# Medicare Program; Changes to the Hospital Outpatient Prospective Payment System and Calendar Year 2004 Payment Rates > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A03-27791 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** November 7, 2003 - **Citation:** 68 FR 63398 ## Text DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 410 and 419 [CMS-1471-FC] 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: Final rule with comment period. SUMMARY: This final rule with comment period revises 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 describes 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 are applicable to services furnished on or after January 1, 2004. Finally, this rule responds to public comments received on the August 12, 2003 proposed rule for revisions to the hospital outpatient prospective payment system and payment rates (68 FR 47966). DATES: Effective date: This final rule is effective January 1, 2004. Comment date: We will consider comments on the ambulatory payment classification assignments of Healthcare Common Procedure Coding System codes identified in Addendum B with new interim (NI) condition codes, if we receive them at the appropriate address, as provided below, no later than 5 p.m. on January 6, 2004. ADDRESSES: In commenting, please refer to file code CMS-1471-FC. 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-FC, 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. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Dana Burley, (410) 786-0378—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) 786-7195. Availability of Copies and Electronic Access Copies: To order copies of the Federal Register containing this document, send your request to: New Orders, Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date of the issue requested and enclose a check or money order payable to the Superintendent of Documents, or enclose your Visa or Master Card number and expiration date. Credit card orders can also be placed by calling the order desk at (202) 512-1800 (or toll-free at 1-888-293-6498) or by faxing to (202) 512-2250. The cost for each copy is $10. As an alternative, you can view and photocopy the Federal Register document at most libraries designated as Federal Depository Libraries and at many other public and academic libraries throughout the country that receive the Federal Register . This Federal Register document is also available from the Federal Register online database through GPO Access , a service of the U.S. Government Printing Office. The web site address is: 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 C. Summary of Changes in the August 12, 2003 Proposed Rule 1. Changes Required by Statute 2. Additional Changes to OPPS D. Public Comments and Responses to the August 12, 2003 Proposed Rule II. 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. August 2003 Meeting 3. 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. Creation of APCs for Combinations of Device Procedures III. Recalibration of APC Weights for CY 2004 A. Data Issues 1. Period of Claims Data Used 2. Treatment of “Multiple Procedure” Claims B. Description of Our Calculation of Weights for CY 2004 C. Discussion of Relative Weights for Specific Procedural APCs 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. Reinstitution of C Codes for Expired Device Categories D. Other Policy Issues Relating to Pass-Through Device Categories 1. Reducing Transitional Pass-Through Device Categories To Offset Costs Packaged Into APC Groups 2. Multiple Procedure Reduction for Devices 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. Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals 3. Payment for Drugs, Biologicals, and Radiopharmaceuticals That Are Not Packaged 4. Payment for Drug Administration 5. Generic Drugs and Radiopharmaceuticals 6. Orphan Drugs 7. Vaccines 8. Blood and Blood Products 9. Intravenous Immune Globulin 10. Payment for Split Unit of Blood 11. Other Issues VII. Wage Index Changes for CY 2004 VIII. Copayment for CY 2004 IX. Conversion Factor Update for CY 2004 X. Outlier Policy and Elimination of Transitional Corridor Payments for CY 2004 A. Outlier Policy for CY 2004 B. Elimination of Transitional Corridor Payments for CY 2004 XI. Other Policy Decisions and 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. General Data, Billing, and Coding Issues XIII. Provisions of the Final Rule With Comment Period for 2004 A. Changes Required by Statute B. Additional Changes C. Major Changes From the Proposed Rule XIV. Collection of Information Requirements XV. Response to Public Comments XVI. Regulatory Impact Analysis A. General B. Changes in This Final Rule C. Limitations of Our Analysis D. Estimated Impacts of This Final Rule on Hospitals E. Projected Distribution of Outlier Payments F. Estimated Impacts of This Final 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 This Final Rule With Comment Period 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 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. Subsequently, we announced a delay in implementation of the OPPS from July 1, 2000 to 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 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) to provide 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. It also 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. • On August 12, 2003, we published a proposed rule (68 FR 47966) that proposed the Medicare OPPS conversion factor for CY 2004. In addition, it described proposed changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. C. Summary of Changes in the August 12, 2003 Proposed Rule On August 12, 2003, we published a proposed rule (68 FR 47966) that proposed changes to the Medicare hospital OPPS and CY 2004 payment rates including proposed changes used to determine these payment rates. The following is a summary of the major changes that we proposed and the issues we addressed in the August 12, 2003 proposed rule. 1. Changes Required by Statute We proposed the following changes to implement statutory requirements: • Add APCs, delete APCs, and modify the composition of some existing APCs. • Recalibrate the relative payment weights of the APCs. • Update the conversion factor and the wage index. • Revise the APC payment amounts to reflect the APC reclassifications, the recalibration of payment weights, and the other required updates and adjustments. • Cease transitional pass-through payments for drugs and biologicals and devices that will have been paid under the transitional pass-through methodology for at least 2 years by January 1, 2004. • Cease transitional outpatient payments (TOPS payments) for all hospitals paid under OPPS except for cancer hospitals and children s hospitals. 2. Additional Changes to OPPS We proposed the following additional changes to the OPPS: • Adjust payment to moderate the effects of decreased median costs for non-pass-through drugs, biologicals, and radiopharmaceuticals. • Implement a new method for paying for drug administration. • Create new evaluation and management service codes for outpatient clinic and emergency department encounters. • Change status indicators for Healthcare Common Procedure Coding System (HCPCS) codes. • List midyear and proposed HCPCS codes that are paid under OPPS. • Allocate a portion of the outlier percentage target amount to community mental health centers (CMHCs) and create a separate threshold for outlier payments for partial hospitalization services. • Create methodology and payment rates for separately payable drugs and radiopharmaceuticals for 2004. • Make several changes in our current payment policy with regard to payment for Q0081, Q0083, Q0084, and Q0085 to facilitate accurate payments for drugs and drug administration. • Change the status indicator and payment amount for P9010 by assigning it to APC 0957 (Platelet concentrate) with a payment rate of $37.30. • Establish new payment bands for new technology APCs. D. Public Comments and Responses to the August 12, 2003 Proposed Rule We received approximately 876 timely items of correspondence containing multiple comments on the August 12, 2003 proposed rule. Summaries of the public comments and our responses to those comments are set forth below under the appropriate section heading of this final rule with comment period. We