Medicare Program; Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2004 Payment Rates
Federal RegisterAug 12, 2003
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410 and 419
[CMS-1471-P]
RIN 0938-AL19
Medicare Program; Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2004 Payment Rates
AGENCY:
Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION:
Proposed rule.
SUMMARY:
This proposed rule would revise the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system. In addition, it would describe proposed changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes would be applicable to services furnished on or after January 1, 2004.
DATES:
We will consider comments if we receive them at the appropriate address, as provided below, no later than 5 p.m. on October 6, 2003.
ADDRESSES:
In commenting, please refer to file code CMS-1471-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission or e-mail.
Mail written comments (one original and two copies) to the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1471-P, P.O. Box 8018, Baltimore, MD 21244-8018.
Please allow sufficient time for mailed comments to be timely received in the event of delivery delays.
If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) to one of the following addresses:
Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201, or Room C5-14-03, 7500 Security Boulevard, Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and could be considered late.
We encourage commenters submitting as comments information that contains beneficiary specific information (for example, medical records, or invoices with beneficiary identification) to remove any individually identifiable information, such as information that identifies an individual, diagnoses, addresses, telephone numbers, attending physician, medical record number, or Medicare or other insurance number. Moreover, individually identifiable beneficiary medical records, including progress notes, medical orders, test results, consultation reports, and photocopies of checks from hospitals or other documents that contain bank routing numbers should not be submitted to us. Persons or organizations submitting proprietary information as public comments must designate in writing if part or all of the information contained in such comments should be considered as exempt from disclosure under Exemption 4 of the Freedom of Information Act (FOIA). Generally, Exemption 4 of the FOIA protects trade secrets and commercial or financial information that is privileged or confidential, and affords the same protections as the Trade Secrets Act, which is also applicable. We will attempt to keep confidential and protect from disclosure information that qualifies under Exemption 4. However, only data that can be available for public inspection would be used for the final rule. For information on viewing public comments, see the beginning of the
SUPPLEMENTARY INFORMATION
section.
FOR FURTHER INFORMATION CONTACT:
Dana Burley, (410) 786-4532—outpatient prospective payment issues; Suzanne Asplen, (410) 786-4558 or Jana Petze, (410) 786-9374—partial hospitalization and community mental health centers issues.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments:
Comments received timely will be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, call (410) 786-7197.
Availability of Copies and Electronic Access
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http://www.access.gpo.gov/nara/index.html.
To assist readers in referencing sections contained in this document, we are providing the following table of contents.
Outline of Contents
I. Background
A. Authority for the Outpatient Prospective Payment System
B. Summary of Rulemaking for the Outpatient Prospective Payment System
II. Proposed Changes to the Ambulatory Payment Classification (APC) Groups and Relative Weights
A. Recommendations of the Advisory Panel on APC Groups
1. Establishment of the Advisory Panel on APC Groups
2. The Panel's Meetings
3. Establishment of an Observation Subcommittee
4. Recommendations of the Advisory Panel and Our Responses
B. Other Changes Affecting the APCs
1. Limit on Variation of Costs of Services Classified Within an APC Group
2. Procedures Moved from New Technology APCs to Clinically Appropriate APCs
3. Revision of Cost Bands and Payment Amounts for New Technology APCs
4. APC Assignment for New Codes Created During Calendar Year (CY) 2003
5. Creation of APCs for Combinations of Device Procedures
6. New APC for Antepartum Care
III. Recalibration of APC Weights for CY 2004
A. Data Issues
1. Period of Claims Data Used
2. Treatment of “Multiple Procedure” Claims
3. Adjustment of Median Costs for CY 2003 OPPS
B. Description of How We Propose To Calculate Weights for CY 2004
IV. Transitional Pass-Through and Related Payment Issues
A. Background
B. Discussion of Pro Rata Reduction
V. Payment for Devices
A. Pass-Through Devices
B. Expiration of Transitional Pass-Through Payments in CY 2004
C. Other Policy Issues Relating to Pass-Through Device Categories
VI. Payment for Drugs, Biologicals, Radiopharmaceutical Agents, Blood, and Blood Products
A. Pass-Through Drugs and Biologicals
B. Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals
3. Payment for Drugs, Biologicals, and Radiopharmaceuticals That Are Not Packaged
4. Proposed Payment Methodology for Drug Administration
5. Generic Drugs and Radiopharmaceuticals
6. Orphan Drugs
7. Vaccines
8. Blood and Blood Products
9. Intravenous Immune Globulin
10. Drug and Device Coding
11. Payment for Split Unit of Blood
12. Other Issues
VII. Wage Index Changes for CY 2004
VIII. Copayment for CY 2004
IX. Conversion Factor Update for CY 2004
X. Proposed Outlier Policy and Elimination of Transitional Corridor Payments for CY 2004
A. Proposed Outlier Policy for CY 2004
B. Elimination of Transitional Corridor Payments for CY 2004
XI. Other Policy Decisions and Proposed Changes
A. Hospital Coding for Evaluation and Management (E/M) Services
B. Status Indicators and Issues Related to OCE Editing
C. Observation Services
D. Procedures That Will Be Paid Only As Inpatient Procedures
E. Partial Hospitalization Payment Methodology
1. Background
2. PHP APC Update for CY 2004
3. Outlier Payments to CMHCs
XII. Summary of and Responses to MedPAC Recommendations
XIII. Summary of Proposed Changes for 2004
A. Changes Required by Statute
B. Additional Changes
XIV. Collection of Information Requirements
XV. Response to Public Comments
XVI. Regulatory Impact Analysis
A. General
B. Changes in This Proposed Rule
C. Limitations of Our Analysis
D. Estimated Impacts of This Proposed Rule on Hospitals
E. Projected Distribution of Outlier Payments
F. Estimated Impacts of This Proposed Rule on Beneficiaries
Addenda
Addendum A—List of Ambulatory Payment Classifications (APCs) with Status Indicators, Relative Weights, Payment Rates, and Copayment Amounts
Addendum B—Payment Status by HCPCS Code, and Related Information
Addendum C—Hospital Outpatient Payment for Procedures by APC: Displayed on Web Site Only
Addendum D—Payment Status Indicators for the Hospital Outpatient Prospective Payment System
Addendum E—CPT Codes That Would Be Paid Only as Inpatient Procedures
Addendum H—Wage Index for Urban Areas
Addendum I—Wage Index for Rural Areas
Addendum J—Wage Index for Hospitals That Are Reclassified
Addendum L—Packaged Nonchemotherapy Infusion Drugs
Addendum M—Separately Paid Nonchemotherapy Infusion Drugs
Addendum N—Packaged Chemotherapy Drugs Other Than Infusion
Addendum O—Separately Paid Chemotherapy Drugs Other Than Infusion
Addendum P—Packaged Chemotherapy Drugs Infusion Only
Addendum Q—Separately Paid Chemotherapy Drugs Infusion Only
Alphabetical List of Acronyms Appearing in the Proposed Rule
ACEP—American College of Emergency Physicians
AHA—American Hospital Association
AHIMA—American Health Information Management Association
AMA—American Medical Association
APC—Ambulatory payment classification
ASC—Ambulatory surgical center
AWP—Average wholesale price
BBA—Balanced Budget Act of 1997
BIPA—Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000
BBRA—Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999
CAH—Critical access hospital
CCR—Cost center specific cost-to-charge ratio
CMHC—Community mental health center
CMS—Centers for Medicare & Medicaid Services (Formerly known as the Health Care Financing Administration)
CPT—[Physicians'] Current Procedural Terminology, Fourth Edition, 2002, copyrighted by the American Medical Association
CY—Calendar year
DMEPOS—Durable medical equipment, prosthetics, orthotics, and supplies
DRG—Diagnosis-related group
DSH—Disproportionate Share Hospital
EACH—Essential Access Community Hospital
E/M—Evaluation and management
ESRD—End-stage renal disease
FACA—Federal Advisory Committee Act
FDA—Food and Drug Administration
FI—Fiscal intermediary
FSS—Federal Supply Schedule
FY—Federal fiscal year
HCPCS—Healthcare Common Procedure Coding System
HCRIS—Hospital Cost Report Information System
HHA—Home health agency
HIPAA—Health Insurance Portability and Accountability Act of 1996
ICD-9-CM—International Classification of Diseases, Ninth Edition, Clinical Modification
IME—Indirect Medical Education
IPPS—(Hospital) inpatient prospective payment system
IVIG—Intravenous Immune Globulin
LTC—Long Term Care
MedPAC—Medicare Payment Advisory Commission
MDH—Medicare Dependent Hospital
MSA—Metropolitan statistical area
NECMA—New England County Metropolitan Area
OCE—Outpatient code editor
OMB—Office of Management and Budget
OPD—(Hospital) outpatient department
OPPS—(Hospital) outpatient prospective payment system
PHP—Partial hospitalization program
PM—Program memorandum
PPS—Prospective payment system
PPV—Pneumococcal pneumonia (virus)
PRA—Paperwork Reduction Act
RFA—Regulatory Flexibility Act
RRC—Rural Referral Center
SBA—Small Business Administration
SCH—Sole Community Hospital
SDP—Single drug pricer
SI—Status Indicator
TEFRA—Tax Equity and Fiscal Responsibility Act
TOPS—Transitional outpatient payments
USPDI—United States Pharmacopoeia Drug Information
I. Background
A. Authority for the Outpatient Prospective Payment System
When the Medicare statute was originally enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), enacted on August 5, 1997, added section 1833(t) to the Social Security Act (the Act) authorizing implementation of a PPS for hospital outpatient services. The Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), enacted on November 29, 1999, made major changes that affected the hospital outpatient PPS (OPPS). The Medicare, Medicaid, and
SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554), enacted on December 21, 2000, made further changes in the OPPS. The OPPS was first implemented for services furnished on or after August 1, 2000.
B. Summary of Rulemaking for the Outpatient Prospective Payment System
• On September 8, 1998, we published a proposed rule (63 FR 47552) to establish in regulations a PPS for hospital outpatient services, to eliminate the formula-driven overpayment for certain hospital outpatient services, and to extend reductions in payment for costs of hospital outpatient services. On June 30, 1999, we published a correction notice (64 FR 35258) to correct a number of technical and typographic errors in the September 1998 proposed rule including the proposed amounts and factors used to determine the payment rates.
• On April 7, 2000, we published a final rule with comment period (65 FR 18434) that addressed the provisions of the PPS for hospital outpatient services scheduled to be effective for services furnished on or after July 1, 2000. Under this system, Medicare payment for hospital outpatient services included in the PPS is made at a predetermined, specific rate. These outpatient services are classified according to a list of ambulatory payment classifications (APCs). The April 7, 2000 final rule with comment period also established requirements for provider departments and provider-based entities and prohibited Medicare payment for nonphysician services furnished to a hospital outpatient by a provider or supplier other than a hospital unless the services are furnished under arrangement. In addition, this rule extended reductions in payment for costs of hospital outpatient services as required by the BBA and amended by the BBRA. Medicare regulations governing the hospital OPPS are set forth at 42 CFR part 419.
• On June 30, 2000, we published a notice (65 FR 40535) announcing a delay in implementation of the OPPS from July 1, 2000 to August 1, 2000. We implemented the OPPS on August 1, 2000.
• On August 3, 2000, we published an interim final rule with comment period (65 FR 47670) that modified criteria that we use to determine which medical devices are eligible for transitional pass-through payments. The August 3, 2000 rule also corrected and clarified certain provider-based provisions included in the April 7, 2000 rule.
• On November 13, 2000, we published an interim final rule with comment period (65 FR 67798). This rule provided for the annual update to the amounts and factors for OPPS payment rates effective for services furnished on or after January 1, 2001. We implemented the 2001 OPPS on January 1, 2001. We also responded to public comments on those portions of the April 7, 2000 final rule that implemented related provisions of the BBRA and public comments on the August 3, 2000 rule.
• On November 2, 2001, we published a final rule (66 FR 55857) that announced the Medicare OPPS conversion factor for calendar year (CY) 2002. In addition, it described the Secretary's estimate of the total amount of the transitional pass-through payments for CY 2002 and the implementation of a uniform reduction in each of the pass-through payments for that year.
• On November 2, 2001, we also published an interim final rule with comment period (66 FR 55850) that set forth the criteria the Secretary will use to establish new categories of medical devices eligible for transitional pass-through payments under Medicare's OPPS.
• On November 30, 2001, we published a final rule (66 FR 59856) that revised the Medicare OPPS to implement applicable statutory requirements, including relevant provisions of BIPA, and changes resulting from continuing experience with this system. In addition, it described the CY 2002 payment rates for Medicare hospital outpatient services paid under the PPS. This final rule also announced a uniform reduction of 68.9 percent to be applied to each of the transitional pass-through payments for certain categories of medical devices and drugs and biologicals.
• On December 31, 2001, we published a final rule (66 FR 67494) that delayed, until no later than April 1, 2002, the effective date of CY 2002 payment rates and the uniform reduction of transitional pass-through payments that were announced in the November 30, 2001 final rule. In addition, this final rule indefinitely delayed certain related regulatory provisions.
• On March 1, 2002, we published a final rule (67 FR 9556) that corrected technical errors that affected the amounts and factors used to determine the payment rates for services paid under the Medicare OPPS and corrected the uniform reduction to be applied to transitional pass-through payments for CY 2002 as published in the November 30, 2001 final rule. These corrections and the regulatory provisions that had been delayed became effective on April 1, 2002.
• On November 1, 2002, we published a final rule (67 FR 66718) that revised the Medicare OPPS to update the payment weights and conversion factor for services payable under the 2003 OPPS on the basis of data from claims for services furnished from April 1, 2001 through March 31, 2002. The rule also removed from pass-through status most drugs and devices that had been paid under pass-through provisions in 2002 as required by the applicable provisions of law governing the duration of pass-through payment.
II. Proposed Changes to the Ambulatory Payment Classification (APC) Groups and Relative Weights
Under the OPPS, we pay for hospital outpatient services on a rate-per-service basis that varies according to the APC group to which the service is assigned. Each APC weight represents the median hospital cost of the services included in that APC relative to the median hospital cost of the services included in APC 601, Mid-Level Clinic Visits. The APC weights are scaled to APC 601 because a mid-level clinic visit is one of the most frequently performed services in the outpatient setting.
Section 1833(t)(9)(A) of the Act requires the Secretary to review the components of the OPPS not less often than annually and to revise the groups, relative payment weights, and other adjustments to take into account changes in medical practice, changes in technology, and the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act requires the Secretary, beginning in 2001, to consult with an outside panel of experts to review the APC groups and the relative payment weights.
Finally, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the group is more than 2 times greater than the lowest median cost for an item or service within the same group (referred to as the “2 times rule”).
We use the median cost of the item or service in implementing this provision. The statute authorizes the Secretary to make exceptions to the 2 times rule “in
unusual cases, such as low volume items and services.”
For purposes of this proposed rule, we analyzed the APC groups within this statutory framework.
A. Recommendations of the Advisory Panel on APC Groups
1. Establishment of the Advisory Panel on APC Groups
Section 1833(t)(9)(A) of the Act requires that we consult with an outside panel of experts, the Advisory Panel on APC Groups (the Panel), to review the clinical integrity of the groups and weights. The Act specifies that the Panel will act in an advisory capacity. This expert panel, which is to be composed of representatives of providers subject to the OPPS (currently employed full-time, in their respective areas of expertise), reviews and advises us about the clinical integrity of the APC groups and their weights. The Panel is not restricted to using our data and may use data collected or developed by organizations outside the Department in conducting its review.
On November 21, 2000, the Secretary signed the charter establishing an “Advisory Panel on APC Groups.” The Panel is technical in nature and is governed by the provisions of the Federal Advisory Committee Act (FACA) as amended (Pub. L. 92-463).
On November 1, 2002, the Secretary renewed the charter. The new charter indicates that the Panel continues to be technical in nature, is governed by the provisions of the FACA, may convene “up to three meetings per year,” and is chaired by a Federal official.
To establish the Panel, we solicited members in a notice published in the
Federal Register
on December 5, 2000 (65 FR 75943). We received applications from more than 115 individuals nominating either a colleague or themselves. After carefully reviewing the applications, we chose 15 highly qualified individuals to serve on the Panel.
Because of the loss of 6 Panel members in March 2003 due to the expiration of terms of office, retirement, and a career change, a
Federal Register
notice was published on February 28, 2003 (68 FR 9671), requesting nominations of Panel members. From the 40 nominations we received, 6 new members have been chosen and will be identified on the CMS Web site.
