# Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2006 Rates > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A05-15406 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** August 12, 2005 - **Citation:** 70 FR 47278 ## Text DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 405, 412, 413, 415, 419, 422, and 485 [CMS-1500-F] RIN 0938-AN57 Medicare Program; Changes to the Hospital Inpatient Prospective Payment Systems and Fiscal Year 2006 Rates AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS. ACTION: Final rule. SUMMARY: We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs to implement changes arising from our continuing experience with these systems. In addition, in the Addendum to this final rule, we describe the changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. We also are setting forth rate-of-increase limits as well as policy changes for hospitals and hospital units excluded from the IPPS that are paid in full or in part on a reasonable cost basis subject to these limits. These changes are applicable to discharges occurring on or after October 1, 2005, with one exception: The changes relating to submittal of hospital wage data by a campus or campuses of a multicampus hospital system (that is, the changes to § 412.230(d)(2) of the regulations) are effective on August 12, 2005. Among the policy changes that we are making are changes relating to: The classification of cases to the diagnosis-related groups (DRGs); the long-term care (LTC)-DRGs and relative weights; the wage data, including the occupational mix data, used to compute the wage index; rebasing and revision of the hospital market basket; applications for new technologies and medical services add-on payments; policies governing postacute care transfers, payments to hospitals for the direct and indirect costs of graduate medical education, submission of hospital quality data, payment adjustment for low-volume hospitals, changes in the requirements for provider-based facilities; and changes in the requirements for critical access hospitals (CAHs). DATES: Effective Dates: The provisions of this final rule, except the provisions of § 412.230(d)(2), are effective on October 1, 2005. The provisions of § 412.230(d)(2) are effective on August 12, 2005. This rule is a major rule as defined in 5 U.S.C. 804(2). Pursuant to 5 U.S.C. 801(a)(1)(A), we are submitting a report to Congress on this rule on August 1, 2005. FOR FURTHER INFORMATION CONTACT: Marc Hartstein, (410) 786-4548, Operating Prospective Payment, Diagnosis-Related Groups (DRGs), Wage Index, New Medical Services and Technology Add-On Payments, Hospital Geographic Reclassifications, Postacute Care Transfers, and Disproportionate Share Hospital Issues. Tzvi Hefter, (410) 786-4487, Capital Prospective Payment, Excluded Hospitals, Graduate Medical Education, Critical Access Hospitals, and Long-Term Care (LTC)-DRGs, and Provider-Based Facilities Issues. Steve Heffler, (410) 786-1211, Hospital Market Basket Revision and Rebasing. Siddhartha Mazumdar, (410) 786-6673, Rural Hospital Community Demonstration Project Issues. Mary Collins, (410) 786-3189, Critical Access Hospitals (CAHs) Issues. Debbra Hattery, (410) 786-1855, Quality Data for Annual Payment Update Issues. Martha Kuespert, (410) 786-4605, Specialty Hospitals Definition Issues. SUPPLEMENTARY INFORMATION: Electronic Access 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. Free public access is available on a Wide Area Information Server (WAIS) through the Internet and via asynchronous dial-in. Internet users can access the database by using the World Wide Web; the Superintendent of Documents home page address is http://www.access.gpo.gov/nara_docs/ , by using local WAIS client software, or by telnet to swais.access.gpo.gov , then login as guest (no password required). Dial-in users should use communications software and modem to call (202) 512-1661; type swais, then login as guest (no password required). Acronyms AAOS American Association of Orthopedic Surgeons ACGME Accreditation Council on Graduate Medical Education AHIMA American Health Information Management Association AHA American Hospital Association AICD Automatic implantable cardioverter defibrillator AMI Acute myocardial infarction AOA American Osteopathic