received comments from various sources including but not limited to health care facilities, physicians, drug and device manufacturers, and beneficiaries. Hospital associations and the Medicare Payment Advisory Commission (MedPAC) generally supported our proposed approach to revising the relative weights for APCs. Pharmaceutical and medical device manufacturers and some individual hospitals that furnish particular devices or drugs were concerned with the proposed reductions in payment for medical devices and drugs. We received many thoughtful comments from a wide range of commenters with regard to methodological issues in OPPS. In addition, several comments provided external data to support their assertions. The following are the major issues addressed by the commenters: • The proposal to use $150 as the packaging threshold for separate payment of drugs. • The proposal to pay for orphan drugs within the OPPS, basing payment on claims data. • The proposal to pay for generic drugs at 43 percent of average wholesale prices (AWP) beginning with the time of the generic drug's Food and Drug Administration (FDA) approval. • The proposed payments for blood and blood products under OPPS. • The proposal to establish a separate outlier pool for community mental health centers(CMHCs).The proposal to apply an adjustment to increase payment to small rural hospitals' clinic and emergency room (ER) visit rates to ameliorate the effect of the sunsetting of the transitional corridor payments. • The proposal to reinstitute drug and device coding requirements. • Propose APC assignments and status indicators for numerous services. In addition to comments regarding the policy proposals in the August 12, 2003 proposed rule, we received comments about the publication date of the proposed rule and the comment period. Comment: Some commenters objected to the use of the date on which the August 12, 2003 proposed rule was made public by web posting and by public display at the Office of the Federal Register as the beginning of the comment period. They indicated that we should start the comment period only on the publication of the proposed rule in the Federal Register because that is where subscribers look for it. They objected to what they view as a 55-day comment period if it were to start on the date of Federal Register publication (August 12, 2003). Some commenters objected to the publication of the proposed rule so late in the year. They indicated that our publication on August 9 resulted in the comment period ending so close to the publication deadline for the final rule that they believed that their comments could not be fully analyzed and used and would not be as effective as if the proposed rule were published in June or early July. They urged us to publish the proposed rule in late spring. Some commenters objected to the scheduling of the APC Panel meeting so soon after the issuance of the proposed rule because they felt that it gave them inadequate time to prepare their presentations for the Panel. Response: The comment period on a proposed rule begins on the day that the proposed rule is available for public comment. We believe that putting the document on display at the Office of the Federal Register and also making it available on the CMS Web site meets the test of being publicly available and that, therefore, is the start of the comment period. The publication of the proposed rule on the internet makes it available to many more people than routinely access the Federal Register or can visit the Office of the Federal Register where the display copy is located. The public had 60 days to comment on the proposed rule. This is the standard amount of time generally allowed for comment on notices of proposed rulemaking. Therefore, we do not believe the public was at a disadvantage or limited in the amount of time available to make public comments. Our review of the public comments is extensive, with the comments being read and considered carefully, often by many staff. We agree that it is preferable, when possible, to issue the proposed rule as early as possible. However, the important issue is whether we have sufficient time to carefully and thoughtfully consider all comments in development of the final rule, rather than the amount of time between the end of the comment period and the publication of the final rule. II. 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 0601, Mid-Level Clinic Visits. The APC weights are scaled to APC 0601 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 the proposed rule and this final 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 Social Security Act (the Act) requires that we consult with an outside panel of experts, the Panel, to review the clinical integrity of the APC groups and their 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 have been identified on the CMS web site. We received one comment regarding our selection of Panel members. Comment: One commenter stated that Community Mental Health Centers (CMHCs) have not been represented on the APC Panel even though the names of qualified nominees have been submitted. The commenter went on to say that the Federal Register (February 28, 2003, at 68 FR 9671 through 9672) specifically states, “Qualified nominees will meet those requirements necessary to be a Panel member. Panel members must be representatives of Medicare providers (including Community Mental Health Centers) subject to the OPPS * * * [therefore,] I feel that it is imperative to have a freestanding CMHC representative on the Panel.” Response: The Federal Register notice on the APC Panel to which the commenter referred, states in section II, Criteria for Nominees, the following: “The Panel shall consist of up to 15 members selected by the Secretary, or designee, from among representatives of Medicare providers (including Community Mental Health Centers) subject to the OPPS.” The language does not mandate that a CMHC representative will be on the Panel. In the regulation, we simply identified representatives from CMHCs—or any other organizations—as possible nominees. This year, when we requested nominations for the APC Panel, the list of nominees was long, prestigious, and included representatives from all aspects of the health care industry: Doctors, nurses, hospital administrators, coders, etc. Therefore, our choices were difficult; however, since there are definite Federal guidelines governing our selections, and specific Panel and Agency needs to address, given the clinical range of services paid under the OPPS, we were able to identify the most qualified individuals. Since the needs of the Agency and the Panel change due to members leaving, we invite all concerned Medicare providers to continue to nominate qualified individuals when the need arises. The Panel's biannual meetings are forums to discuss APCs and representatives from the CMCHs—and other organizations—are invited to attend Panel meetings and to make presentations to the Panel on relevant agenda items. Comment: The commenter also stated that the APC Panel sets the payment rates for the outpatient services. Response: While the Panel is an advisory committee mandated by law to review the APC groups, and their associated weights, and to advise the Secretary of Health and Human Services and the Administrator of the Centers for Medicare & Medicaid Services concerning the clinical integrity of the APC groups and their weights, the APC Panel does not set payment rates for outpatient services. The advice provided by the Panel is considered by us in our development of the annual rulemaking to update the hospital OPPS. The APC Panel's activities most often address whether or not the HCPCS codes within the APCs are comparable clinically and with respect to resource use, assigning new codes to new or existing APCs, reassigning codes to different APCs, and the configuring of existing APCs into new APCs. 2. August 2003 Meeting The APC Panel met on August 22, 2003 to discuss issues presented in the proposed rule of August 12. We announced the meeting in the Federal Register on July 25 and invited the public to make presentations to the Panel on issues discussed in the proposed rule. In this section, we summarize the issues discussed by the Panel, their recommendations on those issues, and our decisions with respect to their