2. The Panel's Meetings
The first Panel meeting was held on February 27, February 28, and March 1, 2001. During the 2001 meeting, the Panel members felt that requiring consistency for all presentations with regard to format, data submission, and general information would assist them in analyzing the submissions and presentations and making recommendations. Therefore, upon the Panel's recommendation, the Research Subcommittee was established during the 2001 meeting.
The Panel began its 2002 meeting on January 22, 2002, by considering the Research Subcommittee's recommendation to the Panel on requirements for written submissions and oral presentations. The Research Subcommittee recommended that all future oral presentations and written submissions contain the following:
• Name, address, and telephone number of the proposed presenter.
• Financial relationship(s), if any, with any company whose products, services, or procedures are under consideration.
• CPT ([Physicians'] Current Procedural Technology) codes involved.
• APC(s) affected.
• Description of the issue.
• Clinical description of the service under discussion, with comparison to other services within the APC.
• Description of the resource inputs associated with the service under discussion, with a comparison to resource inputs for other services within the APC.
• Recommendations and rationale for change.
• Expected outcome of change and potential consequences of no change.
The Panel adopted these Subcommittee recommendations.
The third Panel meeting was held on January 21 and 22, 2003, to discuss the APCs of the newly implemented 2003 OPPS. We published a notice in the
Federal Register
on December 27, 2002 (67 FR 79107), to announce the following: The location and time of the third Panel meeting; a list of agenda items; and that the meeting was open to the public. In that document, we solicited public comment specifically on the items included on the agenda for the January 2003 Panel meeting. In this section, “commenter” refers to entities that provided comments in response to that
Federal Register
notice. We also provided additional information about the Panel meeting through a press release and on the CMS Web site. Presentations for the 2003 meeting met, at a minimum, the adopted guidelines for presentations referred to above.
3. Establishment of an Observation Subcommittee
At the third annual meeting in January 2003, the Panel suggested numerous changes to the APCs (listed below) and that a subcommittee be established to review observation issues, such as allowable International Classification of Diseases, clinical modification codes, and operational issues. Therefore, before the close of the third annual meeting, the Observation Subcommittee was established. Other Panel members that are not currently participating in this subcommittee are welcome to take part in this subcommittee, which is tasked with reviewing International Classification of Disease Codes, clinical modification codes, and operational issues related to observation. This subcommittee will report its findings to the Panel in 1 year.
4. Recommendations of the Advisory Panel and Our Responses
In this section, we consider the Panel's recommendations affecting specific APCs. The Panel based its recommendations on claims data for the period April 1, 2002 through September 30, 2002. This data set comprises a portion of the data that will be used to set 2004 payment rates. APC titles in this discussion are those that existed when the APC Panel met in January 2003. In a few cases, APC titles have been changed for this proposed rule, and, therefore, some APCs do not have the same title in Addendum A as they have in this section.
The Panel's agenda included APCs that our staff believe violate the 2 times rule as well as APCs for which comments were submitted. As discussed below, the Panel sometimes declined to recommend a change in an APC even though the APC appeared to violate the 2 times rule. In section II.B of this preamble, we discuss our proposals regarding the 2 times rule based on the April 1, 2002 through December 31, 2002 data that we used to determine the proposed 2004 APC relative weights. Section II.B also details the criteria we used when deciding to propose exceptions to the 2 times rule.
a. Debridement and Destruction.
APC 0012: Level I Debridement & Destruction.
APC 0013: Level II Debridement & Destruction.
We expressed concern to the Panel that APCs 0012 and 0013 appear to violate the 2 times rule. In order to remedy these violations, we asked the Panel to consider the following changes:
(1) Move the following codes from APC 0013 to APC 0012:
HCPCS
Description
11001
Debride infected skin add-on.
11302
Shave skin lesion.
15786
Abrasion, lesion, single.
15793
Chemical peel, nonfacial.
15851
Removal of sutures.
16000
Initial treatment of burn(s).
16025
Treatment of burn(s).
(2) Move code 11057 (Trim skin lesions, over 4) from APC 0012 to APC 0013.
The Panel agreed with our staff and recommended that we make these changes. We propose to accept the Panel's recommendation.
b. Excision/Biopsy.
APC 0019: Level I Excision/Biopsy.
APC 0020: Level II Excision/Biopsy.
APC 0021: Level III Excision/Biopsy.
We expressed concern to the Panel that APCs 0019 and 0020 appear to violate the 2 times rule. In order to remedy these violations, we asked the Panel to consider the following changes:
(1) Move the following HCPCS codes from APC 0019 to a new APC:
HCPCS
Description
11755
Biopsy, nail unit.
11976
Removal of contraceptive cap.
24200
Removal of arm foreign body.
28190
Removal of foot foreign body.
56605
Biopsy of vulva/perineum.
56606
Biopsy of vulva/perineum.
69100
Biopsy of external ear.
(2) Move the following HCPCS codes from APC 0020 to APC 0021:
HCPCS
Description
11404
Removal of skin lesion.
11423
Removal of skin lesion.
11604
Removal of skin lesion.
11623
Removal of skin lesion.
The Panel recommended that we not change the structure of APCs 0019, 0020, and 0021 at this time in the interest of preserving clinical homogeneity. We propose to accept the Panel's recommendation that we make no changes to the structure of these APCs for 2004. We plan to place these APCs on the Panel's agenda for the 2005 update.
c. Thoracentesis/Lavage Procedures and Endoscopies.
APC 0071: Level I Endoscopy Upper Airway.
APC 0072: Level II Endoscopy Upper Airway.
APC 0073: Level III Endoscopy Upper Airway.
We expressed concern to the Panel that APCs 0071 and 0072 appear to violate the 2 times rule. In order to remedy these violations, we asked the Panel to consider the following changes:
Move the following HCPCS codes as described below:
Table 1.—HCPCS Codes Proposed To Be Redistributed From APCs 0071 and 0072 to APCs 0071, 0072, and 0073
HCPCS
Description
2003 APC
2004 APC
31505
Diagnostic laryngoscopy
0072
0071
31575
Diagnostic laryngoscopy
0071
0072
31720
Clearance of airways
0072
0073
The Panel recommended that we make the above changes. We propose to accept the Panel's recommendation, with the exception of CPT code 31720. After reviewing an additional quarter of claims data that was not available at the time the Panel convened, placement of CPT code 31720 into APC 0072 better reflects its resource consumption. Therefore, we propose to keep CPT code 31720 in APC 0072.
d. Cardiac and Ambulatory Blood Pressure Monitoring.
APC 0097: Cardiac and Ambulatory Blood Pressure Monitoring.
We expressed concern to the Panel that APC 0097 appears to violate the 2 times rule. We asked the Panel to recommend options for resolving this violation, and suggested splitting APC 0097 into two APCs. The Panel recommended that the structure of APC 0097 should not be changed at this time based on clinical homogeneity considerations. We propose to accept the Panel's recommendation that we make no changes to APC 0097 for 2004. We plan to place this APC on the Panel's agenda for the 2005 update.
e. Electrocardiograms.
APC 0099: Electrocardiograms.
APC 0340: Minor Ancillary Procedures.
We expressed concern to the Panel that APC 0099 appears to violate the 2 times rule. We asked the Panel to recommend options for resolving this violation, and suggested moving CPT code 93701 (Bioimpedance, thoracic) from APC 0099 to APC 0340. The Panel felt, however, that the structure of APC 0099 should not be changed at this time based on clinical homogeneity considerations. We propose to accept the Panel's recommendation that we make no changes to APC 0099 for 2004. We plan to place this APC on the Panel's agenda for the 2005 update.
f. Cardiac Stress Tests.
APC 0100: Cardiac Stress Tests.
A presenter to the Panel, who represented a device manufacturer, requested that we move CPT code 93025 (Microvolt t-wave assessment) out of APC 0100. The presenter believes that the actual cost for this procedure is significantly higher than for other procedures in the same APC. Since this technology is often billed in conjunction with other procedures (for example, stress tests, CPT code 93017), few single-APC claims were available to evaluate the presenter's contention.
The Panel felt the data presented are insufficient to merit moving the code and recommends that CPT code 93025 remain in APC 0100 until more data are available for review. We propose to accept the Panel's recommendation that CPT code 93025 remain in APC 0100 until more claims data become available for review.
g. Revision/Removal of Pacemakers or Automatic Implantable Cardioverter Defibrillators.
APC 0105: Revision/Removal of Pacemakers, AICD, or Vascular.
We asked the Panel to review the codes within APC 0105 for an apparent violation of the 2 times rule, stating that we believe the apparent violation is a result of incorrectly coded claims. The Panel agreed and recommended no changes to APC 0105 at this time. We propose to accept the Panel's recommendation that we make no changes to APC 0105 until more accurate claims data become available and support the need for a change.
h. Sigmoidoscopy.
APC 0146: Level I Sigmoidoscopy.
APC 0147: Level II Sigmoidoscopy.
We expressed concern to the Panel that relatively simple procedures such as anoscopy and rigid sigmoidoscopy have higher median costs than more complex procedures such as flexible sigmoidoscopy. Panel members suggested the high costs may be due to the need to perform an otherwise minor office procedure in a hospital setting (for example, due to the clinical condition of the patient). Panel members also suggested that claims may be incorrectly coded because coding
instructions do not clearly state how to code when the procedure performed is not as extensive as the procedure planned (for example, when a colonoscopy is planned but only a sigmoidoscopy is performed). In these cases, coding instructions are unclear as to whether the planned procedure should be reported with a modifier for reduced services or with the code for the actual procedure performed.
The Panel recommended that we make no changes to APCs 0146 and 0147 at this time. We propose to accept the Panel's recommendation that we make no changes to APCs 0146 and 0147. We plan to place this APC on the Panel's agenda for the 2005 update.
i. Anal/Rectal Procedures.
APC 0148: Level I Anal/Rectal Procedure.
APC 0149: Level III Anal/Rectal Procedure.
APC 0155: Level II Anal/Rectal Procedure.
We expressed concern to the Panel that APCs 0148 and 0149 appear to violate the 2 times rule. We asked the Panel to recommend options for resolving these violations, and suggested rearranging some of the CPT codes within APCs 0148, 0149, and 0155. The Panel recommended that we move CPT code 46040 (Incision of rectal abscess) from APC 0155 to APC 0149. We propose to accept the Panel's recommendation.
j. Insertion of Penile Prosthesis.
APC 0179: Urinary Incontinence Procedures.
APC 0182: Insertion of Penile Prosthesis.
A presenter to the Panel representing manufacturers and providers requested that APC 0182 be split into two APCs, based on whether the procedure used inflatable or non-inflatable penile prostheses. The presenter stated that the complexity of the procedure, the cost of the devices, and related resources were all significantly higher with inflatable prostheses.
The Panel recommended that we eliminate APCs 0179 and 0182 and create two new APCs, 0385 and 0386 that contain the following CPT codes:
HCPCS
Description
APC 0385:
52282
Cystoscopy, implant stent.
53440
Correct bladder function.
53444
Insert tandem cuff.
54400
Insert semi-rigid prosthesis.
54416
Remv/repl penis contain prosthesis.
APC 0386:
53445
Insert uro/ves nck sphincter.
53447
Remove/replace ur sphincter.
54401
Insert self-contained prosthesis.
54405
Insert multi-comp penis prosthesis.
54410
Remove/replace penis prosthesis.
We propose to accept the Panel's recommendation to eliminate APCs 0179 and 0182 and create two new APCs, 0644 and 0645, containing the above CPT code configurations.
k. Surgical Hysteroscopy.
APC 0190: Surgical Hysteroscopy.
A presenter to the Panel, who represented a device manufacturer, requested that we move CPT code 58563 (Hysteroscopy, ablation) from APC 0190 to a higher paying APC. The presenter noted that endometrial cryoablation is included in a new technology APC, while a thermal ablation system is included with older, less costly techniques. The presenter expressed concern that cryoablation may be reimbursed at a higher rate than the thermal ablation system, giving its manufacturers an unfair competitive advantage.
Panel members agreed that new, more expensive technologies that prove to be more effective merit review for a higher payment rate. Without substantial evidence of greater effectiveness, however, the Panel was reluctant to create APCs that provide an incentive to use a more expensive device. In its discussion of whether or not to recommend moving CPT code 58563 to a higher paying APC, the Panel recommended that we take into account different methods of endometrial ablation associated with hysteroscopy, adequately reflect the resources used for the various procedures, avoid creating a competitive advantage or disadvantage, and collect data needed to track costs on the type of technologies used for this procedure.
After consulting with experts in the field, we propose to split APC 0190 (Surgical Hysteroscopy) into 2 APCs that are more clinically homogeneous. We propose to change the description for APC 0190 from “Surgical Hysteroscopy” to “Level I Hysteroscopy” and keep the following HCPCS codes in APC 0190:
HCPCS
Description
58558
Hysteroscopy, biopsy.
58559
Hysteroscopy, lysis.
58562
Hysteroscopy, remove fb.
58579
Hysteroscope procedure.
We also propose to move the following HCPCS codes from APC 0190 to newly created APC 0387 titled “Level II Hysteroscopy”:
HCPCS
Description
58560
Hysteroscopy, resect septum.
58561
Hysteroscopy, remove myoma.
58563
Hysteroscopy, ablation.
In addition, we propose to move the following HCPCS codes as described below:
Table 2.—HCPCS Codes Proposed To Be Redistributed to APCs 0130, 0195, and 0190
HCPCS
Description
2003 APC
2004 APC
58578
Laparoscopic procedure, uterus
0190
0130
58353
Endometrial ablate, thermal
0193
0195
58555
Hysteroscopy, diagnostic, sep. procedure
0194
0190
We believe these proposed changes take into account the different technologies used to perform these procedures while maintaining the clinical comparability of these APCs as well as improving their homogeneity in terms of resource consumption.
l. Female Reproductive Procedures.
APC 0195: Level VII Female Reproductive Proc. APC 0202: Level VIII Female Reproductive Proc.
A commenter requested that we place CPT code 57288 (Repair bladder defect) in its own APC because it requires the use of a device. Our staff suggested that CPT codes 57288 and 57287 remain in APC 0202, while the remaining codes in APC 0202 be moved to APC 0195:
HCPCS
Description
57109
Vaginectomy partial w/nodes.
58920
Partial removal of ovary(s).
58925
Removal of ovarian cyst(s).
The Panel agreed with our staff, and we propose to accept the Panel's recommendation to move CPT codes
57109, 58920, and 58925 from APC 0202 to APC 0195.
m. Nerve Injections.
APC 0203: Level IV Nerve Injections.
APC 0204: Level I Nerve Injections.
APC 0206: Level II Nerve Injections.
APC 0207: Level III Nerve Injections.
Several commenters suggested changes in the configuration of APCs 0203, 0204, 0206, and 0207 because of concerns that the current classifications result in payment rates that are too low relative to the resource costs associated with certain procedures in these APCs. Several of these APCs include procedures associated with drugs or devices for which pass-through payments are scheduled to expire in 2003.
We requested the Panel's input regarding whether or not these APCs should be restructured. The Panel stated that the current configuration of APCs 0203, 0204, 0206, and 0207 is more clinically cohesive than the previous year's configuration and that more data should be collected before making any changes. We propose to accept the Panel's recommendation that we make no changes to the structure of these APCs until more data become available for review.
n. Laminotomies and Laminectomies; Implantation of Pain Management Device.
APC 0208: Laminotomies and Laminectomies.
APC 0223: Implantation of Pain Management Device.
A presenter to the Panel, who represented a device manufacturer, requested that we move CPT code 62351 (Implant spinal canal catheter) from APC 0208 to APC 0223 to better capture the device cost that may be involved with the procedure. The Panel felt the data were insufficient to merit moving the code and recommended that CPT code 62351 remain in APC 0208 until more data are available for review. We propose to accept the Panel's recommendation that CPT code 62351 remain in APC 0208 until more claims data become available for review.
o. Extended EEG Studies and Sleep Studies; Electroencephalogram.
APC 0209: Extended EEG Studies and Sleep Studies, Level II.
APC 0213: Extended EEG Studies and Sleep Studies, Level I.
APC 0214: Electroencephalogram.
We expressed concern to the Panel that APC 0213 appears to minimally violate the 2 times rule. In order to remedy this violation, we asked the Panel to consider a commenter's suggestion that we move CPT code 95955 (EEG during surgery) from APC 0214 to APC 0213. The Panel agreed with the commenter's suggestion. We propose to accept the Panel's recommendation to move CPT code 95955 from APC 0214 to APC 0213.
p. Nerve and Muscle Tests.