Association ASC Ambulatory Surgical Center ASP Average sales price AWP Average wholesale price BBA Balanced Budget Act of 1997, Pub. L. 105-33 BES Business Expenses Survey BIPA Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Benefits Improvement and Protection Act of 2000, Pub. L. 106-554 BLS Bureau of Labor Statistics CAH Critical access hospital CBSAs Core-Based Statistical Areas CC Complication or comorbidity CIPI Capital Input Price Index CMS Centers for Medicare & Medicaid Services CMSA Consolidated Metropolitan Statistical Area COBRA Consolidated Omnibus Reconciliation Act of 1985, Pub. L. 99-272 CoP Condition of Participation CPI Consumer Price Index CRNA Certified registered nurse anesthetist CRT Cardiac Resynchronization Therapy DRG Diagnosis-related group DSH Disproportionate share hospital ECI Employment Cost Index FDA Food and Drug Administration FIPS Federal Information Processing Standards FQHC Federally qualified health center FTE Full-time equivalent FY Federal fiscal year GAAP Generally accepted accounting principles GAF Geographic adjustment factor HIC Health Insurance Card HIS Health Information System GME Graduate medical education HCRIS Hospital Cost Report Information System HIPC Health Information Policy Council HIPAA Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191 HHA Home health agency HHS Department of Health and Human Services HPSA Health Professions Shortage Area HQA Hospital Quality Alliance ICD-9-CM International Classification of Diseases, Ninth Revision, Clinical Modification ICD-10-PCS International Classification of Diseases, Tenth Edition, Procedure Coding System ICU Intensive Care Unit IHS Indian Health Service IME Indirect medical education IPPS Acute care hospital inpatient prospective payment system IPF Inpatient psychiatric facility IRF Inpatient rehabilitation facility IRP Initial residency period JCAHO Joint Commission on Accreditation of Healthcare Organizations LAMCs Large area metropolitan counties LTC-DRG Long-term care diagnosis-related group LTCH Long-term care hospital MCE Medicare Code Editor MCO Managed care organization MDC Major diagnostic category MDH Medicare-dependent small rural hospital MedPAC Medicare Payment Advisory Commission MedPAR Medicare Provider Analysis and Review File MEI Medicare Economic Index MGCRB Medicare Geographic Classification Review Board MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108-173 MRHFP Medicare Rural Hospital Flexibility Program MSA Metropolitan Statistical Area NAICS North American Industrial Classification System NCD National coverage determination NCHS National Center for Health Statistics NCVHS National Committee on Vital and Health Statistics NECMA New England County Metropolitan Areas NICU Neonatal intensive care unit NQF National Quality Forum NTIS National Technical Information Service NVHRI National Voluntary Hospital Reporting Initiative OES Occupational Employment Statistics OIG Office of the Inspector General OMB Executive Office of Management and Budget O.R. Operating room OSCAR Online Survey Certification and Reporting (System) PRM Provider Reimbursement Manual PPI Producer Price Index PMS Performance Measurement System PMSAs Primary Metropolitan Statistical Areas PPS Prospective payment system PRA Per resident amount ProPAC Prospective Payment Assessment Commission PRRB Provider Reimbursement Review Board PS&R Provider Statistical and Reimbursement System QIA Quality Improvement Organizations RHC Rural health clinic RHQDAPU Reporting Hospital Quality Data for Annual Payment Update RNHCI Religious nonmedical health care institution RRC Rural referral center RUCAs Rural-Urban Commuting Area Codes SCH Sole community hospital SDP Single Drug Pricer SIC Standard Industrial Codes SNF Skilled nursing facility SOCs Standard occupational classifications SOM State Operations Manual SSA Social Security Administration SSI Supplemental Security Income TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248 UHDDS Uniform Hospital Discharge Data Set Table of Contents I. Background A. Summary 1. Acute Care Hospital Inpatient Prospective Payment System (IPPS) 2. Hospitals and Hospital Units Excluded from the IPPS a. IRFs b. LTCH c. IPFs 3. Critical Access Hospitals (CAHs) 4. Payments for Graduate Medical Education (GME) B. Summary of Provisions of the FY 2006 IPPS Proposed Rule 1. Changes to the DRG Reclassifications and Recalibrations of Relative Weights 2. Changes to the Hospital Wage Index 3. Revision and Rebasing of the Hospital Market Basket 4. Other Decisions and Changes to the PPS for Inpatient Operating and GME Costs 5. PPS for Capital-Related Costs 6. Changes for Hospitals and Hospital Units Excluded From the IPPS 7. Payment for Blood Clotting Factors for Inpatients With Hemophilia 8. Determining Prospective Payment Operating and Capital Rates and Rate-of-Increase Limits 9. Impact Analysis 10. Recommendation of Update Factor for Hospital Inpatient Operating Costs 11. Discussion of Medicare Payment Advisory Commission Recommendations C. Public Comments Received in Response to the FY 2006 IPPS Proposed Rule II. Changes to DRG Classifications and Relative Weights A. Background B. DRG Reclassifications 1. General 2. Yearly Review for Making DRG Changes; Request for Public Comment 3. Pre-MDC: Intestinal Transplantation 4. MDC 1 (Diseases and Disorders of the Nervous System) a. Strokes b. Unruptured Cerebral Aneurysms 5. MDC 5 (Diseases and Disorders of the Circulatory System) a. Severity Adjusted Cardiovascular Procedures b. Automatic Implantable Cardioverter/Defibrillator c. Coronary Artery Stents d. Insertion of Left Atrial Appendage Device e. External Heart Assist System Implant f. Carotid Artery Stent g. Extracorporeal Membrane Oxygenation (ECMO) 6. MDC 6 (Diseases and Disorders of the Digestive System): Artificial Anal Sphincter 7. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) a. Hip and Knee Replacements b. Kyphoplasty c. Multiple Level Spinal Fusion d. Charite(tm) Spinal Disc Replacement Device 8. MDC 18 (Infectious and Parasitic Diseases (Systemic or Unspecified Sites)): Severe Sepsis 9. MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders): Drug-Induced Dementia 10. Medicare Code Editor (MCE) Changes a. Newborn Age Edit b. Newborn Diagnoses Edit c. Diagnoses Allowed for “Males Only” Edit d. Tobacco Use Disorder Edit e. Noncovered Procedure Edit 11. Surgical Hierarchies 12. Refinement of Complications and Comorbidities (CC) List a. Background b. Comprehensive Review of the CC List c. CC Exclusion List for FY 2006 13. Review of Procedure Codes in DRGs 468, 476, and 477 a. Moving Procedure Codes from DRG 468 or DRG 477 to MDCs b. Reassignment of Procedures among DRGs 468, 476, and 477 c. Adding Diagnosis or Procedure Codes to MDCs 14. Changes to the ICD-9-CM Coding System 15. Other Issues a. Acute Intermittent Porphyria b. Prosthetic Cardiac Support Device (Code 37.41) c. Coronary Intravascular Ultrasound (IVUS) (Procedure Code 00.24) d. Islet Cell Transplantation C. Recalibration of DRG Weights D. LTC-DRG Reclassifications and Relative Weights for LTCHs for FY 2006 1. Background 2. Changes in the LTC-DRG Classifications a. Background b. Patient Classifications into DRGs 3. Development of the Proposed FY 2006 LTC-DRG Relative Weights a. General Overview of Development of the LTC-DRG Relative Weights b. Data c. Hospital-Specific Relative Value Methodology d. Low-Volume LTC-DRGs 4. Steps for Determining the FY 2006 LTC-DRG Relative Weights 5. Other Public Comments Relating to the LTCH PPS Payment Policies E. Add-On Payments for New Services and Technologies 1. Background 2. FY 2006 Status of Technology Approved for FY 2005 Add-On Payments 3. Reevaluation of FY 2005 Applications That Were Not Approved 4. FY 2006 Applicants for New Technology Add-On Payments III. Changes to the Hospital Wage Index A. Background B. Core-Based Statistical Areas for the Hospital Wage Index C. Occupational Mix Adjustment to FY 2006 Index 1. Development of Data for the Occupational Mix Adjustment 2. Calculation of the Occupational Mix Adjustment Factor and the Occupational Mix Adjusted Wage Index D. Worksheet S-3 Wage Data for the FY 2006 Wage Index Update E. Verification of Worksheet S-3 Wage Data F. Computation of the FY 2006 Unadjusted Wage Index G. Computation of the FY 2006 Blended Wage Index H. Revisions to the Wage Index Based on Hospital Redesignation 1. General 2. Effects of Reclassification 3. Application of Hold Harmless Protection for Certain Urban Hospitals Redesignated as Rural 4. FY 2006 MGCRB Reclassifications 5. FY 