recommendations. a. Blood and Blood Products The Panel heard testimony by suppliers of blood and blood products and their representatives who expressed significant concerns about the proposed payment rates, particularly in light of new safety and testing requirements. These presenters to the Panel recommended that we exclude blood and blood products from the OPPS and pay for them at reasonable cost. After listening to the testimony, reviewing the median costs and proposed payments rate from our hospital claims data, and deliberating the issue, the Panel recommended that we continue to pay for blood and blood products within the OPPS. However, the Panel further recommended that we freeze the payment rates for blood and blood products at 2003 levels for 2004 and 2005 while we undertake further analysis of the cost data. The Panel also recommended that hospitals be educated on the proper billing for blood and blood products. As discussed elsewhere in this final rule, we will accept the Panel's recommendation with respect to 2004. We will freeze the payment rates for blood and blood products at the 2003 payment levels. However, we are not making a decision with respect to 2005 at this time. Any proposals regarding our 2005 payment rates or policies for these items will be discussed in our proposed rule for the CY 2005 update. The Panel also recommended that the APCs for blood and blood products be on the agenda for the winter 2004 meeting in time for consideration of the 2005 payment rates. We agree to place this item on the agenda for the next APC Panel meeting. b. Nuclear Medicine, Brachytherapy, and Radiosurgery Services (1) Nuclear Medicine APCs and Radiopharmaceuticals The Panel heard testimony on and considered the proposed restructuring of the nuclear medicine APCs discussed in the August 12, 2003 proposed rule. The Panel recommended that we move forward with the categorization system in the proposed OPPS 2004 rule absent strong, reasoned opposition from provider groups. If strong opposition was revealed in the public comments, the Panel recommended that we maintain the classification system that is in place for 2003. The Panel also recommended that we change the HCPCS code descriptors for radiopharmaceuticals to be on a “per-dose” basis—not on a “per-unit” basis. We have accepted the Panel's recommendation that we move forward with the proposed restructuring, after considering public comments on this issue. As discussed in section II.A.3 of this final rule, we will implement the restructuring with certain changes to the proposed reclassification based on our review of the public comments. For reasons discussed in section VI.B.3 of this final rule, we are not accepting the Panel's recommendation to change the HCPCS code descriptors at this time. The Panel further recommended that APCs for radiopharmaceuticals be on the agenda for the January 2004 meeting. In preparation for that meeting, the Panel recommended that our staff analyze the claims for the nuclear medicine APCs and do the following: Itemize the costs, determine what proportion of the median cost can be attributed to radiopharmaceuticals, and present the data at the Panel's January 2004 meeting. The Panel recommended that the issue of packaging the costs of radiopharmaceuticals under the 2003 threshold of $150 be placed on the agenda for the Panel's winter 2004 meeting. We will consider this topic for placement on the agenda for the Panel's 2004 meeting. As discussed in section VI.B.3 of this rule, however, we are revising our threshold for packaging radiopharmaceuticals from $150 to $50. (2) Brachytherapy Services The Panel recommended that we review whether the codes for needles and catheters were included in the payment rate proposed for APC 0313. The Panel also recommended that we consider outside data presented by commenters in establishing payment rates for APCs 312 and 651 to arrive at an appropriate payment rate. See our discussion, below, regarding APCs 312, 313, and 651 and our considerations concerning the claims used to set the relative weights for these APCs. The Panel further recommended that we discontinue use of G codes for prostate brachytherapy and use appropriate Current Procedural Terminology (CPT) codes paid in clinical APCs when making payment for these services. The Panel recommended we pay separately for brachytherapy sources for the treatment of prostate cancer in the same manner by which we are paying separately for the brachytherapy sources for the treatment of other types of cancer. We have accepted the Panel's recommendation. As discussed in section II.B.4 of this final rule, we will discontinue use of the special G codes for prostate brachytherapy and allow separate payment for the sources used in these treatments. (3) Radiation Therapy and Radiosurgery APC Issues The APC Panel heard testimony concerning radiation treatment delivery codes CPT 77412 through 77416, which we proposed to assign to APC 0301 and CPT 77417, assigned to APC 0260. The presenter stated that many hospital billing departments had not updated their charge masters since the inception of OPPS to reflect the costs of newer technology, specifically with respect to the use of x-ray guidance during external beam radiation treatment delivery. The APC Panel recommended that we review whether the use of x-ray guidance (as opposed to CT or ultrasound guidance) for radiation therapy is being properly reported and included in the payment rates for the radiation treatment delivery codes. We agree that we should review these issues further and will do so in preparation for the 2005 update. However, we did not receive sufficient or convincing information upon which to base a change for 2004. Therefore, we encourage interested parties to submit any additional information on the use of these codes and cost of providing these services in the outpatient hospital setting in response to this final rule with comment period. The APC Panel also heard testimony concerning the proposed payment rate for CPT 77418, assigned to APC 0412 (IMRT treatment delivery). The presenter stated that the proposed amount was too low. However, the APC Panel supported the proposal in the absence of compelling evidence that the rate derived from the claims data is wrong. We concur with the APC Panel's recommendation and will retain CPT 77418 in APC 0412. We used approximately 113,000 claims to set the weight for this procedure, which we believe is a sufficiently robust set of data. During this section of the APC Panel's August 22 meeting, the Panel members also heard testimony concerning HCPCS codes G0251 and G0173 used to report stereotactic radiosurgery. The APC Panel supported the proposed payment rates for these codes until more data become available. The APC Panel also asked to review this issue further at its winter 2004 meeting. We discuss stereotactic radiosurgery in further detail below. We have decided to make certain changes to the payment for these procedures. However, the APC assignment for these codes for 2004 is interim final. We solicit comments on the 2004 assignments, and we will also include this on the APC Panel's agenda for its winter 2004 meeting. The final topic in this section of the APC Panel's August 22 meeting pertained to HCPCS codes G0242 and G0243 (multi source photon stereotactic planning). The APC Panel was requested to recommend that we combine the coding for these procedures under one code, with the payment for the new code derived by adding the payment for G0242 and G0243 together. The information presented to the APC Panel stated that the services represented by the two G codes represent one continuous procedure, that it is a surgical procedure, and the cost center mapping should be to a surgical cost center. The APC Panel will review this request at its winter 2004 meeting. The APC Panel is interested in receiving comments on this topic from professional societies representing neurosurgeons, radiation oncologists and others concerning this proposal. c. Payment and Coding for Drug Administration and for Certain Drugs, Biologicals, and Radiopharmaceuticals The APC Panel heard testimony and discussed the proposals described in the August 12, 2003 proposed rule on payment for drug administration and the packaging of the costs of drugs, biologicals, and radiopharmaceuticals. The APC Panel