APC 0215: Level I Nerve and Muscle Tests.
APC 0216: Level III Nerve and Muscle Tests.
APC 0218: Level II Nerve and Muscle Tests.
We expressed concern to the Panel that APC 0218 appears to violate the 2 times rule. In order to remedy this violation, one commenter requested that we move CPT codes 95921 (Autonomic nerve function test) and 95922 (Autonomic nerve function test) from APC 0218 to APC 0216, while another commenter requested that we move CPT code 95904 (Sensory nerve conduction test) from APC 0215 to APC 0218. Alternatively, our staff suggested to the Panel that the following CPT codes be moved from APC 0218 to APC 0215.
HCPCS
Description
95858
Tensilon test & myogram.
95870
Muscle test, nonparaspinal.
95900
Motor nerve conduction test.
95903
Motor nerve conduction test.
After considering all of the above proposals, the Panel recommended that we move CPT codes 95858, 95870, 95900, and 95903 from APC 0218 to APC 0215. We propose to accept the Panel's recommendation.
q. Implantation of Drug Infusion Device.
APC 0227: Implantation of Drug Infusion Device.
APC 0227 contains only two CPT codes: one for implantation of programmable spine infusion pumps, 62362, and for implantation of non-programmable spine infusion pumps, 62361. A commenter requested that we split APC 0227 into two APCs to recognize the cost difference between CPT code 62361 and CPT code 62362. However, since our cost data do not show a significant cost difference between the two devices and APC 227 does not violate the 2 times rule, the Panel recommended that CPT codes 62361 and 62362 remain in APC 0227. We propose to accept the Panel's recommendation.
r. Ophthalmologic APCs.
APC 0230: Level I Eye Tests & Treatments.
APC 0235: Level I Posterior Segment Eye Procedures.
APC 0236: Level II Posterior Segment Eye Procedures.
APC 0698: Level II Eye Tests & Treatments.
We advised the Panel that APCs 0230 and 0235 violate the 2 times rule but that the current configuration of these APCs reflects the Panel's previous recommendations. A presenter to the Panel, who represented a device manufacturer, expressed concern that the pass-through device category “New Technology: Intraocular Lens” was discontinued and these devices are now packaged. The presenter asked the Panel to recommend that future new intraocular lens devices be considered for a new pass-through category.
To remedy the violations to the 2 times rule, we asked the Panel to consider moving CPT code 67820 (Revise eyelashes) from APC 0230 to APC 0698 and CPT code 67110 (Repair detached retina) from APC 0235 to APC 0236. The Panel recommended that we make these changes. We propose to accept the Panel's recommendation and monitor the data for APC 0235 for possible review next year. The Panel also acknowledged that making recommendations concerning pass-through categories is beyond their purview.
s. Skin Tests and Miscellaneous Red Blood Cell Tests; Transfusion Laboratory Procedures.
APC 0341: Skin Tests and Miscellaneous Red Blood Cell Tests.
APC 0345: Level I Transfusion Laboratory Procedures.
We advised the Panel that APCs 0341 and 0345 minimally violate the 2 times rule and suggested moving several CPT codes within these APCs into a new APC because a commenter expressed concern over the combination of skin tests and miscellaneous red blood cell tests in APC 0341, asserting that services within this APC cannot be considered comparable with respect to resource usage.
In order to remedy these violations to the 2 times rule, we suggested moving CPT code 86901 (Blood typing, Rh (D)) from APC 0345 to a new APC along with the following CPT codes from APC 0341:
HCPCS
Description
86880
Coombs test, direct.
86885
Coombs test, indirect, qualitative.
86886
Coombs test, indirect, titer.
86900
Blood typing, ABO.
The Panel recommended that we make the above changes. We propose to accept the Panel's recommendation to move HCPCS codes 86880, 86885, 86886, and 86900 from APC 0341 to new APC 0409 and to move CPT code 86901 (Blood typing, Rh (D)) from APC 0345 to new APC 0409.
t. Otorhinolaryngologic Function Tests.
APC 0363: Level I Otorhinolaryngologic Function Tests.
APC 0660: Level II Otorhinolaryngologic Function Tests.
We expressed concern to the Panel that APC 0660 appears to violate the 2 times rule and suggested moving CPT codes 92543 (Caloric vestibular test) and 92588 (Evoked auditory test) from APC 0660 to APC 0363. The Panel recommended that we make these CPT code changes. We propose to accept the Panel's recommendation to move CPT codes 92543 and 92588 from APC 0660 to APC 0363.
u. Tube Changes and Repositioning.
APC 0121: Level I Tube changes and Repositioning
APC 0122: Level II Tube changes and Repositioning
We expressed concern to the Panel that APC 0121 appears to violate the 2 times rule. In order to remedy this violation, we suggested moving the following CPT codes from APC 0121 to APC 0122:
HCPCS
Description
47530
Revise/reinsert bile tube.
50688
Change of ureter tube.
51710
Change of bladder tube.
62225
Replace/irrigate catheter.
The Panel recommended that we make these CPT code changes. We propose to accept the Panel's recommendation to move CPT codes 47530, 50688, 51710, and 62225 from APC 0121 to APC 0122.
v. Myelography.
APC 0274: Myelography.
We advised the Panel that APC 0274 minimally violates the 2 times rule and suggested moving CPT codes 72285 (X-ray c/t spine disk) and 72295 (X-ray
c/t spine disk) from APC 0274 to a new APC. A presenter, from an organization representing radiologists, agreed with our proposal. The Panel recommended that we make these CPT code changes. We propose to accept the Panel's recommendation to move CPT codes 72285 and 72295 from APC 0274 to new APC 0388.
w. Therapeutic Radiologic Procedures.
APC 0296: Level I Therapeutic Radiologic Procedures
APC 0297: Level II Therapeutic Radiologic Procedures
We advised the Panel that APCs 0296 and 0297 appear to minimally violate the 2 times rule as a result of changes recommended by the Panel and adopted by CMS last year. The Panel recommended that no changes be made to APCs 0296 and 0297 in the interest of preserving the clinical homogeneity of these APCs. We propose to accept the Panel's recommendation that we make no CPT code changes to APCs 0296 and 0297.
x. Vascular Procedures; Cannula/Access Device Procedures.
APC 0103: Miscellaneous Vascular Procedures
APC 0115: Cannula/Access Device Procedures
A commenter requested that we move CPT code 36860 (External cannula declotting) from APC 0103 to APC 0115, asserting that this procedure is more similar to other procedures in APC 0115 and does not fit well in its current miscellaneous APC. The Panel found that the claims data were insufficient to support moving CPT code 36860 from APC 0103 to the higher paying APC 0115 and recommends that CPT code 36860 remain in APC 0103 until more data are available for review. We propose to accept the Panel's recommendation that CPT code 36860 remain in APC 0103 until more claims data become available for review.
y. Angiography and Venography Except Extremity.
APC 0279: Level II Angiography and Venography except Extremity.
APC 0280: Level III Angiography and Venography except Extremity.
APC 0668: Level I Angiography and Venography except Extremity.
A commenter requested that we move CPT code 75978 (Repair venous blockage) from APC 0668 to APC 0280 and that we move CPT code 75774 (Artery x-ray, each vessel) from APC 0668 to APC 0279. A presenter to the Panel testified that CPT code 75978 is commonly used for dialysis patients and often requires multiple intraoperative attempts to succeed; thus, it should be paid under APC 280. The Panel felt that APCs 0279, 0280, and 0668 were clinically homogenous and recommended that we only make changes after consulting with experts in the field. We propose to accept the Panel's recommendation to make no changes to APCs 0279, 0280, and 0668 until consulting with experts in the field. We plan to place these APCs on the Panel's agenda for the 2005 update.
z. Computed Tomography (CT), Magnetic Resonance (MR), and Ultrasound Guidance Procedures Currently Packaged.
APC 0332: Computerized Axial Tomography and Computerized Angiography without Contrast Material.
APC 0335: Magnetic Resonance Imaging, Miscellaneous.
APC 0268: Ultrasound Guidance Procedures.
A presenter to the Panel expressed concern that the packaging of guidance procedures for tissue ablation does not recognize the significant difference in cost and time required to perform each procedure (for example, MRI vs. CT). This presenter felt that hospitals needed more education on the appropriate application of these codes. Another commenter requested that CPT codes 76362, 76394, and 76490 be changed from a status indicator of N to a status indicator of S and included in an appropriate clinical or new technology APC.
The Panel agreed with the above comments and stated that the packaging of these three procedures made it difficult for hospitals to track their use for the purpose of allocating funds. The Panel recommended changing the following CPT codes from a packaged status (N status indicator) to a separately payable status (S status indicator) within the indicated APCs:
Table 3.—HCPCS Codes Proposed To Be Designated as Separately Payable
HCPCS
Description
2003 status
2004 APC
76362
CT scan for tissue ablation
Packaged
0332
76394
MRI for tissue ablation
Packaged
0335
76490
US for tissue ablation
Packaged
0268
We propose to accept the Panel's recommendation to change HCPCS codes 76362, 76394, and 76490 from a packaged status to a separately payable status as indicated above.
aa. Magnetic Resonance Imaging and Magnetic Resonance Angiography Without Contrast.
APC 0336: Magnetic Resonance Imaging and Magnetic Resonance Angiography without Contrast
A commenter requested that we change CPT code 76393 (MR guidance for needle placement) from a packaged status to a separately payable status within APC 0336. Based on clinical homogeneity considerations, the Panel agreed with the commenter and recommended that CPT code 76393 be changed from a status indicator of N to a status indicator of S and placed in APC 0335. We propose to accept the Panel's recommendation.
bb. Plain Film Except Teeth; Plain Film Except Teeth Including Bone Density Measurement.
APC 0260: Level I Plain Film Except Teeth.
APC 0261: Level II Plain Film Except Teeth Including Bone Density Measurement.
APC 0272: Level I Fluoroscopy.
A commenter requested that we move CPT codes 76120 (Cine/video x-rays) and 76125 (Cine/video x-rays add-on) from APC 0260 to APC 0261. However, a presenter to the Panel argued that these CPT codes are fluoroscopic procedures that should not be grouped with Level I radiography procedures. The Panel recommended that we move CPT code 76120 from APC 0260 to APC 0272 and that CPT code 76125 remain in APC 0260. This change makes the APCs more clinically coherent. We propose to accept the Panel's recommendation.
cc. Chemotherapy Administration by Other Technique Except Infusion.
APC 0116: Chemotherapy Administration by Other Technique Except Infusion.
A presenter to the Panel requested that we split APC 0116 into three APCs according to the method of administration: (a) Subcutaneous or intramuscular administration (CPT code 96400); (b) “push” administration (CPT code 96408); and (c) central nervous system administration (CPT code 96450). The presenter also requested that existing CPT codes should replace the more nonspecific Q codes for administration of chemotherapy because the CPT codes would provide more detailed data on methods of chemotherapy administration, which could be used for future payment policy decisions. Another presenter agreed with this request and stated that CPT codes are preferable to Q codes because other payers require CPT codes.
The Panel agreed with the above suggestions to split APC 0116 into 3 APCs according to the method of administration. The Panel recommended that we require hospitals to use the existing CPT codes (for example, 96400, 96408, and 96450) for administration of chemotherapy and map them to APCs 0116, 0117, and 0118, as appropriate. The Panel also recommended that payment rates be based on current Q code cost data until cost data for the CPT codes are available. These cost data would be used to determine whether to change the APC structure for chemotherapy administration.
We propose not to accept the Panel's recommendations to split APC 0116 into 3 APCs and to use CPT codes for administration of chemotherapy. We would consider such a split in the future but would like to first address the administration of drugs issue. We believe that making a change in APC 116 would be too complicated for hospitals given the changes for administration in general that we are considering in this proposed rule for implementation in CY 2004. We will consider such a split for APC 116 for CY 2005. We also believe the use of CPT codes would be burdensome to hospitals, would require extensive education, and would result in a significant amount of miscoding. The CPT codes for infusion therapy are based on the service furnished per hour. We do not believe that all hospitals routinely record the start and stop time for infusion therapy and that doing so in order to be able to bill the proper number of hours of infusion therapy could be very burdensome for them. Moreover, the historic cost data on which we base the payment for the service is reported on a per visit basis (much easier to cull from the record than the number of hours of service) and if we changed to CPT codes for these services, we would be unable to convert the charge/cost data now on a per visit basis to a per hour basis (as required by the CPT code) for budget neutrality purposes. Please see section VI of this proposed rule for further discussion on payments for drugs and drug administration.
dd. Capturing the Costs of Drugs and Biologicals Packaged Into APCs.
APC 0290: Level I Diagnostic Nuclear Medicine Excluding Myocardial Scans.
APC 0291: Level II Diagnostic Nuclear Medicine Excluding Myocardial Scans.
APC 0292: Level III Diagnostic Nuclear Medicine Excluding Myocardial Scans.
APC 0294: Level II Therapeutic Nuclear Medicine.
APC 0666: Myocardial Add-on Scans.
We told the Panel that APCs 0290 and 0291 appear to violate the 2 times rule. Several presenters to the Panel expressed concern that our cost data are inadequate because of confusion over coding due to changes in codes and coding instructions for these procedures, poor hospital reporting of radiopharmaceutical use, and the use of single (not multiple) claims in determining costs. One presenter claimed that the current cost data used for CPT code 78122 (Whole blood volume determination) underestimated real costs because of confusion about whether to code radiopharmaceuticals on a “per dose” basis or “per millicurie” basis. This presenter requested that we move CPT code 78122 from APC 0290 to the higher paying APC 0292.
Other presenters agreed with these concerns and said they were applicable to payments for all drugs, not just radiopharmaceuticals. These commenters were also concerned about the loss of drug-specific data due to packaging because hospitals would have no incentive to code, and thereby, identify, packaged drugs.
Pass-through payments for 236 drugs, biologicals, and radiopharmaceuticals expired as of 2003, and these items are now paid either separately or packaged with the procedures with which they are associated. Drugs and radiopharmaceuticals with median costs for administration of $150 or less were packaged. Beginning in 2003 claims data will not provide specific cost information for packaged items. We requested input from the Panel for methods to determine drug costs.
Panel members were concerned that packaging the costs of radiopharmaceuticals into procedures would result in underpayments for the service because we lack adequate data on the cost of radiopharmaceuticals. They were also concerned about creating incentives to use radiopharmaceuticals based on cost rather than clinical efficacy. The Panel recommended that we consider grouping drugs and radiopharmaceuticals into new APCs taking into account both their cost and clinical use. The Panel further recommended that, if new APCs for radionucliides are created, the descriptors should be as simple as possible and use of confusing units of measure should be limited.
Due to the packaging of radiopharmaceuticals into the APC payments for nuclear medicine procedures, we, along with commenters have expressed concern to the Panel regarding whether the current nuclear medicine APC structure is homogeneous in terms of resource consumption. We have reviewed information about the use and cost of various
radiopharmaceuticals and believe that reorganizing the APCs for nuclear medicine would result in greater clinical and resource homogeneity. Therefore, we propose to eliminate APCs 0286, 0290, 0291, 0292, 0294, 0666 and create 20 new APCs for nuclear medicine that contain the following CPT codes:
HCPCS
Description
APC 0389:
78000
Thyroid, single uptake.
78001
Thyroid, multiple uptakes.
78003
Thyroid suppress/stimul.
78020
Thyroid met uptake.
78099
Endocrine nuclear procedure.
78190
Platelet survival, kinetics.
78191
Platelet survival.
78199
Blood/lymph nuclear exam.
78299
GI nuclear procedure.
78399
Musculoskeletal nuclear exam.
78499
Cardiovascular nuclear exam.
78599
Respiratory nuclear exam.
78699
Nervous system nuclear exam.
78725
Kidney function study.
78799
Genitourinary nuclear exam.
78999
Nuclear diagnostic exam.
79999
Nuclear medicine therapy.
APC 0390:
78006
Thyroid imaging with uptake.
78010
Thyroid imaging.
78015
Thyroid met imaging.
78016
Thyroid met imaging/studies.
APC 0391:
78007
Thyroid image, mult uptakes.
78011
Thyroid imaging with flow.
78018
Thyroid met imaging, body.
78070
Parathyroid nuclear imaging.
APC 0392:
78075
Adrenal nuclear imaging.
APC 0393:
78110
Plasma volume, single.
78111
Plasma volume, multiple.
78120
Red cell mass, single.
