset
percentage percentage
61885 ....... Insrt/redo neurostim 1 array ...................... 0039 Level I Implantation of ............................... 82.73 41.37
Neurostimulator .........................................
64590 ....... Insrt/redo perph n generator.
63650 ....... Implant neuroelectrodes ............................ 0040 Percutaneous Implantation of 56.27 28.14
Neurostimulator Electrodes, Excluding
Cranial Nerve.
64555 ....... Implant neuroelectrodes.
63655 ....... Implant neuroelectrodes ............................ 0061 Laminectomy or Incision for Implantation 60.60 30.30
of Neurostimulator Electrodes, Exclud-
ing Cranial Nerve.
33206 ....... Insertion of heart pacemaker .................... 0089 Insertion/Replacement of Permanent 72.99 36.50
Pacemaker and Electrodes.
33207 ....... Insertion of heart pacemaker.
33212 ....... Insertion of pulse generator ...................... 0090 Insertion/Replacement of Pacemaker 76.01 38.01
Pulse Generator.
33210 ....... Insertion of heart electrode ....................... 0106 Insertion/Replacement/Repair of Pace- 56.25 28.13
maker and/or Electrodes.
33211 ....... Insertion of heart electrode.
33216 ....... Insert lead pace-defib, one.
33217 ....... Insert lead pace-defib, dual.
33240 ....... Insert pulse generator ............................... 0107 Insertion of Cardioverter-Defibrillator ........ 89.11 44.56
33249 ....... Eltrd/insert pace-defib ............................... 0108 Insertion/Replacement/Repair of 89.24 44.62

Cardioverter-Defibrillator Leads.
63685 ....... Insrt/redo spine n generator ...................... 0222 Implantation of Neurological Device ......... 84.86 42.43
64553 ....... Implant neuroelectrodes ............................ 0225 Implantation of Neurostimulator Elec- 80.57 40.29
trodes, Cranial Nerve.
62361 ....... Implant spine infusion pump ..................... 0227 Implantation of Drug Infusion Device ........ 80.73 40.37
62362 ....... Implant spine infusion pump.
69930 ....... Implant cochlear device ............................ 0259 Level VI ENT Procedures ......................... 82.94 41.47
61886 ....... Implant neurostim arrays .......................... 0315 Level II Implantation of .............................. 86.15 43.08
Neurostimulator .........................................
53440 ....... Male sling procedure ................................. 0385 Level I Prosthetic Urological Procedures .. 51.56 25.78
53444 ....... Insert tandem cuff.
54400 ....... Insert semi-rigid prosthesis.
TABLE 58.—ADJUSTMENTS TO PAYMENTS FOR ASC COVERED SURGICAL PROCEDURES IN CY 2008 IN CASES OF
DEVICES REPORTED WITHOUT COST OR FOR WHICH FULL OR PARTIAL CREDIT IS RECEIVED—Continued
50 percent
CY 2008
HCPCS CY 2008 of CY 2008
Short descriptor APC title OPPS offset
code OPPS APC OPPS offset
percentage percentage
53445 ....... Insert uro/ves nck sphincter ...................... 0386 Level II Prosthetic Urological Procedures 63.53 31.77
53447 ....... Remove/replace ur sphincter.
54401 ....... Insert self-contd prosthesis.
54405 ....... Insert multi-comp penis pros.
54410 ....... Remove/replace penis prosth.
54416 ....... Remv/repl penis contain pros.
33224 ....... Insert pacing lead & connect .................... 0418 Insertion of Left Ventricular Pacing Elect 82.52 41.26
33225 ....... L ventric pacing lead add-on.
36566 ....... Insert tunneled cv cath .............................. 0625 Level IV Vascular Access Procedures ...... 58.88 29.44
33213 ....... Insertion of pulse generator ...................... 0654 Insertion/Replacement of a permanent 77.13 38.57
dual chamber pacemaker.
33214 ....... Upgrade of pacemaker system ................. 0655 Insertion/Replacement/Conversion of a 74.62 37.31
permanent dual chamber pacemaker.
33208 ....... Insertion of heart pacemaker.
33282 ....... Implant pat-active ht record ...................... 0680 Insertion of Patient Activated Event Re- 73.15 36.58
corders.
TABLE 59.—DEVICES FOR WHICH THE 2. Payment for Covered Ancillary proposed to package into the ASC
‘‘FB’’ OR ‘‘FC’’ MODIFIER MUST BE Services payment for covered surgical
REPORTED WITH THE PROCEDURE Our final CY 2008 payment policies procedures the costs of those ancillary
CODE WHEN FURNISHED WITHOUT under the revised ASC payment system services that are proposed to be
for covered ancillary services vary packaged under the OPPS for CY 2008.
COST OR FOR WHICH FULL OR PAR- Certain covered ancillary services that
TIAL CREDIT IS RECEIVED according to the particular type of
service and its payment policy under we proposed to package for the CY 2008
the OPPS. Our overall policy provides OPPS were assigned payment indicator
Device
HCPCS Short descriptor for separate ASC payment for certain ‘‘Z2’’ or ‘‘Z3’’ in the August 2, 2007
code ancillary services integrally related to revised ASC payment system final rule,
the provision of ASC covered surgical but they were assigned payment
C1721 ....... AICD, dual chamber. procedures if those services are paid indicator ‘‘N1’’ in Addendum BB to the
C1722 ....... AICD, single chamber. separately under the OPPS. Thus, we CY 2008 OPPS/ASC proposed rule. We
C1764 ....... Event recorder, cardiac. established a policy to align ASC refer readers to section II.A.4.c. of this
C1767 ....... Generator, neurostim, imp. final rule with comment period for a
payment bundles with those under the
C1771 ....... Rep dev, urinary, w/sling. description of the CY 2008 OPPS
OPPS. Specifically, our final ASC
C1772 ....... Infusion pump, programmable. proposed packaging approach that we
C1776 ....... Joint device (implantable).
payment policies provide separate ASC
payment for brachytherapy sources and also proposed to adopt in ASCs. In
C1777 ....... Lead, AICD, endo single coil.
drugs and biologicals that are separately addition, OPPS payments for
C1778 ....... Lead, neurostimulators.
paid under the OPPS at the OPPS rates, brachytherapy sources and separately
C1779 ....... Lead, pmkr, transvenous VDD.
C1785 ....... Pmkr, dual, rate-resp. while we pay for radiology services at payable drugs and biologicals are
C1786 ....... Pmkr, single, rate-resp. the lower of the MPFS nonfacility PE discussed in sections VII.B. and V. of
C1813 ....... Prosthesis, penile, inflatab. RVU (or technical component) amount this final rule with comment period,
C1815 ....... Pros, urinary sph, imp. or the rate calculated according to the respectively. Other separately paid
C1820 ....... Generator, neuro rechg bat sys. standard methodology of the revised covered ancillary services in ASCs,
C1881 ....... Dialysis access system. ASC payment system based on the specifically corneal tissue acquisition
C1882 ....... AICD, other than sing/dual. OPPS relative payment weight for the and devices with OPPS pass-through
C1891 ....... Infusion pump, non-prog, perm. service. status, do not have prospectively
C1895 ....... Lead, AICD, endo dual coil. As evidenced by our final policies for established ASC payment rates
C1896 ....... Lead, AICD, non sing/dual. the CY 2008 revised ASC payment according to the final policies of the
C1897 ....... Lead, neurostim, test kit. system, our intention is to maintain revised ASC payment system. Payments
C1898 ....... Lead, pmkr, other than trans. consistent payment and packaging for devices with pass through status
C1899 ....... Lead, pmkr/AICD combination. policies across HOPD and ASC settings under the OPPS, for which separate
C1900 ....... Lead coronary venous. for covered ancillary services that are payment would be made to ASCs at
C2619 ....... Pmkr, dual, non rate-resp. integral to covered surgical procedures contractor-priced rates, are discussed in
C2620 ....... Pmkr, single, non rate-resp. performed in ASCs. Therefore, detail in section VI. of this final rule
C2621 ....... Pmkr, other than sing/dual. consistent with our policy to pay with comment period.
C2622 ....... Prosthesis, penile, non-inf.
separately only for those ancillary We received many public comments
C2626 ....... Infusion pump, non-prog, temp.
services that are paid separately under on our proposal for payment of covered
C2631 ....... Rep dev, urinary, w/o sling.
L8614 ........ Cochlear device/system.
the OPPS, in the CY 2008 OPPS/ASC ancillary services under the CY 2008
proposed rule (72 FR 42790), we also revised ASC payment system. A
summary of the public comments and is packaged only sometimes. The in §§ 414.22(b)(5)(i)(A) and (b)(5)(i)(B),
our response follow. services that are packaged into covered respectively. Furthermore, physician
Comment: Many commenters disagree surgical procedures are always payment for nonsurgical services
with the proposal to package payment packaged; that is, they are provided in ASCs, for which no facility
for CPT codes 72285 (Discography, unconditionally packaged. There is no payment is made to ASCs under the
cervical or thoracic, radiologic payment policy for ASCs that parallels existing ASC payment system, varies
supervision and interpretation) and the OPPS policy for the ‘‘Q’’ status based on local Medicare contractor
72295 (Discography, lumbar, indicator which, under OPPS policy. Some contractors pay physicians
radiological supervision and conditional packaging policies, provides only for the professional component
interpretation), in accordance with the packaged payment for the service unless (PC) of the service and others make
proposed packaging policy under the it is billed without any other separately payment to the physician for the
OPPS. The commenters were concerned payable OPPS service (or in some cases, technical component (TC) as well.
that the surgical procedures that are without any other separately payable Under the current policy, as described
packaged into CPT codes 72285 and surgical procedure) on the same day, in in the CY 2002 Physician Fee Schedule
72295 (CPT codes 62290 (Injection which case separate OPPS payment is final rule with comment period (66 FR
procedure for discography, each level; allowed for the status indicator ‘‘Q’’ 55264), Medicare payment to the
lumbar) and 62291 (Injection procedure service. In ASCs, there is no physician for a noncovered surgical
for discography, each level; cervical or circumstance in which Medicare would procedure performed in an ASC
thoracic)), as well as a number of other make separate payment to an ASC for a constitutes payment in full. This is so
surgical procedures that are packaged service if it was not performed with a even if the physician is paid the facility
into other codes in the range of CPT covered surgical procedure. Only rate (because there is no nonfacility
codes for radiology services, will no covered surgical procedures may be rate). In this case, there is no beneficiary
longer be available in ASCs as a result paid when billed alone, without other liability other than the deductible and
of the new packaging policy. The separately payable services. Our policy copayment for the physician’s services.
commenters requested that CMS is to make separate payment for all According to the policy adopted in
develop a payment policy like that covered surgical procedures and for all the August 2, 2007 revised ASC
applied to these codes under the OPPS covered ancillary services which, by payment system final rule, Medicare
to allow separate payment for the definition, are provided integral to a will make facility payments to ASCs for
services when they are provided covered surgical procedure performed all covered surgical procedures except
without a covered surgical procedure. in an ASC. Therefore, under the revised those that could pose a significant risk
Response: As explained in the August ASC payment system, the radiology to beneficiary safety or would be
2, 2007 revised ASC payment system services of concern to the commenters expected to require active medical
final rule (72 FR 42485), we continue to are packaged for CY 2008. monitoring and care at midnight
believe that packaging payment for After consideration of the public following the procedure (that is, an
those surgical procedures that are comments received, we are providing overnight stay). The revised policy will
packaged under the OPPS is appropriate CY 2008 payment for covered ancillary result in a significant expansion in the
under the revised ASC payment system. procedures in accordance with their number and type of surgical procedures
Our policy is aligned with the final payment policies under the revised for which Medicare will make an ASC
recommendation of the Practicing ASC payment system as described in the facility payment. The final payment
Physicians Advisory Council (PPAC) to August 2, 2007 revised ASC payment policy for the revised ASC payment
apply payment policies uniformly in the system final rule and their final system also allows separate payments to
ASC and HOPD settings. It also treatment under the CY 2008 OPPS. ASCs for certain covered ancillary
maintains comparable payment bundles Covered ancillary services and their services (for example, some drugs,
under the OPPS and the revised ASC final payment indicators are listed in brachytherapy sources, and certain
payment system for the services, Addendum BB to this final rule with radiology services) that are provided
consistent with the recommendation of comment period. integral to an ASC covered surgical
MedPAC to maintain consistent procedure. According to the final
payment bundles under both payment G. Physician Payment for Procedures
policy, when covered ancillary services,
systems. and Services Provided in ASCs
which are integral to the performance of
Under the OPPS, the services Under current policy, when a covered surgical procedure and are
described by CPT codes 72285 and physicians perform surgical procedures performed on the same day as the
72295 may be provided without another in ASCs that are included on the ASC covered surgery, immediately before,
separately paid surgical procedure and, list of covered surgical procedures, they during or following the procedure,
therefore, have been assigned to the are paid under the MPFS for the PE Medicare will allow separate ASC
OPPS status indicator ‘‘Q’’ to indicate component using the facility PE RVUs. payment for those services.
that payment for the service is usually This is appropriate because the surgical The revised ASC payment system is
packaged into payment for another procedures are those for which based on the APC groups and payment
procedure but that under some Medicare allows facility payment to weights of the OPPS. We believe ASCs
circumstances, the service may be paid ASCs. However, when physicians are facilities that are similar, insofar as
separately. For example, in the HOPD, perform surgical procedures in ASCs the delivery of surgical and related
if the service described by CPT code that are not included on the ASC list of nonsurgical services, to HOPDs.
72285 is provided without another covered surgical procedures and for Specifically, when services are provided
separately paid service (into which it which Medicare does not allow facility in ASCs, the ASC, not the physician,
usually would be packaged), then a payments to ASCs, physicians are paid bears responsibility for the facility costs
separate payment is made for it under for the PE component at the higher associated with the service. This
the OPPS. MPFS nonfacility PE RVUs (unless a situation parallels the hospital facility
According to the revised ASC nonfacility rate does not exist, in which resource responsibility for hospital
payment system policies, there is no case Medicare pays the physician at the outpatient services. Therefore, as
instance in which payment for a service facility rate). These policies are set forth explained in the CY 2008 OPPS/ASC
proposed rule, we believe it would be been excluded from ASC payment for to provide prostate brachytherapy
more appropriate for physicians to be safety reasons, because they are services to a larger number of Medicare
paid for all services furnished in ASCs expected to require an overnight stay, or patients if he could continue to receive
just as they would be paid for all because they are not surgical the TC payment for the ancillary
services furnished in the hospital procedures, and they would not be services.
outpatient setting. In addition, because covered by Medicare either directly, Response: Our proposed policy for
we have adopted a final policy for the under the ASC payment system, or physician payment would preclude
revised ASC payment system that indirectly, through PE payments to the physicians from receiving the TC
identifies and excludes from ASC physicians who perform them. payment for procedures performed in
payment only those procedures that In summary, under the proposed ASCs because, under the revised ASC
could pose a significant risk to policy, physicians would receive payment system, Medicare will make
beneficiary safety or would be expected payment for all surgical and nonsurgical payment only to ASCs for ancillary
to require an overnight stay, we believe services furnished in ASCs based on the services provided integral to covered
that it would be incongruous with the facility PE RVUs and excluding the TC surgical procedures. The costs
revised ASC payment system payment, if applicable, consistent with associated with the provision of covered
methodology to continue to pay the physician payment for HOPD services. ancillary services are facility resources,
higher nonfacility rate to physicians Medicare would make no payment for and Medicare will provide separate ASC
who furnish excluded ASC procedures. facility services to ASCs or physicians payment for those costs. However, the
Because these excluded procedures for procedures or services that are ASC is not precluded from contracting
have been specifically identified by performed in ASCs but that are with another entity to provide the
CMS as procedures that could pose a excluded from the list of covered ASC equipment and supplies required to
significant risk to beneficiary safety or surgical procedures or that are not provide specific services. The ASC
would be expected to require an covered ancillary services. While would make payment to its contractors.
overnight stay, we do not believe it physicians would be paid for these Comment: Some commenters stated
would be appropriate to provide services based on the facility PE RVUs, that beneficiaries should not be liable
payment based on the higher nonfacility physicians would no longer receive the for the costs of procedures and services
PE RVUs to physicians who furnish additional payment for the associated that are not covered when performed in
them. In fact, we do not expect that the facility resources. ASCs. A few commenters believed that
excluded procedures will be performed Consistent with the current OPPS the beneficiary should only be liable for
in ASCs after the revised ASC payment payment policy that prohibits facility his or her deductible and coinsurance
system is implemented on January 1, payments to the hospital for noncovered amounts, just as he or she would be for
services (such as those surgical covered procedures in ASCs. One
2008. Therefore, we proposed to revise
procedures on the OPPS inpatient list) commenter stated that the course of a
§§ 414.22(b)(5)(i)(A) and (b)(5)(i)(B) to
and makes the beneficiary liable for planned, covered procedure cannot
reflect this proposed policy.
those charges, this proposed policy always be determined in advance
We believe that the proposed revised would make beneficiaries responsible because the physician may have to alter
policy would provide appropriate for the ASC charges for noncovered the procedure intraoperatively, and
payment to physicians for services services furnished to them in ASCs. sometimes that alteration results in
provided in the ASC facility setting and We received a number of public performance of an excluded,
would encourage the most appropriate comments on our proposal to pay noncovered procedure. The commenter
utilization of ASCs. For procedures that physicians at the facility PE rate instead did not believe it would be fair to hold
are not excluded from coverage under of the nonfacility PE amount for the beneficiary liable in such cases. One
the revised ASC payment system, the excluded procedures, to not pay commenter suggested that CMS create a
ASC would be paid for the covered physicians the technical component modifier that the ASC would use to
surgical procedure and associated (TC) payment for ancillary services, and identify cases in which the planned,
covered ancillary services, and the to make beneficiaries responsible for the covered procedure was altered
physician would be paid for the ASC charges for noncovered services intraoperatively due to unexpected
professional work and facility PE furnished to them in ASCs. A summary circumstances. The commenter
associated with performing the of the public comments and our indicated that payment in those cases
procedure. In the case of noncovered responses follow. could be priced by the contractor based
surgical procedures or other noncovered Comment: Several commenters on review of the operative report. The
services provided in ASCs, Medicare requested that CMS not proceed with commenter stated that use of the
would make no payment to the ASC the proposal and continue the existing modifier would enable CMS to track
under the revised ASC payment system payment policy for excluded services such occurrences and could audit as
and no payment to the physician under performed in ASCs and payment for the needed.
the MPFS for the facility resources TC associated with ancillary services to Response: We appreciate the
associated with providing those physicians who provide those services. commenters’’ concern regarding
services. Although the current MPFS One commenter stated that he provides beneficiary liability for excluded ASC
payment policy provides payment to the permanent seed prostate brachytherapy procedures. However, because we have
physician for some facility costs as if the services to Medicare beneficiaries in adopted a final policy for the revised
service were being furnished in a hospital and ASC settings. Under ASC payment system that identifies and
physician’s office, according to the final current Medicare payment policy, the excludes from ASC payment only those
policy of the revised payment system, commenter received the TC payment for procedures that pose a significant risk to
the services would not be covered ASC a number of services in the radiology beneficiary safety or would be expected
services. Consistent with Medicare range of CPT codes because he brought to require an overnight stay, we
payment policy in other care settings, the necessary equipment to the facility continue to believe that it would be
no payment for facility costs would be with him when he came to provide the incongruous with the revised ASC
made for the noncovered services. In brachytherapy procedures. The payment system methodology to
this case, the noncovered services have commenter stated that he would be able continue to pay the higher nonfacility
rate to physicians who furnish excluded been subject to the physician self- imaging services that are ‘‘covered
ASC procedures. Therefore, consistent referral prohibition. ancillary services,’’ as defined at
with Medicare payment policy in other Taken together, these provisions 416.164(b), for which separate payment
care settings, no payment for facility effectively excluded from the physician is made under the revised ASC payment
costs would be made for the noncovered self-referral prohibition referrals for: (1) system (72 FR 42792). That is, we
services, and the beneficiary would be Radiology and certain other imaging proposed that those radiology and
liable. As we explained in the CY 2008 services that were paid through the ASC imaging procedures that are integral to
OPPS/ASC proposed rule, because of composite payment rate; and (2) a covered ASC surgical procedure and
the significant expansion of the ASC list radiology procedures that were integral that are performed immediately before,
of covered surgical procedures, we to the performance of an ASC covered during, or immediately following the
expect that excluded procedures will surgical procedure, that were paid surgical procedure (that is, on the same
not be performed in ASCs beginning in separately, and that were performed in day) would not constitute ‘‘radiology
CY 2008. the ASC either (a) during the surgical and certain other imaging procedures’’
After consideration of the public procedure or (b) immediately after the for purposes of the physician self-
comments received, we are finalizing surgical procedure if required to referral law. We noted that if we did not
our CY 2008 proposal, without confirm placement of an item placed revise the definition of ‘‘radiology and
modification, to pay physicians only the during the nonradiological medical certain other imaging services’’ for
facility PE amount and exclude payment procedure. (For physician self-referral physician self-referral purposes to
of the TC if applicable, for the purposes, we have considered radiology exclude these radiology and other
performance of surgical procedures and and certain other imaging services that imaging procedures, the physician self-
nonsurgical services in ASCs and to are performed while the patient is still referral law would prohibit an ASC from
make beneficiaries liable for the facility in the operating room to confirm that billing Medicare for these separately
charges for procedures provided in the ASC surgery is effective to be performed payable, integral ancillary services
during the surgical procedure.) rendered to patients who had been
ASC that are excluded from ASC
Under the August 2, 2007 revised referred by a physician with an
payment.
ASC payment system final rule (72 FR ownership or investment interest in, or
H. Changes to Definitions of ‘‘Radiology 42470), effective January 1, 2008, compensation relationship with, an ASC
and Certain Other Imaging Services’’ Medicare makes a bundled or composite unless an exception applies.
and ‘‘Outpatient Prescription Drugs’’ payment for facility services and a For the reasons that warrant our
separate payment for each covered revising the definition of ‘‘radiology and
In section 1877(h)(6) of the Act, the ancillary service that is integral to a certain other imaging services,’’ we also
Congress defined the ‘‘designated health covered surgical procedure and proposed to exclude from the definition
services’’ (DHS) that are subject to the performed in the ASC on the same day. of ‘‘outpatient prescription drugs’’ at
physician self-referral prohibition to Because facility services continue to be § 411.351, drugs that are ‘‘covered as
include 11 broad categories of services. paid under a composite rate, a physician ancillary services’’ as defined at new
In our regulations at § 411.351, we referral for any radiology or other § 416.164(b) under the revised ASC
define each of the 11 DHS categories, imaging service or outpatient payment system. These drugs are
including ‘‘radiology and certain other prescription drug that is paid for as a furnished, for example, during the
imaging services’’ and ‘‘outpatient facility service under § 416.164(a) is immediate postoperative recovery
prescription drugs.’’ The definition of excluded from the physician self- period to a patient to reduce suffering
‘‘designated health services’’ at referral prohibition under paragraph (2) from nausea or pain. Under our
§ 411.351 excludes ‘‘services that are of the definition of ‘‘designated health proposal, such drugs would not
reimbursed by Medicare as part of a services’’ at § 411.351. constitute DHS, although the physician
composite rate (for example, ASC Covered ancillary services for which self-referral provisions would continue
services or SNF Part A services),’’ separate payment is made per item or to be applicable when an ASC furnishes
except to the extent that the DHS service include many radiology and outpatient prescription drugs for use in
categories are themselves payable certain other imaging services. The the patient’s home.
through a composite rate. In the August 2, 2007 revised ASC payment Although we believe that physician
definition of ‘‘radiology and certain system final rule discusses the radiology referrals to entities with which they
other imaging services’’ at § 411.351, we services that are included in new have a financial relationship are
previously excluded x-ray, fluoroscopy, § 416.164(b) as covered ancillary susceptible to abuse, we believe that our
and ultrasound procedures that require services integral to, and furnished on revision to the definitions of ‘‘radiology
the insertion of a needle, catheter, tube, the same day as the ASC surgical and certain other imaging services’’ and
or probe through the skin or into a body procedure (72 FR 42496 through 42498). ‘‘outpatient prescription drugs’’ promote
orifice. In addition, the definition of Under the revised ASC payment quality of care without posing a risk of
‘‘radiology and certain other imaging system, a greater variety of surgical abuse. The change will promote quality
services’’ excludes radiology procedures procedures than previously allowed can of care by allowing patients timely,
that are integral to the performance of a be provided as ASC services, and, thus, convenient access to outpatient drugs
nonradiological medical procedure and a greater number of ‘‘radiology and and radiology and imaging services that
(1) performed during the certain other imaging services’’ would are integral to an ASC procedure and
nonradiological medical procedure or be subject to the physician self-referral necessary for its safe performance in an
(2) performed immediately following prohibition. Accordingly, in the August ASC. The risk of program abuse is
the nonradiological medical procedure 2, 2007 rule proposing changes to both avoided by the requirement that the
when necessary to confirm placement of the outpatient hospital prospective items and services must be ‘‘integral to’’
an item placed during the payment system and the ASC payment the ASC procedure (that is, performed
nonradiological medical procedure. system, we proposed to revise the in the ASC immediately preceding,
Radiology and certain other imaging physician self-referral definition of during, or immediately following the
services performed before a ‘‘radiology and certain other imaging covered surgical procedure). We caution
nonradiological medical procedure have services’’ to exclude those radiology and that only those items and services that
are integral to an ASC procedure and radioactive sources and they are not I. New Technology Intraocular Lenses
performed on the same day as the included in a composite rate.
1. Background
covered surgical procedure will qualify Response: The DHS category
for the exclusion from the definitions of ‘‘radiation therapy services and At the inception of the ASC benefit on
‘‘radiology and certain other imaging supplies’’ includes radioactive sources September 7, 1982, Medicare paid 80
services’’ and ‘‘outpatient prescription used in connection with brachytherapy percent of the reasonable charge for
drugs.’’ Other separately billable procedures. The commenters are correct IOLs supplied for insertion concurrent
services that do not satisfy these that a urologist or other type of with or following cataract surgery
conditions will remain subject to the physician who has an ownership or performed in an ASC (47 FR 34082,
physician self-referral prohibition. We investment interest in, or a August 5, 1982). Section 4063(b) of
will continue to monitor the provision compensation relationship with, an ASC OBRA 1987, Pub. L. 100–203, amended
of services in ASCs for potential abuse. may not refer a Medicare patient to the the Act to mandate that we include
In addition, for clarity, we proposed payment for an IOL furnished by an
ASC for a brachytherapy procedure,
to make a technical correction to ASC for insertion during or following
unless an exception is satisfied.
paragraph (2) of the definition of cataract surgery as part of the ASC
‘‘radiology and certain other imaging Previously, except for brachytherapy facility fee for insertion of the IOL, and
services’’ at § 411.351 to exclude from procedures performed as inpatient or that the facility fee include payment
the definition not only ‘‘radiology outpatient hospital procedures, that is reasonable and related to the cost
procedures’’ that are integral to the Medicare made payment for the of acquiring the class of lens involved
performance of a ‘‘nonradiological radioactive sources to the individual or in the procedure.
procedure,’’ but also to exclude entity that furnished the radioactive Section 4151(c)(3) of the Omnibus
‘‘radiology and certain other imaging sources. Under the ASC payment system Budget Reconciliation Act of 1990
services’’ that are integral to the effective for procedures performed on or (OBRA 1990), Pub. L. 101–508, froze the
performance of ‘‘a medical procedure after January 1, 2008, Medicare pays the IOL payment amount at $200 for IOLs
that is not identified on the List of CPT/ ASC for facility services that are furnished by ASCs in conjunction with
HCPCS Codes as a ‘radiology or certain packaged into the ASC payment. In surgery performed during the period
other imaging service.’ ’’ addition, Medicare makes a separate beginning November 5, 1990, and
We received one public comment payment to an ASC for certain ancillary ending December 31, 1992. We
supporting the proposed change in the items and services, including continued paying an IOL allowance of
definition of ‘‘radiology and other brachytherapy sources. $200 from January 1, 1993, through
imaging services.’’ Two additional The commenters are correct that, December 31, 1993.
public comments concern radioactive without an exception under the Section 13533 of the Omnibus Budget
seeds and ribbons (radioactive sources) physician self-referral provisions, a Reconciliation Act of 1993 (OBRA
implanted during brachytherapy urologist who refers a Medicare patient 1993), Pub. L. 103–66, mandated that
procedures performed in an ASC. These for an ASC-covered brachytherapy payment for an IOL furnished by an
items are included within the DHS procedure may not have either an ASC be equal to $150 beginning January
category of ‘‘radiation therapy and ownership or investment interest in the 1, 1994, through December 31, 1998.
supplies.’’ ASC or a compensation relationship Section 141(b)(1) of the Social Security
Comment: Two commenters asked with the ASC because the brachytherapy Act Amendments of 1994 (SSAA 1994),
CMS to exclude from the definition of sources are DHS. Pub. L. 103–432, required us to develop
DHS radioactive sources (including and implement a process under which
Although we did not propose to
seeds and ribbons) furnished during a interested parties may request a review
exclude, nor are we excluding in this
brachytherapy procedure performed in of the appropriateness of the payment
final rule with comment period,
an ASC because DHS, as defined at amount for insertion of an IOL, to
brachytherapy sources supplied in
§ 411.351, does not include ‘‘services ensure that the facility fee for the
connection with an ASC-covered
that are reimbursed by Medicare as part procedure includes payment that is
brachytherapy procedure, we intend to reasonable and related to the cost of
of a composite rate (for example,
consider this issue, and if we decide to acquiring a lens that belongs to a class
ambulatory surgical center services
propose an exception, we will include of NTIOLs.
* * *).’’ In addition, the commenter
such changes in a proposed rule and
suggested that, consistent with our In the February 8, 1990 Federal
seek public comment.
proposal to exclude radiology services Register (55 FR 4526), we published a
and outpatient prescription drugs that We are adopting the proposed final notice entitled ‘‘Revision of
are ‘‘covered ancillary services’’ physician self-referral provisions Ambulatory Surgery Center Payment
furnished on the same day as an ASC without change and we are making one Rate Methodology,’’ which
procedure, we should exclude from the additional technical, nonsubstantive implemented Medicare payment for an
definition of ‘‘radiation therapy services change. We are revising the definition of IOL furnished at an ASC as part of the
and supplies’’ brachytherapy sources ‘‘designated health services’’ at ASC facility fee for insertion of the IOL.
that are also ASC covered ancillary § 411.351 to reflect the fact that CMS no In the June 16, 1999 Federal Register
services integral to a covered surgical longer pays for all ASC procedures (64 FR 32198), we published a final rule
procedure for which separate payment under a composite rate. Specifically, the entitled ‘‘Adjustment in Payment
is made under new § 416.164(b). The definition will refer to ‘‘SNF Part A Amounts for New Technology
commenters pointed out that, if these payments or ASC services identified at Intraocular Lenses Furnished by
radioactive sources were not excluded § 416.164(a)’’ as examples of services Ambulatory Surgical Centers,’’ to add
from the physician self-referral that Medicare pays as part of a Subpart F (§§ 416.180 through 416.200)
prohibition, many urologist-owners of composite rate. Section 416.164(a) sets to 42 CFR Part 416, which established
ASCs would not be able to order and forth the facility services for which a a process for adjusting payment
furnish brachytherapy services because bundled or composite payment is made amounts for insertion of a class of
the ASC must bill Medicare for the under the revised ASC payment system. NTIOLs furnished by ASCs.
Since June 16, 1999, we have issued 30 days following publication of the list such as the need for YAG laser
a series of Federal Register notices to of requests. treatment;
list lenses for which we received • In the Federal Register document ++ Decreased incidence of
requests for an NTIOL payment that finalizes the update of ASC subsequent IOL exchange;
adjustment and to solicit comments on payment rates for the following calendar ++ Decreased blurred vision, glare,
those requests, or to announce the year, we will— other quantifiable symptom or vision
lenses that we have determined meet + Provide a list of determinations deficiency.
the criteria and definition of NTIOLs. made as a result of our review of all For a request to be considered
We last published a Federal Register requests and public comments; and complete, we require submission of the
notice pertaining specifically to NTIOLs + Publish the deadline for submitting information that is found in the
on April 28, 2006 (71 FR 25176). requests for review in the following guidance document entitled
calendar year. ‘‘Application Process and Information
2. Changes to the NTIOL Determination In determining whether a lens belongs Requirements for Requests for a New
Process Finalized for CY 2008 to a new class of NTIOLs and whether Class of New Technology Intraocular
In the CY 2007 OPPS/ASC final rule the ASC payment amount for insertion Lens (NTIOL)’’ posted on the CMS Web
with comment period, we finalized our of that lens in conjunction with cataract site at: http://www.cms.hhs.gov/
proposal to update and streamline the surgery is appropriate, we expect that ASCPayment/05_NTIOLs.asp.
process for recognizing IOLs inserted the insertion of the candidate IOL As stated in the CY 2007 OPPS/ASC
during or subsequent to cataract would result in significantly improved final rule with comment period (71 FR
extraction as belonging to a new, active clinical outcomes compared to currently 68180), there are three possible
NTIOL class that is qualified for a available IOLs. In addition, to establish outcomes from our review of a request
payment adjustment. The following is a a new NTIOL class, the candidate lens for determination of a new NTIOL class.
summary of the changes beginning for must be distinguishable from lenses As appropriate, for each completed
CY 2008 that were finalized in the CY already approved as members of active request for a candidate IOL that is
2007 OPPS/ASC final rule with or expired classes of NTIOLs that share received by the established deadline,
comment period (71 FR 68176 through a predominant characteristic associated one of the following determinations
68181). with improved clinical outcomes that would be announced annually in the
We modified the historical process of was identified for each class. In the CY final rule updating the ASC payment
using separate Federal Register notices 2007 final rule, we finalized our rates for the next calendar year:
to notify the public of requests to review proposal to base our determinations on • The request for a payment
lenses for membership in new NTIOL consideration of the following factors: adjustment is approved for the IOL for
classes, to solicit public comment on • The IOL must have been approved 5 full years as a member of a new
requests, and to notify the public of by the FDA and claims of specific NTIOL class described by a new HCPCS
CMS’s determinations concerning lenses clinical benefits and/or lens code.
assigned to classes of NTIOLs for which characteristics with established clinical • The request for a payment
an ASC payment adjustment would be relevance in comparison with currently adjustment is approved for the IOL for
made. In the CY 2007 OPPS/ASC final available IOLs must have been approved the balance of time remaining as a
rule with comment period (71 FR by the FDA for use in labeling and member of an active NTIOL class.
68176), we specified that these NTIOL- advertising. • The request for a payment
related notifications will be fully • The IOL is not described by an adjustment is not approved.
integrated into the annual notice and active or expired NTIOL class; that is, it We also discussed our plan to
comment rulemaking cycle for updating does not share the predominant, class- summarize briefly in the final rule the
the ASC payment rates, the specific defining characteristic associated with evidence that was reviewed, the public
payment system in which NTIOL improved clinical outcomes with comments, and the basis for our
payment adjustments are made. Our designated members of an active or determinations. We established that
final policy for updating the revised expired NTIOL class. when a new NTIOL class is created, we
ASC payment system to be implemented • Evidence demonstrates that use of would identify the predominant
in January 2008 will utilize an annual the IOL results in measurable, clinically characteristic of NTIOLs in that class
update process in coordination with meaningful, improved outcomes in that sets them apart from other IOLs
notice and comment rulemaking for the comparison with use of currently (including those previously approved as
OPPS. Aligning the NTIOL process with available IOLs. According to the statute, members of other expired or active
this annual update will promote and consistent with previous examples NTIOL classes) and is associated with
coordination and efficiency, thereby provided by CMS, superior outcomes improved clinical outcomes. The date of
streamlining and expediting the NTIOL that would be considered include the implementation of a payment
notification, comment, and review following: adjustment in the case of approval of an
process. + Reduced risk of intraoperative or IOL as a member of a new NTIOL class
Specifically, we established the postoperative complication or trauma; would be set prospectively as of 30 days
following process: + Accelerated postoperative recovery; after publication of the ASC payment
• We will announce annually in the + Reduced induced astigmatism; update final rule, consistent with the
Federal Register document that + Improved postoperative visual statutory requirement.
proposes the update of ASC payment acuity;
rates for the following calendar year, a 3. NTIOL Application Process for CY
+ More stable postoperative vision;
list of all requests to establish new + Other comparable clinical 2008 Payment Adjustment
NTIOL classes accepted for review advantages, such as— To provide process and information
during the calendar year in which the ++ Reduced dependence on other requirements for applications requesting
proposal is published and the deadline eyewear (for example, spectacles, a review of the appropriateness of the
for submission of public comments contact lenses, and reading glasses); payment amount for insertion of an IOL
regarding those requests. The deadline ++ Decreased rate of subsequent to ensure that the ASC payment for
for receipt of public comments will be diagnostic or therapeutic interventions, covered surgical procedures includes
payment that is reasonable and related Intraocular Lenses (NTIOLs).’’ This that applies to the establishment of new
to the cost of acquiring a lens that is guidance document can be accessed on NTIOL classes. We ordinarily complete
approved as belonging to a new class of the CMS Web site at: http:// the review of such a request within 90
NTIOLs, in February 2007 we posted the www.cms.hhs.gov/ASCPayment/ days of receipt, and upon completion of
guidance document to the CMS Web site 05_NTIOLs.asp. our review, we notify the requestor of
regarding such requests as described This guidance document provides our determination and post on the CMS
above. We did not receive any review specific details regarding requests for Web site notification of a lens newly
requests by the deadline of April 1, recognition of IOLs as belonging to an approved for a payment adjustment as
2007, in response to the announcement existing, active NTIOL class, the review
an NTIOL belonging to an active NTIOL
made in the CY 2007 OPPS/ASC final process, and information required for a
class when furnished in an ASC.
rule with comment period (71 FR request to review. Currently, there is
68181) soliciting CY 2008 requests for one active NTIOL class whose defining 4. Classes of NTIOLs Approved for
review of the appropriateness of the characteristic is the reduction of Payment Adjustment
payment amount for new classes of spherical aberration. CMS accepts
NTIOLs furnished in ASCs. requests throughout the year to review Since implementation of the process
We note that we have also issued a the appropriateness of recognizing an for adjustment of payment amounts for
guidance document entitled ‘‘Revised IOL as a member of an active class of NTIOLs that was established in the June
Process for Recognizing Intraocular NTIOLs. That is, review of candidate 16, 1999 Federal Register, we have
Lenses Furnished by Ambulatory lenses for membership in an existing, approved three classes of NTIOLs, as
Surgery Centers (ASCs) as Belonging to active NTIOL class is ongoing and not shown in the following table:
an Active Subset of New Technology limited to the annual review process
NTIOL cat- HCPCS $50 approved for services NTIOL characteristic IOLs eligible for adjustment
egory code furnished on or after
1 .................. Q1001 .... May 18, 2000, through May Multifocal ............................. Allergan AMO Array Multifocal lens, model SA40N.
18, 2005.
2 .................. Q1002 .... May 18, 2000, through May Reduction in Preexisting STAAR Surgical Elastic Ultraviolet-Absorbing Silicone
18, 2005. Astigmatism. Posterior Chamber IOL with Toric Optic, models
AA4203T, AA4203TF, and AA4203TL.
3 .................. Q1003 .... February 27, 2006, through Reduced Spherical Aberra- Advanced Medical Optics (AMO) Tecnis IOL models
February 26, 2011. tion. Z9000, Z9001, Z9002, ZA9003 and AR40xEM; Alcon
Acrysof IQ Model SN60WF and Acrysert Delivery
System Model SN60WS; Bausch & Lomb Sofport AO
model LI61AOV.
5. Payment Adjustment the revised payment system, which comment period for the rest of the
applies the ASC budget neutrality OPPS/ASC proposed rule.
The current payment adjustment for a adjustment to the OPPS conversion Response: We appreciate the
5-year period from the implementation factor to calculate an ASC conversion commenters’ continuing support
date of a new NTIOL class is $50. In the factor that is then multiplied by the ASC regarding our recent revision to the
CY 2007 OPPS/ASC final rule with payment weight for the surgical process for recognizing IOLs inserted
comment period, we revised procedure to implant the IOL. CY 2008 during or subsequent to cataract
§ 416.200(a) through (c) to clarify how ASC payment for the cost of a extraction as belonging to a new or
the IOL payment adjustment will be conventional lens will be packaged into active NTIOL class. We continue to
made and how an NTIOL will be paid the payment for the associated covered believe that aligning the NTIOL process
after expiration of the payment surgical procedure performed by the with annual updates to the OPPS and
adjustment, as well as made minor ASC. We included the proposed CY the revised ASC payment system
editorial changes to § 416.200(d). For CY 2008 ASC payment rates for IOL promotes coordination and efficiency,
2008, we did not propose to revise, nor insertion procedures in Table 66 of the thereby streamlining and expediting the
are we revising in this final rule with proposed rule (72 FR 42795) that is NTIOL notification, comment, and
comment period, the current payment reprinted, with final CY 2008 ASC review process. In response to the
adjustment amount, but we reiterate our payment rates, below. comment urging us to adjust the
intention, as stated in the CY 2007 final Comment: Several commenters comment period regarding requests to
rule, to reevaluate whether or not the supported the revision to the process for establish new classes of NTIOLs to 60
ASC payment rates established for recognizing IOLs inserted during or days, we note that section 141(b)(3) of
cataract surgery with IOL insertion are subsequent to cataract extraction as the Social Security Act Amendments of
appropriate when a lens determined to belonging to a new or active NTIOL 1994 (SSAA 1994), Pub. L. 103-432,
be an NTIOL is furnished after we have class. One commenter suggested that, clearly requires us to provide a 30-day
implemented the revised ASC payment for purposes of administrative comment period on lenses that are the
system in CY 2008. simplicity, CMS should make the subject of requests for recognition as
6. CY 2008 ASC Payment for Insertion comment period on requests for new belonging to a new class of NTIOLs.
of IOLs NTIOL classes 60 days, rather than 30 Therefore, we will continue to provide
days as proposed. The commenter a 30-day comment period on lenses that