recommended that: • We continue to use the current “Q” codes for drug administration and not institute new “G” codes to represent the administration of either packaged or separately paid drugs. • We allow billing of Q0081 on a per-visit basis, rather than on a per-day basis as proposed. • We delete Q0085 and allow hospitals to use both Q0083 and Q0084 when billing for chemotherapy administered by both infusion and other techniques in a given visit. • That we consider adopting the final option among the three new methods of paying for drug administration that we proposed, as options to the current policy, in the August 12, 2003 proposed rule. • That we look further at hospital pharmacies' costs for preparing drugs and radiopharmaceuticals and this issue be examined more closely by the Panel during its winter 2004 meeting. The APC Panel also expressed serious concern about the dollar threshold for the packaging of drugs and the adequacy of payment for separately paid drugs. However, in the absence of alternative proposals by us, the APC Panel did not make further recommendations on that issue. The APC Panel requested that we present alternative options during the winter 2004 meeting, including a new APC structure for drugs and radiopharmaceuticals. As for specific drug issues, after hearing testimony concerning the codes for Baclofin refill kits, the APC Panel recommended that we delete code C9010 and retain the other codes for this product used in the treatment of Parkinson's disease and spasticity. We have carefully considered each of the APC Panel's recommendations along with comments on the subject of drug administration and payment for drugs, biologicals, and radiopharmaceuticals. For the reasons discussed more fully elsewhere in this final rule, we have decided to accept the APC Panel's recommendations that we continue using Q0081 through Q0084 in 2004; that we continue to define these codes on a per-visit, rather than per-day basis; that we delete code Q0085; and that we delete code C9010. We have decided to continue paying for the drug administration “Q” codes according to our current rules and discuss that decision further in section VI.B.4 of this final rule. We will consider the Panel's recommendation that we investigate other approaches for paying for drugs and radiopharmaceuticals. However, for 2004, we have determined that we will pay separately under their own APCs for drugs, biologicals and radiopharmaceuticals for which the median per day costs are in excess of $50. (4) Device-Related Procedures The APC Panel heard testimony from the device manufacturing community and others concerning payment for procedures that involve the implantation of devices. The presenters discussed concerns that affected such procedures in general, such as the absence of a proposal to limit payment reductions for such procedures between 2003 and 2004 and issues related to the hospital claims for these procedures. Presentations to the APC Panel also discussed inadequacies in the claims data or our methodology for using the claims data to set relative weights for specific device-related APCs (APCs 0046, 0107, 0108, 0222, 0225, 0385, and 0386. Presenters urged that the APC Panel advise us to use the best external data possible, including proprietary data that would be held confidential. Presentations to the APC Panel also addressed the multiple surgical reduction with respect to device-related APCs. The APC Panel recommended: • That we use credible external data that can be made publicly available for establishing the median costs for APCs 0107 and 0386. • That we change the status indicator for CPT 61885 so that it is not subject to the multiple procedure discounting. • That we assign the new CPT codes for central venous access devices into appropriate APCs, either clinical APCs or new technology APCs. • That the APC assignments of the new central venous access devices be reviewed by the APC Panel at its next meeting. • That we provide the APC Panel with median cost data for all APCs in spreadsheet format for its consideration in advance of and during its next meeting. • That we review the presenter's suggestions with respect to APC 0046 and make recommendations for any changes to this APC to the APC Panel at its next meeting. • That we change the status indicator for CPT 93571 and 93572 from “N” (packaged status) to an appropriate indicator that allows separate payment under the APC. We considered the final set of recommendations from the APC Panel's August 2003 meeting and have accepted several of them. Specifically, we decided to use external data in setting the median cost for 2004 for APC 0107. We have not used external data for APC 0386. Each of these decisions is discussed in greater detail elsewhere in this final rule. We accepted the Panel's recommendation to change the status indicator for CPT 61885. In order to do so, we moved this code into its own APC, 0039, Implant neurostim, one array. We have assigned the new CPT codes for central venous access devices to New Technology APCs as displayed in Addendum B. The range of new CPT codes is 36555 through 36597, and the new APC assignments include APCs 0032, 0115, 0109, 0187, and 1541. The assignment of these codes is subject to public comment and will be placed on the APC Panel's agenda for its next meeting. During that meeting, we will also provide the APC Panel with spreadsheet data on the median costs of all APCs. With respect to APC 0046, we are sympathetic to the presenter's concerns. However, we were not provided with data that we considered sufficient to assess whether a new coding structure with increased payment rates is warranted for the treatment of bone fractures with external fixation devices. However, we would support the specialty societies' efforts to request changes to the existing CPT coding structure. For reasons discussed elsewhere, we have not accepted the Panel's recommendation with respect to CPT codes 93571 and 93572. Comment: An association voiced concern that the Panel meeting on August 22, 2003 came too soon after the publication of the August 12, 2003 proposed rule for its members to prepare adequately for presentation to the Panel. Response: The agency must schedule the Panel meetings sufficiently in advance of the meeting in order to provide ample notice to the public of the meeting and to allow sufficient time for the Panel members to arrange their schedules. We attempted to balance those needs with the goal of conducting the first mid-year meeting of the Panel during the comment period so that issues discussed in the August 12, 2003 proposed rule could be topics for the Panel's consideration and interested parties' testimony before the Panel. The July 25, 2003 Federal Register notice (68 FR 44089) announced the second 2003 meeting of the APC Panel, which we believe provided sufficient advance notice of the meeting. While it is true that the proposed rule was placed on display on August 6, published on August 12, and the meeting was held on August 22, 2003, many interested parties attended the meeting and presented thoughtful comments on most issues discussed in the proposed rule. Nevertheless, we will take this comment into consideration for future planning of APC Panel meetings. Comment: Several commenters expressed concern about the length of the meeting and time allotted on the agenda to particular issues. One commenter stated that scheduling only [1] day for Panel deliberations was inadequate. A commenter was concerned that device-related issues were relegated to the last hour, that presenters were given only 2 minutes, and that there was little time for Panel discussion and consideration of the issues presented. Response: We appreciate the commenter's interest in ensuring that adequate time be allowed for the public to present issues for the Panel's consideration and for the Panel to have sufficient time for their discussion and deliberation. Although the device issues were scheduled for the last hour of the meeting, the Panel members received the written presentations beforehand, and had an opportunity to review them before the meeting. Placing a limit on presentations is a prerogative of the Panel Chair and must at times be done in order to allow all interested parties to make presentations on agenda items. However, we will take all of the concerns into consideration when scheduling future meetings. 