78121
Red cell mass, multiple.
78122
Blood volume.
78130
Red cell survival study.
78135
Red cell survival kinetics.
78140
Red cell sequestration.
78160
Plasma iron turnover.
78162
Radioiron absorption exam.
78170
Red cell iron utilization.
78172
Total body iron estimation.
APC 0400:
78102
Bone marrow imaging, ltd.
78103
Bone marrow imaging, mult.
78104
Bone marrow imaging, body.
78185
Spleen imaging.
78195
Lymph system imaging.
APC 0394:
78201
Liver imaging.
78202
Liver imaging with flow.
78205
Liver imaging (3D).
78206
Liver image (3d) with flow.
78215
Liver and spleen imaging.
78216
Liver & spleen image/flow.
78220
Liver function study.
78223
Hepatobiliary imaging.
APC 0395:
78230
Salivary gland imaging.
78231
Serial salivary imaging.
78232
Salivary gland function exam.
78258
Esophageal motility study.
78261
Gastric mucosa imaging.
78262
Gastroesophageal reflux exam.
78264
Gastric emptying study.
78278
Acute GI blood loss imaging.
78290
Meckel's divert exam.
78291
Leveen/shunt patency exam.
78270
Vit B-12 absorption exam.
78271
Vit b-12 absrp exam, int fac.
78272
Vit B-12 absorp, combined.
78282
GI protein loss exam.
APC 0396:
78300
Bone imaging, limited area.
78305
Bone imaging, multiple areas.
78306
Bone imaging, whole body.
78315
Bone imaging, 3 phase.
78320
Bone imaging (3D).
APC 0397:
78414
Non-imaging heart function.
78445
Venous thrombosis study.
78455
Venous thrombosis study.
78456
Acute venous thrombus image.
78457
Venous thrombosis imaging.
78458
Ven thrombosis images, bilat.
APC 0398:
78428
Cardiac shunt imaging.
78460
Heart muscle blood, single.
78461
Heart muscle blood, multiple.
78464
Heart image (3d), single.
78465
Heart image (3d), multiple.
78466
Heart infarct image.
78468
Heart infarct image (ef).
78469
Heart infarct image (3D).
78472
Gated heart, planar, single.
78473
Gated heart, multiple.
78481
Heart first pass, single.
78483
Heart first pass, multiple.
78494
Heart image, spect.
APC 0399:
78478
Heart wall motion add-on.
78480
Heart function add-on.
78496
Heart first pass add-on.
APC 0401:
78580
Lung perfusion imaging.
78584
Lung V/Q image single breath.
78585
Lung V/Q imaging.
78586
Aerosol lung image, single.
78587
Aerosol lung image, multiple.
78588
Perfusion lung image.
78591
Vent image, 1 breath, 1 proj.
78593
Vent image, 1 proj, gas.
78594
Vent image, mult proj, gas.
78596
Lung differential function.
APC 0402:
78600
Brain imaging, ltd static.
78601
Brain imaging, ltd w/flow.
78605
Brain imaging, complete.
78606
Brain imaging, compl w/flow.
78607
Brain imaging (3D).
78610
Brain flow imaging only.
78615
Cerebral vascular flow image.
APC 0403:
78630
Cerebrospinal fluid scan.
78635
CSF ventriculography.
78645
CSF shunt evaluation.
78647
Cerebrospinal fluid scan.
78650
CSF leakage imaging.
78660
Nuclear exam of tear flow.
APC 0404:
78700
Kidney imaging, static.
78701
Kidney imaging with flow.
78704
Imaging renogram.
78707
Kidney flow/function image.
78708
Kidney flow/function image.
78709
Kidney flow/function image.
78710
Kidney imaging (3D).
78715
Renal vascular flow exam.
APC 0405:
78730
Urinary bladder retention.
78740
Ureteral reflux study.
78760
Testicular imaging.
78761
Testicular imaging/flow.
APC 0406:
78800
Tumor imaging, limited area.
78801
Tumor imaging, mult areas.
78802
Tumor imaging, whole body.
78803
Tumor imaging, whole body.
78805
Abscess imaging, ltd area.
78806
Abscess imaging, whole body.
78807
Nuclear localization/abscess.
G0273
Pretx planning, non-Hodgkins.
APC 0407:
79000
Init hyperthyroid therapy.
79001
Repeat hyperthyroid therapy.
79020
Thyroid ablation.
79030
Thyroid ablation, carcinoma.
79035
Thyroid metastatic therapy.
APC 0408:
79100
Hematopoetic nuclear therapy.
79200
Intracavitary nuclear trmt.
79300
Interstitial nuclear therapy.
79400
Nonhemato nuclear therapy.
79420
Thyroid metastatic therapy.
79440
Nuclear joint therapy.
G0274
Radiopharm tx, non-Hodgkins.
We believe that the proposed APC structure, which takes into account the organ(s) being examined (or treated) as well as the type and complexity of the procedure, is more homogeneous both clinically and in terms of resource consumption than the current APC structure.
Currently, payment for the radiopharmaceutical “zevalin” (Ibritumomab Tiuxetan) is packaged into the payment for HCPCS codes G0273 (Pretx planning, non-Hodgkins) and G0274 (Radiopharm tx, non-Hodgkins). To ensure consistency with our payment policy for other radiopharmaceuticals (that is, making separate payment for radiopharmaceuticals whose costs are greater than $150 per episode of care), we are proposing to make payment for “zevalin” (Ibritumomab Tiuxetan) separately from payment for the procedures with which “zevalin” (Ibritumomab Tiuxetan) is used.
We propose to use HCPCS A9522 (Indium 111 ibritumomab tiuxetan) to report the use of In-111 Zevalin (In-111 Ibritumomab Tiuxetan) and HCPCS A9523 (Yttrium 90 ibritumomab tiuxetan) to report the use of Y90 Zevalin (Y90 Ibritumomab Tiuxetan). We would place HCPCS A9522 in APC 9118 with a payment amount of $2,084.55 and HCPCS A9523 in APC 9117 with a payment amount of $18,066.09. We note that payment rates for radiopharmaceuticals are not subject to wage index adjustments because no
portion of the payment is attributed to labor-related costs.
Because we propose that payment for G0273 and G0274 no longer include payment for “zevalin,” we also propose to place G0273 into newly created APC 0406 and G0274 into newly created APC 0408. These APCs include procedures that are similar clinically and in terms of resource consumption to G0274 and G0273, respectively.
Please see section VI of this proposed rule for further discussion on payments for drugs, biologicals, and radiopharmaceuticals.
ee. Endoscopy Lower Airway.
APC 0076: Endoscopy Lower Airway.
A presenter to the Panel expressed concern that APC 0076 apparently violates the 2 times rule and requested that we move CPT code 31631 (bronchoscopy with tracheal stent placement) from APC 0076 and into a new APC.
The Panel suggested that a new APC comprised of the four most costly procedures in APC 0076 would result in a more homogenous grouping, and recommended that we move the following CPT codes from APC 0076 and into newly created APC 0415.
HCPCS
Description
31630
Bronchoscopy dilate/fracture reduction.
31631
Bronchoscopy, dilate w/stent.
31640
Bronchoscopy w/tumor excise.
31641
Bronchoscopy, treat blockage.
We propose to accept the Panel's recommendation that we move CPT codes 31630, 31631, 31640, and 31641 from APC 0076 to new APC 0415.
ff. Gastrointestinal Endoscopic Stenting Procedures.
APC 0141: Upper GI Procedures.
APC 0142: Small Intestine Endoscopy.
APC 0143: Lower GI Endoscopy.
APC 0147: Level II Sigmoidoscopy.
A commenter requested that we create a new APC that would be comprised of all the gastrointestinal endoscopic stent codes. The Panel agreed with the commenter's suggestion because the resource requirements for all gastrointestinal endoscopic stents appear to be similar.
The Panel recommended that we move the following CPT codes from their 2003 APCs to newly created APC 0384 for 2004:
Table 4.—HCPCS Codes To Be Moved Into New APC 0646
HCPCS
Description
2003 APC
2004 APC
43219
Esophagus endoscopy
0141
0384
43256
Upper GI endoscopy w/stent
0141
0384
44370
Small bowel endoscopy w/stent
0142
0384
44379
Small bowel endoscopy w/stent
0142
0384
44383
Small bowel endoscopy
0142
0384
44397
Colonoscopy w/stent
0143
0384
45387
Colonoscopy w/stent
0143
0384
45327
Proctosigmoidoscopy w/stent
0147
0384
45345
Sigmoidoscopy w/stent
0147
0384
We propose to accept the Panel's recommendation to move the following gastrointestinal endoscopic stent CPT codes into newly created APC 0384: 43219, 43256 (from APC 0141); 44370, 44379, 44383 (from APC 0142); 44397, 45387 (from APC 0143); 45327, and 45345 (from APC 0147).
gg. Capturing the Costs of Devices That Are Packaged Into APCs.
APC 0081: Non-Coronary Angioplasty or Atherectomy.
APC 0083: Coronary Angioplasty and Percutaneous Valvuloplasty.
APC 0104: Transcatheter Placement of Intracoronary Stents.
APC 0222: Implantation of Neurological Device.
APC 0223: Implantation of Pain Management Device.
APC 0227: Implantation of Drug Infusion Device.
APC 0229: Transcatheter Placement of Intravascular Shunts.
Several commenters requested that the status indicators for the above APCs (all of which include high-cost devices) be changed from T (multiple-procedure discount applies) to S (multiple-procedure discount does not apply). Two presenters to the Panel stated that hospitals do not pay less for devices when they are used in the context of a multiple-procedure claim and suggested that we apply the multiple-procedure reduction to the non-device portion of the claim only. Alternatively, these presenters recommended that we apply the discount policy only when the device cost is below a predetermined proportion of the APC cost. Another presenter to the Panel requested that APCs 0222, 0223, and 0227 be exempt from the multiple procedure discount policy because the cost of the devices used in these procedures makes up more than 50 percent of the APC cost.
We sought the Panel's input as to whether there are situations in which we should not apply our multiple procedure discount policy. The Panel recommended no changes to the status indicators for any of the device-related APCs discussed because they were concerned that exemptions from the discount policy could result in incentives to use more devices than necessary. However, the Panel asked that we analyze our data to determine if we may be underpaying for devices when the multiple procedure discounting policy is applied and recommended that we develop some methodology to track device costs. In section V.C of this proposed rule, we discuss the issue of device costs and multiple procedure reductions and our progress to date in developing “combination APCs” to address the Panel's concern.
hh. Discussion of Ways To Increase the Use of Multiple Claims To Set APC Payment Rates.
A presenter to the Panel suggested that we use dates of service on multiple procedure claims to increase the number of claims we use to set payment rates. Another presenter suggested that we could further increase the number of multiple procedure claims that could be used to set payment rates by ignoring codes with status indicator K. Other suggestions were to exclude from consideration those APCs with small dollar values and to create a new code or APC specifically for the insertion and removal of devices.
The Panel recommended that our staff explore ways to increase the number of claims used to set payment rates, including the following methodologies: sort multiple claims by date of service; exclude codes with K status indicator from evaluation; exclude those APCs with nominal costs (the definition of “nominal” can be determined by
modeling a variety of possible dollar amounts). In addition, the Panel recommended that we create no G codes as part of the effort to use multiple procedure claims for developing relative weights. If new codes are needed, the Panel suggested that our staff work with the American Medical Association's CPT Board to identify possible new codes. Please see section V.C of this proposed rule for our discussion of the use of multiple procedure claims for developing payment rates for procedures that use devices.
B. Other Changes Affecting the APCs
1. Limit on Variation of Costs of Services Classified Within an APC Group
Section 1833(t)(2) of the Act provides that the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest cost item or service within an APC group is more than 2 times greater than the lowest cost item or service within the same group. However, the statute authorizes the Secretary to make exceptions to this limit on the variation of costs within each APC group in unusual cases such as low volume items and services. No exception may be made in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act.
Taking into account the proposed APC changes discussed in relation to the APC Panel recommendations in section II.A.4 of this proposed rule and the use of 2002 claims data to calculate the median cost of procedures classified to APCs, we reviewed all the APCs to determine which of them would not meet the 2 times limit. We use the following criteria when deciding whether to make exceptions to the 2 times rule for affected APCs:
• Resource homogeneity.
• Clinical homogeneity.
• Hospital concentration.
• Frequency of service (volume).
• Opportunity for upcoding and code fragmentation.
For a detailed discussion of these criteria, refer to the April 7, 2000 final rule (65 FR 18457).
The following table contains APCs that we propose to exempt from the 2 times rule based on the criteria cited above. In cases in which a recommendation of the APC Panel appeared to result in or allow a violation of the 2 times rule, we generally accepted the Panel recommendation because Panel recommendations were based on explicit consideration of resource use, clinical homogeneity, hospital specialization, and the quality of the data used to determine payment rates.
The median cost for hospital outpatient services for these and all other APCs can be found at Web site:
http://www.cms.hhs.gov.
Table 5.—Table of APCs Exempted From 2 Times Rule
Proposed rule APC
Description
0004
Level I Needle Biopsy/Aspiration Except Bone Marrow.
0018
Biopsy of Skin/Puncture of Lesion.
0019
Level I Excision/Biopsy.
0020
Level II Excision/Biopsy.
0032
Insertion of Central Venous/Arterial Catheter.
0043
Closed Treatment Fracture Finger/Toe/Trunk.
0046
Open/Percutaneous Treatment Fracture or Dislocation.
0048
Arthroplasty with Prosthesis.
0055
Level I Foot Musculoskeletal Procedures.
0058
Level I Strapping and Cast Application.
0060
Manipulation Therapy.
0072
Level II Endoscopy Upper Airway.
0073
Level III Endoscopy Upper Airway.
0080
Diagnostic Cardiac Catheterization.
0084
Level I Electrophysiologic Evaluation.
0097
Cardiac and Ambulatory Blood Pressure Monitoring.
0099
Electrocardiograms.
0105
Revision/Removal of Pacemakers, AICD, or Vascular.
0130
Level I Laparoscopy.
0147
Level II Sigmoidoscopy.
0148
Level I Anal/Rectal Procedure.
0155
Level II Anal/Rectal Procedure.
0164
Level I Urinary and Anal Procedures.
0165
Level III Urinary and Anal Procedures.
0192
Level IV Female Reproductive Proc.
0203
Level IV Nerve Injections
0204
Level I Nerve Injections.
0207
Level III Nerve Injections.
0213
Extended EEG Studies and Sleep Studies, Level I.
0214
Electroencephalogram.
0218
Level II Nerve and Muscle Tests.
0231
Level III Eye Tests & Treatments.
0233
Level II Anterior Segment Eye Procedures.
0235
Level I Posterior Segment Eye Procedures.
0239
Level II Repair and Plastic Eye Procedures.
0245
Level I Cataract Procedures without IOL Insert.
0252
Level II ENT Procedures.
0262
Plain Film of Teeth.
0266
Level II Diagnostic Ultrasound Except Vascular.
0274
Myelography.
0303
Treatment Device Construction.
0330
Dental Procedures.
0340
Minor Ancillary Procedures.
0341
Skin Tests.
0344
Level III Pathology.
0363
Level I Otorhinolaryngologic Function Tests.
0364
Level I Audiometry.
0367
Level I Pulmonary Test.
0368
Level II Pulmonary Tests.
0370
Allergy Tests.
0373
Neuropsychological Testing.
0385
Urinary Incontinence Procedures.
0397
Vascular Imaging.
0408
Non-thyroid Radionucliide Treatment.
0409
Red Blood Cell Tests.
0600
Low Level Clinic Visits.
0668
Level I Angiography and Venography except Extremity.
0692
Electronic Analysis of Neurostimulator Pulse Generators.
0698
Level II Eye Tests & Treatments.
2. Procedures Moved From New Technology APCs to Clinically Appropriate APCs
In the November 30, 2001 final rule (66 FR 59903), we made final our proposal to change the period of time during which a service may be paid under a new technology APC. The April 7, 2000 final rule initially established the time frame that new technology APCs would be in effect (65 FR 18457). Beginning in 2002, we retain a service within a new technology APC group until we have acquired adequate data that allow us to assign the service to a clinically appropriate APC. This policy allows us to move a service from a new technology APC in less than 2 years if sufficient data are available, and it also allows us to retain a service in a new technology APC for more than 3 years if sufficient data upon which to base a decision for reassignment have not been collected.