In accordance with the final policies believed that Congress intended that are the subject of requests for
of the revised ASC payment system for CMS provide at least a 30-day comment recognition as members of a new class
CY 2008, payment for IOL insertion period and argued that further adjusting of NTIOLs.
services will be established according to the comment period for NTIOLs to 60 After considering the public
the standard payment methodology of days would be consistent with the comments received, we are finalizing,
without modification, the process and 7. Announcement of CY 2008 Deadline technology IOLs must be received at
timelines proposed for NTIOL for Submitting Requests for CMS CMS by 5 p.m., EST, on March 14, 2008.
consideration under the ASC payment Review of Appropriateness of ASC Send requests to: ASC/NTIOL, Division
system. The payment adjustment for Payment for Insertion of an NTIOL of Outpatient Care, Mailstop C4–05–17,
NTIOLs will continue to be $50 for CY Following Cataract Surgery Centers for Medicare and Medicaid
2008. In accordance with § 416.185(a) of our Services,7500 Security Boulevard,
regulations, as revised by the CY 2007 Baltimore, MD 21244–1850.
OPPS/ASC final rule with comment To be considered, requests for NTIOL
period, CMS announces that, in order to reviews must include the information
be considered for payment effective posted on the CMS Web site at http://
January 1, 2009, requests for a review of cms.hhs.gov/ASCPayment/
an application for a new class of new 05_NTIOLs.asp#TopOfPage.
TABLE 60.—INSERTION OF IOL PROCEDURES AND THEIR CY 2008 ASC PAYMENT RATES
CY 2008
HCPCS code Long descriptor ASC pay-
ment
66983 ........... Intracapsular cataract extraction with insertion of intraocular lens prosthesis (one stage procedure) ........................ $976.76
66984 ........... Extracapsular cataract removal with insertion of intraocular lens prosthesis (one stage procedure), manual or me- 976.76
chanical technique (e.g., irrigation and aspiration or phacoemulsification).
66985 ........... Insertion of intraocular lens prosthesis (secondary implant), not associated with concurrent cataract removal ......... 866.51
66986 ........... Exchange of intraocular lens ......................................................................................................................................... 866.51
J. ASC Payment and Comment payment indicator with respect to the We did not receive any comments that
Indicators timeframe when comments would be addressed our proposal related to
In addition to the payment indicators accepted. The comment indicator ‘‘NI’’ implementation and use of comment
that we introduced in the August 2, is used in this final rule with comment indicators for the revised ASC payment
2007 revised ASC payment system final period to indicate new HCPCS codes for system. Therefore, we are finalizing our
rule, we also introduced comment which the interim payment indicator proposal, without modification, to adopt
indicators for the ASC payment system assigned is subject to comment in this the comment indicators as defined in
in the CY 2008 OPPS/ASC proposed final rule. Addendum DD2 to this final rule with
rule (72 FR 42795). We created comment period.
The changes for CY 2008 that we
Addendum DD1 to define ASC payment proposed to the payment indicators K. ASC Policy and Payment
indicators that we will use in Addenda assigned to HCPCS codes for procedures Recommendations
AA and BB to provide payment and services in the August 2, 2007
information regarding covered surgical The GAO published the statutorily
revised ASC payment system final rule mandated report entitled, ‘‘Medicare:
procedures and covered ancillary were identified with a ‘‘CH’’ in the
services, respectively, under the revised Payment for Ambulatory Surgical
OPPS/ASC proposed rule and were Centers Should Be Based on the
ASC payment system. Analogous to the subject to comment during the 60-day
OPPS payment status indicators that we Hospital Outpatient Payment System’’
comment period provided for that (GAO–07–86) on November 30, 2006.
define in Addendum D1 to the annual
proposed rule. ‘‘CH’’ is used in We considered the report’s
OPPS proposed and final rules, the ASC
Addenda AA and BB to this CY 2008 methodology, findings, and
payment indicators in Addendum DD1
OPPS/ASC final rule with comment recommendations in the development of
are intended to capture policy-relevant
characteristics of HCPCS codes that may period to indicate that a new payment the August 2, 2007 revised ASC
receive packaged or separate payment in indicator (in comparison with that in payment system final rule. The GAO
ASCs, including: their ASC payment the August 2, 2007 revised ASC methodology, results, and
status prior to CY 2008; their payment system final rule) has been recommendations are summarized
designations as device-intensive; their assigned to an active HCPCS code for below.
designations as office-based and the the next calendar year; that an active The GAO was directed to conduct a
corresponding ASC payment HCPCS code has been added to the list study comparing the relative costs of
methodology; and their classifications of procedures or services payable in procedures furnished in ASCs to those
as separately payable radiology services, ASCs; or that an active HCPCS code will furnished in HOPDs paid under the
brachytherapy sources, OPPS pass- be deleted at the end of the current OPPS, including examining the
through devices, corneal tissue calendar year. The ‘‘CH’’ comment accuracy of the APC with respect to
acquisition services, drugs or indicators that are published in this CY surgical procedures furnished in ASCs.
biologicals, or NTIOLs. 2008 OPPS/ASC final rule with Section 626(d) of Pub. L. 108–173
We have also created new Addendum comment period are provided to alert indicated that the report should include
DD2 that lists the ASC comment our readers that a change has been made recommendations on the following
indicators. Like the comment indicators since the August 2, 2007 revised ASC matters:
used in the OPPS, the ASC comment payment system final rule, but do not 1. Appropriateness of using groups of
indicators used in Addenda AA and BB indicate that the change is subject to covered services and relative weights
to this OPPS/ASC final rule with comment. The full definitions for the established for the OPPS as the basis of
comment period serve to identify, for comment indicators are provided in payment for ASCs.
the revised ASC payment system, the Addendum DD2 to this final rule with 2. If the OPPS relative weights are
status of a specific HCPCS code and its comment period. appropriate for this purpose, whether
the ASC payments should be based on separately, while in the ASC setting, payment weights and payment rates
a uniform percentage of the payment other Part B suppliers billed Medicare under the revised ASC payment system
rates or weights under the OPPS, or and received payment for many of the on APC groups and relative payment
should vary, or the weights should be related services. weights. In the August 2, 2007 revised
revised based on specific procedures or Finally, in its analysis of labor-related ASC payment system final rule, we
types of services. costs, the GAO determined that the made final our proposal to set the ASC
3. Whether a geographic adjustment mean labor-related proportion of costs relative payment weight for certain
should be used for ASC payment and, was 50 percent. The range of the labor- office-based surgical procedures so that
if so, the labor and nonlabor shares of related costs for the middle 50 percent the national unadjusted ASC payment
such payment. of responding ASCs was 43 percent to rate does not exceed the MPFS
Based on its extensive analyses, the 57 percent of total costs. unadjusted nonfacility PE RVU amount.
GAO determined that the APC groups in Based on its findings from the study, Our final policy is to calculate ASC
the OPPS accurately reflect the relative the GAO recommended that CMS payment rates by multiplying the ASC
costs of the procedures performed in implement a payment system for relative payment weights by the ASC
ASCs. The GAO’s analysis of the cost procedures performed in ASCs based on conversion factor. In the August 2, 2007
ratios showed that the ASC-to-APC cost the OPPS, taking into account the lower revised ASC payment system final rule,
ratios were more tightly distributed relative costs of procedures performed our estimate of the CY 2008 budget
around their median cost ratio than in ASCs compared to HOPDs in neutral ASC conversion factor was
were the OPPS-to-APC cost ratios. The determining ASC payment rates. $42.542. In the CY 2008 OPPS/ASC
ASC-to-APC median cost ratio is a Comment: One commenter expressed proposed rule, the proposed ASC
comparison of the median cost of each concern that the public was denied time conversion factor for CY 2008 was
of the 20 surgical procedures with the to analyze and respond to the findings $41.400. For this final rule with
highest ASC claims volume to the in the congressionally mandated GAO comment period, the ASC conversion
median cost of the APC group in which report on ASC costs. The commenter factor for CY 2008 is $41.401. Although
it would be placed under the OPPS, believed that CMS’ reliance on the GAO this final ASC conversion factor differs
while the OPPS-to-APC cost ratio is a Report findings in finalizing the little from the estimate in the August 2,
comparison of the median cost of each development of the revised payment 2007 revised ASC payment system final
of those same procedures under the system for ASCs, without also rule and the CY 2008 OPPS/ASC
OPPS with the median cost of its considering comments from the public proposed rule, it reflects several
assigned APC group. These patterns about those findings, potentially changes, including: (1) Use of the final
demonstrated that the APC groups violated principles of fairness and OPPS relative payment weights for CY
reflect the relative costs of procedures transparency. The commenter 2008; (2) use of the final MPFS
performed by ASCs as they do for specifically stated that the report’s nonfacility PE RVU amounts for CY
procedures performed in HOPDs and, findings are flawed and that the OPPS 2008; (3) use of updated utilization data
therefore, that the APC groups could be is not a relative cost proxy for ASCs’ from CY 2006; and (4) application of an
used as the basis for an ASC payment costs for gastrointestinal (GI) adjustment to reflect differences in the
system. The GAO determined, in fact, procedures. geographic wage adjustment policy
that there was less variation in the ASC Response: As we discussed in our between the current and revised systems
setting between individual procedures’ response to comments on this topic in (discussed in further detail below). As
costs and the costs of their assigned the August 2, 2007 revised ASC in the proposed rule, in this final rule
APC groups than there is in the HOPD payment system final rule (72 FR with comment period, we use the final
setting. It concluded that, as a group, the 42475), in accordance with section methodology described in the August 2,
costs of procedures performed in ASCs 1833(i)(2)(D)(i) of the Act, we did take 2007 revised ASC payment system final
have a relatively consistent relationship into account the recommendations rule (72 FR 42522) to calculate the final
with the costs of the APC groups to made in the GAO Report in developing CY 2008 ASC conversion factor and the
which they are assigned under the the final policies for the revised ASC final ASC relative payment weights and
OPPS. The GAO’s analysis also found payment system. We appreciate the rates.
that procedures in the ASC setting had public’s interest in providing us with
substantially lower costs than those 2. Budget Neutrality Requirement
detailed input regarding the revised
same procedures in the HOPD. While Section 626(b) of Pub. L. 108–173
ASC payment system from a variety of
ASC costs for individual procedures amended section 1833(i)(2) of the Act by
perspectives. We noted that the GAO’s
varied, in general, the median costs for adding subparagraph (D) to require that
recommendations were in complete
procedures were lower in ASCs, relative in the year the revised ASC payment
accord with our proposal for the revised
to the median costs of their APC groups, system is implemented:
ASC payment system (71 FR 49635), ‘‘[S]uch system shall be designed to
than the median costs for the same
and we provided a 90-day comment result in the same aggregate amount of
procedures in HOPDs. The median cost
period on our proposal for CY 2008. We expenditures for such services as would
ratio among all ASC procedures was
believe that the comment period for the be made if this subparagraph did not
0.39 (0.84 when weighted by Medicare
volume based on CY 2004 claims), August 23, 2006 proposed rule provided apply, as estimated by the Secretary
whereas the median cost ratio among all the public with ample opportunity to * * *.’’
OPPS procedures was 1.04. comment on the policies that ultimately As discussed in the August 2, 2007
The GAO found many similarities in were recommended by the GAO. revised ASC payment system final rule,
the additional items and services L. Calculation of the ASC Conversion the ASC conversion factor is calculated
provided by ASCs and HOPDs for the Factor and ASC Payment Rates so that estimated total Medicare
top 20 ASC procedures. However, of payments under the revised ASC
these additional items and services, few 1. Overview payment system would be budget
resulted in additional payment in one As discussed in section XVI.C. of this neutral to estimated total Medicare
setting but not the other. HOPDs were final rule with comment period, we payments under the current ASC
paid for some of the related services finalized our policy to base ASC relative payment system as required by the
statute. That is, application of the ASC a. Estimated CY 2008 Medicare Program payment rates are based on the CY 2007
conversion factor is designed to result in Payments (Excluding Beneficiary ASC payment rates, which were listed
aggregate expenditures under the Coinsurance) Under the Existing ASC in Addendum AA to the CY 2007 OPPS/
revised ASC payment system in CY Payment System ASC final rule with comment period (71
2008 equal to aggregate expenditures Step 1: Migration from HOPDs to FR 68243 through 68283) and take into
that would have occurred in CY 2008 in ASCs is valued using CY 2008 OPPS account the OPPS cap on payment for
the absence of the revised system, taking payment rates. ASC services as required by section
into consideration the cap on payments (a) We multiply the estimated CY 5103 of Pub. L. 109–171 and reflect the
in CY 2007 as required under section 2008 HOPD utilization for each new zero percent CY 2008 update for ASC
5103 of Pub. L. 109–171. ASC procedure by 0.125, consistent services mandated by section
with our assumption that 25 percent of 1833(i)(2)(C) of the Act. In estimating
We note that we consider the term ASC utilization for CY 2008, we take
‘‘expenditures’’ in the context of the the HOPD utilization for new ASC
procedures will migrate to the ASC over into account the impact of the multiple
budget neutrality requirement under procedure discount (as discussed in
section 626(b) of Pub. L. 108–173 to the first 2 years of the revised ASC
payment system, only half of which section V.C.3. of the August 2, 2007
mean expenditures from the Medicare revised ASC payment system final rule).
would occur in CY 2008. In estimating
Part B Trust Fund. We do not consider (b) We estimate the amount the
HOPD utilization for CY 2008, we take
expenditures to include beneficiary into account the impact of the multiple Medicare program would pay in CY
coinsurance and copayments. procedure discount (as discussed in 2008 for implantable prosthetic devices
more detail in section V.C.3. the August and implantable DME for which ASCs
3. Calculation of the ASC Payment Rates
2, 2007 revised ASC payment system currently receive separate payment
for CY 2008 under the DMEPOS fee schedule.
final rule).
The following is a step-by-step (b) For each new ASC procedure, we (c) We sum the results of Steps 3(a)
illustration of the final budget neutrality multiply the results of Step 1(a) by the and 3(b) to estimate the aggregate
adjustment calculation as finalized in CY 2008 OPPS payment rate for the amount of expenditures that would be
the August 2, 2007 revised ASC procedure, and then subtract beneficiary made in CY 2008 for current covered
payment system final rule and as coinsurance for the procedure. surgical procedures under the existing
(c) We sum the results of Step 1(b) ASC payment system.
applied to updated data available for
across all new ASC procedures. Step 4: Sum the results of Steps 1–3.
this final rule with comment period.
Step 2: Migration of procedures from b. Estimated Medicare Program
The final methodology for physicians’ offices to ASCs is valued Payments (Excluding Beneficiary
establishing budget neutrality under the using CY 2008 physician in-office Coinsurance) Under the Revised ASC
revised ASC payment system takes into payment rates. ‘‘Physician in-office Payment System
account a 4-year transition to full payment rate’’ is equal to the MPFS Step 5: HOPD migration is valued
implementation of the revised payment nonfacility PE RVUs multiplied by the using CY 2008 OPPS payment rates.
rates and the effects of several CY 2008 MPFS conversion factor. This step is the same as Step 1, above.
assumptions regarding migration of (a) We multiply the estimated Step 6: We identify new ASC
services across ASCs, HOPDs, and physician office utilization for CY 2008 procedures that are office-based (as
physicians’ offices. Payments during the for each new ASC procedure by 0.0375, discussed in section III.C. of the August
4-year transition to the fully consistent with our assumption that 15 2, 2007 revised ASC payment system
implemented revised ASC payment percent of the physician’s office final rule).
rates will be based on a blend of the CY utilization for new ASC procedures will Step 7: Migration of new ASC office-
2007 ASC payment rates and the revised migrate to the ASC over the full 4-year based procedures from physicians’
ASC payment rates at 75/25 in CY 2008, transition period. offices to ASCs is valued based on CY
50/50 in CY 2009, and 25/75 in CY (b) For each new ASC procedure, we 2008 OPPS payment rates capped at the
2010, with payment at 100 percent of multiply the results of Step 2(a) by the CY 2008 physician in-office payment
the revised ASC payment rates in 2011. CY 2008 physician in-office payment rates, if appropriate.
The methodology assumes no net cost or rate for the procedure, and then subtract (a) For each new ASC procedure
savings to Medicare from the migration beneficiary coinsurance for the determined to be office-based, we
procedure. multiply the results of Step 2(a) above
of existing ASC services among ASCs,
(c) We sum the results of Step 2(b) by the lesser of—
HOPDs, and physicians’ offices. It
across all new ASC procedures. (1) The CY 2008 OPPS rate for the
includes assumptions that 15 percent of
Step 3: CY 2007 ASC services are procedure; or
physicians’ office utilization for new (2) The CY 2008 physician in-office
valued using the estimated CY 2008
ASC procedures, specifically those first ASC payment rates under the current payment rate for the procedure, and
added for ASC payment beginning in ASC system. then subtract beneficiary coinsurance
CY 2008, will migrate to ASCs over a 4- To estimate the aggregate for the procedure.
year period (3.75 percent each year) and expenditures that would be made in CY (b) The results of Step 7(a) are
that 25 percent of the new procedures’ 2008 under the existing ASC payment summed across all new ASC procedures
HOPD utilization will migrate over the system: considered to be office based.
first 2 years under the revised payment (a) We multiply the estimated CY Step 8: Migration of new ASC
system (12.5 percent each year) and 2008 ASC utilization for each HCPCS procedures not determined to be office-
accounts for the Medicare costs and code on the CY 2007 ASC list by the based from physicians’ offices to ASCs
savings associated with that movement. estimated CY 2008 ASC payment rate is valued using the CY 2008 OPPS rates.
A detailed explanation of the model for the HCPCS code under the existing (a) For each new ASC procedure not
may be found in section V.C. of the ASC payment system, and then subtract considered to be office-based, we
August 2, 2007 revised ASC payment beneficiary coinsurance for the multiply the results of Step 2(a) above
system final rule (72 FR 42521). procedure. The estimated CY 2008 ASC by the CY 2008 OPPS rate for the
procedure, and then subtract beneficiary 2007 ASC list of covered surgical same dataset, we also estimated total CY
coinsurance for the procedure. procedures. 2008 payment using revised ASC
(b) The results of Step 8(a) are The application of the above payment rates, a labor-related portion of
summed across all new ASC procedures methodology to the data available for 50 percent, and the pre-reclassification
not considered to be office-based. this final rule with comment period wage index values based on CBSAs.
Step 9: Migration of new ASC results in a budget neutrality adjustment Comparing the two totals, we calculated
procedures from physicians’’ offices to of 0.65. This number does not differ an adjustment of 1.00464, suggesting
ASCs is valued using the CY 2008 MPFS from the estimated budget neutrality that the revised wage index values and
physician out-of-office payment rate. adjustment of 0.65 for the CY 2008 labor-related portion would modestly
‘‘Physician out of-office payment rate’’ OPPS/ASC proposed rule for the revised reduce payments under the revised
is equal to the facility PE RVUs ASC payment system that was based on wage policy compared to the current
multiplied by the CY 2008 MFPS partial year CY 2006 utilization and policy. We built this adjustment factor
conversion factor. proposed CY 2008 OPPS and MPFS into our budget neutrality model to
(a) For each new ASC procedure, we payment rates (72 FR 42797). calculate the final budget neutrality
multiply the results of Step 2(a) from We built an estimate of differences in adjustment for the revised ASC payment
above by the CY 2008 physician out-of- total payment created by differences in system. Incorporating an adjustment for
office payment rate for the procedure, the geographic adjustment policy geographic wage differences did not
and then subtract beneficiary between current and revised systems change the final budget neutrality
coinsurance for the procedure. into the above model. Medicare adjustment.
currently accounts for geographic wage The final budget neutrality
(b) The results of Step 9(a) are
variations when calculating individual adjustment of 0.65 for the CY 2008
summed across all new ASC
ASC payments under the existing revised ASC payment system reflects
procedures.
payment system by applying the updated data, including complete CY
Step 10: Current ASC services are relevant IPPS wage index values and 2006 utilization and final CY 2008
valued using the CY 2008 OPPS localities that were established under OPPS and MPFS payment rates, as well
payment rates. the IPPS prior to the implementation of as the addition of an adjustment for the
To estimate the aggregate amount of Core Based Statistical Areas (CBSAs) final geographic wage adjustment policy
expenditures that would be made in CY issued by the Office of Management and of the revised ASC payment system.
2008, we use CY 2008 OPPS payment Budget in June 2003 to a labor-related
amounts instead of estimated CY 2008 portion of 34.45 percent of the ASC d. Calculation of the CY 2008 ASC
ASC payment amounts under the payment amount. As discussed in the Payment Rates
current system, and we multiply the August 2, 2007 revised ASC payment After developing the final CY 2008
estimated CY 2008 ASC volume for each system final rule (72 FR 42518), the budget neutrality adjustment of 0.65
HCPCS code on the CY 2007 ASC list revised payment system will account for according to the policies established in
of covered surgical procedures by the geographic wage variations when the August 2, 2007 revised ASC
CY 2008 OPPS payment rate for the calculating individual ASC payments by payment system final rule, to determine
HCPCS code, and then subtract applying the pre-reclassification wage the final CY 2008 ASC conversion
beneficiary coinsurance for the index to a labor-related portion of 50 factor, we multiplied the final CY 2008
procedure. We sum the results over all percent of the ASC payment amount. OPPS conversion factor by the ASC
services on that ASC list. In the CY 2008 OPPS/ASC proposed budget neutrality adjustment. The final
Step 11: The results of Steps 5 and 7– rule, we noted that we did not have a CY 2008 OPPS conversion factor is
10 are summed. provider-level dataset of ASC utilization $63.694, and multiplying that by the
c. Calculation of the CY 2008 Budget that accurately identified unique ASCs 0.65 budget neutrality adjustment yields
Neutrality Adjustment and their geographic information and our final CY 2008 ASC conversion factor
that this prevented us from calculating of $41.401. To determine the fully
Step 12: The result of Step 4 is a budget-neutral wage adjustment. In implemented ASC payment rates for
divided by the result of Step 11. our August 2, 2007 revised ASC this final rule with comment period,
Step 13: The application of the cap at payment system final rule, we estimated including beneficiary coinsurance,
the CY 2008 physician in-office that the change in the wage policy according to the final payment
payment rates that occurs in Step 7 is would not significantly change methodology that applies to most
dependent on the ASC conversion aggregate ASC payment. We have since covered surgical procedures and certain
factor. The ASC budget neutrality constructed this provider-level database covered ancillary services under the
adjustment resulting from Step 12 is using several sources to verify the revised ASC payment system, we
calibrated to take into account the validity of geographic information on multiplied the ASC conversion factor by
interactive nature of the ASC conversion the file. We have also crosswalked the ASC relative payment weight (which
factor and the physician’s office deleted HCPCS codes and their equals the OPPS payment weight in CY
payment cap. The ASC budget associated utilization to the CY 2008 2008) for each procedure or service. As
neutrality calculation is also calibrated HCPCS codes. Items previously paid further discussed in section XVI.C. of
to take into account the fact that the under the ASC system, for which this final rule with comment period, the
additional physician out-of-office payment was not adjusted for ASC relative payment weights for
payment rates under the revised ASC differences in labor costs (for example, certain office-based surgical procedures
payment system calculated in Step 9 NTIOLs), were not included in this and covered ancillary radiology services
must be fully offset by the budget analysis. Using this provider-level are set so that the national unadjusted
neutrality adjustment to ASC services dataset of CY 2006 ASC claims, we ASC payment rate does not exceed the
under the revised payment system. estimated total CY 2008 payment using MPFS unadjusted nonfacility PE RVU
Furthermore, the budget neutrality revised ASC payment rates, the existing amount. In addition, the ASC relative
calculation is calibrated to take into payment system labor-related portion of payment weights for device-intensive
account the CY 2008 transitional 34.45 percent, and the existing payment covered surgical procedures are set
payment rates for procedures on the CY system wage index values. Using the according to a modified payment
methodology to ensure the same device payment for separately payable covered recommended that CMS use the hospital
payment under the revised ASC ancillary services that have a market basket as the update for inflation
payment system as under the OPPS. The predetermined national payment under the revised ASC payment system
CY 2008 ASC payment rates of covered amount (that is, their national payment because that update would more
ancillary drugs and biologicals and amounts are not based on OPPS relative appropriately reflect inflation in the
brachytherapy sources are set equal to payment weights) such as drugs and costs of providing surgical services. In
their final CY 2008 OPPS payment rates, biologicals that are separately paid addition, the commenters believed that
so the ASC conversion factor is not under the OPPS. Any service with a the same update under the two payment
applicable to these items. We then predetermined national payment systems would allow for a consistent
calculated the CY 2008 payment rate for amount would be included in the relationship between their payment for
procedures on the CY 2007 ASC list of budget neutrality comparison, but the same surgical procedures.
covered surgical procedures using a scaling of the relative payment weights Response: While we appreciate the
blend of 75 percent of the final CY 2007 would not apply to those services. The commenters’ concerns, the update
ASC payment rate and 25 percent of the ASC payment weights for those services policy for the revised ASC payment
final CY 2008 ASC payment rate without predetermined national system was not open to comment in the
developed according to the payment amounts (that is, their national CY 2008 OPPS/ASC proposed rule
methodology of the revised ASC payment amounts would be based on because we finalized that policy in the
payment system, applying the special OPPS relative payment weights if a August 2, 2007 revised ASC payment
transition treatment to device-intensive payment limitation did not apply) system final rule after we received and
procedures as discussed in section would be scaled to eliminate any addressed public comments (72 FR
XVI.C of this final rule with comment difference in the total payment weight 42519). Beginning in CY 2010, when the
period. We refer readers to Addenda AA between the current year and the update period of the zero update for ASCs that
and BB to this final rule with comment year. the statute requires ends, we will apply
period for the final CY 2008 ASC b. Updating the ASC Conversion Factor the CPI–U to update the ASC conversion
payment weights and payment rates for factor for inflation under the revised
covered surgical procedures and Section 1833(i)(2)(C) of the Act
ASC payment system.
covered ancillary services that are requires that, if the Secretary has not
expected to be paid separately under the updated the ASC payment amounts in a M. Annual Updates
calendar year after CY 2009, the
CY 2008 revised ASC payment system. Under the revised ASC payment
payment amounts shall be increased by
4. Calculation of the ASC Payment Rates the percentage increase in the CPI–U as system, we update on an annual
for CY 2009 and Future Years estimated by the Secretary for the 12- calendar year basis the ASC conversion
month period ending with the midpoint factor, the relative payment weights and
a. Updating the ASC Relative Payment APC assignments, the ASC payment
Weights of the year involved. Therefore, as
discussed in the August 2, 2007 revised rates, and the list of procedures for
In the August 2, 2007 revised ASC ASC payment system final rule, we which Medicare would not make ASC
payment system final rule, we finalized adopted a final policy to update the payment. To the extent possible under
our policy to update the ASC relative ASC conversion factor using the CPI–U the rules and policies of the revised
payment weights in the revised ASC in order to adjust ASC payment rates for ASC payment system, we maintain
payment system each year using the inflation (72 FR 42518). We will consistency between the OPPS and the
national OPPS relative payment weights implement the annual updates through ASC payment system in the way we
(and MPFS nonfacility PE RVU an adjustment to the conversion factor treat new and revised HCPCS and CPT
amounts, as applicable) for that same under the revised ASC payment system, codes for payment under the ASC
calendar year and to uniformly scale the beginning in CY 2010 when the payment system. We also will invite
ASC relative payment weights for each statutory requirement for a zero update comment as part of the annual update
update year to make them budget no longer applies. cycle to determine if there are
neutral (72 FR 42531). For example, We received a number of public procedures that we exclude from
holding ASC utilization and the mix of comments regarding the update of the payment in the ASC setting that merit
services constant, for CY 2009, we will ASC conversion factor using the CPI–U. reconsideration as a result of changes in
compare the total weight using the CY A summary of the public comments and clinical practice or innovations in
2008 ASC relative payment weights our responses follow. technology.
under the 75/25 blend (of the CY 2007 Comment: Several commenters were We update the ASC list of covered
payment rate and the revised payment concerned that updating the conversion surgical procedures and payment
rate) with the total weight using CY factor for the revised ASC payment system as part of the annual proposed
2009 relative payment weights under system using the CPI–U would cause and final rulemaking cycle updating the
the 50/50 blend (of the CY 2007 divergence in the relationship between hospital OPPS. We believe that
payment rate and the revised payment payment to HOPDs (the OPPS is including the ASC update as part of the
rate), taking into account the changes in updated annually as the statute requires, OPPS rulemaking cycle will ensure that
the OPPS relative payment weights using the hospital market basket updates of the ASC payment rates and
between CY 2008 and CY 2009. We will percentage increase, as described in the list of covered surgical procedures
use the ratio of CY 2008 to CY 2009 total section II.C. of this final rule with for which Medicare makes payment to
weight to scale the ASC relative comment period) and ASCs over time ASCs will be issued in a regular,
payment weights for CY 2009. Scaling of that would not be based on growing predictable, and timely manner.
ASC relative payment weights would differences between the costs of Moreover, the ASC payment system will
apply to covered surgical procedures providing procedures in those two be updated concurrent with changes in
and covered ancillary services whose different settings. The commenters the APC groups and the OPPS inpatient
payment rates are related to OPPS believed that hospitals and ASCs list, making it easier to predict changes
relative payment weights. Scaling experienced similar inflationary in payment for particular services from
would not apply in the case of ASC pressures. Therefore, they year to year.
In addition, we evaluate each year all The commenters stated that during CYs among affected parties and, to the extent
new HCPCS codes that describe surgical 2008 and 2009 ASCs would gain feasible and practicable, include
procedures to make preliminary experience with the revised payment measures set forth by one or more
determinations regarding whether or not system and reporting quality measures national consensus building entities.
they should be payable in the ASC and by CY 2010 could be ready to adopt The Secretary is not prevented from
setting and, if so, whether they are the UB–04 for submitting their Medicare selecting measures that are the same as
office-based procedures. In the absence claims. (or a subset of) the measures for which
of claims data that would indicate Response: This same comment was data are required to be submitted under
where procedures described by new addressed in the August 2, 2007 revised section 1886(b)(3)(B)(viii) of the Act for
codes are being performed and identify ASC payment system final rule (72 FR the IPPS Reporting Hospital Quality
the facility resources required to 42534). As we discussed in that final Data for Annual Payment Update
perform them, we proposed to use other rule, we will explore the feasibility of (RHQDAPU) program. New section
available information, including our adopting the ASC billing change 1833(t)(17)(D) of the Act gives the
clinical advisors’ judgment, predecessor recommended by commenters. We Secretary the authority to replace
CPT and Level II HCPCS codes, reiterate here that a policy change that measures or indicators as appropriate,
information submitted by requires ASCs to use a different billing such as when all hospitals are
representatives of specialty societies format would have to allow adequate effectively in compliance or when the
and professional associations, and time for CMS and ASCs to make the measures or indicators have been
information submitted by commenters necessary systems changes and for CMS subsequently shown not to represent the
during the public comment period to provide training for contractors and best clinical practice. New section
following publication of the final rule ASCs prior to implementing the new 1833(t)(17)(E) of the Act requires the
with comment period in the Federal format. We plan to pursue the feasibility Secretary to establish procedures for
Register. We publish in the annual of this option and to coordinate any making data submitted available to the
OPPS/ASC payment update final rule possible change to ASC billing public. Such procedures must give
those interim determinations for the requirements with CMS’’ overall hospitals the opportunity to review data
new codes to be active January 1 of the contracting transition. We welcome before these data are released.
update year. The ASC payment system additional information from the public In the CY 2007 OPPS/ASC final rule
treatment of those procedures will be regarding recommendations for ASC with comment period (71 FR 68189), we
open to comment on that final rule, and billing modifications or improvements indicated our intent to establish, in CY
we will respond to comments about our that we should consider once the
2009, an OPPS RHQDAPU program
interim determinations in the OPPS/ revised payment system is
modeled after the current IPPS
ASC final rule for the following year. implemented.
RHQDAPU program. We stated our
After our review of public comments XVII. Reporting Quality Data for belief that the quality of hospital
and in the absence of physicians’ claims Annual Payment Rate Updates outpatient services would be most
data, if our determination regarding a appropriately and fairly rewarded
new code was that it should be included A. Background
through the reporting of quality
on the ASC list of covered surgical 1. Reporting Hospital Outpatient measures developed specifically for
procedures as an office based procedure Quality Data for Annual Payment application in the hospital outpatient
subject to the payment limitation, this Update setting. We agreed with the commenters
determination would remain
Section 109(a) of the MIEA–TRHCA that assessment of hospital outpatient
preliminary until we are able to
(Pub. L. 109 432) amended section performance would ultimately be most
consider more recent volume and
1833(t) of the Act by adding a new appropriately based on reporting of
utilization data for each individual
subsection (17) that affects the payment hospital outpatient measures developed
procedure code or, if appropriate, the
rate update applicable to OPPS specifically for this purpose. We stated
clinical characteristics, utilization, and
payments for services furnished by our intent to condition the full OPPS
volume of related codes. Using that
information, if we confirm our hospitals in outpatient settings on or payment rate update beginning in CY
determination that the new code was after January 1, 2009. New section 2009 based upon hospital reporting of
appropriately assigned to an office- 1833(t)(17)(A) of the Act, which applies quality data beginning in CY 2008,
based payment indicator, it will then be to hospitals as defined under section using effective measures of the quality
permanently assigned to the list of 1886(d)(1)(B) of the Act, requires that of hospital outpatient care that have
office-based procedures subject to the hospitals that fail to report data required been carefully developed and evaluated,
payment limitation. for the quality measures selected by the and endorsed as appropriate, with
Accordingly, this annual rulemaking Secretary in the form and manner significant input from stakeholders.
and publication of revised payment required by the Secretary under section The amendments to the Act made by
methodologies and payment rates are 1833(t)(17)(B) of the Act will incur a section 109(a) of the MIEA–TRHCA are
reflected in § 416.173 of the regulations. reduction in their annual payment consistent with our intent and direction
Comment: A few commenters urged update factor by 2.0 percentage points. outlined in the CY 2007 OPPS/ASC
us to complete the alignment of the New section 1833(t)(17)(B) of the Act final rule with comment period. Under
OPPS and ASC by migrating from the requires that hospitals submit quality these amendments, we are now
CMS–1500 form to the UB–04 billing data in a form and manner, and at a time statutorily required to establish a
form for ASC claims submission, the that the Secretary specifies. New program under which hospitals will
same claim form that is used by HOPDs sections 1833(t)(17)(C)(i) and (ii) of the report data on the quality of hospital
for Medicare payment and by ASCs for Act require the Secretary to develop outpatient care using standardized
some other payers. They recommended measures appropriate for the measures of care in order to receive the
that CMS initiate a transition process for measurement of the quality of care full annual update to the OPPS payment
providers and the agency’s (including medication errors) furnished rate, effective for payments beginning in
administrative contractors to implement by hospitals in outpatient settings and CY 2009. We will refer to the program
the UB–04 form for ASCs in CY 2010. that these measures reflect consensus established under these amendments as
the Hospital Outpatient Quality Data may otherwise provide,’’ the hospital period, but only if the measures were
Reporting Program (HOP QDRP). outpatient quality data provisions of adopted by the National Quality Forum
In reviewing the measures currently section 1833(t)(17)(B) through (E) of the (NQF). The NQF is a voluntary
available for care in the hospital Act, summarized above, shall apply to consensus standard-setting organization
outpatient settings, we continue to ASCs. established to standardize health care
believe that it would be most We refer readers to section XVII.I. of quality measurement and reporting
appropriate and desirable to use this final rule with comment period for through its consensus development
measures that have been specifically a discussion of our decision to process. Under section
developed for application in the introduce implementation of ASC 1886(b)(3)(B)(viii)(V) of the Act, we are
hospital outpatient setting. Although we quality data reporting in a later required, to the extent feasible and
still believe that hospitals generally rulemaking. practicable, to use measures set forth by
function as integrated systems in entities such as NQF when adding new
3. Reporting Hospital Inpatient Quality
inpatient and outpatient settings, we do measures.
Data for Annual Payment Update
not believe it is appropriate to use Section XVII.J. of this final rule with
participation in the IPPS RHQDAPU Section 5001(a) of the Deficit comment period contains a discussion
program for the purpose of Reduction Act of 2005, Pub. L. 109–171, of our decision to add two additional
implementing section 1833(t)(17) of the set out the current requirements for the NQF-endorsed quality measures to the
Act in the hospital outpatient setting. IPPS RHQDAPU program. We IPPS RHQDAPU program, with
Nonetheless, section 1833(t)(17)(C)(ii) of established the RHQDAPU program in reporting to begin with the first calendar
the Act indicates that the Secretary is order to implement section 501(b) of quarter of 2008 discharges, for the FY
not prevented ‘‘from selecting measures Pub. L. 108–173. The program builds on 2009 annual payment update.
that are the same as (or a subset of) the our ongoing voluntary Hospital Quality
Initiative. The Initiative is intended to B. Hospital Outpatient Measures
measures for which data are required to
be submitted’’ under the IPPS empower consumers with quality of For the initial implementation of the
RHQDAPU program. In the CY 2008 care information so that they can make HOP QDRP, we proposed 10 quality
OPPS/ASC proposed rule (72 FR 42799), more informed decisions about their measures that we believed to be both
we proposed to establish a separate health care while also encouraging applicable to care provided in hospital
reporting program and proposed quality hospitals and clinicians to improve the outpatient settings and likely to be
measures that are appropriate for quality of their care. Under the current sufficiently developed to permit data
measuring hospital outpatient quality of statutory provisions found in section collection consistent with the
care, that reflect consensus among 1886(b)(3)(B)(viii) of the Act, the IPPS timeframes defined by statute. These
affected parties, and are set forth by one annual payment update for ‘‘subsection measures address care provided to a
or more of the national consensus (d)’’ hospitals that do not submit large number of adult patients in
building entities. inpatient quality data in a form, and hospital outpatient settings, across a
manner, and at a time specified by the diverse set of conditions, and were
2. Reporting ASC Quality Data for Secretary is reduced by 2.0 percentage selected for the initial set of HOP QDRP
Annual Payment Increase points. measures based on their relevance as a
Section 109(b) of the MIEA–TRHCA, We used an initial ‘‘starter set’’ of 10 set to all hospitals.
Pub. L. 109–432 amended section quality measures for the IPPS The first five of these measures
1833(i) of the Act by adding new RHQDAPU program under section capture the quality of outpatient care in
sections 1833(i)(2)(D)(iv) and 1833(i)(7) 501(b) of Pub. L. 108–173 and have hospital emergency departments (EDs),
to the Act. These amendments may expanded the measures as required specifically for those adult patients with
affect ASC payments for services under section 1886(b)(3)(B)(viii)((IV) acute myocardial infarction (AMI) who
furnished in ASC settings on or after and (V) of the Act, as added by section are treated and then transferred to
January 1, 2009. New section 5001(a) of Pub. L. 109–171. We initially another facility for further care. These
1833(i)(2)(D)(iv) of the Act authorizes added measures as a part of the annual patients receive many of the same
the Secretary to implement the revised IPPS rulemaking process. In response to interventions as patients who are
payment system for services furnished public comments asking that we issue evaluated and admitted at the same
in ASCs (established under section IPPS RHQDAPU program quality facility, whose care is currently assessed
1833(i)(2)(D) of the Act), ‘‘so as to measures and other requirements as far in measures that are endorsed by the
provide for a reduction in any annual in advance as possible, we also have National Quality Forum (NQF). NQF is
payment increase for failure to report on used the OPPS annual payment update a voluntary consensus standard setting
quality measures.’’ rulemaking process to adopt IPPS organization established to standardize
New section 1833(i)(7)(A) of the Act RHQDAPU program measures and health care quality measurement and
authorizes the Secretary to provide that requirements. In the CY 2007 OPPS reporting through its consensus
any ASC that fails to report data final rule (71 FR 68201), we added six development process. Moreover, these
required for the quality measures additional IPPS RHQDAPU program are also inpatient AMI measures that
selected by the Secretary in the form quality measures for FY 2008 update. have long been reported under the IPPS
and manner required by the Secretary Most recently, in the FY 2008 IPPS RHQDAPU program, and are published
under new section 1833(i)(7) of the Act proposed rule (72 FR 24805), we on the Hospital Compare Web site at:
will incur a reduction in any annual proposed adding 5 additional quality www.HospitalCompare.hhs.gov.
payment increase of 2.0 percentage measures in for the FY 2009 update. Transferred AMI patients historically
points. New section 1833(i)(7)(A) of the However, in the FY 2008 IPPS final rule have not been included with the
Act also specifies that a reduction for with comment period (72 FR 47351), we directly-admitted patients for purposes
one year cannot be taken into account only adopted one of the proposed of the calculation of the inpatient AMI
in computing the ASC update for a additional five measures. We indicated measures because of differences in data
subsequent year. that we intended to adopt three collection and reporting for the two
New section 1833(i)(7)(B) of the Act additional measures in this CY 2008 groups. With the input of provider and
provides that, ‘‘except as the Secretary OPPS/ASC final rule with comment practitioner experts in the field, we
developed specifications for related As required by statute, consensus was Comment: Several commenters
emergency department transfer reached by affected parties, as the supported collecting quality measure
measures that, while consistent with the measures were identified as appropriate data for outpatient hospital services.
measure specifications for the related for reporting on hospital outpatient care Several commenters agreed with not
hospital inpatient measures, reflect the in collaboration with professionals and using any inpatient quality measures for
unique operational and clinical aspects providers with experience in hospital the outpatient hospital setting. One
of care in hospital outpatient settings. outpatient settings as well as with the commenter stated that the proposed
The processes of care encompassed by Hospital Quality Alliance (HQA), a indicators are things that providers
these measures address care on arrival, hospital-industry led, public-private should be achieving for patients, and if
the promptness of interventions, and collaboration established to promote done correctly, this endeavor will help
discharge care for patients presenting to public reporting on hospital quality of to drive down the overall expenditures
a hospital with an AMI. care. The specifications for outpatient in health care.
In addition to the five ED–AMI measures were then completed for Response: We thank the commenters
measures, CMS identified five quality hospital data collection using the same for their support.
measures that were directly related to format that is used for inpatient Comment: Several commenters
conditions treated or interventions measures. CMS finalized the supported the emergency room
provided in hospital outpatient settings specifications for these 10 measures and measures. However, the commenters
and that we believed were also released them publicly on August 28, also expressed concern that these
appropriate and fully developed for use 2007. In addition these 10 measures measures would most affect smaller
in the HOP QDRP. These measures were have gone through the NQF steering facilities that may not have the
specified in a form that assessed the committee process. resources required for such data
care provided by physicians, however, Nine of the ten proposed measures are collection. One commenter stated that
these measures are also relevant to process measures, while one measure— its facility does not transfer such
assessing care at the facility level. CMS Hemoglobin A1c >9.0 percent—is an patients and would not have any data
was engaged in reviewing, and where intermediate outcome measure that has for this set of measures.
not been risk adjusted. While poor Response: We appreciate the support
appropriate, revising these measure
quality of care can lead to poor diabetes expressed by commenters for the five
specifications so that they explicitly
control and elevated A1c levels, CMS ED–AMI measures. We agree that these
assess care provided in hospital
recognizes that patient noncompliance measures will mostly apply to smaller
outpatient settings. he five measures
with prescribed treatment regimen can facilities that do not admit such
included one measure related to
also lead to poor diabetes control and patients, transferring them instead. In
treatment of heart failure, two measures
elevated A1c levels. Patients with fact, these measures were designed
related to surgical care improvement, specifically for smaller facilities that
one measure addressing treatment of comorbidities or diabetes complications
may also have a harder time controlling were not included under quality
community-acquired pneumonia, and measure reporting for inpatient
one measure related to diabetes care. their diabetes and thus have higher A1c
levels. Therefore, we specifically measures. We recognize that some
Therefore, for hospitals to receive the facilities, usually larger ones, do not
requested comments on this
full OPPS payment update for services transfer such patients; information on
intermediate outcome measure and
furnished in CY 2009, in the CY 2008 these patients for these facilities is
whether it may lead to unintended
OPPS/ASC proposed rule (72 FR 42800) captured under quality measure
consequences.
we proposed to require that hospital CMS believes that an A1c level higher reporting for inpatient measures.
outpatient settings submit data on the than 9.0 percent represents a level of Including the five ED–AMI measures in
following 10 measures, effective with control that is sufficiently poor enough the required measure set for HOP QDRP
hospital outpatient services furnished that it should not result in any will allow smaller facilities the
on or after January 1, 2008. unintended consequences. The opportunity to report quality measure
• ED–AMI–1—Aspirin at Arrival. scientific literature would suggest that data. We acknowledge that there are
• ED–AMI–2—Median Time to an A1c level of 8.0 percent or less might resource costs associated with collecting
Fibrinolysis. represent the best control that could be quality measure data, however, we also
• ED–AMI–3—Fibrinolytic Therapy expected for some patients: therefore, view it important that an opportunity to
Received Within 30 Minutes of Arrival. CMS believes that an A1c level of > 9.0 report such data be provided to smaller
• ED–AMI–4—Median Time to percent represents a level of control that facilities and that consumers have
Electrocardiogram (ECG). is poor enough that risk-adjustment is information available from this type of
• ED–AMI–5—Median Time to not warranted. Additionally, this A1c facility. There is no penalty for not
Transfer for Primary PCI. measure was endorsed by the National reporting quality measure data in the
• PQRI #5 Heart Failure: Quality Forum (NQF) in 2006. One of event that the provider does not have
Angiotensin-Converting Enzyme (ACE) the criteria for evaluation of measures relevant cases.
Inhibitor or Angiotensin Receptor within the NQF process is ‘‘scientific Comment: One commenter did not
Blocker (ARB) Therapy for Left acceptability,’’ which includes support the use of the ED–AMI–4–
Ventricular Systolic Dysfunction appropriate risk-adjustment. Some Median Time to Electrocardiogram as
(LVSD). measures are not endorsed by NQF if this measure has not been adopted by
• PQRI #20 Perioperative Care: risk-adjustment is determined to be NQF, nor is it collected for inpatients
Timing of Antibiotic Prophylaxis. appropriate and is found to be and, thus, is not ready for reporting.
• PQRI #21 Perioperative Care: inadequate. CMS believes that Response: As statutorily required,
Selection of Prophylactic Antibiotic. additional risk-adjustment is not affected parties reached consensus on
• PQRI #59 Empiric Antibiotic for necessary because the NQF endorsed the 10 proposed quality measures for
Community-Acquired Pneumonia. this measure. We invited public outpatient hospital services. In addition,
• PQRI #1 Hemoglobin A1c Poor comment on our rationale for choosing the ED–AMI–4 measure has been
Control in Type 1 or 2 Diabetes a diabetes outcome measure rather than submitted for NQF endorsement with
Mellitus. a process measure. the other ED–AMI measures; all of these
measures have gone through the NQF PQRI #1 and #5 could apply to perioperative care measures will be
steering committee process and have outpatients that present for services required.
been recommended for endorsement. unrelated to their conditions. Two Comment: Commenters supported
Comment: One commenter expressed commenters expressed concerns about some of the non-ED measures. One
concern that for the five ED–AMI patients that walk out from the ED and commenter stated that perioperative
measures, the specifications contain no requested that these patients be care and timing of antibiotics (PQRI
mention of observation patients. excluded from any ED measures. #20) are currently captured for
Response: Observation care is a well- Response: As discussed previously inpatients and would be suitable
defined set of specific, clinically and noted below, data collection on the reporting indicators for outpatient
appropriate services, which include PQRI #1 measure will not be required surgical cases if hospitals are provided
ongoing short-term treatment, for any CY 2009 HOP QDRP specific surgical procedures to be
assessment, and reassessment, before a determinations. We thank the included, are informed whether
decision can be made regarding whether commenters for raising the issue of interventional procedures would be
a patient will require further treatment patients that walk out from the ED and included, and are notified which
as a hospital inpatient. Observation will consider this issue in the prophylactic antibiotics would be
status is commonly assigned to patients formulation of future measure included. One commenter stated that
who present to the emergency room. specifications. We are also concerned the proposed pneumonia measure was
Thus, the five ED–AMI measures are about the comments received logical for measuring quality of care
specifically designed to capture care concerning the administrative burden related to antibiotic administration in
rendered to such patients; patients that for collection on PQRI #5-Heart failure the ED and for patients under
receive care but are not admitted as and PQRI #59-communicty acquired observation status.
inpatients, that is, have outpatient pneumonia. We agree with the Response: We thank the commenters
status. commenters that, at this point, those for their support of these quality
Comment: Many comments addressed measures and intend to provide
proposed quality measures may not be
the use of the Hemoglobin A1c measure. necessary specifications for data
sufficiently refined for use in the
Several commenters expressed opinions collection. At this time, there are no
outpatient setting. Therefore, we are not
ranging from concern with to strong requirements to sample cases for the
adopting PQRI #5 and PQRI #59 at this
opposition to the use of the Hemoglobin perioperative care measures by surgery
A1c measure for measuring outpatient point as quality measures for the HOP
type and thus there is no need to
hospital quality of care. While agreeing QDRP.
separate out specific surgical procedures
with the importance of hemoglobin A1c Comment: Several commenters for the purposes of selecting cases for
levels as a clinical measure for diabetes disagreed with the use of any or all of the perioperative measures.
care, some commenters viewed this as the five, non-ED-AMI measures as Comment: Several commenters
more reflective of physician care and measures of quality of care for hospital expressed concern about the
patient compliance. As the proposed outpatient services on the grounds that administrative and financial burden that
Hemoglobin A1c measure is an outcome these measures were more indicative of would be associated with collecting
measure that is not risk adjusted; the the care provided by other settings, outpatient hospital quality measure
need to use only process measures or especially physician practices. data, and indicated that the effort to be
risk adjust any outcome measures was Response: We acknowledge that the expended to collect such information
also stated. One commenter agreed with five non-ED AMI measures were would outweigh the benefit of this
the use of the proposed Hemoglobin initially developed for measurement of collection. Two commenters stated that
A1c measure and that this measure did quality of care provided by physician data should be collected to improve
not require risk adjustment, but stated practices, and are all part of CMS’’ clinical practice not just for payment
that this measure does need definition physician quality reporting initiative. purposes.
of the expected frequency of what the However, the two surgical infection Response: We recognize that there are
inclusion and exclusion criteria are. prevention measures would also apply administrative and financial costs
One commenter supported the to patients who have surgery in the associated with collecting quality
Hemoglobin A1c measure but suggested hospital outpatient department. The measure data. The reporting of quality
a revision to being <7 percent, diabetes measure and the heart failure measures for hospital outpatient
consistent with clinical guidelines. measure apply to hospital outpatient services builds on our previous efforts
Response: We agree with these department clinics that provide primary in the inpatient arena, having the same
comments regarding the Hemoglobin care services, and the pneumonia purpose. Reporting is intended to
A1c measure. As noted in the proposed measure applies to hospital outpatient encourage hospitals and clinicians to
rule, the Hemoglobin A1c measure is an clinic departments and patients who are improve their quality of care and to
intermediate outcome measure that has seen in an emergency department and empower consumers with quality of
not been risk adjusted. Recognizing the discharged to home from the ED. Thus, care information to make more informed
individual patient challenges with it is our view that all of these measures decisions about their health care. We
regard to this measure, as well as the could be fairly applied to hospital also note the requirement to report
need to otherwise modify the measure, outpatient services as these patients are hospital outpatient quality measure data
we will not include the Hemoglobin seen and services are rendered in this is statutory with the payment
A1c measure in the final HOP QDRP setting. However, in understanding of implication contingent upon the
measure set at this time. various concerns with some of these reporting of such information.
Comment: Several commenters stated measures, we have decided to not Comment: Several commenters stated
that, except for the ED patients, it was include collection of data for the that the infrastructure did not exist to
unclear what the patient populations of proposed heart failure, pneumonia, and support collecting outpatient hospital
interest are under the proposed diabetes measures as discussed in this data as it did for collecting inpatient
outpatient hospital measures. For section, for making HOP QDRP hospital data. The commenters stated
example, surgery patients could come decisions for the CY 2009 payment that it would be extremely difficult if
from several areas of the hospital and update determinations. Data for the two not impossible to meet the
implementation timeline due to the registered on the hospital records as an requirement for OPPS annual payment
complexities of building data collection outpatient and received services (rather updates. Section 1833(t)(17)(A)(i) of the
information systems. In particular, some than supplies alone) from the hospital.’’ Act, as added by section 109(a) of the
of the commenters pointed out Under this definition, such services MIEA–TRHCA (Pub. L. 109–432),
differences in storage of outpatient must be directly received from the requires a 2.0 percentage point
hospital services information and the hospital. Thus, the population of reduction to the OPPS conversion factor
possible need to connect information interest consists of services rendered to update for those ‘‘subsection (d)’’
systems and people from different parts Medicare beneficiaries reimbursed to hospitals that do not submit to the
of a hospital and the lack of existing hospitals under the OPPS or comparable Secretary data required to be submitted
vendors as important differences. services rendered under other payers. on measures selected in a form and
Response: We recognize that the data For Medicare beneficiaries, the claims manner, and at a time, specified by the
infrastructure necessary to support data source for this information would Secretary. Subsection (d) hospitals are
collecting outpatient hospital data be the UB–04, formally known as the defined in section 1886(d)(1)(B) of the
varies considerably among hospitals. To UB–92. The UB–04 is a uniform Act and do not include critical access
lessen the burden associated with this institutional provider bill suitable for hospitals. Additionally, outpatient
effort and recognizing the need for use in billing multiple third party hospital services at critical access
further refinement of some of the payers. All other information necessary hospitals are not reimbursed under the
proposed measures for the outpatient would come from the medical record. OPPS, so a reduction in the OPPS
setting, we have reduced the number of Comment: Several commenters asked update factor would not affect critical
required measures and delayed when the algorithms used for the access hospitals.
implementation as discussed later in measures would be available for review. Comment: Several commenters asked
this final rule with comment period. In particular, they asked if the whether the proposed payment
Also, to aid hospitals in collecting these algorithms would be available for reduction would apply to all services
data, we will be providing a data review at least 120 days prior to any reported in CY 2009.
collection tool in sufficient advance start date to allow for vendor Response: As stated in the statute, the
timing of required data submission. programming. payment reduction would affect the
Comment: Several commenters Response: The measure specifications
annual OPPS payment increase by 2.0
expressed concerns for training/support. were posted on August 28, 2007, far in
percentage points. Thus, all hospital
For example, the commenters asked if a advance of any proposed data reporting
outpatient services subject to this
Quest or Quest-like entity would be requirements. The following Web site
update would be affected.
provided and whether QIOs would be includes the 10 proposed Hospital
involved for the HOP QDRP. One Outpatient (HOP) Measures: http:// Comment: Several commenters urged
commenter urged that QIOs be involved www.cms.hhs.gov/ CMS to not proceed with
in providing support to hospitals for the QualityInitiativesGenInfo/ implementation of measures that have
HOP QDRP. 01_overview.asp. These measure not received NQF endorsement and to
Response: We recognize the need for specifications are final for April 2008 wait until HQA finalizes their list of
hospital support under the HOP QDRP. discharges forward. As discussed later measures; field testing of measures was
It is our intent that a Quest or Quest-like in this section, data collection will also recommended.
entity be provided to support this effort. begin with services rendered beginning Response: The statute requires that we
In addition, we are in the process of April 2008 rather than beginning develop measures appropriate for the
procuring a contractor to assist in January 2008. From our perspective, the measurement of the quality of care
supporting implementation of HOP specifications for the final HOP furnished by hospitals in outpatient
QDRP. Under the initial implementation measures finalized in this final rule settings and that these measures reflect
of the HOP QDRP, there will be no QIO with comment period are ready to use consensus among affected parties and,
involvement. for programming purposes. It is possible to the extent feasible and practicable,
Comment: Several commenters asked that we will issue a revised version of we include measures set forth by one or
questions related to the source of the measure specifications for services more national consensus building
required data, in particular, what claim after April 2008, but sufficient time for entities. The five ED–AMI measures
submission form would be the data programming and data submission will address care provided to outpatients
source, what is the definition of be allowed. that receive many of the same
outpatient hospital services, what is the Comment: One commenter asked interventions as inpatients who are
population or universe for sampling whether vendor tools would be required evaluated and admitted at the same
purposes, what is considered a hospital- to have reporting capabilities. facility, and whose care is currently
based outpatient clinic (for example if a Response: We do not supply external assessed in measures that are endorsed
hospital owns an outside clinic, are vendors with requirements; we provide by NQF. Also, these five ED–AMI
these cases included or are only the the measure specifications. We will measures are inpatient AMI measures
clinics within the hospital to be consider providing such functionality in that have long been reported under the
included). any reporting tool supplied by CMS. IPPS RHQDAPU program. As of the
Response: Under MIEA–TRCHA, Comment: Several commenters asked publication of this final rule with
Quality Measure Reporting for whether critical access hospitals would comment period, the two perioperative
Outpatient Hospital Services applies to be required to report quality measures measures, Perioperative Care: Timing of
‘‘subsection (d)’’ hospitals subject to the for hospital outpatient services. One Antibiotic Prophylaxis and
OPPS. The Medicare Benefit Policy commenter stated that critical access Perioperative Care: Selection of
Manual, Chapter 6, under Hospital hospitals should be required to report Prophylactic Antibiotic, have received
Services Covered Under Part B, provides data on the five ED–AMI measures NQF endorsement. As discussed in this
the following definition of ‘‘hospital proposed. final rule with comment period, data
outpatient’’: ‘‘A hospital outpatient is a Response: The statute specifically collection for the remaining three
person who has not been admitted by notes the entities subject to the proposed measures for heart failure,
the hospital as an inpatient but is reporting quality measure data pneumonia, and diabetes mellitus will
not be required for CY 2009 payment Comment: Several commenters diversity of services and clinical topics
decisions. expressed concerns about OPPS data provided to adult patients in hospital
We utilize field-testing to the extent it reliability due to coding disparities from outpatient settings. The measures
is feasible and practical. The five ED– the high volume of many closely related address some aspects of care provided
AMI transfer measures have been codes. to cancer patients, patients presenting
extensively tested for use in the Response: We understand the with diabetes, pneumonia, chest pains,
inpatient setting. We have removed the complexities of coding for outpatient syncope, or depression, and patients
transfer exclusion in order to services and have designed receiving services related to bones, eyes,
incorporate the ED–AMI measure into specifications with this in and problems associated with aging.
the outpatient hospital setting. We consideration. While data validation While some of the measures relate to
believe the five ED–AMI measures are will not be used in the CY 2009 HOP acute care provided in a hospital
optimal for use in the outpatient QDRP determinations, as discussed outpatient setting, others assess care
hospital setting and will help fulfill our below, future validation efforts can help that a hospital outpatient clinic might
MIEA–TRCHA requirements for to reduce coding disparities. provide on an ongoing basis. In the CY
outpatient quality measure reporting. After consideration of the public 2008 OPPS/ASC proposed rule, (72 FR
We intend to begin additional field comments received and as discussed in 42801), we expressed interest in
testing in November 2007 and plan to the above responses to those comments,
receiving comments from the public
make changes as necessary to for the CY 2009 annual payment update
concerning all dimensions of these
specifications for future reporting. we are requiring HOP QDRP reporting
measures.
Comment: One commenter using 7 of the proposed measures—the
recommended that any CMS-supplied five ED–AMI measures as well as the We expect that once the HOP QDRP
tool should have separate modules for two Perioperative Care measures, PQRI is established, we will expand the set of
inpatient and outpatient data collection #20 Perioperative Care: Timing of measures on which hospital outpatient
and reporting. Antibiotic Prophylaxis and PQRI #21 settings must report data. In the CY
Response: It is our intent that the Perioperative Care: Selection of 2008 OPPS/ASC proposed rule, (72 FR
CMS-supplied tool will have separate Prophylactic Antibiotic. As noted 42801), we also expressed interest in
modules for inpatient and outpatient previously, we have decided to not receiving comments concerning the
data collection and reporting. implement three of the proposed relative priority that should be assigned
Comment: Several commenters noted measures, specifically those related to to each of the measures or topics
that in the specifications of the two heart failure, diabetes, and community- identified in the list below, as well as
surgical measures in the Specifications acquired pneumonia for CY 2009 any additional measures, measure sets,
Manual for hospital outpatient payment decisions. These decisions are or topics that should be developed for
measures, CPT codes as opposed to based upon the recognition of the future reporting.
ICD–9 codes were used to define the burden placed on providers in
relevant procedures and questioned this We would like to note that, while we
developing systems to collect outpatient are committed to identifying measures
approach. Several commenters also quality measure data and need to utilize
suggested that for any NQF-endorsed that are relevant to care in hospital
quality measures sufficiently refined for outpatient settings, it is also our intent
measures, the ‘‘all codes’’ versions use in the outpatient setting.
should be used. to develop, where feasible, hospital
Response: CPT, E/M (Evaluation and C. Other Hospital Outpatient Measures outpatient measures that are
Management) and ICD–9–CM Codes are In addition to the 10 measures ‘‘harmonized’’ with measures for
used to identify eligible cases in the discussed above, we are considering a assessing comparable inpatient and
outpatient measures. Because the set of number of other possible quality ambulatory care—that is, measures that
measures crosses settings (clinic, measures for use in assessing the care are similar in both the care that is
emergency department, hospital provided by hospital outpatient settings, assessed and the manner in which data
outpatient surgery department), it is for the HOP QDRP determinations for are collected, regardless of the setting.
necessary to utilize a variety of codes to CY 2010 or subsequent calendar year The goal of harmonization is to assure
adequately capture and sample the payment updates. These measures are, that comparable care in different care
appropriate populations. For the for the most part, either currently in use settings can be evaluated in similar
surgical measures, each procedure is or were developed for use in settings ways, which further assures that quality
assigned a CPT code on the claim form other than hospital outpatient. However, measurement and improvement can
and hospitals will use this information we believe that these measures are focus more on the needs of a patient
to pull the charts to be abstracted. The applicable to the hospital outpatient with a particular condition than on the
CPT–4 is a uniform coding system settings. specific program or policy attributes of
consisting of descriptive terms and These measures have not received the setting at which the care is
identifying codes that are used formal review by either the HQA or the provided.
primarily to identify medical services NQF as measures of HOP performance. Therefore, we sought public comment
and procedures furnished by physicians As noted in the chart, however, the on the following 30 additional
and other health care professionals. inpatient or ambulatory versions of measures, which have been identified as
More information regarding coding can these measures have all been either hospital outpatient-appropriate
be found on the CMS Web site at: recommended by an NQF subgroup for measures and are under consideration
http://www.cms.hhs.gov/ endorsement, are pending endorsement for inclusion in the HOP QDRP measure
MedHCPCSGenInfo/ by the NQF, or are currently endorsed set, for CY 2010 or subsequent calendar
20_HCPCS_Coding_Questions.asp. by the NQF. The measures present the years:
NQF endorsed for inpa-

Measure tient or ambulatory Description
setting
1 ........... PQRI #2 Low Density Lipoprotein Control in Type Endorsed 2006 ............... Percentage of patients aged 18–75 years with dia-
1 or 2 Diabetes Mellitus. betes (type 1 or type 2) who had most recent
LDL–C level in control (less than 100 mg/dl).
2 ........... PQRI #3 High Blood Pressure Control in Type 1 Endorsed 2006 ............... Percentage of patients aged 18–75 years with dia-
or 2 Diabetes Mellitus. betes (type 1 or type 2) who had most recent
blood pressure in control (less than 140/80 mm
Hg).
3 ........... PQRI #4 Screening for Fall Risk ........................... 2 year Endorsement until Percentage of patients aged 65 years and older
May 8, 2009. who were screened for fall risk (2 or more falls in
the past year or any fall with injury in the past
year) at least once within 12 months.
4 ........... PQRI #9 Antidepressant Medication During Acute Endorsed 2006 ............... Percentage of patients aged 18 years and older di-
Phase for Patient with New Episode of Major De- agnosed with new episode of major depressive
pression. disorder (MDD) and documented as treated with
antidepressant medication during the entire 84-
day (12 week) acute treatment phase.
5 ........... PQRI #10 Stroke and Stroke Rehabilitation: Com- 2 year Endorsement until Percentage of patients aged 18 years and older
puted Tomography (CT) or Magnetic Resonance May 8, 2009. with a diagnosis of ischemic stroke or transient
Imaging (MRI) Reports. ischemic attack (TIA) or intracranial hemorrhage
undergoing CT or MRI of the brain within 24
hours of arrival to the hospital whose final report
of the CT or MRI includes documentation of the
presence or absence of each of the following:
Hemorrhage and mass lesion and acute infarc-
tion.
6 ........... PQRI #11 Stroke and Stroke Rehabilitation: Ca- 2 year Endorsement until Percentage of patients aged 18 years and older
rotid Imaging Reports. May 8, 2009. with a diagnosis of ischemic stroke or transient
ischemic attack (TIA) whose final reports of the
carotid imaging studies performed, with charac-
terization of internal carotid stenosis in the 30–99
percent range, include reference to measure-
ments of distal internal carotid diameter as the
denominator for stenosis measurement.
7 ........... PQRI #24 Osteoporosis: Communication with the 2 year Endorsement until Percentage of patients aged 50 years and older
Physician Managing Ongoing Care Post Fracture. May 8, 2009. treated for a hip, spine or distal radial fracture
with documentation of communication with the
physician managing the patient’s ongoing care
that a fracture occurred and that the patient was
or should be tested or treated for osteoporosis.
8 ........... PQRI #46 Medication Reconciliation ..................... 2 year Endorsement until Percentage of patients aged 65 years and older
May 8, 2009. discharged from any inpatient facility (e.g., hos-
pital skilled nursing facility, or rehabilitation facil-
ity) and seen within 60 days following discharge
in the office by the physician providing on-going
care who had a reconciliation of the discharge
medications with the current medication list in the
medical record documented.
9 ........... PQRI #53 Asthma Pharmacological Therapy ........ Endorsed 2006 ............... Percentage of patients aged 5 to 40 with a diag-
nosis of mild, moderate, or severe persistent
asthma who were prescribed either the preferred
long-term control medication (inhaled
corticosteroid) or an acceptable alternative treat-
ment.
10 ......... PQRI #58 Assessment of Mental Status for Com- 2 year Endorsement until Percentage of patients aged 18 years and older
munity-acquired Pneumonia. May 8, 2009. with a diagnosis of community-acquired bacterial
pneumonia with mental status assessed.
11 ......... Radiation therapy is administered within 1 year of Endorsed May 9, 2007 ... Radiation therapy to the breast initiated within 1
diagnosis for women under age 70 receiving year of date of diagnosis.
breast conserving surgery for breast cancer.
12 ......... Adjuvant chemotherapy is considered or adminis- Endorsed May 9, 2007 ... Consideration or administration of chemotherapy
tered within 4 months of surgery to patients initiated within 4 months of date of diagnosis.
under the age of 80 with AJCC III (lymph node
positive) colon cancer.
13 ......... Adjuvant hormonal therapy ...................................... Endorsed May 9, 2007 ... Cancer—Breast—consideration or administration of
accompanying hormonal therapy for treatment of

breast cancer.
14 ......... Needle biopsy to establish diagnosis of cancer pre- Endorsed May 9, 2007 ... Patient whose date of needle biopsy precedes the
cedes surgical excision/resection. date of surgery.
15 ......... Osteo–02: Screening or Therapy for Women Aged 2 year Endorsement until Bone and joint conditions (osteoporosis)—Screen-
65 years and Older. May 8, 2009. ing or therapy for women aged 65 years and
older.
NQF endorsed for inpa-

Measure tient or ambulatory Description
setting
16 ......... Osteo–03: Management following fracture .............. 2 year Endorsement until Bone and joint conditions (osteoporosis)—Manage-
May 8, 2009. ment following fracture.
17 ......... Osteo–04: Pharmacologic Therapy .......................... 2 year Endorsement until Bone and joint conditions (osteoporosis)—Pharma-
May 8, 2009. cologic therapy.
18 ......... EC–01: Electrocardiogram (ECG) for Patients with 2 year Endorsement until Percentage of patients aged 40 years and older
Non-Traumatic Chest Pain. May 8, 2009. with an emergency department discharge diag-
nosis of nontraumatic chest pain who had an
electrocardiogram (ECG).
19 ......... EC–03: ECG Performed for Patients with Syncope 2 year Endorsement until Percentage of patients aged 18 to 60 years with an
May 8, 2009. emergency department discharge diagnosis of
syncope who had an ECG performed.
20 ......... EC–04: Vital Signs Recorded and Reviewed for 2 year Endorsement until Percentage of patients aged 18 years and older
Patients with Community-Acquired Bacterial May 8, 2009. with a diagnosis of community-acquired bacterial
Pneumonia. pneumonia with vital signs recorded and re-
viewed.
21 ......... Eye–01: Primary Open Angle Glaucoma—Optic 2 year Endorsement until Primary open angle glaucoma—optic nerve evalua-
Nerve Evaluation. May 8, 2009. tion.
22 ......... Eye–02: Age-Related Macular Degeneration—Anti- Recommended for En- Age-related macular degeneration—antioxidant
oxidant Supplement Prescribed/Recommended. dorsement. supplement prescribed/recommended.
23 ......... Eye–03: Age-Related Macular Degeneration—Di- 2 year Endorsement until Age-related macular degeneration—dilated macular
lated Macular Examination. May 8, 2009. examination.
24 ......... Eye–07: Diabetic Retinopathy—Documentation of 2 year Endorsement until Documentation of presence or absence of macular
Presence or Absence of Macular Edema and May 8, 2009. edema and level of severity of retinopathy.
Level of Severity of Retinopathy.
25 ......... Eye–08: Diabetic Retinopathy—Communication 2 year Endorsement until Communication with the physician managing ongo-
with the Physician Managing Ongoing Diabetes May 8, 2009. ing diabetes care.
Care.
26 ......... GI–09: Colonoscopy for Polyp Surveillance—De- Recommended for En- Colonoscopy for polyp surveillance—description of
scription of Polyp Characteristics. dorsement. polyp characteristics.
27 ......... GER–02: Advance Care Plan .................................. Recommended for En- Advance care plan.
dorsement.
28 ......... GER–03: Urinary Incontinence—Assessment of 2 year Endorsement until Assessment of presence or absence of urinary in-
Presence or Absence of Urinary Incontinence in May 8, 2009. continence in women aged 65 years and older.
Women Aged 65 Years and Older.
29 ......... GER–04: Urinary Incontinence—Characterization of 2 year Endorsement until Characterization of urinary incontinence in women
Urinary Incontinence in Women Aged 65 Years May 8, 2009. aged 65 years and older.
and Older.
30 ......... GER–05: Urinary Incontinence—Plan of Care for 2 year Endorsement until Plan of care for urinary incontinence in women
Urinary Incontinence in Women Aged 65 Years May 8, 2009. aged 65 years and older.
and Older.
As with the Hemoglobin A1c diabetes measures should be refined to be more additional 30 measures proposed for
intermediate outcome measure specific to the hospital outpatient future use as it was difficult to know if
described in XVII.B of this preamble, we setting. The commenters viewed the any of them would be considered best
included two diabetes intermediate listed additional 30 measures as more practice in the near future, noting the
outcome measures in this list of 30 relevant to care provided in other period of endorsement was short for
additional measures—that is, good settings, especially physician-based many. Several commenters stated that
control of blood pressure (less than 140/ settings. any quality measure chosen for public
80 mm Hg) and LDL–C levels (less than Response: We acknowledged in the reporting and pay for performance
100 mg/dl). We specifically invited proposed rule that the listed additional should be generally accepted as best
comment on these outcome measures. 30 measures are either in use or were practice. One commenter stated that
We solicited comments on these 30 developed for use in settings other than quality measures with longer ‘‘shelf-
additional measures for inclusion in the hospital outpatient (72 FR 42801). As life’’ be used.
HOP QDRP for CY 2010 or subsequent we stated, it is our intent to develop, Response: We agree with the
calendar years and welcomed comments where feasible, hospital outpatient commenters’’ position that any quality
on whether any of these additional measures that are ‘‘harmonized,’’ with measures chosen for public reporting
measures should be included effective measures for assessing comparable and pay for performance should be
for services furnished on or after inpatient and ambulatory care, that is, generally accepted as best practice. We
January 1, 2008 for the CY 2009 update. comparable care rendered in different understand that it is more desirable to
Comment: Several commenters settings can be evaluated in similar utilize quality measures with more
questioned in general the ways. We intend to expand the set of longevity. We will take these comments
appropriateness of the proposed measures on which hospital outpatient into consideration when we review
measures for hospital outpatient care. In settings must report data for payment additional measures for possible
particular, several commenters stated decisions for CY 2010 and subsequent inclusion in the HOP QDRP measure
that the listed additional 30 measures calendar years. set.
were not suitable for hospital outpatient Comment: Several commenters stated Comment: Three commenters stated
care in their present form and that the that it was difficult to comment on the that the requirement to collect
information that affected hospital Comment: One commenter expressed outpatient setting, the number of
payment that was dependent on concern with the use of PQRI #2 and required measures has been reduced for
physician activity fostered a hostile PQRI #3 as these are outcome measures CY 2008 quality data reporting efforts.
environment. One commenter and as such should not be used as a We will consider these measures for
emphasized that there is no financial basis for determining payment. One future implementation.
incentive for physicians to participate in commenter strongly opposed the PQRI Comment: One commenter stated that
improving hospital outpatient quality #14 measure, stating that a needle with respect to the 30 additional listed
measures. One commenter stated that biopsy is not always appropriate. One measures, populations to be included
creation of this hostile environment commenter strongly opposed the PQRI must be carefully defined so that any
affected larger hospitals to a lesser #18 measure, stating that ordering an public reporting will compare like
extent and made recruitment/retention ECG is a judgment call, and that an ECG populations, to the extent that outcomes
more difficult for smaller hospitals. is not always indicated with non- data are reported, risk adjustment was
Response: Under section 1833(t)(17) traumatic chest pain. Several critical, and that process measures be
of the Act, as added by section 109(a) commenters expressed support for reasonable.
of the MIEA–TRHCA, CMS is statutorily cancer care related measures. Response: We thank the commenter
required to establish a hospital Response: We thank the commenters for these comments to be used in
outpatient care data reporting program. for expressing these concerns and will consideration of future measures.
We will continue to utilize a consensus hold these concerns in consideration of After consideration of the public
process in devising measures applicable future measure requirements. comments received and as noted in the
to the hospital outpatient setting. As Comment: One commenter strongly above responses to those comments, we
supported imaging-related quality are not collecting data for any of the
discussed in this final rule with
measures. additional 30 listed measures under the
comment period, a sampling scheme
Response: CMS appreciates this HOP QDRP for purposes of the CY 2009
devised around hospital outpatient
comment and intends to incorporate update.
volume will be devised to lessen the
burden for smaller hospitals. It is our imaging measures in the future. D. Implementation of the HOP QDRP
intent that quality measure reporting Comment: One commenter stated that and Request for Additional Suggested
will encourage providers and clinicians the term ‘‘outpatient’’ needed to be more Measures
to improve their quality of care. clearly defined and that an approach
that narrowed the population of interest In the CY 2008 OPPS/ASC proposed
Comment: One commenter provided rule, (72 FR 42803), we stated that for
for outpatient care by service as do the
strong support for one potential purposes of CY 2009 payments, we
five ED–AMI measures and the surgical
indicator, ‘‘Radiation therapy is would require hospitals to begin to
day care measures (PQRI #21 and PQRI
administered within 1 year of diagnosis submit data on the 10 measures that we
#22) should be used for other measures.
for women under age 70 receiving breast Response: Although PQRI #21 and identified under section XVII.B. of the
conserving surgery for breast cancer.’’ PQRI #22 were not in the list of 30 proposed rule. We also noted that, while
Response: We thank the commenter measures included in the proposed rule, we would expect to focus on these 10
for supplying information supporting we understand the commenter’s intent measures and would consider
this quality measure and will consider and thank the commenter for this comments on them for the CY 2009
it in the selection of future HOP QDRP suggestion. We will keep it in mind as payment year, we would also consider
measures. we consider future measures. the comments received from the public
Comment: Several commenters stated Comment: Several commenters on the list of 30 additional measures
that in regard to the 30 additional recommended that the same numbering cited above in developing the final lists
measures listed, given the lack of system be used in the specifications of measures for future payment years.
operational data collection processes for manuals for both the inpatient and As described below, procedures for
outpatient hospital data and the outpatient data tables and in particular, submission of hospital outpatient
associated costs of collecting quality that CMS use of the same number for quality information will mirror as
measure data, CMS should not consider corresponding tables. closely as possible all procedures for
any additional measures, especially for Response: We thank the commenters submission of inpatient quality
the first year of reporting. for this suggestion and will look to information. The inpatient procedures
Response: We acknowledge that there aligning the specification manuals for are identified on the QualityNet Web
is a burden with collecting quality inpatient and outpatient quality site, at http://www.qualitynet.org. As
measure data. As stated in the proposed measures to the extent possible. required by new section 1833(t)(17)(E)
rule, we indicated that we were Comment: Several commenters of the Act, we will develop procedures
considering the additional listed 30 suggested that osteoporosis measures to publicly report the measure results
measures for CY 2010 or subsequent (PQRI #24, #39, #40, and #41) be obtained under the HOP QDRP.
calendar year reporting requirements, included in the HOP QDRP; and also Hospitals will have an opportunity to
although we also solicited comments on asked that data collection for these review the information that is to be
whether any of the listed 30 additional measures begin in CY 2008. One made available to the public prior to its
measures should be included in commenter stated that CMS should being made public.
reporting for the CY 2009 payment year. promote the prevention of fragility We believe that ensuring that
Further, as discussed elsewhere in this fractures by distinguishing DXA testing Medicare beneficiaries receive the care
final rule with comment period, we from pharmacologic therapy in HOP they need and that such services are of
have reduced the number of required QDRP measures. appropriately high quality are the
reporting measures for the CY 2009 Response: We thank the commenters necessary initial steps to the
payment year from the 10 we proposed. for support of these measures and for incorporation of value-based purchasing
However, given the importance of the suggestions. As noted above, to into the OPPS. We seek to encourage
outpatient hospital quality measure reduce provider burden and recognizing care that is both efficient and of high
reporting it is our intent to propose the need for further refinement of some quality in the hospital outpatient
additional measures in the future. of the proposed measures for the setting. We plan to work quickly and
collaboratively with the hospital Response: We thank the commenters • Complete the Notice of
community to develop and implement for these observations, and we will Participation form. All hospitals must
quality measures for the OPPS that are continue to strive to ensure send the form to a CMS-designated
fully and specifically reflective of the compatibility and alignment of contractor no later than November 15,
quality of hospital outpatient services. measures across settings. 2007 for the CY 2009 HOP QDRP. At
In the CY 2008 OPPS/ASC proposed Comment: Several commenters this time, the participation form for the
rule, (72 FR 42803), we welcomed suggested that any financial HOP QDRP is separate from the IPPS
suggestions of other additional measures implications related to outpatient RHQDAPU program and completing a
and topics relevant to the hospital quality measure reporting be deferred. submission form for each program is
outpatient setting for future Response: Under section required. Agreeing to participate
development of the measure set, 1833(t)(17)(A)(i) of the Act, as added by includes acknowledging that the data
particularly measures from other section 109(a) of the MIEA–TRHCA, the submitted to the CMS designated
settings (such as hospital inpatient, HOP QDRP is established to affect contractor will be submitted to CMS and
physician office, and emergency care payments effective beginning in CY may be shared with a CMS contractor or
settings) that would contribute to better 2009. contractors supporting the
coordination and harmonization of high implementation of this program.
quality patient care. E. Requirements for HOP QDRP for CY Hospitals not wishing to participate
Comment: Two commenters asked for 2009 and Subsequent Calendar Years must submit a nonparticipation form.
the consideration of the PQRI #4 In the CY 2008 OPPS/ASC proposed Hospitals that have completed a notice
Screening for Future Fall Risk rule, (72 FR 42803), we stated that in of participation form and subsequently
outpatient quality measure as well as order to participate in the HOP QDRP wish to stop participating must submit
the following occupational therapist for CY 2009 and subsequent calendar a withdrawal form.
measures, Patient Co-Development of years, hospitals must meet To reduce the burden on hospitals,
Plan of Care, Pain Assessment Prior to administrative, data collection and once a hospital has indicated its intent
Initiation of Patient Treatment, and submission, and data validation to participate or not participate, we will
Universal Documentation and requirements. Hospitals not consider the hospital to be in that status
Verification of Current Medications in participating in the program or that (either a participant or nonparticipant)
the Medical Record. One commenter withdraw from the program will not until the hospital indicates a change in
suggested measures for preventive care receive the full OPPS payment rate status by submitting a notice of
for future use. Several commenters update. Instead, in accordance with the participation or a withdrawal form.
suggested the inclusion of law, those hospitals would receive a Comment: Several commenters
administration of anti-platelet therapy reduction of 2.0 percentage points in requested delays in implementation in
for patients with coronary artery their updates for the affected payment general, though the November 15, 2007
disease. One commenter suggested the year. date for submitting the Notice of
inclusion of measures on venous Hospitals not meeting the Participation form was not mentioned.
thromboembolism and care requirements of the HOP QDRP also will One commenter urged that
coordination. One commenter suggested not receive the full OPPS payment rate communication of this requirement be
the inclusion of additional medical update. Instead, in accordance with the made clearly and frequently so that all
prophylaxis safety measures including 2 law, those hospitals also would receive hospitals are aware of the steps they
SCIP measures (SCIP–VTE1, venous a reduction of 2.0 percentage points in need to take to participate in the HOP
thromboembolism prophylaxis ordered their payment update factor for the QDRP.
for a surgery patient and SCIP–VTE2, affected payment year. Response: We understand the
prophylaxis within 24 hours pre/post We proposed the following concerns of these commenters and have
surgery). One commenter suggested the requirements for participation in the decided to delay the deadline for
development of additional VTE HOP QDRP: completing the Notice of Participation
measures. One commenter suggested form. The deadline for submission of
that in addition to quality measures, the 1. Administrative Requirements the Notice of Participation form will be
hospital component of the Consumer To participate in the HOP QDRP, the revised from November 15, 2007 to
Assessment of Health Providers and hospital must complete several January 31, 2008. It is our intent that the
Systems (HCAHPS) has several administrative steps. These steps, as in forms for the inpatient and outpatient
questions directed to patients that are the current IPPS RHQDAPU program, programs will be available on the same
applicable to hospital outpatient care require the hospital to: Web site. We understand the difficulties
and, thus, could provide useful • Identify a QualityNet Exchange inherent in implementing a new data
information about outpatient quality administrator who follows the collection system and have revised the
care. registration process and submits the deadline for completion of the Notice of
Response: We thank the commenters information through the CMS- Participation form as part of efforts to
for supplying additional, potential designated contractor. The same person reduce hospital burden as discussed
quality measures for consideration in may be the QualityNet Exchange further later in this section.
the HOP QDRP measure set. administrator for both the IPPS Comment: Several commenters
Comment: One commenter noted that RHQDAPU program and the HOP expressed appreciation that CMS was
there is a discrepancy between the SCIP QDRP. This designation must be kept working to utilize existing processes in
VTE–1 and PQRI #23 measures and that current and must be done, regardless of implementing data collection of hospital
while these are not proposed measures whether the hospital submits data outpatient quality measures.
under this rule, CMS should review all directly to the CMS designated Response: We thank the commenters
of its quality measures to ensure contractor or uses a vendor for for their support of our efforts.
compatibility and lack of conflict. One transmission of data. Comment: One commenter suggested
commenter suggested aligning the PQRI • Register with the QualityNet that small or low volume hospitals be
measures with the outpatient quality Exchange, regardless of the method used held harmless on the reporting of
measures. for data submission. outpatient hospital quality measure data
due to the undue burden of an designated contractor using either the assure that data elements common to
essentially unfunded mandate. CMS Abstraction and Reporting Tool for both inpatient and outpatient settings
Response: We acknowledge the Outpatient Department measures are defined consistently (such as ‘‘time
commenter’s concern regarding burden (CART–OPD) or another third-party of arrival’’). However, HOP QDRP
on smaller hospitals, but continue to vendor that has a tool which has met the quality data, not quality data required to
view the importance of quality measure measure specification requirements for be submitted for a patient treated under
data from all providers of comparable data transmission to the QualityNet the IPPS RHQDAPU program, would be
services. As discussed throughout this Exchange. submitted under the HOP QDRP.
section of the final rule with comment HOP QDRP data submission will be To be accepted by the CMS
period, in response to such burden through the CMS contractor’s secure designated contractor, submissions
concerns, several aspects of the HOP Web site. Detailed information about the would, at a minimum, need to be
QDRP have been revised for the first Web site for submitting quality measure accurate, timely, and complete. Data are
reporting year. data under the HOP QDRP is not considered to have been ‘‘accepted’’ by
Comment: One commenter asked that available as of the publication of this the CMS designated contractor, for
there be a single Notice of Participation final rule with comment period. We purposes of determining eligibility for
form for reporting inpatient and anticipate awarding the contract to the full payment rate update, only when
outpatient hospital quality measure design and manage the OPPS Clinical data are submitted prior to the reporting
data. Warehouse in the near future. We deadline and after they have passed all
Response: We agree that it would be expect the CMS contractor’s Web site to CMS designated contractor edits.
preferable to have a single Notice of meet or exceed all current Health In addition to collecting and
Participation form for the inpatient and Insurance Portability and submitting data as noted above, we
outpatient hospital quality measure data Accountability Act requirements for proposed that, to be eligible for the full
reporting programs. However, a single security of personal health information. OPPS payment update in CY 2009 and
form is not possible at this time due to The OPPS Clinical Warehouse will subsequent years, hospitals must also:
separations of the data and submit the data to CMS on behalf of the
• Submit complete and accurate data.
administrative systems for the two hospitals. While the CMS contract for
A ‘‘complete’’ submission would be
programs. We will seek to consolidate managing the OPPS Clinical Warehouse
determined based on sampling criteria
processes as much as possible in the was not awarded prior to publishing the
that will be published and maintained
future to ease burdens associated with proposed rule, we noted it was possible
in a specifications manual to be found
meeting the different requirements of that a QIO contractor (or subcontractor)
on the Web site at http://
these two programs. would manage the OPPS Clinical
Warehouse. Because the information in www.qualitynet.org, and must
We are finalizing the administrative
the OPPS Clinical Warehouse also may correspond to both the aggregate
requirements as proposed, with the
be considered QIO information, it may number of cases submitted by a hospital
modification of changing the deadline
be subject to the stringent QIO and the number of Medicare claims it
for the Notice of Participation form to
confidentiality regulations in 42 CFR submits for payment.
January 31, 2008.
part 480. • Submit the aggregate numbers of
2. Data Collection and Submission For purposes of the CY 2009 annual outpatient episodes of care which were
Requirements payment update, we proposed to require eligible for submission under the HOP
We proposed that, to be eligible for hospitals to submit data, for the QRDP. These numbers would indicate
the full OPPS payment update in CY finalized set of measures, beginning the number of outpatient episodes of
2009 and subsequent years, hospitals with services furnished on or after care in the universe to which sampling
must: January 1, 2008. The deadline for criteria are applied.
• Collect data required for the submission of data for January 2008 New hospitals are expected to begin
finalized set of measures, beginning discharges would be 4 months from the reporting data as soon as possible, but
with the specifications of the finalized last day of the month, May 31, 2008. no later than beginning with services
set of measures that will be identified in The deadline for submission for provided the first day of the calendar
the CY 2008 OPPS/ASC final rule (for February–March 2008 discharges would quarter immediately following a
payment updates for CY 2009 services) be August 1, 2008. Thereafter, hospital’s receipt of its Medicare
and that will be published and participating hospitals would be provider number and the hospital’s
maintained in a specifications manual required to submit quarterly data on timely completion of the administrative
to be found on the Web site at: http:// finalized measures 4 months from the requirements for participating in the
www.qualitynet.org. last day of the calendar quarter for as HOP QDRP.
• Submit the data according to a data long as the hospitals participated in the Comment: Several commenters
submission schedule that will be HOP QDRP. recommended that CMS adopt some
available on the QualityNet Exchange In the CY 2008 OPPS/ASC proposed delay in implementation. The
Web site. We proposed to have HOP rule (72 FR 42804), we stated our commenters suggested that this delay
data submitted through the QualityNet expectation that hospitals will submit could be accomplished by phasing in or
Exchange secure Web site (https:// data under the HOP QDRP on outpatient reducing the number of measures that
www.qnetexchange.org). This Web site episodes of care to which the required hospitals would be required to collect
meets or exceeds all current Health measures apply. For the purposes of the data and delaying the deadline for
Insurance Portability and HOP QDRP, an outpatient episode of initial data submission. Several
Accountability Act requirements. The care is defined as care provided to a commenters viewed some or all of the
submission deadline for January 2008 patient who has not been admitted as an additional five non-emergency
discharges was May 31, 2008 with inpatient but who is registered on the department measures as an unnecessary,
proposed submission deadlines for all hospital’s medical records as an additional burden, asking for delay or
other data submissions being 4 months outpatient and receives services (rather elimination of some or all of these five
after the last day of the calendar quarter. than supplies alone) directly from the measures until a system for collecting
Data would be submitted to the CMS hospital. Every effort will be made to and reporting can be evaluated.
Response: As noted previously, we proposed rule, or if this date should be We also proposed the following chart
have revised the number of required November 1, 2008. audit validation requirements for full
outpatient hospital measure information Response: As stated above, the CY 2009 payment updates:
by reducing the required measure set deadline for submitting data for the • Apply to January 2008 discharges
from 10 to 7 measures for initial initial quarterly data submission of only.
implementation. For the reporting of April–June 2008 services will be • Require submission of 5 charts
quality measures for HOPD affecting CY November 1, 2008. sampled from each hospital.
2009 payments, data will be required • Establish a passing threshold of 80
Comment: One commenter noted that percent reliability reflecting the
only for the five ED–AMI measures and
the OPPS appeared to have 1st of the accuracy of submitted data elements
the two perioperative care measures
month data submission deadlines, used to calculate quality measures.
(PQRI #20 Perioperative Care: Timing of
whereas, the inpatient measures have a • Use an upper bound of 95 percent
Antibiotic Prophylaxis and PQRI #21
15th of the month submission deadline confidence interval to measure
Perioperative Care: Selective of
and asked for alignment of the accuracy.
Prophylactic Antibiotic). For reasons
discussed above related to hospital
submission deadlines for both. • Incorporate clustering of variability
burden and refinement of measures for Response: We understand that there is at the chart level into the confidence
the outpatient setting, data collection on an interest in alignment to reduce interval.
PQRI #5 Heart Failure: Angiotensin confusion and data submission errors. Validation is intended to provide
Converting Enzyme (ACE) Inhibitor or However, the dates were deliberately some assurance of the accuracy of the
Angiotensin Receptor Blocker (ARB) for chosen and spaced accordingly to avoid hospital abstracted data. We have
Left Ventricular Systolic Dysfunction issues with concurrent submission of specifically chosen these validation
(LSVD), PQRI #59: Empiric Antibiotic large amounts of data. requirements and thresholds to allow
for Community-Acquired Pneumonia, Comment: Due to the large volume of this assurance, provide sufficient time
and PQRI #1: Hemoglobin A1c Poor outpatient services potentially involved to fully process validation data, and
Control in Type I or II Diabetes Mellitus for quality measure reporting, several minimize the burden on hospitals.
To receive the full OPPS payment rate
will not be required in the initial HOP commenters suggested the use of
update in CY 2009, CMS proposed that
QDRP measure set. sampling of cases.
With regard to commenters’ requests the hospital must pass our validation
Response: We agree with the idea of requirement of a minimum of 80 percent
that we delay the deadline for initial sampling of cases for reporting under
data submission, we agree. Due to the reliability, based upon our chart-audit
the HOP QDRP and it is our intent to validation process, for the January 2008
importance of the HOP QDRP and the devise a methodology for determining
need for accurate and timely submission discharges. The 80-percent reliability
sample size requirements based on threshold is consistent with the IPPS
of required data, we are revising our hospital volume as is done for inpatient
proposed submission period and RHQDAPU program validation
quality measure reporting. reliability threshold. Based on our
deadline. Rather than requiring initial
We are finalizing the proposed data previous IPPS RHQDAPU program
submission for services furnished on or
collection and submission requirements experience, we believe that this
after January 1, 2008, we are requiring
initial submission for services furnished with modifications. The initial threshold is reasonable and attainable
on or after April 1, 2008. The data submission will be for services by the vast majority of hospitals. Several
submission deadline for April to June furnished on or after April 1, 2008. The of the measures used in the OPPS HOP
2008 discharges is November 1, 2008, 4 final submission date for the initial QDRP are similar in construction to
months from the last day of the calendar quarterly data for April–June 2008 inpatient measures used in the current
quarter. As proposed, thereafter, services is November 1, 2008. IPPS RHQDAPU program. Based on the
participating hospitals would be 3. HOP QDRP Validation Requirements similar nature of the inpatient and
required to submit quarterly data on outpatient measure sets, we believe that
finalized measures 4 months from the In the CY 2008 OPPS/ASC proposed the 80-percent reliability threshold is
last day of the calendar quarter for as rule, we proposed that data submitted applicable in the OPPS HOP QDRP.
long as the hospitals participate in the under this program meet validation We proposed that the data for the first
HOP QDRP. As noted, we are statutorily requirements. The proposed validation reporting period would be due to the
required to establish a program under requirements were similar to the FY CMS designated contractor by May 31,
which hospitals will report data on the 2006 IPPS RHQDAPU program 2008. We would use confidence
quality of hospital outpatient care using validation requirement (the initial year intervals, as discussed below, to
standardized measures of care in order validation requirement was added to the determine if a hospital has achieved an
to receive the full annual OPPS update IPPS RHQDAPU program) and included 80-percent reliability. The use of
effective for payments beginning in CY independent re-abstraction of medical confidence intervals would allow us to
2009. In balancing the commenters’ record data elements by a clinical data establish an appropriate range below the
concerns and the statutory abstraction center (CDAC). The CMS 80-percent reliability threshold that
requirements, we have delayed the contractor would randomly select 5 would demonstrate a sufficient level of
initial data submission as much as we medical records from all January 2008 reliability to allow the data to still be
believe is possible while still meeting discharge cases successfully submitted considered validated. We note that, for
statutory deadline. For the subsequent to the OPPS Clinical Warehouse. The both timing and burden reasons, we
data submissions for CY 2008 services CDAC would mail requests to the proposed to apply the validation
the submission deadlines will be hospitals to send the selected medical requirements only to January 2008
February 1, 2009 for July to September records to the CDAC within 30 calendar discharges for purposes of determining
2008 services and May 1, 2009 for days. The CDAC would independently eligibility for the full CY 2009 OPPS
October to December 2008 services. re-abstract the medical record data payment rate update. However,
Comment: One commenter asked if elements. We proposed to provide hospitals would still be required to
the quarterly data submission was due abstraction feedback to all hospitals on submit data for subsequent time
November 1, 2009, as stated in the abstracted data elements. periods.
We proposed to use January 2008 validation requirements for determining may be the QualityNet Exchange
discharges to estimate the hospitals’ the CY 2010 payment update. administrator for both the IPPS
validation score for the CY 2009 Comment: Several commenters RHQDAPU program and the HOP
validation proposed requirement. The addressed the reliability threshold set QDRP. This designation must be kept
timeframe for data collection, for validation. Some commenters current and must be done, regardless of
abstraction, and validation tasks total suggested that reliability thresholds whether the hospital submits data
about nine to ten months between should start at lower levels and directly to the CMS designated
patient discharges to completion of gradually be raised to 80 percent. contractor or uses a vendor for
validation appeals. We believe that Response: We understand that there transmission of data.
using later discharges for the CY 2009 may be difficulties with validation • Register with the QualityNet
annual payment update would levels due to this being a new data Exchange, regardless of the method used
adversely impact CMS’ ability to collection effort. As discussed in this for data submission.
complete these tasks and apply the final rule with comment period, • Complete the Notice of
results to the CY 2009 annual payment validation will not be required for Participation form. All hospitals must
update. payment decisions affecting the CY send the form to a CMS-designated
Based on our proposed methodology, 2009 payment update. We continue to contractor no later than January 31,
the confidence interval would be believe that a reliability threshold of 80 2008 for the CY 2009 HOP QDRP. At
slightly wider than is currently utilized percent for data validation purposes for this time, the participation form for the
for the IPPS RHQDAPU program due to future years is appropriate, and we HOP QDRP is separate from the IPPS
the smaller sample size. However, given intend to use it beginning with the CY RHQDAPU program, and completing a
this is the first year of the HOP QDRP, 2010 payment update. submission form for each program is
we believe this would be appropriate. Comment: Several commenters required. Agreeing to participate
We would estimate the percent expressed concern about validating data includes acknowledging that the data
reliability based upon a review of five from a single month for determining submitted to the CMS-designated
charts and then calculate the upper 95 payment. Several commenters stated contractor will be submitted to CMS and
percent confidence limit for that that at least 6 months of reporting may be shared with a CMS contractor or
estimate. If this upper limit is above the should be required for any measure contractors supporting the
required 80 percent reliability before any data validation is done or implementation of this program.
any decisions regarding payment are Hospitals not wishing to participate
threshold, the hospital data would be
made. must submit a Notice of Participation
considered validated. We proposed to
Response: As noted previously, in form indicating non-participation in the
use the design specific estimate of the
response to comments on data volume HOP QDRP. Hospitals that have
variance for the confidence interval
for determining payment and validation completed a notice of participation form
calculation, which, in this case, is a
concerns, for purposes of the CY 2009 and subsequently wish to stop
single stage cluster sample, with
payment update, we will consider data participating must submit a withdrawal
unequal cluster sizes. (For reference, see
reported for the second calendar quarter form. Hospitals not participating in the
Cochran, William G. (1977) Sampling
of 2008, April to June 2008 without any HOP QDRP program or that withdraw
Techniques, John Wiley & Sons, New
validation requirement. It is our intent from the program will not receive the
York, chapter 3, section 3.12.) Each
to use at least 6 months of reported data full OPPS payment rate update. Instead,
sampled medical record is considered as
for the HOP QDRP for purposes of the in accordance with the law, those
a cluster for variance estimation
CY 2010 payment update and for hospitals would receive a reduction of
purposes, as documentation and
subsequent calendar years. Thus, we 2.0 percentage points in their updates
abstraction errors are believed to be
intend to begin validation efforts on for the affected payment year.
clustered within specific medical To reduce the burden on hospitals,
data submitted from July–September
records. once a hospital has indicated its intent
2008 services forward.
Comment: Many commenters asked We are revising our validation to participate or not participate, we will
that validation not be used in requirements from our proposal and not consider the hospital to be in that status
determining payment decisions; that is, requiring validation for purposes of the (either a participant or nonparticipant)
that receipt of full OPPS payment CY 2009 payment update. We intend to until the hospital indicates a change in
update be attached only to the use validation for purposes of the CY status by submitting a notice of
submission of quality data, especially 2010 HOP QDRP, beginning with July– participation or a withdrawal form.
for the first year of the program. September 2008 services and for
Commenters urged that for the CY 2009 2. Data Collection and Submission
subsequent services.
HOP QDRP, data validation should be In summary, after consideration of the Requirements
conducted only as a learning tool for public comments received and as • Collect data required for the
hospitals. discussed in the above responses to finalized set of 7 measures outlined
Response: In response to the many those comments, we are requiring below, beginning with the specifications
comments received on the validation hospitals to meet the below outlined of the finalized set of measures
requirement, acknowledging this is a administrative, data collection, and identified in this final rule for payment
new data collection effort, and submission requirements under the updates for CY 2009 services and that
consistent with the initial HOP QDRP for payment determinations will be published and maintained in a
implementation of the IPPS RHQDAPU affecting the CY 2009 payment update. specifications manual to be found on
program, we have decided not to use the the Web site at: http://
HOP QDRP validation requirement for 1. Administrative Requirements www.cms.hhs.gov.