3. Recommendations of the Advisory Panel and Our Responses January 2003 Meeting 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 final 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 believed violated 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 the August 12, 2003 proposed rule, we discuss our proposals regarding the 2 times rule based on the April 1 through December 31, 2002 data that we used to determine the final 2004 APC relative weights. Section II.B (68 FR 47977) of the August 12, 2003 proposed rule also details the criteria we used when deciding to propose exceptions to the 2 times rule. Unless otherwise specified in each of the following discussions of the APC Panel's recommendations, our proposed actions are finalized in this final 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 proposed to accept the Panel's recommendation. However, we received comments from a group of hospitals concerning the proposed change for CPT code 15851, removal of sutures under anesthesia (other than local), same surgeon. In their comments, the hospitals noted that the descriptor for CPT codes 15851 and 15850 (removal of sutures under anesthesia (other than local), other surgeon, were virtually identical with the exception of which surgeon performs the suture removal. The commenters did not believe that the identity of the surgeon could result in a significant difference in resource costs to the hospital. Our clinical staff agree and believe that the difference in hospital median costs derived from our claims data may be due to a misunderstanding about the coding. For 2004, we have decided that we will place both CPT codes for suture remove under anesthesia in APC 0016. 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. The APC Panel recommended that we make these changes, and we proposed to do so in our August 12, 2003 proposed rule. (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. In August, we proposed to accept the Panel's recommendation that we make no changes to the structure of these APCs for 2004. However, following our review of the median costs developed for the final rule, using a more complete set of claims for services from April through December 2002, we determined that CPT codes 11404 and 11623 should be moved to APC 0021. 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 changes below. Move the following HCPCS codes as described below: Table 1.—HCPCS Codes Final 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 proposed to accept the Panel's recommendation, with the exception of CPT code 31720. After reviewing an additional quarter of claims data that were not available at the time the Panel convened, placement of CPT code 31720 into APC 0072 better reflects its resource consumption. Therefore, we proposed 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 proposed to accept the Panel's recommendation that we make no changes to APC 0097 for 2004. We received no comments disagreeing with this proposal, and we will adopt it for 2004. We also 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 believed, however, that the structure of APC 0099 should not be changed at this time based on clinical homogeneity considerations. We proposed 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 believed the data presented are insufficient to merit moving the code and recommended that CPT code 93025 remain in APC 0100 until more data are available for review. We proposed to accept the Panel's recommendation that CPT code 93025 remain in APC 0100 until more claims data become available for review. We will adopt this proposal for 2004. 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 proposed 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. We will adopt this proposal for 2004. 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 proposed to accept the Panel's recommendation that we make no changes to APCs 0146 and 0147. We will adopt this proposal for 2004. However, 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 proposed to accept the Panel's recommendation, and we will adopt it for 2004. 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: APC 0385 HCPCS Description 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 HCPCS Description 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 proposed to accept the Panel's recommendation to eliminate APCs 0179 and 0182 and create two new APCs, 0385 and 0386, 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 proposed to split APC 0190 (Surgical Hysteroscopy) into two APCs that are more clinically homogeneous. We proposed 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 proposed 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 proposed to move the following HCPCS codes as described below: Table 2.—HCPCS Codes 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 final 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. 1. 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 proposed to accept the Panel's recommendation to move CPT codes 57109, 58920, and 58925 from APC 0202 to APC 0195. We will adopt the Panel's recommendation for 2004. 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 proposed to accept the Panel's recommendation that we make no changes to the structure of these APCs until more data become available for review. We will adopt the Panel's recommendation for 2004. 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 believed 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 proposed to accept the Panel's recommendation that CPT code 62351 remain in APC 0208 until more claims data become available for review. We will adopt the Panel's recommendation for 2004. 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 proposed 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 proposed 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: Implantation of programmable spine infusion pumps, 62362, and 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 0227 does not violate the 2 times rule, the Panel recommended that CPT codes 62361 and 62362 remain in APC 0227. We proposed to accept the Panel's recommendation, which we will adopt for 2004. 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 proposed to accept the Panel's recommendation and monitor the data for APC 0235 for possible review next year. We will adopt this recommendation for 2004. 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 proposed 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. We will adopt the Panel's recommendation for 2004. 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 proposed to accept the Panel's recommendation to move CPT codes 92543 and 92588 from APC 0660 to APC 0363, and we will adopt the proposal for 2004. 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 proposed to accept the Panel's recommendation to move CPT codes 47530, 50688, 51710, and 62225 from APC 0121 to APC 0122. We will adopt the proposal for 2004. 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 proposed to accept the Panel's recommendation to move CPT codes 72285 and 72295 from APC 0274 to new APC 0388. We will adopt the recommendation for 2004. 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 us 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 proposed to accept the Panel's recommendation that we make no CPT code changes to APCs 0296 and 0297, and we are adopting the proposal for 2004. 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 recommended that CPT code 36860 remain in APC 0103 until more data are available for review. We proposed to accept the Panel's recommendation that CPT code 36860 remain in APC 0103 until more claims data become available for review. We will adopt this proposal for 2004. 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 0280. The Panel believed that APCs 0279, 0280, and 0668 were clinically homogenous and recommended that we only make changes after consulting with experts in the field. We proposed to accept the Panel's recommendation to make no changes to APCs 0279, 0280, and 0668 until we have consulted 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 believed 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 be 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 To Be Designated as Separately Payable HCPCS Description 2003 SI 2004 SI 2004 APC 76362 CT scan for tissue ablation N S 0332 76394 MRI for tissue ablation N S 0335 76490 US for tissue ablation N S 0268 We proposed 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. HCPCS 76490 has been deleted for 2004. However, we will pay for it under APC 0268 during the grace period from January through March 2004. 