In the context of new technology procedures, we create HCPCS codes for services only. We do not create HCPCS codes for equipment that is used in the course of providing an item or service (except in the case of “C” codes for devices that meet the criteria for transitional pass-through payments). Equipment that is used to provide an item or service is not separately coded because it is a resource required to furnish the service. Like other resources that are required to furnish a service (for example, cost of a room, cost of staff, cost of supplies), the hospital should show charges either as part of its charge for the procedure or with a revenue code.
As described in more detail below, we propose to delete four HCPCS codes that are currently paid in new technology APCs. These four HCPCS codes do not conform to our current policy to not create HCPCS codes for equipment used to provide a service. In addition, there exist, or soon will exist, CPT codes to describe the services being furnished, including any equipment that is needed to perform them, so we believe it is appropriate at this time to delete the HCPCS codes. The HCPCS codes we propose to delete effective January 1, 2004 are:
C1088: Laser Optic Treatment system, Indigo Laseroptic Treatment System,
C9701: Stretta System,
C9703: Bard Endoscopic Suturing System, and
C9711: H.E.L.P. Apheresis System.
These codes were created and assigned to New Technology APCs when it was CMS policy to create a C code to describe an item of equipment for which there was no other means of making payment for the service in which the equipment was used. In the November 30, 2001 final rule, we announced that we would not use New Technology APCs to pay for drugs, devices, and equipment that are used in the performance of a procedure, but which are not in and of themselves a complete service. It is due to an oversight on our part that we did not delete these codes at that time. We stopped using C codes to describe specific devices in April 2001 and no longer create C codes to describe items of equipment. Moreover, we have found that there are existing CPT codes or, in the case of C9701, there will soon be a CPT tracking code, that will accurately report the services being furnished, and under which the hospital should report the charges for providing the services, including charges related to the equipment needed to furnish the service. Therefore, payment will be appropriate regardless of whether there are separate codes for these items of equipment.
HCPCS code C1088, the Laser Optic Treatment System, Indigo Laseroptic Treatment System, now paid under APC 0980 is no longer needed because our review of data shows that the equipment it describes is appropriately reported under CPT codes 52647 and 52648. The procedures described by these CPT codes may be performed by using several types of equipment, one of which is the type described by C1088. In fact, most of the claims containing line items for C1088 are accompanied by line items for 52647 or 52648. This means that hospitals are appropriately reporting these services under the applicable CPT codes and that any charges associated with C1088 are likely duplicate charges for the service provided. Therefore, we propose to delete C1088 and to have hospitals continue to report these services under CPT codes 52647 and 52648, which are in APC 0163.
HCPCS code C9701, the Stretta System, now paid under APC 0980, is used in a procedure that will soon be given a CPT Category Three Tracking Code by the American Medical Association's CPT Editorial Panel. We propose to use the CPT tracking code to report services using the Stretta System and to delete HCPCS code C9701. We propose to assign the new CPT tracking code in APC 1557.
HCPCS code C9703, the Bard Endoscopic Suturing System, now paid under APC 0979, is used in a procedure that has been granted a CPT Category Three Tracking Code, 0008T, which describes the procedure for which this equipment is used. We propose to delete C9703 and to require hospitals to use 0008T to report services using this equipment. We propose to assign CPT code 0008T to APC 1555 for 2004.
HCPCS code C9711, the H.E.L.P. Apheresis System, now paid under APC
0978, is used to provide apheresis, which is appropriately reported using CPT codes 36511 through 36516. Therefore, we propose to delete C9711 and to require hospitals to report the service in which this equipment is used by using CPT codes 36511 through 36516.
3. Revision of Cost Bands and Payment Amounts for New Technology APCs
In the April 7, 2000 final rule (68 FR 18477), we created 15 new technology APCs (APCs 0970 through 0984) to pay for certain new technology services under the OPPS. As discussed in both the April 7, 2000 and November 30, 2001 final rules, new technology APCs are intended to pay for new or rarely performed procedures for which we lack sufficient cost data to make an assignment to a clinical APC. New technology APCs are defined on the basis of costs, not the clinical characteristics of a service. The payment rate for each new technology APC is based on the midpoint of a range of costs.
In the November 30, 2001 final rule (66 FR 59856), we revised several of the cost bands, added a payment level to the original group of new technology APCs, and assigned status indicator “T” to APCs 0970 through 0985. We also created a parallel set of new technology APCs (APCs 0706 through 0721), each of which was assigned status indicator “S.” In addition, we changed the definition of what is appropriately paid for under a new technology APC; we refined the criteria for determining assignment of a procedure or service to a new technology APC; we clarified the information that must be supplied for a request for new technology status to be considered; and we removed the restrictions on how long a procedure can be assigned to a new technology APC. These changes, which are discussed in detail in the November 30, 2001 final rule, were implemented effective April 1, 2002.
In the November 1, 2002 final rule, we established two additional new technology APCs, APC 989, and APC 725; as these APCs were not discussed in the proposed rule, they were considered interim with comment.
In this proposed rule, we are proposing to implement a comprehensive restructuring of all the new technology APCs. First, the cost intervals in the current new technology APCs are inconsistent, ranging from $50 to $1,500. Secondly, as the number of procedures assigned to new technology APCs increases, we believe that narrower cost bands are required to avoid significant mispayment for new technology services. The increased number of new technology APCs that would result from narrowing the cost bands cannot be accommodated within the current sequence of available APC numbers. Therefore, we are proposing to dedicate two new series of APC numbers to the restructured new technology APCs, which would allow us to narrow the cost bands and also afford us flexibility in creating additional bands as future needs may dictate.
We propose to establish cost bands from $0 to $100 in increments of $50, from $100 through $2,000 in intervals of $100, and from $2,000 through $6,000 in intervals of $500. We believe that these intervals would allow us to price new technology services more appropriately and consistently. We also propose to retain two parallel sets of new technology APCs, one with status indicator “S” and the other with status indicator “T.” We invite comments on the hierarchy of cost levels of the restructured new technology APCs.
We would reassign current new technology procedures to the level in the restructured new technology APCs so that the payment amount for the procedure in 2004 closely approximates the current payment amount. As we explained in the November 30, 2001 final rule, we generally keep a procedure in the new technology APC to which it is initially assigned until we have collected data sufficient to enable us to move the procedure to a clinically appropriate APC. However, in cases where we find that our original new technology APC assignment was based on inaccurate or inadequate information, we may, based on more recent information (including claims data), reassign the procedure or service to a different new technology APC that more appropriately reflects its cost.
The proposed restructured new technology APCs are listed in Addendum A.
4. APC Assignment for New Codes Created During Calendar Year (CY) 2003
During CY 2003, we created several HCPCS codes to describe services payable under the hospital OPPS. These codes have already been assigned to APCs for CY 2003. In this proposed rule, we solicit comment on the APC assignment of these services. In addition, in this proposed rule, we propose to create a new HCPCS code with an effective date of July 1, 2003. Table 6 includes a new procedural HCPCS code created for implementation in July 2003.
Table 6 does not include new codes for drugs and devices for which we established or intend to establish pass-through payment eligibility effective July or October 2003. Furthermore, neither the new procedural HCPCS nor the new pass-through codes proposed for implementation beginning October 2003, or later, are included in Addendum B of this proposed rule.
Table 6—New G Code for 2003
HCPCS code
Long descriptor
SI
Effective date
APC
G0296
PET imaging, full and partial ring PET scanner only, for restaging of previously treated thyroid cancer of follicular cell origin following negative I-131 whole body scan
S
07/01/03
0714
5. Creation of APCs for Combinations of Device Procedures
In the course of developing the proposed rule for the 2004 OPPS, we wanted to ensure that the claims we use to set payment rates for APCs into which we package medical devices accurately reflect the costs of both the device and non-device portions of the service. As discussed in section III of this proposed rule, we have made a number of changes to our methodology for the creation of single procedure claims used to set relative weights. These changes enabled us to use charge data from more claims to set relative weights. However, we have noted that in spite of our new methodology, we were unable to significantly increase the number of single procedure claims used to set relative weights for several APCs that use high cost devices. One reason for this is that these APCs are often billed in combination with several other major procedures so that we are unable to generate single procedure claims for these APCs.
In the past, commenters have alleged that without using multiple procedure claims, we will be unable to capture the
costs of the more complex cases in which multiple procedures are performed and multiple devices are used. These commenters further requested that we change the status indicator of certain APCs from “T” to “S” in order to appropriately capture the cost of high cost devices when multiple procedures, each using devices, were billed. In addition to attempting to find a way to use multiple procedure claims, we also decided to examine our claims data to investigate whether our current payments for multiple procedures performed on the same date, each using high cost devices accurately captured the costs of the device and non-device portion of each procedure.
In order to do this, we reviewed claims from APCs that required high cost devices and from which we were unable to use the majority of claims to set a relative weight for the APC (for example, APCs for insertion of pacemakers, defibrillators, and neurostimulators). We determined the frequency with which other APCs were billed with the high cost device APCs. We then selected those claims where two APCs using high cost devices, or one APC using high cost devices and one high cost, non-device-requiring APC, were billed together with a frequency of more than 100 for the time period April 1, 2002 through September 30, 2002. This number was chosen in order to ensure that we had enough claims to determine reliable median costs. We included the APC combination 0081/0104 unintentionally and performed the analysis without realizing until after the data were developed that it had fewer than 100 claims and therefore should not have been selected. We expected that the data being used to set the 2004 weights would have a similar number of each combination to the number we found in the April 2002 to September 2002 claims. Review of Table 7, Combination APCs Used in Analysis, shows that even starting with 100 claims, we frequently had to determine median costs with very few claims. Additionally, Table 7 reveals that only a few combinations of two high cost device-requiring APCs are billed together 100 or more times. Six of the twelve combinations we analyzed (for example, claims for insertion of pacemakers and defibrillators) contained APC 0105 (Removal of pacemaker defibrillator), which is not a high cost, device-requiring APC. As the data show, APC 0105 is frequently found on multiple procedure claims, but because it is not a high cost device-requiring APC, when it is billed with these APCs, the multiple procedure reductions are applied to APC 0105. Therefore, we have determined that the vast majority of claims for APCs, such as “insertion of Cardioverter Defibrillators,” were not usable multiple procedure claims for the purpose of determining relative weights under our single claim process because they were billed with APC 0105.
After selecting the combinations to review, we determined the hospital costs associated with providing these “combination” procedures using the following methodology:
1. We selected claims where the two APCs of interest both appeared on the claim with the same date of service, and subjected them to the same trimming methodology we use for single procedure claims.
2. We then required that each APC appear on the claim only once. (For example, if two HCPCS codes from APC 0081 appeared on a claim with one HCPCS code from APC 0229, we did not use the claim. Many claims were discarded because of this requirement.)
3. From the claims in step two, we selected only those claims that included the device category codes for the devices required to perform the service. This is similar to our methodology for using single procedure claims where the procedure requires the use of a device with a category code (for example, for claims involving APCs 0222/0225, we used only claims that contained C codes for both a neurostimulator pulse generator and neuroelectrodes).
4. We ignored any line items for separately payable services under OPPS or the lab fee schedule and any line items with revenue centers containing HCPCS other than those in the APCs of interest.
5. At this point, we were left with claims where the only separately payable services were the line items for the HCPCS in the APCs of interest.
6. We packaged into the payable HCPCS codes all device category codes, all packaged HCPCS codes, and all revenue center codes without HCPCS.
7. We then determined the median cost for each APC pair using the remaining claims.
We believe the median cost estimate determined by this methodology should, if anything, overestimate the costs of the procedure combinations studied since all packaged line items were attributed to the APCs of interest unless they were clearly identified as being associated with other procedures. For example, if line items for a clinic visit and a medical or surgical supply revenue center appeared on the claim, we packaged the charges associated with the revenue center entirely into the APCs of interest and not into the APC for clinic visits.
We also determined the median costs for these APCs using our usual single claims methodology (these medians are contained in Addendum A). We then determined a summed median cost of each APC pair using our current payment policy, which allows payment at 100 percent for the most expensive APC with “T” status indicator and 50 percent for each additional APC with “T” status indicator. That is, we added the median cost of the more expensive APC and 50 percent of the median cost of the less expensive APC as a proxy for the total median cost (and payment) using our current payment policy. We then compared this figure with the median cost for the “combination APC.” (
See
Table 7.) We believe this comparison is an indicator of whether our current payment policy accurately pays for the costs of these APCs when they are billed together on the same date of service.
Our comparison reveals that, of the 12 “combination APCs” created, 7 had higher median costs than the median costs obtained with the multiple procedure methodology (we note that because APC 222 has a status indicator of “S”, we did not apply the multiple procedure reduction for the APC 0222/0225 combination).
For three of these seven combinations, we consider the data unreliable because we were able to use very few claims to determine the “combination” median cost. Specifically, for APC combination 0085/0655, we were able to use only 37 claims; for APC combination 0105/0089, we were to use only 16 claims; and for APC combination 0105/0655, we were able to use only 12 claims. This is in distinction to the number of claims we used to determine the median costs for APCs 0655 and 0089 alone (1,170 and 303 respectively). Further, two of these combinations contain only one APC using high cost devices because APC 0105 does not require the use of high cost devices. This means that the multiple procedure reduction was applied to APC 0105. In such cases, we believe the reduction is appropriate because when a pacemaker or defibrillator is removed and replaced, the patient is only anesthetized once, the room only needs to be prepared once, and the time for replacement is usually less than the time for insertion due to the existence of a subcutaneous pocket.
Three other APC combinations, 0105/0090, 0105/0107, and 0105/0654, also contain only one APC requiring the use of high cost devices and therefore
should not pose the problem of underpayment due to the multiple procedure reduction, which was applied to APC 0105. Furthermore, in these three cases, the difference in median costs between the combination median and the median determined by our multiple procedure reduction methodology was, in our view, insignificant (all much less than 5 percent).
For APC combination 0222/0225, the difference in median cost could be considered significant at slightly under 5 percent, but only 74 claims were used to determine the combination median. Because we used approximately 600 claims to determine the median costs for APCs 0222 and APC 0225 individually, we consider the combination median cost comparatively unreliable.
Lastly, we note that for the other five combinations, our current payment policy pays more than the “combination” payment methodology.
Based on this comparison we considered several options for payment of these APCs when billed together:
1. Maintain our current payment policy.
2. Change the status indicators of certain APCs requiring the use of high cost devices to “S.”
3. Create “combination APCs” with relative weights calculated using the methodology described above in order to make a single payment when the two APCs in the combination are billed together.
The third option need not result in creation of new HCPCS codes and APCs for hospitals to report. Instead, we could make changes in the logic of the outpatient code editor (OCE) so that when hospitals bill the two APCs in a combination, the OCE would “map” the payment to a single amount rather than paying the more expensive APC at 100 percent and the less expensive at 50 percent. The following is an example of how combination APCs might work: If a unit of a code in APC 0081 was billed with a unit of a code in APC 0104 on the same date, the multiple procedure discount would not be applied, so payment would no longer be made at 100 percent of the payment for APC 0104 (the highest paid APC in the pair) and 50 percent of the payment for APC 0081. Instead, if we were to implement combination APCs for this pair, the combination of codes would be mapped to a new “combination” APC, and we would make a single payment for both services. The payment rate for the new “combination” APC would be based upon a scaled weight calculated from the median cost for all claims containing one unit of a code from APC 0081 and one unit of a code from APC 0104 (using the methodology described above). If either of the APCs were billed without the partner APC for that established “combination” APC, then the APC would map to the current APC that contains the code.
Based on our analysis, we are proposing option one: Maintaining our current payment policy. We believe that our analysis shows that our current payments for these APCs adequately reflect the costs of the procedures, even when billed in combination.
We note that only a few APCs requiring the use of high cost devices are billed in combination. Thus, we do not believe there are compelling reasons to establish a new, or special, payment policy in situations where two APCs requiring high cost devices are billed together fewer than 100 times. Even when APCs are billed together, we have shown that frequently the data are unreliable due to the low number of claims we can actually use to determine the total median cost of the “combined” procedure. Furthermore, even where the number of usable claims is large enough to give us some assurance that the data are reliable, the median costs as determined by the two methodologies do not support any changes in our current payment policy. In some instances, adoption of the new payment policy would actually reduce payments for these services, and, in most other cases, any increase in payments would be negligible.