purposes of the CY 2009 payment • Identify a QualityNet Exchange Participating hospitals must collect
update. Thus, there will be no administrator who follows the data on the 7 required measures listed
validation requirement for April–June registration process and submits the below if they have cases meeting the
2008 services for the CY 2009 payment information through the CMS- data collection specifications. Hospitals
update. However, it is our intent to use designated contractor. The same person will be allowed to sample cases and this
sampling scheme will be provided in hospitals. It is possible that the • Submit the aggregate numbers of
advance of required data collection. information in the OPPS Clinical outpatient episodes of care which were
• ED–AMI–1—Aspirin at Arrival. Warehouse may be considered QIO eligible for submission under the HOP
• ED–AMI–2—Median Time to information. If so, it may be subject to QRDP beginning with the first reporting
Fibrinolysis. the stringent QIO confidentiality period (April–June 2008) forward. These
• ED–AMI–3—Fibrinolytic Therapy regulations in 42 CFR part 480. numbers would indicate the number of
Received Within 30 Minutes of Arrival. Hospitals are expected to submit data outpatient episodes of care in the
• ED–AMI–4—Median Time to under the HOP QDRP on outpatient universe to which sampling criteria are
Electrocardiogram (ECG). episodes of care to which the required applied.
• ED–AMI–5—Median Time to measures apply. For the purposes of the New hospitals are expected to begin
Transfer for Primary PCI. HOP QDRP, an outpatient episode of reporting data as soon as possible, but
• PQRI #20 Perioperative Care: care is defined as care provided to a no later than beginning with services
Timing of Antibiotic Prophylaxis. patient who has not been admitted as an provided the first day of the calendar
• PQRI #21 Perioperative Care: inpatient but who is registered on the quarter immediately following a
Selection of Prophylactic Antibiotic. hospital’s medical records as an hospital’s receipt of its Medicare
Providers must collect data for the outpatient and receives services (rather provider number and the hospital’s
required finalized set of measures than supplies alone) directly from the timely completion of the administrative
identified in this final rule to receive the hospital. Every effort will be made to requirements for participating in the
full payment update for CY 2009 OPPS assure that data elements common to HOP QDRP.
services. The measure specifications both inpatient and outpatient settings Hospitals must submit data under the
will be published and maintained in a are defined consistently (such as ‘‘time HOP QDRP on outpatient episodes of
specifications manual to be found on of arrival’’). However, HOP QDRP care to which the required measures
the CMS Web site at: http:// quality data, not quality data required to apply. Data submission deadlines for
www.cms.hhs.gov. be submitted for a patient treated under the submission of this data will be the
• Submit the data according to a data the IPPS RHQDAPU program, would be same as for submission of quality
submission schedule that will be submitted under the HOP QDRP. measure data, will begin with the
available on the QualityNet Exchange To be accepted by the CMS submission of April–June 2008 services
Web site. HOP data will be submitted designated contractor, submissions must forward, and will be due 4 months from
through the QualityNet Exchange secure be, at a minimum, accurate, timely, and the last day of the calendar quarter. For
Web site (https:// complete. Data are considered to have the purposes of the HOP QDRP, an
www.qnetexchange.org). This Web site been ‘‘accepted’’ by the CMS designated outpatient episode of care is defined as
meets or exceeds all current Health contractor, for purposes of determining care provided to a patient who has not
Insurance Portability and eligibility for the full payment rate been admitted as an inpatient but who
Accountability Act requirements. Data update, only when data are submitted is registered on the hospital’s medical
for the 7 quality measures finalized in prior to the reporting deadline and after records as an outpatient and receives
this rule from services occurring during they have passed all CMS designated services (rather than supplies alone)
second calendar quarter of 2008 (April– contractor edits. directly from the hospital.
June 2008) are to be collected. The In addition to collecting and
submission deadline for April–June submitting data as noted above, to be 3. HOP QDRP Validation Requirements
2008 service data will be November 1, eligible for the full OPPS payment As discussed above, we are not
2008. All submission deadlines will be update in CY 2009 and subsequent implementing a data validation
4 months after the last day of the years, hospitals must also: requirement for data submitted for the
calendar quarter. Data must be • Submit complete and accurate data. April–June 2008 time period for the
submitted to the CMS designated A ‘‘complete’’ submission is determined purposes of the CY 2009 annual
contractor using either the CMS based on sampling criteria that will be payment update. It is our intention that
Abstraction and Reporting Tool for published and maintained in a there will be validation requirements as
Outpatient Department measures specifications manual to be found on discussed previously and outlined
(CART–OPD) or another third-party the Web site at http:// below for data submitted for July 2008
vendor that has a tool which has met the www.qualitynet.org, and must services forward to affect payment
measure specification requirements for correspond to both the aggregate determinations for CY 2010 and
data transmission to the QualityNet number of cases submitted by a hospital subsequent calendar years. The
Exchange. and the number of Medicare claims it validation requirements include
Hospitals must submit quality data submits for payment. To be considered independent reabstraction of medical
through the CMS contractor’s secure ‘‘accurate,’’ submissions must pass data elements by a clinical data
Web site. Detailed information about the validation. As stated previously in this abstraction center (CDAC). The CMS
Web site for submitting quality measure section, we are revising our validation contractor will randomly select 5 cases
data under the HOP QDRP is not requirement from the proposed rule for from all cases successfully submitted to
available as of the publication of this purposes of the CY 2009 payment the OPPS Clinical Warehouse for any
final rule with comment period. We update. Thus, there is no validation relevant time period. The CDAC will
anticipate awarding the contract to requirement for the initial reporting mail requests to the hospitals to send
design and manage the OPPS Clinical period (April to June 2008) affecting the the selected medical records or other
Warehouse in the near future. We CY 2009 payment update. It is our supporting documentation to the CDAC
expect the CMS contractor’s Web site to intention that there will be validation within 30 calendar days. The CDAC will
meet or exceed all current Health requirements under the HOP QDRP as independently reabstract the medical
Insurance Portability and outlined in this section for reporting record data elements. Abstraction
Accountability Act requirements for periods beginning July–September 2008 feedback will be provided to all
security of personal health information. services forward that will be considered hospitals on abstracted data elements.
The OPPS Clinical Warehouse will for payment decisions beginning with At this time, the following audit
submit the data to CMS on behalf of the the CY 2010 payment update. validation requirements are intended to
apply for full CY 2010 payment updates to report the quality measures on the would parallel the HOP QDRP periodic
forward: CMS Web site. Our intent is to make data submission deadlines.
• A time period of services after the this information public in CY 2009 by Comment: One commenter stated that
initial April to June 2008 time period posting it on the CMS Web site. an attestation statement would be
will be determined. At this time, we Participating hospitals will be granted acceptable as long as providers have
intend to use data from July 2008 the opportunity to preview this sufficient time to review and verify that
services forward for the HOP QDRP for information prior to its public posting as data were submitted accurately. No
the CY 2010 payment update. we have recorded it. comments against the requirement of an
• Submission of supporting Comment: Several commenters attestation statement were received.
documentation for 5 selected cases provided thoughts on the publication of Response: Under any attestation
sampled from each hospital is required. quality data collected. The commenters procedure we implement, providers
• A passing threshold of 80 percent believed that consumers should be able would have time to review and verify
reliability reflecting the accuracy of to access quality data and cost that data were submitted accurately.
submitted data elements is set to information electronically that is In light of the public comments
calculate quality measures. organized to allow comparison of received we intend that an attestation
• An upper bound of 95 percent information that is correct, current, and procedure similar to the attestation
confidence interval to measure accuracy clear. They suggested that the requirement utilized in the IPPS
is set. information be presented on all RHQDAPU program will be included in
• Clustering of variability at the chart available sites of service so consumers the HOP QDRP for CY 2010 and
level will be incorporated into the can compare a hospital outpatient subsequent payment years.
confidence interval. department with an ASC for a procedure
To receive the full OPPS payment rate H. HOP QDRP Reconsiderations
that can be performed in both settings.
update, the hospital must pass our They also suggested that there be a When the IPPS RHQDAPU program
validation requirement of a minimum of provider narrative section to address was initially implemented, it did not
80 percent reliability, based upon our information regarding reliability or include a reconsideration submission
audit validation process, for the accuracy, and provider-specific process for hospitals. Subsequently, we
designated time periods. information such as accreditation status. received many requests for
The methodology to be used for Response: We thank the commenters reconsideration of those payment
calculating the confidence intervals for their support of providing public decisions, and as a result identified a
under the HOP QDRP is that currently access to hospital outpatient quality process by which participating hospitals
utilized for the IPPS RHQDAPU data. We strive to present information would submit requests for
program. Due to the small sample sizes contained on Web sites in as complete reconsideration. We anticipate similar
during CY 2010 (as noted above, data and clear manner possible. We also concerns with the HOP QDRP and,
from only 5 cases will be used), we thank the commenters for their thoughts therefore, in the CY 2008 OPPS/ASC
anticipate that the calculated confidence on additional information that could be proposed rule (72 FR 42805) we
intervals will be larger. However, as CY included that would aid consumers in proposed to establish a reconsideration
2010 is only the second year of the HOP assessing a provider’s quality measure process for the HOP QDRP for those
QDRP, we view this as appropriate. We data. hospitals that fail to meet the CY 2009
anticipate estimating the percent After consideration of the public HOP QDRP requirements with the
reliability based upon a review of 5 comments received and as discussed in procedural details of that process posted
documentation audits and then the above responses to those comments, to the QualityNet Exchange Web site,
calculating the upper 95 percent we intend that information collected https://www.qnetexchange.org. In the
confidence limit for that estimate. If that under the HOP QDRP will be made CY 2008 OPPS/ASC proposed rule (72
upper limit is above the required 80 public in CY 2009 by posting it on the FR 42805), we sought public comment
percent reliability threshold, we CMS Web site. Information from non- specifically on the need for a structured
anticipate considering the hospital’s validated data, including the initial reconsideration process for CY 2009 and
data valid for payment update purposes reporting period (April–June 2008) will subsequent calendar years. We also
for CY 2010 forward. As proposed, we not be posted. Participating hospitals requested comment on what such a
intend to use the design specific will be granted the opportunity to process should entail. For example,
estimate of the variance for the preview this information prior to its such a process, if established, could
confidence interval calculation, which, public posting as we have recorded it. include—
in this case, is a single stage cluster
G. Attestation Requirement for Future • A limited time, such as 30 days
sample, with unequal cluster sizes. (For from the public release of the decision,
Payment Years
reference, see Cochran, William G. for requesting a reconsideration;
(1977) Sampling Techniques, John CMS also solicited comments on • Specific individuals or functions in
Wiley & Sons, New York, chapter 3, whether to implement an HOP QDRP a hospital organization that can request
section 3.12.) Each sampled medical attestation requirement in CY 2010 and such a reconsideration and that would
record is considered as a cluster for subsequent payment years similar to the be notified of its outcome;
variance estimation purposes, as proposed attestation requirement in the • The specific factors that CMS will
documentation and abstraction errors IPPS RHQDAPU program set out in the consider in such a reconsideration, such
are believed to be clustered within FY 2008 IPPS proposed rule (72 FR as an inability to submit data timely due
specific medical records. 24808). Hospitals would be required to to CMS systems failures;
submit a written form to a CMS • Specific requirements for
F. Publication of HOP QDRP Data contractor indicating that they formally submitting a reconsideration request,
Collected attest to the accuracy and completeness such as a written request for
New section 1833(t)(17)(E) of the Act of their data, including the volume of reconsideration specifically stating all
requires that the Secretary establish data submitted to the OPPS Data reasons and factors why the hospital
procedures to make data collected under Warehouse. We anticipated that the believes it did meet the HOP QDRP
this program available to the public and attestation form submission deadlines program requirements;
• Suggestions regarding the type of clause (iv) as clause (v), adding new delay implementation of collection of
entity that should conduct the section 1833(i)(2)(D)(iv), and adding ASC quality measure data. We also
reconsideration process; and new section 1833(i)(7) to the Act. These recognize the necessity of equal
• The timeframe, such as 60 days, for amendments authorize the Secretary to accountability for providers of the same
CMS to provide its reconsideration require ASCs to submit data on quality services and appreciate this reminder.
decision to the hospital. measures and to reduce the annual Comment: Several commenters stated
We also requested comments on the increase in a year by 2.0 percentage that an administrative claims-based
reasons for not establishing such a points for ASCs that fail to do so. These quality measure reporting system
reconsideration process. We indicated provisions permit, but do not require, should be implemented for ASCs,
that we planned to establish procedures the Secretary to require ASCs to submit similar to that in place for physician
that are as similar as possible to those such data and to reduce any annual reporting. Commenters suggested that a
used by the IPPS RHQDAPU program increase for non-compliant ASCs. claims-based system would reduce the
should we finalize our proposal to In the CY 2008 OPPS/ASC proposed financial and administrative burden for
implement a reconsideration process for rule, we did not propose to introduce these smaller facilities that more
HOP QDRP. quality measures for reporting in ASCs resemble physician offices than
Comment: While we did not receive for CY 2008 as we did for the OPPS as hospitals, noting that ASCs will
any comments opposing a described in sections XVII.B. through H. continue submitting Medicare claims
reconsideration process, two of the proposed rule. We believe that using the CMS 1500 form as do
commenters suggested that the promoting high quality care in the ASC physicians at least through 2008,
reconsideration process be setting through quality reporting is providing ASCs the ability to report data
straightforward, transparent, and timely. highly desirable and fully in line with in the same manner as physicians. One
One commenter requested that clear our efforts under other payment commenter suggested CMS work with
guidance on how to submit appeals be systems. However, we also believe that ASC leaders to develop HCPCS level II
provided, and that any appeals be the transition to the revised ASC G codes that would allow facility-level
expedited. One commenter stated that it payment system in CY 2008 poses such quality measures to be reported using an
was important to have a reconsideration a significant challenge to ASCs that it administrative claims-based approach.
process in the case of disputes regarding would be most appropriate to allow Response: We thank the commenters
submitted data. One commenter some experience with the revised for their suggestions for our
supported having a reconsideration payment system before introducing consideration in implementing a quality
process similar to the one used under other new requirements. measure program for ASCs.
the inpatient quality measure reporting Implementation of quality reporting at Comment: Several commenters stated
program. this time would require systems changes that CMS should consider the use of five
Response: We thank the commenters and other accommodations by ASCs, ASC measures currently under
for voicing their support for a facilities which do not have prior development if the five were NQF-
reconsideration process. CMS always experience with quality reporting as endorsed. These five measures focus on
strives to implement processes that are hospitals already have for inpatient patient falls, patient burns, hospital
straightforward, transparent, and timely quality measures, at a time when they transfer/admission, wrong site/patient/
and fully intend to provide guidance on are implementing a significantly revised procedure/implant situations, and
any reconsideration process used for payment system. We believe that our CY prophylactic antibiotic timing similar to
outpatient hospital data. It is our intent 2008 proposal to implement quality PQRI #20 and #21.
to model a reconsideration process for reporting for HOPDs prior to Response: We thank the commenters
the HOP QDRP similar to the one used establishing quality reporting for ASCs for supplying this information for our
under the inpatient quality measure would allow time for ASCs to adjust to consideration in developing quality
reporting program. the changes in payment and case-mix measures for ASCs.
Comment: Several commenters stated that are anticipated under the revised After consideration of the public
there should be an expeditious payment system. We would also gain comments received, and as discussed in
mechanism for corrections or resolution experience with quality measurement in the above responses to those comments,
of disagreements about any information the ambulatory setting in order to we are finalizing to our decision to
posted for public presentation. identify the most appropriate measures delay implementation of ASC quality
Response: We intend that any process for quality reporting in ASCs prior to measure reporting. We expect to
put in place for corrections or resolution the introduction of the requirement in implement the provisions of section
of disagreements about any information ASCs. We intend to implement the 109(b) of the MIEA–TRHCA, Pub. L.
posted for public presentation will be as provisions of section 109(b) of the 109–432, in a future rulemaking.
expeditious as possible. MIEA–TRHCA, Pub. L. 109–432, in a
After consideration of the public future rulemaking. J. FY 2009 IPPS Quality Measures
comments received and as discussed in Comment: Several commenters agreed Under the RHQDAPU Program
the above responses to those comments, with our decisions to delay As stated in FY 2008 IPPS proposed
we intend that a reconsideration process implementation of quality measures for rule (72 FR 24805), we proposed to add
modeled after that for reporting ASCs. However, one commenter urged 1 outcome measure and 4 process
inpatient quality measures will be CMS to implement a quality reporting measures to the existing 27 measure set
included in the HOP QDRP for CY 2009 system for ASCs as soon as possible as to establish a new set of 32 quality
and subsequent calendar years. all providers that perform the same measures to be used under the
services should be held to the same RHQDAPU program for the FY 2009
I. Reporting of ASC Quality Data accountability standards with respect to IPPS annual payment determination.
As discussed in section XVII.A.2. of the quality of the care the deliver. There We proposed to add the following five
this final rule with comment period, were no other comments in measures for the FY 2009 IPPS annual
section 109(b) of the MIEA–TRHCA disagreement with the planned delay. payment determination:
(Pub. L. 109–432) amended section Response: We appreciate these • PNE 30-day mortality measure
1833(i) of the Act by redesignating commenters’ support for our decision to (Medicare patients)
• SCIP Infection 4: Cardiac Surgery rule would not be finalized in that final • SCIP Infection 4: Cardiac Surgery
Patients With Controlled 6AM rule. Patients With Controlled 6AM
Postoperative Serum Glucose At the time we published the FY 2008 Postoperative Serum Glucose
• SCIP Infection 6: Surgery Patients IPPS final rule, only the PNE 30-day • SCIP Infection 6: Surgery Patients
With Appropriate Hair Removal mortality measure had been endorsed by With Appropriate Hair Removal
• SCIP Infection 7: Colorectal Patients As we stated in the FY 2008 IPPS
the NQF. Therefore, we finalized only
With Immediate Postoperative proposed rule (72 FR 24805), these
that measure as part of the FY 2009 IPPS
Normothermia measures reflect our continuing
• SCIP Cardiovascular 2: Surgery measure set and stated that we would commitment to quality improvement in
Patients on a Beta-Blocker Prior to further address adding additional both clinical care and quality, and they
Arrival Who Received a Beta-blocker measures in the CY 2008 OPPS final demonstrate our commitment to include
During the Perioperative Period rule (that is, this CY 2008 OPPS/ASC in the RHQDAPU program only those
We stated that we planned to formally final rule with comment period) and, if quality measures that reflect consensus
adopt these measures a year in advance necessary, in the FY 2009 IPPS among affected parties and that have
in order to provide time for hospitals to proposed and final rules. We also been reviewed by a consensus building
prepare for changes related to the responded to comments we had process. Because these measures are
RHQDAPU program. We also stated that received on the 5 proposed measures. now endorsed by the NQF, we are
we anticipated that the proposed (72 FR 47348 through 47351) finalizing them for the FY 2009 measure
measures would be endorsed by the The NQF has endorsed the following set, bringing the total number of
NQF. Finally, we stated that any additional process measures that we measures in that measure set to 30.
proposed measure that was not proposed to include in the FY 2009 The measure set to be used for FY
endorsed by the NQF by the time that RHQDAPU measure set: 2009 annual payment determination is
we published the FY 2008 IPPS final as follows:
Topic Quality measure
Heart Attack (Acute Myocardial Infarction) • Aspirin at arrival.*

• Aspirin prescribed at discharge.*
• ACE inhibitor (ACE–I) or Angiotensin Receptor Blocker (ARBs) for left ventricular systolic dysfunc-
tion.*
• Beta blocker at arrival.*
• Beta blocker prescribed at discharge.*
• Fibrinolytic (thrombolytic) agent received within 30 minutes of hospital arrival.**
• Primary Percutaneous Coronary Intervention (PCI) received within 120 minutes of hospital ar-
rival.**
• Adult smoking cessation advice/counseling.**
Heart Failure (HF) ...................................... • Left ventricular function assessment.*

• ACE inhibitor (ACE–I) or Angiotensin Receptor Blocker (ARBs) for left ventricular systolic dysfunc-
tion.*
• Discharge instructions.**
Pneumonia (PNE) ...................................... • Initial antibiotic received within 4 hours of hospital arrival.*
• Oxygenation assessment.*
• Pneumococcal vaccination status.*
• Blood culture performed before first antibiotic received in hospital.**
• Appropriate initial antibiotic selection.**
• Influenza vaccination status.**
Surgical Care Improvement Project (SCIP) • Prophylactic antibiotic received within 1 hour prior to surgical incision.**
named SIP for discharges prior to July
2006 (3Q06).
• Prophylactic antibiotics discontinued within 24 hours after surgery end time.**
• SCIP–VTE 1: Venous thromboembolism (VTE) prophylaxis ordered for surgery patients.***
• SCIP–VTE 2: VTE prophylaxis within 24 hours pre/post surgery.***
• SCIP–Infection 2: Prophylactic antibiotic selection for surgical patients.***
• SCIP–Infection 4: Cardiac Surgery Patients with Controlled 6AM Postoperative Serum Glu-
cose.*****
• SCIP–Infection 6: Surgery Patients with Appropriate Hair Removal.*****
Mortality Measures (Medicare patients) .... • Acute Myocardial Infarction 30-day mortality Medicare patients.***
• Heart Failure 30-day mortality Medicare patients.***
• Pneumonia 30-day mortality Medicare patients.****
Patients’ Experience of Care ..................... • HCAHPS patient survey.***

* Measure included in 10 measure starter set.
** Measure included in 21 measure expanded set.
*** Measure added in CY 2007 OPPS final rule.
**** Measure added in FY 2008 IPPS final rule.
***** Measure added in CY 2008 OPPS final rule.
We also stated in the FY 2008 final only secondary roads, 15-miles) from necessary provider designations are co-
rule that the RHQDAPU participation the nearest hospital or other CAH. In located with other hospitals, which
requirements for the FY 2009 program addition, CAHs receive payment for typically are PPS-excluded inpatient
would apply to additional measures we services furnished to Medicare psychiatric facilities or inpatient
adopt for that year’s program (72 FR beneficiaries differently. CAHs receive rehabilitation facilities. We are also
47361). cost-based payment for 101 percent of aware that there is interest in the
Therefore, hospitals must start their reasonable costs. creation or acquisition by CAHs with
submitting data for SCIP Infection 4 and Prior to January 1, 2006, the CAH necessary provider designation of off-
SCIP Infection 6 starting with first minimum distance eligibility campus facilities that they do not
quarter calendar year 2008 discharges requirement was not applicable to believe would be subject to CAH
and subsequent quarters until further entities States had certified as necessary location requirements.
notice, and hospitals must submit their provider CAHs. Approximately 850 For the reasons noted below, in the
aggregate population and sample size current CAHs have been designated by CY 2008 OPPS/ASC proposed rule (72
counts for Medicare and non-Medicare their States as necessary providers. The FR 42806), we took a proactive
patients. These requirements are criteria used to qualify a CAH as a approach by proposing a change in the
consistent with the requirements for the necessary provider were established by regulation to be consistent with our
other 24 AMI, HF, PN, and SCIP process each State in its Medicare Rural belief that the intent of the CAH
measures included in the FY 2009 Hospital Flexibility Program (MRHFP). program is to maintain hospital level
measure set. The complete list of The State’s MRHFP rural health care services in rural communities while
procedures for participating in the plan contains the necessary assurances ensuring access to care. We believe that
RHQDAPU program for FY 2009 is that the plan was developed to further this proposed change to the regulations
provided in the FY 2008 final rule (72 the goals of the statute and regulations will help to maintain the integrity of the
FR 47359–47361). to ensure access to essential health care MRHFP within the statutory
We plan to propose in the FY 2009 services for rural residents. States, in requirements.
IPPS proposed rule that we will add consultation with their hospital
these two measures to the current 24 2. Co-location of Necessary Provider
associations and Offices of Rural Health,
process measures included in the CAHs
have defined those CAHs that provide
RHQDAPU chart audit validation necessary services to a particular patient Some necessary provider CAHs are
requirement starting with first quarter community in the event that the facility co-located with other hospitals,
2008 calendar year discharges. These did not meet the required 35-mile (or, in particularly specialty psychiatric and/or
validation results would be included as the case of mountainous terrain or in rehabilitation hospitals. Prior to the
part of a RHQDAPU FY 2010 chart areas with only secondary roads, 15- enactment of section 405(g) of Public
validation requirement if they are mile) distance requirement from the Law 108–173, it is understandable that
finalized in the FY 2009 IPPS final rule. nearest hospital or CAH. Each State’s a State MRHFP might have allowed co-
We are announcing our intention to criteria are different, but the criteria location of a CAH with a necessary
make this proposal to provide hospitals share certain similarities and all define provider designation with the
with sufficient advance notice when a necessary provider related to the specialized services of a psychiatric
abstracting and submitting these facility location. and/or an inpatient rehabilitation
measures to CMS. However, section 405(h)(1) of Public hospital. The State may have believed
Since SCIP Cardiovascular 2 is not Law 108–173 amended section that beneficiary access to care would be
currently endorsed by the NQF, CMS 1820(c)(2)(B)(i)(II) of the Act by adding enhanced through the provision of both
will not adopt this measure as part of language that ended States’ authority to CAH and these specialized services at
the official FY 2009 IPPS measure set certify a CAH as a necessary provider, the same location, and the CAH itself
for annual payment determination at effective January 1, 2006. In addition, might have had difficulty in providing
this time. In addition, as stated in the section 405(h)(2) of Public Law 108–173 such services within its permitted bed
FY 2008 IPPS final rule, CMS is not amended section 1820(h) of the Act to limits. However, section 405 of Public
adopting the SCIP Infection 7 measure include a grandfathering provision for Law 108–173 included several
as part of the FY 2009 IPPS measure set CAHs that were certified as necessary provisions that permit CAHs themselves
for annual payment determination at providers prior to January 1, 2006. We to address such access to care issues.
this time. incorporated these amendments in Specifically, section 405(e) of Public
§ 485.610(c) of our regulations in the FY Law 108–173 amended sections
XVIII. Changes Affecting Critical 2005 IPPS final rule (69 FR 49220). 1820(c)(2)(B)(iii) and 1820(f) of the Act
Access Hospitals (CAHs) and Hospital Because those regulations did not to increase the permitted number of
Conditions of Participation (CoPs) address the situation where the CAH inpatient beds from 15 to 25. In
A. Changes Affecting CAHs grandfathered CAH is no longer the addition, section 405(g) of Public Law
same facility due to relocation, in the 108–173 added section 1820(c)(2)(E) to
1. Background FY 2006 IPPS final rule (70 FR 47490), the Act, which permits a CAH to operate
CAHs are subject to different we amended § 485.610 of our distinct part inpatient psychiatric and/
participation requirements than are regulations to add a new § 485.610(d) or rehabilitation units, each subject to a
hospitals. Among other requirements, a that addressed the relocation criteria a 10-bed limit that is not included as part
CAH must be located in a rural area (or necessary provider CAH has to meet to of the CAH’s 25-bed limit. Therefore, a
an area treated as rural) and, under retain its necessary provider CAH can operate a 45-bed facility
section 1820(c)(2)(B)(i)(I) of the Act and designation. addressing a wide range of needs in the
§ 485.610(c) of our regulations, must Additional circumstances concerning rural community it serves. We believe
meet an additional distance-related CAHs with existing necessary provider that CAHs seeking to provide access to
location requirement. Under this designations have come to our attention specialized services should avail
requirement, a CAH must be located at that we believe also need to be themselves of the statutory provisions
least 35-miles (or, in the case of addressed. Specifically, we have learned governing distinct part units in CAHs
mountainous terrain or in areas with that some CAHs with grandfathered rather than making arrangements with
other hospital providers to share space 3. CAH Provider-Based Facilities provider CAH, or a CAH that does not
at the CAH location. We have consistently taken the have a necessary provider designation,
In light of these changes to the statute, position that the intent of the CAH operates a provider-based facility as
we proposed to no longer allow a program is to keep hospital-level defined in § 413.65(a)(2), or a
necessary provider CAH to enter into services in rural communities, thereby psychiatric or rehabilitation distinct
ensuring access to care (FY 2006 IPPS part unit as defined in § 485.647 that
co-location arrangements between CAHs
final rule (70 FR 47469)). A CAH is was created or acquired on or after
and hospitals, unless such arrangements
permitted to create or acquire an off- January 1, 2008, it must comply with
were in effect before January 1, 2008,
campus location, including a distinct the distance requirement of a 35-mile
and the type and scope of services drive to the nearest hospital or CAH (or
offered by the facility co-located with part unit that satisfies the location
criteria for a CAH and operates under 15 miles in the case of mountainous
the necessary provider CAH do not terrain or in areas with only secondary
change. the CAH’s provider agreement under the
roads). (In the proposed § 485.610(e)(2),
provider-based regulations at 42 CFR
Currently, co-location arrangements we inadvertently used the phrase ‘‘after
413.65. We note that, under section
seem to involve psychiatric or January 1, 2008’’ instead of ‘‘on or after
1820(c)(2)(B)(i)(II) of the Act, a CAH
rehabilitation hospitals. However, we January 1, 2008.’’ We have corrected
does not have to meet the distance
are concerned that, without this change, this language in this final rule with
requirements relative to other hospitals
there may be situations where more comment period. We also included the
or CAHs if it was certified as a necessary
necessary provider CAHs will co-locate words ‘‘off-campus’’ before the words
provider by the State prior to January 1,
with PPS hospitals. We also cannot rule ‘‘provider-based locations’’ in the same
2006. We stated in the FY 2006 IPPS
out a scenario where two necessary regulation to conform to the references
final rule (70 FR 47472), when
provider CAHs could co-locate after in the section for off campus location.)
addressing the relocation criteria for a
relocation. We believe the co location of necessary provider CAH, that the 4. Termination of Provider Agreement
a necessary provider CAH with another ‘‘necessary provider’’ designation is In the event that a CAH with a
hospital or necessary provider CAH is specific to the physical location(s) of the necessary provider designation enters
not consistent with the CAH statutory CAH in existence at the time of the into a co location arrangement on or
framework that establishes requirements designation. We believe the necessary after January 1, 2008, or acquires or
for a CAH to be a certain minimum provider CAH designation cannot be creates an off-campus facility on or after
distance from other hospitals or CAHs. considered to extend to any new January 1, 2008, that does not satisfy the
We believe that the elimination of facilities not in existence when the CAH CAH distance requirements in
States’ authority to designate necessary received its original necessary provider § 485.610(c), we proposed that we
provider CAHs and the new authority designation. Accordingly, we believe would terminate that CAH’s provider
for CAHs to operate psychiatric and the creation of any new location that agreement, in accordance with the
rehabilitation units in addition to their would cause any part of the CAH to be provisions of § 489.53(a)(3). (In
expanded ceiling for inpatient beds situated at a location not in compliance proposed § 485.610(e)(3), we
should provide sufficient flexibility for with the distance requirements at 42 inadvertently used the phrase ‘‘after
necessary provider CAHs to operate CFR 485.610 would cause the entire January 1, 2008’’ instead of ‘‘on or after
within the statutory framework without CAH to violate the distance January 1, 2008.’’ We have corrected
engaging in additional arrangements. requirements. this language in this final rule with
We also proposed to clarify that, Of the approximately 1,300 CAHs, comment period.) The necessary
under certain circumstances, a change 453 CAHs have health clinics, 81 have provider CAH could avoid termination
of ownership of any of the facilities psychiatric units, and 20 have by converting to a hospital that is paid
rehabilitation units. We do not know under the IPPS, assuming that the
(either the CAH or the existing co-
how many of the existing clinics and facility satisfies all requirements for
located facility) with a co-location
distinct part units are at off-site participation as a hospital in the
arrangement that was in effect before
locations. However, we are concerned Medicare program under the provisions
January 1, 2008, will not be considered
with CAHs creating or acquiring off- in 42 CFR Part 482. We also noted that
to be a new co-location arrangement. If
campus locations, including distinct if the necessary provider CAH corrects
a change of ownership should occur in part psychiatric and rehabilitation units,
a CAH with a grandfathered co-location the situation that led to the
that do not comply with the CAH noncompliance, a termination action
arrangement on or after January 1, 2008, location requirement relative to other
the provider agreement will be assigned will not be triggered. A CAH that is not
facilities. Therefore, when such off- a necessary provider CAH could not
to the new owner unless the new owner campus facilities are created by a CAH
rejects assignment of the provider have a co-location situation due to the
with a necessary provider designation, distance requirements it is required to
agreement. Grandfathered necessary there is no reason to assume that the meet at § 485.610(c).
provider CAH status, including distance exemption given to the CAH
grandfathered co-location arrangements, should be extended without 5. Regulation Changes
would not transfer to a new CAH owner qualification to any location for that In the CY 2008 OPPS/ASC proposed
who does not assume the provider CAH’s off-campus facilities. rule (72 FR 42807), we proposed to
agreement from the previous owner. To Accordingly, any CAH off-campus amend § 485.610 by adding a new
obtain CAH designation, the new locations must satisfy the current paragraph (e) to address situations
provider would have to comply with all statutory CAH distance requirements, under our proposal relating to off-
the CAH designation requirements, without exception, regardless of campus and co-location requirements
including the location requirements whether the main provider CAH is a for all CAHs (including CAHs with
relative to other providers, that is, more necessary provider CAH. necessary provider designations).
than a 35-mile drive (or 15 miles in Therefore, in the CY 2008 OPPS/ASC Comment: Several commenters stated
areas of mountainous terrain or proposed rule (72 FR 42807), we that while it is a good policy to
secondary roads). proposed to clarify that if a necessary eliminate future co-location
arrangements between CAHs and acute provider-based clinics should not be facilities at § 413.65(a)(2) that must
care hospitals, they do not believe it is grandfathered. comply with this requirement.
a good policy to eliminate relationships Another commenter stated that it Comment: One commenter stated that
between CAHs and other hospitals in valued the cost-based financial support for any CAH that is landlocked against
opening psychiatric or rehabilitation that CMS extends to CAHs. The future growth, this proposed change
services. They indicated that such a commenter supported CMS’ proposed would severely restrict the CAH’s ability
policy change would only limit access rule and viewed the proposed policy to provide the quality services required
to care without providing cost savings changes as a step towards restoring the by the community. At the very least, the
or improving efficiency. The ‘‘intended spirit’’ of the CAH commenter urged that CMS increase the
commenters stated that co-locating with designation. current on-campus yards from 250 yards
other providers would lead to cost- Response: We appreciate the to 500 or 750 yards. Another commenter
effective high quality delivery of health commenters’ support. However, we stated that it is reasonable that CAHs are
care services to Medicare beneficiaries disagree with the comment that existing prohibited from creating new services
and others who need the services. provider-based clinics should not be that are close to competing
Another commenter stated that CMS grandfathered. The current regulations organizations, but believed that limiting
provided no basis for this proposal in did not explicitly address the issue of all off-campus services to only those in
the background material to the proposed necessary provider CAHs from acquiring place by the end of the year, would
rule. or creating off-campus facilities that do freeze the CAH into an increasingly out-
Response: We disagree with the not meet the minimum distance of-date delivery modality.
comment that we did not provide a requirements. However, our policy has Response: We acknowledge the CAH’s
basis for the proposed requirements. been that CAHs are required to meet the constraints of having to locate a
Additionally, we are not seeking to provider-based clinic on its campus.
distance requirement, including any off-
eliminate Medicare beneficiary access to However, this rule will not restrict a
campus facilities. In light of the
inpatient psychiatric and rehabilitation CAH from building or obtaining an off-
statutory change to the designations for
site provider-based clinic on or after
services specifically, or access to any necessary provider CAHs, we believe
January 1, 2008. The CAH can have a
type of care in general. As we explained that it is necessary to grandfather
provider-based clinic that complies with
in the preamble to the proposed rule, we existing provider-based clinics.
the provider-based rules in § 413.65. In
proposed the revisions to § 485.610 in Comment: Numerous commenters addition, the off-site clinic must be
light of recent changes to the statute. requested that rural health clinics located more than a 35-mile (or 15-mile)
These statutory changes allow for: (1) (RHCs) be excluded from the category of drive from another CAH or hospital. For
An increase in the number of CAH provider-based entities that must example, the CAH could have a
inpatient beds from 15 to 25; and (2) a comply with the proposed change. provider-based clinic located 2 miles or
CAH to operate distinct part inpatient Some commenters stated that operating 10 miles from the provider CAH,
psychiatric and/or rehabilitation units, an RHC is the only way to provide providing the clinic complies with the
each with a 10-bed limit that is not healthcare to the medically underserved distance requirements and is 35 (or 15)
included as part of the CAH’s 25-bed population in their service area. One miles away from another CAH or
limit. By allowing a CAH to operate a commenter stated that if CMS does not hospital. The regional offices will
45-bed facility, these amendments to the exempt RHCs from the proposed policy, evaluate these issues on a case-by-case
statute permit CAHs themselves to CMS should allow grandfathered CAH/ basis, consistent with all existing
address the access to care issues provider-based RHCs to move the regulations. Also, as discussed above,
mentioned by the commenters. location of the RHC without because we are now excluding RHCs
These statutory provisions clearly jeopardizing the CAH status of the from these CAH provider-based
provide an opportunity for the CAH to parent provider. requirements, a CAH would have even
directly meet the wide range of needs in Response: To be certified as an RHC, more flexibility in choosing the location
the rural community it serves. However, the clinic must be located in an area of its provider-based RHC.
co-location arrangements between CAHs designated, either by population or Comment: Several commenters stated
and hospitals that were in effect before geographic area or location, as a that they have started plans (and, in
January 1, 2008 would still be Medically Underserved Area (MUA) or some cases, construction) for a new
permitted, provided that there is no Health Professional Shortage Area provider-based facility that will not be
change in the type and scope of services (HPSA). In addition, State governors are completed by January 1, 2008. They
offered by the facility co-located with allowed to designate areas with a have requested an exemption to be able
the necessary provider CAH. shortage of professional health services to move forward with their plans that
Comment: One commenter expressed through the use of statewide shortage were initiated prior to the publication of
complete support for the proposal, and designation plans approved by HRSA’s the proposed rule.
saw it as a clarification of existing Bureau of Health Professions. Because Response: We recognize that a
policy. The commenter stated that a RHCs have their own location number of CAHs have plans underway
CAH provider-based clinic was built requirements and because, unlike other to build or acquire provider-based
across the street from its outpatient provider-based clinics, a provider-based facilities that will not be completed
clinic to increase market share as its RHC is a separate entity which before January 1, 2008. For those CAHs
population was dwindling. The undergoes a separate certification that demonstrate that they have begun
commenter stated that CAHs were process and has a unique provider such planning and/or construction, our
financed and designed to serve the identification number from the base regional offices will evaluate those
needs of the underserved, not to provider, we believe that our concerns issues on a case-by-case basis. A
compete in the market against not-for- leading to our provider based proposal demonstration that construction plans
profit hospitals that are not subsidized do not apply to CAH provider-based were ‘‘under development’’ prior to
like CAHs. The commenter also stated RHCs. Accordingly, in this final rule January 1, 2008 could include
that since the regulation is a with comment period, we are excluding supporting documentation such as the
clarification and is not new, the existing RHCs from the list of provider-based drafting of architectural specifications,
the letting of bids for construction, the CAHs concerned about access to CAH. Other commenters were
purchase of land and building supplies, primary care services in the concerned that this proposed rule
documented efforts to secure financing communities that they serve, we have would ban necessary provider CAHs
for construction, expenditure of funds revised our initial proposal in order to from operating an off-site facility.
for construction, and compliance with permit CAHs to continue to operate • One commenter stated that its
State requirements for construction such provider-based RHCs. Additionally, Medicare designation as a sole
as zoning requirements, application for physician offices, owned by CAHs, that community hospital has geographic
a certificate of need, and architectural are not provider-based (billed under the limitations, but that it should not be
review. However, we recognize that it CAH’s provider number) can continue threatened with loss of its special
may not have been feasible for a CAH to be operated by CAHs. reimbursement status if it meets
to have completed all of these activities We agree with the IOM and other community needs by developing
noted above as examples prior to national bodies that contend that quality provider-based or off-campus services.
January 1, 2008. Thus, we expect the of care in rural areas can be maximized The commenter questioned why CMS is
CMS Regional Offices to consider all of through collaboration. The IOM report treating CAHs differently.
the factors involved in each CAH’s plan entitled, ‘‘Quality through • Several commenters stated that
and make case by case determinations of Collaboration: The Future of Rural access will be diminished in many rural
whether a CAH can continue its plans Health’’ 1 states that some of the quality communities because those areas are
to acquire or construct an off-campus shortcomings in rural areas stem from experiencing an increasing inability to
provider-based clinic. We note that we the lack of access to ‘‘core health care recruit or retain physicians in non-
have also used the above documentation services’’ such as primary care in the provider-based practices due to
guidelines in Publication 100–20 for community, emergency medical perceived inadequate Medicare and
grandfathered specialty hospitals to services, and hospital care. We believe Medicaid payment to free-standing
determine if construction plans were that CAH provider-based facilities that RHCs, insufficient payment for
‘‘under development.’’ are located in the immediate physicians under the fee-schedule, and
Comment: Many commenters stated communities of the CAH will help to healthcare professional workforce
that CMS should not adopt the ensure that the people in those shortages. One commenter stated that to
provisions in the proposed rule because communities have access to primary continue to apply the ‘‘necessary
limiting off-site clinics would impede care. Also, CAHs will be able to utilize provider’’ designation to off-site services
the provision of health care in their provider-based RHCs to provide primary will preserve one of the only methods
surrounding communities due to the care to Medicare beneficiaries. that a CAH has to recruit physicians to
fact that it could not be provided Comment: By providing specific rural service areas. The commenter
without cost-based reimbursements. details and scenarios about their own stated that CMS should allow the
Also, the commenters suggested that as CAHs, many commenters expressed necessary provider CAH to have a
physicians cannot be paid competitively other reasons for requesting that CMS waiver provision for off-site services
without cost-based reimbursement, this not adopt this proposal. Overall, the beyond January 1, 2008 if other
would further compound the difficulties commenters believed that the proposed hospitals within the radius have no
in recruiting healthcare providers to requirements, if implemented, would objections to the services.
work in rural areas. Other commenters have the unintended effect of limiting • One commenter stated that the
stated that the only way to recruit and access to healthcare services for the proposed rule indicates CMS’ interest in
maintain physicians is for hospitals to residents of their communities. The constraining CAHs. The commenter
offer the competitive salaries that are reasons these commenters gave for encouraged CMS to adopt a philosophy
afforded through a provider-based requesting that CMS not adopt the that limits unnecessary constraints and
arrangement. A few commenters stated proposal were as follows: enables CAHs to serve their patients.
that denying CAHs the opportunity to • Several commenters stated that the The commenter urged CMS to remain
invest in physician offices in rule would have a devastating impact on supportive of the CAH program.
communities where physicians are many senior citizens who do not drive Additionally, one commenter stated that
desperately needed will disadvantage and who would therefore not have CMS has already weighed in on the
the patients living in those areas. One access to quality health care in their issues where cost-based reimbursement
commenter requested that CMS not rural community. One commenter stated could be a major advantage and has
adopt the provisions of the proposed that the proposed change would take eliminated cost-based reimbursement
rule and enter into a dialogue with away their organization’s opportunity to for certain lab services. The commenter
CAHs about an approach that would be cost reimbursed from Medicare and noted that there may be situations
allow for the level of community-based Medicaid. The commenters stated that where other services need to be
access and collaboration being called for this would be a roadblock to increased considered, but that they should be
by the Institute of Medicine (IOM), the access to care for the elderly and low dealt with on a case-by-case basis. If
National Advisory Committee on Rural income. competitive advantage for CAHs is a
Health and Human Services, and other • One commenter expressed concern concern for CMS, the commenter asked
national bodies. about linking an off-campus or distinct that examples be given of such
Response: We do not agree that CMS part unit’s compliance to the CAH arrangements and suggested that a more
should not adopt the provisions in the distance requirements with the narrowly tailored rule should be
proposed rule because, in addition to hospital’s continued designation as a designed to address such issues.
grandfathering the existing provider- CAH and believed that such • Several commenters stated that the
based clinics, CAHs will still be able to applications of the distance purpose of the CAH program is to
provide needed services in their requirements could result in decreasing provide financial stability for small
communities through existing and new patients’ access to surgical and other rural hospitals to serve their
provider-based clinics that meet the procedures that are provided in the communities. The commenters believed
distance requirements and through on- that this rule would eliminate the CAH’s
campus facilities. In addition, and 1 Institute of Medicine of the National Academies ability to provide care to rural seniors.
perhaps most importantly for those of Science; Report released on November 1, 2004. Another commenter stated that the
regulation would be devastating to the distance requirements for a CAH the needs of the immediate and
many provider-based clinics because that are allowed under the Act and surrounding communities. If the
they would be unable to provide the under the requirements. In addition, all community’s needs have changed, the
same level of care, services, and staffing CAHs will be able to establish provider- facility may want to reconsider their
as independent sites. Several based entities on their campus. CAH status and may elect to become a
commenters stated that by forcing CAHs Comment: One commenter requested PPS acute care hospital without the
to have services on-campus, CMS will that CMS clarify provider-based location location limitations that are imposed on
be leaving some community members and indicate whether it includes on- CAHs and their provider-based
without access to services. campus. locations.
Response: We appreciate the varied Response: Provider-based status Comment: A few commenters stated
comments. We first note that the means the relationship between a main that since all of their CAHs are
proposed change will not eliminate the provider and a provider-based entity or necessary provider CAHs, it would be
101 percent reasonable cost a department of a provider (with all geographically impossible to find a new
reimbursement that CAHs currently terms being defined in detail under off-campus location that would meet the
receive. As stated earlier, we do not § 413.65(a)(2)). Provider-based locations 35-mile requirement and that this rule
believe access to these needed services can be both on-campus and off-campus. should not apply to necessary provider
will be diminished as CAHs will still be This rule would not restrict CAHs from CAHs.
able to increase access to care for the having a provider-based entity on Response: We believe that there are
population of its community through a campus. other options for necessary provider
variety of means. Both the Comment: One commenter stated that CAHs that cannot meet the mileage
grandfathering provision of this rule, if CMS adopted the proposed change for requirements. Some examples that we
which allows for provider-based CAHs it should apply to all providers, have previously discussed are on-
locations and off-campus distinct part such as RHCs and Federally qualified campus clinics, provider-based RHCs, or
psychiatric and rehabilitation units that health centers (FQHCs). non-provider-based physician offices
were created or acquired before January Response: We appreciate the owned by CAHs.
1, 2008, and the exclusion of provider- commenter’s opinion regarding Comment: One commenter stated that
based RHCs from the rule provide CAHs treatment of all rural providers; instead of a 35 (or 15)-mile restriction,
with excellent opportunities to not only however, we note that RHCs and FQHCs a minimum mileage limitation (for
maintain access to care but to expand it have different requirements for example 10 miles) would be effective
as well. The role that RHCs play in participating in the Medicare/Medicaid without the potential effect of reducing
providing rural communities with programs than those for CAHs. As we and/or limiting resources for rural
essential access to primary care services noted previously, we are excluding citizens. Additionally, one commenter
cannot be overemphasized. RHCs from the CAH provider-based stated that it objected to CMS’
From the inception of the CAH requirement in light of the specific RHC classification of this new policy as a
program, which started with the certification requirements. ‘‘clarification.’’
essential access community hospitals Comment: One commenter stated that Response: As we have stated
and rural primary care hospitals (EACH/ the proposed change would limit CAH’s previously, the statute, at section
RPCH) 7-State demonstration program, ability to compete on a level playing 1820(c)(2)(B)(i)(I) of the Act, and the
we have been sensitive to the special field with PPS or other for-profit regulation, at 42 CFR § 485.610, both
needs of, not only the CAH program, but providers who have no restrictions on state that the criteria for designation as
of all rural and remote providers. This location of facilities. Another a CAH is that it must be located more
sensitivity has been demonstrated in commenter stated that it is cheaper for than a 35-mile drive (or, in the case of
regulations we recently adopted that the CAH or other hospitals to move mountainous terrain or in areas with
provide flexibility in staffing offsite the care that does not need high only secondary roads available, a 15-
requirements and physician oversight of cost hospital wing space, such as that mile drive) from a hospital, or another
nonphysician practitioners in CAHs. provided in physical therapy. The CAH. We note a provider-based clinic
Ultimately though, the distance-based commenters suggested that it would (other than an RHC) is considered part
requirement, as one of the requirements save CMS money on the cost-report to of the CAH and it is paid the same as
to become certified as a CAH, is allow CAHs to open these offsite the CAH, that is, 101 percent of
provided for in the statute and in the locations. A few commenters also stated reasonable cost. As stated above, CAHs
regulation. We believe the distance that offsite locations may be secured by statute and regulation must comply
requirement is a statutory requirement much more reasonably to offer with the distance requirements. As
that reflects the intent of the CAH additional services than additional such, we view this rule as a clarification
program to provide hospital-level space which may be obtained through on the distance requirements of
services in essentially small rural construction of new facilities on participation for CAHs and their
communities. Our proposal reflects this campus. provider-based locations and off-
understanding and the special status of Response: As stated previously, there campus distinct part units in light of the
CAHs (as opposed to other rural are statutory requirements that dictate change in statute concerning necessary
entities) and should not limit access to the location of CAHs. These statutory provider designations.
care. In addition, as the distance location requirements support the Comment: One commenter objected to
requirement is statutory, a waiver of the original intent of the CAH program, that CMS proposing these changes in the
distance requirement for some CAHs, as is, to ensure and extend access to hospital OPPS proposed rule because
one commenter requested, would not be healthcare services for rural and remote they believed that many CAHs will not
allowed under the statute. However, communities. The program was never evaluate, pay attention to, or read the
CAHs (including necessary provider intended to encourage competition OPPS proposed rule. The commenter
CAHs) will still be able to acquire and between CAHs and PPS hospitals. believed that such proposed changes
create new provider-based clinics as However, it might be a reasonable should be the subject of a separate
long as those provider-based clinics are course of action for a CAH to reevaluate proposed rule. They also believe that, as
either RHCs or entities that comply with whether the CAH program still meets a result of CMS proposing these changes
in the OPPS rule, CMS might not have The requirements permit such CAHs to completion of the postanesthesia
all the information necessary to finish relocate as long as they remain evaluation in the Anesthesia services
the rulemaking on the proposed essentially the same provider and CoP. This action was initiated in
requirements. continue to provide services to the same response to broad criticism from the
Response: On occasion, we have rural service area. medical community that the then-
proposed changes to the CAH program Comment: Several commenters current requirements governing these
in an OPPS rulemaking. We point out requested that we state which types of areas were burdensome and did not
that the subject of the CAH proposed entities to which this policy applies. reflect current practice.
changes was included in the title of the Response: While we do not provide a Since this final rule became effective
OPPS rule. In addition, CMS has complete list of provider-based entities on January 26, 2007, we have received
announced the proposed changes during in this final rule with comment period, a great number of comments and
its Open Door Forums. Having received we define a provider-based entity at questions from providers about the
comments from approximately 200 § 413.65(a)(2). Generally, with the timeframe requirements (for both the
commenters (including various rural exception of RHCs, this CAH provider- initial medical history and physical
health and hospital associations), we are based rule will apply to an entity that examination and its update) as well as
confident that we have received is provider-based to a CAH that will bill about the postanesthesia evaluation
sufficient information, through the Medicare under its provider number for requirements. In both areas, commenters
public comment process, necessary to services rendered. have sought clarification on the
complete the rulemaking process. After consideration of the public application of these requirements for
Comment: One commenter requested comments received, we are finalizing patients undergoing outpatient surgeries
clarification on what CMS means in the the requirements as proposed with the and procedures. While the new
termination discussion of the proposed following revisions. For the reasons requirements contained in the Carve-out
rule and suggested that clarification was noted previously, in § 485.610(e)(2), we rule provide hospitals greater flexibility
needed to explain how such a process have revised the language of the in ensuring the quality of inpatient care,
would work in practice and how a CAH regulation to exclude RHCs, as defined the issues surrounding outpatient care
could avoid losing CAH status. In under § 405.2401(b), from the list of in the hospital setting, particularly with
addition the commenter believed that provider-based facilities that must regard to outpatient surgeries and
the threat of closure is an unduly harsh comply with this requirement. We procedures, are not clear. After
punishment when payment for an revised proposed § 485.610(e)(2) and conducting a thorough review of the
offending facility could be withheld. § 485.610(e)(3) to correct the date hospital CoPs and the interpretive
Response: Failure to substantially references to ‘‘on or after January 1, guidelines, we isolated the relevant
meet one or more conditions of 2008.’’ Finally, we also added the words issues regarding outpatient care and
participation is a cause for termination ‘‘off-campus’’ before the words proposed revisions to the current
in the Medicare program, not closure of ‘‘provider-based locations’’ in regulations to address these concerns.
the CAH. A CAH with a necessary § 485.610(e)(2) and § 485.610(e)(3) to According to the most recent data, 30
provider designation that enters into a conform these references to the million surgical procedures are
co-location arrangement on or after preamble language. performed each year in the United
January 1, 2008, or acquires or creates States with over 60 percent done as
an off-campus facility on or after B. Revisions to Hospital CoPs outpatient procedures and another 10 to
January 1, 2008, that does not satisfy the 1. Background 15 percent performed on a same-day
CAH distance requirements in admission basis. These figures
§ 485.610(c), will be placed on a 90-day On November 27, 2006, we published combined translate to approximately 21
termination track as outlined in section a final rule in the Federal Register million surgical procedures performed
3012 of the State Operations Manual. entitled ‘‘Medicare and Medicaid each year in the U.S. on patients who
During this 90-day period, the CAH will Programs; Hospital Conditions of are admitted to the hospital on the day
be afforded every opportunity to come Participation: Requirements for History of their procedure. A majority of these
back into compliance and meet all and Physical Examinations; patients are also discharged from the
conditions of participation. As we noted Authentication of Verbal Orders; hospital the same day that they are
in the proposed rule, if the CAH corrects Securing Medications; and admitted. It is unclear whether these
the situation that led to the non- Postanesthesia Evaluations’’ (71 FR numbers also include other procedures,
compliance, the termination action 68672). In that final rule (also frequently such as diagnostic ones, which also
against the CAH will cease. referred to as the ‘‘Carve-out rule’’), we require anesthesia services, and which
Comment: Several commenters asked finalized changes, which were based on include all of the risks to patient safety
if current facilities would be allowed to timely public comments submitted on inherent in such procedures. In either
relocate or be replaced and keep the the proposed rule published in the case, significant numbers of patients
current relationship under the March 25, 2005 Federal Register (70 FR undergo surgeries and other procedures
grandfather provisions. 15266), to four of the requirements (or each year as either outpatients or same-
Response: We have addressed in conditions of participation (CoPs)) that day admission patients.
greater detail the situation of a relocated hospitals must meet to participate in the The current requirements for the
CAH in the FY 2006 IPPS final rule (70 Medicare and Medicaid programs. completion of the medical history and
FR 47490). Generally, we believe that it Specifically, that final rule revised and physical examination are found in the
would be reasonable for a CAH to be updated our CoP requirements for: regulations at § 482.22 (Medical staff
able to move its facility as long as the completion of the history and physical CoP), § 482.24 (Medical record services
new facility can meet the relocation examination in the Medical staff and the CoP), and § 482.51 (Surgical services
requirements contained under Medical record services CoPs; CoP). We believe that these
§ 485.610(d), which specify the criteria authentication of verbal orders in the requirements do not adequately address
a necessary provider CAH must satisfy Nursing services and the Medical record the patient who is admitted for
upon relocation in order to retain its services CoPs; securing medications in outpatient or same-day surgery or a
Medicare provider agreement as a CAH. the Pharmaceutical services CoP; and, procedure requiring anesthesia services.
The standards at § 482.22(c), Medical allow for a medical history and physical and seriousness of these procedures still
staff bylaws, and § 482.24(c), Content of examination that may be as much as 30 remain as do the risks to patient health
record, both contain requirements for a days old. Without a requirement that an and safety. Along with the increased
medical history and physical updated examination be completed after complexity and types of outpatient
examination, and an update of the admission and prior to surgery or other procedures being performed today,
medical history and physical procedure, any changes in a patient’s come the higher levels of sedation and
examination documenting any changes condition would most likely be missed anesthesia required for these
in a patient’s condition if the medical by hospital staff. Failing to identify procedures. Thus, distinctions between
history and physical examination was changes in a patient’s condition prior to inpatients and outpatients in the
completed within 30 days before surgery may adversely impact not only requirements for postanesthesia
admission, to be completed and the procedure but also consequently, evaluations are less relevant than ever.
documented within 24 hours after and perhaps more significantly, the In addition, the current language
admission. Under the Surgical services outcome of the procedure for the regarding the completion and
CoP at § 482.51(b)(1), there is a patient. documentation of an evaluation ‘‘within
provision that requires a complete In the CY 2008 OPPS/ASC proposed 48 hours after surgery’’ assumes that all
history and physical workup to be in the rule (72 FR 42808), we proposed patients receiving anesthesia services
chart of every patient prior to surgery. revisions to §§ 482.22, 482.24, and have undergone surgery. It also assumes
However, there is currently no 482.51 that would require an updated that they have not been discharged from
requirement for an updated examination examination, including any changes in the hospital prior to the end of this 48-
of the patient, including any changes to a patient’s condition, to be completed hour timeframe and that they are still
the patient’s condition, to be completed and documented for each patient after available for evaluation. Many patients
and documented after admission or admission or registration and prior to who have received anesthesia services
registration, and prior to any surgery or surgery or to a procedure requiring (either general anesthesia or monitored
procedure being performed. For patients anesthesia services. These revisions anesthesia care) have undergone
who are admitted as inpatients for would ensure that any changes in the diagnostic or therapeutic procedures as
surgery to be performed in the next day patient’s condition are discovered opposed to surgical ones and are
or so, this does not pose a problem. before a procedure is performed. With discharged within hours after such
These inpatients will be followed while the most up-to-date information procedures. Diagnostic and therapeutic
in the hospital with both daily progress regarding a patient’s condition readily procedures that require anesthesia
and nursing notes made in their medical available to hospital staff prior to a services (either general anesthesia or
record. In addition, as required under procedure, the risks to patient safety monitored anesthesia care) include
the current regulations, these patients should be minimized and a poor esophagogastroduodenoscopy (EGD),
will also have an updated examination outcome for the patient would be colonoscopy, endoscopic retrograde
for any changes in their condition avoided. However, under these cholangiopancreatography (ERCP), and
within 24 hours after their admission. proposed requirements, it is not our electroconvulsive therapy (ECT).
intent to include those minor Furthermore, and as noted above, even
As evidenced by the numbers of procedures that only require the
outpatient and same day admission those patients who have undergone
administration of local anesthetics, as inpatient surgical procedures are often
inpatient procedures discussed above, might be the case for procedures such as
procedures that were once done only on discharged well before 48 hours after
biopsies of skin lesions or suturing of surgery.
an inpatient basis are now routinely noncomplex lacerations.
performed in outpatient settings. Therefore, in the CY 2008 OPPS/ASC
Conversely, the current requirements proposed rule (72 FR 42809), we
Therefore, the patient is not admitted or at § 482.52, Anesthesia services, still
registered as an outpatient until the day proposed revisions to § 482.52(b) that
distinguish between inpatients and
of the procedure. Often this admission would ensure that all patients who have
outpatients with regard to
or registration is just hours before the received anesthesia services, regardless
postanesthesia evaluation, with the
procedure is performed. In addition, of inpatient or outpatient status, have a
requirements for outpatient evaluation
there are many patients who are postanesthesia evaluation completed
actually being less stringent than those
admitted as inpatients on the same day and documented by an individual
for inpatients. When the current
that they are scheduled for more qualified to administer anesthesia before
hospital regulations were originally
complex procedures, which will then they are discharged or transferred from
written in 1986, these differences in
require postoperative hospital stays. the postanesthesia recovery area.
regulatory oversight may have been
However, for patients admitted or Finally, in our review of the CoPs, we
entirely appropriate. At that time there
registered for outpatient procedures as discovered a cross-reference under
were still very clear differences between
well as for those patients admitted on § 482.23, Nursing services, that is no
inpatient and outpatient procedures,
the same day as their surgery, there is longer valid. We took the opportunity in
with inpatient procedures (and the
currently no mechanism to ensure that the proposed rule to correct this error
anesthesia services required) considered
these patients are examined for any much more serious and complex in through a proposed technical
changes in their condition prior to nature. Since that time, there has been amendment.
undergoing a procedure. Paragraph a gradual blurring of the distinctions 2. Provisions of the Final Regulations
(b)(1) of § 482.51 currently requires that between what were previously termed
every patient have a complete medical ‘‘inpatient’’ procedures and those that a. Timeframes for Completion and
history and physical examination were classified as ‘‘outpatient’’ Documentation of the Medical History
documented in the chart prior to procedures. Procedures that were once and Physical Examination
surgery, except in emergencies. done only on an inpatient basis are now The proposed revisions to
However, the timeframe requirements routinely performed in outpatient § 482.22(c)(5) retained the requirement
for this medical history and physical settings. While advances in medical that the medical staff bylaws include a
examination contained under both technology and surgical technique have requirement that a medical history and
§ 482.22(c)(5) and § 482.24(c)(2)(i)(A) allowed for this shift, the complexity physical examination be completed no
more than 30 days before or 24 hours We proposed to revise the words ‘‘for revise § 482.52(b)(3) by requiring that
after admission for each patient. We any changes in the patient’s condition’’ the postanesthesia evaluation be
proposed to revise this provision to to ‘‘including any changes in the completed and documented before
include the requirement that the patient’s condition’’ at both discharge or transfer from the
completion and documentation of the § 482.22(c)(5) and § 482.24(c)(2)(i)(B). postanesthesia recovery area. As
medical history and physical Under § 482.24(c), Content of record, discussed above, the intent of this
examination (and the updated we proposed to revise both section of the proposed rule was to
examination) would also be required § 482.24(c)(2)(i)(A) and eliminate the distinctions currently
prior to surgery or a procedure requiring § 482.24(c)(2)(i)(B) by adding the found in the regulations between
anesthesia services. language ‘‘but prior to surgery or a inpatients and outpatients with regard
We also proposed to retain the current procedure requiring anesthesia to anesthesia services.
provision that the medical staff bylaws services’’ with regard to both the Comment: One commenter supported
contain a requirement for the completion and the documentation of CMS’s efforts to eliminate the
completion and documentation of an the medical history and physical distinctions, currently found in the
updated examination within 24 hours examination and the updated hospital CoPs, between inpatients and
after admission (when the medical examination. outpatients with regard to history and
history and physical examination has We proposed to revise the Surgical physical examinations, examination
been completed within 30 days before services CoP at § 482.51(b)(1) by updates, and anesthesia evaluations.
admission). However, we proposed to deleting the language regarding medical They noted that the proposed changes
delete the language regarding the histories and physical examinations that would help to dispel misconceptions
placement of the medical history and have been dictated but which are not yet regarding documentation completion
physical examination and the updated recorded in the patient’s chart. Our and timeframe requirements.
examination in the medical record overall intent in the proposed rule was Additionally, the commenter expressed
within 24 hours after admission because to require that the most current the opinion that such revisions to the
we believed that the proposed language information regarding a patient’s CoPs would not only ensure complete,
requiring not only the completion, but condition be available to the hospital
accurate, and timely documentation,
also the documentation, of both the staff prior to surgery or a procedure
which is vital for the protection of
medical history and physical requiring anesthesia services so that
patients and for the monitoring of the
examination and the updated risks to patient safety can be minimized
quality of care provided by clinical staff
examination, would achieve this and potential adverse outcomes can be
but would also ensure the efficient and
purpose. In addition, requirements for avoided.
We proposed to retain the language effective coordination of care by case
the physical placement of the medical managers, discharge planners, and
history and physical examination and regarding the requirement for a medical
history and physical examination prior social services staff.
the updated examination in the patient’s
to surgery, except in the case of Response: We appreciate the
medical record are currently, and more
appropriately, contained under the emergencies, and proposed to extend commenter’s support of the proposed
‘‘Medical record services’’ CoP at this to a requirement for an updated changes and agree that the accurate and
§ 482.24(c)(2), which we proposed to examination. We proposed to divide the timely documentation of patient
retain under the proposed rule. requirements for the medical history medical information is an essential
Further, we proposed to separate the physical examination and the updated component of quality across the
requirements for the medical history examination under two separate spectrum of patient care.
and physical examination and for the provisions at § 482.51(b)(1)(i) and Comment: One commenter stated that
updated examination under two § 482.51(b)(1)(ii) in the Surgical services the proposed requirements for an
provisions at § 482.22(c)(5)(i) and CoP. updated examination of the patient to be
§ 482.22(c)(5)(ii), respectively. At completed and documented in the
b. Requirements for Preanesthesia and patient’s medical record within 24
§ 482.22(c)(5)(i), we proposed to retain
the current requirement that the medical Postanesthesia Evaluations hours after admission or registration but
history and physical examination be In the CY 2008 OPPS/ASC proposed prior to surgery or any procedure
completed by a physician (as defined in rule (72 FR 42810), we proposed to requiring anesthesia services, would be
section 1861(r) of the Act), an revise the requirement at § 482.52(b)(1), operationally and unnecessarily
oromaxillofacial surgeon, or other under the ‘‘Delivery of services’’ burdensome on hospitals. The
qualified individual in accordance with standard of the ‘‘Anesthesia services’’ commenter noted that the requirement
State law and hospital policy. However, CoP for a preanesthesia evaluation to would lead to surgical scheduling
we proposed to add the words ‘‘and include the language ‘‘or a procedure inefficiencies, since surgeons would
documented’’ after ‘‘be completed’’ as requiring anesthesia services.’’ We need to stop procedures so that they
well as the word ‘‘licensed’’ after proposed this revision in order to could dictate a medical history and
‘‘qualified’’ to further clarify this include the range of procedures that physical examination or an update. The
requirement. In addition, we proposed require anesthesia services but that are commenter also expressed the opinion
to revise § 482.22(c)(5)(ii) to require that not necessarily surgical in nature. We that it was operationally difficult, if not
the updated examination of the patient proposed to add this language under impossible, to ensure that
must be completed and documented by § 482.52(b)(3) for the postanesthesia documentation of a medical history and
the same individuals as proposed above. evaluation requirement. physical examination or an update was
We also proposed to add the words ‘‘or Further, we proposed to revise this placed in the patient’s medical record
registration’’ to follow ‘‘after admission’’ standard by deleting both the words prior to the beginning of surgery. The
to reflect differences in terminology that ‘‘with respect to inpatients’’ at commenter requested clarification on
may exist with the admission of patients § 482.52(b)(3) and the entire provision at these proposed changes, particularly on
for outpatient procedures. We proposed § 482.52(b)(4), which are the current which provider could complete the
this revision here as well as in § 482.24 requirements for postanesthesia update and whether it would need to be
and § 482.51, where appropriate. evaluations for patients. We proposed to dictated.
Response: The changes contained in commenter’s concerns regarding examination (and its update, if
the proposal are a clarification of the medical histories and physical applicable) is required for each patient
current medical history and physical examinations that have been dictated admitted or registered to the hospital.
examination requirements, which were but not yet transcribed, and, thus, are This requirement is not based on
contained in the Carve-out rule (71 FR not physically present in the patient’s whether the patient is undergoing
68672) published November 27, 2006, medical record. Supporting the overall surgery or a procedure requiring
and which were discussed above. At the intent of this rule to require that the anesthesia services. However, the
time of the publication of that final rule, most current information regarding a medical history and physical
we explained in the preamble that if the patient’s condition be available to examination (and its update) are
patient’s medical history and physical hospital staff prior to surgery or a required prior to surgery or a procedure
examination was completed before procedure requiring anesthesia services, requiring anesthesia services, except in
admission to the hospital, the updated we proposed to delete the language the case of emergencies.
examination must be completed and currently contained under the Surgical A postanesthesia evaluation would be
documented within 24 hours after services CoP at § 482.51(b)(1) which required after surgery or a procedure
admission but before a surgical allows for medical histories and requiring anesthesia services and must
procedure. This original intention from physical examinations that have been be completed and documented by an
the Carve-out rule has been clarified in dictated but which are not yet recorded individual qualified to administer
this final rule with comment period. in the chart. Additionally, the proposed anesthesia. The list of individuals who
Both the medical history and physical revisions at §§ 482.22, 482.24, and are qualified to administer anesthesia is
examination and the update can be 482.51 all require that the medical set out at § 482.52(a).
completed and documented by a history and physical examination (and Comment: One commenter supported
physician (as defined in section 1861(r) its update) be completed and the proposed changes to the
of the Act), an oromaxillofacial surgeon, documented in the patient’s medical preanesthesia and postanesthesia
or other qualified licensed individual in record within 24 hours after admission evaluation requirements and believed
accordance with State law and hospital or registration but prior to surgery or a that they reflected current standards of
policy. The individual who completes procedure requiring anesthesia services care. The commenter agreed with CMS’
the update does not have to be the same (and except in the case of emergencies decision to remove the distinctions
individual who did the medical history as allowed for under § 482.51(b)(1)). We between inpatients and outpatients with
and physical examination. Both intend to finalize the proposed regard to the postanesthesia evaluation.
documents may be handwritten, requirements without further revision. The commenter also agreed with the
dictated and transcribed, or completed We believe that these requirements will application of the standards to all
electronically. Under these address concerns regarding patients receiving anesthesia services
requirements, hospitals have the documentation and will emphasize the regardless of whether they were
flexibility to establish their own policies important role that the timely and undergoing surgical or non-surgical
for the format in which this essential complete documentation of patient procedures.
patient information is documented in information plays in reducing patient
the medical record. However, several commenters took
risk.
Comment: One commenter stated that Comment: One commenter stated that exception to the proposed requirement
they were opposed to the removal of the the term ‘‘anesthesia services’’ should that the postanesthesia evaluation be
language in the current CoPs that be defined in the requirements and that completed and documented before the
requires that the medical history and it should include standard terminology patient is discharged or transferred from
physical examination be documented such as moderate sedation, deep the postanesthesia recovery area.
and placed ‘‘on the medical record’’ sedation, and general anesthesia. The Several commenters stated that this part
[sic] within 24 hours. The commenter commenter also asked whether CMS of the provision does not reflect current
expressed concerns about physicians intends to apply the same requirements standards of postanesthesia care. One
who continue to believe that a dictated, regarding medical histories and physical commenter noted that its State’s
but not yet transcribed, medical history examinations and postanesthesia regulations allow for the use of
and physical examination is adequate evaluations to moderate sedation approved medical staff postanesthesia
because it is ‘‘in the system,’’ even administered by a physician or surgeon recovery area criteria, which means that
though it is not yet physically in the and to general anesthesia administered qualified postanesthesia recovery area
patient’s medical record. The by an anesthesiologist. staff can discharge patients from the
commenter stated that the current Response: We expect hospitals, which recovery area if they meet certain
JCAHO standards require that the furnish anesthesia services, to follow standards established by qualified
medical history and physical the current standards of anesthesia care, anesthesia practitioners.
examination be in the medical record. along with the accepted definitions of Another commenter pointed out that,
The commenter believed that this such care, that have been established by as proposed, § 482.52(b)(3) would create
requirement should be reinforced in the nationally recognized bodies such as the a situation where patients who could be
Medicare hospital CoPs. American Society of Anesthesiologists safely transferred to another unit of the
Response: As we stated in our (ASA) and the American Association of hospital or discharged home would be
discussion of the proposed change, we Nurse Anesthetists (AANA). We also held for hours in the recovery area. The
believe that the requirements for the expect that those established guidelines commenter further stated that
physical placement of the medical should be reflected in the hospital’s completing the postanesthesia
history and physical examination, as policies and procedures regarding evaluation in the recovery area is simply
well as those for its update, are more anesthesia services as appropriate to the too soon to fully capture or address the
appropriately located where they scope of services offered. patient’s complete postanesthesia
currently are, that is, under the Medical The requirements for H&Ps and experience, including any anesthesia-
record services CoP at § 482.24(c)(2), postanesthesia evaluations are not the related complications, which is more
which we will retain under this rule. same. As previously discussed, a effectively done by anesthesia providers
Furthermore, we appreciate the medical history and physical who make follow-up visits or phone
calls to patients either later that day or Interpretive Guidelines to reflect neutrality for the transition to the MS–
the next. changes in the hospital CoPs and that DRG patient classification system, using
One commenter stressed that it is the healthcare professionals and their the Secretary’s authority under section
surgeon or lead physician who professional associations be notified by 1886(d)(3)(A)(vi) of the Act to adjust the
determines when the patient is ready for CMS on a timely basis regarding such standardized amount to eliminate the
discharge or transfer and that this updates. effect of changes in coding or
decision is based on the monitoring and Response: This request is outside of classification that do not reflect real
documentation of the patient by the the scope of this rule. However, we will change in case-mix, we also provided
recovery nurse. This commenter noted forward this comment to the appropriate for a documentation and coding
that though there may be some residual component within CMS responsible for adjustment to the IPPS payment rates of
effects from anesthesia, this does not the Interpretive Guidelines. ¥1.2 percent. On September 28, 2007,
mean that it is inappropriate to we issued a correction notice to the FY
discharge or transfer the patient from c. Technical Amendment to Nursing
2008 IPPS final rule with comment
the recovery area. This commenter Services CoP
period that corrected an inadvertent
believed that with proper discharge In the CY 2008 OPPS/ASC proposed technical calculation error made in the
instructions specific to that patient, a rule (72 FR 42810), we proposed to FY 2008 IPPS final rule with comment
patient may be safely discharged home revise the cross-reference to period that affected IPPS payment rates,
to rest following a procedure and that § 405.1910(c) currently found under the factors, and thresholds. (This notice,
follow-up over the phone by the nursing services CoP at § 482.23(b)(1), as which we will refer to as the ‘‘second
anesthesia provider would then this citation has been changed and is no FY 2008 IPPS correction notice,’’ was
complete the postanesthesia evaluation. longer valid. We proposed a technical printed in the October 10, 2007 Federal
Two commenters also stated that the amendment to this provision to correct Register at 72 FR 57634.)
proposed requirement for the timing of the cross-reference to § 488.54(c). On September 29, 2007, the TMA,
the postanesthesia evaluation would We did not receive any public Abstinence Education, and QI Programs
place an undue burden on small rural comments on this proposed change. Extension Act of 2007 TMA), Public
hospitals where there are a limited After consideration of the public Law 110–90, was enacted. As discussed
number of anesthesia providers. They comments received, we are finalizing in more detail in section XIX.B. of this
argued that such constraints would limit the proposed changes without revision, final rule, section 7 of Public Law 110–
access to surgical services in these with the exception of those under 90 included a provision that reduces the
communities by significantly slowing § 482.52(b)(3). We are revising the ¥1.2 percent documentation and
down the number of cases each day. proposed revision to require that the coding adjustment for the MS–DRG
These commenters argued that such postanesthesia evaluation must be system that we adopted in the FY 2008
hospitals would have to hire an completed and documented by an IPPS final rule to ¥0.6 percent. To
additional provider to comply with this individual qualified to administer comply with the provision of section 7
requirement without yielding any anesthesia no later than 48 hours after of Public Law 110–90, we are revising
benefits to patient safety or access to surgery or a procedure requiring certain FY 2008 IPPS payment rate,
care. anesthesia services, and that the thresholds, and factors that were
Response: We appreciate the postanesthesia evaluation for anesthesia included in the October 10, 2007
comments received. After consideration recovery must be in accordance with correction notice for the FY 2008 final
of the public comments and a further State law and with hospital policies and rule with comment period.
review of the current standards of procedures, which have been approved In addition, in this final rule, we are
anesthesia care, we agree that our by the medical staff and which reflect making a policy change to the IPPS that
proposed changes to the postanesthesia current standards of anesthesia care. As was not part of Public Law 110–90. In
evaluation requirements may not truly
finalized in this final rule with the FY 2008 IPPS final rule, we
reflect current and safe anesthesia
comment period, these requirements established a policy of applying the
practice, may in fact impose a burden
will provide hospitals greater flexibility documentation and coding adjustment
on hospitals and anesthesia providers,
while ensuring the quality and safety of to the hospital-specific rates for
and, as an unintended consequence,
care provided to patients. Medicare-dependent, small rural
limit some patients’ access to health
care services. Therefore, we have hospitals (MDHs) and sole community
XIX. Changes to the FY 2008 Hospital
revised the proposed requirements for hospitals (SCHs) for FY 2008. We have
Inpatient Prospective Payment System
the postanesthesia evaluation in this determined that application of the
(IPPS) Payment Rates
final rule with comment period to better documentation and coding adjustment
A. Background to the hospital-specific rates is not
reflect current standards of care. We are
requiring that the postanesthesia On August 1, 2007, we issued a final consistent with the plain meaning of
evaluation must be completed and rule with comment period to update the section 1886(d)(3)(A)(vi) of the Act.
documented by an individual qualified hospital inpatient prospective payment Therefore, we have decided to change
to administer anesthesia no later than 48 system (IPPS) for FY 2008. (This rule this policy, effective October 1, 2007, as
hours after surgery or a procedure was printed in the August 22, 2007 discussed in section XIX.B.2. of this
requiring anesthesia services, and that Federal Register at 72 FR 47130 through final rule.
the postanesthesia evaluation for 48175.) In that final rule with comment B. Revised IPPS Payment Rates
anesthesia recovery must be completed period, as part of the annual update of
in accordance with State law and with policies and payment rates under the 1. MS–DRG Documentation and Coding
hospital policies and procedures that IPPS, we adopted a new patient Adjustment
have been approved by the medical staff diagnosis classification system, the As stated earlier, we adopted the new
and that reflect current standards of Medicare severity diagnosis-related MS–DRG patient classification system
anesthesia care. group (MS–DRG) system, to replace the for the IPPS, effective October 1, 2007.
Comment: One commenter requested existing CMS–DRG system, effective The intent of the MS–DRG system is to
that CMS regularly update the online October 1, 2007. To maintain budget better recognize severity of illness in
Medicare payment rates. Adoption of have increased by about 0.6 percent as 2. Application of the Documentation
the MS–DRGs resulted in the expansion a result of changes in the documentation and Coding Adjustment to the Hospital-
of the number of DRGs from 538 to 745. and coding adjustment required under Specific Rates
By increasing the number of DRGs and section 7 of Public Law 110–90. Under section 1886(d)(5)(D)(i) of the
more fully taking into account severity We also have recalculated the outlier Act, SCHs are paid based on whichever
of illness in Medicare payment rates, the threshold based on the revised of the following rates yields the greatest
MS–DRGs encourage hospitals to standardized amounts. As a result of the aggregate payment: the Federal national
improve their documentation and change made by section 7 of Public Law rate; the updated hospital-specific rate
coding of patient diagnoses. Because of 110–90, the revised outlier threshold for based on FY 1982 costs per discharge;
the incentives that the MS–DRGs FY 2008 is $22,185. This represents a the updated hospital-specific rate based
provide for improved documentation decrease of $275 from the previously on FY 1987 costs per discharge; or the
and coding of patient diagnoses, we published FY 2008 outlier threshold. updated hospital-specific rate based on
indicated in the FY 2008 IPPS final rule The revised outlier factors are: 0.948983 FY 1996 costs per discharge. Under
that we believe the adoption of the MS– for operating national; 0.964060 for section 1886(d)(5)(G) of the Act, MDHs
DRGs would lead to increases in operating Puerto Rico; 0.952336 for are paid based on the Federal national
aggregate payments due to improved capital national; and 0.959464 for rate or, if higher, the Federal national
documentation and coding without a capital Puerto Rico. rate plus 75 percent of the difference
corresponding increase in actual patient In addition, we have recalculated the between the Federal national rate and
severity of illness. To maintain budget thresholds that are being used to the updated hospital-specific rate based
neutrality, using the Secretary’s evaluate applications for new on either the FY 1982, 1987, or 2002
authority under section technology add-on payments for FY costs per discharge. When we
1886(d)(3)(A)(vi) of the Act to adjust the 2008 under the IPPS, as shown in Table recalculated the FY 2008 IPPS rates to
standardized amount to eliminate the 10 below. (We note that, for ease of comply with the provision of section 7
effect of changes in coding or reference, we have retained the original of Public Law 110–90, we reviewed the
classification that do not reflect real table numbering from the FY 2008 IPPS policy we established in the FY 2008
change in case-mix, we established a final rule and the second FY 2008 IPPS IPPS final rule of applying the
documentation and coding adjustment correction notice. As a result, table document and coding adjustment to the
of ¥1.2 percent for FY 2008. numbering in this section is not
Section 7 of Public Law 110–90 hospital-specific rates for MDHs and
sequential because only certain tables SCHs. In that final rule, we stated that
included a provision concerning this
from the FY 2008 IPPS final rule and the we believe the hospital-specific rates for
documentation and coding adjustment
second FY 2008 IPPS correction notice MDHs and SCHs should be subject to
for the MS–DRGs. Specifically, section 7
require changes to comply with the the documentation and coding
of Public Law 110–90 requires the
provisions of section 7 of Public Law adjustment that we were applying under
Secretary to apply a prospective
110–90.) These thresholds, which are section 1886(d)(3)(A)(vi) of the Act to
documentation and coding adjustment
equal to the geometric mean maintain budget neutrality for the
for discharges during FY 2008 of ¥0.6
standardized charges plus the lesser of adoption of the MS–DRGs. That is, as
percent rather than the ¥1.2 percent
75 percent of the national adjusted these hospitals use the same DRG
adjustment specified in the FY 2008
operating standardized payment amount system as all other hospitals, we believe
IPPS final rule. To comply with the
provision of section 7 of Public Law (increased to reflect the differences they should be equally subject to the
110–90, we are changing the IPPS between costs and charges) or 75 budget neutrality adjustment that we
documentation and coding adjustment percent of 1 standard deviation of mean were applying for adoption of the MS–
for FY 2008 to ¥0.6 percent and charges by MS–DRG, were recalculated DRGs to all other hospitals.
recalculating the operating standardized due to the change in the standardized After further review of this issue, we
amounts, capital standard Federal operating amount resulting from the have decided that the application of the
payment rates, the outlier threshold, the change made by section 7 of Public Law documentation and coding adjustment
offset factors that are applied to the 110–90. Depending on the particular to the hospital-specific rates is not
standardized amounts to account for MS–DRG, the revised new technology consistent with the plain meaning of the
projected outlier payments, and the thresholds are either the same as, or statute. Section 1886(d)(3)(A)(vi) of the
thresholds that are used to evaluate have increased slightly from, the Act provides the Secretary with the
applications for new technology add-on previously published amounts. authority to adjust ‘‘the average
payments for FY 2008. All of these Both the FY 2008 IPPS final rule and standardized amounts’’ so as to
revised rates, factors, and thresholds are the second FY 2008 IPPS correction eliminate the effect of changes in coding
effective October 1, 2007. These revised notice included a table entitled or classification of discharges that do
rates, factors, and thresholds replace ‘‘Comparison of FY 2007 Standardized not reflect real changes in case-mix.
those rates, factors, and thresholds Amounts to the FY 2008 Single However, section 1886(d)(3)(A)(vi) of
published in the FY 2008 IPPS final rule Standardized Amount with Full Update the Act only provides authority to adjust
and in the second FY 2008 IPPS and Reduced Update.’’ We are including the average standardized amounts, and
correction notice. We issued the second an updated version of that table in this does not refer to the hospital-specific
FY 2008 IPPS correction notice prior to final rule, which reflects the payment rates. We continue to believe that it
enactment of Public Law 110–90 and, rates, factors, and thresholds that have would be appropriate to apply the
consequently, that correction notice did been revised to comply with section 7 documentation and coding adjustment
not reflect the change from the ¥1.2 of Public Law 110–90. to the hospital-specific rates because we
percent to the ¥0.6 percent We note that section 7 of Public Law believe that aggregate IPPS payments
documentation and coding adjustment 110–90 includes provisions concerning will increase after implementation of
for FY 2008. documentation and coding adjustments the MS–DRGs due to incentives to
The revised standardized amounts are to payment rates for years after FY 2008. improve coding and documentation.
shown in Table 1A, 1B, 1C, and 1D. As We will address those provisions in However, we believe that such an
expected, the standardized amounts future years’ rulemaking for the IPPS. adjustment is not authorized under
section 1886(d)(3)(A)(vi) of the Act. As 0.995743, established in the October 10, SCHs for FY 2008 without application
a result, we are establishing a policy of 2007 correction notice for the FY 2008 of a ¥1.2 percent or a ¥0.6 percent
not applying the documentation and IPPS final rule, which corrected the documentation and coding adjustment.
coding adjustment to the hospital- budget neutrality factor established in This policy is effective October 1, 2007,
specific rates for FY 2008. the FY 2008 IPPS final rule (72 FR for FY 2008.
Consequently, the revised DRG 47416 and 47423), will be applied to the
classification and recalibration factor of hospital-specific rates of MDHs and
TABLE 1A.—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS; LABOR/NONLABOR