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 proposed 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 proposed to accept the Panel's recommendation, and we will adopt the proposal for 2004. 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 will 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 will be used to determine whether to change the APC structure for chemotherapy administration. We proposed not to accept the Panel's recommendations to split APC 0116 into three APCs and to use CPT codes for administration of chemotherapy. We will consider such a split in the future but would like to first address the administration of drugs issue. Based on the comments we received on our proposed drug administration coding, we believe that making a change in APC 0116 will be too complicated and burdensome for hospitals at this time. (See a full discussion of this in section VI.B.4 of this final rule.) We will consider such a split for APC 0116 for CY 2005. We also believe the use of CPT codes will be burdensome to hospitals, will require extensive education, and will 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 are 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 will 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. See section VI of this final rule for further discussion on payments for drugs and drug administration. dd. Capturing the Costs of Drugs, Biologicals and Radiopharmaceuticals 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 At the January 2003 meeting, 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 stated 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 will have no incentive to code, and thereby identify, packaged drugs. Pass-through payments for 236 drugs, biologicals, and radiopharmaceuticals expired as of 2003, were then 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 do not provide specific cost information for packaged items. We requested input from the Panel on methods for determining drug costs in the future. 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 radionuclides 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 restructuring the APCs for nuclear medicine will result in greater clinical and resource homogeneity. Therefore, we proposed to eliminate APCs 0286, 0290, 0291, 0292, 0294, and 0666 and create 20 new APCs for nuclear medicine. Comment: We received many comments about the proposed nuclear medicine APCs. Generally, commenters supported our proposal for the new APCs but had suggestions for modifications to improve clinical and resource use homogeneity. The suggested modifications are: • Split APC 0398 into three levels to account for differences in the number of sessions provided and type and amount of radiopharmaceutical used with these procedures. • Split APC 0401 into two levels to account for the different number of sessions, type and amount of radiopharmaceuticals used, and whether or not ventilation imaging and perfusion imaging are part of the procedure. • Delete codes G0273 and G0274 and use the newly created CPT codes 78804 and 79403. They recommended that we assign 78804 to a new APC 0406T, Tumor/Infection Imaging Level II and that we assign 79403 to the new APC for Radionucliide Therapy APC, created by combining proposed APCs 0407 and 0408. • Move codes 78015, 78016, and 78018 from APC 0390 to APC 0406 because they are for metastatic tumor imaging rather than for one organ system. • Move all of the nuclear medicine “add-on” codes into one APC to be named “Nuclear Medicine Add-On Imaging.” Three of the codes, 78478, Heart wall motion add-on, 78480 Heart function add-on, and 78496, Heart function first pass add-on, are assigned to proposed APC 0399. They recommended moving the remaining add-on code, 78020, Thyroid carcinoma metastases uptake, to proposed APC 0399 with the other three add-on codes, to create an APC comprised of add-on codes with a status indicator “X.” • Move each of the codes in the series of codes, 78X99 into the appropriate APCs based on the organ system to be consistent with the proposed APC structure. • Reassign codes 78270, 78271, and 78272 to APC 0389 because they are non-imaging nuclear medicine procedures with resource use more similar to the procedures in APC 0389. • Combine APCs 0390, 0391, and 0392 to create two new APCs composed of thyroid, parathyroid, and adrenal systems. They suggest that the codes should be reassigned to two levels of endocrine imaging based on the number of sessions and radiopharmaceuticals used in the procedure. The titles suggested for the new APCs are “Endocrine Level I” and “Endocrine Level II.” • Combine proposed APCs 0407 and 0408 into one APC because hospital claims data do not reflect any logical division between the two proposed APCs. Further, they request that all of the nuclear medicine therapy codes in the new APC should be paid separately since they know of no nuclear medicine therapeutic radiopharmaceutical that has costs below the proposed $150 threshold for packaging. • Collapse and redistribute code assignments in APCs 0404 and 0405 to create two new APCs for Level I and Level II Renal and Genitourinary Studies. They recommended assigning only one code, 78709, Kidney imaging, multiple studies, with and without pharmaceutical intervention, to the Level II APC. Response: After careful review of the recommendations, with one exception, we concur with the commenters that their recommended modifications to the proposed APC classifications improve clinical homogeneity and payment equity. The shifts in median cost that result from the adjustments are minor in most cases and overall, the increased cost is not significant. The one exception to our agreement with the commenters' recommendation is regarding the assignment of 78708, Kidney imaging with vascular flow and function, single study. Commenters recommended that it be assigned to APC 0404. We believe that it is more appropriately assigned to APC 0405 based on both clinical and resource use considerations. Although we do not disagree with the commenters' suggestions, we also will not assign the new code 78804, pre-treatment planning, non-Hodgkins to the APC suggested by the commenters. Instead, we will assign it to new technology APC 1508. A detailed discussion of this assignment and other issues related to Zevalin is below in section VI.B. Thus, we will finalize the nuclear medicine APCs as shown below. APC 0376: Cardiac Imaging Level II HCPCS Description 78473 Gated heart, multiple. 78483 Heart first pass, multiple. APC 0377: Cardiac Imaging Level III HCPCS Description 78461 Heart muscle blood, multiple. 78465 Heart image (3D), multiple. APC 0378: Pulmonary Imaging Level II HCPCS Description 78584 Lung V/Q image gas, single breath. 78585 Lung V/Q imaging gas. 78588 Lung V/Q imaging aerosol. 78596 Lung differential function. APC 0389: Non-Imaging Nuclear Medicine HCPCS Description 78000 Thyroid, single uptake. 78001 Thyroid, multiple uptakes. 78003 Thyroid suppress/stimuli. 78190 Platelet survival, kinetics. 78191 Platelet survival. 78270 Vitamin B-12 absorption exam. 78271 Vitamin B-12 absorp. exam, intrin. Fac. 78272 Vitamin B-12 absorp, combined. 78725 Kidney function study. APC 0390: Endocrine Level I HCPCS Description 78006 Thyroid imaging with uptake. 78010 Thyroid imaging. 78011 Thyroid imaging with flow. 78099 Endocrine nuclear procedure. APC 0391: Endocrine Level II HCPCS Description 78007 Thyroid image, mult uptakes. 78070 Parathyroid nuclear imaging. 78075 Adrenal nuclear imaging. APC 0393: Red Cell/Plasma Studies HCPCS Description 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 0394: Hepatobiliary Imaging HCPCS Description 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: Gastrointestinal Imaging HCPCS Description 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. 78282 GI protein loss exam. 78290 Meckel's divert exam. 78291 Leveen/shunt patency exam. 78299 GI nuclear procedure. APC 0396: Bone Imaging HCPCS Description 78300 Bone imaging, limited area. 78305 Bone imaging, multiple areas. 