One commenter has brought to our attention the fact that, rarely, correct coding does not allow hospitals to bill for two APCs requiring high cost devices. One example is APC 0082 (Coronary Atherectomy) and APC 0104 (Transcoronary Stent Placement) because atherectomy is considered to be a component of stent placement when both are performed together. In those cases, we would expect hospitals to bill for all the devices used to accomplish the atherectomy and the stent placement. To the extent that both were performed, the median cost of stent placement should reflect the cost of performing an atherectomy. Therefore, we do not believe there is a compelling reason to create new payment policy for these rare situations. (See also the discussion below on “case rate” purchasing by hospitals.)
It could be reasoned that our analysis of the costs of “combined” procedures is faulty because hospital coding and billing inaccuracies may apply to these claims as well as single procedure claims (and may even be magnified). However, that reasoning would undercut, and be contrary to, the repeated comments that we need to use more multiple procedure claims to set relative weights because single procedure claims do not capture the true costs of complex procedures or episodes of care. Our investigation was performed precisely to address these concerns, determine how we might use multiple procedure claims, and what effect use of those claims would have on payment rates. Even with use of a methodology that overestimated the costs of combination procedures, we were unable to show that the median costs (and payments) using our current payment policy do not accurately reflect the costs for performing these procedures.
Other possible factors affecting our analysis include charge compression and/or inadequate charges for these procedures or the devices associated with them. However, it is not possible for us to know the magnitude of how charge compression or inadequate charges might affect costs or what methodologic or payment adjustment would be appropriate to address the problem. Furthermore, we point out that charge compression and inadequate charges should affect our cost data for these APCs when billed alone and when these APCs are billed in combination. It is unknown whether the effects would be similar in each instance but we have no reason to believe they would be different. Therefore, we do not believe that adjusting for charge compression or inadequate charges would change the “relative” median costs of the APCs when billed alone or in combination. Finally, we believe that the median costs of the APCs billed in combination support the concept that economies of scale are achieved in those cases. There are at least two reasons why this might occur: First, many hospitals purchase devices on a case rate or capitated basis, which means that the hospitals' device cost “per case” is fixed (with quarterly adjustments made based on volume and actual device use in the previous quarter(s)). For example, inserting a stent or cardioverter defibrillator requires the use of multiple devices in addition to the stent or defibrillator. A hospital may agree to pay $XXXX “per case” for all the devices used to insert a stent (for example, guidewires, introducers, catheters, rotablators etc.). This “per case” payment means that the hospital has the same cost irrespective of whether a rotablator, two catheters, or four catheters were used for a specific patient. Second, even if hospitals purchase devices on a “per device” basis, it is possible that no extra catheters, guidewires, and/or
introducers, for example, are used when a second related procedure is performed (for example, an electrophysiology study and a defibrillator lead placement, or an angioplasty and a stent placement).
In summary, we have concluded that there is no compelling reason to change our current payment policy for APCs requiring the use of high cost devices.
We solicit public comments on our methodology, analysis, and payment options for these APCs. We particularly solicit comments on how our analysis should affect any use of external data sources in the final rule. Specifically, we ask commenters to explain why submitted external data should be used in preference to our single or multiple claim data for APCs requiring the use of high cost devices.
We also note that creation of “combination APCs” would allow us to set relative weights using a number of claims that we otherwise would not be able to use. Therefore we solicit comments on this approach to using more claims to set relative weights and specifically request comments on how to use those claims even if we do not create “combination APCs.”
Table 7.—Combination APCs Used in Analysis
Combination of APCs
Descriptions of both APCs in the combination
Sum of single APC medians adjusted for multiple procedure policy
Frequency of combination APC billed on the same date
Frequency of claims used for median cost of services in both APCs
Median cost of services in both APCs
Percent difference median for both APCs to sum of adjusted single medians
0081/0104
Noncoronary Angioplasty/Athectomy & Transcatheter Placement of Intracoronary Stent
$5,760.50
55
2
$5,589.14
−2.97
0081/0229
Noncoronary Angioplasty/Athectomy & Transcatheter Placement of Iintravascular Stent
4,507.09
6177
135
4,116.50
−8.67
0085/0108
Level II Electrophysiologic Evaluation & Insertion/Replacement/Convert of Cardioverter Defibrillator
29,749.68
502
63
20,438.99
−31.30
0085/0655
Level II Electrophysiologic Evaluation & Insertion/Replacement/Conversion of Permanent Dual Chamber Pacemaker
9,398.45
268
37
10,832.16
15.25
0105/0089
Revision/Removal of Pacemakers, AICD, or Vascular & Insertion/replacement of Permanent Pacemaker and Electrodes
7,360.80
221
16
12,268.96
66.68
0105/0090
Revision/Removal of Pacemakers, AICD, or Vascular & Insertion/replacement of Permanent Pacemaker Pulse Generator
5,668.72
1426
516
5,751.30
1.46
0105/0107
Revision/Removal of Pacemakers, AICD, or Vascular & Insertion of Cardioverter-Defibrillator
17,579.21
1106
235
18,294.85
4.07
0105/0108
Revision/Removal of Pacemakers, AICD, or Vascular & Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads
29,239.29
294
8
26,843.72
−8.19
0105/0654
Revision/Removal of Pacemakers, AICD, or Vascular & Insertion/Replacement of a permanent dual chamber pacemaker
6,639.65
3653
1475
7,014.00
5.64
0105/0655
Revision/Removal of Pacemakers, AICD, or Vascular & Insertion/Replacement/Conversion of a Permanent Dual Chamber Pacemaker
8,888.06
237
12
10,290.88
15.78
0222/0225
Implantation of Neurological Device & Implantation of Neurostimulator Electrodes
14,345.41
368
74
15,002.40
4.58
0223/0227
Implantation of Pain Management Device & Implantation of Drug Infusion Device
10,350.16
222
65
9,815.08
−5.17
Table 7 lists the combinations that we investigated, abbreviated titles for the single APCs in the pair, the number of times the APCs were billed together, the number of claims used to set the combination APC median, a combined median cost for claims in which both the APCs appeared (derived from the methodology discussed above), the median cost for the two APCs using the multiple procedure reduction policy, and the difference in median costs (expressed in percent).
6. New APC for Antepartum Care
We propose to split APC 0199, Obstetrical Care Service into two APCs. New APC 0700, Antepartum Care Service, would be created and 59412 (external cephalic version) would be assigned there. The two remaining HCPCS code 59409 (vaginal delivery only) and 59612 (vaginal delivery only, after previous cesarean delivery) would remain in APC 0199, Obstetrical Care Service. We propose to make this change because of the great difference in cost between vaginal delivery and the external cephalic version procedures. We believe that inclusion of the lower cost procedure in the APC with vaginal deliveries may have an affect on the median cost for the APC that results in less accurate payment.
III. Recalibration of APC Weights for CY 2004
Section 1833(t)(9)(A) of the Act requires that the Secretary review and revise the relative payment weights for APCs at least annually, beginning in 2001. In the April 7, 2000 final rule (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000 for each APC group. Except for some reweighting due to APC changes, these relative weights continued to be in effect for CY 2001. (See the November 13, 2000 interim final rule (65 FR 67824 to 67827).)
To recalibrate the relative APC weights for services furnished on or after January 1, 2004 and before January 1, 2005, we are proposing to use the same basic methodology that we
described in the April 7, 2000 final rule. That is, we would recalibrate the weights based on claims and cost report data for outpatient services. We propose to use the most recent available data to construct the database for calculating APC group weights. For the purpose of recalibrating APC relative weights for CY 2004, the most recent available claims data are the approximately 115 million final action claims for hospital outpatient department services furnished on or after January 1, 2002 and before January 1, 2003. We then eliminated the following 45.7 million claims because many of these claims were for services that are not paid under OPPS: Claims in the first quarter of calendar year 2002; claims for bill types other than OPPS bill types; claims for services furnished in Maryland, Guam, and the Virgin Islands. We matched the 69.3 million claims that were paid under the OPPS to the most recent cost report filed by the individual hospitals represented in our claims data. The APC relative weights would continue to be based on the median hospital costs for services in the APC groups.
A. Data Issues
1. Period of Claims Data Used
We propose to use claims for the period beginning April 1, 2002 through and including December 31, 2002 as the base for the CY 2004 OPPS. The statute requires that we take into account new cost data and other relevant information and factors in reviewing and revising the weights, and we believe that this period will give us the most recent costs. We chose not to include the claims for the period beginning on January 1, 2002 through March 31, 2002 because they were used to set the payment rates for the 2003 OPPS and we believe that the most recent 9 months of claims data will result in payment rates that are most representative of the current relative costs of hospital outpatient services.
The claims base used to calculate the proposed payment weights and payment rates in this proposed rule is not the totality of claims on which the final weights and rates will be based. The use of this claims base is due to (1) a lag in claims submission by providers; (2) a statutory limit on the date before which no claim can be paid; and (3) the additional processing time it takes for the claims data to be included in the national claims history, which is the source of our claims data. For these reasons, the claims data used for this proposed rule are for the period of services furnished between April 1, 2002 and November 1, 2002. However, when the final weights and rates are calculated, we will have access to approximately 95 percent of the claims data for services furnished from April 1, 2002 through December 1, 2002.
2. Treatment of “Multiple Procedure” Claims
We have received many requests asking that we ensure that the data from claims that contain charges for multiple procedures are included in the data from which we calculate the CY 2004 relative payment weights. Those making the requests believe that relying solely on single-procedure claims to recalibrate APC weights fails to take into account data for many frequently performed procedures, particularly those commonly performed in combination with other procedures.
We agree that optimally, it is desirable to use the data from as many claims as possible to recalibrate the relative payment weights, including those with multiple procedures. We identified certain multiple-procedure claims that could be treated as single-procedure claims, enabling us to greatly increase the number of services used to develop the APC payment weights for CY 2003. However, several inherent features of multiple procedure claims prevented us from using all of them to recalibrate the payment weights. We discussed these obstacles in detail in the August 9, 2002 proposed rule (67 FR 52092, 52108 through 52111), and the November 1, 2002 final rule (67 FR 66718, 66743 through 66746).
For the CY 2004 OPPS, we propose several changes to how we handle and use claims data to enable us to use more claims in the creation of median costs on which our payment weights and rates are based. Specifically, we propose to expand the number of HCPCS codes that we ignore for purposes of creating a pseudo single claim from claims that contain other separately payable HCPCS codes. We also looked at dates of service on packaged HCPCS codes and packaged revenue centers, and propose, where possible, to attribute the charges to major, separately payable HCPCS codes based on the codes' dates of service. Our complete discussion of the use of data to set the weights for CY 2004 OPPS follows in section III.B of this proposed rule.
Expansion of the list of codes to be ignored in creation of single claims.
For CY 2003 OPPS, we ignored the presence of HCPCS codes 93005, 71010, and 71020 to create pseudo single claims where there was one remaining separately paid, major HCPCS code on the claim. This enabled us to attribute the costs of packaged HCPCS codes and packaged revenue centers to the remaining separately paid HCPCS codes and, therefore, to use the charge data on the claim. We did this based on our belief that these three separately payable HCPCS codes would not have charges related to them that would be placed in packaged HCPCS codes or packaged revenue centers. Instead, we believe that the charges found in the packaged HCPCS or packaged revenue centers would be appropriately associated with the only other separately payable HCPCS that remained on the claim when these codes are ignored.
For CY 2004 OPPS, we propose to expand the list of HCPCS codes that we would ignore for purposes of creating pseudo single claims. On claims that contain other separately payable HCPCS, we propose to ignore the HCPCS codes in the APCs identified in Table 9. As with HCPCS codes 93005, 71010, and 71020, we believe that these codes are highly unlikely to have charges that are found in packaged HCPCS or in packaged revenue centers. Therefore, we believe that they can be ignored for the purpose of creating a pseudo single claim from the remaining charges on the claim. We solicit comments on the proposed methodology to create pseudo single claims, on the list of codes in Table 9 that we propose to ignore, and whether there are other low cost services that we could ignore in using this methodology. We also request comments on whether we should use the charges for the codes in the APCs in Table 9 to create pseudo single claims to be used in setting the median costs for these APCs.
Use of dates of service to create single claims.
For CY 2003, we did not use dates of service to attribute charges on packaged HCPCS and packaged revenue centers to major separately payable HCPCS codes. For CY 2004, we propose to use dates of service on HCPCS codes and on packaged revenue centers to attribute charges to a major payable HCPCS code where the dates of service match. We can only use this approach where there are different dates of service for the separately payable major HCPCS codes. Where there are multiple major payable HCPCS codes on a claim with the same date, we cannot use this approach because there is no way to tell to which major payable HCPCS code the charges from the packaged HCPCS or packaged revenue center belong. Moreover, where the hospital does not provide dates for all packaged revenue centers, we cannot attribute charges based on the date of service.
We believe that this methodology yields more single claims than if we did not use dates of service. However,
because hospitals are not required to put dates of service for line items with only a revenue center but no HCPCS code, we will not be able to perform this analysis routinely for each claim. Therefore, the claims from hospitals that do provide those dates are more likely to be used for weight-setting than claims of hospitals that do not provide those dates on the claim. We are unable to determine what impact, if any, this methodology has on the weights for the services and we solicit comments on the approach.
We invite comments on whether we should require hospitals to enter a line item date of service for every OPPS charge. We are interested in receiving comments regarding the implications the policy would have for hospitals, including potential obstacles and estimates on the amount of time that would be required to implement this change.
3. Adjustment of Median Costs for CY 2003 OPPS
The relative weights of several APCs, especially APCs requiring the use of high cost devices, that were developed for the 2003 OPPS fee schedule, using claims data from April 1, 2001 to March 31, 2002, showed a significant decrease from the relative weights that were established for the 2002 OPPS fee schedule. The 2002 OPPS relative weights were based on both claims data and packaging of 75 percent of the manufacturer submitted costs for devices into the APC cost. Using our April 1, 2001, through March 31, 2002 claims data resulted in significant decreases in payment for many blood products and separately payable drugs. In order to minimize any beneficiary access problems related to the reduction in payment for blood products, separately payable drugs, and certain device-related APCs, we created a limit for any payment reductions as follows:
Device and Procedural APCs
For APCs requiring the use of one or more devices receiving pass-through payments, we determined the median cost of the APC using only claims that contained device category “C” codes. For selected APCs, we used only claims containing the device “C” code specific to the service furnished (for example, we used only claims containing the “C” codes for cardioverter defibrillators to determine the median cost for the APC for inserting cardioverter defibrillators).
We then compared the median costs established for the 2002 OPPS fee schedule and the median costs based on our April 1, 2001, through March 31, 2002 claims data and limited decreases in median costs (from the 2002 fee schedule) by 15 percent plus half the amount of any reduction beyond 15 percent (for example, if the claims data showed the median cost of an APC decreased 45 percent, the amount of allowed reduction would have been 15 percent +
1/2
× (45 percent−15 percent) = 30 percent). For a few APCs where device costs accounted for more than 80 percent of the total cost of the APC, we also incorporated external data into our calculation of the median cost.
Blood and Blood Products
We limited reductions in median costs to 11 percent as compared to the 2002 median costs so that the reduction in payments, after other adjustments, for these items would generally not exceed 15 percent.
Separately Payable Drugs
We noted in the November 1, 2002 final rule that the reason our April 1, 2001, through March 31, 2002 claims data resulted in lower median costs for many drugs was that the payment rates for 2002 were based on 95 percent of average wholesale price (AWP) as required by law for pass-through drugs. We believed, and continue to believe, that the acquisition cost for many drugs is considerably less than 95 percent of AWP. However, we limited reductions in median costs for separately payable drugs and for administration of packaged drugs using the same methodology as described above for device and procedural APCs.
Procedural and Device Intense APCs for 2004 OPPS
Comparison of procedural APC medians for 2004 OPPS to adjusted medians for 2003 OPPS.
Our analysis of the April 1, 2002, through December 31, 2002 claims data, which is the basis for the proposed median costs for the 2004 OPPS, reveals a distribution of changes in median costs that are not unusual. Compared to the adjusted median costs used for the 2003 OPPS, most of the median cost increases and decreases were for nondevice-related APCs. Very few device-related APCs saw their median costs decrease significantly. We also note that, with a few exceptions, the median cost increases and decreases were not unusually distributed; we believe that the fluctuations should not be unexpected in a new payment system. For example, the cost of providing items and services changes yearly and, in a new payment system, the accuracy of coding services will improve year to year. We also compared the actual median costs from the April 1, 2001 through March 31, 2002 claims data with the actual median costs from the April 1, 2002 through December 31, 2002 claims data. Given the level of consistency we see in our claims data, we believe that adjustment of median costs last year may have resulted in payment amounts for some APCs that were too high.