2006 Redesignations under Section 1886(d)(8)(B) of the Act 6. Reclassifications under Section 508 of Pub. L. 108-173 I. FY 2006 Wage Index Adjustment Based on Commuting Patterns of Hospital Employees J. Requests for Wage Index Data Corrections IV. Rebasing and Revision of the Hospital Market Baskets A. Background B. Rebasing and Revising the Hospital Market Basket 1. Development of Cost Categories and Weights 2. PPS—Selection of Price Proxies 3. Labor-Related Share C. Separate Market Basket for Hospitals and Hospital Units Excluded from the IPPS 1. Hospitals Paid Based on Their Reasonable Costs 2. Excluded Hospitals Paid Under Blend Methodology 3. Development of Cost Categories and Weights for the 2002-Based Excluded Hospital Market Basket D. Frequency of Updates of Weights in IPPS Hospital Market Basket E. Capital Input Price Index Section V. Other Decisions and Changes to the IPPS for Operating Costs and GME Costs A. Postacute Care Transfer Payment Policy 1. Background 2. Changes to DRGs Subject to the Postacute Care Transfer Policy B. Reporting of Hospital Quality Data for Annual Hospital Payment Update 1. Background 2. Requirements for Hospital Reporting of Quality Data C. Sole Community Hospitals and Medicare Dependent Hospitals 1. Background 2. Budget Neutrality Adjustment to Hospital Payments Based on Hospital-Specific Rate 3. Technical Change D. Rural Referral Centers 1. Case-Mix Index 2. Discharges 3. Technical Change E. Payment Adjustment for Low-Volume Hospitals F. Indirect Medical Education (IME) Adjustment 1. Background 2. IME Adjustment for IPPS-Excluded Hospitals Converting to IPPS Hospitals 3. Section 1886(d)(3)(E) Teaching Hospitals That Withdraw Rural Reclassification G. Payment to Disproportionate Share Hospitals (DSHs) 1. Background 2. Implementation of Section 951 of Pub. L. 108-173 3. Calculation of the Medicare Fraction 4. Calculation of the Medicaid Fraction H. Geographic Reclassifications 1. Background 2. Multicampus Hospitals 3. Urban Group Hospital Reclassifications 4. Clarification of Goldsmith Modification Criterion for Urban Hospitals Seeking Reclassification as Rural I. Payment for Direct Graduate Medical Education 1. Background 2. Direct GME Initial Residency Period a. Background b. Direct GME Initial Residency Period Limitation: Simultaneous Match 3. New Teaching Hospitals' Participation in Medicare GME Affiliated Groups 4. GME FTE Cap Adjustments for Rural Hospitals 5. Technical Changes: Cross-References J. Provider-Based Status of Facilities under Medicare 1. Background 2. Limits on Scope of Provider-Based Regulations—Facilities for Which Provider-Based Determinations Will Not Be Made 3. Location Requirement for Off-Campus Facilities: Application to Certain Neonatal Intensive Care Units 4. Technical and Clarifying Changes K. Rural Community Hospital Demonstration Program L. Definition of a Hospital in Connection with Specialty Hospitals VI. PPS for Capital-Related Costs VII. Changes for Hospitals and Hospital Units Excluded From the IPPS A. Payments to Excluded Hospitals and Hospital Units 1. Payments to Existing Excluded Hospitals and Hospital Units 2. Updated Caps for New Excluded Hospitals and Units 3. Implementation of a PPS for IRFs 4. Implementation of a PPS for LTCHs 5. Implementation of a PPS for IPFs 6. Report of Adjustment (Exception) Payments B. Critical Access Hospitals (CAHs) 1. Background 2. Policy Change Relating to Continued Participation by CAHs in Lugar Counties 3. Policy Change Relating to Designation of CAHs as Necessary Providers a. Determination of the Relocation Status of a CAH b. Relocation of a CAH Using a Waiver To Meet the CoP for Distance VIII. Payment for Blood Clotting Factor Administered to Hemophilia Inpatients IX. MedPAC Recommendations A. Medicare Payment Policy 1. Update Factor 2. Quality Incentive Payment Policy 3. Refinement of DRGs Based on Severity of Illness 4. APR-DRGs 5. DRG Relative Weights 6. High-Cost Outliers B. Other MedPAC Recommendations X. Other Required Information A. Requests for Data From the Public B. Collection of Information Requirements Regulation Text Addendum—Schedule of Standardized Amounts Effective with Discharges Occurring On or After October 1, 2005 and Update Factors and Rate-of-Increase Percentages Effective With Cost