78306 Bone imaging, whole body. 78315 Bone imaging, 3 phase. 78320 Bone imaging (3D). 78399 Musculoskeletal nuclear exam. APC 0397: Vascular Imaging HCPCS Description 78445 Venous thrombosis study. 78455 Venous thrombosis study. 78456 Acute venous thrombus image. 78457 Venous thrombosis imaging. 78458 Ven thrombosis images, bilat. APC 0398: Cardiac Imaging Level I HCPCS Description 78414 Non-imaging heart function. 78428 Cardiac shunt imaging. 78460 Heart muscle blood, single. 78464 Heart image (3D), single. 78466 Heart infarct image. 78468 Heart infarct image (ef). 78469 Heart infarct image (3D). 78472 Gated heart, planar, single. 78481 Heart first pass, single. 78494 Heart image, spect. 78499 Unlisted cardiovascular. APC 0399: Nuclear Medicine Add-On Imaging HCPCS Description 78020 Thyroid met uptake. 78478 Heart wall motion add-on. 78480 Heart function add-on. 78496 Heart first pass add-on. APC 0400: Hematopoietic Imaging HCPCS Description 78102 Bone marrow imaging, ltd. 78103 Bone marrow imaging, mult. 78104 Bone marrow imaging, body. 78185 Spleen imaging. 78195 Lymph system imaging. 78199 Blood/lymph nuclear exam. APC 0401: Pulmonary Imaging, Level 1 HCPCS Description 78580 Lung perfusion imaging. 78586 Aerosol lung image, single. 78587 Aerosol lung image, multiple. 78591 Vent image, 1 breath, 1 proj. 78593 Vent image, 1 proj, gas. 78594 Vent image, mult proj, gas. 78599 Respiratory Nuclear Exam. APC 0402: Brain Imaging HCPCS Description 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. 78699 Nervous system nuclear exam. APC 0403: CSF Imaging HCPCS Description 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: Renal & Genitourinary Studies Level I HCPCS Description 78700 Kidney imaging, static. 78701 Kidney imaging with flow. 78704 Imaging renogram. 78707 Kidney flow/function image. 78710 Kidney imaging (3D). 78715 Renal vascular flow exam. APC 0405: Renal & Genitourinary Studies Level II HCPCS Description 78708 Kidney flow/function image. 78709 Kidney flow/function image. APC 0406: Tumor/Infection Imaging HCPCS Description 78015 Thyroid metastases imaging. 78016 Thyroid metastases imaging/studies. 78018 Thyroid metastases imaging/body. 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. APC 0407: Radionucliide Therapy HCPCS Description 79000 Init hyperthyroid therapy. 79001 Repeat hyperthyroid therapy. 79020 Thyroid ablation. 79030 Thyroid ablation, carcinoma. 79035 Thyroid metastatic therapy. 79100 Hematopoetic nuclear therapy. 79200 Intracavitary nuclear treatment. 79300 Interstitial nuclear therapy. 79400 Nonhemato nuclear therapy. 79420 Intravascular nuclear therapy. 79440 Nuclear joint therapy. 79999 Nuclear medicine therapy. APC 1507: New Technology Level VII ($500-$600) 79403 Hematopoetic nuclear therapy. APC 1508: Tumor/Infection Imaging Level II HCPCS Description 78804 Pre-tx planning, non-Hodgkins. We believe that the final 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. 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 will 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 proposed to accept the Panel's recommendation that we move CPT codes 31630, 31631, 31640, and 31641 from APC 0076 to new APC 0415. We received no comments disagreeing with this proposal and will adopt this recommendation for 2004. 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 will 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 0384 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 proposed 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, 45345 (from APC 0147). We received no comments disagreeing with this proposal, and we will adopt it for 2004. 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 II.B of this preamble, 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 not create 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. 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 preamble 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 the final list of APCs that we 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.—APCS Exempted From 2 Times Rule Final Rule APC Description 0006 Level I Incision & Drainage. 0012 Level I Debridement & Destruction. 0018 Biopsy of Skin/Puncture of Lesion. 0019 Level I Excision/Biopsy. 0020 Level II Excision/Biopsy. 0043 Closed Treatment Fracture Finger/Toe/Trunk. 0046 Open/Percutaneous Treatment Fracture or Dislocation. 0058 Level I Strapping and Cast Application. 0060 Manipulation Therapy. 0071 Level I Endoscopy Upper Airway. 0074 Level IV Endoscopy Upper Airway. 0084 Level I Electrophysiologic Evaluation. 0093 Vascular Reconstruction/Fistula Repair without Device. 0097 Cardiac and Ambulatory Blood Pressure Monitoring. 0099 Electrocardiograms. 0103 Miscellaneous Vascular Procedures. 0105 Revision/Removal of Pacemakers, AICD, or Vascular. 0109 Removal of Implanted Devices. 0130 Level I Laparoscopy. 0147 Level II Sigmoidoscopy. 0148 Level I Anal/Rectal Procedure. 0155 Level II Anal/Rectal Procedure. 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. 0279 Level II Angiography and Venography except Extremity. 0297 Level II Therapeutic Radiologic Procedures. 0303 Treatment Device Construction. 0314 Hyperthermic Therapies. 0323 Extended Individual Psychotherapy. 0340 Minor Ancillary Procedures. 0341 Skin Tests. 0344 Level III Pathology. 0355 Level III Immunizations. 0356 Level IV Immunizations. 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. 0397 Vascular Imaging. 0398 Level I Cardiac Imaging. 0402 Brain Imaging. 0404 Renal and Genitourinary Studies Level I. 0407 Radionuclide Therapy. 0409 Red Blood Cell Tests. 0688 Revision/Removal of Neurostimulator Pulse Generator Receiver. 0692 Electronic Analysis of Neurostimulator Pulse Generators. 0698 Level II Eye Tests & Treatments. 0699 Level IV Eye Tests & Treatments. 1528 New Technology—Level XXVIII ($5000-$5500). 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. Beginning in 2002, the policy is to 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 below, we proposed to delete four HCPCS codes that are currently paid in new technology APCs. We believed that 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, we stated that there soon would exist, CPT codes to describe all of 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 which we proposed to delete effective January 1, 2004 were: 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. A full description of these HCPCS is available in the proposed rule (67 FR 47978). We received no comments in response to this proposal. However, we have determined that our proposal to delete codes C9701 and C9703 was in error. Upon further review of this issue, we have determined that these codes were in fact established to represent complete procedures. Therefore, we will retain codes C9701 and C9703. Comment: A provider of treatment planning software submitted several comments regarding this service. In their first set of comments on the 2003 OPPS final rule with comment, the commenter agreed with our decision to create a new G-code, G0288, for their product, Preview, and other similar treatment planning software and to assign this service to new technology APC 0975. G0288 was created and assigned to new technology APC 0975 for the 2003 final rule and was subject to comment after its publication. In their comments in response to the 2003 final rule with comment, they indicated that the $625 payment rate associated with new technology APC 0975 appropriately reflected the costs of Preview to providers. However, this party recommended that we pay for G0288 under certain circumstances. These included payment only for treatment planning imaging services that are FDA approved; that is, to follow FDA's determinations concerning which imaging software programs are sufficiently comprehensive and accurate. Further, the commenter recommended that we pay for both pre-surgical and post-surgical imaging, claiming optimum effectiveness of the related endovascular repair procedures only occurs when imaging studies are performed both before and after surgery. Third, this party recommended that we use G0288 in the OPPS but not in other Medicare payment systems until cost data were more complete. The commenter believed that we should encourage use of the CPT process to develop codes that