The medians we propose to use to set weights for the 2004 OPPS for APCs in Table 8 have decreased more than 10 percent in median cost when compared to the adjusted median costs for 2003 OPPS. For reference, we also provide the actual median cost from the claims data we used to set 2003 OPPS payment rates. Some changes appear to be the result of normal fluctuation in the costs of services. In other cases the actual median cost in the April through December 2002 data (the 2004 OPPS medians) is consistent with the actual median cost in the April 1, 2001 through March 31, 2002 data (used for the 2003 OPPS medians), but decreased significantly only in comparison to the adjusted 2001 medians used for 2003 OPPS. In general, where there is consistency between the 2001 (2003 OPPS) and 2002 (2004 OPPS) unadjusted medians or where a change appears to represent normal fluctuations in costs, and we know of no special circumstances that would cause us to believe that there are problems in the claims data, we conclude that the claims data accurately represent the cost of the service. After reviewing the data, we believe that there is no sound basis for making an across-the-board adjustment to our April through December 2002 median costs, notwithstanding that using the unadjusted 2004 median may result in a reduced payment compared to the payment that was based on adjusted medians under 2003 OPPS.
Table 8.—APCs With Median Cost Decreases of 10 Percent or More
Final APC
Description
SI
Final 2003 dampened median cost
2004 proposed rule APC median cost
% diff APC median cost (2003 dampened vs. 2004 proposed rule)
0312
Radioelement Applications
S
$3,141.77
$216.18
−93.12
0330
Dental Procedures
S
284.02
32.87
−88.43
0692
Electronic Analysis of Neurostimulator Pulse Generators
S
371.55
56.40
−84.82
0651
Complex Interstitial Radiation Source Application
S
3,250.63
588.67
−81.89
0225
Implantation of Neurostimulator Electrodes
S
8,277.07
3,283.68
−60.33
0352
Level I Injections
X
13.10
6.31
−51.83
0068
CPAP Initiation
S
123.29
65.83
−46.61
0124
Revision of Implanted Infusion Pump
T
2,975.12
1,608.78
−45.93
0688
Revision/Removal of Neurostimulator Pulse Generator Receiver
T
4,429.71
2,495.57
−43.66
1719
Brachytx seed, Non-HDR Ir-192
K
31.04
17.89
−42.36
0699
Level IV Eye Tests & Treatments
T
223.07
130.15
−41.65
0199
Obstetrical Care Service
T
232.46
142.74
−38.59
0313
Brachytherapy
S
1,249.57
769.14
−38.45
0236
Level II Posterior Segment Eye Procedures
T
1,873.66
1,153.59
−38.43
0123
Bone Marrow Harvesting and Bone Marrow/Stem Cell Transplant
S
380.54
234.84
−38.29
0223
Implantation or Revision of Pain Management Catheter
T
2,437.21
1,525.61
−37.40
0385
Level I Prosthetic Urological Procedures
T
6,199.09
3,895.76
−37.16
0681
Knee Arthroplasty
T
8,780.47
5,669.25
−35.43
0302
Level III Radiation Therapy
S
548.35
363.26
−33.75
0301
Level II Radiation Therapy
S
187.53
125.03
−33.33
0094
Level I Resuscitation and Cardioversion
S
228.18
154.77
−32.17
0671
Level II Echocardiogram Except Transesophageal
S
140.57
96.05
−31.67
0098
Injection of Sclerosing Solution
T
99.06
68.15
−31.20
0346
Level II Transfusion Laboratory Procedures
X
30.59
22.72
−25.73
0043
Closed Treatment Fracture Finger/Toe/Trunk
T
148.63
112.70
−24.17
0687
Revision/Removal of Neurostimulator Electrodes
T
1,535.37
1,171.45
−23.70
0359
Level II Injections
X
67.50
51.53
−23.66
0122
Level II Tube changes and Repositioning
T
638.40
494.56
−22.53
0363
Level I Otorhinolaryngologic Function Tests
X
64.56
50.02
−22.52
0081
Non-Coronary Angioplasty or Atherectomy
T
2,584.47
2,041.29
−21.02
0191
Level I Female Reproductive Proc
T
12.27
9.84
−19.80
0685
Level III Needle Biopsy/Aspiration Except Bone Marrow
T
355.90
286.61
−19.47
0371
Level I Allergy Injections
X
29.69
23.93
−19.39
0152
Percutaneous Abdominal and Biliary Procedures
T
595.64
486.01
−18.41
0222
Implantation of Neurological Device
T
13,528.13
11,061.74
−18.23
0118
Chemotherapy Administration by Both Infusion and Other Technique
S
325.75
267.63
−17.84
0086
Ablate Heart Dysrhythm Focus
T
3,138.30
2,611.43
−16.79
0202
Level VIII Female Reproductive Proc
T
2,706.38
2,273.91
−15.98
0228
Creation of Lumbar Subarachnoid Shunt
T
3,541.71
2,996.28
−15.40
0347
Level III Transfusion Laboratory Procedures
X
66.49
56.52
−14.99
0245
Level I Cataract Procedures without IOL Insert
T
863.71
736.87
−14.69
0189
Level III Female Reproductive Proc
T
90.69
77.39
−14.67
0085
Level II Electrophysiologic Evaluation
T
2,478.31
2,128.77
−14.10
0665
Bone Density: AppendicularSkeleton
S
49.02
42.34
−13.63
0670
Intravenous and Intracardiac Ultrasound
S
1,796.55
1,555.61
−13.41
0368
Level II Pulmonary Tests
X
62.61
54.62
−12.76
0107
Insertion of Cardioverter-Defibrillator
T
19,378.60
17,025.21
−12.14
0362
Level III Otorhinolaryngologic Function Tests
X
168.41
148.74
−11.68
0287
Complex Venography
S
415.06
368.16
−11.30
0120
Infusion Therapy Except Chemotherapy
T
129.56
115.11
−11.15
0212
Nervous System Injections
T
196.63
175.73
−10.63
0004
Level I Needle Biopsy/ Aspiration Except Bone Marrow
T
103.36
92.43
−10.57
0676
Level II Transcatheter Thrombolysis
T
245.24
219.77
−10.39
0268
Ultrasound Guidance Procedures
S
82.47
74.07
−10.19
0106
Insertion/Replacement/Repair of Pacemaker and/or Electrodes
T
3,256.61
2,927.17
−10.12
We solicit comments on the proposed weights for all APCs and for the APC placement of all HCPCS codes. However, because we believe the public may be interested in commenting on APCs where the payment rate decreases, we discuss several APCs whose payment rates decrease by more than 10 percent. We are particularly interested in comments, including the submission of external data (as discussed below) regarding these APCs.
Discussion of Selected APCs
APC 312 Radioelement Applications
—The proposed median for this APC falls 93.12 percent in comparison with the 2003 adjusted median (from $3,141.77 to $216.18). The 2003 OPPS median was adjusted against
the 2002 OPPS median ($7,080.00) into which we packaged the cost of brachytherapy seeds. However, for 2003 and 2004, we are making separate payment for bracytherapy seeds (with the exception of prostate brachytherapy) and, therefore, the costs of those seeds is not packaged into the APC payment (except for prostate brachytherapy). The 2003 OPPS unadjusted median was $265.53, which is comparable to the proposed 2004 OPPS median. Hence, we think the 2003 OPPS median reflects the costs of brachytherapy, with seeds paid separately.
APC 692 Electronic Analysis of Neurostimulator Pulse Generators
—The proposed median for this APC falls 84.82 percent in comparison with the 2003 OPPS adjusted median (from $371.55 to $56.40). The 2003 OPPS median was adjusted against the 2002 OPPS median ($819.00), which contained costs for devices that should not have been packaged. Moreover, the 2003 OPPS unadjusted median for the service was $46.95, and this is comparable to the 2004 OPPS median of $56.40. Hence, we believe that the proposed 2004 OPPS median reflects the cost of the service.
APC 651 Complex Interstitial Radiation Source Application
—The proposed median for this APC falls 81.89 percent in comparison with the 2003 OPPS adjusted median (from $3,250.63 to $588.67). The 2003 OPPS median was adjusted against the 2002 OPPS median ($7,080.00), which contained costs for brachytherapy seeds that are currently paid separately. Moreover, the 2003 OPPS unadjusted median for the service was $483.25, and this is comparable to the proposed 2004 OPPS median of $588.67. Hence, we believe that the proposed 2004 OPPS median reflects the cost of the service because brachytherapy seeds are paid separately.
APC 225 Implantation of Neurostimulator Electrodes
—The proposed median for this APC fell 60.33 percent (from $8,277.07 to $3,283.68) as compared to the adjusted median used for the 2003 OPPS. The 2003 OPPS median was adjusted against the 2002 OPPS median ($15,286.00), which reflected the manufacturer(s) price(s) for the devices packaged into the APC. However, the proposed 2004 OPPS median ($3,283.68) is very close to the unadjusted 2003 OPPS median ($3,561.03), causing us to believe that the 2004 proposed median accurately reflects the costs of the procedure. Because this APC is commonly performed with implantation of a neurostimulator pulse generator (APC 222), we changed the status indicator of APC 225 to “S” so that it would not be subjected to the multiple procedure reduction when it is performed with implantation of a neurological device. We do not propose to change the status indicator this year, and the multiple procedure reductions would not be applied in CY 2004 to APC 0225.
We determined the proposed 2004 OPPS median for APC 225, using only claims that contained the C codes for the neurostimulator leads (either C1778 Lead, neurostimulator, or C1897 Lead, neurostimulator test kit) in order to ensure that we captured the costs for the leads in the data used to calculate the median. We solicit comments concerning the accuracy of our data and whether they appropriately reflect the cost of neurostimulator electrodes, as well as submission of data on the acquisition cost of neurostimulator electrodes (both permanent and test electrodes).
APC 352 Level 1 Injections
—The proposed 2004 OPPS median for this APC fell 51.83 percent (from $13.10 to $6.31) as compared to the adjusted 2003 OPPS median. The 2003 OPPS median was adjusted against the 2002 OPPS median ($23.00). However, the 2003 OPPS median ($6.65) is very close to the proposed 2004 OPPS median ($6.31), and this leads us to believe that the proposed 2004 median reflects the cost of the service.
APC 313 Brachytherapy.
—The proposed median for this APC falls 38.45 percent in comparison with the 2003 OPPS adjusted median (from $1,249.57 to $769.14) because the 2003 OPPS median was adjusted against the 2002 OPPS median ($2,030.00), which contained costs for brachytherapy seeds that should not have been included because the radioelement sources used in this APC are not single use seeds. Moreover, the 2003 OPPS unadjusted median for the service was $773.63, and this is comparable to the proposed 2004 OPPS median of $769.14. Hence, we believe that the proposed 2004 OPPS median reflects the cost of the service.
APC 223 Implantation or Revision of Pain Management Catheter.
—The proposed median for this APC falls 37.40 percent in comparison with the 2003 OPPS adjusted median (from $2,437.21 to $1,525.61). The single CPT code in this APC describes three procedures: revision, repositioning, and insertion of a pain management catheter. Therefore, the median cost of this APC should reflect the relative frequencies with which these three procedures are performed. Furthermore, the descriptor makes it inappropriate to use only claims containing “C” codes to determine the median cost for this APC because a device is not always used when this procedure is performed. To require that a “C” code be on claims for this procedure would result in inaccurate median costs. We believe the decrease in median cost is due to the packaging of 75 percent of the cost of the catheter into the APC amount for the 2002 OPPS fee schedule.
APC 385 Level 1 Prosthetic Urological Procedures.
—The proposed median for this APC fell 37.16 percent compared to the adjusted median for this APC in 2003 OPPS ($3895.76 compared to $6,199.09). This occurred because we removed the more expensive inflatable penile prosthesis and prosthetic urinary sphincters from APC 179 and placed them in a new APC (APC 386 with proposed 2004 OPPS median of $6,298.89). Hence, we believe that the proposed medians for both APCs reflect the costs of the services that they now contain.
APC 687 Revision/Removal of Neurostimulator Electrodes
—The proposed median costs of this APC decreased 23.7 percent as compared to the adjusted median used for the 2003 OPPS fee schedule ($1,171.45 compared to $1,535.37). (
See
Table 8.) However, none of the procedures in this APC require the use of high cost devices, and we believe the change in median cost reflects fluctuation in the costs of providing these services.
APC 359 Level II Injections
—
See
section VI.B.4 of this proposed rule for the discussion of administration of drugs.
APC 81 Non Coronary Angioplasty or Atherectomy
—The median for this APC fell 21.02 percent in comparison with the actual median cost used in the 2003 OPPS fee schedule (from $2,584.47 to $2,041.29). The median cost used for OPPS 2003 was significantly higher than the median cost used for the 2002 OPPS, which included packaging of 75 percent of the devices used in this APC. We believe the decrease this year, which is still substantially higher than the median used for 2002, reflects the fluctuating costs of providing this service.
APC 222 Implantation of Neurological Device
—The proposed median for this APC fell 18.23 percent in comparison with the 2003 OPPS adjusted median (from $13,528.13 to $11.528.13). The 2003 OPPS adjusted median was adjusted against the 2002 OPPS median, which packaged 75 percent of the cost (based on manufacturer submitted data) of the devices ($17,284.00) into the APC. However, the proposed 2004 OPPS median of $11,061.74 compares favorably with the unadjusted 2003 OPPS median of $9,146.22. Because we
developed the proposed 2004 median for APC 222 using only claims that contained charges for device code C1767, we believe our current cost data better reflect the cost of these devices. We solicit comments on the accuracy of our data as well as the submission of data on the acquisition cost of these devices.
APC 118 Chemotherapy Administration by Both Infusion and Other Technique
—
See
section VI.B.4 of this proposed rule for the discussion of administration of drugs.
APC 86 Ablate Heart Dysrhythm Focus
—The proposed median for this APC fell 16.79 percent for 2004 OPPS when compared to the adjusted median for 2003 (from $3,138.30 to $2,611.43). The proposed 2004 OPPS median is comparable to the unadjusted median for 2003 OPPS of $2,745.69. Because this APC requires the use of a device, we required that the claims used to set the median for this APC contain a device code to qualify. We believe that our cost data accurately reflect the cost of providing this service. We note that the high payment rate for 2003 was adjusted against the 2002 median, which reflected packaging 75 percent of the device cost (based on manufacturer submitted costs) into the APC.
APC 202 Level VIII Female Reproductive Procedure
—We made several changes to the structure of this APC and the proposed median for this APC fell 15.98 percent for 2004 OPPS when compared to the adjusted median for the 2003 (from $2,706.38 to $2,273.91). The proposed 2004 OPPS median is comparable to the unadjusted median for 2003 OPPS of $2,327.25. This APC requires the use of a device and, therefore, we required that the claims used to set the median for this APC must contain one or more specified device codes to qualify (C1771 Repair device, urinary incontinence, with sling graft, C2631 Repair device, urinary incontinence, without sling graft). We believe our cost data accurately reflect the costs of providing this service.
APC 670 Intravenous and Intracardiac Ultrasound
—The proposed median for this APC fell 13.41 percent for the 2004 OPPS when compared to the median for 2003 OPPS (from $1,796.55 to $1,555.61). This APC requires the use of a device and therefore we required that the claims used to set the median for this APC must contain a device code to qualify. We believe that our cost data accurately reflect the cost of providing this service and that any change in median cost is due to fluctuations in hospital costs.
APC 107 Insertion of Cardioverter-Defibrillator
—The proposed 2004 OPPS median for this APC fell 12.14 percent (from $19,378.60 to $17,025.21) as compared to the adjusted median cost for the 2003 OPPS fee schedule. The 2003 OPPS median was adjusted against the 2002 OPPS median ($21,679.00) which reflected packaging 75 percent of the manufacturer submitted prices for the devices used in this APC. The proposed 2004 OPPS median is much closer to the adjusted median than it is to the unadjusted 2003 OPPS median ($13,572.62).
We acquired the proposed 2004 OPPS median for APC 107 by using only claims that contained the C codes for cardioverter-defibrillators (either C1721 Cardioverter-defibrillator dual chamber, C1722 Cardioverter-defibrillator, single chamber, or C1882 Cardioverter-defibrillator, other than single or dual chamber) in order to ensure that we captured the costs for the device in the data used to calculate the median. Although the proposed median cost of this APC is lower than the adjusted median used last year, it is considerably higher than the actual median from last year, and we have confidence that it reflects the cost of the devices used in the procedure. We would also note that the proposed median cost for APC 108 also rose dramatically and is higher than the adjusted median used for the 2003 OPPS fee schedule. Assuming that the proposed median cost for APC 108 accurately reflects the cost of inserting a cardioverter-defibrillator with leads, we would expect that the proposed median cost of APC 107, which also rose significantly as compared to the actual median cost used for OPPS 2003, accurately reflects the cost of inserting a cardioverter-defibrillator without leads.