Reporting Periods Beginning On or After October 1, 2005 I. Summary and Background II. Changes to Prospective Payment Rates for Hospital Inpatient Operating Costs for FY 2006 A. Calculation of the Adjusted Standardized Amount 1. Standardization of Base-Year Costs or Target Amounts 2. Computing the Average Standardized Amount 3. Updating the Average Standardized Amount 4. Other Adjustments to the Average Standardized Amount a. Recalibration of DRG Weights and Updated Wage Index—Budget Neutrality Adjustment b. Reclassified Hospitals—Budget Neutrality Adjustment c. Outliers d. Rural Community Hospital Demonstration Program Adjustment (Section 410A of Pub. L. 108-173) 5. FY 2006 Standardized Amount B. Adjustments for Area Wage Levels and Cost-of-Living 1. Adjustment for Area Wage Levels 2. Adjustment for Cost-of-Living in Alaska and Hawaii C. DRG Relative Weights D. Calculation of Prospective Payment Rates for FY 2006 1. Federal Rate 2. Hospital-Specific Rate (Applicable Only to SCHs and MDHs) a. Calculation of Hospital-Specific Rate b. Updating the FY 1982, FY 1987, and FY 1996 Hospital-Specific Rates for FY 2006 3. General Formula for Calculation of Prospective Payment Rates for Hospitals Located in Puerto Rico Beginning On or After October 1, 2005 and Before October 1, 2006 a. Puerto Rico Rate b. National Rate III. Changes to Payment Rates for Acute Care Hospital Inpatient Capital-Related Costs for FY 2006 A. Determination of Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update 1. Capital Standard Federal Rate Update a. Description of the Update Framework b. Comparison of CMS and MedPAC Update Recommendation 2. Outlier Payment Adjustment Factor 3. Budget Neutrality Adjustment Factor for Changes in DRG Classifications and Weights and the Geographic Adjustment Factor 4. Exceptions Payment Adjustment Factor 5. Capital Standard Federal Rate for FY 2006 6. Special Capital Rate for Puerto Rico Hospitals B. Calculation of Inpatient Capital-Related Prospective Payments for FY 2006 C. Capital Input Price Index 1. Background 2. Forecast of the CIPI for FY 2006 IV. Changes to Payment Rates for Excluded Hospitals and Hospital Units: Rate-of-Increase Percentages A. Payments to Existing Excluded Hospitals and Units B. Updated Caps for New Excluded Hospitals and Units V. Payment for Blood Clotting Factor Administered to Hemophilia Inpatients Tables Table 1A—National Adjusted Operating Standardized Amounts, Labor/Nonlabor (69.7 Percent Labor Share/30.3 Percent Nonlabor Share If Wage Index Is Greater Than 1) Table 1B—National Adjusted Operating Standardized Amounts, Labor/Nonlabor (62 Percent Labor Share/38 Percent Nonlabor Share If Wage Index Is Less Than or Equal to 1) Table 1C—Adjusted Operating Standardized Amounts for Puerto Rico, Labor/Nonlabor Table 1D—Capital Standard Federal Payment Rate Table 2—Hospital Case-Mix Indexes for Discharges Occurring in Federal Fiscal Year 2004; Hospital Wage Indexes for Federal Fiscal Year 2006; Hospital Average Hourly Wage for Federal Fiscal Years 2004 (2000 Wage Data), 2005 (2001 Wage Data), and 2006 (2002 Wage Data); Wage Indexes and 3-Year Average of Hospital Average Hourly Wages Table 3A—FY 2006 and 3-Year Average Hourly Wage for Urban Areas by CBSA Table 3B—FY 2006 and 3-Year Average Hourly Wage for Rural Areas by CBSA Table 4A—Wage Index and Capital Geographic Adjustment Factor (GAF) for Urban Areas by CBSA Table 4B—Wage Index and Capital Geographic Adjustment Factor (GAF) for Rural Areas by CBSA Table 4C—Wage Index and Capital Geographic Adjustment Factor (GAF) for Hospitals That Are Reclassified by CBSA Table 4F—Puerto Rico Wage Index and Capital Geographic Adjustment Factor (GAF) by CBSA Table 4J—Out-Migration Wage Adjustment—FY 2006 Table 5—List of Diagnosis-Related Groups (DRGs), Relative Weighting Factors, and Geometric and Arithmetic Mean Length of Stay (LOS) Table 6A—New Diagnosis Codes Table 6B—New Procedure Codes Table 6C—Invalid Diagnosis Codes Table 6D—Invalid Procedure Codes Table 6E—Revised Diagnosis Code Titles Table 6F—Revised Procedure Code Titles Table 6G—Additions to the CC Exclusions List Table 6H—Deletions from the CC Exclusions List Table 7A—Medicare Prospective Payment System Selected Percentile Lengths of Stay [FY 2004 MedPAR Update March 2005 GROUPER V22.0] Table 7B—Medicare