[69.7 Percent Labor Share/30.3 Percent Nonlabor Share if Wage Index Greater Than 1]
Full update (3.3 percent) Reduced update (1.3 percent)
Labor-related Nonlabor-related Labor-related Nonlabor-related
$3,478.45 $1,512.15 $3,411.10 $1,482.87
TABLE 1B.—NATIONAL ADJUSTED OPERATING STANDARDIZED AMOUNTS, LABOR/NONLABOR

[62 Percent Labor Share/38 Percent Nonlabor Share if Wage Index Less Than Or Equal to 1]
Full update (3.3 percent) Reduced update (1.3 percent)
Labor-related Nonlabor-related Labor-related Nonlabor-related
$3,094.17 $1,896.43 $3,034.26 $1,859.71
TABLE 1C.—ADJUSTED OPERATING STANDARDIZED AMOUNTS FOR PUERTO RICO, LABOR/NONLABOR

Rates if wage index Rates if wage index less
greater than 1 than or equal to 1
Labor Nonlabor Labor Nonlabor
National ............................................................................................................................ $3,478.45 $1,512.15 $3,094.17 $1,896.43

Puerto Rico ...................................................................................................................... 1,462.27 896.23 1,384.44 974.06
TABLE 1D.—CAPITAL STANDARD TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS
FEDERAL PAYMENT RATE THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA-
TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING
Rate STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT
National ......................................... $426.14 (INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF-
Puerto Rico ................................... 201.67 FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND
CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND-
ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES
TABLE 10.—GEOMETRIC MEAN PLUS
BY MEDICARE SEVERITY-DIAGNOSIS- BY MEDICARE SEVERITY-DIAGNOSIS-
THE LESSER OF .75 OF THE NA-
RELATED GROUP (MS DRG) OCTO- RELATED GROUP (MS DRG) OCTO-
TIONAL ADJUSTED OPERATING
BER 2007 1—Continued BER 2007 1—Continued
STANDARDIZED PAYMENT AMOUNT
(INCREASED TO REFLECT THE DIF- Number of Threshold Number of Threshold
MS–DRG MS–DRG
FERENCE BETWEEN COSTS AND cases ($) cases ($)
CHARGES) OR .75 OF ONE STAND-
11 ...................... 1,297 71,694 36 ...................... 7,454 36,602
ARD DEVIATION OF MEAN CHARGES 12 ...................... 1,956 51,613 37 ...................... 4,803 51,825
BY MEDICARE SEVERITY-DIAGNOSIS- 13 ...................... 1,476 37,000 38 ...................... 16,531 32,848
RELATED GROUP (MS DRG) OCTO- 20 ...................... 910 138,461 39 ...................... 53,619 23,940
BER 2007 1 21 ...................... 566 108,125 40 ...................... 4,585 57,599
22 ...................... 249 74,864 41 ...................... 8,005 39,541
Number of Threshold 23 ...................... 3,564 81,082 42 ...................... 5,216 34,291
MS–DRG 24 ...................... 2,168 57,415 52 ...................... 1,188 29,379
cases ($)
25 ...................... 8,493 77,774 53 ...................... 590 21,941
1 ........................ 652 $345,031 26 ...................... 12,059 52,410 54 ...................... 4,750 30,273
2 ........................ 335 178,142 27 ...................... 14,191 41,344 55 ...................... 16,945 24,952
3 ........................ 24,400 248,318 28 ...................... 1,623 74,228 56 ...................... 7,800 28,358
4 ........................ 21,825 149,288 29 ...................... 3,089 45,957 57 ...................... 48,665 18,154

5 ........................ 634 167,763 30 ...................... 3,592 30,059 58 ...................... 796 28,750
6 ........................ 296 92,366 31 ...................... 1,061 60,385 59 ...................... 2,676 21,475
7 ........................ 378 134,606 32 ...................... 3,064 35,538 60 ...................... 4,240 16,415
8 ........................ 583 92,357 33 ...................... 4,237 28,788 61 ...................... 1,368 53,087
9 ........................ 1,388 97,098 34 ...................... 821 58,431 62 ...................... 2,320 42,059
10 ...................... 182 73,504 35 ...................... 2,911 41,625 63 ...................... 1,150 36,344
TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS TABLE 10.—GEOMETRIC MEAN PLUS
THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA- THE LESSER OF .75 OF THE NA-
TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING TIONAL ADJUSTED OPERATING
STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT STANDARDIZED PAYMENT AMOUNT
(INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF- (INCREASED TO REFLECT THE DIF-
FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND FERENCE BETWEEN COSTS AND
CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND- CHARGES) OR .75 OF ONE STAND-
ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES ARD DEVIATION OF MEAN CHARGES
BY MEDICARE SEVERITY-DIAGNOSIS- BY MEDICARE SEVERITY-DIAGNOSIS- BY MEDICARE SEVERITY-DIAGNOSIS-
RELATED GROUP (MS DRG) OCTO- RELATED GROUP (MS DRG) OCTO- RELATED GROUP (MS DRG) OCTO-
BER 2007 1—Continued BER 2007 1—Continued BER 2007 1—Continued
Number of Threshold Number of Threshold Number of Threshold

MS–DRG MS–DRG MS–DRG
cases ($) cases ($) cases ($)
64 ...................... 56,448 33,903 138 .................... 926 17,071 218 .................... 2,963 97,926
65 ...................... 115,423 26,274 139 .................... 1,710 19,625 219 .................... 10,112 131,361
66 ...................... 91,644 19,975 146 .................... 696 35,254 220 .................... 14,302 93,832
67 ...................... 1,403 30,850 147 .................... 1,457 25,264 221 .................... 7,644 81,272
68 ...................... 12,512 21,801 148 .................... 924 17,390 222 .................... 2,862 150,295
69 ...................... 104,325 17,613 149 .................... 39,487 14,828 223 .................... 5,774 116,655
70 ...................... 7,165 33,429 150 .................... 945 25,286 224 .................... 1,930 138,362
71 ...................... 10,283 26,043 151 .................... 6,840 12,717 225 .................... 5,882 109,348
72 ...................... 5,811 19,097 152 .................... 2,363 22,142 226 .................... 7,078 112,911
73 ...................... 8,728 27,072 153 .................... 16,167 14,126 227 .................... 50,687 88,751
74 ...................... 32,760 19,857 154 .................... 1,857 28,071 228 .................... 3,099 124,543
75 ...................... 1,229 34,005 155 .................... 4,431 20,298 229 .................... 4,351 88,368
76 ...................... 861 22,530 156 .................... 4,969 14,819 230 .................... 1,797 72,722
77 ...................... 1,112 33,155 157 .................... 1,164 28,432 231 .................... 1,484 138,797
78 ...................... 1,386 23,660 158 .................... 3,158 19,955 232 .................... 1,799 107,899
79 ...................... 896 18,688 159 .................... 2,365 14,144 233 .................... 16,996 118,324
80 ...................... 2,095 24,178 163 .................... 13,502 78,360 234 .................... 39,349 86,766
81 ...................... 8,250 15,979 164 .................... 18,484 48,016 235 .................... 9,680 95,767
82 ...................... 1,664 34,288 165 .................... 14,267 37,961 236 .................... 33,005 68,343
83 ...................... 2,070 28,476 166 .................... 20,398 57,329 237 .................... 22,981 84,187
84 ...................... 2,527 21,042 167 .................... 21,074 39,878 238 .................... 43,967 53,516
85 ...................... 5,383 34,836 168 .................... 5,555 30,256 239 .................... 13,900 59,293
86 ...................... 10,921 26,197 175 .................... 12,032 33,180 240 .................... 13,862 40,658
87 ...................... 11,827 18,483 176 .................... 40,330 25,127 241 .................... 2,927 30,323
88 ...................... 730 30,589 177 .................... 57,526 35,918 242 .................... 17,243 63,797
89 ...................... 2,836 22,350 178 .................... 72,497 29,908 243 .................... 40,609 50,067
90 ...................... 3,285 16,402 179 .................... 26,495 23,293 244 .................... 65,831 42,281
91 ...................... 6,763 29,413 180 .................... 22,628 33,071 245 .................... 6,081 54,243
92 ...................... 15,467 20,636 181 .................... 32,425 26,996 246 .................... 41,300 65,115
93 ...................... 15,043 15,988 182 .................... 6,085 21,762 247 .................... 272,543 46,643
94 ...................... 1,533 55,314 183 .................... 1,679 29,948 248 .................... 5,558 58,161
95 ...................... 1,101 41,950 184 .................... 4,279 21,041 249 .................... 29,332 41,991
96 ...................... 749 35,573 185 .................... 2,607 14,730 250 .................... 5,768 53,663
97 ...................... 1,266 50,432 186 .................... 8,586 31,572 251 .................... 39,992 38,522
98 ...................... 1,065 35,836 187 .................... 10,362 25,688 252 .................... 44,846 48,444
99 ...................... 637 30,059 188 .................... 4,840 19,425 253 .................... 52,457 42,864
100 .................... 16,012 28,517 189 .................... 105,009 28,936 254 .................... 53,894 34,709
101 .................... 57,312 17,754 190 .................... 57,361 27,734 255 .................... 2,624 38,540
102 .................... 1,373 24,528 191 .................... 126,608 22,656 256 .................... 3,944 29,847
103 .................... 15,199 15,977 192 .................... 193,798 17,011 257 .................... 694 21,430
113 .................... 592 31,418 193 .................... 88,637 29,505 258 .................... 599 50,000
114 .................... 593 19,667 194 .................... 274,002 23,196 259 .................... 7,342 35,334
115 .................... 1,110 25,665 195 .................... 142,476 16,909 260 .................... 872 47,409
116 .................... 715 23,533 196 .................... 5,173 30,869 261 .................... 2,921 28,499
117 .................... 1,406 15,540 197 .................... 7,087 25,433 262 .................... 3,284 21,635
121 .................... 609 21,777 198 .................... 4,822 19,617 263 .................... 792 29,116
122 .................... 666 12,422 199 .................... 3,279 33,401 264 .................... 30,336 39,332
123 .................... 2,865 17,881 200 .................... 8,321 23,384 280 .................... 61,020 35,621
124 .................... 684 24,261 201 .................... 3,470 16,338 281 .................... 62,050 27,981
125 .................... 4,742 15,308 202 .................... 32,849 19,060 282 .................... 57,249 21,202
129 .................... 1,401 38,113 203 .................... 40,990 13,891 283 .................... 16,022 31,225
130 .................... 1,063 27,826 204 .................... 26,244 16,200 284 .................... 5,089 23,429
131 .................... 895 36,667 205 .................... 5,816 26,248 285 .................... 3,008 16,066
132 .................... 910 26,200 206 .................... 22,615 17,512 286 .................... 23,379 40,375
133 .................... 2,057 31,674 207 .................... 46,394 81,181 287 .................... 173,151 27,701
134 .................... 3,781 19,478 208 .................... 79,797 41,263 288 .................... 3,262 48,462
135 .................... 430 34,472 215 .................... 154 151,824 289 .................... 1,471 35,223
136 .................... 503 21,916 216 .................... 8,437 161,730 290 .................... 447 27,620
137 .................... 847 27,054 217 .................... 7,940 116,752 291 .................... 184,689 29,043

292 .................... 245,075 22,187 369 .................... 4,850 24,300 443 .................... 6,445 16,775
293 .................... 200,858 16,283 370 .................... 3,104 18,383 444 .................... 12,529 31,163
294 .................... 1,756 20,506 371 .................... 16,940 32,006 445 .................... 17,390 25,361
295 .................... 1,631 12,987 372 .................... 23,722 26,630 446 .................... 16,434 18,758
296 .................... 1,844 26,712 373 .................... 14,227 19,299 453 .................... 852 162,946
297 .................... 893 18,216 374 .................... 9,505 34,394 454 .................... 1,700 108,994
298 .................... 518 11,608 375 .................... 20,165 26,552 455 .................... 1,715 84,036
299 .................... 17,570 27,717 376 .................... 4,486 20,960 456 .................... 770 132,720
300 .................... 49,533 20,057 377 .................... 50,797 30,805 457 .................... 2,084 93,391
301 .................... 37,733 14,452 378 .................... 118,928 22,456 458 .................... 1,282 76,799
302 .................... 7,919 23,176 379 .................... 95,521 17,322 459 .................... 3,212 91,603
303 .................... 81,896 14,065 380 .................... 2,934 32,459 460 .................... 51,227 61,623
304 .................... 2,116 24,314 381 .................... 5,702 25,732 461 .................... 1,071 78,604
305 .................... 36,019 13,919 382 .................... 4,681 18,936 462 .................... 14,292 59,135
306 .................... 1,385 27,686 383 .................... 1,307 28,384 463 .................... 5,317 58,718
307 .................... 6,479 17,568 384 .................... 8,723 19,941 464 .................... 6,589 40,875
308 .................... 33,741 27,391 385 .................... 2,119 33,612 465 .................... 2,748 30,484
309 .................... 85,320 19,164 386 .................... 7,449 24,853 466 .................... 3,914 70,332
310 .................... 156,223 13,820 387 .................... 5,105 19,162 467 .................... 14,340 53,276
311 .................... 25,143 12,408 388 .................... 18,375 29,468 468 .................... 21,479 45,819
312 .................... 170,267 16,986 389 .................... 47,827 21,609 469 .................... 29,879 56,126
313 .................... 222,163 13,782 390 .................... 47,010 15,176 470 .................... 412,628 41,706
314 .................... 60,587 30,529 391 .................... 47,836 25,010 471 .................... 2,241 71,743
315 .................... 33,354 22,371 392 .................... 308,502 16,603 472 .................... 6,629 48,496
316 .................... 18,077 15,239 393 .................... 24,053 29,116 473 .................... 22,659 39,769
326 .................... 11,616 86,300 394 .................... 48,058 22,377 474 .................... 2,857 47,857
327 .................... 11,348 49,623 395 .................... 24,695 16,159 475 .................... 3,709 34,489
328 .................... 8,994 31,842 405 .................... 3,949 82,266 476 .................... 1,560 23,529
329 .................... 48,381 78,446 406 .................... 5,420 49,216 477 .................... 2,262 56,532
330 .................... 68,497 46,925 407 .................... 2,195 36,325 478 .................... 7,379 41,594
331 .................... 29,611 34,940 408 .................... 1,682 68,612 479 .................... 10,118 33,437
332 .................... 1,897 72,565 409 .................... 1,771 46,946 480 .................... 25,993 50,104
333 .................... 6,490 45,834 410 .................... 693 35,927 481 .................... 74,669 37,466
334 .................... 3,751 34,051 411 .................... 985 65,669 482 .................... 49,780 31,682
335 .................... 7,194 67,395 412 .................... 1,098 47,894 483 .................... 6,572 44,289
336 .................... 12,815 43,093 413 .................... 850 37,530 484 .................... 17,287 37,116
337 .................... 8,636 32,710 414 .................... 5,643 59,314 485 .................... 1,152 55,664
338 .................... 1,513 58,176 415 .................... 7,154 40,716 486 .................... 2,066 41,511
339 .................... 3,289 39,849 416 .................... 6,018 30,467 487 .................... 1,345 33,504
340 .................... 3,551 29,763 417 .................... 16,735 46,569 488 .................... 2,541 33,357
341 .................... 878 43,074 418 .................... 28,654 36,593 489 .................... 6,198 25,879
342 .................... 2,662 32,095 419 .................... 37,427 27,109 490 .................... 21,668 34,253
343 .................... 6,796 22,560 420 .................... 738 62,636 491 .................... 57,424 22,157
344 .................... 897 51,758 421 .................... 1,118 37,131 492 .................... 4,761 47,754
345 .................... 3,090 33,808 422 .................... 359 28,797 493 .................... 16,833 36,159
346 .................... 2,758 25,650 423 .................... 1,528 64,794 494 .................... 29,419 27,047
347 .................... 1,577 36,724 424 .................... 934 44,801 495 .................... 1,888 49,306
348 .................... 4,295 27,903 425 .................... 148 35,332 496 .................... 5,499 34,296
349 .................... 5,539 17,498 432 .................... 16,397 30,728 497 .................... 7,196 26,140
350 .................... 1,802 41,307 433 .................... 9,146 21,794 498 .................... 1,258 36,549
351 .................... 4,663 28,433 434 .................... 931 15,756 499 .................... 1,173 20,709
352 .................... 8,835 18,578 435 .................... 12,004 32,834 500 .................... 1,359 47,311
353 .................... 3,076 44,840 436 .................... 14,157 26,609 501 .................... 3,956 30,725
354 .................... 9,041 30,936 437 .................... 4,304 23,809 502 .................... 6,635 21,338
355 .................... 16,621 21,562 438 .................... 14,497 31,835 503 .................... 743 38,573
356 .................... 8,411 57,588 439 .................... 25,932 25,153 504 .................... 2,274 30,902
357 .................... 8,336 39,793 440 .................... 26,506 17,450 505 .................... 3,142 22,627
358 .................... 2,477 30,966 441 .................... 14,036 29,059 506 .................... 921 23,455
368 .................... 3,069 31,708 442 .................... 13,192 22,508 507 .................... 840 33,200

508 .................... 2,717 24,377 594 .................... 2,828 15,050 671 .................... 917 28,789
509 .................... 674 24,413 595 .................... 1,092 29,735 672 .................... 940 17,260
510 .................... 994 38,968 596 .................... 5,792 18,108 673 .................... 12,678 43,365
511 .................... 4,183 30,425 597 .................... 555 29,944 674 .................... 13,848 38,562
512 .................... 12,088 21,576 598 .................... 1,502 23,666 675 .................... 8,371 31,105
513 .................... 1,104 28,511 599 .................... 342 14,643 682 .................... 76,428 30,069
514 .................... 1,175 18,054 600 .................... 611 21,165 683 .................... 128,229 25,154
515 .................... 3,601 50,850 601 .................... 841 13,706 684 .................... 28,358 16,191
516 .................... 11,512 37,284 602 .................... 21,456 26,755 685 .................... 2,520 18,480
517 .................... 17,926 30,578 603 .................... 132,037 16,799 686 .................... 1,596 31,266
533 .................... 835 26,707 604 .................... 2,652 25,338 687 .................... 3,467 24,382
534 .................... 3,647 14,482 605 .................... 22,943 15,043 688 .................... 1,098 16,621
535 .................... 6,888 26,510 606 .................... 1,371 23,134 689 .................... 55,794 25,693
536 .................... 34,492 14,330 607 .................... 7,242 13,623 690 .................... 201,347 16,948
537 .................... 694 19,017 614 .................... 1,429 44,434 691 .................... 908 32,141
538 .................... 1,139 12,077 615 .................... 1,594 32,741 692 .................... 653 23,510
539 .................... 3,397 33,275 616 .................... 1,145 57,824 693 .................... 2,256 27,791
540 .................... 4,317 26,909 617 .................... 6,944 36,311 694 .................... 19,345 16,454
541 .................... 1,787 20,216 618 .................... 268 26,622 695 .................... 982 24,103
542 .................... 6,196 32,603 619 .................... 675 60,418 696 .................... 10,646 13,740
543 .................... 18,834 24,660 620 .................... 2,007 41,247 697 .................... 585 16,016
544 .................... 12,389 16,758 621 .................... 6,560 35,467 698 .................... 21,255 27,734
545 .................... 4,061 33,895 622 .................... 1,241 43,164 699 .................... 27,064 21,858
546 .................... 6,159 23,684 623 .................... 3,392 32,438 700 .................... 11,141 15,265
547 .................... 4,717 16,961 624 .................... 392 23,639 707 .................... 6,053 34,784
548 .................... 592 32,830 625 .................... 1,107 40,382 708 .................... 15,996 27,483
549 .................... 1,139 25,116 626 .................... 2,751 27,124 709 .................... 796 33,829
550 .................... 855 16,440 627 .................... 14,146 17,672 710 .................... 2,015 28,079
551 .................... 9,580 29,166 628 .................... 3,297 50,999 711 .................... 953 34,060
552 .................... 88,568 17,262 629 .................... 4,125 39,920 712 .................... 793 18,806
553 .................... 2,820 24,459 630 .................... 551 30,418 713 .................... 12,009 24,773
554 .................... 20,429 13,865 637 .................... 16,431 26,770 714 .................... 32,647 14,452
555 .................... 2,006 21,701 638 .................... 46,657 17,852 715 .................... 662 34,122
556 .................... 19,316 13,456 639 .................... 36,178 12,405 716 .................... 1,367 26,199
557 .................... 3,196 28,928 640 .................... 56,149 24,007 717 .................... 666 31,542
558 .................... 14,252 17,984 641 .................... 189,293 15,306 718 .................... 601 17,543
559 .................... 1,646 27,945 642 .................... 1,570 23,279 722 .................... 881 29,202
560 .................... 4,208 19,203 643 .................... 5,072 30,747 723 .................... 2,078 23,886
561 .................... 7,439 12,631 644 .................... 12,220 23,221 724 .................... 648 14,696
562 .................... 5,051 26,500 645 .................... 8,140 17,134 725 .................... 808 23,735
563 .................... 36,361 14,373 652 .................... 10,695 57,657 726 .................... 3,956 15,110
564 .................... 1,622 27,272 653 .................... 1,591 83,632 727 .................... 1,106 26,438
565 .................... 3,385 19,726 654 .................... 3,387 53,616 728 .................... 6,224 15,600
566 .................... 2,673 14,394 655 .................... 1,514 40,319 729 .................... 603 22,575
573 .................... 5,721 44,240 656 .................... 3,739 56,790 730 .................... 533 13,176
574 .................... 12,468 32,357 657 .................... 7,946 38,780 734 .................... 1,528 39,574
575 .................... 6,221 24,293 658 .................... 7,957 31,512 735 .................... 1,278 24,152
576 .................... 563 45,021 659 .................... 4,484 50,404 736 .................... 842 68,949
577 .................... 2,305 31,260 660 .................... 7,985 36,216 737 .................... 3,487 39,556
578 .................... 3,228 21,726 661 .................... 4,264 28,963 738 .................... 912 26,791
579 .................... 3,359 42,843 662 .................... 998 41,878 739 .................... 980 48,297
580 .................... 11,019 29,022 663 .................... 2,288 29,568 740 .................... 4,638 31,766
581 .................... 12,249 19,890 664 .................... 4,543 21,878 741 .................... 6,330 22,182
582 .................... 5,787 22,538 665 .................... 693 47,261 742 .................... 11,685 29,942
583 .................... 9,356 17,024 666 .................... 2,405 30,788 743 .................... 34,686 19,452
584 .................... 801 29,827 667 .................... 3,765 17,825 744 .................... 1,634 28,687
585 .................... 1,687 19,824 668 .................... 3,768 39,776 745 .................... 2,080 18,005
592 .................... 4,026 29,402 669 .................... 13,307 27,864 746 .................... 2,664 27,898
593 .................... 13,080 21,992 670 .................... 12,685 17,652 747 .................... 11,073 19,176