APC 120 Infusion Therapy Except Chemotherapy
—See section VI.B.4 of this proposed rule for a discussion of infusion therapy other than chemotherapy.
APC 106 Insertion/Replacement/Repair of Pacemaker and/or Electrodes
—The proposed 2004 OPPS median for this APC fell 10.12 percent compared to the 2003 OPPS median (from a final 2003 OPPS median of $3,256.61 to a proposed 2004 Median of $2,927.17). This APC contains both CPT codes for insertion of temporary pacemaker leads (CPT codes 33210 and 33211) and repair and revision of pacemaker leads (33216, 33217, 33218, and 33220). This APC contains a mixture of services and, therefore, its median cost should reflect the mixture of services provided. We solicit comments on whether the proposed median cost for this APC reflects the cost of providing these services as well as the submission of data on the acquisition costs of the leads used for each service in this APC.
Preferred Characteristics of External Data Submitted in Comments.
We will consider external data on devices that are provided to the extent that they enable us to verify or adjust claims data where we are convinced that an adjustment is appropriate. All data we use to create payment amounts for the final rule will be available for public inspection.
External data must meet the following criterion:
• Be available for public inspection.
External data that are likely to be of optimal use should meet the following criteria:
• Represent a diverse group of hospitals both by location (for example, rural, urban) and by type (for example, community, teaching). We would prefer that commenters identify each hospital including location with city and State, nonprofit vs. for profit status, teaching vs. nonteaching status, and the percent of Medicare vs. non-Medicare patients receiving the service; a pseudo identifier could be used for the hospital identification. Data should be submitted both “per hospital” and in the aggregate.
• Identify the number of devices billed to Medicare by each hospital as well as any rebates or reductions for bulk purchase or similar discounts and identify the characteristics of providers to which any such price rebates or reductions apply.
• Identify all HCPCS codes with which each item would be used.
• Identify the source of the data.
• Include both the charges and costs for each hospital, by quarter for the last 3 quarters of 2002. Cost data for 2003 are not compatible with 2002 claims data.
This information would enable us to compare our claims data to the external data and help us determine whether the submitted data are representative of hospitals that submit claims under OPPS.
Please note that information that contains beneficiary-specific information (for example, medical records, invoices with beneficiary identification on it) should be altered, if necessary, to remove any individually identifiable information, such as information that identifies an individual, diagnoses, addresses, telephone numbers, attending physician, medical record number, Medicare or other insurance number, etc. Moreover, individually identifiable beneficiary medical records, including progress notes, medical orders, test results, consultation reports, etc. should
not be submitted to us. Similarly, photocopies of checks from hospitals or other documents that contain bank routing numbers should not be submitted to us.
Blood and Blood Products
See
section VI.B.8 of this proposed rule for our discussion of the analysis of data for blood and blood products and our proposal.
Separately Paid Drugs
See
section VI.B.3 of this proposed rule for our discussion of the analysis of data for separately paid drugs and our proposal.
B. Description of How We Propose To Calculate Weights for CY 2004
The methodology we followed to calculate the APC relative payment weights proposed for CY 2004 is as follows:
• We excluded from the data claims for those bill and claim types that would not be paid under the OPPS (for example, bill type 72X for dialysis services for patients with end-stage renal disease (ESRD)).
• We eliminated claims from hospitals located in Maryland, Guam, and the U.S. Virgin Islands.
• Using the most recent available cost report from each hospital, we converted billed charges to costs and aggregated them to the procedure or visit level first by identifying the cost-to-charge ratio specific to each hospital's cost centers (“cost center specific cost-to-charge ratios” or CCRs) and then by matching the CCRs to revenue centers used on the hospital's CY 2001 outpatient bills. The CCRs include operating and capital costs but exclude items paid on a reasonable cost basis.
• We eliminated from the hospital CCR data 325 hospitals that we identified as having reported charges on their cost reports that were not actual charges (for example, a uniform charge applied to all services). Of these, only 166 hospitals had claims data.
• We eliminated from our data claims for critical access hospitals that are not paid under OPPS and whose claims are therefore not suitable for use in setting weights for services paid under OPPS.
• We calculated the geometric mean of the total operating CCRs of hospitals remaining in the CCR data. We removed from the CCR data 29 hospitals whose total operating CCR deviated from the geometric mean by more than three standard deviations.
• We excluded from our data approximately 2.1 million claims submitted by the hospitals that we removed or trimmed from the hospital CCR data.
• We matched revenue centers from the remaining universe of claims to hospital CCRs.
• We separated the 66.345 million claims that we had matched with a cost report into the following three distinct groups: (1) Single-procedure claims; (2) multiple-procedure claims; and (3) claims on which we could not identify at least one OPPS covered service. Single-procedure claims are those that include only one HCPCS code (other than laboratory and incidentals such as packaged drugs and venipuncture) that could be grouped to an APC. Multiple-procedure claims include more than one HCPCS code that could be mapped to an APC. Thus, dividing the claims yielded approximately 21.92 million single-procedure claims and 14.8 million multiple-procedure claims. Approximately 19.57 million claims without at least one covered OPPS service were set aside.
We converted 8.47 million multiple-procedure claims to single-procedure claims using the following criteria: (1) If a multiple-procedure claim contained lines with a HCPCS code in the pathology series (that is, CPT 80000 series of codes), we treated each of those lines as a single claim. (2) For multiple-procedure claims with a packaged HCPCS code (status indicator “N”) on the claim, we ignored line items for preoperative procedures and for those services in the APCs identified in Table 9. These are services with payment amounts below $50 (under CY 2003 OPPS) for which we believe the charge represents the totality of the charges associated with the service (that is, that there are no packaged HCPCS or packaged revenue centers attributable to the service). If only one procedure (other than HCPCS codes in Table 9) existed on the claim, we treated it as a single-procedure claim. (3) If the claim had no packaged HCPCS codes and if there were no packaged revenue centers on the claim, we treated each line with a procedure as a single-procedure claim if billed with single units. (4) If the claim had no packaged HCPCS codes but had packaged revenue centers for the procedure, we ignored the line item for codes in the APCs identified in Table 9. If only one HCPCS code remained, we treated the claim as a single-procedure claim.
Table 9.—APCS That Were Ignored To Create Pseudo Single Procedure Claims
0001
Level I Photochemotherapy
S
0060
Manipulation Therapy
S
0077
Level I Pulmonary Treatment
S
0099
Electrocardiograms
S
0215
Level I Nerve and Muscle Tests
S
0215
Level I Nerve and Muscle Tests
S
0230
Level I Eye Tests & Treatments
S
0260
Level I Plain Film Except Teeth
X
0262
Plain Film of Teeth
X
0271
Mammography
S
0341
Skin Tests and Miscellaneous Red Blood Cell Tests
X
0342
Level I Pathology
X
0343
Level II Pathology
X
0344
Level III Pathology
X
0345
Level I Transfusion Laboratory Procedures
X
0364
Level I Audiometry
X
0367
Level I Pulmonary Test
X
0669
Digital Mammography
S
0690
Electronic Analysis of Pacemakers and other Cardiac Devices
S
0706
New Technology—Level I ($0-$50)
S
In addition, we assessed the dates of service for HCPCS codes and packaged revenue centers on each claim that contained more than one major code. Where it was possible to attribute charges for packaged HCPCS and packaged revenue centers to HCPCS codes for major procedures by matching unique dates of service, we did this and created single claims by packaging charges into the charge for the major service on the same date. We were only able to do this if the multiple major procedures had different dates of service and if there were dates of service on all of the packaged revenue centers. Dates of service on revenue centers are not required and, therefore, only claims from hospitals that submitted dates of service on revenue centers in CY 2002 could be used in this process for maximizing the number of single-procedure claims to be used for weight setting. We created an additional 23.58 million single-procedure bills through this process, which enabled us to use these data from multiple-procedure claims in calculation of the APC relative payment weights.
• To calculate median costs for services within an APC, we used only single-procedure bills and those multiple-procedure bills that we converted into single claims except as described otherwise. If a claim had a single code with a zero charge (that would have been considered a single-procedure claim), we did not use it. As we discussed in section III.A.2 of this proposed rule, we did not use multiple-procedure claims that billed more than one separately payable HCPCS code with charges for packaged items and services such as anesthesia, recovery room, or supplies that could not be reliably allocated or apportioned among the primary HCPCS codes on the claim. We have not yet developed what we regard as an acceptable method of using multiple procedure bills to recalibrate APC weights that minimizes the risk of improperly assigning charges to the wrong procedure or visit.
For APCs in Table 10, we required that there be a C code on the claim for the claim to be used. These APCs require the use of a device in the provision of the service. Moreover, in 2002, hospitals were required to bill the C code in order for the device to receive pass-through payment for the device. Therefore, if no C code was billed on the claim, we presumed that the claim was incorrectly coded, and we did not use it. For some of these APCs, we further required that specific devices be on the claim.
Table 10.—APCS for Which a HCPCS for a Device Was Required To Be on a Claim Used for Weight Setting
APC
APC description
Status
0032
Insertion of Central Venous/Arterial Catheter
T
0048
Arthroplasty with Prosthesis
T
0080
Diagnostic Cardiac Catheterization
T
0081
Non-Coronary Angioplasty or Atherectomy
T
0082
Coronary Atherectomy
T
0083
Coronary Angioplasty and Percutaneous Valvuloplasty
T
0085
Level II Electrophysiologic Evaluation
T
0086
Ablate Heart Dysrhythm Focus
T
0087
Cardiac Electrophysiologic Recording/Mapping
T
0089
Insertion/Replacement of Permanent Pacemaker and Electrodes
T
0090
Insertion/Replacement of Pacemaker Pulse Generator
T
0104
Transcatheter Placement of Intracoronary Stents
T
0106
Insertion/Replacement/Repair of Pacemaker and/or Electrodes
T
0107
Insertion of Cardioverter-Defibrillator
T
0108
Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads
T
0115
Cannula/Access Device Procedures
T
0119
Implantation of Devices
T
0122
Level II Tube Changes and Repositioning
T
0167
Level III Urethral Procedures
T
0182
Insertion of Penile Prosthesis
T
0202
Level VIII Female Reproductive Proc
T
0222
Implantation of Neurological Device
T
0225
Implantation of Neurostimulator Electrodes
S
0226
Implantation of Drug Infusion Reservoir
T
0227
Implantation of Drug Infusion Device
T
0229
Transcatheter Placement of Intravascular Shunts
T
0259
Level VI ENT Procedures
T
0313
Brachytherapy
S
0384
GI Procedures with Stents
T
0385
Level I Prosthetic Urological Procedures
T
0386
Level II Prosthetic Urological Procedures
T
0648
Breast Reconstruction with Prosthesis
T
0652
Insertion of Intraperitoneal Catheters
T
0653
Vascular Reconstruction/Fistula Repair with Device
T
0654
Insertion/Replacement of a permanent dual chamber pacemaker
T
0655
Insertion/Replacement/Conversion of a permanent dual chamber pacemaker
T
0670
Intravenous and Intracardiac Ultrasound
S
0674
Prostate Cryoablation
T
0680
Insertion of Patient Activated Event Recorders
S
0681
Knee Arthroplasty
T
• For each single-procedure claim, we calculated a cost for every billed line item charge by multiplying each revenue center charge by the appropriate hospital-specific CCR. We used the most recent settled or submitted cost reports. Using the most recent “submitted to settled ratio,” we adjusted CCRs for the submitted cost reports but not the settled ones. If an appropriate cost center did not exist for a given hospital, we crosswalked the revenue center to a secondary cost center when possible, or used the hospital's overall CCR for outpatient department services. We excluded from this calculation all charges associated with HCPCS codes previously defined as not paid under the OPPS (for example, laboratory, ambulance, and therapy services). We included all charges associated with HCPCS codes that are designated as packaged services (that is, HCPCS codes with the status indicator of “N”).
• To calculate per-service costs, we used the charges shown in revenue centers that contained items integral to performing services. Table 11 contains a list of the revenue centers that we packaged into major HCPCS codes when they appeared on the same claim. This is a change to the packaging of revenue centers by category of service that had been done since the inception of the OPPS in the April 7, 2000 final rule (65 FR 18457). In all prior years of OPPS, we had specific subsets of revenue centers that we packaged into major HCPCS codes based on the type of service we assigned to the HCPCS code for this purpose. For example, we had a set of revenue centers that could be packaged into visit codes and a different, but overlapping, set of revenue centers that could be packaged into surgery codes. We propose to convert these categories to a single set of revenue codes (
see
Table 11) that would be packaged into the major HCPCS code with which it appears on a claim. We believe that this will increase the likelihood that the total charge for the major HCPCS code will capture all of the costs attributed to the services furnished.
Table 11 lists packaged services by revenue center that we are proposing to use to calculate per-service costs for outpatient services furnished in CY 2004.
Table 11.—
Packaged Services by Revenue Code
Revenue Code
Description
250
PHARMACY
251
GENERIC
252
NONGENERIC
254
PHARMACY INCIDENT TO OTHER DIAGNOSTIC
255
PHARMACY INCIDENT TO RADIOLOGY
257
NONPRESCRIPTION DRUGS
258
IV SOLUTIONS
259
OTHER PHARMACY
260
IV THERAPY, GENERAL CLASS
262
IV THERAPY/PHARMACY SERVICES
263
SUPPLY/DELIVERY
264
IV THERAPY/SUPPLIES
269
OTHER IV THERAPY
270
M&S SUPPLIES
271
NONSTERILE SUPPLIES
272
STERILE SUPPLIES
274
PROSTHETIC/ORTHOTIC DEVICES
275
PACEMAKER DRUG
276
INTRAOCULAR LENS SOURCE DRUG
278
OTHER IMPLANTS
279
OTHER M&S SUPPLIES
280
ONCOLOGY
289
OTHER ONCOLOGY
290
DURABLE MEDICAL EQUIPMENT
370
ANESTHESIA
371
ANESTHESIA INCIDENT TO RADIOLOGY
372
ANESTHESIA INCIDENT TO OTHER DIAGNOSTIC
379
OTHER ANESTHESIA
390
BLOOD STORAGE AND PROCESSING
399
OTHER BLOOD STORAGE AND PROCESSING
560
MEDICAL SOCIAL SERVICES
569
OTHER MEDICAL SOCIAL SERVICES
621
SUPPLIES INCIDENT TO RADIOLOGY
622
SUPPLIES INCIDENT TO OTHER DIAGNOSTIC
624
INVESTIGATIONAL DEVICE (IDE)
630
DRUGS REQUIRING SPECIFIC IDENTIFICATION, GENERAL CLASS
631
SINGLE SOURCE
632
MULTIPLE
633
RESTRICTIVE PRESCRIPTION
637
SELF-ADMINISTERED DRUG (INSULIN ADMIN. IN EMERGENCY DIABETIC COMA)
700
CAST ROOM
709
OTHER CAST ROOM
710
RECOVERY ROOM
719
OTHER RECOVERY ROOM
720
LABOR ROOM
721
LABOR
762
OBSERVATION ROOM
810
ORGAN ACQUISITION
819
OTHER ORGAN ACQUISITION
942
EDUCATION/TRAINING
• We standardized costs for geographic wage variation by dividing the labor-related portion of the operating and capital costs for each billed item by the proposed FY 2004 hospital inpatient prospective payment system (IPPS) wage index published in the
Federal Register
on May 9, 2002 (67 FR 31602). We used 60 percent to represent our estimate of that portion of costs attributable, on average, to labor. We have used this estimate since the inception of the OPPS and continue to believe that it is appropriate. (See the April 7, 2000 final rule (65 FR 18496) for a complete description of how we derived this percentage).
• We summed the standardized labor-related cost and the nonlabor-related cost component for each billed item to derive the total standardized cost for each procedure or medical visit.
• We removed extremely unusual costs that appeared to be errors in the data using a trimming methodology analogous to what we use in calculating the diagnosis-related group (DRG) weights for the hospital IPPS. That is, we eliminated any bills with costs outside of three standard deviations from the geometric mean.
• After trimming the procedure and visit level costs, we mapped each procedure or visit cost to its assigned APC, including, to the extent possible, the proposed APC changes.
• We calculated the
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