describe a wide range of applications for the treatment planning imaging that may develop. The commenter also commented on our August 12, 2003 proposed rule, in which we proposed assigning G0288 to new APC 0414, with a payment rate of $260.65. This commenter stated that the proposed payment is inadequate and based on flawed, imputed cost data. It also asserted that the descriptors for APC 0414 and G0288 do not restrict the use of this code to services that meet the “recognized standards and specifications” for three-dimensional computer-aided measurement planning simulation (“3D-CAMPS”) services and recommended that we revise the proposed payment for APC 0414 based on hospital acquisition cost data that they provided. The commenter also recommended that we create a revenue code specifically for APC 0414 to enable more rational charge determination for the service and that we revise the descriptors for APC 0414 and G0288 to ensure that the codes only are used for the 3D-CAMPS systems, and to clarify that the service may be applied pre- or post-surgically. The recommended descriptor is: “Three-dimensional computer-aided measurement simulation (3D-CAMPS) services for pre-surgical and post-surgical imaging.” Response: We proposed to move G0288 from new technology APC 0975 to APC 0414 because we believe that we had sufficient 2002 claims data for our analysis. The predecessor C-code for Preview, C9708, was reported approximately 1,300 times in 2002, with a median cost of $272.48. However, we have reviewed the hospital cost data that the commenting party provided, and believe that there may be some claims in our data that understate the cost of the treatment planning software. We have decided to give equal weight to the median cost based on our claims data and the median cost of $625 provided by the commenter, based on its analysis. Therefore, we are establishing the appropriate cost amount as $448.74. As a result, we are assigning G0288 to new technology service APC 1506, for a payment rate of $450.00. We are continuing the assignment of G0288 to a new technology APC because this is still a relatively new procedure and we still have concerns regarding our cost data. We agree that this can be used for treatment planning prior to surgery and for post-surgical monitoring and have revised the code descriptor to clarify this point. The descriptor for this code is revised as follows: G0288 Reconstruction, computed tomographic angiography of aorta for preoperative planning and evaluation post vascular surgery. We assume that hospitals providing this service will abide by the FDA labeling requirements for equipment used in providing this service. 3. Revision of Cost Bands and Payment Amounts for New Technology APCs We proposed 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 inaccurate payment 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 proposed 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 proposed 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 solicited comments on the hierarchy of cost levels of the restructured new technology APCs. The final list of restructured new technology APCs is in Addendum A. We received a number of comments in support of this proposal to restructure the new technology APC bands. Therefore, we will finalize our proposal. 4. Creation of APCs for Combinations of Device Procedures In the August 12, 2003 proposed rule, we discussed data development that we had undertaken to create median costs for combinations of HCPCS codes in different APCs that we believed were frequently performed on the same day. We focused our work on pairs of APCs, one of which contained a service that required an expensive device. See 68 FR 47979 for a complete description of the data development. We undertook this activity to see if creating larger classification groups of this type might increase the number of multiple procedure claims that we could use to set payment rates for these services. We also thought that the analysis might yield useful information regarding the appropriateness of the multiple procedure reduction for combinations of services that include at least one APC with an expensive device, that are commonly performed on the same date. In many cases, we found that the combination APC medians closely approximated the median that results under the current policy (that is, the sum of single medians for each APC, reducing the median for the lower cost procedure by 50 percent). In other cases, the data revealed combination APC median costs that were considerably higher or lower than under our current policy. We concluded in the proposed rule that the results of the study provided no compelling reason to change our payment policy. We asked for comment on all aspects of the methodology, analysis, and payment options. We also asked for discussion of how we could use more multiple procedure claims were we not to create combination APCs and for an explanation of why external data should be used in lieu of our single or multiple procedure claims data to set median costs for APCs with large device costs. However, we did not propose to create combination APCs or to make payment based on the combination APC medians for 2004. We received only a few comments on the combination APC methodology and these were in the context of why we should not apply multiple procedure reductions to specific combinations of APCs. See the discussion of multiple procedure reduction in V.D.2 for a summary of these comments and our responses. 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 used the same basic methodology that we described in the April 7, 2000 final rule. That is, we recalibrated the weights based on claims and cost report data for outpatient services. We used 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 127 million final action claims for hospital outpatient department services furnished on or after April 1, 2002 and before January 1, 2003. We eliminated 2.6 million claims for bill types other than OPPS bill types and claims for services furnished in Maryland, Guam, and the Virgin Islands. We matched the remaining claims that were paid under the OPPS to the most recent cost report filed by the individual hospitals represented in our claims data. We were left with about 75 million claims for which we could identify cost report data. The APC relative weights 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 used claims for the period beginning April 1, 2002 through and including December 31, 2002 as the basis 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. Comment: Some commenters supported our use of claims for this 9-month period for setting the weights for the 2004 OPPS. Other commenters wanted us to use external data in lieu of claims data for specified APCs because they believed that the payments that result from the median costs developed using claims data were inadequate. Other commenters objected to the use of 2002 claims data because they stated that 2002 costs would not be an appropriate proxy for the relative costs of drugs, biologicals, and radiopharmaceuticals in 2004 and they urged us to use hospital acquisition costs instead of claims data. Response: We used 2002 claims data for services furnished from April 1, 2002 through December 31, 2002 as the basis for the relative weights used to create payment amounts for the 2004 OPPS. Our established policy is to use the most recent claims data available. For the August 12, 2003 proposed rule and this final rule, those data are for services in the last 3 quarters of 2002. These data are used to calculate median costs upon which to base our relative weights. The OPPS seeks and uses relative costs to create weights that are used to distribute a fixed amount of Medicare payment for OPPS services appropriately among hospitals. Therefore, the accuracy of the relativity is more important than whether the median costs derived from the claims data accurately reflect the costs of the services. See section III.B for our discussion of the use of external data. 2. Treatment of “Multiple Procedure” Claims Since the inception of the OPPS, 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 OPPS relative payment weights. Those making the requests believe [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A03-27791. Public record. Not legal advice.