748 .................... 21,289 18,499 835 .................... 1,458 30,848 914 .................... 7,082 15,123
749 .................... 1,048 42,978 836 .................... 1,554 23,636 915 .................... 928 24,288
750 .................... 477 22,403 837 .................... 1,638 86,041 916 .................... 5,418 9,886
754 .................... 1,097 31,885 838 .................... 942 41,650 917 .................... 14,498 28,189
755 .................... 3,219 24,350 839 .................... 1,368 27,174 918 .................... 35,052 13,329
756 .................... 783 15,311 840 .................... 15,248 37,709 919 .................... 10,672 28,054
757 .................... 1,326 31,206 841 .................... 11,355 28,818 920 .................... 14,259 20,512
758 .................... 1,659 24,086 842 .................... 7,431 22,926 921 .................... 9,672 13,742
759 .................... 1,141 17,474 843 .................... 1,498 32,726 922 .................... 1,027 26,694
760 .................... 1,815 17,766 844 .................... 2,893 25,240 923 .................... 4,264 14,600
761 .................... 1,844 12,285 845 .................... 988 19,989 927 .................... 187 176,359
765 .................... 2,606 19,738 846 .................... 2,498 37,638
928 .................... 819 59,807
766 .................... 2,664 13,500 847 .................... 23,816 25,436
929 .................... 448 32,905
767 .................... 123 14,158 848 .................... 1,695 18,894
933 .................... 158 31,820
768 .................... 10 28,544 849 .................... 1,507 27,052
769 .................... 87 30,064 853 .................... 31,591 74,820 934 .................... 701 23,903
770 .................... 188 15,884 854 .................... 6,945 49,005 935 .................... 2,209 21,647
774 .................... 1,476 11,268 855 .................... 429 35,456 939 .................... 428 42,892
775 .................... 5,343 8,224 856 .................... 6,215 64,154 940 .................... 732 32,945
776 .................... 495 14,028 857 .................... 10,284 36,043 941 .................... 1,058 25,659
777 .................... 180 17,674 858 .................... 3,362 28,370 945 .................... 5,485 19,140
778 .................... 494 7,925 862 .................... 7,481 32,201 946 .................... 2,759 16,452
779 .................... 107 12,859 863 .................... 21,957 20,215 947 .................... 6,597 22,649
780 .................... 50 5,097 864 .................... 19,959 19,205 948 .................... 34,624 14,331
781 .................... 3,062 11,922 865 .................... 2,032 28,153 949 .................... 767 17,139
782 .................... 129 7,495 866 .................... 9,474 15,750 950 .................... 463 11,233
790 .................... 1 10,892 867 .................... 5,387 37,627 951 .................... 1,008 13,228
793 .................... 1 7,090 868 .................... 2,507 24,427 955 .................... 456 82,569
799 .................... 631 76,408 869 .................... 1,129 18,549 956 .................... 3,769 54,324
800 .................... 730 45,534 870 .................... 13,815 88,107 957 .................... 1,324 98,399
801 .................... 581 35,405 871 .................... 204,810 33,501 958 .................... 1,221 65,730
802 .................... 693 51,922 872 .................... 92,533 25,285 959 .................... 295 44,733
803 .................... 1,030 33,848 876 .................... 971 40,709 963 .................... 1,509 46,426
804 .................... 978 23,443 880 .................... 10,578 14,303 964 .................... 2,538 32,437
808 .................... 8,276 34,018 881 .................... 4,636 10,640 965 .................... 1,105 23,186
809 .................... 15,783 25,043 882 .................... 1,673 11,353 969 .................... 676 74,072
810 .................... 3,694 19,852 883 .................... 799 16,323 970 .................... 159 41,796
811 .................... 18,481 24,822 884 .................... 21,747 17,521 974 .................... 6,358 38,864
812 .................... 83,743 16,735 885 .................... 78,937 14,233 975 .................... 4,516 27,898
813 .................... 15,112 25,412 886 .................... 377 13,044 976 .................... 2,770 20,952
814 .................... 1,649 29,868 887 .................... 427 17,908 977 .................... 5,016 23,376
815 .................... 3,483 23,384 894 .................... 4,627 7,335 981 .................... 26,444 75,197
816 .................... 2,274 16,506 895 .................... 6,777 14,018 982 .................... 19,320 52,409
820 .................... 1,490 83,924 896 .................... 5,447 25,226 983 .................... 6,143 37,918
821 .................... 2,593 40,916 897 .................... 36,860 12,339 984 .................... 671 56,061
822 .................... 2,108 28,993 901 .................... 924 48,983 985 .................... 1,108 38,816
823 .................... 2,452 64,964 902 .................... 2,217 31,794 986 .................... 833 27,982
824 .................... 3,130 40,720 903 .................... 1,687 22,773
987 .................... 8,040 53,190
825 .................... 1,940 29,726 904 .................... 980 39,791
988 .................... 12,302 35,697
826 .................... 566 77,536 905 .................... 779 24,032
989 .................... 6,162 25,762
827 .................... 1,354 40,320 906 .................... 751 22,406
999 .................... 30 11,270
828 .................... 851 29,066 907 .................... 8,164 53,029
829 .................... 1,386 44,486 908 .................... 8,553 34,813 1 Cases taken from the FY 2006 MedPAR
830 .................... 520 24,753 909 .................... 5,427 25,547 file; MS–DRGs are from GROUPER Version
834 .................... 5,293 50,536 913 .................... 828 26,581 25.0.
COMPARISON OF FY 2007 STANDARDIZED AMOUNTS TO THE FY 2008 SINGLE STANDARDIZED AMOUNT WITH FULL
UPDATE AND REDUCED UPDATE
Full update (3.3 per- Full update (3.3 per- Reduced update (1.3 Reduced update (1.3
cent); wage index is cent); wage index is percent); wage index is percent); wage index is
greater than 1.0000 less than 1.0000 greater than 1.0000 less than 1.0000
FY 2007 Base Rate, after removing re- Labor: $3,609.23 ......... Labor: $3,210.51 ......... Labor: $3,609.23 ......... Labor: $3,210.51
classification budget neutrality, dem- Nonlabor: $1,569.01 ... Nonlabor: $1,967.73 ... Nonlabor: $1,569.01 ... Nonlabor: $1,967.73.
onstration budget neutrality, wage
index transition budget neutrality fac-
tors and outlier offset (based on the
labor and market share percentage for
FY 2008).
FY 2008 Update Factor ............................ 1.033 ........................... 1.033 ........................... 1.013 ........................... 1.013.
FY 2008 DRG Recalibrations and Wage 0.996383 ..................... 0.996383 ..................... 0.996383 ..................... 0.996383.
Index Budget Neutrality Factor.
FY 2008 Reclassification Budget Neu- 0.991290 ..................... 0.991290 ..................... 0.991290 ..................... 0.991290.
trality Factor.
Adjusted for Blend of FY 2007 DRG Re- Labor: $3,682.49 ......... Labor: $3,275.68 ......... Labor: $3,611.20 ......... Labor: $3,212.26.
calibration and Wage Index Budget Nonlabor: $1,600.86 ... Nonlabor: $2,007.67 ... Nonlabor: $1,569.86 ... Nonlabor: $1,968.80.
Neutrality Factors.
Imputed Rural Floor Budget Neutrality 0.999265 ..................... 0.999265 ..................... 0.999265 ..................... 0.999265.
Factor.
FY 2008 Outlier Factor ............................. 0.948983 ..................... 0.948983 ..................... 0.948983 ..................... 0.948983.
Rural Demonstration Budget Neutrality 0.999902 ..................... 0.999902 ..................... 0.999902 ..................... 0.999902.
Factor.
FY 2008 Documentation and Coding Ad- 0.994 ........................... 0.994 ........................... 0.994 ........................... 0.994.
justment.
Rural Floor Adjustment ............................. 1.002214 ..................... 1.002214 ..................... 1.002214 ..................... 1.002214.
Rate for FY 2008 ...................................... Labor: $3,478.45 ......... Labor: $3,094.17 ......... Labor: $3,411.10 ......... Labor: $3,034.26.
Nonlabor: $1,512.15 ... Nonlabor: $1,896.43 ... Nonlabor: $1,482.87 ... Nonlabor: $1,859.71.
XX. Medicare Graduate Medical event there is an ‘‘emergency area’’ and residents in an approved GME program.
Education Affiliation Provisions for continues during an ‘‘emergency This additional payment is to reflect the
Teaching Hospitals in Certain period’’ as those terms are defined in higher patient care costs of teaching
Emergency Situations the statute. Under section 1135(g) of the hospitals, that is, the indirect graduate
Act, an emergency area is a geographic medical education (IME) costs. Sections
If you choose to comment on issues in
area in which there exists an emergency 1886(h)(4)(F) and 1886(d)(5)(B)(v) of the
this section, please include the caption
or disaster that is declared by the Act establish limits on the number of
‘‘Medicare GME Affiliations’’ at the
President according to the National allopathic and osteopathic residents that
beginning of your comment.
Emergencies Act or the Robert T. hospitals may count for purposes of
A. Background Stafford Disaster Relief and Emergency calculating direct GME payments and
Assistance Act, and a public health the IME adjustment, respectively,
1. Legislative Authority
emergency declared by the Secretary establishing hospital-specific direct
The stated purpose of section 1135 of according to section 319 of the Public GME and IME full-time equivalent (FTE)
the Act is to enable the Secretary to Health Service Act. (Section 319 of the resident caps. Under the authority
ensure, to the maximum extent feasible, Public Health Service Act authorizes the granted by section 1886(h)(4)(H)(ii) of
in any emergency area and during an Secretary to declare a public health the Act, the Secretary has issued rules
emergency period, that sufficient health emergency and take the appropriate to allow institutions that are members of
care items and services are available to action to respond to the emergency, the same affiliated group to apply their
meet the needs of enrollees in Medicare, consistent with existing authorities.) direct GME and IME FTE resident caps
Medicaid, and the State Children’s Throughout the remainder of this on an aggregate basis through a
Health Insurance Program (SCHIP). discussion, we will refer to such Medicare GME affiliation agreement.
Section 1135 of the Act authorizes the emergency areas and emergency periods The Medicare regulations at §§ 413.75
Secretary, to the extent necessary to as ‘‘section 1135’’ emergency areas and and 413.79 permit hospitals, through a
accomplish the statutory purpose, to emergency periods. Medicare GME affiliation agreement, to
temporarily waive or modify the Under section 1886(h) of the Act, as adjust IME and direct GME FTE resident
application of certain types of statutory amended by section 9202 of the caps to reflect the rotation of residents
and regulatory provisions (such as Consolidated Omnibus Budget among affiliated hospitals.
conditions of participation or other Reconciliation Act (COBRA) of 1985
certification requirements, program (Public Law 99–272), the Secretary is 2. Existing Medicare Direct GME and
participation or similar requirements, or authorized to make payments to Indirect GME Policies
preapproval requirements) with respect hospitals for the direct costs of The Medicare program makes
to health care items and services approved GME programs. Section payments to teaching hospitals to
furnished by health care provider(s) in 1886(d)(5)(B) of the Act provides for an account for two types of costs, the direct
an emergency area during an emergency additional payment per Medicare costs (direct GME) and the indirect costs
period. discharge for acute care hospitals paid (IME) of a hospital’s GME program.
The Secretary’s authority under under the inpatient prospective Direct GME payments represent the
section 1135 of the Act arises in the payment system (IPPS) that have direct costs of training residents (for
example, resident salaries and fringe teaching hospitals in the city were displaced residents are training at
benefits, and teaching physician costs closed as a result of the disaster and that various hospitals, even as the hurricane
associated with an approved GME the displaced residents were being affected hospitals are rebuilding their
program) and generally are calculated transferred to training programs at host training programs. The modifications to
by determining the product of the hospitals in other parts of the country. the regulations at § 413.75(b) and
Medicare patient load (that is, the For purposes of discussion in this rule, § 413.79(f) provided flexibility for home
Medicare percentage of the hospital’s a host hospital is a hospital that trains hospitals whose residency programs
inpatient days), the hospital’s per residents displaced from a training have been disrupted in an emergency
resident payment amount, and the program in a section 1135 emergency area to enter into emergency Medicare
weighted number of FTE residents area. Also, a home hospital is one that GME affiliation agreements with host
training at the hospital. meets all of the following: (1) Is located hospitals where the hospitals may not
The IME adjustment is made to in a section 1135 emergency area (2) had meet the regulatory requirements for
teaching hospitals for the additional its inpatient bed occupancy decreased regular Medicare GME affiliations. Due
indirect patient care costs attributable to by 20 percent or more due to the to the infrastructure damage and
teaching activities. For example, disaster so that it is unable to train the continued disruption of operations
teaching hospitals typically offer more number of residents it originally experienced by medical facilities, and
technologically advanced treatments to intended to train in that academic year, the consequent disruption in residency
their patients, and therefore, patients and (3) needs to send the displaced training, caused by Hurricanes Katrina
who are sicker and need more residents to train at a host hospital. and Rita in 2005, there became an
sophisticated treatment are more likely Section 413.79(h) allows a hospital urgent need for these regulation changes
to go to teaching hospitals. Furthermore, that closed, or that closed one or more to be applied retroactively.
there are additional costs associated of its residency training programs, to Section 1871(e)(1)(A) of the Act, as
with teaching residents resulting from temporarily transfer FTE residents and amended by section 903(a)(1) of the
the additional tests or procedures part or all of its FTE resident caps to Medicare Prescription Drug,
ordered by residents and the demands another hospital in order to allow the Improvement, and Modernization Act of
put on physicians who supervise, and accepting hospital to count the 2003 (MMA) (Public Law 108–173),
staff who support, the residents. IME displaced residents for direct GME and generally prohibits the Secretary from
payments are made as a percentage add- IME payment and to enable the making retroactive substantive changes
on adjustment to the per discharge IPPS displaced residents to complete their in policy unless retroactive application
payment, and are calculated based on training despite closure of either the
of the change is necessary to comply
the hospital’s ratio of FTE residents to hospital or the residency training
with statutory requirements, or failure
available beds as defined at program in which they were originally
to apply the change retroactively would
§ 412.105(b). The statutory formula for training. In the aftermath of Hurricanes
be contrary to the public interest.
calculating the IME adjustment is: c x Katrina and Rita, the training programs
Because existing regulations did not
[(1 + r).405 ¥ 1], where ‘‘r’’ represents at many teaching hospitals in New
adequately address the issues faced by
the hospital’s ratio of FTE residents to Orleans and surrounding areas were
hospitals that are located in the
beds, and ‘‘c’’ represents an IME temporarily closed (or substantially
emergency areas, or hospitals that
multiplier, which is set by the Congress. reduced), and the displaced residents
The amount of IME payment a assisted by training displaced residents
were even transferred to other hospitals
hospital receives for a particular in other parts of the country to continue from the emergency area, and because
discharge is dependent upon the their training programs. We initially we believed hospitals affected by
number of FTE residents the hospital suggested that hospitals whose GME Hurricanes Katrina and Rita would
trains, the hospital’s number of programs were affected by Hurricanes otherwise have faced dramatic financial
available beds, the current level of the Katrina and Rita could use these ‘‘closed hardship and the recovery of graduate
statutory IME multiplier, and the hospital’’ and ‘‘closed program’’ medical education programs in the
otherwise payable per discharge IPPS regulations to address issues relating to emergency area would have been
payment. Sections 1886(d)(5)(B)(v) and displaced residents. (We refer readers to impeded, we found that failure to apply
1886(h)(4)(F) of the Act established the CMS Q&A’s Web site at: http:// the regulatory changes in the April 12,
hospital-specific limits (that is, caps) on questions.cms.hhs.gov. The Web site 2006, interim final rule retroactively
the number of allopathic and link is located at ID 5696.) would be contrary to the public interest.
osteopathic FTE residents that hospitals While a number of the residents have Thus, the provisions of this interim final
may count for purposes of calculating since returned to the hurricane-affected rule were made effective retroactively as
indirect and direct GME payments, hospitals, others remain displaced to of August 29, 2005.
respectively. other hospitals, including hospitals To provide regulatory relief,
located in States outside of the section especially in situations not addressed
3. Regulatory Changes Issued in 2006 To 1135 emergency area. In response to under existing regulations (for example,
Address Certain Emergency Situations immediate concerns relating to where hospitals had initially closed, but
As explained above, when Hurricane displaced residents, CMS issued were in the process of gradually
Katrina occurred on August 29, 2005, regulations on April 12, 2006 in an reopening their programs, or where
disrupting health care operations and interim final rule with comment period hospitals had severely reduced but
medical residency training programs at published in the Federal Register (71 never completely closed their programs
teaching hospitals in New Orleans and FR 18654). The regulatory changes in after Hurricanes Katrina and Rita), we
the surrounding area, the conditions that rule allowed home and host established the emergency Medicare
were met to establish an emergency area hospitals under certain circumstances to GME affiliation provisions in the April
and emergency period under section form emergency Medicare GME 12, 2006 interim final rule with
1135(g) of the Act. Shortly after affiliations. The purpose of these comment period. In summary, the April
Hurricane Katrina occurred, we were emergency Medicare GME affiliation 12, 2006 interim final rule with
informed by hospitals in New Orleans rules was to permit Medicare GME comment period made changes as
that the training programs at many support to be maintained while follows:
• To provide hospitals with more the regulations at § 413.79(f) to provide B. Additional Changes in This Interim
flexibility to train displaced residents at for more flexibility than would have Final Rule With Comment Period
various sites, and to allow host hospitals been possible under regular Medicare 1. Summary of Regulatory Changes
to count displaced residents for IME and GME affiliations to allow home
direct GME payment purposes, home hospitals to efficiently find training sites Since the establishment of the
hospitals were permitted to enter into for displaced residents. Under the emergency provisions in the April 12,
emergency Medicare GME affiliation flexibility provided by the emergency 2006 interim final rule with comment
agreements effective retroactive to the period, we have been monitoring the
Medicare GME affiliated group
date of the first day of the section 1135 application of the emergency Medicare
provisions as specified at § 413.79(f)(6),
emergency period. GME affiliation agreement rules in order
decisions regarding the transfer of FTE
• Home hospitals were permitted to to assess whether those regulatory
resident cap slots, including how to changes were adequate to address the
affiliate with host hospitals anywhere in
distribute slots up to the home needs of hospitals located in the section
the country. That is, a host hospital may
be located in any State and may receive hospital’s FTE resident caps in 1135 emergency area in the aftermath of
a temporary adjustment to its FTE caps situations where the home hospital was Hurricanes Katrina and Rita. We
to reflect displaced residents added or training a number of residents in excess understand that hospitals with GME
subtracted because the hospital is of its cap before the disaster, as well as programs in the section 1135 area
participating in an emergency Medicare the tracking of those FTE resident slots, continue to find it necessary to adjust
GME affiliated group as defined at was left to the home and host hospitals the location of resident training both
§ 413.75(b). to work out among themselves. within and outside the emergency area,
• Emergency Medicare GME However, the home and host hospitals as affected hospitals continue to reopen
affiliation agreements were required to were required to include much of this beds at different rates, and as feedback
be submitted to CMS with a copy to the information in their emergency from accreditation surveys warrants
CMS fiscal intermediary or Medicare Medicare GME affiliation agreements educational adjustments. Furthermore,
administrative contractor (MAC) by the submitted both to CMS and the CMS stakeholders in Louisiana have
later of 180 days after the section 1135 contractor, as specified under informed CMS that they believe fluidity
emergency period begins or by July 1 of § 413.79(f)(6). Furthermore, since in GME programs will continue for
the academic year in which the hospitals were permitted to amend their several more years, and are not likely to
emergency Medicare GME affiliation emergency Medicare GME affiliation stabilize until permanent replacement
agreement is effective. However, for agreements (on or before June 30 of the facilities are established and functioning
hospitals affected by Hurricanes Katrina relevant academic year) to reflect the in the emergency area. As a result, we
and Rita, the deadline was subsequently actual training situation among the believe the provisions first established
extended to October 9, 2006. (We refer hospitals participating in the emergency in the April 12, 2006 interim final rule
readers to the final rule published in the need to be further modified to meet the
Medicare GME affiliated group,
Federal Register on July 6, 2006, for a two priorities stated earlier. Therefore,
hospitals were provided with a great
detailed discussion (71 FR 38264 through this interim final rule with
degree of flexibility to accommodate any comment period, we are modifying the
through 38266). changing residency training
• The effective period of the regulations for emergency Medicare
emergency Medicare GME affiliation circumstances within the emergency GME affiliated groups at § 413.79(f)(6) to
agreement was permitted to begin on or Medicare GME affiliated group. We note provide continuing relief to home and
after the first day of a section 1135 that the emergency Medicare GME host hospitals affected by disruptions in
emergency period, and must terminate affiliation provisions are intended for residency programs in the section 1135
no later than at the conclusion of 2 the purpose of enabling the continued emergency area declared after
academic years following the academic training of residents displaced from a Hurricanes Katrina and Rita, as well as
year during which the section 1135 section 1135 emergency area, and not to to provide relief for similar challenges
emergency period began. enable hospitals to take advantage of the in any future emergency situation. We
• During the effective period of the increased flexibility in order to shift note that we did receive a number of
emergency Medicare GME affiliation FTE resident cap slots to other hospitals comments on the interim final rule with
agreement, hospitals in the emergency in the country (for instance, in order to comment period issued on April 12,
Medicare GME affiliated group were not maximize Medicare IME and direct 2006. However, we believe it would be
required to participate in a shared GME payments). beneficial to provide the public with the
rotational arrangement (as they would We stated in the April 12, 2006 opportunity to submit formal comments
be under a regular Medicare GME on these latest changes in the context of
interim final rule with comment period
affiliation agreement). the current training situation in the area
that, in developing a policy to provide
• Host hospitals were allowed an affected by Hurricanes Katrina and Rita.
hospitals increased flexibility in We intend to respond to comments
exception from the otherwise applicable
response to a disaster, we intended to submitted on both this interim final rule
rolling average resident count for FTE
address two priorities. First, we believe with comment period and the April 12,
residents added as a result of an
emergency Medicare GME affiliation that in disaster situations, to the extent 2006 interim final rule with comment
agreement, but only during the period that the statute permits, the policy period in a future final rule.
from August 29, 2005 to June 30, 2006. should facilitate the continuity of GME, Under existing regulations, the
For a detailed discussion on each of minimizing the disruption of residency emergency Medicare GME affiliation
the above emergency Medicare GME training. Second, the policy should take agreement must be written, signed, and
affiliation provisions, we refer readers to into account that the training programs dated by responsible representatives of
the April 12, 2006 interim final rule in the section 1135 emergency area have each participating hospital and must: (1)
with comment period. (71 FR 18654 been severely disrupted by a disaster List each participating hospital and its
through 18667). and that the hospitals affected by the provider number, and specify whether
In the April 12, 2006 interim final disaster will usually want to rebuild the hospital is a home or host hospital;
rule with comment period, we revised their GME programs as soon as possible. (2) specify the effective period of the
emergency Medicare GME affiliation following increased flexibility. First, for return residents to their original training
agreement (which must, in any event, emergency Medicare GME affiliation sites, with their need to be given the
terminate at the conclusion of two agreements involving a host hospital opportunity to rebuild their programs
academic years following the academic located in a different State from the incrementally. We believe extending the
year in which the section 1135 home hospital (hereinafter, an ‘‘out-of- applicability of emergency affiliations
emergency period began); (3) list each State host hospital’’), the permissible for out of State host hospitals for 2 years
participating hospital’s IME and direct effective period for such agreements is (for a total of up to 5 years) only for the
GME FTE caps in effect for the current extended from up to 3 years (i.e., the actual residents displaced from home
academic year before the emergency year in which the section 1135 hospitals allows such displaced
Medicare GME affiliation (that is, if the emergency period began plus two residents to complete their training
hospital was already a member of a subsequent academic years) to up to 5 outside the affected area while
regular Medicare GME affiliated group years (i.e., the year in which the section providing an incentive for home
before entering into the emergency 1135 emergency period began plus four hospitals to begin training new
Medicare GME affiliation, the subsequent academic years). However, incoming residents locally (or closer to
emergency Medicare GME affiliation emergency Medicare GME affiliation the home hospital), increasing the
must be premised on the FTE caps of agreements involving out of State host likelihood for the residents to stay and
the hospital as adjusted per the regular hospitals during these two additional practice in the area after their training
Medicare GME affiliation agreement, periods may only apply with respect to is completed. Affected hospitals in the
and not include any slots gained under the actual residents that were displaced New Orleans area have informed CMS
section 422 of the MMA); and (4) from training in a hospital located in the that residents will tend to go into
specify the total adjustment to each section 1135 emergency area. By ‘‘actual practice where they train. We believe
hospital’s FTE caps in each year that the residents that were displaced from this makes intuitive sense and the
emergency Medicare GME affiliation training in a hospital located in the policy established in this interim final
agreement is in effect, for both direct section 1135 area,’’ we mean residents rule with comment period will provide
GME and IME, that reflects a positive in an approved medical residency additional impetus for residents to
adjustment to the host hospital’s direct training program at a home hospital at return to the State where their ‘‘home
and indirect FTE caps that is offset by the time of the disaster that were either hospital’’ is located, increasing the odds
a negative adjustment to the home actually training at the home hospital or that the physicians will stay and
hospital’s (or hospitals’) direct and were scheduled to rotate to the home practice there, and encouraging
indirect FTE caps of at least the same hospital during the training program. regeneration of the health care system
amount. The sum total of all the For emergency Medicare GME affiliation affected by the section 1135 emergency.
participating hospitals’ FTE caps under agreements involving a host hospital We note that this is consistent with
the emergency Medicare GME affiliation located in the same State as the home needs expressed by affected hospitals in
agreement may not exceed the aggregate hospital (hereinafter, an ‘‘in-State host the New Orleans area for more
adjusted caps of the hospitals hospital’’), the permissible effective physicians to replace the large numbers
participating in the emergency Medicare period for such agreements is extended that left immediately after the hurricane
GME affiliated group. A home hospital’s from up to 3 years to up to 5 years for Furthermore, after the expiration of the
IME and direct GME FTE cap reduction any resident (even those not displaced initial 3 years of the emergency
under an emergency Medicare GME from training in a hospital located in the Medicare GME affiliation agreement
affiliation agreement is limited to the 1135 emergency area). Emergency effective period, we believe it would be
home hospital’s IME and direct GME Medicare GME affiliation agreements appropriate to begin bringing emergency
FTE resident caps in effect for the involving in-State host hospitals during Medicare GME affiliation rules into
academic year, in accordance with these additional two academic years accord with regular Medicare GME
regulations at § 413.79(c) or § 413.79 need not apply only with respect to the affiliation rules which specify
(f)(1) through (f)(5), that is, the actual residents that were displaced geographical limits. That is, regular
hospital’s base year FTE resident caps as immediately following the disaster. In Medicare GME affiliation rules limit
adjusted by any and all existing other words, such agreements may hospitals geographically to affiliations
affiliation agreements in effect as of the apply with respect to residents that with other hospitals that are located in
first day of the section 1135 period. were actually displaced as a result of the the same urban or rural area (as those
Finally, as we stated in the April 12, disaster, as well as to new residents that terms are defined under § 412.62(f)) or
2006 interim final rule with comment were not training in the program at the in a contiguous area.
period, amendments to the emergency time the disaster occurred. With the 2- In addition, home or host hospitals
Medicare GME affiliation agreement to year extension described above, the that have emergency Medicare GME
adjust the distribution of the FTE effective period of an emergency affiliation agreements and are training
resident caps specified in the original Medicare GME affiliation agreement displaced residents in nonhospital sites
emergency Medicare GME affiliation may begin with the first day of a section are permitted to submit written
among the hospitals that are part of the 1135 emergency period, and must agreements with nonhospital sites, as
emergency Medicare GME affiliated terminate no later than at the end of the described under § 413.78, that may be
group in order to reflect the actual fourth academic year following the effective beginning with the first day of
placement of residents can be made academic year during which the section the section 1135 emergency period to
through June 30 of the academic year for 1135 emergency period began (for cover the displaced residents training at
which it is effective. [71 FR 18662] Hurricanes Katrina and Rita, this would nonhospital sites. We discuss the policy
In this interim final rule with be June 30, 2010). As home hospitals for training that occurs in the
comment period, we are further recover the ability to train residents nonhospital setting and the
modifying the regulations at § 413.75(b) after a disaster, the effective period for requirements for written agreements in
and § 413.79(f) to allow hospitals to emergency Medicare GME affiliation further detail in the following section.
enter into emergency Medicare GME agreements is intended to allow home However, in brief, this interim final rule
affiliation agreements with the hospitals to balance their desire to with comment period provides hospitals
that are participating in emergency 2005, to November 1, 2007, home or travel and lodging where applicable)
Medicare GME affiliation agreements host hospitals with valid emergency and the portion of the cost of teaching
with increased flexibility in submitting Medicare GME affiliation agreements physicians’’ salaries and fringe benefits
written agreements relating to training may submit written agreements or incur attributable to direct graduate medical
that occurs in nonhospital sites. Home ‘‘all or substantially all’’ of the costs of education (GME); and (b) effective for
or host hospitals with valid emergency the training program (that is, the cost reporting periods beginning on or
Medicare GME affiliation agreements ‘‘concurrent payment’’ option) to cover after July 1, 2007, at least 90 percent of
training displaced residents in a those specific residents by April 29, the total of the costs of the residents’’
nonhospital site may submit a copy of 2008. salaries and fringe benefits (including
the written agreement, as specified Based on what we have learned about travel and lodging where applicable)
under § 413.78(e)(iii) and (f)(iii) as the impact of a disaster on teaching and the portion of the cost of teaching
applicable, to the CMS contractor hospitals, we continue to believe it is physicians’’ salaries attributable to non-
servicing the hospital by 180 days after necessary to provide hospitals with patient care direct GME activities.
the first day the resident began training greater flexibility to distribute FTE (3) There is a written agreement
at the nonhospital site. We note that, as resident caps within a group of home between the hospital and the
with the existing rules for written and host hospitals if there is an nonhospital site that indicates that the
agreements specified at § 413.78(f), emergency at a home hospital resulting hospital will incur the costs of the
adjustments to the amounts specified (in in the designation of a section 1135 resident’s salary and fringe benefits
other words, the total program costs and emergency area. We believe that this while the resident is training in the
the portion of certain costs to be modified emergency Medicare GME nonhospital site, and the hospital is
incurred by the hospital) in the written affiliation policy will allow affected providing reasonable compensation to
agreement can be made through June 30 hospitals an appropriate degree of the nonhospital site for supervisory
of the academic year for which it is flexibility following the disaster so that teaching activities. The agreement must
effective. residents displaced by the disaster can indicate the compensation the hospital
Furthermore, under current rules, continue their residency training at is providing to the nonhospital site for
hospitals that are training residents at other hospitals, while the home supervisory teaching activities. In
nonhospital sites have two options as hospitals can remain committed to addition, in the same May 11, 2007 final
specified by the regulations at reopening their programs. rule cited above, we clarified the
§ 413.78(e). That is, hospitals must Emergency Medicare GME affiliation regulations at § 413.78(f)(3)(ii) to specify
either have a written agreement in place agreements should be submitted to: that the written agreement must be in
before the training occurs or they must Centers for Medicare & Medicaid place between the hospital and the
pay ‘‘all or substantially all’’ of the costs Services, Division of Acute Care, nonhospital site before the training
for the training program in the Attention: Elizabeth Truong or Renate begins in that nonhospital site. We also
nonhospital setting attributable to Rockwell,Mailstop C4–08–06, 7500 specified that the written agreement
training that occurs during a month by Security Boulevard, Baltimore, MD must specify the total cost of the
the end of the third month following the 21244. training program in the nonhospital site,
month in which the training in the ‘‘Emergency Medicare GME the amount of the total cost that the
nonhospital site occurred. We discuss Affiliation Agreement’’ should be hospital will incur (at least 90 percent
this ‘‘concurrent payment’’ option in clearly labeled on the outside envelope. of the total cost of the training program),
more detail in the following section. In and must indicate the portion of the
2. Discussion of Training in Nonhospital
this interim final rule with comment amount the hospital will incur that
Settings
period, we are providing additional reflects residents’’ salaries and fringe
flexibility in the ‘‘concurrent payment’’ Under the existing regulations at benefits (and travel and lodging where
option for home or host hospitals that § 413.78(e) and (f), for portions of cost applicable), and the portion of the
have emergency Medicare GME reporting periods occurring on or after amount the hospital will incur that
affiliation agreements and are training October 1, 2004, the time residents reflects teaching physician
displaced residents in nonhospital sites spend in nonhospital settings such as compensation. Furthermore, we revised
by extending the time allowable for freestanding clinics, nursing homes, and the regulations to indicate that the
‘‘concurrent payment’’ from 3 months to physicians’ offices in connection with amounts specified in the written
6 months. That is, a home or host approved programs may be included in agreement may be modified by June 30
hospital with a valid emergency determining the hospital’s number of of the applicable academic year.
Medicare GME affiliation agreement is FTE residents for purposes of (4) Alternatively, for portions of cost
permitted to incur ‘‘all or substantially calculating both direct GME and IME reporting periods occurring on or after
all’’ of the costs for the training program payments, if all of the following October 1, 2004, hospitals have two
in the nonhospital setting attributable to conditions are met: options as specified by the regulations
training that occurs during a month by (1) The resident spends his or her at § 413.78(e). Hospitals must either
the end of the sixth month following the time in patient care activities. have a written agreement in place before
month in which the training in the (2) The hospital incurs ‘‘all or the training occurs or they must incur
nonhospital site occurred. substantially all’’ of the costs for the ‘‘all or substantially all’’ of the costs for
In the case of the section 1135 training program in the nonhospital the training program in the nonhospital
emergency resulting from Hurricanes setting. In the May 11, 2007 final rule setting attributable to training that
Katrina and Rita, the time limit we are (72 FR 26948), we revised the definition occurs during a month by the end of the
adopting to submit written agreements of ‘‘all or substantially all of the costs third month following the month in
or to meet the ‘‘concurrent payment’’ for the training program in the which the training in the nonhospital
requirement may have already passed. nonhospital setting’’ to mean: (a) site occurred (the ‘‘concurrent payment’’
Therefore, as discussed in detail in the Effective on or after January 1, 1999 and option).
following section, we are providing that, for cost reporting periods beginning For a more detailed discussion on the
for residents training in nonhospital before July 1, 2007, the residents’’ requirements a hospital must meet in
sites during the period of August 29, salaries and fringe benefits (including order to count residents training in
nonhospital sites for IME and direct hospitals that have been adversely sixth month following the month in
GME payment purposes, we refer affected by the disaster and host which the training in the nonhospital
readers to the May 11, 2007 final rule hospitals that accept residents pursuant site occurred.
(72 FR 26948 through 26977). to an emergency Medicare GME In the case of Hurricanes Katrina and
Recently, it has come to our attention affiliation agreement greater flexibility Rita, the time limits we are adopting
that in the wake of Hurricanes Katrina in the timeframes for compliance with regarding the submission of written
and Rita, host hospitals, many of which our nonhospital site policies. agreements to cover residents training in
received large numbers of displaced Consequently, we are providing nonhospital sites for home or host
residents, were hard-pressed to find additional flexibility in regards to the hospitals with a valid emergency
training sites for these unanticipated submission of written agreements by Medicare GME affiliation agreement
residents. Many host hospitals called home and host hospitals by specifying may have already passed. Therefore, we
upon community physician practices, in this interim final rule with comment are providing that a home or host
clinics, and other nonhospital settings period that home or host hospitals with hospitals with valid emergency
to supplement existing training a valid emergency Medicare GME Medicare GME affiliation agreements
locations and accommodate the affiliation agreement may submit the may submit written agreements to cover
displaced residents. Some of the host written agreement required under our residents training in nonhospital sites
hospitals that took in displaced regulations even after the residents have during the period of August 29, 2005, to
residents had never before had any begun training at the nonhospital site. November 1, 2007, by April 29, 2008.
residency training programs, and were The submission deadline for written Similarly, for residents training in
therefore new to Medicare rules agreements after a disaster is subject to nonhospital sites during the period of
regarding graduate medical education. the following requirements: (1) A home August 29, 2005, to November 1, 2007,
In the haste and confusion surrounding or host hospital must be participating in home or host hospitals with valid
this unprecedented displacement of a valid emergency Medicare GME emergency Medicare GME affiliation
residents, many host hospitals arranged affiliation and (2) a home or host agreements may pay ‘‘all or
for displaced residents to begin training hospital training displaced residents in substantially all’’ of the costs of the
in nonhospital sites without first a nonhospital site must submit a copy training program (i.e., the ‘‘concurrent
establishing a written agreement, as of the written agreement, subject to the payment’’ option) to cover those specific
specified in § 413.78(e), between the requirements of a written agreement as residents by April 29, 2008.
hospital and nonhospital site. Similarly, specified under § 413.78 (e)(iii) or (f)(iii)
home hospitals that may have sent some C. Response to Comments on the April
as applicable, to the CMS fiscal
of their residents away to train at host 12, 2006 Interim Final Rule With
intermediary or MAC servicing the
hospitals while continuing to train a Comment Period and This Interim Final
hospital by 180 days after the first day
reduced number of residents in the Rule With Comment Period
the resident began training at the
home hospital program, may find that nonhospital site. We are also specifying We note that we did receive a number
the usual nonhospital sites for the that amendments to the written of comments on the interim final rule
residents in that program have also been agreement can be made through June 30 with comment issued on April 12, 2006.
negatively affected by the disaster. of the academic year for which it is We believe it would be beneficial to
Consequently, home hospitals may have effective. provide the public with the opportunity
hastily arranged for displaced residents to submit formal comments on the latest
to begin training in nonhospital sites Furthermore, as we discussed above,
under current rules hospitals that are changes in this interim final rule with
and due to the reduced administrative comment period in the context of the
capability in the aftermath of the training residents at nonhospital sites
have the option of paying ‘‘all or current training situation in the area
disaster, home hospitals may not have affected by Hurricanes Katrina and Rita.
been able to establish a written substantially all’’ of the costs for the
training program in the nonhospital We intend to respond to comments
agreement, as specified in § 413.78(e), submitted on both this interim final rule
with the nonhospital site before setting attributable to training that
occurs during a month by the end of the with comment period (to be submitted
residents started training in the as specified in the ADDRESSES section of
nonhospital site. Also, in the confusion third month following the month in
which the training in the nonhospital this document) and the April 12, 2006
and haste under which arrangements interim final rule with comment period
were made for displaced residents to site occurred. For the same reasons cited
above supporting our belief that it is in a future final rule.
train in nonhospital sites, many
hospitals did not actually incur all or appropriate to extend the deadline to XXI. Files Available to the Public Via
substantially all of the costs of the submit written agreements after a the Internet
training program in the nonhospital site disaster, we are also providing
additional flexibility in the ‘‘concurrent A. Information in Addenda Related to
in accordance with our regulations at the Revised CY 2008 Hospital OPPS
§ 413.78(e)(3)(i) or (f)(3)(i). payment’’ option for home or host
In the April 12, 2006 interim final hospitals that have emergency Medicare Addenda A and B to this final rule
rule with comment period, we did not GME affiliation agreements and are with comment period provide various
specifically mention the policies that training displaced residents in data pertaining to the CY 2008 payment
pertain to training in nonhospital sites, nonhospital sites by extending the time for items and services under the OPPS.
although we did indicate that, to allowable for ‘‘concurrent payment’’ Addendum A, which includes a
determine direct GME and IME from 3 months to 6 months. That is, a complete list of all APCs payable under
payments under an emergency Medicare home or host hospital with a valid the OPPS, and Addendum B, which
GME affiliation, all of the normal rules emergency Medicare GME affiliation includes a complete list of all active
for counting FTEs as specified at agreement is permitted to pay ‘‘all or HCPCS codes for CY 2008 and all
§ 413.78 apply. Based on what we have substantially all’’ of the costs for the currently active HCPCS codes that will
learned since the occurrence of training program in the nonhospital be discontinued at the end of CY 2007
Hurricanes Katrina and Rita, we believe setting attributable to training that with assigned payment status and
it would be appropriate to provide home occurs during a month by the end of the comment indicators, are available to the
public by clicking ‘‘Addendum A and methodology established in the final whether an information collection
Addendum B Updates’’ on the CMS rule for the revised ASC payment should be approved by OMB, section
Web site at: http://www.cms.hhs.gov/ system published in the Federal 3506(c)(2)(A) of the Paperwork
HospitalOutpatientPPS/. Register on August 2, 2007 (72 FR Reduction Act of 1995 (PRA) requires
For the convenience of the public, we 42470) to the final CY 2008 OPPS and that we solicit comment on the
are also including on the CMS Web site MPFS ratesetting information. following issues:
a table that displays the HCPCS data in Addendum DD1 defines the payment • The need for the information
Addendum B sorted by APC indicators that are used in Addenda AA collection and its usefulness in carrying
assignment, identified as Addendum C. and BB to this final rule with comment out the proper functions of our agency.
Addendum D1 defines payment status period. Addenda AA and BB provide • The accuracy of our estimate of the
indicators that are used in Addenda A payment information regarding covered information collection burden.
and B. Addendum D2 defines comment surgical procedures and covered • The quality, utility, and clarity of
indicators that are used in Addendum ancillary services under the revised ASC the information to be collected.
B. Addendum E lists HCPCS codes that payment system. Addendum DD2 • Recommendations to minimize the
are only payable as inpatient procedures defines the comment indicators that we information collection burden on the
and are not payable under the OPPS. are using to provide additional affected public, including automated
Addendum L contains the out-migration information about the status of ASC collection techniques.
wage adjustment for CY 2008. covered surgical procedures and In the CY 2008 OPPS/ASC proposed
Addendum M lists the HCPCS codes covered ancillary services. rule, we solicited public comment on
that are members of a composite APC Addendum EE (available only on the each of these issues for the following
and identifies the composite APC to Internet) lists the surgical procedures sections included in the proposed rule
which they are assigned. This that are excluded from Medicare that contain information collection
addendum also identifies the status payment in ASCs. The excluded requirements.
indicator for the code and a comment procedures listed in Addendum EE are Section 419.43(h) Adjustment to
indicator if there has been a change in surgical procedures that either are national program payment and
the code’s status with regard to its assigned to the OPPS inpatient list, are beneficiary copayment amounts:
membership in the composite APC. not covered by Medicare, are reported Applicable adjustments to conversion
Each of the HCPCS codes included in using a CPT unlisted code, or are factor for CY 2009 and for subsequent
Addendum M has a single procedure determined to pose a significant safety calendar years
payment APC, listed in Addendum B, to risk or are expected to require an Section 419.43(h) requires hospitals,
which it is assigned when the criteria overnight stay when performed in ASCs. in order to qualify for the full annual
for assignment to the composite APC are Those addenda and other supporting update, to submit quality data to CMS,
not met. When the criteria for payment ASC data files are included on the CMS as specified by CMS. In the proposed
of the code through the composite APC Web site at: http://www.cms.hhs.gov/ rule, we proposed the specific
are met, one unit of the composite APC ASCPayment/ in a format that can be requirements related to the data that
payment is paid, thereby providing easily downloaded and manipulated. must be submitted for the update for CY
packaged payment for all services that The final ASC relative weights and 2009. The burden associated with this
are assigned to the composite APC payment rates for CY 2008 are section is the time and effort associated
according to the specific Outpatient published in this CY 2008 OPPS/ASC with collecting and submitting the data,
Code Editor (OCE) logic that applies to final rule with comment period, and completing participating forms and
the APC. We refer readers to the related data files are included on the submitting charts. We estimate that
discussion of composite APCs in section CMS Web site as noted above. MPSF there will be approximately 3,500
II.A.4.d of this final rule with comment data files are located at http:// respondents per year.
period for a complete description of the www.cms.hhs.gov/PhysicianFeeSched/. For hospitals to collect and submit the
composite APCs. The links to all of the FY 2008 IPPS information on the required measures,
Those addenda and other supporting wage index related tables (that are used we estimate it will take 30 minutes per
OPPS data files are available on the for the CY 2008 OPPS) from the FY 2008 sampled case. Further, based on an
CMS Web site at: http:// IPPS final rule with comment period (72 estimated ten percent sample size and
www.cms.hhs.gov/ FR 47436 through 47539) as corrected in estimated populations of 2.5–5 million
HospitalOutpatientPPS/. the October 10, 2007 Federal Register outpatient visits per measure, we
notice to the FY 2008 IPPS final rule estimate a total of 1,800,000 cases per
B. Information in Addenda Related to year. In addition, we estimate that
the Revised CY 2008 ASC Payment with comment period (72 FR 57634
through 57738) are accessible on the completing participation forms with
System require approximately 4 hours per
CMS Web site at: http://
Addenda AA, BB, DD1, and DD2 to www.cms.hhs.gov/AcuteInpatientPPS/ hospital per year. We expect the burden
this final rule with comment period WIFN/list.asp#TopOfPage. for all of these hospitals to total 914,000
provide various data pertaining to the For additional assistance, contact hours per year.
ASC covered surgical procedures and Chuck Braver, (410) 786–6719. In this final rule with comment
the covered ancillary services for which period, for CY 2009, we have delayed
ASCs may receive separate payment XXII. Collection of Information implementation of our validation
beginning in CY 2008 when the Requirements process which will require participating
ancillary service provided in the ASC is Under the Paperwork Reduction Act hospitals to submit 5 charts. The burden
integral to a covered surgical procedure of 1995, we are required to provide 30- associated with this requirement is the
and provided immediately before, day notice in the Federal Register and time and effort associated with
during, or immediately following the solicit public comment when a collecting, copying, and submitting
covered surgical procedure. All relative collection of information requirement is these charts. It will take approximately
payment weights and payment rates are submitted to the Office of Management 2 hours per hospital to submit the 5
final for CY 2008 as a result of applying and Budget (OMB) for review and charts. There will be a total of
the revised ASC payment system approval. In order to fairly evaluate approximately 17,500 charts (3,500
hospitals × 5 charts per hospital) and documented by the individuals as necessary to comply with the
submitted by the hospitals to CMS for required under § 482.22(c)(5)(i). requirement would be incurred by
a total burden of 7,000 hours. However, The burden associated with this persons in the normal course of their
as noted above, this validation process proposed requirement is the time and activities.
will not apply for the CY 2009 update. effort it would take for medical staff to Section 482.52 Condition of
Therefore, we expect the total burden document any changes in the patient’s participation: Anesthesia services
for all hospitals for the CY 2009 updates condition. While the burden associated We proposed under § 482.52(b)(1) to
to be 921,000 hours per year. with this proposed requirement is require a preanesthesia evaluation to be
In section XVII.J. of this final rule subject to the PRA, we believe the completed and documented by an
with comment period, we are finalizing burden is exempt as defined in 5 CFR individual qualified to administer
a provision from the FY 2008 IPPS final 1320.3(b)(2) because the time, effort, anesthesia, performed within 48 hours
rule with comment period relating to and financial resources necessary to prior to surgery or a procedure requiring
the FY 2009 RHQDAPU quality measure comply with the requirement would be anesthesia services. We proposed under
set to include SCIP Infection 4: Cardiac incurred by persons in the normal § 482.52(b)(3) to require a
Surgery Patients with Controlled 6AM course of their activities. postanesthesia evaluation to be
Postoperative Serum Glucose and SCIP Section 482.24 Condition of completed and documented by an
Infection 6: Surgery Patients with participation: Medical record services individual qualified to administer
Appropriate Hair Removal, bringing the We proposed under § 482.24(c)(2)(i) to anesthesia, after surgery or a procedure
total number of measures in that require evidence of: requiring anesthesia services, but before
measure set to 30.) The burden (A) A medical history and physical
discharge or transfer from the
associated with the collection of these examination completed and
postanesthesia recovery area.
two measures was included in the documented no more than 30 days
As discussed in section XVIII.B.2. of
burden estimates in the FY 2008 IPPS before or 24 hours after admission or
this final rule with comment period, in
final rule with comment period (72 FR registration, but prior to surgery or a
response to public comments, we have
47409 and 48169). There is no procedure requiring anesthesia services.
revised § 482.52(b)(3) to specify that a
additional burden imposed in this final The medical history and physical
postanesthesia evaluation must be
rule with comment period. examination must be placed in the
completed and documented no later
patient’s medical record within 24
Section 482.22 Condition of than 48 hours after surgery or a
hours after admission or registration,
participation: Medical staff procedure requiring anesthesia services.
but prior to surgery or a procedure
We proposed under § 482.22(c)(5)(i) to The postanesthesia evaluation must be
requiring anesthesia.
require that a medical history and (B) An updated examination of the completed in accordance with State law
physical examination be completed and patient, including any changes in the and with hospital policies and
documented no more than 30 days patient’s condition, when the medical procedures that are approved by the
before or 24 hours after admission or history and physical examination are medical staff and that reflect current
registration, but prior to surgery or a completed within 30 days before standards of anesthesia care.
procedure requiring anesthesia services, admission or registration. While the burden associated with
for each patient by a physician (as Documentation of the updated these requirements is subject to the
defined in section 1861(r) of the Act), an examination must be placed in the PRA, we believe the burden is exempt
oromaxillofacial surgeon, or other patient’s medical record within 24 as defined in 5 CFR 1320.3(b)(2) because
qualified licensed individual in hours after admission or registration, the time, effort, and financial resources
accordance with State law and hospital but prior to surgery or a procedure necessary to comply with the
policy. requiring anesthesia services. requirement would be incurred by
The burden associated with this While the burden associated with persons in the normal course of their
requirement is the time and effort it these two proposed requirements is activities.
would take for medical staff to subject to the PRA, we believe the In section XX. of this document, we
document the patient’s medical history burden is exempt as defined in 5 CFR are specifying the requirement for the
and the results of a physical 1320.3(b)(2) because the time, effort, submittal of emergency Medicare GME
examination. While the burden and financial resources necessary to affiliation agreements under the
associated with this proposed comply with the requirement would be provisions of § 413.79(f) of the
requirement is subject to the PRA, we incurred by persons in the normal regulations by hospitals in declared
believe the burden is exempt as defined course of their activities. emergency areas. The burden associated
in 5 CFR 1320.3(b)(2) because the time, Section 482.51 Condition of with this requirement is the time and
effort, and financial resources necessary participation: Surgical services effort it would take for the GME
to comply with the requirement would We proposed under § 482.51(b)(1) to affiliated hospital to develop and submit
be incurred by persons in the normal require medical staff, prior to surgery or the emergency Medicare GME affiliation
course of their activities. a procedure requiring anesthesia agreement. It is difficult for us to
We proposed under § 482.22(c)(5)(ii) services, and except in the case of determine estimated annual burden
to require that an updated examination emergencies, to document no more than because we do not know how many
of the patient, including any changes in 30 days before or 24 hours after hospitals will be affected in any given
the patient’s condition, be completed admission or registration a patient’s disaster. It would depend on what
and documented within 24 hours after medical history, the results of the resources are available to the affected
admission or registration, but prior to patient’s physical examination, and any hospitals after sustaining damage from
surgery or a procedure requiring changes in the patient’s condition. the disaster. This could take a few hours
anesthesia services, when the medical While the burden associated with per hospital or much longer depending
history and physical examination are these requirements is subject to the on if they keep records available and
completed within 30 days before PRA, we believe the burden is exempt current. Hospitals also have to
admission or registration. The updated as defined in 5 CFR 1320.3(b)(2) because coordinate with other hospitals to draw
examination must also be completed the time, effort, and financial resources up an affiliation agreement which may
take more time if the hospitals have to alternatives and, if regulation is section XVI.L. of this final rule with
negotiate. necessary, to select regulatory comment period.
We have submitted a copy of this final approaches that maximize net benefits Our estimate in this final rule with
rule with comment period and this (including potential economic, comment period of 5-year savings as a
interim final rule with comment period environmental, public health and safety result of the revised ASC payment
to OMB for its review of the information effects, distributive impacts, and system and our estimate of additional
collection requirements described equity). A regulatory impact analysis payments to ASCs in CY 2008 differ
above. These requirements are not (RIA) must be prepared for major rules slightly from the estimates presented in
effective until they have been approved with economically significant effects the August 2, 2007 revised ASC
by OMB. ($100 million or more in any 1 year). payment system final rule. The ASC
If you comment on these information We estimate that the effects of the budget neutrality adjustment and the
collection and recordkeeping OPPS provisions that would be resulting savings estimates in the
requirements, please mail copies implemented by this final rule with August 2, 2007 final rule are calculated
directly to the following: comment period will result in using CY 2005 utilization data, the
Centers for Medicare & Medicaid expenditures exceeding $100 million in current CY 2007 OPPS relative weights
Services, Office of Strategic any 1 year. We estimate the total with an estimated update factor for CY
Operations and Regulatory Affairs, increase (from changes in this final rule 2008, and the CY 2007 MPFS PE RVUs
Division of Regulations Development, with comment period as well as trended forwarded to CY 2008. The ASC
Attn: Melissa Musotto, (CMS–1392– enrollment, utilization, and case-mix budget neutrality adjustment and the
FC for OPPS/ASC matters, or CMS– changes) in expenditures under the resulting savings estimates in this final
1531–IFC2, for Medicare GME OPPS for CY 2008 compared to CY 2007 rule with comment period are
Affiliation Agreement matters) Room to be approximately $3.4 billion. calculated using the newly available CY
C4–26–05, 7500 Security Boulevard, We estimate that implementing the 2006 utilization data, the CY 2008 OPPS
Baltimore, MD 21244–1850; and revised ASC payment system in CY relative payment weights finalized in
Office of Information and Regulatory this final rule with comment period,
2008 based on the August 2, 2007 final
Affairs, Office of Management and and the CY 2008 MPFS PE RVUs
rule for the revised ASC payment
Budget, Room 10235, New Executive finalized in the CY 2008 MPFS final
system and the final policies in this CY
Office Building, Washington, DC rule. As we indicated in the August 2,
2008 OPPS/ASC final rule with
20503, Attn: Carolyn Lovett, CMS 2007 revised ASC payment system final
comment period (such as adding 11
Desk Officer, CMS–1392–FC for rule, the estimates in that rule were
procedures to the ASC list of covered
meant to be illustrative of the final
OPPS/ASC matters, or CMS–1531– surgical procedures and designating 18
policies only, in large part because we
IFC2, for Medicare GME Affiliation additional procedures as office-based)
used the existing CY 2007 OPPS relative
Agreement matters carolyn_lovett@ will have no net effect on Medicare
payment weights and the existing CY
omb.eop.gov. Fax (202) 395–6974. expenditures in CY 2008 compared to 2007 MPFS PE RVUs to estimate the CY
XXIII. Response to Comments the level of expenditures that would 2008 values. Because the savings
have occurred in CY 2008 in the estimates in this final rule with
Because of the large number of public absence of the revised payment system.
comments we normally receive on comment period are based on the final
A more detailed discussion of the effects CY 2008 OPPS relative payment weights
Federal Register documents, we are not of the changes to the ASC list of covered
able to acknowledge or respond to them that have just become available in this
surgical procedures and the effects of final rule with comment period and the
individually. We will consider all the revisions to the ASC payment
comments we receive by the date and final CY 2008 MPFS PE RVUs that
system in CY 2008 is provided in recently became available in the CY
time specified in the DATES section of section XXIV.C. of this final rule with
this final rule with comment period, 2008 MPFS final rule with comment
comment period. period, the estimates in this final rule
and, when we proceed with a While we estimate that there will be
subsequent document(s), we will with comment period based on that
no net change in Medicare expenditures newly available information represent
respond to those comments in the in CY 2008 as a result of implementing
preamble to that document(s). our best estimates at this time.
the revised ASC payment system and This final rule with comment period
XXIV. Regulatory Impact Analysis the ASC provisions of this final rule is an economically significant rule
with comment period, we estimate that under Executive Order 12866, and a
A. Overall Impact the revised system will result in savings major rule under 5 U.S.C. 804(2).
We have examined the impacts of this of $220 million over 5 years due to
final rule with comment period as migration of new ASC covered surgical 2. Regulatory Flexibility Act (RFA)
required by Executive Order 12866 procedures from HOPDs and physicians’ The RFA requires agencies to
(September 1993, Regulatory Planning offices to ASCs over time. In addition, determine whether a rule would have a
and Review), the Regulatory Flexibility we note that there will be a total significant economic impact on a
Act (RFA) (September 19, 1980, Public increase in Medicare payments to ASCs substantial number of small entities. For
Law 96–354), section 1102(b) of the of approximately $240 million for CY purposes of the RFA, small entities
Social Security Act, the Unfunded 2008 compared to Medicare include small businesses, nonprofit
Mandates Reform Act of 1995 (Public expenditures that would have occurred organizations, and small governmental
Law 104–4), and Executive Order 13132. in the absence of the revised payment jurisdictions. Most hospitals and most
system. These additional payments to other providers and suppliers are small
1. Executive Order 12866 ASCs of approximately $240 million in entities, either by nonprofit status or by
Executive Order 12866 (as amended CY 2008 will be fully offset by savings having average annual revenues of $31
by Executive Order 13258, which from reduced Medicare spending in million or less.
merely reassigns responsibility of HOPDs and physicians’ offices on For purposes of the RFA, we have
duties) directs agencies to assess all services that migrate from these settings determined that approximately 37
costs and benefits of available regulatory to ASCs, as described in detail in percent of hospitals and 73 percent of
ASCs would be considered small million in 1995 dollars, updated one device category, HCPCS code C1820
entities according to the Small Business annually for inflation. That threshold (Generator, neurostimulator,
Administration (SBA) size standards. level is currently approximately $120 (implantable), with rechargeable battery
(We refer readers to the standards at the million. This final rule with comment and charging system), from pass through
Web site: http://www.sba.gov/idc/ period does not mandate any payment status in CY 2008.
groups/public/documents/ requirements for State, local, or tribal Under this final rule with comment
serv_sstd_tablepdf.pdf). Individuals and government, nor does it affect private period, the update change to the
States are not included in the definition sector costs. conversion factor as provided by statute
of a small entity. will increase total OPPS payments by
Not-for-profit organizations are also 5. Federalism 3.3 percent in CY 2008. The one time
considered to be small entities under Executive Order 13132 establishes wage reclassification under section 508
the RFA. There are 2,141 voluntary certain requirements that an agency expired September 30, 2007, and
hospitals that we consider to be not for- must meet when it publishes any rule therefore, is not contemplated in this
profit organizations to which this final (proposed or final) that imposes final rule with comment period. The
rule with comment period applies. substantial direct costs on State and changes to the APC weights, including
local governments, preempts State law, the changes that will result from the
3. Small Rural Hospitals or otherwise has Federalism expansion of packaging, changes to the
In addition, section 1102(b) of the Act implications. wage indices, and the continuation of a
requires us to prepare a regulatory We have examined this final rule with payment adjustment for rural SCHs and
impact analysis if a rule may have a comment period in accordance with EACHs with extension to brachytherapy
significant impact on the operations of Executive Order 13132, Federalism, and sources in CY 2008 will not increase
a substantial number of small rural have determined that it will not have an OPPS payments because these changes
hospitals. This analysis must conform to impact on the rights, roles, and to the OPPS are budget neutral.
the provisions of section 604 of the responsibilities of State, local or tribal However, these updates do change the
RFA. With the exception of hospitals governments. As reflected in Table 61, distribution of payments within the
located in certain New England we estimate that OPPS payments to budget neutral system as shown in
counties, for purposes of section 1102(b) governmental hospitals (including State Table 61 and described in more detail
of the Act, we previously defined a and local governmental hospitals) will in this section.
small rural hospital as a hospital with increase by 3.9 percent under this final
fewer than 100 beds that is located rule with comment period. The 1. Alternatives Considered
outside of a Metropolitan Statistical provisions related to payments to ASCs Alternatives to the changes we are
Area (MSA) (or New England County in CY 2008 will not affect payments to making and the reasons that we have
Metropolitan Area (NECMA)). However, government hospitals. chosen the options are discussed
under the new labor market definitions throughout this final rule with comment
B. Effects of OPPS Changes in This Final
that we adopted in the CY 2005 final period. Some of the major issues
Rule With Comment Period
rule with comment period (consistent discussed in this final rule with
with the FY 2005 IPPS final rule), we no We are making several changes to the comment period and the options
longer employ NECMAs to define urban OPPS that are required by the statute. considered are discussed below.
areas in New England. Therefore, we We are required under section
now define a small rural hospital as a 1833(t)(3)(C)(ii) of the Act to update a. Alternatives Considered for the
hospital with fewer than 100 beds that annually the conversion factor used to Packaging Policies for CY 2008 OPPS
is located outside of an MSA. Section determine the APC payment rates. We In section II.A.4.c. of this final rule
601(g) of the Social Security are also required under section with comment period, we are packaging
Amendments of 1983 (Public Law 98– 1833(t)(9)(A) of the Act to revise, not payment for the following seven
21) designated hospitals in certain New less often than annually, the wage index categories of ancillary and supportive
England counties as belonging to the and other adjustments. In addition, we services into payment for the
adjacent NECMA. Thus, for purposes of must review the clinical integrity of independent service with which they
the OPPS, we classify these hospitals as payment groups and weights at least are billed. We are also making payment
urban hospitals. We believe that the annually. Accordingly, in this final rule for several composite APCs in which a
changes to the OPPS in this final rule with comment period, we are updating single payment is made for multiple
with comment period rule will affect the conversion factor and the wage major services that are commonly
both a substantial number of rural index adjustment for hospital outpatient performed on the same date. We discuss
hospitals as well as other classes of services furnished beginning January 1, below each category of services that we
hospitals and that the effects on some 2008, as we discuss in sections II.C. and are packaging and each set of services
may be significant. The changes to the II.D., respectively, of this final rule with for which we are establishing a
ASC payment system for CY 2008 will comment period. We also are revising composite APC.
have no effect on small rural hospitals. the relative APC payment weights using
claims data from January 1, 2006, (1) Guidance Services
Therefore, we conclude that this final
rule with comment period will have a through December 31, 2006, and We are packaging payment for
significant impact on a substantial updated cost report information. In supportive guidance services into the
number of small rural hospitals. response to a provision in Public Law payment for the independent procedure
108–173 that we analyze the cost of to which the guidance service is
4. Unfunded Mandates outpatient services in rural hospitals ancillary and supportive. In the case of
Section 202 of the Unfunded relative to urban hospitals, we are one particular guidance procedure,
Mandates Reform Act of 1995 (Public continuing increased payments to rural which would usually be provided in
Law 104–4) also requires that agencies SCHs, including EACHs. Section II.F. of conjunction with another independent
assess anticipated costs and benefits this final rule with comment period procedure but may occasionally be
before issuing any rule whose mandates provides greater detail on this rural provided without another independent
require spending in any 1 year of $100 adjustment. Finally, we are removing service on the same date of service, we
will permit separate payment if the provided in conjunction with an providing separate payment for each
service is billed without an independent independent procedure on the same imaging processing service whenever it
procedure on the same date of service. date of service) is not provided on the is performed is not consistent with
We refer readers to section II.A.4.c.(1) of same date as an independent procedure, encouraging value-based purchasing
this final rule with comment period for we will pay separately for that service. under the OPPS. We believe it is
the complete discussion of this final We believe that this alternative will important to package payment for
policy. We considered several policy provide the most appropriate incentives supportive dependent services that
options for the payment of guidance to control volume and spending for accompany independent procedures but
services in CY 2008. these services, without discouraging the that may not need to be provided face-
The first alternative we considered performance of the service in those to-face with the patient in the same
was to not make any changes to infrequent cases when one particular encounter as the independent service.
packaging for the CY 2008 OPPS. Under guidance service is provided without an Packaging encourages hospitals to
this alternative, codes that were independent procedure. establish protocols that ensure that
packaged for CY 2007 would have services are furnished only when they
remained packaged for CY 2008 and (2) Image Processing
are medically necessary and to carefully
codes that were separately paid for CY We are packaging payment for image scrutinize the services ordered by
2007 would have remained separately processing services into the payment for practitioners to minimize unnecessary
paid for CY 2008. There are a number the major independent service to which use of hospital resources. Therefore, we
of CPT codes that describe independent the image processing service is ancillary believe that this alternative will provide
surgical procedures for which the code and supportive. We refer readers to additional appropriate incentives to
descriptors indicate that guidance is section II.A.4.c.(2) of this final rule with control volume and spending for these
included in the code reported for the comment period for the complete services, without discouraging the use
surgical procedure if it is used and, discussion of this final policy. We of the service in those infrequent cases
therefore, for which the OPPS already considered several policy options for when it is provided with an
makes packaged payment for the the payment of image processing independent procedure but on a
associated guidance service. With a services in CY 2008. different date of service.
number of guidance services already The first alternative we considered
packaged, we did not select this option was to make no changes to packaging for (3) Intraoperative Services
in part because we did not want to the CY 2008 OPPS. Under this We are packaging payment for
create financial incentives for hospitals alternative, codes that were packaged intraoperative services into the payment
to use one form of guidance instead of for CY 2007 would have remained for the independent procedure to which
another or to use guidance all the time, packaged for CY 2008 and codes that the intraoperative service is ancillary
even if a procedure could be safely were separately paid for CY 2007 would and supportive. In the case of two
provided without guidance. have remained separately paid for CY intraoperative services, which would
Furthermore, we believe this alternative 2008. We did not select this alternative usually be provided in conjunction with
would not provide additional incentives because we believe it would not provide another independent procedure but may
for hospitals to utilize the most cost- additional incentives for hospitals to occasionally be provided without
effective and clinically advantageous utilize the most cost-effective and another independent service on the
method of guidance that is appropriate clinically advantageous image same date of service, we will permit
in each situation. processing services that are appropriate separate payment if the services are
The second alternative we considered in each situation. billed without an independent
was to package the costs of guidance The second alternative we considered procedure on the same date of service.
services in all cases, without regard to was to package the costs of image We refer readers to section II.A.4.c.(3) of
the possibility of the service being processing services in cases in which this final rule with comment period for
furnished without an independent the image processing service is the complete discussion of this final
service on the same date of service. We furnished on the same date as an policy. We considered several policy
did not select this alternative because independent service to which the image options for the payment of
we believe that in the case of one processing service is ancillary and intraoperative services in CY 2008.
particular guidance procedure, the supportive but to pay separately for the The first alternative we considered
procedure may sometimes be image processing service when it is was to make no changes to packaging for
appropriately furnished without other furnished without an independent the CY 2008 OPPS. Under this
independent services on the same date service on the same date of service. We alternative, codes that were packaged
and in these cases, we believe that there did not select this alternative because it for CY 2007 would have remained
should be separate payment for the would not have provided substantial packaged for CY 2008 and codes that
guidance service. additional incentives for hospitals to were separately paid for CY 2007 would
The third alternative we considered, utilize image processing in the most have remained separately paid for CY
and the alternative we selected, was to cost-effective and clinically 2008. We did not select this alternative
unconditionally package payment for advantageous manner. because we believe it would not provide
most supportive guidance services, The third alternative we considered, additional incentives for hospitals to
while allowing separate payment for and ultimately selected, was to package utilize the most cost-effective and
one particular guidance service when payment for the costs of image clinically advantageous intraoperative
that guidance service is furnished processing services in all cases, without services that are appropriate in each
without an independent service. When regard to the possibility of the service situation.
guidance services are furnished as an being furnished without an independent The second alternative we considered
ancillary and supportive adjunct to an service on the same date of service. was to package payment for the costs of
independent procedure, we are While an image processing service is not intraoperative services in all cases,
packaging payment for all guidance necessarily provided on the same date without regard to the possibility of the
procedures. When one specific guidance of service as the independent procedure service being furnished without an
service (which is occasionally not to which it is ancillary and supportive, independent service on the same date of
service. We did not select this the payment of imaging supervision and volume and spending for these services,
alternative because we believe that, in interpretation services in CY 2008. without discouraging the performance
the case of two particular intraoperative The first alternative we considered of the services in those cases when they
procedures, those procedures may was to make no changes to packaging for are furnished with a service with a
sometimes be appropriately furnished the CY 2008 OPPS. Under this status indicator other than ‘‘T.’’
without other independent services on alternative, codes that were packaged
for CY 2007 would have remained (5) Diagnostic Radiopharmaceuticals
the same date and, in these cases, we
believe that there should be separate packaged and codes that were separately We are packaging payment for
payment for the intraoperative services. paid for CY 2007 would have remained diagnostic radiopharmaceuticals into
The third alternative we considered, separately paid for CY 2008. We did not the payment for their associated nuclear
and ultimately selected, was to select this alternative because we medicine procedures. In response to
unconditionally package the costs of believe it would not provide additional comments, we are using only claims for
intraoperative services in all cases incentives for hospitals to utilize the nuclear medicine procedures that
except two, to allow for the possibility most cost effective and clinically contain a Level II HCPCS code for a
of these two intraoperative services advantageous imaging supervision and diagnostic radiopharmaceutical to set
being furnished without an independent interpretation services that are the median costs for the nuclear
service on the same date of service. We appropriate in each situation. medicine services, and we are
believe that there is some possibility The second alternative we considered implementing claims processing edits
that these procedures could be was to unconditionally package imaging that require that a nuclear medicine
appropriately performed without supervision and interpretation service must have a diagnostic
another independent procedure on the procedures that we believe are always radiopharmaceutical HCPCS code on
same date of service. We do not believe integral to and dependent upon an the same claim to be accepted for
this to be true of the other intraoperative independent separately payable processing. We refer readers to section
services that we proposed to procedure, but to conditionally package II.A.4.c.(5) of this final rule with
unconditionally package. We selected payment for those imaging supervision comment period for the complete
this alternative because we believe it and interpretation services that we discussion of this final policy. We
unlikely that intraoperative services believe are sometimes furnished considered several policy options for
other than the two particular services without another separately payable the payment of diagnostic
would ever be provided without an service on the same date. We did not radiopharmaceuticals in CY 2008.
independent service. Packaging accept this alternative because The first alternative we considered
encourages hospitals to establish commenters convinced us that to do this was to make no changes to our
protocols that ensure that services are would sometimes result in packaging packaging methodology for diagnostic
furnished only when they are medically these services with services for which radiopharmaceuticals in the CY 2008
necessary and to carefully scrutinize the packaging of the imaging supervision OPPS. Under this alternative, diagnostic
services ordered by practitioners to and interpretation services was radiopharmaceuticals with a mean per-
minimize unnecessary use of hospital inappropriate (for example, visits and day cost of $60 or less would be
resources. We believe that this is the minor diagnostic tests). packaged into the payment for
most appropriate alternative because, in The third alternative we considered, associated procedures present on the
general, it creates additional incentives and the alternative we selected, was to claim. Diagnostic radiopharmaceuticals
for hospitals to provide intraoperative unconditionally package imaging with a per-day cost over $60 would
services only when both medically supervision and interpretation receive separate payment. We did not
necessary and cost efficient for the procedures that we believe are always select this alternative because we
individual patient. Therefore, we integral to and dependent upon an believe it would not provide additional
believe that this alternative will provide independent separately payable incentives for hospitals to utilize the
the most appropriate incentives to procedure, but to conditionally package most cost-effective and clinically
control volume and spending for these payment for certain imaging supervision advantageous diagnostic
services. and interpretation services only when radiopharmaceuticals that are
they are provided on the same date of appropriate in each situation.
(4) Imaging Supervision and service as a service with a status The second alternative we considered
Interpretation Services indicator of ‘‘T.’’ We believe that this was to package the costs of diagnostic
We are unconditionally packaging alternative is the most appropriate radiopharmaceuticals in cases in which
payment for some imaging supervision choice because it creates additional the diagnostic radiopharmaceutical is
and interpretation services into the incentives for hospitals to provide furnished on the same date as an
payment for the independent service to services only when medically necessary independent service to which the
which the imaging supervision and to an individual patient when the diagnostic radiopharmaceutical is
interpretation service is ancillary and supervision and interpretation service is ancillary and supportive, but to pay
supportive and conditionally packaging furnished as an ancillary and supportive separately for the diagnostic
payment for other imaging supervision adjunct to the independent procedural radiopharmaceutical when it is
and interpretation services when the service and does not package the furnished without an independent
independent service has a status payment for the supervision and service on the same date of service. We
indicator of ‘‘T.’’ For this latter subset of interpretation service with the payment did not select this alternative because
codes, we are permitting separate for a visit or other service. We will pay diagnostic radiopharmaceuticals are
payment if there is no service with separately for some imaging supervision always intended to be used with a
status indicator of ‘‘T’’ billed the same and interpretation services in those diagnostic nuclear medicine procedure.
date of service. We refer readers to cases where they are not furnished on Our claims data indicate that diagnostic
section II.A.4.c.(4) of this final rule with the same date as a service with status radiopharmaceuticals are infrequently
comment period for the complete indicator of ‘‘T.’’ Therefore, we believe provided on a different date of service
discussion of this final policy. We that this alternative will provide the from a nuclear medicine procedure.
considered several policy options for most appropriate incentives to control Because our standard OPPS ratesetting
methodology packages costs across packaging methodology for contrast services, per hour) for CY 2008.
dates of service on ‘‘natural’’ single media in the CY 2008 OPPS. Under this Payment for observation will be
claims, we believe that our standard alternative, contrast media with a mean packaged as part of the payment for the
methodology adequately captures the per-day cost of $60 or less would be separately payable services with which
costs of diagnostic radiopharmaceuticals packaged into the payment for it is billed. In addition, we created two
associated with diagnostic nuclear associated procedures present on the additional composite APCs for extended
medicine procedures that are not claim. Contrast media with a per-day assessment and management, of which
provided on the same date of service. cost over $60 would receive separate observation care is a component. We
The third alternative we considered, payment. We did not select this refer readers to section II.A.4.c.(7) of
and the alternative we selected, was to alternative because we believe it would this final rule with comment period for
package the costs of diagnostic not provide additional incentives for the complete discussion of this final
radiopharmaceuticals with their hospitals to utilize contrast media in the policy. We considered several policy
associated nuclear medicine procedures, most cost-effective and clinically options for the payment of observation
to calculate the median costs of nuclear advantageous manner. With most services in CY 2008.
medicine procedures using only claims contrast media already packaged based The first alternative we considered
that contain a Level II HCPCS code for on our $60 packaging threshold, this was to make no changes to payment of
a diagnostic radiopharmaceutical, and alternative would potentially maintain observation services for the CY 2008
to implement claims processing edits inconsistent payment incentives across OPPS. Since January 1, 2006, hospitals
that require that a claim that reports a similar products. have reported observation services
code for a nuclear medicine procedure The second alternative we considered based on an hourly unit of care using
must also contain a code for a diagnostic was to package the costs of contrast HCPCS code G0378. This code has a
radiopharmaceutical to be accepted for media in cases in which the contrast status indicator of ‘‘Q’’ under the CY
processing. Packaging the costs of medium is furnished on the same date 2007 OPPS, meaning that the OPPS
supportive items and services into the as an independent service but to pay claims processing logic determines
payment for the independent procedure separately for the contrast medium whether the observation is packaged or
or service with which they are when it is furnished without an separately payable. The OCE’s current
associated encourages additional independent service on the same date of logic determines whether observation
hospital efficiencies and enables service. We did not select this care billed under G0378 is separately
hospitals to better manage their alternative because we believe it is payable through APC 0339
resources with maximum flexibility. unlikely that contrast media would ever (Observation), or whether payment for
Diagnostic radiopharmaceuticals are be provided without an independent observation services will be packaged
always intended to be used with a service on the same date of service. into the payment for other separately
diagnostic nuclear medicine procedure, The third alternative we considered, payable services provided by the
and are, therefore, particularly well and the alternative we selected, was to hospital in the same encounter based on
suited for packaging under the OPPS for unconditionally package the costs of criteria discussed in more detail in
the reasons identified in section contrast media with their associated section II.A.4.c.(7) of this final rule with
II.A.4.c.(5) of this final rule with independent diagnostic and therapeutic comment period. For CY 2007, we
comment period. Moreover, calculating procedures. The vast majority of continued to apply the criteria for
the median cost of nuclear medicine contrast media will currently be separate payment for observation care
procedures using only claims that also packaged under the $60 packaging and the coding and payment
contain at least one diagnostic threshold. Given that most contrast methodology for observation care that
radiopharmaceutical will ensure that agents will already be packaged under were implemented in CY 2006. We did
the cost of the radiopharmaceuticals the OPPS in CY 2008, we believe it not select this alternative because the
used in the procedure will be captured would be desirable to package payment current criteria for separate payment for
in the median cost. In addition, for the remaining contrast agents, as this observation services treat payment for
implementing a claims processing edit approach promotes additional efficiency observation care for various clinical
that will require that a claim that and results in a more consistent conditions differently and may provide
contains a code for a nuclear medicine payment policy across products that disincentives for efficiency. In addition,
procedure must also contain a code for may be used in many of the same there has been substantial growth in
a diagnostic radiopharmaceutical will independent procedures. In the case of program expenditures for hospital
ensure that in future years, all claims for echocardiography procedures that are outpatient services under the OPPS in
nuclear medicine procedures will performed with contrast, we have recent years, a trend that is reflected in
include the cost of the established separate Level II HCPCS the rapidly increasing volume of claims
radiopharmaceuticals used to furnish codes to report these services, so that we for separately payable observation
the service. will pay for contrast and noncontrast services. This alternative would not
studies through separate APC groups as provide additional incentives for
(6) Contrast Media section 1833(t)(2)(G) of the Act requires. hospitals to utilize observation services
We are packaging payment for The median cost of the APC for in the most cost effective and clinically
contrast media into their associated noncontrast echocardiography services advantageous manner.
independent diagnostic and therapeutic was set based on those claims for the The second alternative we considered
procedures. We refer readers to section studies that also reported a contrast was to accept the APC Panel’s
II.A.4.c.(6) of this final rule with agent, to ensure that the procedure recommendations to add syncope and
comment period for the complete payment includes the cost of the dehydration to the list of diagnoses
discussion of this final policy. We necessary contrast agent. eligible for separate payment or to
considered several policy options for consider other clinical conditions for
the payment of contrast media in CY (7) Observation Services separate payment for observation care.
2008. We are packaging payment for all We believe that, in certain
The first alternative we considered observation care, reported under HCPCS circumstances, observation could be
was to make no changes to our code G0378 (Hospital observation appropriate for patients with a range of
diagnoses. Both the APC Panel and care may sometimes rise to the level of observation services, above, and to
numerous commenters to prior OPPS a major component service, specifically, section II.A.4.c.(7) of this final rule with
proposed rules have confirmed their when it is provided for 8 hours or more comment period for further discussion
agreement with this perspective. in association with a high level clinic or of the composite APCs of which
However, as packaging payment emergency department visit, direct observation is a part. We refer readers to
provides additional desirable incentives admission to observation, or critical care section II.A.4.d. of this final rule with
for more efficient delivery of health care services and it is not provided in comment period for a discussion of APC
and provides hospitals with significant conjunction with a surgical procedure. 0034.
flexibility to manage their resources, we Therefore, we have created two A composite APC is an APC that
believe it is most appropriate to treat composite APCs that will provide provides a single payment for several
observation care for all diagnoses payment to hospitals in certain independent services when they are
similarly by packaging its costs into circumstances when extended furnished on the same date of service.
payment for the separately payable assessment and management of a patient Composite APCs are intended to
procedures with which the observation occur. These composite APCs describe establish APC payment rates for
is associated. Consequently, we did not an extended encounter for care provided combinations of services that are
select this alternative to expand separate to a patient. Specifically, we are creating frequently furnished together so that the
observation payment to additional two new composite APCs for CY 2008, multiple procedure claims on which
diagnoses. APC 8002 (Level I Extended Assessment they are submitted may be used to set
The third alternative we considered and Management Composite) and APC the payment rates for them and so that
was to package payment for all 8003 (Level II Extended Assessment and the payment for the services provides
observation services reported with Management Composite). The payment greater incentives for efficient use of
HCPCS code G0378 under the CY 2008 associated with APCs 8002 and 8003 is hospital resources. Specifically, as
OPPS. We believe this is the most intended to pay the hospital for the proposed, we are establishing composite
appropriate alternative within the costs associated with a single episode of APC 8000 for low dose rate prostate
context of our packaging approach care involving more intense extended brachytherapy (which will be paid
because observation is always provided assessment and management that when CPT codes 55875 (Transperineal
as a supportive service in conjunction includes a high level clinic or placement of needles or catheters into
with other independent separately emergency department visit, direct prostate for interstitial radioelement
payable hospital outpatient services admission to observation, or critical care application, with or without cystoscopy)
such as an emergency department visit, services; 8 hours or more of observation and 77778 (Interstitial radiation source
surgical procedure, or another services; and any associated packaged application; complex) are billed on the
separately payable service, and thus its services. same date of service) and APC 8001 for
costs can be packaged into the OPPS In summary, for CY 2008, payment for cardiac electrophysiologic evaluation
payment for such services. We believe observation services will remain and ablation services (which will be
that packaging payment into larger packaged with a status indicator ‘‘N.’’ paid when at least one designated
payment bundles creates incentives for We are creating two composite APCs for cardiac electrophysiologic evaluation
providers to furnish services in the most extended assessment and management, service is billed on the same date as at
efficient way that meets the needs of the of which observation care is a major least one designated cardiac ablation
patient, encouraging long-term cost component service. When criteria for service). We refer readers to sections
containment. With approximately 70 payment of one of the composite APCs II.A.4.d.(2) and II.A.4.d.(3) of this final
percent of the occurrences of are met, separate payment will be made rule with comment period for a detailed
observation care billed under the OPPS to the hospital through the composite discussion of the policies for these
currently packaged, this alternative will APC. This composite APC payment APCs. We note that we will continue to
extend the incentives for efficiency methodology will contribute to our goal pay individual services under their
already present for the vast majority of of providing payment under the OPPS single procedure APCs as we have in the
observation care that is already for a larger bundle of component past, in those clinical circumstances in
packaged under the OPPS to the services provided in a single hospital which the combinations of services
remaining 30 percent of observation outpatient encounter, creating proposed for payment through the
care for which we currently make additional hospital incentives for composite APCs are not furnished on
separate payment. efficiency and cost containment, while the same date. We considered two
However, based on the public providing hospitals with the most alternatives with regard to creating
comments we received, while we are flexibility to manage their resources. composite APCs.
adopting our proposal to package The first alternative we considered
payment for all observation services (8) Composite APCs was to make no change to how we pay
reported with HCPCS code G0378 under We are establishing five composite for these services. If we were to make no
the CY 2008 OPPS, we will also create APCs for the CY 2008 OPPS. In addition change, we could continue to pay
two additional composite APCs for to the two composite APCs that we separately for each service. We did not
extended assessment and management, proposed for the CY 2008 OPPS and for select this alternative because the
of which observation care is a major which we discuss the alternatives payment rates would continue to be
component. This refinement of the third considered in this section, we have also based on single procedure claims,
alternative responds to commenters who created two composite APCs for which we have been told by
stated that observation care is extended assessment and management stakeholders do not represent the
sometimes a major component of a (of which observation care is a part), typical treatment scenario. Interested
patient’s visit. We continue to believe and we identify APC 0034 (Mental parties have repeatedly told us, and our
that observation services are usually Health Services Composite), the examination of claims data supports,
ancillary and supportive to the other longstanding limit on per diem payment that these services are typically
independent services that are provided for mental health services, as a furnished in combination with one
to the patient on the same day. composite APC. We refer readers to the another and, therefore, this may suggest
However, we believe that observation discussion of alternatives considered for that the use of single procedure claims
to establish the median costs that form cost of the device when there is no credit of 50 percent or more of the cost
the basis for payment for these services credit, there should be a reduction in of the new replacement device being
may result in our using clinically the Medicare payment amount when the implanted. We are requiring hospitals to
unusual or incorrectly coded claims as hospital receives a substantial credit report the ‘‘FC’’ modifier when the
the basis for payment. toward cost of the replacement device. hospital receives a partial credit that is
The second alternative we considered, Similarly, we believe that the 50 percent or more of the cost of the
and the alternative we selected, is to beneficiary cost sharing should be based device being replaced. We are adopting
create composite APCs for these on an amount that also reflects the this alternative because we believe that
services, which are commonly furnished credit. this approach provides an appropriate
in combination with one another, and to The second alternative we considered and equitable payment to the hospital
make a single payment for the multiple was to extend the current policy to cases from Medicare and, depending on the
services specified in the composite APC of partial credit without change. This service, may reduce the beneficiary’s
at a prospectively established rate based would reduce the payment in all cases cost sharing for the service.
on the total cost of the combination of in which the hospital received a credit
services furnished. This alternative by the full offset amount for the APC, c. Brachytherapy Sources
responds to public comments that that is, by 100 percent of the estimated Pursuant to sections 1833(t)(2)(H) and
multiple procedure claims for these device cost contained in the APC. We 1833(t)(16)(C) of the Act, we paid for
services that we have heretofore been considered this alternative because, in brachytherapy sources furnished from
unable to use for ratesetting reflect the our discussions with hospitals about January 1, 2004 through December 31,
most common treatment scenarios. It partial credits for devices, they advised 2006, on a per source basis at an amount
also provides additional incentives for us that hospitals generally charge the equal to the hospital’s charge adjusted
efficient provision of services by same amount for a device regardless of to cost by application of the hospital-
bundling payment for multiple services whether they receive a significant specific overall CCR. Moreover,
into a single payment. Composite APCs amount in credit towards the cost of that pursuant to section 107(a) of the MIEA–
enable us to use more of our claims data device. Hence, in such a case the costs TRHCA, which amended section
and to use single procedure claims only that are packaged into the APC payment 1833(t)(16)(C) of the Act by extending
to set payment rates for the uncommon for the applicable procedure contain the the payment period for brachytherapy
circumstances in which a particular same amount of device cost as if the sources based on a hospital’s charges
service is not furnished in combination hospital incurred the full cost of the adjusted to cost, we are paying for
with other related independent services. device. We did not select this brachytherapy sources using the charges
Therefore, we are establishing alternative because we did not believe it adjusted to cost methodology through
composite APCs 0034, 8000, 8001, 8002, was appropriate to reduce the payment December 31, 2007. Section 107(b)(1) of
and 8003 for the CY 2008 OPPS. to the hospital by the full cost of a the MIEA–TRHCA amended section
device if the hospital only received a 1833(t)(2)(H) of the Act, by adding a
b. Partial Device Credits requirement for the establishment of
partial credit, and not a full credit,
We are reducing payment by 50 towards the cost of the device. separate payment groups for ‘‘stranded
percent of the device offset amount for The third alternative we considered and non-stranded’’ brachytherapy
specified APCs when hospitals report was to reduce the APC payment by 50 devices beginning July 1, 2007. In
that they have received a credit for a percent of the offset amount (that would section VII.B. of this final rule with
replacement device of greater than or be applied if the hospital received full comment period, we are adopting
equal to 50 percent of the cost of the credit) in cases in which the hospital prospective payment for all
new replacement device being receives a partial credit of 20 percent or brachytherapy sources under the CY
implanted, if the device is on a list of more of the cost of the new replacement 2008 OPPS, including separate payment
specified devices. We refer readers to device being implanted. We would for stranded and non-stranded versions
section IV.A.3. of this final rule with require hospitals to report a new of sources currently known to us, that
comment period for a complete modifier when the hospital receives a is, iodine-125, palladium-103 and
discussion of this final policy. This is an partial credit that is 20 percent or more cesium-131. For each of the sources for
extension of the current policy that of the cost of the device being replaced. which we have information that only
reduces the APC payment by the full We are not adopting this policy, which non-stranded source versions are
device offset amount when the hospital we proposed in the CY 2008 OPPS/ASC marketed, we are making payment based
receives a replacement device without proposed rule, for several reasons. We on the median cost per source based on
cost or receives a credit for the full cost note it would not be consistent with the our CY 2006 claims data. For sources for
of the device being replaced. We FY 2008 IPPS partial credit device which we have information that both
considered several alternatives in policy, and we were concerned that 20 stranded and non-stranded versions are
developing this partial device credit percent is a nominal portion of the cost marketed and for which our CY 2006
policy for CY 2008. of a device and would not justify the billing codes do not differentiate
The first alternative we considered administrative and operational burden stranded and non-stranded sources, we
was to make no change to the current posed by the policy and, accordingly, are basing payment for stranded and
policy. Under this alternative, Medicare the 50-percent payment reduction non-stranded brachytherapy sources on
and the beneficiary would continue to would be more than the partial credit the 60th percentile and 40th percentile
pay the full APC rate, which is received in some cases. of our claims data, respectively, for CY
calculated using only claims for which The fourth alternative, which we are 2008. We discuss each alternative we
the full cost of a device is billed by the adopting, is a modification of the third considered below.
hospital, even if the hospital received a alternative described above. This The first alternative we considered
substantial credit towards the cost of the alternative is to reduce the APC was to pay for each source of
replacement device. We did not select payment by 50 percent of the offset brachytherapy based on our CY 2006
this alternative because we believe that, amount (that would be applied if the median costs, with the exception of the
as long as the APC payment amount is hospital received full credit) in cases in 3 sources for which we do not have
initially established to reflect the full which the hospital receives a partial separately reported cost data for their
stranded and non-stranded versions, data for stranded sources and the 40th that there could be a behavioral
that is, iodine-125, palladium-103, and percentile of our aggregate data for nonresponse to our final policy to package
cesium-131. Under this option, for these stranded sources. This methodology payment for guidance services, image
six stranded and non-stranded sources, provides for separate payment of all processing services, intraoperative
we considered payment based on sources, including stranded and non- services, imaging supervision and
hospital charges reduced to cost for CY stranded sources, recognizes a cost interpretation services, diagnostic
2008. This approach would be a step differential between stranded and non- radiopharmaceuticals, contrast agents,
toward prospective payment for stranded sources, is consistent with our and observation services, and to pay for
brachytherapy sources, as the sources prospective payment methodology for certain services through composite
that only have non-stranded versions setting payment rates for other services, APCs when the services are furnished in
would receive prospective payment and is consistent with the expiration of specified combinations. However, we
consistent with the overall OPPS the requirement of the MIEA–TRHCA are unable to estimate what the effect of
methodology. However, payment for that payment for brachytherapy sources possible behavioral responses may be on
stranded and non-stranded iodine-125, be made at charges reduced to cost payment to hospitals. We refer readers
palladium-103 and cesium-131 would through December 31, 2007. to section II.A.4. of this final rule with
deviate from the overall OPPS comment period for further discussion
2. Limitations of Our Analysis
framework for prospective payment and
The distributional impacts presented of the packaging approach. The purpose
from the prospective payment of the
here are the projected effects of the of packaging these services and creating
non-stranded only sources specifically.
policy changes on various hospital composite APCs is to remove financial
This approach would subject similar
items that are essential to brachytherapy groups. We post our hospital-specific incentives to furnish additional services
treatments to different payment estimated payments for CY 2008 with and, instead, to provide greater
methodologies and could potentially the other supporting documentation for incentives for hospitals to assess the
create financial incentives for the use of this final rule with comment period. To most cost-effective and appropriate
some products over others. view the hospital-specific estimates, we means to furnish necessary services. In
The second alternative we considered refer readers to the Web site at: http:// addition, we expect that hospitals will
was to continue making payments for all www.cms.hhs.gov/ negotiate for lower prices from suppliers
sources based on hospital charges HospitalOutpatientPPS/. Select to maximize the margin between their
reduced to cost. Although hospitals are ‘‘regulations and notices’’ from the left cost of providing services and the
familiar with this payment methodology side of the page and then select CMS– Medicare payment for the services. We
and this methodology would be 1392–FC from the list of regulations and recognize that it is also possible that
consistent with the requirement that notices. The hospital-specific file layout hospitals could change behavior in a
brachytherapy sources be paid and the hospital-specific file are listed manner that seeks to overcome any
separately, we believe that to continue with the other supporting reductions in total payments by ceasing
to pay on this basis would be documentation for this final rule with to provide certain packaged services on
inconsistent with the general comment period. We show hospital- the same date of service and instead
methodology of a prospective payment specific data only for hospitals whose requiring patients to receive those
system and would provide no incentive claims were used for modeling the services on different dates of service or
for hospitals to provide brachytherapy impacts shown in Table 61. We do not at different locations, so as to either
treatments in the most cost-effective and show hospital-specific impacts for receive separate additional payment for
clinically advantageous manner. hospitals whose claims we were unable services that would otherwise be
The third alternative we considered, to use. We refer readers to Section packaged or to not incur the additional
and the alternative we selected, is to II.A.2. of this final with comment period costs of those services. However, we
provide prospective payment for each for a discussion of the hospitals whose believe that this will be uncommon for
brachytherapy source based on its claims we do not use for ratesetting and
several reasons. We anticipate that
median costs. For the sources which impact purposes.
We estimate the effects of individual hospitals will continue to provide care
only have non-stranded versions, we are
policy changes by estimating payments that is aligned with the best interests of
using our standard median cost
per service, while holding all other the patient. In the vast majority of cases
methodology. For the 3 sources that
have stranded and non-stranded payment policies constant. We use the for the services that are newly
versions and for which we do not yet best data available but do not attempt to unconditionally packaged in CY 2008,
have separately reported stranded and predict behavioral responses to our the services need to be provided in the
non-stranded claims data, we are policy changes. In addition, we do not same facility and during the same
calculating the median costs based on make adjustments for future changes in encounter as the independent procedure
the assumption that the reportedly variables such as service volume, they support. Furthermore, in the case
lower cost non-stranded sources would service-mix, or number of encounters. of conditionally packaged services, we
be unlikely to be in the top 20 percent As we have done in previous rules, we note that the supportive services that we
of the cost distribution of our aggregate solicited comments and information have included in our packaging policies
CY 2006 claims data for each respective about the anticipated effect of the are typically services that are provided
source, and on the assumption that the changes on hospitals and our during or shortly preceding the
reportedly higher cost stranded sources methodology for estimating them. We independent procedure to which they
would be unlikely to be in the bottom discuss below several specific are ancillary and supportive, and thus it
20 percent of the CY 2006 cost limitations of our analysis. is unlikely that the supportive service
distribution for each source. This One limitation of our analysis is our that is packaged and the independent
approach to calculating median costs for inability to estimate behavioral procedure will be performed in different
stranded and non-stranded iodine-125, responses to our increase in packaging locations. However, we are unable to
palladium-103, and cesium-131 sources and our payment for multiple quantify the extent to which such
results in Medicare payment rates based procedures based on one composite behavioral change may impact Medicare
on the 60th percentile of our aggregate payment rate. Specifically, it is possible payments to hospitals.
Secondly, we are not able to estimate assumption. In the CY 2008 OPPS/ASC The estimated increase in the total
the impact on hospitals of our policy to proposed rule, we welcomed data that payments made under the OPPS is
reduce payment when a hospital would provide the expected CY 2008 limited by the increase to the
receives a partial credit for a medical ratio of stranded sources to non- conversion factor set under the
device that fails while under warranty stranded sources for purposes of this CY methodology in the statute. The
or otherwise. We do not currently 2008 final rule impact analysis. We did distributional impacts presented do not
require hospitals to notify us when they not receive any information regarding include assumptions about changes in
received a partial credit for a device for the ratio of stranded to non-stranded volume and service-mix. The enactment
which they are billing. In addition, sources in the public comments on the of Public Law 108–173 on December 8,
hospitals have informed us that proposed rule. 2003, provided for the additional
hospitals generally do not currently The final limitation of our analysis is payment outside of the budget
reduce the charge for a device when that we cannot predict the utilization of neutrality requirement for wage indices
they receive a partial credit toward the new CY 2007 and CY 2008 CPT codes for specific hospitals reclassified under
device for which they are billing that replace existing CY 2006 CPT codes section 508. The amounts attributable to
Medicare. Therefore, we have no means for which we have cost data on which this reclassification are incorporated
of knowing the frequency with which we base the CY 2008 OPPS payment into the CY 2007 estimates but because
this happens or the extent to which rates. In years past, we have estimated section 508 expired for CY 2008 rates,
hospitals’ costs for the devices being the impact of these code changes as if no additional payments under section
replaced are reduced as a result of the the deleted codes would continue to 508 are considered for CY 2008 in this
partial credits and cannot estimate the exist for the applicable year for which impact analysis.
impact of the policy on hospital we were estimating impacts. For this Table 61 shows the estimated
payments under the OPPS in CY 2008. final rule with comment period, we redistribution of hospital and CMHC
Third, we are unable to estimate the applied the AMA’s estimates of new payments among providers as a result of
extent to which hospitals will incur no code utilization which are used for the APC reconfiguration and recalibration
cost for devices or will receive full or MPFS final rule with comment period. including the expansion of packaging;
partial credits for devices being replaced However, we do not know whether wage indices, and continuation of the
as a result of the failure of the device. these estimates of physician utilization adjustment for rural SCHs and EACHs
In CY 2006, hospitals reported the ‘‘FB’’ are equally applicable to hospital with extension to brachytherapy sources
modifier on codes for devices that they outpatient services. in CY 2008; the estimated distribution
received without cost or for which they In the CY 2008 OPPS/ASC proposed of increased payments in CY 2008
received a full credit. However, we are rule, we requested comments regarding resulting from the combined impact of
unable to forecast the extent to which whether it would be appropriate for us the APC recalibration with the
the frequency or the type of device for to use the AMA estimates of utilization expansion of packaging, wage effects,
which this occurred in CY 2006 will for new codes in the estimation of the the rural SCH and EACH adjustment,
recur for CY 2008. We believe that most impact of the final CY 2008 payments and the market basket update to the
of these occurrences were the result of for hospitals. We received no comments conversion factor; and, finally,
specific activity that we have no reason on this issue. estimated payments considering all
to believe will occur in CY 2008 at the 3. Estimated Impacts of This Final Rule payments for CY 2008 relative to all
same frequency at which it occurred in With Comment Period on Hospitals and payments for CY 2007, including the
CY 2006, and hence we have made no CMHCs impact of expiring wage provisions of
estimates of how such activity may section 508, changes in the outlier
impact payments to hospitals. Similarly, Table 61 below shows the estimated threshold, and changes to the pass-
we have no estimate of the extent to impacts of this final rule with comment through estimate. Because updates to
which hospitals will receive partial period on hospitals. Historically, the the conversion factor, including the
credits for devices under warranty first line of the impact table, which update of the market basket and the
actions in CY 2008. Beginning January estimates the change in payments to all addition of money not dedicated to
1, 2008, hospitals will report cases in hospitals, has always included cancer pass-through payments, are applied
which they receive a partial credit for a and children’s hospitals, which are held uniformly, observed redistributions of
device if the credit is 50 percent or more harmless to their pre-BBA payment to payments in the impact table for
of the cost of the replacement device. cost ratio. This year, for the first time, hospitals largely depend on the mix of
However, these data will not be we are also including CMHCs in the first services furnished by a hospital (for
available until the development of the line that includes all providers because example, how the APCs for the
CY 2010 OPPS, which will be based on we included CMHCs in our weight hospital’s most frequently furnished
CY 2008 claims. scaler estimate. We are not showing the services would change), the impact of
Fourth, for purposes of this impact estimated impact of the changes on the wage index changes on the hospital,
analysis, for those brachytherapy CMHCs alone because CMHCs bill only and the impact of the payment
sources with new codes to distinguish one service under the OPPS, partial adjustment for rural SCHs, including
between stranded and non-stranded hospitalization, and each CMHC can EACHs. However, total payments made
version, we assume that half of the easily estimate the impact of the under this system and the extent to
brachytherapy sources that hospitals changes by referencing payment for APC which this final rule with comment
will use in CY 2008 will be stranded 0033 (Partial Hospitalization) in period will redistribute money during
sources and that half of them will be Addendum A to this final rule with implementation also would depend on
non-stranded sources. The statute comment period. As discussed in changes in volume, practice patterns,
requires us to pay for stranded and non- section II.B. of this final rule with and the mix of services billed between
stranded sources through different APC comment period, the payment for APC CY 2007 and CY 2008, which CMS
groups, but given the lack of separately 0033 (Partial Hospitalization) for CY cannot forecast.
reported claims data for stranded and 2008 will decline by 13 percent Overall, the final OPPS rates for CY
non-stranded sources, for the purposes compared to the payment for APC 0033 2008 will have a positive effect for
of this impact analysis, we make this for CY 2007. providers paid under the OPPS,
resulting in a 3.6 percent increase in rural floor, as discussed in section II.D. a multiple threshold of 1.75 and a fixed-
Medicare payments. Removing cancer of this final rule with comment period. dollar threshold of $1,825 would be
and children’s hospitals because their We modeled the independent effect of approximately 0.73 percent of total
payments are held harmless to the pre- updating the wage index and the rural payments. Outlier payments of 0.73
BBA ratio between payment and cost, adjustment by varying only the wage percent appear in the CY 2007
and CMHCs, suggests that changes will index, using the CY 2008 scaled comparison in Column 5. We used the
result in a 3.8 percent increase in weights, and a CY 2007 conversion same set of claims and a charge inflation
Medicare payments to all other factor that included a budget neutrality factor of 12.78 percent (1.1278) and the
hospitals, exclusive of transitional pass- adjustment for changes in wage effects CCRs on the July 2007 Outpatient
through payments. and the rural adjustment between CY Provider-Specific File, with an
To illustrate the impact of the final 2007 and CY 2008. adjustment of 1.0027 to reflect relative
CY 2008 changes, our analysis begins Column 4 demonstrates the combined changes in cost and charge inflation
with a baseline simulation model that ‘‘budget neutral’’ impact of APC between CY 2006 and CY 2008, to
uses the final CY 2007 weights, the FY recalibration with the packaging policy model the CY 2008 outliers at 1.0
2007 final post-reclassification IPPS (that is, Column 2), the wage index percent of total payments using a
wage indices, and the final CY 2007 update and the adjustment for rural multiple threshold of 1.75 and a fixed
conversion factor. Column 2 in Table 61 SCHs and EACHs (that is, Column 3), as dollar threshold of $1,575.
shows the independent effect of changes well as the impact of updating the
resulting from the reclassification of conversion factor with the market basket Column 1: Total Number of Hospitals
services among APC groups, the update. We modeled the independent The first line in Column 1 in Table 61
recalibration of APC weights and the effect of the budget neutrality shows the total number of providers
changes to packaging that we adopted adjustments and the market basket (4,250), including cancer and children’s
for this final rule with comment period, update by using the weights and wage hospitals and CMHCs for which we
based on 12 months of CY 2006 hospital indices for each year, and using a CY were able to use CY 2006 hospital
OPPS claims data and more recent cost 2007 conversion factor that included the outpatient claims to model CY 2007 and
report data. We modeled the effect of market basket update and budget CY 2008 payments by classes of
APC recalibration and packaging neutrality adjustments for differences in hospitals. We excluded all hospitals for
changes for CY 2008 by varying only the wages and the adjustment for rural which we could not accurately estimate
weights (the final CY 2007 weights SCHs and EACHs. CY 2007 or CY 2008 payment and
versus the estimated CY 2008 weights Finally, Column 5 depicts the full entities that are not paid under the
including expanded packaging in our impact of the CY 2008 policy on each OPPS. The latter entities include CAHs,
baseline model) and calculating the hospital group by including the effect of all-inclusive hospitals, and hospitals
percent difference in payments. Column all the changes for CY 2008 (including located in Guam, the U.S. Virgin
2 also reflects the effect of changes the APC reconfiguration and Islands, Northern Mariana Islands,
resulting from the APC reclassification recalibration with the packaging American Samoa, and the State of
and recalibration changes and changes changes shown in Column 2) and Maryland. This process is discussed in
in multiple procedure discount patterns comparing them to all estimated greater detail in section II.A. of this final
that occur as a result of the changes to payments in CY 2007, including rule with comment period. At this time,
packaging. When services are packaged, changes to the wage index under section we are unable to calculate a
the resulting median costs at the HCPCS 508 of Public Law 108 173. Column 5 disproportionate share (DSH) variable
code level often change, requiring shows the combined budget neutral for hospitals not participating in the
migration of HCPCS codes to different effects of Columns 2 through 4, plus the IPPS. Hospitals for which we do not
APCs to address violations of the 2 impact of the change to the fixed outlier have a DSH variable are grouped
times rule (that is, to ensure that the threshold from $1,825 to $1,575, separately and generally include
HCPCS codes within the APC remain expiring section 508 reclassification psychiatric hospitals, rehabilitation
homogeneous with regard to clinical wage index increases, and the impact of hospitals, and LTCHs. We show the
and resource characteristics). The reducing the percentage of total total number (3,984) of OPPS hospitals,
placement of the HCPCS code in a new payments dedicated to transitional pass- excluding the hold-harmless cancer and
APC as a result of the effect of the through payments. We estimate that children’s hospitals, and CMHCs, on the
packaging approach often changes the these cumulative changes increase second line of the table. We excluded
APC median cost. Furthermore, payments by 3.6 percent. We modeled cancer and children’s hospitals because
changing the cost of a service subject to the independent effect of all changes in section 1833(t)(7)(D) of the Act
the multiple procedure discount policy, Column 5 using the final weights for CY permanently holds harmless cancer
as well as packaging some services 2007 and the final weights for CY 2008. hospitals and children’s hospitals to a
previously subject to the multiple We used the final conversion factor for proportion of their pre-BBA payment
procedure discount policy, changes the CY 2007 of $61.468 and the final CY relative to their pre-BBA costs and,
relative weight ranking of services on a 2008 conversion factor of $63.694. therefore, we removed them from our
claim subject to the multiple procedure Column 5 also contains simulated impact analyses. We excluded CMHCs
discount policy, significantly changing outlier payments for each year. We used because they only bill one service under
discounting patterns in some cases. the charge inflation factor used in the the OPPS, and thus they can easily
Column 3 reflects the independent FY 2008 IPPS final rule of 6.2 percent determine the impact of the changes.
effects of updated wage indices, (1.062) to increase individual costs on
including the new occupational mix the CY 2006 claims to reflect CY 2007 Column 2: APC Changes Due to
data described in the FY 2008 IPPS final dollars, and we used the most recent Reassignment, Recalibration and
rule, and the 7.1 percent rural overall CCR in the July 2007 Outpatient Packaging
adjustment for SCHs and EACHs with Provider-Specific File. Using the CY This column shows the combined
extension to brachytherapy sources. The 2006 claims and a 6.2 percent charge effects of reconfiguration, recalibration,
OPPS wage index for CY 2008 includes inflation factor, we currently estimate finalizing the packaging proposal and
the budget neutrality adjustment for the that outlier payments for CY 2007, using other policies (for example, changes to
payment for brachytherapy sources and 5,000 lines and hospitals for which DSH hospitalization and mental health
therapeutic radiopharmaceuticals). In payments are not available will services appearing in Column 2.
many cases, the redistribution created experience decreases of 3.7 to 5.5 Overall, rural hospitals show a 3.0
by the reduction in the partial percent as a result of the decline in percent increase as a result of the
hospitalization payment offsets other payment for partial hospitalization from market basket update. Rural hospitals
recalibration losses. Specifically, the CY 2007 to CY 2008. These declines are that bill less than 5,000 lines will see a
reduction in partial hospitalization somewhat moderated in Column 5 as a 1.8 percent decrease, also as a result of
payment is redistributed to hospitals result of the increased outlier payments decreases in payment for partial
and reflected in the 0.2 percent increase that result from the lower payment hospitalization appearing in Column 2.
for the 3,984 hospitals that remain after rates. Rural hospitals that bill more than 5,000
excluding hospitals held harmless and lines will experience increases of 2.8 to
CMHCs. Overall, these changes will Column 3: New Wage Indices and the 3.5 percent.
increase payments to urban hospitals by Effect of the Rural Adjustment Among teaching hospitals, the
0.3 percent. We estimate that large This column estimates the impact of observed impacts resulting from the
urban hospitals will see an increase of applying the final IPPS FY 2008 wage market basket update include an
0.1 percent and other urban hospitals indices for CY 2008, continuing the increase of 3.6 percent for minor
will see a 0.4 percent increase in rural adjustment for CY 2008, and teaching hospitals and an increase of 3.3
payments attributable to all extending the rural adjustment to percent for major teaching hospitals.
recalibration. include brachytherapy sources. Overall, Classifying hospitals by type of
Overall, rural hospitals will show a these changes will not change the ownership suggests that proprietary
modest 0.2 percent decrease as a result payments to urban hospitals. Overall, hospitals will increase 3.8 percent and
of changes to the APC structure and the rural hospitals show a decrease of 0.1 governmental and voluntary hospitals
expansion of packaging. Rural hospitals percent. will experience an increase of 3.5
of all bed sizes will experience no percent.
Among teaching hospitals, the largest
change or will experience decreases observed impacts resulting from Column 5: All Changes for CY 2008
ranging from 0.1 to 0.6 percent. The changes to the wage indices and the
declines for rural hospitals for this final Column 5 compares all changes for
continuation of the rural adjustment CY 2008 to final payment for CY 2007
rule with public comment period include a decrease of 0.1 percent for
compared to the projected increases of and includes the expired section 508
major teaching hospitals and no change reclassification wage indices, the change
0.2 to 0.6 for rural hospitals in the for minor teaching hospitals.
proposed rule is attributable to the in the outlier threshold, and the
Classifying hospitals by type of difference in pass through estimates
changes in packaging that we made as
ownership suggests that proprietary which are not included in the combined
a result of public comments with regard
hospitals will gain 0.1 percent and that percentages shown in Column 4.
to observation and imaging supervision
governmental hospitals and voluntary Overall, we estimate that providers will
and interpretation services. The
proposed packaging of these services hospitals will each experience no see an increase of 3.6 percent under this
into payment for any service with a change. final rule with comment period in CY
status indicator of ‘‘S,’’ ‘‘T,’’ ‘‘V,’’ or ‘‘X’’ Column 4: All Budget Neutrality 2008 relative to total spending in CY
would have increased OPPS payments Changes and Market Basket Update 2007. The 3.6 percent increase for all
for visits and other services provided in providers in Column 5, which is
rural hospitals. However, in response to The addition of the market basket rounded from 3.56 percent, reflects the
public comments, we created composite update of 3.3 percent alleviates any 3.3 percent market basket increase, plus
APCs for extended assessment and negative impacts on payments for CY 0.12 percent for the change in the pass-
management involving significant 2008 created by the budget neutrality through estimate between CY 2007 and
observation stays and we are packaging adjustments made in Columns 2 and 3, CY 2008, plus 0.27 percent for the
imaging supervision and interpretation with the exception of urban and rural difference in estimated outlier payments
services only into services with a status hospitals with the lowest volume of between CY 2007 (0.73 percent) and CY
indicator of ‘‘T.’’ The services for which services and hospitals not paid under 2008 (1.0 percent), less 0.13 percent for
the median costs are increased as a the IPPS, including psychiatric the expired section 508 wage payments.
result of these final policies are hospitals, rehabilitation hospitals, and When we exclude cancer and children’s
performed more often in urban hospitals long term care hospitals (DSH not hospitals (which are held harmless to
than in rural hospitals, and this available). In general, all hospitals see their pre-OPPS costs), and CMHCs, the
utilization is reflected in the negative an increase of 3.5 percent, attributable gain becomes 3.8 percent.
percents in Column 2. to the 3.3 percent market basket increase The combined effect of all changes for
Among teaching hospitals, the largest and the 0.2 percent increase in payment CY 2008 will increase payments to
observed impacts resulting from APC weight created by the reduction in urban hospitals by 3.9 percent. We
recalibration and the expansion of payment for partial hospitalization that estimate that large urban hospitals will
packaging include an increase of 0.2 is then redistributed to other services. see a 3.9 percent increase, while ‘‘other’’
percent for major teaching hospitals and Overall, these changes will increase urban hospitals will experience an
an increase of 0.4 percent for minor payments to urban hospitals by 3.6 increase of 3.8 percent. Urban hospitals
teaching hospitals. percent. We estimate that large urban that bill less than 5,000 lines will
Classifying hospitals by type of hospitals will see an increase of 3.5 experience an increase of 0.8 percent,
ownership suggests that proprietary percent and other urban hospitals will up from the 0.4 percent decrease in
hospitals will see an increase of 0.3 see a 3.7 percent increase. In contrast, Column 4 due to increases in outlier
percent while governmental and small urban hospitals that bill fewer payments for partial hospitalization.
voluntary hospitals will each see an than 5,000 lines per year will Overall, rural hospitals will show a
increase of 0.2 percent. experience a decrease in payment of 0.4 3.1 percent increase as a result of the
We note also that both low volume percent, largely as a result of the combined effects of all changes for CY
urban and rural hospitals with less than decrease in payment for partial 2008. Rural hospitals will experience a
lower increase than the 3.8 percent decrease in Column 4 due to an increase teaching hospitals and minor teaching
overall hospital increase as a result of in outlier payments for partial hospitals.
the combined effects of the changes to hospitalization. All rural hospitals that Classifying hospitals by type of
the packaging policies that were made bill greater than 5,000 lines experience ownership suggests that proprietary
in response to public comments and the increases ranging from 2.9 percent to 3.7 hospitals will gain 4.1 percent,
expiration of the section 508 percent.
governmental hospitals will experience
reclassification wage indices. Rural Among teaching hospitals, the largest
hospitals that bill less than 5,000 lines observed impacts resulting from the an increase of 3.9 percent, and
experience a decrease of 1.5 percent, combined effects of all changes include voluntary hospitals will experience an
which is less than the 1.8 percent an increase of 3.8 percent for major increase of 3.7 percent.
TABLE 61.—IMPACT OF CHANGES FOR CY 2008 HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM
Combined
New wage (cols 2,3)
Number of APC index and with market All changes
hospitals changes rural adjust- basket up-
ment date
(1) (2) (3) (4) (5)
ALL PROVIDERS * ................................................................................... 4,250 0.0 0.0 3.3 3.6

ALL HOSPITALS (excludes hospitals held harmless and CMHCs) ....... 3,984 0.2 0.0 3.5 3.8
URBAN HOSPITALS ............................................................................... 2,978 0.3 0.0 3.6 3.9
Large urban (GT 1 MILL.) ................................................................ 1,620 0.1 0.1 3.5 3.9
Other urban (LE 1 MILL.) ................................................................. 1,358 0.4 0.0 3.7 3.8
RURAL HOSPITALS ................................................................................ 1,006 ¥0.2 ¥0.1 3.0 3.1
Sole community ................................................................................ 407 ¥0.2 0.1 3.1 3.0
Other rural ......................................................................................... 599 ¥0.2 ¥0.3 2.8 3.1
BEDS (URBAN):
0–99 Beds ........................................................................................ 1,002 0.3 0.1 3.7 3.9
100–199 Beds .................................................................................. 919 0.1 0.1 3.5 3.6
200–299 Beds .................................................................................. 476 0.4 0.0 3.7 4.0
300–499 Beds .................................................................................. 399 0.3 0.1 3.7 4.0
500 + Beds ....................................................................................... 182 0.3 ¥0.1 3.5 3.9
BEDS (RURAL):
0–49 Beds *** ..................................................................................... 350 ¥0.1 ¥0.2 3.1 3.3
50–100 Beds *** ................................................................................. 391 ¥0.2 0.0 3.1 3.3
101–149 Beds .................................................................................. 156 0.0 ¥0.1 3.2 3.4
150–199 Beds .................................................................................. 66 ¥0.2 ¥0.7 2.4 2.5
200 + Beds ....................................................................................... 43 ¥0.6 0.1 2.8 2.6
VOLUME (URBAN):
LT 5,000 Lines .................................................................................. 616 ¥3.7 0.0 ¥0.4 0.8
5,000–10,999 Lines .......................................................................... 174 0.2 0.1 3.6 4.0
11,000–20,999 Lines ........................................................................ 247 0.6 0.1 4.0 4.4
21,000–42,999 Lines ........................................................................ 526 0.5 0.2 4.0 4.2
GT 42,999 Lines ............................................................................... 1,415 0.3 0.0 3.6 3.9
VOLUME (RURAL):
LT 5,000 Lines .................................................................................. 83 ¥4.8 ¥0.3 ¥1.8 ¥1.5
5,000–10,999 Lines .......................................................................... 92 ¥0.1 ¥0.1 3.1 3.6
11,000–20,999 Lines ........................................................................ 189 0.1 ¥0.1 3.3 3.4
21,000–42,999 Lines ........................................................................ 314 0.1 0.1 3.5 3.7
GT 42,999 Lines ............................................................................... 328 ¥0.3 ¥0.2 2.8 2.9
REGION (URBAN):
New England .................................................................................... 157 ¥0.3 0.2 3.2 3.3
Middle Atlantic .................................................................................. 378 0.2 ¥0.1 3.4 3.5
South Atlantic ................................................................................... 462 0.2 ¥0.1 3.5 3.8
East North Cent. ............................................................................... 469 0.4 ¥0.1 3.6 3.7
East South Cent. .............................................................................. 194 0.4 ¥0.3 3.5 3.8
West North Cent. .............................................................................. 186 0.4 0.1 3.8 4.1
West South Cent. ............................................................................. 493 0.6 ¥0.4 3.5 3.8
Mountain ........................................................................................... 189 0.7 0.0 4.0 4.4
Pacific ............................................................................................... 398 ¥0.1 0.9 4.2 4.7
Puerto Rico ....................................................................................... 52 1.0 0.0 4.3 4.7
REGION (RURAL):
New England .................................................................................... 25 ¥0.5 ¥0.6 2.2 2.6
Middle Atlantic .................................................................................. 70 ¥0.7 0.0 2.7 2.9
South Atlantic ................................................................................... 172 ¥0.3 ¥0.2 2.7 3.0
East North Cent. ............................................................................... 129 ¥0.1 ¥0.1 3.2 3.0
East South Cent. .............................................................................. 177 ¥0.1 ¥0.4 2.8 3.0

West North Cent. .............................................................................. 115 ¥0.2 0.0 3.1 3.1
West South Cent. ............................................................................. 205 ¥0.1 ¥0.8 2.4 2.7
Mountain ........................................................................................... 76 0.0 0.3 3.6 3.8
Pacific ............................................................................................... 37 0.0 1.9 5.2 5.1
TEACHING STATUS:
Non-teaching ..................................................................................... 2,956 0.1 0.1 3.5 3.7
TABLE 61.—IMPACT OF CHANGES FOR CY 2008 HOSPITAL OUTPATIENT PROSPECTIVE PAYMENT SYSTEM—Continued
Combined
New wage (cols 2,3)
Number of APC index and with market All changes
hospitals changes rural adjust- basket up-
ment date
(1) (2) (3) (4) (5)
Minor ................................................................................................. 748 0.4 0.0 3.6 3.8

Major ................................................................................................. 280 0.2 ¥0.1 3.3 3.8
DSH PATIENT PERCENT:
0 ........................................................................................................ 5 4.4 ¥0.5 7.3 7.5
GT 0–0.10 ......................................................................................... 416 0.3 0.1 3.6 3.9
0.10–0.16 .......................................................................................... 451 0.3 ¥0.1 3.4 3.4
0.16–0.23 .......................................................................................... 796 0.3 0.0 3.6 3.7
0.23–0.35 .......................................................................................... 948 0.2 0.0 3.4 3.7
GE 0.35 ............................................................................................ 754 0.3 0.1 3.7 4.2
DSH not available ** .......................................................................... 614 ¥5.5 0.4 ¥1.9 ¥1.3
URBAN TEACHING/DSH:
Teaching & DSH ............................................................................... 920 0.3 ¥0.1 3.6 3.9
No teaching/DSH .............................................................................. 1,472 0.3 0.1 3.7 4.0
No teaching/no DSH ......................................................................... 5 4.4 ¥0.5 7.3 7.5
DSH not available ** .......................................................................... 581 ¥5.5 0.4 ¥1.8 ¥1.3
TYPE OF OWNERSHIP:
Voluntary ........................................................................................... 2,141 0.2 0.0 3.5 3.7
Proprietary ........................................................................................ 1,255 0.3 0.1 3.8 4.1
Government ...................................................................................... 588 0.2 0.0 3.5 3.9
Column (1) shows total hospitals.
Column (2) shows the impact of changes resulting from the reclassification of HCPCS codes among APC groups and the recalibration of APC
weights based on 2006 hospital claims data.
Column (3) shows the budget neutral impact of updating the wage index and rural adjustment by applying the FY 2008 hospital inpatient wage
index and extended to rural adjustment to brachytherapy sources.
Column (4) shows the impact of all budget neutrality adjustments and the addition of the market basket update.
Column (5) shows the additional adjustments to the conversion factor resulting from a change in the pass-through estimate, and adds outlier
payments. The change in outlier payments reflects a decrease in the fixed dollar threshold resulting from updated claim, CCR, and inflation esti-
mates. This column also shows the impact of the expired section 508 wage reclassification, which ended on September 30, 2007.
* These 4,250 providers include children and cancer hospitals, which are held harmless to pre-BBA payments, and CMHCs.
** Complete DSH numbers are not available for providers that are not paid under IPPS, including rehabilitation, psychiatric, and long-term care
hospitals.
*** Section 1833(t)(7)(D) of the Act specifies that rural hospitals with 100 or fewer beds (that are not also SCHs) receive additional payment for
covered hospital outpatient services furnished during CY 2008 for which the prospective payment system amount is less than the pre-BBA
amount. The amount of payment is increased by 85 percent of the difference for CY 2008.
4. Estimated Effect of This Final Rule effect for CY 2007. The minimum With respect to partial
With Comment Period on Beneficiaries unadjusted copayment for APC 0037 is hospitalization, the copayment in CY
$172.95, or 20 percent of the payment 2007 of $46.95 will decline to $41.03
For services for which the beneficiary for APC 0037. The minimum unadjusted under this final rule with comment
pays a copayment of 20 percent of the copayment will rise because the period as a result of the decline in the
payment rate, the beneficiary share of payment rate for APC 0037 will rise. In per diem payment for partial
payment will increase for services for all cases, the statute limits beneficiary hospitalization from $234.73 in CY 2007
which the OPPS payments will rise and liability for copayment for a service to to $205.16 for CY 2008.
will decrease for services for which the the inpatient hospital deductible for the
OPPS payments will fall. For example, 5. Conclusion
applicable year. For CY 2008, the
for an electrocardiogram (APC 0099), inpatient deductible is $1,024. The changes in this final rule with
the minimum unadjusted copayment in comment period will affect all classes of
CY 2007 was $4.66. In this final rule In order to better understand the hospitals. Some classes of hospitals
with comment period, the minimum impact of changes in copayment on experience significant gains and others
unadjusted copayment for APC 0099 is beneficiaries, we modeled the percent less significant gains, but almost all
$4.96 because the OPPS payment for the change in total copayment liability classes of hospitals will experience
service will increase under this final using CY 2006 claims. We estimate, positive updates in OPPS payments in
rule with comment period. In another using the claims of the 4,250 hospitals CY 2008. Table 61 demonstrates the
example, for a service assigned to Level and CMHCs on which our modeling is estimated distributional impact of the
IV Needle Biopsy/Aspiration Except based, that total beneficiary liability for OPPS budget neutrality requirements
Bone Marrow (APC 0037) in the CY copayments will decline as an overall and an additional 3.6 percent increase
2007 OPPS, the national unadjusted percentage of total payments from 26.5 in payments for CY 2008, after
copayment was $228.76, and the percent in CY 2007 to 25.1 percent in considering all changes to APC
minimum unadjusted copayment was CY 2008. This estimated decline in reconfiguration and recalibration,
$126.20. In this final rule with comment beneficiary liability is a consequence of including those resulting from the
period, the national unadjusted the APC recalibration and expansion of packaging and the
copayment for APC 0037 is $228.76, the reconfiguration we are making for CY payment for brachytherapy sources on a
same national unadjusted copayment in 2008. prospective payment basis, as well as
the market basket increase, and the 6. Accounting Statement OPPS incurred benefit impact
estimated cost of outliers and changes to associated with the CY 2008 outpatient
the pass through estimate. The As required by OMB Circular A–4 hospital market basket update shown in
accompanying discussion, in (available at http:// this final rule with comment period,
combination with the rest of this final www.whitehouse.gov/omb/circulars/ based on the Mid-Session Review of the
rule with comment period constitutes a a004/a–4.pdf), in Table 62, we have FY 2008 President’s Budget baseline.
regulatory impact analysis. prepared an accounting statement All estimated impacts are classified as
showing the CY 2008 estimated hospital transfers.
TABLE 62.—ACCOUNTING STATEMENT: CY 2008 ESTIMATED HOSPITAL OPPS INCURRED BENEFIT IMPACT ASSOCIATED
WITH THE CY 2008 HOSPITAL OUTPATIENT MARKET BASKET UPDATE
[In billions]
Category Transfers
Annualized Monetized Transfers ........................ $0.9.

From Whom To Whom? ..................................... Federal Government to outpatient hospitals and other providers who receive payment under
the hospital OPPS.
C. Effects of ASC Payment System covered ancillary services (72 FR system were not implemented (72 FR
Changes in This Final Rule With 42778). We also proposed to revise the 42796).
Comment Period regulations to make practice expense The effects of the expanded number
payment to physicians who perform and types of procedures for which an
On August 2, 2007, we published in
noncovered ASC procedures in ASCs ASC payment may be made and other
the Federal Register the final rule for
based on the MPFS facility PE RVUs (72 policy changes that affect the revised
the revised ASC payment system,
FR 42791) and to exclude covered payment system, combined with
effective January 1, 2008 (72 FR 42470).
ancillary radiology services and covered significant changes in payment rates for
In that final rule for the revised ASC
ancillary drugs and biologicals from the covered surgical procedures, will vary
payment system, we adopted the across ASCs, depending on whether or
methodologies we will use to set categories of DHS that are subject to the
physician self-referral prohibition (72 not the ASC limits its services to those
payment rates for ASC services in a particular surgical specialty area,
furnished in association with covered FR 42792). We are finalizing those
proposals in this final rule with the volume of specific services provided
surgical procedures and covered by the ASC, the extent to which ASCs
ancillary procedures beginning January comment period.
The revised Medicare ASC payment will offer different services, and the
1, 2008, and established that the OPPS percentage of its patients that are
relative payment weights will be used as system that we are implementing
beginning January 1, 2008, could have a Medicare beneficiaries.
the basis for the payment of most In the August 2, 2007 OPPS/ASC
covered surgical procedures and far-reaching effect on the provision of
proposed rule (42 FR 42628), we
covered ancillary services under the outpatient surgical services for a
estimated the CY 2008 ASC payment
revised ASC payment system. number of years to come for several
rates, budget neutrality adjustment
In the August 2, 2007 revised ASC reasons. First, the list of procedures that
factor, and impacts using the proposed
payment system final rule, we will be eligible for payment under the CY 2008 OPPS relative payment weights
established that we will update the ASC revised ASC payment system is greatly and update factor for CY 2008, the
payment system annually as part of the expanded from the list of surgical proposed CY 2008 MPFS PE RVUs, and
OPPS rulemaking cycle. As part of the procedures eligible for payment under partial CY 2006 utilization data
annual OPPS rulemaking cycle, we the ASC payment system in CY 2007 projected forward to CY 2008. In this
indicated we will update the lists of and earlier years. In addition, we are final rule with comment period, we are
ASC covered surgical procedures and moving from a limited fee schedule establishing the final CY 2008 ASC
covered ancillary services, as well as based on nine disparate payment groups payment rates and budget neutrality
their payment rates. Such an update is to a payment system incorporating adjustment in accordance with the
very important because the OPPS relative payment weights for groups of methodology for calculating budget
relative payment weights will be used as procedures with similar clinical and neutrality established in the August 2,
the basis for the payment of most resource characteristics, that is, the APC 2007 revised ASC payment system final
covered surgical procedures and groups that are the unit of payment in rule and based on the final CY 2008
covered ancillary services under the the OPPS. OPPS payment weights, the final CY
revised ASC payment system. This joint Implementation by January 1, 2008 of 2008 MPFS PE RVUs, and updated CY
update process will ensure that the ASC a revised ASC payment system designed 2006 utilization data projected forward
updates occur in a regular, predictable, to result in budget neutrality is to CY 2008.
and timely manner, and that the ASC mandated by section 626 of Public Law Our final methodology for calculating
payment rates immediately reflect the 108–173. To set ASC payment rates for the budget neutrality adjustment
updated OPPS relative payment CY 2008 under the revised payment established in the August 2, 2007
weights. system, we are multiplying ASC relative revised ASC payment system final rule
In the CY 2008 OPPS/ASC proposed payment weights for surgical procedures considered not only the effects of the
rule, we proposed to update the revised by an ASC conversion factor that we new payment rates to be implemented
ASC payment system for CY 2008 to calculated to result in the same amount under the revised ASC payment system,
reflect the CY 2008 OPPS relative of aggregate Medicare expenditures in but also the estimated net effect of
payment weights and rates, as well as CY 2008 as we estimate would have migration of new ASC procedures across
update the lists of covered surgical and been made if the revised payment ambulatory care settings. Both the
proposed budget neutrality adjustment HOPDs and physicians’ offices, is 42509), we were concerned that if these
presented in the August 2, 2007 OPPS/ estimated to be $20 million in services were not designated as office-
ASC proposed rule and the budget beneficiary savings in CY 2008. based, it could create financial
neutrality adjustment in this final rule incentives for the procedures to shift
1. Alternatives Considered
with comment period are based on that from physicians’ offices to ASCs for
methodology, which takes into account Alternatives to the changes we are reasons unrelated to the most
projected migration. In the final model, making and the reasons that we have appropriate setting for surgical care.
we assume that over the first 2 years of chosen the options are discussed The second alternative we considered,
the revised payment system, throughout this final rule with comment and the alternative we selected, is to
approximately 25 percent of the HOPD period. Some of the major issues designate 18 additional procedures as
volume of new ASC procedures will discussed in this final rule with office-based for CY 2008. We selected
migrate from the HOPD service setting comment period and the options this alternative because our claims data
to ASCs, and that over the 4-year considered are discussed below. indicate that these procedures could be
transition period, approximately 15 a. Office-Based Procedures considered to be predominantly
percent of the physicians’ office volume performed in physicians’ offices. We
According to our final policy for the believe that designating these
of new ASC procedures will migrate to
revised ASC payment system, we procedures as office-based, which
ASCs.
designate as office-based those results in the ASC payment rate for
We estimate that the revised ASC procedures that are added to the ASC these procedures being capped at the
payment system will result in neither list of covered surgical procedures in CY physician’s office rate (that is, the MPFS
savings nor costs to the Medicare 2008 or later years and that we nonfacility practice PE RVU amount), if
program in CY 2008. That is, because it determine are predominantly performed applicable, is an appropriate step to
is designed to be budget neutral, in CY in physicians’ offices based on ensure that Medicare payment policy
2008, the revised ASC payment system consideration of the most recent does not create financial incentives for
will neither increase nor decrease available volume and utilization data for such procedures to shift unnecessarily
expenditures under Part B of Medicare. each individual procedure code and/or, from physicians’ offices to ASCs,
We further estimate that beneficiaries if appropriate, the clinical consistent with our final policy adopted
will save approximately $20 million characteristics, utilization, and volume in the August 2, 2007 revised ASC
under the revised ASC payment system of related codes. We establish payment payment system final rule.
in CY 2008, because ASC payment rates for procedures designated as office-
will, in most cases, be lower than OPPS based at the lesser of the MPFS b. Partial Device Credits
payment rates for the same services and nonfacility PE RVU amount or the ASC We are reducing the ASC payment by
because, except for screening flexible rate developed according to the one half of the device offset amount for
sigmoidoscopy and screening standard methodology of the revised certain surgical procedures into which
colonoscopy procedures, beneficiary ASC payment system. In the August 2, the device cost is packaged, when an
coinsurance for ASC services is 20 2007 OPPS/ASC proposed rule, we ASC receives a partial credit toward
percent rather than 20 to 40 percent as proposed to designate 19 additional replacement of specific implantable
is the case under the OPPS. (The only procedures as office-based, based on our devices. This partial payment reduction
possible instance in which an ASC evaluation of the most recent available will apply when the amount of the
coinsurance amount could exceed the CY 2006 volume and utilization data for device credit is greater than or equal to
OPPS copayment amount will be when each individual procedure code and/or 50 percent of the cost of the new
the coinsurance amount for a procedure related codes. In developing this final replacement device being implanted.
under the revised ASC payment system rule with comment period, we reviewed Under this policy, both the Medicare
exceeds the hospital inpatient the newly available CY 2006 utilization payment to the ASC and the beneficiary
deductible. Section 1833(t)(8)(C)(i) of data for all the surgical procedures we coinsurance liability will be reduced
the Act provides that the copayment proposed to designate as office-based. when an ASC receives a partial device
amount for a procedure paid under the Based on that review, we are credit. This policy is an extension of the
OPPS cannot exceed the inpatient designating 18 additional procedures as policy established in the August 2, 2007
deductible established for the year in office-based for CY 2008. We considered revised ASC payment system final rule,
which the procedure is performed, but two alternatives in developing this which reduces the ASC payment by the
there is no such requirement related to policy. full device offset amount for certain
the ASC coinsurance amount.) The first alternative we considered devices when the ASC receives a
Beneficiary coinsurance for services was to make no change to the current replacement device without cost or
migrating from physicians’ offices to policy for these 19 procedures. This receives a credit for the full cost of the
ASCs may decrease or increase under would mean that we would continue to device being replaced. The final partial
the revised ASC payment system, pay these procedures at the standard device credit policy for ASCs mirrors
depending on the particular service and ASC payment rate developed according the final partial device credit for the
whether the Medicare payment to the to the standard methodology of the OPPS in this final rule with comment
physician for providing that service in revised ASC payment system. We did period. We considered several
his or her office is higher or lower than not select this alternative because our alternatives in developing this partial
the sum of the Medicare payment to the analysis of data for these services and device credit policy for CY 2008.
ASC for providing the facility portion of related procedures indicated that 18 of The first alternative we considered
that service and the Medicare payment the procedures we proposed to was to make no change to the current
to the physician for providing that designate as office-based could be policy. Under this alternative, Medicare
service in a facility (non-office) setting. considered to be predominantly and the beneficiary would continue to
As noted previously, the net effect of the performed in physicians’ offices. pay the ASC the full payment rate for
revised ASC payment system on Consistent with our final policy adopted the device implantation procedure even
beneficiary coinsurance, taking into in the August 2, 2007 revised ASC if the ASC received a substantial credit
account the migration of services from payment system final rule (72 FR towards the cost of the replacement
device. The ASC payment for the device the ASC from Medicare and will reduce regardless of whether a procedure is on
implantation procedure is based on the the beneficiary’s cost sharing for the the ASC list of covered surgical
OPPS relative weight for the procedure, service. procedures. We selected this alternative
which is calculated using only OPPS for several reasons. We believe ASCs are
c. Payment to Physicians for Services
claims for which the full cost of a device facilities that are similar, insofar as the
Not on the ASC List of Covered Surgical
is billed. We did not select this delivery of surgical and related
Procedures
alternative because we believe that, as nonsurgical services, to HOPDs.
long as the ASC payment amount is Under current policy, when Specifically, when services are provided
established based on an OPPS relative physicians perform surgical procedures in ASCs, the ASC, not the physician,
weight that is calculated using only in ASCs that are included on the ASC bears responsibility for the facility costs
claims that reflect the full cost of the list of covered surgical procedures, they
associated with the service. This
device when there is no credit, there are paid under the MPFS for the PE
situation parallels the hospital facility
should be a reduction in the Medicare component using the facility PE RVUs.
resource responsibility for hospital
payment amount when the ASC receives When physicians perform surgical
procedures in ASCs that are not outpatient services. Therefore, we
a substantial credit toward the cost of believe it would be more appropriate for
the replacement device. Similarly, we included on the ASC list of covered
surgical procedures and for which physicians to be paid for all services
believe that the beneficiary cost sharing
Medicare does not allow facility furnished in ASCs just as they would be
should be based on an amount that also
payments to ASCs, physicians currently paid for all services furnished in the
reflects the device credit.
The second alternative we considered are paid for the PE component at the hospital outpatient setting. In addition,
was to extend the current no cost/full higher nonfacility rate (unless a because we have adopted a final policy
credit reduction policy to cases of nonfacility rate does not exist, in which for the revised ASC payment system
partial credit, without change. This case Medicare pays the facility rate). In that identifies and excludes from ASC
would reduce the payment in all cases this final rule with comment period, we payment only those procedures that
in which the ASC received a credit by are providing that regardless of whether could pose a significant risk to
the full offset amount for the device a procedure is on the ASC list of beneficiary safety or would be expected
implantation procedure, that is, by 100 covered surgical procedures, a to require an overnight stay, we believe
percent of the estimated device cost physician performing that procedure in that it would be incongruous with the
included in the procedure payment rate. an ASC will receive payment based on revised ASC payment system
We did not select this alternative the facility PE RVUs and excluding the methodology to continue to pay the
because we did not believe it was technical component (TC) payment, if higher nonfacility rate to physicians
appropriate to reduce the payment to applicable. We considered two who furnish excluded ASC procedures.
the ASC by the full cost of a device if alternatives in developing this policy.
The first alternative we considered 2. Limitations of Our Analysis
the ASC only received a partial credit,
and not a full credit, towards the cost of was to make no change to the current Presented here are the projected
the device. policy concerning physician payment
effects of the policy and statutory
The third alternative, which we are for services performed in ASCs that are
changes that will be effective for CY
adopting in this final rule with not on the ASC list of covered surgical
2008 on aggregate ASC utilization and
comment period, is to reduce the ASC procedures. Under current policy, the
Medicare payments. One limitation is
procedure payment by 50 percent of the physician is paid the higher nonfacility
PE amount for performing a service in our lack of information on ASC resource
offset amount (that will be applied if the
an ASC that is not on the ASC list of use. ASCs are not required to file
ASC received full credit) in cases in
covered surgical procedures (unless a Medicare cost reports and, therefore, we
which the ASC receives a partial credit
nonfacility rate does not exist in which do not have cost information to evaluate
greater than or equal to 50 percent of the
case Medicare pays the facility PE rate). whether or not the payments for ASC
cost of the new replacement device
being implanted. This is consistent with We adopted a final policy to identify services coincide with the resources
the final CY 2008 OPPS policy and exclude from ASC payment only required by ASCs to provide those
described in detail in section IV.A.3. of those procedures that could pose a services. A second limitation of our
this final rule with comment period. We significant risk to beneficiary safety or analysis is our inability to predict
will reduce the ASC payment for the would be expected to require an changes in service mix between CY
specific procedure to implant the device overnight stay. Because the excluded 2006 and CY 2008 with precision. The
by one-half of the device offset that procedures have been specifically aggregated impact tables below are
would be applied if a replacement identified by CMS as procedures that based upon a methodology that assumes
device were provided at no cost or with are unsafe for Medicare beneficiaries in no changes in service mix with respect
full credit, if the credit is 50 percent or ASCs because they could pose a to the CY 2006 ASC data used for this
more of the new replacement device significant risk to beneficiary safety or final rule with comment period. We
cost, rather than the proposed 20 would be expected to require an believe that the net effect on Medicare
percent. We believe that payment overnight stay, we do not believe it expenditures resulting from changes in
policies across the OPPS and the ASC would be appropriate to provide service mix for current ASC covered
payment system should align whenever payment based on the higher nonfacility surgical procedures will be negligible in
possible and appropriate, as is true in PE RVUs to physicians who furnish the aggregate. Such changes may have
this case. Moreover, we are requiring the them. Consequently, we did not select differential effects across surgical
ASC to report a new modifier when the this alternative. specialties as ASCs adjust to payment
ASC receives a partial credit that is The second alternative that we rates. However, we are unable to
greater than or equal to 50 percent of the considered, and that we selected, was to accurately project such changes at a
cost of the device being replaced. We provide payment to physicians for disaggregated level. Clearly, individual
are selecting this alternative because we performing procedures in ASCs based ASCs will experience changes in
believe that this approach provides an on the facility PE RVUs and excluding payment that differ from the aggregated
appropriate and equitable payment to the TC payment, if applicable, estimated changes presented below.
3. Estimated Effects of This Final Rule first to 50/50 and then to a 25/75 blend 2008 payment amounts are expressed in
With Comment Period on ASCs of the CY 2007 ASC rate and the revised millions of dollars.
a. Payment to ASCs ASC payment rate. Beginning in CY • Column 3—Estimated CY 2008
2011, we will pay ASCs for covered Percent Change with Transition (75/25
Some ASCs are multispecialty surgical procedures on the CY 2007 ASC Blend) is the aggregate percentage
facilities that perform the gamut of list at the fully implemented revised increase or decrease in Medicare
surgical procedures, from excision of ASC payment rates. We will not program payment to ASCs for each
lesions to hernia repair to cataract transition payment for procedures that surgical specialty group that is
extraction; others focus on a single were not included on the ASC list of attributable to changes in the ASC
specialty and perform only a limited covered surgical procedures in CY 2007; payment rates for CY 2008 under the 75/
range of surgical procedures, such as we will pay for these procedures at the 25 blend of the CY 2007 ASC payment
eye, digestive system, or orthopedic fully implemented ASC rate, beginning rate and the CY 2008 revised ASC
procedures. The combined effect on an in CY 2008. payment rate.
individual ASC of the CY 2008 revised
payment system and the expanded ASC
Table 63 shows the effects on • Column 4—Estimated CY 2008
aggregate Medicare payments under the Percent Change without Transition
list of covered surgical procedures will
revised ASC payment system by surgical (Fully Implemented) is the aggregate
depend on a number of factors,
specialty group. We have aggregated the percentage increase or decrease in
including, but not limited to, the mix of
surgical HCPCS codes by specialty Medicare program payment to ASCs for
services the ASC provides, the volume
group and estimated the effect on each surgical specialty group that is
of specific services provided by the
ASC, the percentage of its patients who aggregated payment for surgical attributable to changes in the ASC
are Medicare beneficiaries, and the specialty groups, considering separately payment rates for CY 2008 if there were
extent to which an ASC will choose to the CY 2008 transitional rate and the no transition period to the revised
provide different services. The fully implemented revised ASC payment rates. The percentages
following discussion presents tables that payment rate discussed above. The appearing in Column 4 are presented as
provide estimates of the impact of the groups are sorted for display in comparisons to the percentage changes
revised ASC payment system on descending order by estimated Medicare under the transition policy in column 3
Medicare payments to ASCs for current program payment to ASCs for CY 2008 and do not depict the impact of the fully
ASC services, assuming the same mix of in the absence of the revised ASC implemented policy in 2011.
services as reflected in our CY 2006 payment system. The following is an As seen in Table 63, for all but
claims data. Table 63 depicts the explanation of the information digestive system procedures, if an ASC
aggregate percent change in payment by presented in Table 63. offers the same mix of services in CY
surgical specialty group and Table 64 • Column 1—Surgical Specialty 2008 that is reflected in our national CY
shows a comparison of payment for Group indicates the surgical specialties 2006 claims data, Medicare payments to
procedures that we estimate would into which ASC procedures are the ASC for services in that surgical
receive the most Medicare payment in grouped. We used the CPT code range specialty group are expected to increase
CY 2008 under the current payment definitions and Level II HCPCS codes under the revised payment system. If
system. and Category III CPT codes, as the revised payment system was fully
In section XVI.C.1.c.(5) of this final appropriate, to account for all surgical implemented in CY 2008, we expect all
rule with comment period, we reiterate procedures to which the Medicare but digestive system procedures and
the transition of 4 years under the program payments are attributed. nervous system procedures to receive
revised ASC payment system, where • Column 2—Estimated CY 2008 ASC greater Medicare payment. In addition
payments for most surgical procedures Payments in the absence of the revised to the effects on Medicare payments for
will be made using a blend of the rates ASC payment system were calculated by current ASC procedures shown in Table
based on the CY 2007 ASC payment rate multiplying the CY 2007 ASC payment 63, it is important to note that estimated
and the revised ASC payment rate. In rate by CY 2008 ASC utilization (which CY 2008 payments to ASCs are
CY 2008, we will pay ASCs using a is based on CY 2006 ASC utilization estimated to increase by more than $240
75/25 blend, in which payment will be multiplied by a factor of 1.176 to take million in CY 2008 due to projected
calculated by adding 75 percent of the into account expected volume growth migration of new ASC services from
CY 2007 ASC rate for a surgical with volume adjustment, as appropriate, HOPDs and physicians’ offices to ASC.
procedure on the CY 2007 ASC list of for the multiple procedure discount). This increased spending in ASCs is
covered surgical procedures and 25 The resulting amount was then projected to be fully offset by savings
percent of the CY 2008 revised ASC rate multiplied by 0.8 to estimate the from reduced spending in HOPDs and
for the same procedure. For CYs 2009 Medicare program’s share of the total physicians’ offices due to service
and 2010, we will transition the blend payments to the ASC. The estimated CY migration.
TABLE 63.—ESTIMATED CY 2008 IMPACT OF THE REVISED ASC PAYMENT SYSTEM ON ESTIMATED AGGREGATE CY 2008
MEDICARE PROGRAM PAYMENTS UNDER THE 75/25 TRANSITION BLEND AND WITHOUT A TRANSITION, BY SURGICAL
SPECIALTY GROUP
Estimated CY
Estimated CY
Estimated CY 2008 percent
2008 percent
2008 ASC change with-
Surgical specialty group change with
payments (in out transition
transition (75/
millions) (fully imple-
25 Blend) mented)
(1) (2) (3) (4)
Eye and ocular adnexa ................................................................................................................ $1,247 2 3
TABLE 63.—ESTIMATED CY 2008 IMPACT OF THE REVISED ASC PAYMENT SYSTEM ON ESTIMATED AGGREGATE CY 2008
MEDICARE PROGRAM PAYMENTS UNDER THE 75/25 TRANSITION BLEND AND WITHOUT A TRANSITION, BY SURGICAL
SPECIALTY GROUP—Continued
Estimated CY
Estimated CY
Estimated CY 2008 percent
2008 percent
2008 ASC change with-
Surgical specialty group change with
payments (in out transition
transition (75/
millions) (fully imple-
25 Blend) mented)
(1) (2) (3) (4)
Digestive system .......................................................................................................................... 708 ¥4 ¥16

Nervous system ........................................................................................................................... 260 3 ¥4
Musculoskeletal system ............................................................................................................... 165 24 94
Integumentary system ................................................................................................................. 75 8 32
Genitourinary system ................................................................................................................... 74 11 43
Respiratory system ...................................................................................................................... 18 16 64
Cardiovascular system ................................................................................................................ 8 24 94
Auditory system ........................................................................................................................... 4 23 80
Hemic and lymphatic systems ..................................................................................................... 2 31 124
Other systems .............................................................................................................................. 0.1 27 108
Table 64 below shows the estimated rate by CY 2008 ASC utilization (which blend of the estimated ASC payment
impact of the revised payment system is based on CY 2006 ASC utilization using the CY 2007 ASC payment rate
on aggregate ASC payments for selected multiplied by a factor of 1.176 to take and the CY 2008 revised ASC payment
procedures during the first year of into account expected volume growth rate.
implementation (CY 2008) with and with volume adjustment, as appropriate, • Column 5—CY 2008 Percent
without the transitional blended rate. for the multiple procedure discount). Change without Transition (Fully
The table displays 30 of the procedures The resulting amount was then Implemented) reflects the percent
receiving the most Medicare estimated multiplied by 0.8 to estimate the differences between the estimated ASC
CY 2008 ASC payments under the Medicare program’s share of the total payment rates for CY 2008 under the
existing Medicare payment system. The payments to the ASC. The estimated CY current system and the estimated
HCPCS codes are sorted in descending 2008 payment amounts are expressed in payment rates for CY 2008 under the
order by estimated program payment. millions of dollars. revised payment system if there were no
• Column 1—HCPCS code • Column 4—CY 2008 Percent transition period to the revised payment
• Column 2—Short Descriptor of the Change with Transition (75/25 Blend) rates. The percentages appearing in
HCPCS code reflects the percent differences between Column 5 are presented as a comparison
• Column 3—Estimated CY 2008 ASC the estimated ASC payment rates for CY to the percentage changes under the
Payments in the absence of the revised 2008 under the current system and the transition policy in Column 4 and do
payment system were calculated by payment rates for CY 2008 under the not depict the impact of the fully
multiplying the CY 2007 ASC payment revised system, incorporating a 75/25 implemented policy in 2011.
TABLE 64.—ESTIMATED CY 2008 IMPACT OF REVISED ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS FOR
PROCEDURES WITH THE MOST MEDICARE ESTIMATED CY 2008 PAYMENTS UNDER THE CURRENT SYSTEM
Estimated
CY 2008
Estimated Estimated percent
CY 2008 CY 2008
HCPCS changes
Short descriptor ASC pay- percent
code without tran-
ments (in change (75/ sition (fully
millions) 25 blend) imple-
mented)
66984 ....... Cataract surg w/iol, 1 stage .............................................................................................. 1,017 0 1

43239 ....... Upper GI endoscopy, biopsy ............................................................................................. 156 ¥5 ¥17
45378 ....... Diagnostic colonoscopy ..................................................................................................... 141 ¥4 ¥14
45380 ....... Colonoscopy and biopsy ................................................................................................... 115 ¥4 ¥14
45385 ....... Lesion removal colonoscopy ............................................................................................. 95 ¥4 ¥14
66821 ....... After cataract laser surgery ............................................................................................... 89 ¥8 ¥25
62311 ....... Inject spine l/s (cd) ............................................................................................................ 75 ¥3 ¥10
64483 ....... Inj foramen epidural l/s ...................................................................................................... 43 ¥3 ¥10
66982 ....... Cataract surgery, complex ................................................................................................ 39 0 1
45384 ....... Lesion remove colonoscopy .............................................................................................. 39 ¥4 ¥14

G0121 ...... Colon ca scrn not hi rsk ind .............................................................................................. 36 ¥7 ¥22
G0105 ...... Colorectal scrn; hi risk ind ................................................................................................. 28 ¥7 ¥22
15823 ....... Revision of upper eyelid .................................................................................................... 26 4 12
43235 ....... Uppr gi endoscopy, diagnosis ........................................................................................... 24 1 4
52000 ....... Cystoscopy ........................................................................................................................ 23 ¥6 ¥21
64475 ....... Inj paravertebral l/s ............................................................................................................ 23 ¥3 ¥10
TABLE 64.—ESTIMATED CY 2008 IMPACT OF REVISED ASC PAYMENT SYSTEM ON AGGREGATE PAYMENTS FOR
PROCEDURES WITH THE MOST MEDICARE ESTIMATED CY 2008 PAYMENTS UNDER THE CURRENT SYSTEM—Continued
Estimated
CY 2008
Estimated Estimated percent
CY 2008 CY 2008
HCPCS changes
Short descriptor ASC pay- percent
code without tran-
ments (in change (75/ sition (fully
millions) 25 blend) imple-
mented)
64476 ....... Inj paravertebral l/s ADD-on .............................................................................................. 22 ¥18 ¥65

29881 ....... Knee arthroscopy/surgery ................................................................................................. 17 22 55
64721 ....... Carpal tunnel surgery ........................................................................................................ 16 17 43
43248 ....... Uppr gi endoscopy/guide wire ........................................................................................... 14 ¥5 ¥17
62310 ....... Inject spine c/t ................................................................................................................... 13 ¥3 ¥10
67904 ....... Repair eyelid defect ........................................................................................................... 12 6 16
29880 ....... Knee arthroscopy/surgery ................................................................................................. 12 22 55
64484 ....... Inj foramen epidural ADD-on ............................................................................................. 12 ¥12 ¥42
28285 ....... Repair of hammertoe ......................................................................................................... 10 17 44
G0260 ...... Inj for sacroiliac jt anesth .................................................................................................. 10 ¥3 ¥10
29848 ....... Wrist endoscopy/surgery ................................................................................................... 9 ¥3 ¥8
64623 ....... Destr paravertebral n ADD-on ........................................................................................... 9 ¥3 ¥10
45383 ....... Lesion removal colonoscopy ............................................................................................. 8 ¥4 ¥14
26055 ....... Incise finger tendon sheath ............................................................................................... 8 13 35
Over time, we believe that the current decrease would be expected if there urology specialty ASC may currently
ASC payment system has served as an were no transition period to the revised perform more cystoscopy procedures
incentive to ASCs to focus on providing CY 2008 payment rates. The estimated than any other genitourinary procedure,
procedures for which they determine increased payments at the full group we believe that under the revised ASC
Medicare payments will support the level are due to the moderating effect of payment system, each ASC has the
ASC’s continued operation. We note the payment increases for the less opportunity to adapt to the payment
that, under the existing payment system, frequently performed procedures within decrease for its most frequently
the ASC payment rates for many of the the surgical specialty group. The performed procedures by offering an
most frequently performed procedures exception to this is the surgical increased breadth of procedures, still
in ASCs are similar to the OPPS specialty group of eye and ocular within the clinical specialty area, and
payment rates for the same procedures. adnexa where the projected aggregate receive payments that are adequate to
Conversely, we note that procedures increase in CY 2008 under the revised support continued operations.
with existing ASC payment rates that system is driven by a very small Similarly, payment for all of the highest
are substantially lower than the OPPS increase, less than 1 percent, in volume pain management injection
rates are performed least often in ASCs. payment for the highest volume procedures are expected to decrease in
We believe the revised ASC payment procedure (CPT code 66984, CY 2008, although payment for nervous
system represents a major stride towards Extracapsular cataract removal with system procedures overall are expected
encouraging greater efficiency in ASCs insertion of intraocular lens prosthesis to increase. However, if there were no
and promoting a significant increase in (one stage procedures), manual or transition period, we estimate that CY
the breadth of surgical procedures mechanical technique (e.g., irrigation 2008 payments also would decrease
performed in ASCs, because it and aspiration or phacoemulsification)). slightly for the nervous system surgical
distributes payments across the entire As a result of the redistribution of specialty group.
spectrum of covered surgical payments across the expanded breadth We note that the estimated percent
procedures, based on a coherent system of surgical procedures for which changes in payment under the revised
of relative payment weights that are Medicare will provide an ASC payment, ASC payment system for the surgical
related to the clinical and facility we believe that ASCs may change the procedures with the highest aggregate
resource characteristics of those mix of services they provide over the Medicare ASC payments closely
procedures. next several years. The revised ASC resemble those presented in the CY
Table 64 identifies a number of ASC payment system should encourage ASCs 2008 OPPS/ASC proposed rule, with the
procedures receiving the most Medicare to expand their service-mix beyond the exception of CPT codes 64476
estimated CY 2008 payment under the handful of the highest paying (Injection, anesthetic agent and/or
current system and shows that most of procedures which comprise the majority steroid, paravertebral facet joint or facet
them will experience payment decreases of ASC utilization under the existing joint nerve; lumbar or sacral, each
in CY 2008 under the revised ASC ASC payment system. For example, additional level (List separately in
payment system. This contrasts with the although the payment rate for addition to code for primary
estimated aggregate payment increases cystoscopy (CPT code 52000), the procedure)); and 64484 (Injection,
at the surgical specialty group level highest volume ASC genitourinary anesthetic agent and/or steroid,
displayed in Table 63. In fact, Table 63 procedure, is 6 percent less for CY 2008 transforaminal epidural; lumbar or
shows only one surgical specialty group than under the existing payment system, sacral, each additional level (List
of procedures for which the payments overall payment to ASCs for the group separately in addition to code for
are expected to decrease in the first year of genitourinary procedures currently primary procedure)). Our estimates of
under the revised ASC payment system, performed in ASCs is expected to the percent changes in ASC payment for
and only two groups for which a increase by 11 percent. Although a these two injection procedures are
considerably greater for this final rule increase by 22 percent. For these two ancillary items and services newly
than they were for the CY 2008 OPPS/ procedures and the other procedures eligible for separate payment in ASCs
ASC proposed rule. Both of these with estimated payment increases will be paid comparably to their OPPS
nervous system procedures had greater than 10 percent, the increases rates because we would not expect
significantly more single claims are due to the comparatively higher ASCs to experience efficiencies in
available for OPPS ratesetting for this OPPS rates which, when adjusted by the providing them. Lastly, the August 2,
final rule with comment period, ASC budget neutrality factor and 2007 revised ASC payment system final
reflecting much lower costs that their blended with the CY 2007 ASC payment rule established a specific payment
median costs for the proposed rule. amounts, generate CY 2008 ASC methodology for device-intensive
These data resulted in the reassignment payment rates that are substantially procedures that provides the same
of CPT codes 64476 and 64484 to above the current CY 2007 ASC packaged payment for the device as
different clinical APCs for CY 2008 than payment amounts. under the OPPS, while providing a
proposed, in order to ensure the clinical As indicated elsewhere in this final reduced service payment that is subject
and resource homogeneity of the OPPS rule with comment period, payments for to the 4-year transition if the device-
APCs for CY 2008. Their lower OPPS most of the highest volume colonoscopy intensive procedure is on the CY 2007
payment rates in turn resulted in lower and upper gastrointestinal endoscopy ASC list of covered surgical procedures.
payments than those estimated in the procedures will decrease under the We expect that this final methodology
proposed rule for the two services under revised payment system. Table 63 will allow ASCs to continue to expand
the revised ASC payment system. estimates that payment decreases also their provision of device-intensive
However, as shown in Table 63, above, are expected for the digestive system services and to begin performing new
the final estimated decrease in ASC surgical specialty group overall. We device-intensive ASC procedures.
payment for nervous system procedures believe that the reason for decreased
payments for so many of the digestive b. Payment to Physicians for Performing
overall without the transition is
system procedures is that the current Excluded ASC Procedures in an ASC
estimated to be 4 percent in this final
rule with comment period, very close to ASC payment rates are close to the As discussed in section XVI.G. of this
the CY 2008 OPPS/ASC proposed rule OPPS rates. Procedures with current final rule with comment period, we are
estimated decrease of 2 percent for payment rates that are nearly as high as paying physicians at the facility rate for
nervous system procedures. Thus, we their OPPS rates are negatively affected furnishing procedures in ASCs that are
believe that our final policies will under the revised payment system while excluded from the ASC list of covered
continue to ensure Medicare beneficiary procedures for which ASC rates have procedures. This policy reduces site of
access to surgical procedures involving historically been much lower than the service (facility versus nonfacility)
the nervous system in ASCs under the comparable OPPS rates are positively differentials that currently exist and
revised ASC payment system in CY affected. The payment decreases aligns physician payment policies for
2008. expected in the first year under the services furnished in ASCs and HOPDs.
For those procedures that will be paid revised ASC payment system for some We believe that the effect of the
a significantly lower amount under the of the high volume digestive system change will be small. Currently,
revised payment system than they are procedures are not large (all less than or physicians are paid for procedures
currently paid, we believe that their equal to 7 percent). We believe that performed in ASCs that are not on the
current payment rates, which are closer ASCs can generally continue to cover list of ASC covered surgical procedures
to the OPPS payment rates than are the their costs for these procedures, and that based on the nonfacility PE RVUs,
rates for other ASC procedures, are ASCs specializing in providing those unless a nonfacility rate does not exist,
likely to be generous relative to ASC services will be able to adapt their in which case they are paid based on the
costs, so ASCs would, in all likelihood, business practices and case mix to facility rate. For CY 2008, we excluded
continue performing those procedures manage declines for individual procedures from the ASC list of covered
under the revised payment system. We procedures. surgical procedures because they could
also note that the majority of the most In addition to the procedures pose a significant risk to beneficiary
frequently performed ASC procedures currently on the ASC list of covered safety or would be expected to require
specifically studied by the GAO for its surgical procedures discussed above, in an overnight stay and, as such, the
report to Congress on ASC costs, as CY 2008 we also are adding hundreds excluded procedures are generally more
described in the August 2, 2007 revised of surgical procedures to the already complex than procedures furnished in
ASC payment system final rule (72 FR extensive list of procedures for which physicians’ offices. Consequently, most
42474), appear in Table 64 with Medicare allows payment to ASCs, surgical procedures that are excluded
payment decreases under the revised creating new opportunities for ASCs to from the list of ASC covered surgical
ASC payment system. The GAO expand their range of covered surgical procedures in CY 2008 do not have
concluded that for those procedures the procedures. For the first time, ASCs will nonfacility PE RVUs. Specifically, only
OPPS APC groups accurately reflect the be paid separately for covered ancillary about 46 of approximately 2,000
relative costs of procedures performed services that are integral to covered excluded ASC procedures for CY 2008
at ASCs and that ASCs have surgical procedures, including certain have nonfacility PE RVUs. As a result,
substantially lower costs. radiology procedures, costly drugs and even under our current policy,
For some procedures, the payment biologicals, devices with pass-through physicians performing an excluded ASC
amounts in CY 2008 are much higher status under the OPPS, and procedure in an ASC would be paid for
than the CY 2007 rates currently paid to brachytherapy sources. While separately most excluded procedures based on the
ASCs. For example, payments for CPT paid radiology services will be paid facility PE RVUs. Thus, our policy to
codes 29880 (Arthroscopy, knee, based on their ASC relative payment pay physicians for excluded ASC
surgical; with meniscectomy (medial weight calculated according to the procedures performed in ASCs based on
AND lateral, including any meniscal standard ratesetting methodology of the the facility PE RVUs will only affect
shaving)) and 29881 (Arthroscopy, knee, revised ASC payment system or the Medicare payment rates for the small
surgical; with meniscectomy (medial OR MPFS nonfacility PE RVU amount, proportion of excluded procedures that
lateral, including meniscal shaving)) whichever is lower, the other covered have nonfacility PE RVUs.
4. Estimated Effects of This Final Rule safety risk to beneficiaries when migrate from these settings to ASCs (as
With Comment Period on Beneficiaries furnished in an ASC or are expected to discussed in detail in section XVI.L. of
a. Payment to ASCs require an overnight stay when this final rule with comment period).
furnished in ASCs and, therefore, Furthermore, we estimate that the
We estimate that the changes for CY Medicare provides no payment to ASCs revised ASC payment system will result
2008 will be positive for beneficiaries in for these procedures. The revision to in Medicare savings of $220 million
at least two respects. Except for §§ 414.22(b)(5)(i)(A) and (B) will also
screening colonoscopy and flexible over 5 years due to migration of new
provide for no payment to physicians ASC services from HOPDs and
sigmoidoscopy procedures, the ASC for the facility resources required to
coinsurance rate for all procedures is 20 physicians’ offices to ASCs over time.
furnish excluded services in ASCs,
percent. This contrasts with procedures We anticipate that this final rule with
leaving the beneficiary liable for the
performed in HOPDs where the comment period will have a significant
facility payment if a surgical procedure
beneficiary is responsible for excluded by Medicare from ASC economic impact on a substantial
copayments that range from 20 percent payment is, in fact, performed in the number of small entities.
to 40 percent. In addition, ASC payment ASC setting. We do not expect that the 6. Accounting Statement
rates under the revised payment system change will result in a meaningful
are lower than payment rates for the increase in beneficiary liability because As required by OMB Circular A–4
same procedures under the OPPS, so the we do not expect that excluded services, (available at http://www.whitehousegov/
beneficiary coinsurance amount under which we have determined could pose omb/circulars/a004/a-4.pdf), in Table
the ASC payment system almost always a significant risk to beneficiary safety or 65 below, we have prepared an
will be less than the OPPS copayment would be expected to require an accounting statement showing the
amount for the same services. (The only overnight stay, will be furnished to classification of the expenditures
exceptions will be when the ASC Medicare beneficiaries in ASCs. associated with the implementation of
coinsurance amount exceeds the Furthermore, we expect that physicians
inpatient deductible. The statute the CY 2008 revised ASC payment
and ASCs will advise beneficiaries of all system, based on the provisions of this
requires that copayment amounts under of the possible consequences (including
the OPPS not exceed the inpatient final rule with comment period. As
denial of Medicare payment with explained above, we estimate that
deductible.) Beneficiary coinsurance for concomitant beneficiary liability and
services migrating from physicians’ Medicare payments to ASCs for CY 2008
significant surgical risk) if surgical
offices to ASCs may decrease or increase procedures excluded from ASC payment will be about $240 million higher than
under the revised ASC payment system, are provided in ASCs. they otherwise would be in the absence
depending on the particular service and of the revised ASC payment system.
the relative payment amounts for that 5. Conclusion This $240 million in additional
service in the physician’s office The changes to the ASC payment payments to ASCs will be fully offset by
compared with the ASC. As noted system for CY 2008 will affect each of savings from reduced Medicare
previously, the net effect of the revised the approximately 4,800 ASCs currently spending in HOPDs and physicians’
ASC payment system on beneficiary approved for participation in the offices on services that migrate from
coinsurance, taking into account the Medicare program. The effect on an these settings to ASCs. This table
migration of services from HOPDs and individual ASC will depend on the provides our best estimate of Medicare
physicians’ offices, is estimated to be ASC’s mix of patients, the proportion of payments to providers and suppliers as
$20 million in beneficiary savings in CY the ASC’s patients that are Medicare a result of the CY 2008 revised ASC
2008. beneficiaries, the degree to which the payment system, as presented in this
In addition to the lower out-of-pocket payments for the procedures offered by final rule with comment period. All
expenses, we believe that beneficiaries the ASC are changed under the revised expenditures are classified as transfers.
also will have access to more services in payment system, and the degree to
ASCs as a result of the addition of which the ASC chooses to provide a
approximately 800 surgical procedures different set of procedures.
TABLE 65.—ACCOUNTING STATEMENT:
to the ASC list of covered surgical The revised ASC payment system is CLASSIFICATION OF ESTIMATED EX-
services eligible for Medicare payment designed to result in the same aggregate PENDITURES FROM CY 2007 TO CY
in CY 2008. We expect that ASCs will amount of Medicare expenditures in CY 2008 AS A RESULT OF THE CY 2008
provide a broader range of surgical 2008 that would be made in the absence REVISED ASC PAYMENT SYSTEM
services under the revised payment of the revised ASC payment system. As
system and that beneficiaries will mentioned previously, we estimate that Category Transfers
benefit from having access to a greater the revised ASC payment system and
variety of surgical procedures in ASCs. the expanded ASC list of covered Annualized Monetized $0 Million.
surgical procedures that we are Transfers.
b. Payment to ASCs for Excluded implementing in CY 2008 will have no From Whom to Whom Federal Government
Procedures Performed in an ASC net effect on Medicare expenditures to Medicare Pro-
viders and Sup-
In addition, the revision to compared to the level of Medicare
pliers.
§§ 414.22(b)(5)(i)(A) and (B) will impose expenditures that would have occurred Annualized Monetized $0 Million.
beneficiary liability for facility costs in CY 2008 in the absence of the revised Transfer.
associated with surgical procedures that payment system. However, there will be From Whom to Whom Premium Payments
are not Medicare covered surgical a total increase in Medicare payments to from Beneficiaries
procedures in ASCs. In the August 2, ASCs for CY 2008 of approximately to Federal Govern-
2007 revised ASC payment system final $240 million as a result of the revised ment.
rule, CMS determined that the only ASC payment system, which will be
surgical procedures that will be fully offset by savings from reduced Total ................... $0 Million.
excluded from ASC payment in CY 2008 Medicare spending in HOPDs and
are those that could pose a significant physicians’ offices on services that
D. Effects of the Requirements for offered by the facilities co-located with practices are usual and customary
Reporting of Quality Data for Hospital the necessary provider CAH do not business practices.
Outpatient Settings change, the CAH can continue those In accordance with the provisions of
In section XVII. of this final rule with arrangements. In addition, if a CAH Executive Order 12866, this final rule
comment period, we discuss our (including one with a necessary with comment period was reviewed by
measures and requirements for reporting provider designation) acquires or creates the OMB.
of quality data to CMS for services an off-campus provider-based location
G. Impact of the Changes to the Hospital
furnished in hospital outpatient settings or an off-campus distinct part
Inpatient Prospective Payment System
under the HOP QDRP. We note that we psychiatric or rehabilitation unit on or
(IPPS) Payment Rates
have reduced the number of initial after January 1, 2008, the CAH off-
campus provider-based facility must 1. Overall Impact
quality measures to be reported from the
comply with the location requirements. We have examined the impacts of this
10 we proposed to 7. We have also
We revised the language of the final rule relating to the changes to
modified the date for which the initial
regulation to exclude RHCs, as defined hospital inpatient prospective payment
submission of quality data begins from
under § 405.2401(b), from the list of system payment rates as required by
services furnished on or after January
provider-based facilities that must Executive Order 12866 (September
2008 to services furnished on or after
comply with this regulation. Because
April 2008. The initial submission for 1993, Regulatory Planning and Review),
CAHs can continue current co-location
data for April–June 2008 services is due section 1102(b) of the Social Security
and off-campus arrangements that are in
to the OPPS Clinical Warehouse by Act, the Unfunded Mandates Reform
place before January 1, 2008, we believe
November 1, 2008. CMS and its Act of 1995 (Public Law 104–4), and
there is no burden associated with this
contractors will provide assistance to all Executive Order 13132. We have also
regulation.
hospitals that wish to submit data. In examined the impacts of this final rule
addition, we have modified our F. Effects of Policy Revisions to the in the context of the Regulatory
proposal for the CY 2009 payment Hospital CoPs Flexibility Act (RFA) (September 19,
update, so that hospitals are not In section XVIII.B. of the preamble of 1980, Public Law 96–354).
required to submit charts for or pass our this final rule with comment, we Based on the IPPS provisions
validation requirement of a minimum of discuss changes to the hospital CoPs specified in section XIX. of this final
80 percent reliability, based upon our relating to timeframes for completion of rule, we have determined that this rule
chart-audit validation process for medical history and physical is a major rule as defined in 5 U.S.C.
January 2008 services. As noted in examinations and requirements for 804(2). This final rule includes changes
section XVII.E. of this final rule with preanesthesia and postanesthesia in FY 2008 IPPS payments due to the
comment period, we are providing evaluations of Medicare beneficiaries. enactment of Public Law 110–90, which
validation criteria for services furnished We believe that these revisions would requires the Secretary to apply a
on or after July 1, 2008 for purposes of impose minimal additional costs on prospective documentation and coding
the CY 2010 and subsequent years’ hospitals. In fact, hospitals may realize adjustment for discharges during FY
payment updates to ensure that the some minimal cost savings. The cost of 2008 of ¥0.6 percent rather than the
quality data being sent to CMS are implementing these changes would ¥1.2 percent specified in the FY 2008
accurate. The requirement of five charts largely be limited to the one-time cost IPPS final rule. In addition, this final
per hospital per quarter will result in related to the revision of a hospital’s rule includes a change in policy to not
the submission of approximately 21,500 medical staff bylaws and its policies and apply the documentation and coding
charts per quarter for services furnished procedures as they relate to the adjustment to the hospital-specific
on or after July 1, 2008 to the agency. requirements for medical history and payment rates. We estimate that the
We believe that a requirement for five physical examinations and for increase in FY 2008 IPPS operating and
charts per hospital per quarter for preanesthesia and postanesthesia capital payments to hospitals resulting
services furnished on or after July 1, evaluations. There also may be some from the provisions of this final rule
2008, represents a minimal burden to minimal cost associated with will be in excess of $100 million.
the participating hospital. communicating these changes to With the exception of the IPPS
affected hospital staff. However, we changes included in this final rule, all
E. Effects of Policy Revisions on CAH FY 2008 IPPS payment policies were
believe that these costs would be offset
Off-Campus and Co-Location established in the FY 2008 IPPS final
by the benefits derived from the overall
Requirements rule (72 FR 47130) issued on August 1,
intent of these revisions to require that
In section XVIII.A. of the preamble of the most current information regarding 2007. As noted in section XIX. of this
this final rule with comment period, we a patient’s condition be available to document, on September 28, 2007, we
discuss our changes regarding a CAH’s hospital staff so that risks to patient issued a notice relating to the FY 2008
ability to co-locate with another acute safety can be minimized and potential IPPS final rule that corrected a technical
care hospital or establish an off-campus adverse outcomes can be avoided. calculation and typographical errors in
location that does not comply with the Furthermore, the changes would clarify that final rule. The correction notice
location requirements (more than a 35- existing hospital CoPs to make them appeared in the October 10, 2007
mile drive, or in the case of more consistent with current practice, Federal Register and is hereinafter
mountainous terrain or in areas with while still retaining the flexibility and referred to as the ‘‘second FY 2008 IPPS
only secondary roads available, a 15- reduction in burden that hospitals are correction notice.’’ In the second FY
mile drive) for CAHs. We clarified in currently provided in meeting those 2008 IPPS correction notice, we
this final rule with comment period that CoPs. Therefore, no burden is being estimated a $4.0 billion increase in FY
if a CAH with a necessary provider assessed on the revision of medical staff 2008 operating and capital payments as
designation has a co-location bylaws and hospital policies and a result of the market basket update to
arrangement with another hospital or procedures or on the communication of the FY 2008 IPPS rates required by the
CAH that was in effect before January 1, these revisions to staff that would be statute, in conjunction with the other
2008, and the type and scope of services required by these revisions as these payment policies established in the FY
2008 IPPS final rule. In this final rule, index.html.) For purposes of the RFA, operate efficiently and minimize
we have updated our estimate of the all hospitals and other providers and unnecessary costs while at the same
increase in FY 2008 IPPS operating and suppliers are considered to be small time ensuring that payments are
capital payments based on the policies entities. Individuals and States are not sufficient to adequately compensate
and market basket update established in included in the definition of a small hospitals for their legitimate costs. In
the FY 2008 IPPS final rule and the entity. We believe that the IPPS addition, we share national goals of
addition of the IPPS provisions payment rate changes in this final rule preserving the Medicare Hospital
included in this final rule. We now will have a significant impact on small Insurance Trust Fund.
estimate an increase in FY 2008 entities as explained subsequently.
operating and capital payments of In addition, section 1102(b) of the Act We believe that the policies
approximately $4.6 billion, an increase requires us to prepare a regulatory established in the FY 2008 IPPS final
of about $665 million over our prior impact analysis for any proposed or rule and the IPPS provisions of this final
estimate. Our current estimate includes final rule that may have a significant rule will further each of these goals
the statutorily mandated ¥0.6 percent impact on the operations of a substantial while maintaining the financial viability
adjustment for documentation and number of small rural hospitals. This of the hospital industry and ensuring
coding changes to the IPPS standardized analysis must conform to the provisions access to high quality health care for
amounts and capital Federal rates for FY of section 604 of the RFA. With the Medicare beneficiaries. We expect that
2008 under section 7 of Public Law exception of hospitals located in certain these changes will ensure that the
110–90, and the removal of the New England counties, for purposes of outcomes of this payment system are
application of the documentation and section 1102(b) of the Act, we now reasonable and equitable while avoiding
coding adjustment to the hospital- define a small rural hospital as a or minimizing unintended adverse
specific rates. For purposes of the hospital that is located outside of an consequences.
impact analysis, we also assume a 1.2 urban area and has fewer than 100 beds.
percent increase in case-mix growth, as Section 601(g) of the Social Security 3. Limitations of Our Analysis
determined by the Office of the Actuary, Amendments of 1983 (Public Law 98–
because we believe the adoption of the 21) designated hospitals in certain New The following quantitative analysis
MS–DRGs will result in case-mix England counties as belonging to the presents the projected effects of our
growth due to documentation and adjacent urban area. Thus, for purposes IPPS policy changes, as well as statutory
coding changes that do not reflect real of the IPPS, we continue to classify changes effective for FY 2008, on
changes in patient severity of illness. these hospitals as urban hospitals. various hospital groups. We use the best
The estimates do not reflect any other Section 202 of the Unfunded available data, but generally do not
changes in hospital admissions or case- Mandates Reform Act of 1995 (Public attempt to make adjustments for future
mix intensity in operating PPS Law 104–4) also requires that agencies changes in such variables as admissions,
payments, which will also affect overall assess anticipated costs and benefits length of stay, or case-mix. However, as
payment changes. before issuing any rule whose mandates stated in the FY 2008 IPPS final rule, we
The RFA requires agencies to analyze require spending in any 1 year of $100 believe that adoption of the MS–DRGs
options for regulatory relief of small million in 1995 dollars, updated will create a risk of increased aggregate
businesses for any rule for which the annually for inflation. That threshold levels of payment as a result of more
agency publishes a general notice of level is currently approximately $120 comprehensive documentation and
proposed rulemaking. Since we have million. This IPPS changes in this final coding. As explained in section XIX. of
waived notice and comment rulemaking rule will not mandate any requirements this final rule, the FY 2008 IPPS final
for the IPPS provisions in this final rule for State, local, or tribal governments,
rule established a documentation and
as discussed in section XIX.C. of this nor will it affect private sector costs.
final rule, we do not believe the Executive Order 13132 establishes coding adjustment of ¥1.2 percent to
Regulatory Flexibility Act requires a certain requirements that an agency maintain budget neutrality for the
regulatory flexibility analysis in this must meet when it promulgates a transition to the MS–DRGs.
case. While we do not believe we are proposed rule (and subsequent final Subsequently, Congress enacted Public
required to perform a regulatory rule) that imposes substantial direct Law 110–90, which reduced the FY
flexibility analysis, we are including in requirement costs on State and local 2008 IPPS documentation and coding
section XIX. of this final rule and in this governments, preempts State law, or adjustment from ¥1.2 percent to ¥0.6
impact analysis section final rule all of otherwise has Federalism implications. percent. Therefore, in section XIX. of
the components that would be required As stated above, the IPPS changes in this final rule, we have revised the
of a final regulatory flexibility analysis. this final rule will not have a substantial payment rates, factors and thresholds to
For purposes of the RFA, small effect on State and local governments. reflect the ¥0.6 percent documentation
entities include small businesses, The following analysis, in and coding adjustment. While the
nonprofit organizations, and conjunction with the section XIX. of this documentation and coding adjustment
government agencies. Most hospitals document, demonstrates that this rule is has been changed for payment purposes,
and most other providers and suppliers consistent with the regulatory we continue to believe that an increase
are considered to be small entities, philosophy and principles identified in in case mix of 1.2 percent in FY 2008
either by nonprofit status or by having Executive Order 12866, the RFA, and is likely as a result of the adoption of
revenues of $31.5 million or less in any section 1102(b) of the Act. The rule will the MS–DRGs. The impacts shown
1 year. (For details on the latest affect payments to a substantial number below illustrate the impact of the FY
standards for heath care providers, we of small rural hospitals, as well as other
refer readers to page 33 of the Table of 2008 IPPS changes on hospital operating
classes of hospitals, and the effects on
Small Business Size Standards at the payments, including the ¥0.6 percent
some hospitals may be significant.
Small Business Administration Web site documentation and coding adjustment
at: http://www.sba.gov/services/ 2. Objectives to the IPPS standardized amounts, both
contractingopportunities/ The primary objective of the IPPS is prior to and following the projected 1.2
sizestandardstopics/tableofsize/ to create incentives for hospitals to percent growth in case-mix.
4. Quantitative Effects of the IPPS Policy from ¥1.2 percent to ¥0.6 percent. geographic reclassifications (including
Changes for Operating Costs Thus, our previously published impact reclassifications under section
estimates reflect a ¥1.2 percent 1886(d)(8)(B) and section 1886(d)(8)(E)
In this final rule, we are employing
documentation and coding adjustment of the Act that have implications for
the same operating payment simulation
and our current impact estimates reflect capital payments) are 2,578, 1,425,
model as used in the FY 2008 IPPS final
a ¥0.6 percent adjustment. While the 1,153, and 956, respectively.
rule. Our methodology underlying the
documentation and coding adjustment The next three groupings examine the
simulation model is discussed in detail
has been changed for payment purposes, impacts of the changes on hospitals
in the FY 2008 IPPS final rule (72 FR
we continue to believe that an increase grouped by whether or not they have
48158 through 48159). The difference
in case-mix of 1.2 percent for FY 2008 GME residency programs (teaching
between the impact estimates in this is likely to occur. Table 1 illustrates the
final rule and the FY 2008 IPPS final hospitals that receive an IME
impact of the FY 2008 IPPS changes on adjustment) or receive DSH payments,
rule reflects the application of a hospital payments, including the
documentation and coding adjustment or some combination of these two
documentation and coding adjustment adjustments. There are 2,480
of ¥0.6 percent (instead of ¥1.2 to the IPPS standardized amounts, both
percent) and the removal of the nonteaching hospitals in our analysis,
prior to and following the projected 1.2 815 teaching hospitals with fewer than
application of the documentation and percent growth in case-mix.
coding adjustment to the hospital- 100 residents, and 239 teaching
The table categorizes hospitals by hospitals with 100 or more residents.
specific rates. Our impact estimates in various geographic and special payment
this final rule also reflect a technical In the DSH categories, hospitals are
considerations to illustrate the varying grouped according to their DSH
correction to a calculation error made in impacts on different types of hospitals.
our previously published impact payment status, and whether they are
The top row of the table shows the
estimates, as discussed in more detail considered urban or rural for DSH
overall impact on the 3,534 hospitals
subsequently. purposes. The next category groups
included in the analysis.
The next four rows of Table I contain together hospitals considered urban
5. Analysis of Table I after geographic reclassification, in
hospitals categorized according to their
Table I displays the estimated geographic location: All urban, which is terms of whether they receive the IME
increase in IPPS operating payments further divided into large urban and adjustment, the DSH adjustment, both,
between FY 2007 and FY 2008. It other urban; and rural. There are 2,539 or neither.
compares the impact estimates hospitals located in urban areas The next five rows examine the
previously published in the second FY included in our analysis. Among these, impacts of the changes on rural
2008 IPPS correction notice to the FY there are 1,406 hospitals located in large hospitals by special payment groups
2008 IPPS final rule, which is based on urban areas (populations over 1 (SCHs, RRCs, and MDHs), as well as
the payment policies and market basket million), and 1,133 hospitals in other rural hospitals not receiving a special
update established in the FY 2008 IPPS urban areas (populations of 1 million or payment designation. There were 194
final rule, with our current impact fewer). In addition, there are 995 RRCs, 367 SCHs, 150 MDHs, 99
estimates, which are based on both the hospitals in rural areas. The next two hospitals that are both SCHs and RRCs,
IPPS policies established in the FY 2008 groupings are by bed size categories, and 8 hospitals that are both an MDH
IPPS final rule and the IPPS policy shown separately for urban and rural and an RRC.
changes included in this final rule. hospitals. The final groupings by The next series of groupings concern
As noted previously, we believe that geographic location are by census the geographic reclassification status of
the adoption of the MS–DRGs in FY divisions, also shown separately for hospitals. The first grouping displays all
2008 will create a financial risk of urban and rural hospitals. urban hospitals that were reclassified by
increased aggregate payments as a result The second part of Table I shows the MGCRB for FY 2008. The second
of more comprehensive documentation hospital groups based on hospitals’ FY grouping shows the MGCRB rural
and coding. To maintain budget 2008 payment classifications, including reclassifications.
neutrality, the FY 2008 IPPS final rule any reclassifications under section The final two groupings are based on
established a documentation and coding 1886(d)(10) of the Act. For example, the the type of ownership and the hospital’s
adjustment of ¥1.2 percent for FY 2008. rows labeled urban, large urban, other Medicare utilization expressed as a
Subsequently, Public Law 110–90 was urban, and rural show that the number percent of total patient days. These data
enacted, which reduces the FY 2008 of hospitals paid based on these were taken from the FY 2004 Medicare
documentation and coding adjustment categorizations after consideration of cost reports.
TABLE I.—IMPACT ANALYSIS OF CHANGES FOR FY 2008

Previously Current esti- Previously Current esti-
published all mate of all published all mate of all
FY 2008 FY 2008 FY 2008 FY 2008
No. of changes w/ changes w/ changes w/ changes w/
hospitals CMI adjust- CMI adjust- CMI adjust- CMI adjust-
ment prior ment prior ment and ment and
to estimated to estimated estimated estimated
growth 11 growth 12 growth 13 growth 14
(1) (2a) (2b) (3a) (3b)

All Hospitals ............................................................................................. 3,534 2.5 3.1 3.7 4.3

By Geographic Location:
Urban hospitals ................................................................................. 2,539 2.6 3.3 3.9 4.5
Large urban areas ............................................................................ 1,406 3.1 3.7 4.3 5.0
Other urban areas ............................................................................ 1,133 2 2.7 3.3 3.9
TABLE I.—IMPACT ANALYSIS OF CHANGES FOR FY 2008—Continued

FY 2008 FY 2008 FY 2008 FY 2008
(1) (2a) (2b) (3a) (3b)
Rural hospitals .................................................................................. 995 1.2 1.7 2.4 2.9

Bed Size (Urban):
0–99 beds ......................................................................................... 630 1 1.6 2.2 2.8
100–199 beds ................................................................................... 851 2.3 2.9 3.6 4.2
200–299 beds ................................................................................... 480 2.5 3.1 3.8 4.4
300–499 beds ................................................................................... 411 3 3.6 4.2 4.8
500 or more beds ............................................................................. 167 2.9 3.5 4.1 4.8
Bed Size (Rural):
0–49 beds ......................................................................................... 337 0.1 0.5 1.3 1.7
50–99 beds ....................................................................................... 372 1.2 1.6 2.4 2.9
100–149 beds ................................................................................... 173 1.2 1.8 2.5 3.0
150–199 beds ................................................................................... 68 1.2 1.8 2.5 3.0
200 or more beds ............................................................................. 45 1.8 2.3 3.1 3.6
Urban by Region:
New England .................................................................................... 122 2.4 3.0 3.7 4.3
Middle Atlantic .................................................................................. 350 2.2 2.9 3.5 4.1
South Atlantic ................................................................................... 390 2.7 3.4 4 4.6
East North Central ............................................................................ 395 2.4 3.0 3.7 4.3
East South Central ........................................................................... 166 2.1 2.7 3.3 3.9
West North Central ........................................................................... 157 2.4 3.0 3.6 4.2
West South Central .......................................................................... 355 2.6 3.2 3.8 4.4
Mountain ........................................................................................... 153 2.6 3.2 3.8 4.4
Pacific ............................................................................................... 398 4 4.6 5.2 5.8
Puerto Rico ....................................................................................... 53 2.9 3.5 4.1 4.8
Rural by Region:
New England .................................................................................... 23 1.2 1.6 2.4 2.8
Middle Atlantic .................................................................................. 72 1.4 1.8 2.6 3.0
South Atlantic ................................................................................... 173 1.6 2.2 2.8 3.4
East North Central ............................................................................ 122 1.4 1.8 2.7 3.1
East South Central ........................................................................... 177 0.9 1.5 2.1 2.7
West North Central ........................................................................... 115 1.4 1.8 2.6 3.0
West South Central .......................................................................... 199 –0.3 0.3 0.9 1.5
Mountain ........................................................................................... 77 2 2.4 3.2 3.6
Pacific ............................................................................................... 37 2.9 3.3 4.2 4.6
By Payment Classification:
Urban hospitals ................................................................................. 2,578 2.6 3.3 3.9 4.5
Large urban areas ............................................................................ 1,425 3.1 3.7 4.3 4.9
Other urban areas ............................................................................ 1,153 2 2.6 3.3 3.9
Rural areas ....................................................................................... 956 1.3 1.7 2.5 3.0
Teaching Status:
Nonteaching ...................................................................................... 2,480 2.1 2.7 3.3 3.9
Fewer than 100 residents ................................................................. 815 2.5 3.1 3.8 4.4
100 or more residents ...................................................................... 239 3.1 3.8 4.4 5.0
Urban DSH:
Non-DSH ........................................................................................... 859 1.7 2.3 3 3.6
100 or more beds ............................................................................. 1,512 2.9 3.5 4.1 4.7
Less than 100 beds .......................................................................... 355 1.9 2.5 3.1 3.7
Rural DSH:
SCH .................................................................................................. 384 1.6 2.0 2.9 3.2
RRC .................................................................................................. 203 1.3 1.9 2.5 3.1
100 or more beds ............................................................................. 46 1.4 2.0 2.6 3.3
Less than 100 beds .......................................................................... 175 0.2 0.8 1.4 2.1
Urban teaching and DSH:
Both teaching and DSH .................................................................... 807 3 3.6 4.2 4.8
Teaching and no DSH ...................................................................... 186 1.9 2.5 3.2 3.8
No teaching and DSH ....................................................................... 1,060 2.6 3.2 3.8 4.4
No teaching and no DSH ................................................................. 525 1.7 2.3 2.9 3.6
Special Hospital Types:

RRC .................................................................................................. 194 1.5 2.1 2.7 3.3
SCH .................................................................................................. 367 1.3 1.6 2.5 2.8
MDH .................................................................................................. 150 2 2.3 3.2 3.6
SCH and RRC .................................................................................. 99 1.7 2.0 2.9 3.3
MDH and RRC .................................................................................. 8 1.3 1.5 2.6 2.7
Type of Ownership:
TABLE I.—IMPACT ANALYSIS OF CHANGES FOR FY 2008—Continued

FY 2008 FY 2008 FY 2008 FY 2008
(1) (2a) (2b) (3a) (3b)
Voluntary ........................................................................................... 2,064 2.4 3.0 3.6 4.2

Proprietary ........................................................................................ 823 2.7 3.3 4 4.6
Government ...................................................................................... 597 2.7 3.3 3.9 4.5
Medicare Utilization as a Percent of Inpatient Days:
0–25 .................................................................................................. 230 4.2 4.9 5.5 6.1
25–50 ................................................................................................ 1,289 3.1 3.7 4.3 4.9
50–65 ................................................................................................ 1,451 1.9 2.4 3.1 3.7
Over 65 ............................................................................................. 440 1.2 1.8 2.5 3.0
FY 2008 Reclassifications by the Medicare Geographic Classification
Review Board:
All Reclassified Hospitals ................................................................. 738 2.2 2.8 3.4 4.0
Non-Reclassified Hospitals ............................................................... 2,796 2.6 3.2 3.8 4.4
Urban Hospitals Reclassified ............................................................ 372 2.4 3.1 3.7 4.3
Urban Nonreclassified, FY 2008: ..................................................... 2,147 2.7 3.3 3.9 4.5
All Rural Hospitals Reclassified Full Year FY 2008: ........................ 366 1.6 2.1 2.8 3.3
Rural Nonreclassified Hospitals Full Year FY 2008: ........................ 566 0.4 0.9 1.7 2.1
All Section 401 Reclassified Hospitals: ............................................ 26 0.6 0.8 1.8 2.0
Other Reclassified Hospitals (Section 1886(d)(8)(B)) ...................... 63 1.5 2.0 2.8 3.3
Former 508 Hospitals ....................................................................... 107 –0.6 0.0 0.6 1.2
Specialty Hospitals:
Cardiac specialty Hospitals .............................................................. 22 –0.4 0.2 0.8 1.4
11 This column shows our previous estimate published in the second FY 2008 IPPS correction notice of the changes in payments from FY
2007 to FY 2008 including a 0.988 CMI adjustment for coding and documentation improvements that are anticipated with the adoption of the
MS–DRGs prior to the estimated growth occurring. It also reflects all FY 2008 IPPS policies adopted in the FY 2008 IPPS final rule.
12 This column shows our current estimate of the changes in payments from FY 2007 to FY 2008 including a 0.994 CMI adjustment for coding
and documentation improvements that are anticipated with the adoption of the MS–DRGs prior to the estimated growth occurring. It also reflects
all FY 2008 IPPS policies adopted in the FY 2008 IPPS final rule and this final rule.
13 This column shows our previous estimate published in CMS–1533–CN2 of the changes in payments from FY 2007 to FY 2008 including a
.988 CMI adjustment and the estimated case-mix growth of 1.2 percent as a result of improvements in documentation and coding. It also reflects
all FY 2008 IPPS policies adopted in the FY 2008 IPPS final rule.
14 This column shows our current estimate of the changes in payments from FY 2007 to FY 2008 including a .994 CMI adjustment and the es-
timated case-mix growth of 1.2 percent (when comparing column 2b to column 3b) as a result of improvements in documentation and coding. It
also reflects all FY 2008 IPPS policies adopted in the FY 2008 IPPS final rule and this final rule.
a. Effects of All Changes With CMI IPPS proposed rule based on the with the statutorily mandated change in
Adjustment Prior to Estimated Growth policies established in the FY 2008 IPPS the documentation and coding
(Columns 2a and 2b) final rule, including a ¥1.2 percent adjustment from ¥1.2 percent to ¥0.6
documentation and coding adjustment. percent. As a result of the combination
Columns 2a and 2b show our Column 2b shows our current estimate of the law change and a policy of not
previously published and current based on the same FY 2008 IPPS applying the documentation and coding
estimates of the change in IPPS payment policies, except it also adjustment to the hospital-specific rates
payments from FY 2007 to FY 2008, includes the policy changes established for MDHs and SCHs, certain categories
reflecting all FY 2008 IPPS policies in this final rule (that is, the statutorily of hospitals (MDHs, SCHs, rural
including a documentation and coding mandated ¥0.6 percent documentation hospitals, and certain rural geographic
adjustment to the FY 2008 rates, but not and coding adjustment and the change areas with relatively large numbers of
taking into account the expected 1.2 in policy of not applying the SCHs and MDHs) are estimated to
percent growth in case-mix due to the documentation and coding adjustment experience an increase in their
anticipated improvement in to the hospital specific rates). Column operating payments of slightly more
documentation and coding as a result of 2b also corrects for a technical error that than 0.6 percentage points compared
the MS–DRGs. Because columns 2a and occurred in the second FY 2008 IPPS with the policies articulated in the FY
2b model the impact to include the correction notice that inadvertently 2008 IPPS final rule. However, column
documentation and coding adjustment overestimated FY 2008 payments to 2b shows an increase in operating
for anticipated case-mix increase providers that receive the hospital payments for these categories of
without accounting for the actual case- specific rate. hospitals of only about 0.2 to 0.5
mix increase itself, these columns Comparing columns 2a and 2b, the percentage points greater than our
illustrate a total payment change that is average increase in FY 2008 IPPS previously published impact estimates
less than what is anticipated to occur. payment for all hospitals is in column 2a (rather than more than 0.6
Column 2a shows our previously approximately 0.6 percentage points percentage points) due to a technical
published estimate in the October 10, higher than in the second FY 2008 IPPS error in our previously published
2007 correction notice to the FY 2008 correction notice, as would be expected impact estimates that had overstated the
FY 2008 increase in payments to these change in the documentation and mandated change in the FY 2008
hospitals. coding adjustment to the standardized documentation and coding adjustment
amounts from ¥1.2 percent to ¥0.6 from ¥1.2 percent to ¥0.6 percent.
b. Effects of All Changes With CMI
percent. As shown in table 1, columns Therefore, we project that capital
Adjustment and Estimated Growth
3a and 3b, most classes of hospitals are payments will increase by $342 million
(Column 3)
estimated to experience an additional in FY 2008 compared to FY 2007. The
Columns 3a and 3b show our 0.6 percent increase in payments in FY operating and capital payments should
previously published and current 2008 compared with our previously result in a net increase of $4.635 billion
estimates of the change in IPPS published estimates with the increases to IPPS providers. This is an additional
payments from FY 2007 to FY 2008, shown in the table sometimes appearing increase in estimated payments by $665
reflecting all FY 2008 IPPS policies to be slightly more (0.7 percentage million compared to the estimated
including a documentation and coding points) due to rounding. As noted increase in payments published in the
adjustment to the FY 2008 rates and previously, as a result of the second FY 2008 IPPS correction notice.
taking into account the expected 1.2 combination of the law change and a The discussions presented in the
percent growth in case-mix in FY 2008 policy change to not apply the previous subsections, in combination
due to anticipated improvements in documentation and coding adjustment with section XIX. of this final rule,
documentation and coding as a result of to the hospital-specific rates for MDHs constitute a regulatory impact analysis.
the MS–DRGs. and SCHs, certain categories of hospitals
Column 3a shows our previously (MDHs, SCHs, rural hospitals, and 7. Accounting Statement
published estimate in the correction certain rural geographic areas with As required by OMB Circular A–4
notice to the FY 2008 IPPS proposed relatively large numbers of SCHs and (available at http://www.whitehousegov/
rule of the FY 2008 increase in MDHs) are estimated to experience an omb/circulars/a004/a-4.pdf), in Table II
operating payments based on the increase in their operating payments of below, we have prepared an accounting
policies established in the FY 2008 IPPS slightly more than 0.6 percentage points statement showing the classification of
final rule, including a ¥1.2 percent compared with the policies articulated the expenditures associated with the
documentation and coding adjustment in the FY 2008 IPPS final rule. However, IPPS provisions of this final rule. This
which is assumed to be fully offset by column 3b shows an increase in table provides our best estimate of the
a 1.2 percent increase in case-mix. operating payments for these categories increase in Medicare payments to
Column 3b shows our current estimate of hospitals of only about 0.1 to 0.5 providers from FY 2007 to FY 2008 as
based on the same FY 2008 IPPS percentage points greater than our a result of the IPPS policies established
payment policies, except it also previously published impact estimates in the FY 2008 IPPS final rule and in
includes the policy changes established in column 3a (rather than more than 0.6 section XIX. of this final rule. All
in this final rule (that is, the statutorily percentage points) due to a technical expenditures are classified as transfers
mandated ¥0.6 percent documentation error in our previously published to Medicare providers.
and coding adjustment and the change impact estimates that had overstated the
in policy of not applying the FY 2008 increase in payments to these TABLE II.—ACCOUNTING STATEMENT:
documentation and coding adjustment hospitals. CLASSIFICATION OF ESTIMATED EX-
to the hospital-specific rates). In column
3b, even though the documentation and 6. Overall Conclusion PENDITURES FROM FY 2007 TO FY
coding adjustment reduces the The IPPS changes we are making in 2008
standardized amount by 0.6 percent, this final rule will affect all classes of
Category Transfers
this column assumes a 1.2 percent hospitals. All classes of hospitals are
increase in case-mix due to improved expected to experience increases in Annualized Monetized $4.635 Billion.
documentation and coding that is their FY 2008 IPPS payments as a result Transfers.
estimated to occur equally across all of the provisions of this final rule. Table From Whom to Whom Federal Government
hospitals as determined by the Office of I of this section demonstrates the to IPPS Medicare
the Actuary. Furthermore, it assumes statutorily mandated change to the Providers.
that a 1.2 percent increase in case-mix documentation and coding adjustment
from improved documentation and applied to the standardized amount, the Total ................... $4.635 Billion.
coding will occur for hospitals that policy change of the nonapplication of
receive the hospital-specific rate. the documentation and coding 8. Executive Order 12866
Similar to column 2b, column 3b also adjustment to the hospital-specific rate In accordance with the provisions of
corrects for a technical error that and all other policies reflected in the FY Executive Order 12866, this final rule
occurred in the second FY 2008 IPPS 2008 IPPS final rule. Table I also shows was reviewed by the Office of
correction notice that inadvertently an overall increase of 4.3 percent in Management and Budget.
overstated the FY 2008 increase in operating payments, an estimated
payments to providers that receive the increase of $4.29 billion, which H. Impact of the Policy Revisions
hospital specific-rate. includes hospital reporting of quality Related to Emergency Medicare GME
Column 3b reflects our current data program costs ($1.89 million) and Affiliated Groups for Hospitals in
estimate of the impact of all FY 2008 all operating payment policies as Certain Declared Emergency Areas
changes relative to FY 2007. The described in this section XXIV.G. As we discussed in detail in section
average increase for all hospitals is Capital payments are estimated to XX. of this document, we are issuing an
approximately 4.3 percent. This is a 0.6 increase by 1.2 percent per case from FY interim final rule with comment period
percent increase in expected payments 2007 to FY 2008. The average increase that modifies the current GME
compared to the 3.7 percent average in FY 2008 capital IPPS payments for all regulations as they apply to emergency
increase to all hospitals published in the hospitals is approximately 0.6 Medicare GME affiliated groups to
second FY 2008 IPPS correction notice. percentage points higher than in the provide for greater flexibility in training
This estimated increase in payments can second FY 2008 IPPS correction notice, residents in approved residency
be attributed to the statutorily mandated as expected based on the statutorily programs during times of disaster.
Specifically, the interim final rule with 6. Anticipated Effects that entered the program after the
comment period modifies provisions for We believe that there are limited disaster occurred would be limited to in
‘‘emergency Medicare GME affiliated effects associated with modifying the State emergency affiliations. We believe
groups’’ to address the needs of teaching existing emergency Medicare GME that the policy established in this
hospitals that are forced to find alternate affiliation regulations to extend the interim final rule with comment period
training sites for residents that were effective period as well as to permit extends additional flexibility while
displaced by a disaster. certain written agreements for training providing an incentive for home
that occurs in the nonhospital setting to hospitals to bring displaced residents
1. Overall Impact
be submitted retroactively. We note that back to train in the State in which the
This interim final rule with comment home hospital is located, increasing the
these changes do not allow hospitals to
period rule is not a major rule under probability that the physicians would
count for Medicare IME or direct GME
Executive Order 12866 because we stay and practice locally after their
payment purposes additional FTE
anticipate that the cost to the Medicare training is completed. In addition, we
residents that had not been counted by
program will be negligible under the believe that providing for flexibility in
Medicare before a qualifying emergency.
provisions included in this rule. submitting written agreements after
Hospitals participating in emergency
2. RFA Medicare GME affiliated groups are held residents begin training in the
to their respective FTE resident caps as nonhospital sites for hospitals
For purposes of the RFA, we believe participating in emergency Medicare
that the impact on the affected hospitals specified by the emergency affiliation
agreement. IME and direct GME GME affiliation agreements alleviates an
will not be significant and will not additional deadline burden and allows
affect a substantial number of small payments to the hospitals under this
provision will not be based upon any appropriate GME payments to be made
entities. to those hospitals that are facing
FTE residents in excess of the caps
3. Small Rural Hospitals specified under the emergency Medicare financial and programmatic hardships
GME affiliation agreements. due to a disaster. We believe failure to
For purposes of section 1102(b) of the
apply the regulatory changes in this
Act, we define a small rural hospital as 7. Alternatives Considered interim final rule with comment would
a hospital that is located outside of a
We considered making no changes at be contrary to the public interest
Metropolitan Statistical Area and has
this time to the existing emergency because hospitals affected by Hurricanes
fewer than 100 beds. This interim final
Medicare GME affiliation provisions. Katrina and Rita could otherwise face
rule with comment period is not
However, teaching hospitals affected by dramatic disruptions in their Medicare
anticipated to have a significant effect
Hurricanes Katrina and Rita have GME funding, with possible dire effects
on small rural hospitals because the
reported to us that they are still on their GME programs and financial
provisions of this interim final rule with
experiencing difficulties in stability.
comment period are most likely to be
used by large teaching hospitals that reestablishing their training programs 8. Conclusion
have established residency programs and they have requested the extension
of the effective period for emergency For these reasons, we are not
and the capacity to train a larger preparing analyses for either the RFA or
complement of displaced residents. The Medicare GME affiliation agreements to
continue beyond June 30, 2008. We section 1102(b) of the Act because we
majority of this type of teaching hospital have determined that this interim final
is located in non-rural areas. understand that GME programs in the
affected area are finding it necessary to rule with comment period would not
4. Unfunded Mandates continue to adjust the location of have a significant economic impact on
resident training both within the a substantial number of small entities or
Section 202 of the Unfunded
emergency area and in other States, as a significant impact on the operations of
Mandates Reform Act of 1995 requires
affected hospitals in the section 1135 a substantial number of small rural
that agencies assess anticipated costs
emergency area continue to reopen beds hospitals.
and benefits before issuing any rule
whose mandates require spending in at different rates, and as feedback from 9. Executive Order 12866
any 1 year of $100 million in 1995 accreditation surveys warrant
educational adjustments. Extending the In accordance with the provisions of
dollars, updated annually for inflation. Executive Order 12866, this interim
That threshold level is currently effective period of emergency Medicare
GME affiliation agreements for two more final rule with comment period was
approximately $120 million. This reviewed by the Office of Management
interim final rule with comment period academic years (for a total effective
period of up to 5 academic years) would and Budget.
will not have an effect on State, local,
or tribal governments in the aggregate allow these hospitals the time to XXV. Waiver of Proposed Rulemaking,
and the private sector costs will be less stabilize their training programs. Waiver of Delay in Effective Date, and
than the $120 million threshold. Furthermore, we considered the option Retroactive Effective Date
of extending the effective period for
5. Federalism emergency Medicare GME affiliations A. Requirements for Waivers and
Executive Order 13132 establishes for two additional academic years Retroactive Rulemaking
certain requirements that an agency without limiting the out of State We ordinarily publish a notice of
must meet when it promulgates a emergency affiliations to apply to only proposed rulemaking in the Federal
proposed rule (and subsequent final the residents that were immediately Register to provide for public comment
rule) that imposes substantial direct displaced following the disaster. before the provisions of a rule take effect
requirement costs on State and local However, we ultimately specified that in accordance with section 553(b) of the
governments, preempts State law, or in the additional 2 years, only the Administrative Procedure Act (APA).
otherwise has Federalism implications. residents that were immediately However, we can waive notice-and-
This interim final rule with comment displaced following the disaster would comment procedures if the Secretary
period will not have a substantial effect be eligible to participate in out of State finds, for good cause, that the notice-
on State or local governments. emergency affiliations while residents and-comment process is impracticable,
unnecessary, or contrary to the public and coding adjustment that we adopted infrastructure damage and disruption of
interest, and incorporates a statement of in the FY 2008 IPPS final rule and, as operations experienced by medical
the finding and the reasons therefore in a result, the standardized amounts for facilities, and the consequent and
the rule. Section 553(d) of the APA also FY 2008 will be higher. In section continuing disruption in residency
ordinarily requires a 30-day delay in XIX.B.1. of this final rule, we merely are training, caused by Hurricanes Katrina
effective date of final rules after the date announcing new payment factors, rates, and Rita in August of 2005, there is an
of their publication. However, this 30- and thresholds that result from applying urgent need for the regulation changes
day delay in effective date can be the statutorily mandated documentation provided in this interim final rule with
waived if an agency finds for good cause and coding adjustment pf ¥0.6 percent comment period to be applied
that the delay is impracticable, to the payment policies we adopted in retroactively. The existing regulations
unnecessary, or contrary to the public the FY 2008 IPPS final rule. Therefore, specify that the effective period for
interest, and the agency incorporates a we do not believe these changes emergency Medicare GME affiliation
statement of the findings and its reasons implicate section 1871(e)(1)(A) of the agreements must end no later than June
in the rule issued. Moreover, section Act. 30, 2008, even though many hospitals
1871(e)(1)(A) of the Act generally With respect to the application of the within the section 1135 emergency area
prohibits the Secretary from making documentation and coding adjustment have not fully recovered from the
retroactive substantive changes in to hospital-specific rates discussed in disruption caused by Hurricanes Katrina
policy unless retroactive application of section XIX.B.2. of this final rule, we are and Rita. Hospitals have informed CMS
the change is necessary to comply with waiving notice-and-comment that it is critical for the permissible
statutory requirements or failure to procedures, the 30-day delay in effective effective period for emergency Medicare
apply the change retroactively would be date, and making a retroactive GME affiliation agreements to be
contrary to the public interest. substantive change to a policy adopted extended because the current
in the FY 2008 IPPS final rule. As regulations do not adequately address
B. IPPS Payment Rate Policies discussed in section XIX.B.2. of this the continuing issues relating to
We are waiving notice-and-comment final rule, we believe that the policy we Medicare GME payment policy faced by
procedures and the 30-day delay in adopted in the FY 2008 IPPS final rule both home and host hospitals.
effective date with respect to the revised was not consistent with the plain Specifically, where home or host
payment factors, rates, and thresholds meaning of section 1886(d)(3)(A)(vi) of hospitals with valid emergency
discussed in section XIX.B.1. of this the Act. Therefore, we are waiving Medicare GME affiliation agreements
final rule. In section XIX.B.1. of this notice-and-comment procedures with have been training displaced residents
final rule, we are revising certain respect to this policy change because we in non-hospital sites at any time since
payment factors, rates, and thresholds believe it would be unnecessary and August 29, 2005, the provisions in this
under the IPPS to reflect the changes to contrary to the public interest to interim final rule with comment period
the documentation and coding undertake notice-and-comment allow these home or host hospitals to
adjustment mandated under section 7 of procedures prior to changing our policy submit written agreements or incur all
Public Law 110–90. The policies to make the policy consistent with the or substantially all of the costs of the
adopted in the FY 2008 IPPS final rule plain meaning of the statute. For the program at the nonhospital site
were subjected to notice-and-comment same reasons, we are waiving the 30-day retroactive to that date in order to
procedures. The payment factors, rates, delay in effective date because we
and thresholds discussed in section permit the home or host hospitals to
believe it would be unnecessary and
XIX.B.1. of this final rule reflect the count the FTE residents training in non-
contrary to the public interest to delay
payment policies adopted in the FY hospital sites for direct GME and IME
the policy change beyond the October 1,
2008 IPPS final rule, but have been payment purposes. We believe failure to
2007 effective date of the FY 2008 IPPS
recalculated using the reduced coding apply the regulatory changes contained
final rule. We are also applying this
and documentation adjustment to the in this interim final rule with comment
policy change retroactive to October 1,
standardized amounts. Therefore, we period retroactively would be contrary
2007 under section 1871(e)(1)(A)(i) of
find that it would be unnecessary and to the public interest because hospitals
the Act because it would be contrary to
contrary to the public interest to delay whose graduate medical education
the public interest for our policy not to
correction of payment factors and rates programs were affected by Hurricanes
be consistent with the plain meaning of
under the IPPS by undertaking further the statute. Furthermore, because an Katrina and Rita could otherwise face
notice-and-comment procedures. For adjustment to the hospital-specific rates dramatic disruptions in their Medicare
the same reasons, we are also waiving to account for changes in GME funding, with possible dire effects
the 30-day delay in effective date with documentation and coding is not on the residency training programs and
respect to the revised payment factors, authorized under section financial stability of the hospitals, and
rates, and thresholds discussed in 1886(d)(3)(A)(vi) of the Act, retroactive possible adverse consequences for the
section XIX.B.1. of this final rule. We application of this change is necessary Medicare program in terms of access to
believe that it is in the public interest to comply with the statute. hospital and physician health care
to ensure that these revised payment resources.
factors, rates, and thresholds are C. Medicare GME Affiliation Agreement Furthermore, the training programs at
effective as of the October 1, 2007 Provisions many teaching hospitals in New Orleans
effective date of the FY 2008 IPPS final We find that failure to apply the and surrounding areas were temporarily
rule. provisions of this interim final rule with closed or significantly reduced in the
The revised payment factors, rates, comment period retroactively to August aftermath of the hurricanes, and the
and thresholds discussed in section 29, 2005, which is the first date on displaced residents were transferred to
XIX.B.1. of this final rule do not which there was an emergency area and other hospitals to continue their training
substantively change policies adopted emergency period under section 1135 of programs in other parts of the country.
in the FY 2008 IPPS final rule. Under the Act resulting from the impact of While some residents have returned to
section 7 of Public Law 110–90, we are Hurricane Katrina, would be contrary to the hurricane-affected hospitals, others
required to reduce the documentation the public interest. Due to the remain displaced from their home
hospitals to hospitals located out-of- displaced residents training at host ■ a. Revising paragraph (a)(1)(iii).
state. Immediate regulatory changes are hospitals. The ordinary notice-and- ■ b. Revising paragraph (f).
required in order to maintain Medicare comment procedures would serve to The revisions read as follows:
GME funding relating to displaced delay (or, in certain cases, preclude) § 410.27 Outpatient hospital services and
residents training at various hospitals hurricane-affected hospitals and GME supplies incident to a physician service:
outside of the emergency area, and at programs from responding effectively to Conditions.
the same time, to encourage re- their circumstances by availing (a) * * *
establishment of residency training themselves of the flexibility permitted (1) * * *
within the hurricane-affected State, and under this interim final rule with (iii) In the hospital or at a department
to assist home hospitals to rebuild comment period. of a provider, as defined in
incrementally their GME programs. § 413.65(a)(2) of this subchapter, that
List of Subjects
Existing regulations relating to closed has provider-based status in relation to
hospitals and closed residency training 42 CFR Part 410 a hospital under § 413.65 of this
programs, and relating to regular and Health facilities, Health professions, subchapter; and
emergency Medicare GME affiliation Laboratories, Medicare, Rural areas, X * * * * *
agreements, as well as to residency rays (f) Services furnished at a department
training that occurs in non-hospital of a provider, as defined in
settings, contain certain limitations that 42 CFR Part 411
§ 413.65(a)(2) of this subchapter, that
render them inapplicable or ineffective Kidney diseases, Medicare, Physician has provider-based status in relation to
to address the issues faced by hospitals referral, Reporting and recordkeeping a hospital under § 413.65 of this
as a result of disruptions caused by requirements subchapter, must be under the direct
Hurricanes Katrina and Rita. supervision of a physician. ‘‘Direct
42 CFR Part 413
We also ordinarily publish a notice of supervision’’ means the physician must
proposed rulemaking in the Federal Health facilities, Kidney diseases, be present and on the premises of the
Register and invite public comment on Medicare, Puerto Rico, Reporting and location and immediately available to
the proposed rule. The notice of recordkeeping requirements. furnish assistance and direction
proposed rulemaking includes a 42 CFR Part 414 throughout the performance of the
reference to the legal authority under procedure. It does not mean that the
which the rule is proposed, and the Administrative practice and
physician must be present in the room
terms and substance of the proposed procedure, Health facilities, Health
when the procedure is performed.
rule or a description of the subjects and professions, Kidney diseases, Medicare,
issues involved. However, this Reporting and recordkeeping PART 411—EXCLUSIONS FROM
procedure can be waived if an agency requirements MEDICARE AND LIMITATIONS ON
finds good cause that a notice-and- 42 CFR Part 416 MEDICARE PAYMENT
comment procedure is impracticable,
Health facilities, Kidney diseases, ■ 3. The authority citation for Part 411
unnecessary or contrary to the public
Medicare, Reporting and recordkeeping continues to read as follows:
interest and incorporates a statement of
requirements.
the finding and supporting reasons in Authority: Secs. 1102, 1860D–1 through
the rule issued. We find that good cause 42 CFR Part 419 1860D–42, 1871, and 1877 of the Social
exists to waive the requirement for Security Act (42 U.S.C. 1302, 1395w–101
Hospitals, Medicare, Reporting and through 1395w–152, and 1395nn.
publication of a notice of proposed recordkeeping requirements.
rulemaking and public comment prior ■ 4. Section 411.351 is amended by
to the effective date of this rule because 42 CFR Part 482 revising paragraph (2) of the definition
such a procedure would be Grant program-health, Hospitals, of ‘‘designated health services’’ and the
impracticable and contrary to the public Medicaid, Medicare, Reporting and definitions of ‘‘outpatient prescription
interest. As explained above, in order to recordkeeping requirements drugs’’ and ‘‘radiology and certain other
respond to the urgent needs of the imaging services’’ to read as follows:
hospitals and GME programs affected by 42 CFR Part 485
Hurricanes Katrina and Rita, Grant program-health, Health § 411.351 Definitions.
particularly in the provision regarding facilities, Medicaid, Medicare, * * * * *
the retroactive submission of written Reporting and recordkeeping Designated health services (DHS)
agreements or payment of all or requirements. means * * *
substantially all of the costs of the (2) Except as otherwise noted in this
■ For reasons stated in the preamble of subpart, the term ‘‘designated health
program at the non-hospital site to allow this final rule with comment period, the
hospitals that have been training services’’ or DHS means only DHS
Centers for Medicare & Medicaid payable, in whole or in part, by
residents in non-hospital sites since the Services is amending 42 CFR Chapter IV
first day of the section 1135 emergency Medicare. DHS do not include services
as set forth below: that are reimbursed by Medicare as part
period relating to Hurricanes Katrina
and Rita on August 29, 2005, it is PART 410—SUPPLEMENTARY of a composite rate (for example, SNF
necessary for the regulation to take MEDICAL INSURANCE (SMI) Part A payments or ASC services
effect retroactively to August 29, 2005. BENEFITS identified at § 416.164(a)), except to the
Furthermore, as hospitals engage in extent that services listed in paragraphs
planning for the training of residents in ■ 1. The authority citation for Part 410 (1)(i) through (1)(x) of this definition are
programs for the upcoming academic continues to read as follows: themselves payable through a composite
year which begins on July 1, 2008, Authority: Secs. 1102 and 1871 of the rate (for example, all services provided
hospitals need adequate time to arrange Social Security Act (42 U.S.C. 1302 and as home health services or inpatient and
emergency Medicare GME affiliation 1395hh). outpatient hospital services are DHS).
agreements with respect to remaining ■ 2. Section 410.27 is amended by— * * * * *
Outpatient prescription drugs means Authority: Secs. 1102, 1812(d), 1814(b), the cost of the resident’s salary and
all drugs covered by Medicare Part B or 1815, 1833(a), (i), and (n), 1861(v), 1871, fringe benefits while the resident is
D, except for those drugs that are 1881, 1883, and 1886 of the Social Security training in the nonhospital site and the
‘‘covered ancillary services,’’ as defined Act (42 U.S.C. 1302, 1395d(d), 1395f(b), hospital is providing reasonable
1395g, 1395l(a), (i), and (n), 1395x(v),
at § 416.164(b) of this chapter, for which 1395hh, 1395rr, 1395tt, and 1395ww); and
compensation to the nonhospital site for
separate payment is made to an sec. 124 of Public Law 106–133 (113 Stat. supervisory teaching activities. The
ambulatory surgical center. 1501A–332). agreement must indicate the
* * * * * compensation the hospital is providing
■ 6. Section 413.75(b) is amended by to the nonhospital site for supervisory
Radiology and certain other imaging
revising paragraph (2) under the teaching activities. The written
services means those particular services
definition of ‘‘Emergency Medicare agreement must be submitted to the
so identified on the List of CPT/HCPCS
GME affiliated group’’ to read as contractor by 180 days after the training
Codes. All services identified on the List
follows: at the nonhospital site begins. For
of CPT/HCPCS Codes are radiology and
certain other imaging services for § 413.75 Direct GME payments: General written agreements that would
purposes of this subpart. Any service requirements. otherwise be required to be submitted
not specifically identified as radiology * * * * * prior to the date the resident(s) begin
and certain other imaging services on (b) * * * training at the nonhospital site during
the List of CPT/HCPCS Codes is not a Emergency Medicare GME affiliated the period of August 29, 2005 through
radiology or certain other imaging group * * * November 1, 2007, the written
service for purposes of this subpart. The (2) Host hospital means a hospital agreement must be submitted to the
list of codes identifying radiology and training residents displaced from a CMS contractor by April 29, 2008.
certain other imaging services includes home hospital. * * * * *
the professional and technical (a) In-State host hospital means a host (f) * * *
components of any diagnostic test or hospital located in the same State as a (3) * * *
procedure using x-rays, ultrasound, home hospital. (iii) If the hospital has in place an
computerized axial tomography, (b) Out-of-State host hospital means a emergency Medicare GME affiliation
magnetic resonance imaging, nuclear host hospital located in a different State agreement in accordance with
medicine (effective January 1, 2007), or from the home hospital. § 413.79(f)(6), during the period covered
other imaging services. All codes * * * * * by the emergency Medicare GME
identified as radiology and certain other ■ 7. Section 413.78 is amended by— affiliation agreement—
imaging services are covered under ■ a. Removing the semicolon and the (A) The hospital must pay all or
section 1861(s)(3) of the Act and word ‘‘or’’ at the end of paragraph substantially all of the costs of the
§ 410.32 and § 410.34 of this chapter, (e)(3)(i) and replacing them with a training program in a nonhospital
but do not include— period. setting(s) attributable to training that
(1) X-ray, fluoroscopy, or ultrasound ■ b. Adding a new paragraph (e)(3)(iii). occurs during a month by the end of the
procedures that require the insertion of ■ c. Removing the semicolon and the sixth month after the month in which
a needle, catheter, tube, or probe word ‘‘or’’ at the end of paragraph the training in the nonhospital site
through the skin or into a body orifice; (f)(3)(i) and replacing them with a occurs. For the costs that would
(2) Radiology or certain other imaging period. otherwise be required to be incurred by
■ d. Adding a new paragraph (f)(3)(iii). the hospital during the period of August
services that are integral to the
performance of a medical procedure that The additions read as follows: 29, 2005 through November 1, 2007, the
is not identified on the list of CPT/ § 413.78 Direct GME payments: participating hospital must incur the
HCPCS codes as a radiology or certain Determination of the total number of FTE costs by April 29, 2008; or
other imaging service and is residents. (B) There is a written agreement that
performed— * * * * * specifies that the hospital will incur at
(i) Immediately prior to or during the (e) * * * least 90 percent of the total of the costs
medical procedure; or (3) * * * of the resident’s salary and fringe
(ii) Immediately following the (iii) If the hospital has in place an benefits (and travel and lodging where
medical procedure when necessary to emergency Medicare GME affiliation applicable) while the resident is training
confirm placement of an item placed agreement in accordance with in the nonhospital site and the portion
during the medical procedure. § 413.79(f)(6), during the period covered of the cost of the teaching physician’s
(3) Radiology and certain other by the emergency Medicare GME salary attributable to nonpatient care
imaging services that are ‘‘covered affiliation agreement— direct GME activities. The written
ancillary services,’’ as defined at (A) The hospital must pay all or agreement must specify the total cost of
§ 416.164(b), for which separate substantially all of the costs of the the training program at the nonhospital
payment is made to an ASC. training program in a nonhospital site, and the amount the hospital will
* * * * * setting(s) attributable to training that incur (at least 90 percent of the total),
occurs during a month by the end of the and must indicate the portion of the
PART 413—PRINCIPLES OF sixth month following the month in amount the hospital will incur that
REASONABLE COST which the training in the nonhospital reflects residents’ salaries and fringe
REIMBURSEMENT; PAYMENT FOR site occurred. For the costs that would benefits (and travel and lodging where
END-STAGE RENAL DISEASE otherwise be required to be paid by the applicable), and the portion of this
SERVICES; PROSPECTIVELY hospital during the period of August 29, amount that reflects teaching physician
DETERMINED PAYMENT RATES FOR 2005 through November 1, 2007, the compensation. The written agreement
SKILLED NURSING FACILITIES participating hospital must pay the costs must be submitted to the contractor by
by April 29, 2008; or 180 days after the training at the
■ 5. The authority citation for Part 413 (B) There is a written agreement that nonhospital site begins. Hospitals may
is revised to read as follows: specifies that the hospital is incurring modify the amounts specified in the
written agreement by the end of the resident caps at § 413.79(c) or PART 416—AMBULATORY SURGICAL
academic year (that is, June 30) to reflect § 413.79(f)(1) through (f)(5), that is, as SERVICES
that at least 90 percent of the costs of adjusted by any and all existing
the training program in the nonhospital affiliation agreements as applicable. ■ 11. The authority citation for Part 416
site has been incurred. For written continues to read as follows:
(3) For emergency Medicare GME
agreements that would otherwise be affiliation agreements for the third or Authority: Secs. 1102 and 1871 of the
required to be submitted prior to the fourth academic years subsequent to the Social Security Act (42 U.S.C. 1302 and
date the training begins in the 1395hh).
year in which the section 1135
nonhospital site during the period of emergency period began and involving ■ 12. Section 416.179 is amended by—
August 29, 2005 through November 1, an out-of-State host hospital, the ■ a. Revising the section heading.
2007, the hospital must submit the positive adjustment to the out-of-State ■ b. Revising paragraphs (a)(1) and
written agreement to its contractor by host hospital’s direct and indirect FTE (a)(2).
April 29, 2008. caps pursuant to the agreement shall ■ c. Adding new paragraph (a)(3).
* * * * * reflect only FTE residents that were ■ d. Revising paragraph (b).
actually displaced from a home hospital The revisions and additions read as
■ 8. Section 413.79 is amended by—
immediately following the emergency. follows:
■ a. Revising the introductory text of
paragraph (f)(6). * * * * * § 416.179 Payment and coinsurance
■ b. Revising paragraph (f)(6)(i)(D). reduction for devices replaced without cost
(ii) * * *
■ c. Revising paragraph (f)(6)(ii)(A)(2). or when full or partial credit is received.
The revisions read as follows: (A) * * * (a) * * *
(2) Four subsequent academic years. (1) The device is replaced without
§ 413.79 Direct GME payments: cost to the ASC or the beneficiary;
Determination of the weighted number of The later of 180 days after the section
1135 emergency period begins, or by (2) The ASC receives full credit for
FTE residents.
July 1 of each academic year for 4 the cost of a replaced device; or
* * * * * (3) The ASC receives partial credit for
subsequent years.
(f) * * * the cost of a replaced device but only
(6) Emergency Medicare GME * * * * * where the amount of the device credit
affiliated group. Effective on or after is greater than or equal to 50 percent of
August 29, 2005, home and host PART 414—PAYMENT FOR PART B
MEDICAL AND OTHER HEALTH the cost of the new replacement device
hospitals as defined in § 413.75(b) may being implanted.
form an emergency Medicare GME SERVICES
(b) Amount of reduction to the ASC
affiliated group by meeting the payment for the covered surgical
requirements provided in this section. ■ 9. The authority citation for Part 414 procedure.
The emergency Medicare GME continues to read as follows: (1) The amount of the reduction to the
affiliation agreements may be made Authority: Secs. 1102, 1871, and 1881(b)(1) ASC payment made under paragraphs
effective beginning on or after the first of the Social Security Act (42 U.S.C. 1302, (a)(1) and (a)(2) of this section is
day of a section 1135 emergency period, 1395hh, and 1395rr(b)(1)). calculated in the same manner as the
and must terminate no later than at the device payment reduction that would be
■ 10. Section 414.22 is amended by
conclusion of 4 academic years applied to the ASC payment for the
revising paragraphs (b)(5)(i)(A) and (B)
following the academic year during covered surgical procedure in order to
to read as follows:
which the section 1135 emergency remove predecessor device costs so that
period began. § 414.22 Relative value units (RVUs). the ASC payment amount for a device
* * * * * * * * * * with pass-through status under § 419.66
(i) * * * of this subchapter represents the full
(b) * * * cost of the device, and no packaged
(D) Specify the total adjustment to
each participating hospital’s FTE caps (5) * * * device payment is provided through the
in each academic year that the (i) * * * ASC payment for the covered surgical
emergency Medicare GME affiliation procedure.
(A) Facility practice expense RVUs. (2) The amount of the reduction to the
agreement is in effect, for both direct The lower facility practice expense
GME and IME, that reflects a positive ASC payment made under paragraph
RVUs apply to services furnished to (a)(3) of this section is 50 percent of the
adjustment to the host hospital’s direct patients in the hospital, skilled nursing
and indirect FTE caps that is offset by payment reduction that would be
facility, community mental health calculated under paragraph (b)(1) of this
a negative adjustment to the home center, or in an ambulatory surgical
hospital’s (or hospitals’) direct and section.
center. (The facility practice expense
indirect FTE caps of at least the same * * * * *
RVUs for a particular code may not be
amount subject to the following— greater than the nonfacility RVUs for the
(1) The sum total of adjustments to all PART 419—PROSPECTIVE PAYMENT
code.) SYSTEM FOR HOSPITAL OUTPATIENT
the participating hospitals’ FTE caps
under the emergency Medicare GME (B) Nonfacility practice expense DEPARTMENT SERVICES
affiliation agreement may not exceed the RVUs. The higher nonfacility practice
expense RVUs apply to services ■ 13. The authority citation for Part 419
aggregate adjusted FTE caps of the continues to read as follows:
hospitals participating in the emergency performed in a physician’s office, a
Medicare GME affiliated group. patient’s home, a nursing facility, or a Authority: Secs. 1102, 1833(t), and 1871 of
(2) A home hospital’s IME and direct facility or institution other than a the Social Security Act (42 U.S.C. 1302,
hospital or skilled nursing facility, 1395l(t), and 1395hh).
GME FTE cap reductions in an
emergency Medicare GME affiliation community mental health center, or ■ 14. Section 419.43 is amended by
agreement are limited to the home ASC. revising paragraph (g)(4) to read as
hospital’s IME and direct GME FTE * * * * * follows:
§ 419.43 Adjustments to national program but only where the amount of the device accordance with State law and hospital
payment and beneficiary copayment credit is greater than or equal to 50 policy.
amounts. percent of the cost of the new (ii) An updated examination of the
* * * * * replacement device being implanted. patient, including any changes in the
(g) * * * (b) Amount of reduction to the APC patient’s condition, be completed and
(4) Excluded services and groups. payment. documented within 24 hours after
Drugs and biologicals that are paid (1) The amount of the reduction to the admission or registration, but prior to
under a separate APC and devices paid APC payment made under paragraphs surgery or a procedure requiring
under § 419.66 are excluded from (a)(1) and (a)(2) of this section is anesthesia services, when the medical
qualification for the payment calculated in the same manner as the history and physical examination are
adjustment in paragraph (g)(2) of this offset amount that would be applied if completed within 30 days before
section. the device implanted during a admission or registration. The updated
* * * * * procedure assigned to the APC had examination of the patient, including
■ 15. Section 419.44 is amended by— transitional pass-through status under any changes in the patient’s condition,
■ a. Revising the section heading. § 419.66. must be completed and documented by
■ b. Revising paragraph (b). (2) The amount of the reduction to the a physician (as defined in section
The revisions and addition read as APC payment made under paragraph 1861(r) of the Act), an oromaxillofacial
follows: (a)(3) of this section is 50 percent of the surgeon, or other qualified licensed
offset amount that would be applied if individual in accordance with State law
§ 419.44 Payment reductions for and hospital policy.
the device implanted during a
procedures.
procedure assigned to the APC had * * * * *
* * * * * transitional pass-through status under
(b) Interrupted procedures. When a § 419.66. § 482.23 [Amended]
procedure is terminated prior to ■ 20. In § 482.23(b)(1), the cross-
completion due to extenuating * * * * *
reference ‘‘§ 405.1910(c)’’ is removed
circumstances or circumstances that § 419.70 [Amended] and the cross-reference ‘‘§ 488.54(c)’’ is
threaten the well-being of the patient, added in its place.
the Medicare program payment amount ■ 17. Section 419.70 is amended by—
■ a. In paragraph (d)(1)(i), removing the ■ 21. Section 482.24 is amended by
and the beneficiary copayment amount
cross-reference ‘‘§ 412.63(b)’’ and revising paragraph (c)(2)(i) to read as
are based on—
(1) The full program and beneficiary adding the cross-reference ‘‘§ 412.64(b)’’ follows:
copayment amounts if the procedure for in its place.
■ b. In paragraph (d)(2)(i), removing the § 482.24 Condition of participation:
which anesthesia is planned is Medical record services.
cross-reference ‘‘§ 412.63(b)’’ and
discontinued after the induction of * * * * *
adding the cross-reference ‘‘§ 412.64(b)’’
anesthesia or after the procedure is (c) * * *
in its place.
started; (2) * * *
■ c. In paragraph (d)(4)(ii), removing the
(2) One-half the full program and the (i) Evidence of—
beneficiary copayment amounts if the cross-reference ‘‘§ 412.63(b)’’ and
(A) A medical history and physical
procedure for which anesthesia is adding the phrase ‘‘§ 412.63(b) or
examination completed and
planned is discontinued after the § 412.64(b), as applicable,’’ in its place.
documented no more than 30 days
patient is prepared and taken to the PART 482—CONDITIONS OF before or 24 hours after admission or
room where the procedure is to be PARTICIPATION FOR HOSPITALS registration, but prior to surgery or a
performed but before anesthesia is procedure requiring anesthesia services.
induced; or ■ 18. The authority citation for Part 482 The medical history and physical
(3) One-half of the full program and continues to read as follows: examination must be placed in the
beneficiary copayment amounts if a patient’s medical record within 24
Authority: Secs. 1102 and 1871 of the
procedure for which anesthesia is not Social Security Act (42 U.S.C. 1302 and hours after admission or registration,
planned is discontinued after the 1395hh). but prior to surgery or a procedure
patient is prepared and taken to the requiring anesthesia services.
■ 19. Section 482.22 is amended by
room where the procedure is to be (B) An updated examination of the
revising paragraph (c)(5) to read as
performed. patient, including any changes in the
follows:
■ 16. Section 419.45 is amended by— patient’s condition, when the medical
■ a. Revising the section heading. § 482.22 Condition of participation: history and physical examination are
■ b. Revising paragraph (a)(1). Medical staff. completed within 30 days before
■ c. Revising paragraph (a)(2). * * * * * admission or registration.
■ d. Adding new paragraph (a)(3). (c) * * * Documentation of the updated
■ e. Revising paragraph (b). (5) Include a requirement that— examination must be placed in the
The revisions and additions read as (i) A medical history and physical patient’s medical record within 24
follows: examination be completed and hours after admission or registration,
§ 419.45 Payment and copayment documented for each patient no more but prior to surgery or a procedure
reduction for devices replaced without cost than 30 days before or 24 hours after requiring anesthesia services.
or when full or partial credit is received. admission or registration, but prior to * * * * *
(a) * * * surgery or a procedure requiring ■ 22. Section 482.51 is amended by
(1) The device is replaced without anesthesia services. The medical history revising paragraph (b)(1) to read as
cost to the provider or the beneficiary; and physical examination must be follows:
(2) The provider receives full credit completed and documented by a
for the cost of a replaced device; or physician (as defined in section 1861(r) § 482.51 Condition of participation:
(3) The provider receives partial of the Act), an oromaxillofacial surgeon, Surgical services.
credit for the cost of a replaced device or other qualified licensed individual in * * * * *
(b) * * * the medical staff and that reflect current location, as defined in § 413.65(a)(2) of
(1) Prior to surgery or a procedure standards of anesthesia care. this chapter, or an off-campus distinct
requiring anesthesia services and except * * * * * part psychiatric or rehabilitation unit, as
in the case of emergencies: defined in § 485.647, that was created or
(i) A medical history and physical PART 485—CONDITIONS OF acquired by the CAH on or after January
examination must be completed and PARTICIPATION: SPECIALIZED 1, 2008, the CAH can continue to meet
documented no more than 30 days PROVIDERS the location requirement of paragraph
before or 24 hours after admission or (c) of this section only if the off-campus
■ 24. The authority citation for Part 485 provider-based location or off-campus
registration.
continues to read as follows: distinct part unit is located more than
(ii) An updated examination of the
patient, including any changes in the Authority: Secs. 1102 and 1871 of the a 35-mile drive (or, in the case of
patient’s condition, must be completed Social Security Act (42 U.S.C. 1302 and mountainous terrain or in areas with
1395hh). only secondary roads available, a 15-
and documented within 24 hours after
admission or registration when the ■ 25. Section 485.610 is amended by mile drive) from a hospital or another
medical history and physical adding new paragraph (e) to read as CAH.
examination are completed within 30 follows: (3) If either a CAH or a CAH that has
days before admission or registration. been designated as a necessary provider
§ 485.610 Condition of participation: by the State does not meet the
* * * * * Status and location.
requirements in paragraph (e)(1) of this
■ 23. Section 482.52 is amended by— * * * * * section, by co-locating with another
■ a. Revising paragraph (b)(1). (e) Standard: Off-campus and co- hospital or CAH on or after January 1,
■ b. Revising paragraph (b)(3).
location requirements for CAHs. A CAH 2008, or creates or acquires an off-
may continue to meet the location campus provider-based location or off-
■ c. Removing paragraph (b)(4).
requirement of paragraph (c) of this campus distinct part unit on or after
The revisions read as follows: section based only if the CAH meets the January 1, 2008, that does not meet the
§ 482.52 Condition of participation: following: requirements in paragraph (e)(2) of this
Anesthesia services. (1) If a CAH with a necessary provider section, the CAH’s provider agreement
* * * * * designation is co-located (that is, it will be subject to termination in
shares a campus, as defined in accordance with the provisions of
(b) * * *
§ 413.65(a)(2) of this chapter, with § 489.53(a)(3) of this subchapter, unless
(1) A preanesthesia evaluation another hospital or CAH), the necessary
completed and documented by an the CAH terminates the off-campus
provider CAH can continue to meet the arrangement or the co-location
individual qualified to administer location requirement of paragraph (c) of
anesthesia, as specified in paragraph (a) arrangement, or both.
this section only if the co-location Authority: (Catalog of Federal Domestic
of this section, performed within 48 arrangement was in effect before January
hours prior to surgery or a procedure Assistance Program No. 93.773, Medicare—
1, 2008, and the type and scope of Hospital Insurance; and Program No. 93.774,
requiring anesthesia services. services offered by the facility co- Medicare—Supplementary Medical
* * * * * located with the necessary provider Insurance Program).
(3) A postanesthesia evaluation CAH do not change. A change of (Catalog of Federal Domestic Assistance
completed and documented by an ownership of any of the facilities with Program No. 93.778, Medical Assistance
individual qualified to administer a co-location arrangement that was in Program)
anesthesia, as specified in paragraph (a) effect before January 1, 2008, will not be Dated: October 25, 2007.
of this section, no later than 48 hours considered to be a new co-location Kerry Weems,
after surgery or a procedure requiring arrangement. Acting Administrator, Centers for Medicare
anesthesia services. The postanesthesia (2) If a CAH or a necessary provider & Medicaid Services.
evaluation for anesthesia recovery must CAH operates an off-campus provider-
be completed in accordance with State based location, excluding an RHC as Dated: October 30, 2007.
law and with hospital policies and defined in § 405.2401(b) of this chapter, Michael O. Leavitt,
procedures that have been approved by but including a department or remote Secretary.
ADDENDUM A.—OPPS APCS FOR CY 2008

National Minimum
Relative Payment
APC Group title SI unadjusted unadjusted
weight rate copayment copayment
0001 ........... Level I Photochemotherapy ............................................................................. S ................. 0.4806 $30.61 $7.00 $6.12
0002 ........... Level I Fine Needle Biopsy/Aspiration ............................................................ T ................. 1.1097 $70.68 .................... $14.14
0003 ........... Bone Marrow Biopsy/Aspiration ...................................................................... T ................. 3.1008 $197.50 .................... $39.50
0004 ........... Level I Needle Biopsy/ Aspiration Except Bone Marrow ................................ T ................. 4.3270 $275.60 .................... $55.12
0005 ........... Level II Needle Biopsy/Aspiration Except Bone Marrow ................................. T ................. 7.1147 $453.16 .................... $90.63
0006 ........... Level I Incision & Drainage ............................................................................. T ................. 1.4066 $89.59 .................... $17.92
0007 ........... Level II Incision & Drainage ............................................................................ T ................. 11.5594 $736.26 .................... $147.25
0008 ........... Level III Incision and Drainage ........................................................................ T ................. 18.3197 $1,166.85 .................... $233.37
0012 ........... Level I Debridement & Destruction ................................................................. T ................. 0.2963 $18.87 .................... $3.77
0013 ........... Level II Debridement & Destruction ................................................................ T ................. 0.7930 $50.51 .................... $10.10
0015 ........... Level III Debridement & Destruction ............................................................... T ................. 1.4595 $92.96 .................... $18.59
0016 ........... Level IV Debridement & Destruction ............................................................... T ................. 2.6604 $169.45 .................... $33.89
0017 ........... Level VI Debridement & Destruction ............................................................... T ................. 19.9041 $1,267.77 .................... $253.55
0019 ........... Level I Excision/ Biopsy .................................................................................. T ................. 4.3039 $274.13 $71.87 $54.83
0020 ........... Level II Excision/ Biopsy ................................................................................. T ................. 8.6850 $553.18 .................... $110.64
0021 ........... Level III Excision/ Biopsy ................................................................................ T ................. 16.1001 $1,025.48 $219.48 $205.10
0022 ........... Level IV Excision/ Biopsy ................................................................................ T ................. 21.1098 $1,344.57 $354.45 $268.91
ADDENDUM A.—OPPS APCS FOR CY 2008—Continued

National Minimum
Relative Payment
0023 ........... Exploration Penetrating Wound ....................................................................... T ................. 9.6341 $613.63 .................... $122.73
0028 ........... Level I Breast Surgery ..................................................................................... T ................. 20.6417 $1,314.75 $303.74 $262.95
0029 ........... Level II Breast Surgery .................................................................................... T ................. 31.7134 $2,019.95 $581.52 $403.99
0030 ........... Level III Breast Surgery ................................................................................... T ................. 39.8191 $2,536.24 $747.07 $507.25
0031 ........... Smoking Cessation Services ........................................................................... X ................. 0.1648 $10.50 .................... $2.10
0033 ........... Partial Hospitalization ...................................................................................... P ................. 3.2211 $205.16 .................... $41.03
0034 ........... Mental Health Services Composite ................................................................. P ................. 3.2211 $205.16 .................... $41.03
0035 ........... Arterial/Venous Puncture ................................................................................. T ................. 0.2143 $13.65 .................... $2.73
0037 ........... Level IV Needle Biopsy/Aspiration Except Bone Marrow ............................... T ................. 13.5764 $864.74 $228.76 $172.95
0039 ........... Level I Implantation of Neurostimulator .......................................................... S ................. 186.4739 $11,877.27 .................... $2,375.45
0040 ........... Percutaneous Implantation of Neurostimulator Electrodes, Excluding Cranial S ................. 63.7866 $4,062.82 .................... $812.56
Nerve.
0041 ........... Level I Arthroscopy .......................................................................................... T ................. 28.7803 $1,833.13 .................... $366.63
0042 ........... Level II Arthroscopy ......................................................................................... T ................. 45.7072 $2,911.27 $804.74 $582.25
0043 ........... Closed Treatment Fracture Finger/Toe/Trunk ................................................. T ................. 1.7682 $112.62 .................... $22.52
0045 ........... Bone/Joint Manipulation Under Anesthesia .................................................... T ................. 14.7658 $940.49 $268.47 $188.10
0047 ........... Arthroplasty without Prosthesis ....................................................................... T ................. 35.9040 $2,286.87 $537.03 $457.37
0048 ........... Level I Arthroplasty with Prosthesis ................................................................ T ................. 50.8876 $3,241.23 .................... $648.25
0049 ........... Level I Musculoskeletal Procedures Except Hand and Foot .......................... T ................. 21.2689 $1,354.70 .................... $270.94
0050 ........... Level II Musculoskeletal Procedures Except Hand and Foot ......................... T ................. 29.1900 $1,859.23 .................... $371.85
0051 ........... Level III Musculoskeletal Procedures Except Hand and Foot ........................ T ................. 42.9850 $2,737.89 .................... $547.58
0052 ........... Level IV Musculoskeletal Procedures Except Hand and Foot ........................ T ................. 79.4244 $5,058.86 .................... $1,011.77
0053 ........... Level I Hand Musculoskeletal Procedures ...................................................... T ................. 16.4637 $1,048.64 $253.49 $209.73
0054 ........... Level II Hand Musculoskeletal Procedures ..................................................... T ................. 26.3105 $1,675.82 .................... $335.16
0055 ........... Level I Foot Musculoskeletal Procedures ....................................................... T ................. 20.8284 $1,326.64 $355.34 $265.33
0056 ........... Level II Foot Musculoskeletal Procedures ...................................................... T ................. 44.2687 $2,819.65 .................... $563.93
0057 ........... Bunion Procedures .......................................................................................... T ................. 29.4167 $1,873.67 $475.91 $374.73
0058 ........... Level I Strapping and Cast Application ........................................................... S ................. 1.0931 $69.62 .................... $13.92
0060 ........... Manipulation Therapy ...................................................................................... S ................. 0.4482 $28.55 .................... $5.71
0061 ........... Laminectomy, Laparoscopy, or Incision for Implantation of Neurostimulator S ................. 82.8597 $5,277.67 .................... $1,055.53
Electrodes, Excluding Cranial Nerve.
0062 ........... Level I Treatment Fracture/Dislocation ........................................................... T ................. 26.1592 $1,666.18 $372.87 $333.24
0063 ........... Level II Treatment Fracture/Dislocation .......................................................... T ................. 41.1091 $2,618.40 $548.33 $523.68
0064 ........... Level III Treatment Fracture/Dislocation ......................................................... T ................. 59.2233 $3,772.17 $835.79 $754.43
0065 ........... Level I Stereotactic Radiosurgery, MRgFUS, and MEG ................................. S ................. 16.5911 $1,056.75 .................... $211.35
0066 ........... Level II Stereotactic Radiosurgery, MRgFUS, and MEG ................................ S ................. 45.0693 $2,870.64 .................... $574.13
0067 ........... Level III Stereotactic Radiosurgery, MRgFUS, and MEG ............................... S ................. 61.6965 $3,929.70 .................... $785.94
0069 ........... Thoracoscopy .................................................................................................. T ................. 32.5666 $2,074.30 $591.64 $414.86
0070 ........... Thoracentesis/Lavage Procedures .................................................................. T ................. 5.2024 $331.36 .................... $66.27
0071 ........... Level I Endoscopy Upper Airway .................................................................... T ................. 0.8224 $52.38 $11.20 $10.48
0072 ........... Level II Endoscopy Upper Airway ................................................................... T ................. 1.6115 $102.64 $21.27 $20.53
0073 ........... Level III Endoscopy Upper Airway .................................................................. T ................. 3.9940 $254.39 $69.15 $50.88
0074 ........... Level IV Endoscopy Upper Airway .................................................................. T ................. 17.0160 $1,083.82 $292.25 $216.76
0075 ........... Level V Endoscopy Upper Airway ................................................................... T ................. 22.7191 $1,447.07 $445.92 $289.41
0076 ........... Level I Endoscopy Lower Airway .................................................................... T ................. 9.9575 $634.23 $189.82 $126.85
0077 ........... Level I Pulmonary Treatment .......................................................................... S ................. 0.3877 $24.69 $7.74 $4.94
0078 ........... Level II Pulmonary Treatment ......................................................................... S ................. 1.3362 $85.11 .................... $17.02
0079 ........... Ventilation Initiation and Management ............................................................ S ................. 2.4783 $157.85 .................... $31.57
0080 ........... Diagnostic Cardiac Catheterization ................................................................. T ................. 38.9204 $2,479.00 $838.92 $495.80
0082 ........... Coronary or Non-Coronary Atherectomy ......................................................... T ................. 87.5137 $5,574.10 .................... $1,114.82
0083 ........... Coronary or Non-Coronary Angioplasty and Percutaneous Valvuloplasty ..... T ................. 45.3845 $2,890.72 .................... $578.14
0084 ........... Level I Electrophysiologic Procedures ............................................................ S ................. 9.5834 $610.41 .................... $122.08
0085 ........... Level II Electrophysiologic Procedures ........................................................... T ................. 47.2949 $3,012.40 .................... $602.48
0086 ........... Level III Electrophysiologic Procedures .......................................................... T ................. 92.8564 $5,914.40 .................... $1,182.88
0088 ........... Thrombectomy ................................................................................................. T ................. 38.7673 $2,469.24 $655.22 $493.85
0089 ........... Insertion/Replacement of Permanent Pacemaker and Electrodes ................. T ................. 121.6508 $7,748.43 $1,682.28 $1,549.69
0090 ........... Insertion/Replacement of Pacemaker Pulse Generator .................................. T ................. 100.8341 $6,422.53 $1,612.80 $1,284.51
0091 ........... Level II Vascular Ligation ................................................................................ T ................. 42.6114 $2,714.09 .................... $542.82
0092 ........... Level I Vascular Ligation ................................................................................. T ................. 25.8410 $1,645.92 .................... $329.18
0093 ........... Vascular Reconstruction/Fistula Repair without Device .................................. T ................. 30.1294 $1,919.06 .................... $383.81
0094 ........... Level I Resuscitation and Cardioversion ......................................................... S ................. 2.4590 $156.62 $46.29 $31.32
0095 ........... Cardiac Rehabilitation ..................................................................................... S ................. 0.5685 $36.21 $13.86 $7.24
0096 ........... Non-Invasive Vascular Studies ....................................................................... S ................. 1.4689 $93.56 $37.42 $18.71
0097 ........... Cardiac and Ambulatory Blood Pressure Monitoring ...................................... X ................. 1.0015 $63.79 $23.79 $12.76
0099 ........... Electrocardiograms .......................................................................................... S ................. 0.3892 $24.79 .................... $4.96
0100 ........... Cardiac Stress Tests ....................................................................................... X ................. 2.5547 $162.72 $41.44 $32.54
0101 ........... Tilt Table Evaluation ........................................................................................ S ................. 4.1973 $267.34 $100.24 $53.47
0103 ........... Miscellaneous Vascular Procedures ............................................................... T ................. 14.6576 $933.60 .................... $186.72
0104 ........... Transcatheter Placement of Intracoronary Stents .......................................... T ................. 89.0159 $5,669.78 .................... $1,133.96
0105 ........... Repair/Revision/Removal of Pacemakers, AICDs, or Vascular Devices ........ T ................. 23.9802 $1,527.39 .................... $305.48
0106 ........... Insertion/Replacement of Pacemaker Leads and/or Electrodes ..................... T ................. 69.5217 $4,428.12 .................... $885.62
0107 ........... Insertion of Cardioverter-Defibrillator .............................................................. T ................. 333.8096 $21,261.67 .................... $4,252.33
0108 ........... Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads .................. T ................. 404.8543 $25,786.79 .................... $5,157.36
0109 ........... Removal/Repair of Implanted Devices ............................................................ T ................. 5.6614 $360.60 .................... $72.12
0110 ........... Transfusion ...................................................................................................... S ................. 3.3967 $216.35 .................... $43.27
0111 ........... Blood Product Exchange ................................................................................. S ................. 11.5058 $732.85 $198.40 $146.57
0112 ........... Apheresis and Stem Cell Procedures ............................................................. S ................. 30.6035 $1,949.26 $433.29 $389.85
0113 ........... Excision Lymphatic System ............................................................................. T ................. 22.9584 $1,462.31 .................... $292.46
0114 ........... Thyroid/Lymphadenectomy Procedures .......................................................... T ................. 44.3240 $2,823.17 .................... $564.63
0115 ........... Cannula/Access Device Procedures ............................................................... T ................. 29.6965 $1,891.49 .................... $378.30

National Minimum
Relative Payment
0121 ........... Level I Tube changes and Repositioning ........................................................ T ................. 3.2383 $206.26 $43.80 $41.25
0125 ........... Refilling of Infusion Pump ............................................................................... T ................. 2.3544 $149.96 .................... $29.99
0126 ........... Level I Urinary and Anal Procedures .............................................................. T ................. 1.0356 $65.96 $16.21 $13.19
0127 ........... Level IV Stereotactic Radiosurgery, MRgFUS, and MEG .............................. S ................. 126.4653 $8,055.08 .................... $1,611.02
0128 ........... Echocardiogram with Contrast ........................................................................ S ................. 8.4896 $540.74 $216.29 $108.15
0130 ........... Level I Laparoscopy ........................................................................................ T ................. 34.3958 $2,190.81 $659.53 $438.16
0131 ........... Level II Laparoscopy ....................................................................................... T ................. 45.5317 $2,900.10 $1,001.89 $580.02
0132 ........... Level III Laparoscopy ...................................................................................... T ................. 69.6652 $4,437.26 $1,239.22 $887.45
0133 ........... Level I Skin Repair .......................................................................................... T ................. 1.2792 $81.48 $25.67 $16.30
0134 ........... Level II Skin Repair ......................................................................................... T ................. 2.1051 $134.08 $42.24 $26.82
0135 ........... Level III Skin Repair ........................................................................................ T ................. 4.5263 $288.30 .................... $57.66
0136 ........... Level IV Skin Repair ........................................................................................ T ................. 15.0458 $958.33 .................... $191.67
0137 ........... Level V Skin Repair ......................................................................................... T ................. 20.2069 $1,287.06 .................... $257.41
0140 ........... Esophageal Dilation without Endoscopy ......................................................... T ................. 5.8431 $372.17 $91.40 $74.43
0141 ........... Level I Upper GI Procedures .......................................................................... T ................. 8.5030 $541.59 $143.38 $108.32
0142 ........... Small Intestine Endoscopy .............................................................................. T ................. 9.5292 $606.95 $152.78 $121.39
0143 ........... Lower GI Endoscopy ....................................................................................... T ................. 8.8486 $563.60 $186.06 $112.72
0146 ........... Level I Sigmoidoscopy and Anoscopy ............................................................ T ................. 5.0972 $324.66 .................... $64.93
0147 ........... Level II Sigmoidoscopy and Anoscopy ........................................................... T ................. 8.7031 $554.34 .................... $110.87
0148 ........... Level I Anal/Rectal Procedures ....................................................................... T ................. 4.7935 $305.32 .................... $61.06
0149 ........... Level III Anal/Rectal Procedures ..................................................................... T ................. 22.7451 $1,448.73 $293.06 $289.75
0150 ........... Level IV Anal/Rectal Procedures .................................................................... T ................. 30.1606 $1,921.05 $437.12 $384.21
0151 ........... Endoscopic Retrograde Cholangio-Pancreatography (ERCP) ........................ T ................. 20.9510 $1,334.45 .................... $266.89
0152 ........... Level I Percutaneous Abdominal and Biliary Procedures ............................... T ................. 28.6884 $1,827.28 .................... $365.46
0153 ........... Peritoneal and Abdominal Procedures ............................................................ T ................. 25.6947 $1,636.60 $397.95 $327.32
0154 ........... Hernia/Hydrocele Procedures ......................................................................... T ................. 30.6788 $1,954.06 $464.85 $390.81
0155 ........... Level II Anal/Rectal Procedures ...................................................................... T ................. 10.9132 $695.11 .................... $139.02
0156 ........... Level III Urinary and Anal Procedures ............................................................ T ................. 3.0469 $194.07 .................... $38.81
0157 ........... Colorectal Cancer Screening: Barium Enema ................................................ S ................. 2.0651 $131.53 .................... $26.31
0158 ........... Colorectal Cancer Screening: Colonoscopy ................................................... T ................. 7.8504 $500.02 .................... $125.01
0159 ........... Colorectal Cancer Screening: Flexible Sigmoidoscopy .................................. S ................. 4.7010 $299.43 .................... $74.86
0160 ........... Level I Cystourethroscopy and other Genitourinary Procedures .................... T ................. 5.9735 $380.48 .................... $76.10
0161 ........... Level II Cystourethroscopy and other Genitourinary Procedures ................... T ................. 17.9420 $1,142.80 $241.15 $228.56
0162 ........... Level III Cystourethroscopy and other Genitourinary Procedures .................. T ................. 24.7749 $1,578.01 .................... $315.60
0163 ........... Level IV Cystourethroscopy and other Genitourinary Procedures .................. T ................. 36.0774 $2,297.91 .................... $459.58
0164 ........... Level II Urinary and Anal Procedures ............................................................. T ................. 2.0077 $127.88 .................... $25.58
0165 ........... Level IV Urinary and Anal Procedures ............................................................ T ................. 19.3414 $1,231.93 .................... $246.39
0166 ........... Level I Urethral Procedures ............................................................................ T ................. 19.1505 $1,219.77 .................... $243.95
0168 ........... Level II Urethral Procedures ........................................................................... T ................. 29.7864 $1,897.21 $388.16 $379.44
0169 ........... Lithotripsy ........................................................................................................ T ................. 41.5299 $2,645.21 $997.74 $529.04
0170 ........... Dialysis ............................................................................................................ S ................. 6.5383 $416.45 .................... $83.29
0181 ........... Level II Male Genital Procedures .................................................................... T ................. 33.9306 $2,161.18 $621.82 $432.24
0183 ........... Level I Male Genital Procedures ..................................................................... T ................. 22.3251 $1,421.97 .................... $284.39
0184 ........... Prostate Biopsy ............................................................................................... T ................. 11.0338 $702.79 .................... $140.56
0188 ........... Level II Female Reproductive Proc ................................................................. T ................. 1.3520 $86.11 .................... $17.22
0189 ........... Level III Female Reproductive Proc ................................................................ T ................. 2.7584 $175.69 .................... $35.14
0190 ........... Level I Hysteroscopy ....................................................................................... T ................. 21.6576 $1,379.46 $424.28 $275.89
0191 ........... Level I Female Reproductive Proc .................................................................. T ................. 0.1309 $8.34 $2.36 $1.67
0192 ........... Level IV Female Reproductive Proc ............................................................... T ................. 6.0783 $387.15 .................... $77.43
0193 ........... Level V Female Reproductive Proc ................................................................ T ................. 19.0203 $1,211.48 .................... $242.30
0195 ........... Level VI Female Reproductive Procedures .................................................... T ................. 32.4237 $2,065.20 $483.80 $413.04
0202 ........... Level VII Female Reproductive Procedures ................................................... T ................. 42.7099 $2,720.36 $981.50 $544.07
0203 ........... Level IV Nerve Injections ................................................................................ T ................. 14.4879 $922.79 $240.33 $184.56
0204 ........... Level I Nerve Injections ................................................................................... T ................. 2.3213 $147.85 $40.13 $29.57
0206 ........... Level II Nerve Injections .................................................................................. T ................. 4.0964 $260.92 $56.01 $52.18
0207 ........... Level III Nerve Injections ................................................................................. T ................. 7.0546 $449.34 .................... $89.87
0208 ........... Laminotomies and Laminectomies .................................................................. T ................. 46.7724 $2,979.12 .................... $595.82
0209 ........... Level II Extended EEG and Sleep Studies ..................................................... S ................. 11.2822 $718.61 $268.73 $143.72
0212 ........... Nervous System Injections .............................................................................. T ................. 8.5263 $543.07 .................... $108.61
0213 ........... Level I Extended EEG and Sleep Studies ...................................................... S ................. 2.2980 $146.37 $53.58 $29.27
0215 ........... Level I Nerve and Muscle Tests ..................................................................... S ................. 0.5804 $36.97 .................... $7.39
0216 ........... Level III Nerve and Muscle Tests ................................................................... S ................. 2.6846 $170.99 .................... $34.20
0218 ........... Level II Nerve and Muscle Tests .................................................................... S ................. 1.1550 $73.57 .................... $14.71
0220 ........... Level I Nerve Procedures ................................................................................ T ................. 18.0518 $1,149.79 .................... $229.96
0221 ........... Level II Nerve Procedures ............................................................................... T ................. 33.2707 $2,119.14 $463.62 $423.83
0222 ........... Level II Implantation of Neurostimulator ......................................................... S ................. 240.7990 $15,337.45 .................... $3,067.49
0224 ........... Implantation of Catheter/Reservoir/Shunt ....................................................... T ................. 36.2768 $2,310.61 .................... $462.12
0225 ........... Implantation of Neurostimulator Electrodes, Cranial Nerve ............................ S ................. 220.7642 $14,061.35 .................... $2,812.27
0227 ........... Implantation of Drug Infusion Device .............................................................. T ................. 183.8928 $11,712.87 .................... $2,342.57
0229 ........... Transcatherter Placement of Intravascular Shunts ......................................... T ................. 88.5367 $5,639.26 .................... $1,127.85
0230 ........... Level I Eye Tests & Treatments ...................................................................... S ................. 0.5903 $37.60 .................... $7.52
0231 ........... Level III Eye Tests & Treatments .................................................................... S ................. 2.1790 $138.79 .................... $27.76
0232 ........... Level I Anterior Segment Eye Procedures ...................................................... T ................. 5.1169 $325.92 $81.65 $65.18
0233 ........... Level II Anterior Segment Eye Procedures ..................................................... T ................. 16.1710 $1,030.00 $266.33 $206.00
0234 ........... Level III Anterior Segment Eye Procedures .................................................... T ................. 23.1758 $1,476.16 $511.31 $295.23
0235 ........... Level I Posterior Segment Eye Procedures .................................................... T ................. 4.1331 $263.25 $58.93 $52.65
0236 ........... Level II Posterior Segment Eye Procedures ................................................... T ................. 18.2350 $1,161.46 .................... $232.29
0237 ........... Level III Posterior Segment Eye Procedures .................................................. T ................. 27.8450 $1,773.56 .................... $354.71
0238 ........... Level I Repair and Plastic Eye Procedures .................................................... T ................. 2.9022 $184.85 .................... $36.97
0239 ........... Level II Repair and Plastic Eye Procedures ................................................... T ................. 7.2847 $463.99 .................... $92.80

National Minimum
Relative Payment
0240 ........... Level III Repair and Plastic Eye Procedures .................................................. T ................. 18.7307 $1,193.03 $309.52 $238.61
0241 ........... Level IV Repair and Plastic Eye Procedures .................................................. T ................. 24.3077 $1,548.25 $383.45 $309.65
0242 ........... Level V Repair and Plastic Eye Procedures ................................................... T ................. 37.7243 $2,402.81 $597.36 $480.56
0243 ........... Strabismus/Muscle Procedures ....................................................................... T ................. 24.1291 $1,536.88 $430.35 $307.38
0244 ........... Corneal and Amniotic Membrane Transplant .................................................. T ................. 37.4896 $2,387.86 $803.26 $477.57
0245 ........... Level I Cataract Procedures without IOL Insert .............................................. T ................. 14.9171 $950.13 $217.05 $190.03
0246 ........... Cataract Procedures with IOL Insert ............................................................... T ................. 23.8649 $1,520.05 $495.96 $304.01
0247 ........... Laser Eye Procedures ..................................................................................... T ................. 5.2001 $331.22 $104.31 $66.24
0249 ........... Level II Cataract Procedures without IOL Insert ............................................. T ................. 28.7035 $1,828.24 $524.67 $365.65
0250 ........... Nasal Cauterization/Packing ........................................................................... T ................. 1.1251 $71.66 $25.10 $14.33
0251 ........... Level I ENT Procedures .................................................................................. T ................. 2.5002 $159.25 .................... $31.85
0252 ........... Level II ENT Procedures ................................................................................. T ................. 7.4474 $474.35 $109.16 $94.87
0253 ........... Level III ENT Procedures ................................................................................ T ................. 16.3288 $1,040.05 $282.29 $208.01
0254 ........... Level IV ENT Procedures ................................................................................ T ................. 23.9765 $1,527.16 $321.35 $305.43
0256 ........... Level V ENT Procedures ................................................................................. T ................. 39.8776 $2,539.96 .................... $507.99
0258 ........... Tonsil and Adenoid Procedures ...................................................................... T ................. 22.2557 $1,417.55 $437.25 $283.51
0259 ........... Level VI ENT Procedures ................................................................................ T ................. 393.2242 $25,046.02 $8,543.66 $5,009.20
0260 ........... Level I Plain Film Except Teeth ...................................................................... X ................. 0.6954 $44.29 .................... $8.86
0261 ........... Level II Plain Film Except Teeth Including Bone Density Measurement ........ X ................. 1.1570 $73.69 .................... $14.74
0262 ........... Plain Film of Teeth .......................................................................................... X ................. 0.5749 $36.62 .................... $7.32
0263 ........... Level I Miscellaneous Radiology Procedures ................................................. X ................. 2.6838 $170.94 .................... $34.19
0265 ........... Level I Diagnostic and Screening Ultrasound ................................................. S ................. 0.9570 $60.96 $22.35 $12.19
0266 ........... Level II Diagnostic and Screening Ultrasound ................................................ S ................. 1.5094 $96.14 $37.80 $19.23
0267 ........... Level III Diagnostic and Screening Ultrasound ............................................... S ................. 2.3792 $151.54 $60.50 $30.31
0269 ........... Level II Echocardiogram Without Contrast Except Transesophageal ............ S ................. 6.3751 $406.06 .................... $81.21
0270 ........... Transesophageal Echocardiogram Without Contrast ..................................... S ................. 8.2165 $523.34 $141.32 $104.67
0272 ........... Fluoroscopy ..................................................................................................... X ................. 1.3271 $84.53 $31.64 $16.91
0274 ........... Myelography .................................................................................................... S ................. 7.5589 $481.46 .................... $96.29
0275 ........... Arthrography .................................................................................................... S ................. 4.0031 $254.97 $69.09 $50.99
0276 ........... Level I Digestive Radiology ............................................................................. S ................. 1.3834 $88.11 $34.97 $17.62
0277 ........... Level II Digestive Radiology ............................................................................ S ................. 2.2222 $141.54 $54.52 $28.31
0278 ........... Diagnostic Urography ...................................................................................... S ................. 2.6121 $166.38 $59.40 $33.28
0279 ........... Level II Angiography and Venography ............................................................ S ................. 28.8788 $1,839.41 .................... $367.88
0280 ........... Level III Angiography and Venography ........................................................... S ................. 44.7114 $2,847.85 .................... $569.57
0282 ........... Miscellaneous Computed Axial Tomography .................................................. S ................. 1.5839 $100.88 $37.81 $20.18
0283 ........... Computed Tomography with Contrast ............................................................ S ................. 4.3564 $277.48 $100.37 $55.50
0284 ........... Magnetic Resonance Imaging and Magnetic Resonance Angiography with S ................. 6.2350 $397.13 $148.40 $79.43
Contrast.
0288 ........... Bone Density:Axial Skeleton ........................................................................... S ................. 1.1384 $72.51 $28.90 $14.50
0293 ........... Level V Anterior Segment Eye Procedures .................................................... T ................. 84.8039 $5,401.50 $1,128.29 $1,080.30
0299 ........... Hyperthermia and Radiation Treatment Procedures ....................................... S ................. 5.7996 $369.40 .................... $73.88
0300 ........... Level I Radiation Therapy ............................................................................... S ................. 1.4229 $90.63 .................... $18.13
0301 ........... Level II Radiation Therapy .............................................................................. S ................. 2.2167 $141.19 .................... $28.24
0303 ........... Treatment Device Construction ....................................................................... X ................. 2.8878 $183.94 $66.95 $36.79
0304 ........... Level I Therapeutic Radiation Treatment Preparation .................................... X ................. 1.5576 $99.21 $38.68 $19.84
0305 ........... Level II Therapeutic Radiation Treatment Preparation ................................... X ................. 3.9276 $250.16 $91.38 $50.03
0307 ........... Myocardial Positron Emission Tomography (PET) imaging ............................ S ................. 21.9955 $1,400.98 $292.49 $280.20
0308 ........... Non-Myocardial Positron Emission Tomography (PET) imaging .................... S ................. 16.6001 $1,057.33 .................... $211.47
0310 ........... Level III Therapeutic Radiation Treatment Preparation .................................. X ................. 13.5621 $863.82 $325.27 $172.76
0312 ........... Radioelement Applications .............................................................................. S ................. 8.5140 $542.29 .................... $108.46
0313 ........... Brachytherapy .................................................................................................. S ................. 11.6779 $743.81 .................... $148.76
0315 ........... Level III Implantation of Neurostimulator ........................................................ S ................. 270.0190 $17,198.59 .................... $3,439.72
0317 ........... Level II Miscellaneous Radiology Procedures ................................................ X ................. 5.3623 $341.55 $77.89 $68.31
0320 ........... Electroconvulsive Therapy .............................................................................. S ................. 5.7299 $364.96 $80.06 $72.99
0322 ........... Brief Individual Psychotherapy ........................................................................ S ................. 1.1729 $74.71 .................... $14.94
0323 ........... Extended Individual Psychotherapy ................................................................ S ................. 1.6044 $102.19 .................... $20.44
0324 ........... Family Psychotherapy ..................................................................................... S ................. 2.3616 $150.42 .................... $30.08
0325 ........... Group Psychotherapy ...................................................................................... S ................. 0.9913 $63.14 $13.81 $12.63
0330 ........... Dental Procedures ........................................................................................... S ................. 9.1677 $583.93 .................... $116.79
0332 ........... Computed Tomography without Contrast ....................................................... S ................. 3.0109 $191.78 $75.24 $38.36
0333 ........... Computed Tomography without Contrast followed by Contrast) .................... S ................. 5.1125 $325.64 $119.01 $65.13
0335 ........... Magnetic Resonance Imaging, Miscellaneous ................................................ S ................. 4.8830 $311.02 $111.92 $62.20
0336 ........... Magnetic Resonance Imaging and Magnetic Resonance Angiography with- S ................. 5.3933 $343.52 $137.40 $68.70
out Contrast.
0337 ........... Magnetic Resonance Imaging and Magnetic Resonance Angiography with- S ................. 8.2463 $525.24 $199.53 $105.05
out Contrast followed by Contrast.
0340 ........... Minor Ancillary Procedures ............................................................................. X ................. 0.6310 $40.19 .................... $8.04
0341 ........... Skin Tests ........................................................................................................ X ................. 0.0844 $5.38 $2.14 $1.08
0342 ........... Level I Pathology ............................................................................................. X ................. 0.0969 $6.17 $2.02 $1.23
0343 ........... Level III Pathology ........................................................................................... X ................. 0.5142 $32.75 $10.84 $6.55
0344 ........... Level IV Pathology .......................................................................................... X ................. 0.8167 $52.02 $15.66 $10.40
0345 ........... Level I Transfusion Laboratory Procedures .................................................... X ................. 0.2140 $13.63 $2.87 $2.73
0346 ........... Level II Transfusion Laboratory Procedures ................................................... X ................. 0.3346 $21.31 $4.37 $4.26
0347 ........... Level III Transfusion Laboratory Procedures .................................................. X ................. 0.7739 $49.29 $11.28 $9.86
0350 ........... Administration of flu and PPV vaccine ............................................................ S ................. 0.3945 $25.13 .................... $0.00
0360 ........... Level I Alimentary Tests .................................................................................. X ................. 1.5330 $97.64 $33.88 $19.53
0361 ........... Level II Alimentary Tests ................................................................................. X ................. 3.9276 $250.16 $83.23 $50.03
0363 ........... Level I Otorhinolaryngologic Function Tests ................................................... X ................. 0.8067 $51.38 $17.10 $10.28
0364 ........... Level I Audiometry ........................................................................................... X ................. 0.4490 $28.60 $7.06 $5.72
0365 ........... Level II Audiometry .......................................................................................... X ................. 1.2549 $79.93 $18.52 $15.99

National Minimum
Relative Payment
0366 ........... Level III Audiometry ......................................................................................... X ................. 1.7624 $112.25 $25.79 $22.45
0367 ........... Level I Pulmonary Test ................................................................................... X ................. 0.5677 $36.16 $13.76 $7.23
0368 ........... Level II Pulmonary Tests ................................................................................. X ................. 0.9253 $58.94 $22.77 $11.79
0369 ........... Level III Pulmonary Tests ................................................................................ X ................. 2.7550 $175.48 $44.18 $35.10
0370 ........... Allergy Tests .................................................................................................... X ................. 1.0430 $66.43 .................... $13.29
0373 ........... Level I Neuropsychological Testing ................................................................ X ................. 1.2448 $79.29 .................... $15.86
0375 ........... Ancillary Outpatient Services When Patient Expires ...................................... S ................. 78.5966 $5,006.13 .................... $1,001.23
0377 ........... Level II Cardiac Imaging ................................................................................. S ................. 11.8512 $754.85 $158.84 $150.97
0378 ........... Level II Pulmonary Imaging ............................................................................. S ................. 4.9509 $315.34 $125.33 $63.07
0379 ........... Injection adenosine 6 MG ............................................................................... K ................. .................... $25.10 .................... $5.02
0381 ........... Single Allergy Tests ......................................................................................... X ................. 0.2773 $17.66 .................... $3.53
0382 ........... Level II Neuropsychological Testing ............................................................... X ................. 2.6169 $166.68 .................... $33.34
0383 ........... Cardiac Computed Tomographic Imaging ...................................................... S ................. 4.7005 $299.39 $117.06 $59.88
0384 ........... GI Procedures with Stents .............................................................................. T ................. 24.9814 $1,591.17 .................... $318.23
0385 ........... Level I Prosthetic Urological Procedures ........................................................ S ................. 83.6366 $5,327.15 .................... $1,065.43
0386 ........... Level II Prosthetic Urological Procedures ....................................................... S ................. 144.1246 $9,179.87 .................... $1,835.97
0387 ........... Level II Hysteroscopy ...................................................................................... T ................. 34.2048 $2,178.64 $655.55 $435.73
0388 ........... Discography ..................................................................................................... S ................. 20.1823 $1,285.49 $289.72 $257.10
0389 ........... Level I Non-imaging Nuclear Medicine ........................................................... S ................. 1.8190 $115.86 $33.81 $23.17
0390 ........... Level I Endocrine Imaging ............................................................................... S ................. 2.0471 $130.39 $52.15 $26.08
0391 ........... Level II Endocrine Imaging .............................................................................. S ................. 3.4513 $219.83 $66.18 $43.97
0392 ........... Level II Non-imaging Nuclear Medicine .......................................................... S ................. 2.9022 $184.85 $49.31 $36.97
0393 ........... Hematologic Processing & Studies ................................................................. S ................. 5.6921 $362.55 $82.04 $72.51
0394 ........... Hepatobiliary Imaging ...................................................................................... S ................. 4.4603 $284.09 $102.61 $56.82
0395 ........... GI Tract Imaging .............................................................................................. S ................. 3.7911 $241.47 $89.73 $48.29
0396 ........... Bone Imaging .................................................................................................. S ................. 3.8039 $242.29 $95.02 $48.46
0397 ........... Vascular Imaging ............................................................................................. S ................. 3.1433 $200.21 $49.58 $40.04
0398 ........... Level I Cardiac Imaging .................................................................................. S ................. 4.8620 $309.68 $100.06 $61.94
0400 ........... Hematopoietic Imaging .................................................................................... S ................. 3.9293 $250.27 $93.22 $50.05
0401 ........... Level I Pulmonary Imaging .............................................................................. S ................. 3.3954 $216.27 $78.19 $43.25
0402 ........... Level II Nervous System Imaging ................................................................... S ................. 8.8235 $562.00 $114.12 $112.40
0403 ........... Level I Nervous System Imaging .................................................................... S ................. 3.2295 $205.70 $79.87 $41.14
0404 ........... Renal and Genitourinary Studies .................................................................... S ................. 5.0824 $323.72 $84.11 $64.74
0406 ........... Level I Tumor/Infection Imaging ...................................................................... S ................. 5.0681 $322.81 $98.18 $64.56
0407 ........... Level I Radionuclide Therapy .......................................................................... S ................. 3.3020 $210.32 $78.13 $42.06
0408 ........... Level III Tumor/Infection Imaging .................................................................... S ................. 15.4033 $981.10 .................... $196.22
0409 ........... Red Blood Cell Tests ...................................................................................... X ................. 0.1190 $7.58 $2.20 $1.52
0412 ........... IMRT Treatment Delivery ................................................................................ S ................. 5.4582 $347.65 .................... $69.53
0413 ........... Level II Radionuclide Therapy ......................................................................... S ................. 5.2741 $335.93 .................... $67.19
0414 ........... Level II Tumor/Infection Imaging ..................................................................... S ................. 8.4176 $536.15 $214.44 $107.23
0415 ........... Level II Endoscopy Lower Airway ................................................................... T ................. 24.0654 $1,532.82 $459.92 $306.56
0418 ........... Insertion of Left Ventricular Pacing Elect ........................................................ T ................. 259.7486 $16,544.43 . $3,308.89
0422 ........... Level II Upper GI Procedures ......................................................................... T ................. 25.3233 $1,612.94 $448.81 $322.59
0423 ........... Level II Percutaneous Abdominal and Biliary Procedures .............................. T ................. 42.9980 $2,738.71 .................... $547.74
0425 ........... Level II Arthroplasty with Prosthesis ............................................................... T ................. 122.2057 $7,783.77 .................... $1,556.75
0426 ........... Level II Strapping and Cast Application .......................................................... S ................. 2.2910 $145.92 .................... $29.18
0427 ........... Level II Tube Changes and Repositioning ...................................................... T ................. 15.3545 $977.99 .................... $195.60
0428 ........... Level III Sigmoidoscopy and Anoscopy .......................................................... T ................. 21.4632 $1,367.08 .................... $273.42
0429 ........... Level V Cystourethroscopy and other Genitourinary Procedures ................... T ................. 45.2042 $2,879.24 .................... $575.85
0430 ........... Drug Preadministration-Related Services ....................................................... S ................. 0.5921 $37.71 .................... $7.54
0432 ........... Health and Behavior Services ......................................................................... S ................. 0.3128 $19.92 .................... $3.98
0433 ........... Level II Pathology ............................................................................................ X ................. 0.2397 $15.27 $5.17 $3.05
0434 ........... Cardiac Defect Repair ..................................................................................... T ................. 132.4129 $8,433.91 .................... $1,686.78
0436 ........... Level I Drug Administration ............................................................................. S ................. 0.2545 $16.21 .................... $3.24
0437 ........... Level II Drug Administration ............................................................................ S ................. 0.3945 $25.13 .................... $5.03
0438 ........... Level III Drug Administration ........................................................................... S ................. 0.8041 $51.22 .................... $10.24
0439 ........... Level IV Drug Administration ........................................................................... S ................. 1.6544 $105.38 .................... $21.08
0440 ........... Level V Drug Administration ............................................................................ S ................. 1.7998 $114.64 .................... $22.93
0441 ........... Level VI Drug Administration ........................................................................... S ................. 2.3446 $149.34 .................... $29.87
0442 ........... Dosimetric Drug Administration ....................................................................... S ................. 27.4298 $1,747.11 .................... $349.42
0604 ........... Level 1 Hospital Clinic Visits ........................................................................... V ................. 0.8388 $53.43 .................... $10.69
0609 ........... Level 1 Emergency Visits ................................................................................ V ................. 0.7970 $50.76 $12.70 $10.15
0617 ........... Critical Care ..................................................................................................... S ................. 7.3166 $466.02 $111.59 $93.20
0618 ........... Trauma Response with Critical Care .............................................................. S ................. 5.1854 $330.28 $132.11 $66.06
0621 ........... Level I Vascular Access Procedures .............................................................. T ................. 10.9092 $694.85 .................... $138.97
0622 ........... Level II Vascular Access Procedures ............................................................. T ................. 24.1069 $1,535.46 .................... $307.09
0623 ........... Level III Vascular Access Procedures ............................................................ T ................. 28.8743 $1,839.12 .................... $367.82
0624 ........... Phlebotomy and Minor Vascular Access Device Procedures ......................... X ................. 0.5689 $36.24 $12.65 $7.25
0625 ........... Level IV Vascular Access Procedures ............................................................ T ................. 81.7482 $5,206.87 .................... $1,041.37
0648 ........... Level IV Breast Surgery .................................................................................. T ................. 56.5774 $3,603.64 .................... $720.73
0651 ........... Complex Interstitial Radiation Source Application .......................................... S ................. 18.1228 $1,154.31 .................... $230.86
0652 ........... Insertion of Intraperitoneal and Pleural Catheters .......................................... T ................. 30.7096 $1,956.02 .................... $391.20

National Minimum
Relative Payment
0653 ........... Vascular Reconstruction/Fistula Repair with Device ....................................... T ................. 40.4667 $2,577.49 .................... $515.50
0654 ........... Insertion/Replacement of a permanent dual chamber pacemaker ................. T ................. 109.2851 $6,960.81 .................... $1,392.16
0655 ........... Insertion/Replacement/Conversion of a permanent dual chamber pace- T ................. 140.0317 $8,919.18 .................... $1,783.84
maker.
0656 ........... Transcatheter Placement of Intracoronary Drug-Eluting Stents ..................... T ................. 118.4265 $7,543.06 .................... $1,508.61
0659 ........... Hyperbaric Oxygen .......................................................................................... S ................. 1.5579 $99.23 .................... $19.85
0660 ........... Level II Otorhinolaryngologic Function Tests .................................................. X ................. 1.4312 $91.16 $28.06 $18.23
0661 ........... Level V Pathology ........................................................................................... X ................. 2.6949 $171.65 $62.09 $34.33
0662 ........... CT Angiography ............................................................................................... S ................. 5.1641 $328.92 $118.88 $65.78
0663 ........... Level I Electronic Analysis of Devices ............................................................ S ................. 1.5313 $97.53 .................... $19.51
0664 ........... Level I Proton Beam Radiation Therapy ......................................................... S ................. 12.8205 $816.59 .................... $163.32
0665 ........... Bone Density:AppendicularSkeleton ............................................................... S ................. 0.5087 $32.40 $12.95 $6.48
0667 ........... Level II Proton Beam Radiation Therapy ........................................................ S ................. 15.3404 $977.09 .................... $195.42
0668 ........... Level I Angiography and Venography ............................................................. S ................. 9.3506 $595.58 .................... $119.12
0672 ........... Level IV Posterior Segment Eye Procedures .................................................. T ................. 37.2078 $2,369.91 .................... $473.98
0673 ........... Level IV Anterior Segment Eye Procedures ................................................... T ................. 39.7101 $2,529.30 $649.56 $505.86
0674 ........... Prostate Cryoablation ...................................................................................... T ................. 122.7133 $7,816.10 .................... $1,563.22
0676 ........... Thrombolysis and Thrombectomy ................................................................... T ................. 2.4824 $158.11 .................... $31.62
0678 ........... External Counterpulsation ............................................................................... T ................. 1.7187 $109.47 .................... $21.89
0679 ........... Level II Resuscitation and Cardioversion ........................................................ S ................. 5.4502 $347.15 $95.30 $69.43
0680 ........... Insertion of Patient Activated Event Recorders .............................................. S ................. 70.6073 $4,497.26 .................... $899.45
0681 ........... Knee Arthroplasty ............................................................................................ T ................. 274.6715 $17,494.93 .................... $3,498.99
0682 ........... Level V Debridement & Destruction ................................................................ T ................. 6.8816 $438.32 $158.65 $87.66
0683 ........... Level II Photochemotherapy ............................................................................ S ................. 2.6045 $165.89 .................... $33.18
0685 ........... Level III Needle Biopsy/Aspiration Except Bone Marrow ................................ T ................. 9.3354 $594.61 .................... $118.92
0687 ........... Revision/Removal of Neurostimulator Electrodes ........................................... T ................. 22.4734 $1,431.42 $438.47 $286.28
0688 ........... Revision/Removal of Neurostimulator Pulse Generator Receiver .................. T ................. 34.4166 $2,192.13 $874.57 $438.43
0689 ........... Electronic Analysis of Cardioverter-defibrillators ............................................. S ................. 0.5946 $37.87 .................... $7.57
0690 ........... Electronic Analysis of Pacemakers and other Cardiac Devices ..................... S ................. 0.3504 $22.32 $8.67 $4.46
0691 ........... Level III Electronic Analysis of Devices .......................................................... S ................. 2.3269 $148.21 $50.49 $29.64
0692 ........... Level II Electronic Analysis of Devices ........................................................... S ................. 1.8376 $117.04 $29.72 $23.41
0694 ........... Mohs Surgery .................................................................................................. T ................. 3.6321 $231.34 $91.69 $46.27
0697 ........... Level I Echocardiogram Without Contrast Except Transesophageal ............. S ................. 3.3401 $212.74 .................... $42.55
0698 ........... Level II Eye Tests & Treatments ..................................................................... S ................. 0.8696 $55.39 .................... $11.08
0699 ........... Level IV Eye Tests & Treatments ................................................................... T ................. 13.7453 $875.49 .................... $175.10
0701 ........... Sr89 strontium ................................................................................................. K ................. 9.6094 $612.06 .................... $122.41
0702 ........... Sm 153 lexidronm ........................................................................................... K ................. 21.3689 $1,361.07 .................... $272.21
0726 ........... Dexrazoxane HCl injection .............................................................................. K ................. .................... $162.11 .................... $32.42
0728 ........... Filgrastim 300 mcg injection ............................................................................ K ................. .................... $193.79 .................... $38.76
0730 ........... Pamidronate disodium ..................................................................................... K ................. .................... $28.31 .................... $5.66
0731 ........... Sargramostim injection .................................................................................... K ................. .................... $24.86 .................... $4.97
0732 ........... Mesna injection ................................................................................................ K ................. .................... $7.97 .................... $1.59
0735 ........... Ampho b cholesteryl sulfate ............................................................................ K ................. .................... $11.89 .................... $2.38
0736 ........... Amphotericin b liposome inj ............................................................................ K ................. .................... $16.21 .................... $3.24
0738 ........... Rasburicase ..................................................................................................... K ................. .................... $144.43 .................... $28.89
0747 ........... Chlorothiazide sodium inj ................................................................................ K ................. .................... $141.07 .................... $28.21
0748 ........... Bleomycin sulfate injection .............................................................................. K ................. .................... $42.93 .................... $8.59
0750 ........... Dolasetron mesylate ........................................................................................ K ................. .................... $4.66 .................... $0.93
0751 ........... Mechlorethamine hcl inj ................................................................................... K ................. .................... $143.08 .................... $28.62
0752 ........... Dactinomycin actinomycin d ............................................................................ K ................. .................... $488.78 .................... $97.76
0759 ........... Naltrexone, depot form .................................................................................... K ................. .................... $1.87 .................... $0.37
0760 ........... Anadulafungin injection ................................................................................... G ................ .................... $1.91 .................... $0.38
0763 ........... Dolasetron mesylate oral ................................................................................. K ................. .................... $43.77 .................... $8.75
0764 ........... Granisetron HCl injection ................................................................................ K ................. .................... $5.74 .................... $1.15
0765 ........... Granisetron HCl 1 mg oral .............................................................................. K ................. .................... $49.96 .................... $9.99
0767 ........... Enfuvirtide injection ......................................................................................... K ................. .................... $0.40 .................... $0.08
0768 ........... Ondansetron hcl injection ................................................................................ K ................. .................... $0.26 .................... $0.06
0769 ........... Ondansetron HCl 8mg oral ............................................................................. K ................. .................... $18.37 .................... $3.67
0800 ........... Leuprolide acetate ........................................................................................... K ................. .................... $452.58 .................... $90.52
0802 ........... Etoposide oral .................................................................................................. K ................. .................... $29.46 .................... $5.89
0804 ........... Vivaglobin, inj .................................................................................................. K ................. .................... $7.01 .................... $1.40
0805 ........... Mecasermin injection ....................................................................................... K ................. .................... $15.62 .................... $3.12
0806 ........... Hyaluronidase recombinant ............................................................................. G ................ .................... $0.40 .................... $0.08
0807 ........... Aldesleukin/single use vial .............................................................................. K ................. .................... $788.84 .................... $157.77
0808 ........... Nabilone oral ................................................................................................... K ................. .................... $16.80 .................... $3.36
0809 ........... Bcg live intravesical vac .................................................................................. K ................. .................... $113.75 .................... $22.75
0810 ........... Goserelin acetate implant ................................................................................ K ................. .................... $192.29 .................... $38.46
0811 ........... Carboplatin injection ........................................................................................ K ................. .................... $7.44 .................... $1.49
0812 ........... Carmus bischl nitro inj ..................................................................................... K ................. .................... $152.24 .................... $30.45
0814 ........... Asparaginase injection .................................................................................... K ................. .................... $54.26 .................... $10.85
0820 ........... Daunorubicin .................................................................................................... K ................. .................... $19.33 .................... $3.87
0821 ........... Daunorubicin citrate liposom ........................................................................... K ................. .................... $55.23 .................... $11.05
0823 ........... Docetaxel ......................................................................................................... K ................. .................... $310.85 .................... $62.17

0825 ........... Nelarabine injection ......................................................................................... G ................ .................... $86.84 .................... $17.37
0827 ........... Floxuridine injection ......................................................................................... K ................. .................... $54.63 .................... $10.93
0828 ........... Gemcitabine HCl ............................................................................................. K ................. .................... $127.31 .................... $25.46
0830 ........... Irinotecan injection ........................................................................................... K ................. .................... $124.61 .................... $24.92
0831 ........... Ifosfomide injection .......................................................................................... K ................. .................... $38.13 .................... $7.63
0832 ........... Idarubicin hcl injection ..................................................................................... K ................. .................... $302.42 .................... $60.48
0834 ........... Interferon alfa-2a inj ........................................................................................ K ................. .................... $41.37 .................... $8.27

National Minimum
Relative Payment
0835 ........... Inj cosyntropin ................................................................................................. K ................. .................... $64.01 .................... $12.80
0836 ........... Interferon alfa-2b inj ........................................................................................ K ................. .................... $13.92 .................... $2.78
0838 ........... Interferon gamma 1-b inj ................................................................................. K ................. .................... $306.66 .................... $61.33
0840 ........... Inj melphalan hydrochl .................................................................................... K ................. .................... $1,548.88 .................... $309.78
0842 ........... Fludarabine phosphate inj ............................................................................... K ................. .................... $226.67 .................... $45.33
0843 ........... Pegaspargase/singl dose vial .......................................................................... K ................. .................... $2,080.19 .................... $416.04
0844 ........... Pentostatin injection ........................................................................................ K ................. .................... $2,051.68 .................... $410.34
0849 ........... Rituximab cancer treatment ............................................................................ K ................. .................... $504.40 .................... $100.88
0850 ........... Streptozocin injection ...................................................................................... K ................. .................... $146.93 .................... $29.39
0851 ........... Thiotepa injection ............................................................................................ K ................. .................... $41.12 .................... $8.22
0852 ........... Topotecan ........................................................................................................ K ................. .................... $859.62 .................... $171.92
0855 ........... Vinorelbine tartrate .......................................................................................... K ................. .................... $21.41 .................... $4.28
0856 ........... Porfimer sodium .............................................................................................. K ................. .................... $2,532.53 .................... $506.51
0858 ........... Inj cladribine .................................................................................................... K ................. .................... $32.04 .................... $6.41
0861 ........... Leuprolide acetate injeciton ............................................................................. K ................. .................... $7.98 .................... $1.60
0862 ........... Mitomycin 5 MG inj .......................................................................................... K ................. .................... $14.39 .................... $2.88
0863 ........... Paclitaxel injection ........................................................................................... K ................. .................... $14.57 .................... $2.91
0864 ........... Mitoxantrone hydrochl ..................................................................................... K ................. .................... $107.96 .................... $21.59
0865 ........... Interferon alfa-n3 inj ........................................................................................ K ................. .................... $9.03 .................... $1.81
0868 ........... Oral aprepitant ................................................................................................. K ................. .................... $4.99 .................... $1.00
0873 ........... Hyalgan/supartz inj per dose ........................................................................... K ................. .................... $101.81 .................... $20.36
0874 ........... Synvisc inj per dose ........................................................................................ K ................. .................... $178.11 .................... $35.62
0875 ........... Euflexxa inj per dose ....................................................................................... K ................. .................... $110.95 .................... $22.19
0877 ........... Orthovisc inj per dose ..................................................................................... K ................. .................... $174.50 .................... $34.90
0878 ........... Gallium nitrate injection ................................................................................... K ................. .................... $1.61 .................... $0.32
0880 ........... Pentastarch 10% solution ................................................................................ K ................. .................... $21.98 .................... $4.40
0882 ........... Melphalan oral ................................................................................................. K ................. .................... $4.14 .................... $0.83
0883 ........... Fondaparinux sodium ...................................................................................... K ................. .................... $5.92 .................... $1.18
0884 ........... Rho d immune globulin inj ............................................................................... K ................. .................... $80.79 .................... $16.16
0887 ........... Azathioprine parenteral ................................................................................... K ................. .................... $47.88 .................... $9.58
0888 ........... Cyclosporine oral ............................................................................................. K ................. .................... $3.52 .................... $0.70
0890 ........... Lymphocyte immune globulin .......................................................................... K ................. .................... $336.10 .................... $67.22
0891 ........... Tacrolimus oral ................................................................................................ K ................. .................... $3.69 .................... $0.74
0898 ........... Gamma globulin 2 CC inj ................................................................................ K ................. .................... $23.82 .................... $4.76
0900 ........... Alglucerase injection ........................................................................................ K ................. .................... $38.85 .................... $7.77
0901 ........... Alpha 1 proteinase inhibitor ............................................................................. K ................. .................... $3.28 .................... $0.66
0902 ........... Botulinum toxin a per unit ............................................................................... K ................. .................... $5.21 .................... $1.04
0903 ........... Cytomegalovirus imm IV /vial .......................................................................... K ................. .................... $870.53 .................... $174.11
0906 ........... RSV-ivig ........................................................................................................... K ................. .................... $16.02 .................... $3.20
0910 ........... Interferon beta-1b / .25 MG ............................................................................. K ................. .................... $106.57 .................... $21.31
0911 ........... Inj streptokinase /250000 IU ........................................................................... K ................. .................... $129.75 .................... $25.95
0912 ........... Interferon alfacon-1 ......................................................................................... K ................. .................... $4.62 .................... $0.92
0913 ........... Ganciclovir long act implant ............................................................................ K ................. .................... $4,707.90 .................... $941.58
0916 ........... Injection imiglucerase /unit .............................................................................. K ................. .................... $3.89 .................... $0.78
0917 ........... Adenosine injection ......................................................................................... K ................. .................... $67.89 .................... $13.58
0924 ........... Gamma globulin 10 CC inj .............................................................................. K ................. .................... $119.09 .................... $23.82
0925 ........... Factor viii ......................................................................................................... K ................. .................... $0.75 .................... $0.15
0927 ........... Factor viii recombinant .................................................................................... K ................. .................... $1.07 .................... $0.21
0928 ........... Factor ix complex ............................................................................................ K ................. .................... $0.80 .................... $0.16
0929 ........... Anti-inhibitor ..................................................................................................... K ................. .................... $1.42 .................... $0.28
0930 ........... Antithrombin iii injection ................................................................................... K ................. .................... $1.82 .................... $0.36
0931 ........... Factor IX non-recombinant .............................................................................. K ................. .................... $0.89 .................... $0.18
0932 ........... Factor IX recombinant ..................................................................................... K ................. .................... $0.99 .................... $0.20
0933 ........... Gamma globulin ≤ 10 CC inj ........................................................................... K ................. .................... $119.09 .................... $23.82
0934 ........... Capecitabine, oral ............................................................................................ K ................. .................... $14.19 .................... $2.84
0935 ........... Clonidine hydrochloride ................................................................................... K ................. .................... $62.78 .................... $12.56
0941 ........... Mitomycin 20 MG inj ........................................................................................ K ................. .................... $57.56 .................... $11.51
0942 ........... Mitomycin 40 MG inj ........................................................................................ K ................. .................... $115.11 .................... $23.02
0943 ........... Octagam injection ............................................................................................ K ................. .................... $33.19 .................... $6.64
0944 ........... Gammagard liquid injection ............................................................................. K ................. .................... $31.06 .................... $6.21
0945 ........... Rhophylac injection ......................................................................................... K ................. .................... $5.29 .................... $1.06
0946 ........... HepaGam B IM injection ................................................................................. K ................. .................... $63.51 .................... $12.70
0947 ........... Flebogamma injection ..................................................................................... K ................. .................... $32.27 .................... $6.45
0948 ........... Gamunex injection ........................................................................................... K ................. .................... $32.06 .................... $6.41
0949 ........... Frozen plasma, pooled, sd .............................................................................. K ................. 1.1598 $73.87 .................... $14.77
0950 ........... Whole blood for transfusion ............................................................................ K ................. 4.0011 $254.85 .................... $50.97
0951 ........... Reclast injection .............................................................................................. G ................ .................... $220.81 .................... $44.16
0952 ........... Cryoprecipitate each unit ................................................................................. K ................. 0.6474 $41.24 .................... $8.25
0954 ........... RBC leukocytes reduced ................................................................................. K ................. 2.9069 $185.15 .................... $37.03
0955 ........... Plasma, frz between 8-24hour ........................................................................ K ................. 1.2235 $77.93 .................... $15.59
0956 ........... Plasma protein fract,5%,50ml ......................................................................... K ................. 1.4739 $93.88 .................... $18.78
0957 ........... Platelets, each unit .......................................................................................... K ................. 1.0911 $69.50 .................... $13.90
0958 ........... Plaelet rich plasma unit ................................................................................... K ................. 5.7070 $363.50 .................... $72.70

National Minimum
Relative Payment
0959 ........... Red blood cells unit ......................................................................................... K ................. 2.0356 $129.66 .................... $25.93
0960 ........... Washed red blood cells unit ............................................................................ K ................. 4.3494 $277.03 .................... $55.41
0961 ........... Albumin (human),5%, 50ml ............................................................................. K ................. 0.3413 $21.74 .................... $4.35
0963 ........... Albumin (human), 5%, 250 ml ......................................................................... K ................. 1.0987 $69.98 .................... $14.00
0964 ........... Albumin (human), 25%, 20 ml ......................................................................... K ................. 0.4118 $26.23 .................... $5.25
0965 ........... Albumin (human), 25%, 50ml .......................................................................... K ................. 1.1362 $72.37 .................... $14.47
0966 ........... Plasmaprotein fract,5%,250ml ......................................................................... K ................. 3.3792 $215.23 .................... $43.05
0967 ........... Blood split unit ................................................................................................. K ................. 2.3409 $149.10 .................... $29.82
0968 ........... Platelets leukoreduced irrad ............................................................................ K ................. 2.1971 $139.94 .................... $27.99
0969 ........... RBC leukoreduced irradiated .......................................................................... K ................. 3.7722 $240.27 .................... $48.05
0998 ........... Inj biperiden lactate/5 mg ................................................................................ K ................. .................... $88.15 .................... $17.63
0999 ........... Edetate calcium disodium inj ........................................................................... K ................. .................... $49.64 .................... $9.93
1009 ........... Cryoprecipitatereducedplasma ........................................................................ K ................. 1.3139 $83.69 .................... $16.74
1010 ........... Blood, l/r, cmv-neg .......................................................................................... K ................. 2.3221 $147.90 .................... $29.58
1011 ........... Platelets, hla-m, l/r, unit ................................................................................... K ................. 10.1413 $645.94 .................... $129.19
1013 ........... Platelets leukocytes reduced ........................................................................... K ................. 1.6879 $107.51 .................... $21.50
1015 ........... Injection glatiramer acetate ............................................................................. K ................. .................... $52.04 .................... $10.41
1016 ........... Blood, l/r, froz/degly/wash ............................................................................... K ................. 3.4353 $218.81 .................... $43.76
1017 ........... Plt, aph/pher, l/r, cmv-neg ............................................................................... K ................. 7.6733 $488.74 .................... $97.75
1018 ........... Blood, l/r, irradiated ......................................................................................... K ................. 2.3099 $147.13 .................... $29.43
1019 ........... Plate pheres leukoredu irrad ........................................................................... K ................. 9.8923 $630.08 .................... $126.02
1020 ........... Plt, pher, l/r cmv-neg, irr .................................................................................. K ................. 10.7787 $686.54 .................... $137.31
1021 ........... RBC, frz/deg/wsh, l/r, irrad .............................................................................. K ................. 5.8716 $373.99 .................... $74.80
1022 ........... RBC, l/r, cmv-neg, irrad ................................................................................... K ................. 4.1363 $263.46 .................... $52.69
1023 ........... Pralidoxime chloride inj ................................................................................... K ................. .................... $35.20 .................... $7.04
1032 ........... Aud osseo dev, int/ext comp ........................................................................... H ................. .................... .................... .................... .
1041 ........... Plicamycin (mithramycin) inj ............................................................................ K ................. .................... $172.41 .................... $34.48
1052 ........... Injection, voriconazole ..................................................................................... K ................. .................... $4.93 .................... $0.99
1064 ........... I131 iodide cap, rx ........................................................................................... K ................. 0.2393 $15.24 .................... $3.05
1083 ........... Adalimumab injection ...................................................................................... K ................. .................... $329.58 .................... $65.92
1084 ........... Denileukin diftitox ............................................................................................ K ................. .................... $1,386.59 .................... $277.32
1086 ........... Temozolomide ................................................................................................. K ................. .................... $7.49 .................... $1.50
1138 ........... Hepagam B intravenous, inj ............................................................................ K ................. .................... $63.51 .................... $12.70
1139 ........... Protein C concentrate ...................................................................................... K ................. .................... $12.08 .................... $2.42
1140 ........... Integra matrix tissue ........................................................................................ K ................. .................... $33.14 .................... $6.63
1141 ........... Primatrix tissue ................................................................................................ G ................ .................... $67.96 .................... $13.59
1142 ........... Supprelin LA implant ....................................................................................... K ................. .................... $14,700.00 .................... $2,940.00
1150 ........... I131 iodide sol, rx ............................................................................................ K ................. 0.1762 $11.22 .................... $2.24
1165 ........... Aripiprazole injection ....................................................................................... K ................. .................... $0.28 .................... $0.06
1166 ........... Cytarabine liposome ........................................................................................ K ................. .................... $412.21 .................... $82.44
1167 ........... Inj, epirubicin hcl .............................................................................................. K ................. .................... $19.79 .................... $3.96
1168 ........... Inj, temsirolimus ............................................................................................... G ................ .................... $48.41 .................... $9.68
1169 ........... Neurawrap nerve protector,cm ........................................................................ G ................ .................... $482.56 .................... $96.51
1178 ........... Busulfan injection ............................................................................................ K ................. .................... $9.17 .................... $1.83
1203 ........... Verteporfin injection ......................................................................................... K ................. .................... $8.99 .................... $1.80
1207 ........... Octreotide injection, depot ............................................................................... K ................. .................... $99.04 .................... $19.81
1280 ........... Corticotropin injection ...................................................................................... K ................. .................... $169.77 .................... $33.95
1436 ........... Etidronate disodium inj .................................................................................... K ................. .................... $70.73 .................... $14.15
1491 ........... New Technology—Level IA ($0–$10) ............................................................. S ................. .................... $5.00 .................... $1.00
1492 ........... New Technology—Level IB ($10–$20) ........................................................... S ................. .................... $15.00 .................... $3.00
1493 ........... New Technology—Level IC ($20–$30) ........................................................... S ................. .................... $25.00 .................... $5.00
1494 ........... New Technology—Level ID ($30–$40) ........................................................... S ................. .................... $35.00 .................... $7.00
1495 ........... New Technology—Level IE ($40–$50) ........................................................... S ................. .................... $45.00 .................... $9.00
1496 ........... New Technology—Level IA ($0–$10) ............................................................. T ................. .................... $5.00 .................... $1.00
1497 ........... New Technology—Level IB($10–$20) ............................................................. T ................. .................... $15.00 .................... $3.00
1498 ........... New Technology—Level IC ($20–$30) ........................................................... T ................. .................... $25.00 .................... $5.00
1499 ........... New Technology—Level ID($30–$40) ............................................................ T ................. .................... $35.00 .................... $7.00
1500 ........... New Technology—Level IE ($40–$50) ........................................................... T ................. .................... $45.00 .................... $9.00
1502 ........... New Technology—Level II ($50–$100) ........................................................... S ................. .................... $75.00 .................... $15.00
1503 ........... New Technology—Level III ($100–$200) ........................................................ S ................. .................... $150.00 .................... $30.00
1504 ........... New Technology—Level IV ($200–$300) ....................................................... S ................. .................... $250.00 .................... $50.00
1505 ........... New Technology—Level V ($300–$400) ........................................................ S ................. .................... $350.00 .................... $70.00
1506 ........... New Technology—Level VI ($400–$500) ....................................................... S ................. .................... $450.00 .................... $90.00
1507 ........... New Technology—Level VII ($500–$600) ...................................................... S ................. .................... $550.00 .................... $110.00
1508 ........... New Technology—Level VIII ($600–$700) ..................................................... S ................. .................... $650.00 .................... $130.00
1509 ........... New Technology—Level IX ($700–$800) ....................................................... S ................. .................... $750.00 .................... $150.00
1510 ........... New Technology—Level X ($800–$900) ........................................................ S ................. .................... $850.00 .................... $170.00
1511 ........... New Technology—Level XI ($900–$1000) ..................................................... S ................. .................... $950.00 .................... $190.00
1512 ........... New Technology—Level XII ($1000–$1100) .................................................. S ................. .................... $1,050.00 .................... $210.00
1513 ........... New Technology—Level XIII ($1100–$1200) ................................................. S ................. .................... $1,150.00 .................... $230.00
1514 ........... New Technology—Level XIV($1200–$1300) .................................................. S ................. .................... $1,250.00 .................... $250.00
1515 ........... New Technology—Level XV ($1300–$1400) .................................................. S ................. .................... $1,350.00 .................... $270.00
1516 ........... New Technology—Level XVI ($1400–$1500) ................................................. S ................. .................... $1,450.00 .................... $290.00
1517 ........... New Technology—Level XVII ($1500–$1600) ................................................ S ................. .................... $1,550.00 .................... $310.00
1518 ........... New Technology—Level XVIII ($1600–$1700) ............................................... S ................. .................... $1,650.00 .................... $330.00
1519 ........... New Technology—Level IXX ($1700–$1800) ................................................. S ................. .................... $1,750.00 .................... $350.00
1520 ........... New Technology—Level XX ($1800–$1900) .................................................. S ................. .................... $1,850.00 .................... $370.00
1521 ........... New Technology—Level XXI ($1900–$2000) ................................................. S ................. .................... $1,950.00 .................... $390.00
1522 ........... New Technology—Level XXII ($2000–$2500) ................................................ S ................. .................... $2,250.00 .................... $450.00
1523 ........... New Technology—Level XXIII ($2500–$3000) ............................................... S ................. .................... $2,750.00 .................... $550.00

National Minimum
Relative Payment
1524 ........... New Technology—Level XXIV ($3000–$3500) ............................................... S ................. .................... $3,250.00 .................... $650.00
1525 ........... New Technology—Level XXV ($3500–$4000) ................................................ S ................. .................... $3,750.00 .................... $750.00
1526 ........... New Technology—Level XXVI ($4000–$4500) ............................................... S ................. .................... $4,250.00 .................... $850.00
1527 ........... New Technology—Level XXVII ($4500–$5000) .............................................. S ................. .................... $4,750.00 .................... $950.00
1528 ........... New Technology—Level XXVIII ($5000–$5500) ............................................. S ................. .................... $5,250.00 .................... $1,050.00
1529 ........... New Technology—Level XXIX ($5500–$6000) ............................................... S ................. .................... $5,750.00 .................... $1,150.00
1530 ........... New Technology—Level XXX ($6000–$6500) ................................................ S ................. .................... $6,250.00 .................... $1,250.00
1531 ........... New Technology—Level XXXI ($6500–$7000) ............................................... S ................. .................... $6,750.00 .................... $1,350.00
1532 ........... New Technology—Level XXXII ($7000–$7500) .............................................. S ................. .................... $7,250.00 .................... $1,450.00
1533 ........... New Technology—Level XXXIII ($7500–$8000) ............................................. S ................. .................... $7,750.00 .................... $1,550.00
1534 ........... New Technology—Level XXXIV ($8000–$8500) ............................................ S ................. .................... $8,250.00 .................... $1,650.00
1535 ........... New Technology—Level XXXV ($8500–$9000) ............................................. S ................. .................... $8,750.00 .................... $1,750.00
1536 ........... New Technology—Level XXXVI ($9000–$9500) ............................................ S ................. .................... $9,250.00 .................... $1,850.00
1537 ........... New Technology—Level XXXVII ($9500–$10000) ......................................... S ................. .................... $9,750.00 .................... $1,950.00
1539 ........... New Technology—Level II ($50–$100) ........................................................... T ................. .................... $75.00 .................... $15.00
1540 ........... New Technology—Level III ($100–$200) ........................................................ T ................. .................... $150.00 .................... $30.00
1541 ........... New Technology—Level IV ($200–$300) ....................................................... T ................. .................... $250.00 .................... $50.00
1542 ........... New Technology—Level V ($300–$400) ........................................................ T ................. .................... $350.00 .................... $70.00
1543 ........... New Technology—Level VI ($400–$500) ....................................................... T ................. .................... $450.00 .................... $90.00
1544 ........... New Technology—Level VII ($500–$600) ...................................................... T ................. .................... $550.00 .................... $110.00
1545 ........... New Technology—Level VIII ($600–$700) ..................................................... T ................. .................... $650.00 .................... $130.00
1546 ........... New Technology—Level IX ($700–$800) ....................................................... T ................. .................... $750.00 .................... $150.00
1547 ........... New Technology—Level X ($800–$900) ........................................................ T ................. .................... $850.00 .................... $170.00
1548 ........... New Technology—Level XI ($900–$1000) ..................................................... T ................. .................... $950.00 .................... $190.00
1549 ........... New Technology—Level XII ($1000–$1100) .................................................. T ................. .................... $1,050.00 .................... $210.00
1550 ........... New Technology—Level XIII ($1100–$1200) ................................................. T ................. .................... $1,150.00 .................... $230.00
1551 ........... New Technology—Level XIV ($1200–$1300) ................................................. T ................. .................... $1,250.00 .................... $250.00
1552 ........... New Technology—Level XV ($1300–$1400) .................................................. T ................. .................... $1,350.00 .................... $270.00
1553 ........... New Technology—Level XVI ($1400–$1500) ................................................. T ................. .................... $1,450.00 .................... $290.00
1554 ........... New Technology—Level XVII ($1500–$1600) ................................................ T ................. .................... $1,550.00 .................... $310.00
1555 ........... New Technology—Level XVIII ($1600–$1700) ............................................... T ................. .................... $1,650.00 .................... $330.00
1556 ........... New Technology—Level XIX ($1700–$1800) ................................................. T ................. .................... $1,750.00 .................... $350.00
1557 ........... New Technology—Level XX ($1800–$1900) .................................................. T ................. .................... $1,850.00 .................... $370.00
1558 ........... New Technology—Level XXI ($1900–$2000) ................................................. T ................. .................... $1,950.00 .................... $390.00
1559 ........... New Technology—Level XXII ($2000–$2500) ................................................ T ................. .................... $2,250.00 .................... $450.00
1560 ........... New Technology—Level XXIII ($2500–$3000) ............................................... T ................. .................... $2,750.00 .................... $550.00
1561 ........... New Technology—Level XXIV ($3000–$3500) ............................................... T ................. .................... $3,250.00 .................... $650.00
1562 ........... New Technology—Level XXV ($3500–$4000) ................................................ T ................. .................... $3,750.00 .................... $750.00
1563 ........... New Technology—Level XXVI ($4000–$4500) ............................................... T ................. .................... $4,250.00 .................... $850.00
1564 ........... New Technology—Level XXVII ($4500–$5000) .............................................. T ................. .................... $4,750.00 .................... $950.00
1565 ........... New Technology—Level XXVIII ($5000–$5500) ............................................. T ................. .................... $5,250.00 .................... $1,050.00
1566 ........... New Technology—Level XXIX ($5500–$6000) ............................................... T ................. .................... $5,750.00 .................... $1,150.00
1567 ........... New Technology—Level XXX ($6000–$6500) ................................................ T ................. .................... $6,250.00 .................... $1,250.00
1568 ........... New Technology—Level XXXI ($6500–$7000) ............................................... T ................. .................... $6,750.00 .................... $1,350.00
1569 ........... New Technology—Level XXXII ($7000–$7500) .............................................. T ................. .................... $7,250.00 .................... $1,450.00
1570 ........... New Technology—Level XXXIII ($7500–$8000) ............................................. T ................. .................... $7,750.00 .................... $1,550.00
1571 ........... New Technology—Level XXXIV ($8000–$8500) ............................................ T ................. .................... $8,250.00 .................... $1,650.00
1572 ........... New Technology—Level XXXV ($8500–$9000) ............................................. T ................. .................... $8,750.00 .................... $1,750.00
1573 ........... New Technology—Level XXXVI ($9000–$9500) ............................................ T ................. .................... $9,250.00 .................... $1,850.00
1574 ........... New Technology—Level XXXVII ($9500–$10000) ......................................... T ................. .................... $9,750.00 .................... $1,950.00
1605 ........... Abciximab injection .......................................................................................... K ................. .................... $420.17 .................... $84.03
1606 ........... Injection anistreplase 30 u .............................................................................. K ................. .................... $2,693.80 .................... $538.76
1607 ........... Eptifibatide injection ......................................................................................... K ................. .................... $17.67 .................... $3.53
1608 ........... Etanercept injection ......................................................................................... K ................. .................... $167.12 .................... $33.42
1609 ........... Rho(D) immune globulin h, sd ........................................................................ K ................. .................... $15.62 .................... $3.12
1612 ........... Daclizumab, parenteral .................................................................................... K ................. .................... $322.28 .................... $64.46
1613 ........... Trastuzumab .................................................................................................... K ................. .................... $58.51 .................... $11.70
1629 ........... Nonmetabolic act d/e tissue ............................................................................ K ................. .................... $20.22 .................... $4.04
1630 ........... Hep b ig, im ..................................................................................................... K ................. .................... $122.02 .................... $24.40
1631 ........... Baclofen intrathecal trial .................................................................................. K ................. .................... $69.73 .................... $13.95
1632 ........... Metabolic active D/E tissue ............................................................................. K ................. .................... $28.45 .................... $5.69
1633 ........... Alefacept .......................................................................................................... K ................. .................... $26.47 .................... $5.29
1643 ........... Y90 ibritumomab, rx ........................................................................................ K ................. 235.8764 $15,023.91 .................... $3,004.78
1645 ........... I131 tositumomab, rx ....................................................................................... K ................. 176.8495 $11,264.25 .................... $2,252.85
1670 ........... Tetanus immune globulin inj ........................................................................... K ................. .................... $103.46 .................... $20.69
1675 ........... P32 Na phosphate ........................................................................................... K ................. 1.7835 $113.60 .................... $22.72
1676 ........... P32 chromic phosphate ................................................................................... K ................. 1.8711 $119.18 .................... $23.84
1682 ........... Aprotonin, 10,000 kiu ...................................................................................... K ................. .................... $2.66 .................... $0.53
1683 ........... Basiliximab ....................................................................................................... K ................. .................... $1,541.03 .................... $308.21
1684 ........... Corticorelin ovine triflutal ................................................................................. K ................. .................... $4.43 .................... $0.89
1685 ........... Darbepoetin alfa, non-esrd .............................................................................. K ................. .................... $2.88 .................... $0.58
1686 ........... Epoetin alfa, non-esrd ..................................................................................... K ................. .................... $8.97 .................... $1.79
1687 ........... Digoxin immune fab (ovine) ............................................................................ K ................. .................... $478.88 .................... $95.78
1688 ........... Ethanolamine oleate ........................................................................................ K ................. .................... $79.23 .................... $15.85
1689 ........... Fomepizole ...................................................................................................... K ................. .................... $12.80 .................... $2.56
1690 ........... Hemin .............................................................................................................. K ................. .................... $7.08 .................... $1.42
1691 ........... Iron dextran 165 injection ................................................................................ K ................. .................... $11.82 .................... $2.36
1692 ........... Iron dextran 267 injection ................................................................................ K ................. .................... $10.30 .................... $2.06
1693 ........... Lepirudin .......................................................................................................... K ................. .................... $159.44 .................... $31.89
1694 ........... Ziconotide injection .......................................................................................... K ................. .................... $6.46 .................... $1.29

National Minimum
Relative Payment
1695 ........... Nesiritide injection ........................................................................................... K ................. .................... $32.95 .................... $6.59
1696 ........... Palifermin injection .......................................................................................... K ................. .................... $11.24 .................... $2.25
1697 ........... Pegaptanib sodium injection ........................................................................... K ................. .................... $1,035.69 .................... $207.14
1700 ........... Inj secretin synthetic human ............................................................................ K ................. .................... $20.12 .................... $4.02
1701 ........... Treprostinil injection ......................................................................................... K ................. .................... $55.36 .................... $11.07
1703 ........... Ovine, 1000 USP units .................................................................................... K ................. .................... $133.77 .................... $26.75
1704 ........... Humate-P, inj ................................................................................................... K ................. .................... $0.88 .................... $0.18
1705 ........... Factor viia ........................................................................................................ K ................. .................... $1.15 .................... $0.23
1709 ........... Azacitidine injection ......................................................................................... K ................. .................... $4.35 .................... $0.87
1710 ........... Clofarabine injection ........................................................................................ K ................. .................... $114.41 .................... $22.88
1711 ........... Vantas implant ................................................................................................. K ................. .................... $1,412.46 .................... $282.49
1712 ........... Paclitaxel protein bound .................................................................................. K ................. .................... $8.79 .................... $1.76
1716 ........... Brachytx, non-str, Gold-198 ............................................................................ K ................. 0.5228 $33.30 .................... $6.66
1717 ........... Brachytx, non-str, HDR Ir-192 ......................................................................... K ................. 2.7505 $175.19 .................... $35.04
1719 ........... Brachytx, NS, Non-HDRIr-192 ........................................................................ K ................. 1.0226 $65.13 .................... $13.03
1738 ........... Oxaliplatin ........................................................................................................ K ................. .................... $9.15 .................... $1.83
1739 ........... Pegademase bovine, 25 iu .............................................................................. K ................. .................... $197.51 .................... $39.50
1740 ........... Diazoxide injection ........................................................................................... K ................. .................... $113.24 .................... $22.65
1741 ........... Urofollitropin, 75 iu .......................................................................................... K ................. .................... $50.22 .................... $10.04
1821 ........... Interspinous implant ........................................................................................ H ................. .................... .................... .................... .
2210 ........... Methyldopate hcl injection ............................................................................... K ................. .................... $13.04 .................... $2.61
2616 ........... Brachytx, non-str,Yttrium-90 ............................................................................ K ................. 184.7105 $11,764.95 ..........

Rule: Medicare: Hospital Outpatient Prospective Payment System and CY 2008 Payment Rates, Etc.

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Rule: Medicare: Hospital Outpatient Prospective Payment System and CY 2008 Payment Rates, Etc.

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Tuesday,

November 27, 2007

42 CFR Parts 410, 411, 412, et al.

Data for Annual Payment Update B. Information in Addenda Related to the

8. OPPS Hospital Coding and Payments

15. Update of the Revised ASC Payment

jaw joint. lower spine.

vis & hips. peripheral. apy field.

tent, compre. 93930 ..... Upper extremity complex.

C8955 .... Chemotx adm, IV

that are particularly relevant to APCs, our responses follow. to 3 years.

TABLE 2.—CY 2008 PACKAGED REVENUE CODES

0250 ................................................ PHARMACY.

0257 ................................................ NONPRESCRIPTION DRUGS.

TABLE 2.—CY 2008 PACKAGED REVENUE CODES—Continued

0264 ................................................ IV THERAPY/SUPPLIES.

TABLE 3.–GROWTH IN EXPENDITURES UNDER OPPS FROM CY 2001–CY 2008

TABLE 4.–PERCENTAGE INCREASE IN VOLUME AND INTENSITY OF HOSPITAL OUTPATIENT SERVICES

EXAMPLE 1.—MYLEOGRAPHY AND LUMBOSACRAL CT WITH CONTRAST

EXAMPLE 2.—ANGIOGRAPHY, CAROTID, CERVICAL, VERTEBRAL AND/OR INTRACRANIAL

EXAMPLE 3.—EVALUATION AND PERCUTANEOUS REVASCULARIZATION OF GRAFT

EXAMPLE 4.—DIAGNOSTIC ANGIOGRAPHY WITH BALLOON ANGIOPLASTY OF SUPERFICIAL FEMORAL ARTERY

HCPCS Descriptor SI APC HCPCS Descriptor SI APC

ment of (dynamically changing) cardiac uous) assessment of (dynamically

HCPCS Descriptor SI APC HCPCS Descriptor SI APC

93320 ....... Doppler echocardiography, pulsed wave N

TABLE 6.–CY 2008 FINAL RULE ECHOCARDIOGRAM APC MEDIANS

TABLE 8.—TEN MOST FREQUENTLY OCCURRING UNIQUE OCCURRENCES OF CARDIAC ELECTROPHYSIOLOGIC

1 .......................... 763 93620 Electrophysiology evaluation ...................................................................... 0085 T

Ablate heart atrial foci, singly or in combination)

(1) (2) (3) (4) (5) (6) (7) (8)

(1) (2) (3) (4) (5) (6) (7) (8)

(1) (2) (3) (4) (5) (6) (7) (8)

(1) (2) (3) (4) (5) (6) (7) (8)

93622 ....... Electrophysiology evaluation ................................... T 0085 N n/a n/a Intraoperative.

(1) (2) (3) (4) (5) (6) (7) (8)

(1) (2) (3) (4) (5) (6) (7) (8)

that is integral to an independent meeting, the same presenter requested

All Days .................................................................................................................................................... $172 $177 $172

TABLE 11.—CY 2008 STATEWIDE AVERAGE CCRS

ALASKA .................................................................................................................................... RURAL ............. 0.537 0.534

MINNESOTA ............................................................................................................................. RURAL ............. 0.499 0.508

TABLE 11.—CY 2008 STATEWIDE AVERAGE CCRS—Continued

MONTANA ................................................................................................................................ URBAN ............. 0.450 0.463

TABLE 12.—NEW NON-DRUG HCPCS CODES IMPLEMENTED IN JULY 2007

TABLE 13.—NEW DRUG HCPCS CODES IMPLEMENTED IN JULY 2007

TABLE 14.—CATEGORY III CPT CODES IMPLEMENTED IN JULY 2007

two parallel sets of New Technology treatment of each new technology

TABLE 17.—FINAL CY 2008 APC ASSIGNMENTS OF CCT AND CCTA PROCEDURES

dian cost median cost

TABLE 17.—FINAL CY 2008 APC ASSIGNMENTS OF CCT AND CCTA PROCEDURES—Continued

TABLE 18.—FINAL CY 2008 APC ASSIGNMENTS OF MRGFUS PROCEDURES

Short descriptor 2007 APC me- 2008 APC

TABLE 20.—FINAL CY 2008 APC ASSIGNMENTS FOR MYOCARDIAL PET SCANS

TABLE 21.—CY 2008 APC REASSIGNMENT OF ARTHROSCOPIC PROCEDURES

Short descriptor APC APC APC APC

29819 ....... Shoulder arthroscopy/surgery ................................................................... 0041 $1,749 0042 $2,876

TABLE 21.—CY 2008 APC REASSIGNMENT OF ARTHROSCOPIC PROCEDURES—Continued

29825 ....... Shoulder arthroscopy/surgery ................................................................... 0041 1,749 0042 2,876

TABLE 22.—CY 2008 SKIN REPAIR APC CONFIGURATION

11950 ....... Therapy for contour defects ...................................................................................................................... 0133 $80

13133 ....... Repair wound/lesion add-on.

TABLE 22.—CY 2008 SKIN REPAIR APC CONFIGURATION—Continued