Prospective Payment System Selected Percentile Lengths of Stay: [FY 2004 MedPAR Update March 2005 GROUPER V23.0] Table 8A—Statewide Average Operating Cost-to-Charge Ratios-July 2005 Table 8B—Statewide Average Capital Cost-to-Charge Ratios-July 2005 Table 9A—Hospital Reclassifications and Redesignations by Individual Hospital and CBSA—FY 2006 Table 9B—Hospital Reclassifications and Redesignation by Individual Hospital Under Section 508 of Pub. L. 108-173—FY 2006 Table 9C—Hospitals Redesignated as Rural under Section 1886(d)(8)(E) of the Act—FY 2006 Table 10—Geometric Mean Plus the Lesser of .75 of the National Adjusted Operating Standardized Payment Amount (Increased to Reflect the Difference Between Costs and Charges) or .75 of One Standard Deviation of Mean Charges by Diagnosis-Related Groups (DRGs)—July 2005 Table 11—FY 2006 LTC-DRGs, Relative Weights, Geometric Average Length of Stay, and 5/6ths of the Geometric Average Length of Stay Appendix A—Regulatory Impact Analysis Appendix B—Recommendation of Update Factors for Operating Cost Rates of Payment for Inpatient Hospital Services I. Background A. Summary 1. Acute Care Hospital Inpatient Prospective Payment System (IPPS) Section 1886(d) of the Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of hospital inpatient stays under a prospective payment system (PPS). Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs). The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located; and if the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-living adjustment factor. This base payment rate is multiplied by the DRG relative weight. If the hospital treats a high percentage of low-income patients, it receives a percentage add-on payment applied to the DRG-adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patient. For qualifying hospitals, the amount of this adjustment may vary based on the outcome of the statutory calculations. If the hospital is an approved teaching hospital, it receives a percentage add-on payment for each case paid under the IPPS (known as the indirect medical education (IME) adjustment). This percentage varies, depending on the ratio of residents to beds. Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. To qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-on payment, it would be inadequately paid under the regular DRG payment. The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any outlier payment due is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology or medical service add-on adjustments. Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid the higher of a hospital-specific rate based on their costs in a base year (the higher of FY 1982, FY 1987, or FY 1996) or the IPPS rate based on the standardized amount. For example, sole community hospitals (SCHs) are the sole source of care in their areas, and Medicare-dependent, small rural hospitals (MDHs) are a major source of care for Medicare beneficiaries in their areas. Both of these categories of hospitals are afforded this special payment protection in order to maintain access to services for beneficiaries. (An MDH receives only 50 percent of the difference between the IPPS rate and its hospital-specific rates if the hospital-specific rate is higher than the IPPS rate. In addition, an MDH does not have the option of using FY 1996 as the base year for its hospital-specific rate.) Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services “in accordance with a prospective payment system established by the Secretary.” The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital PPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Similar adjustments are also made for IME and DSH as under the operating IPPS. In addition, hospitals may receive an outlier payment for those cases that have unusually high costs. The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR Part 412, Subparts A through M. 2. Hospitals and Hospital Units Excluded From the IPPS Under section 1886(d)(1)(B) of the Act, as amended, certain specialty hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Psychiatric hospitals and units; rehabilitation hospitals and units; long-term care hospitals (LTCHs); children's hospitals; and cancer hospitals. Various sections of the Balanced Budget Act of 1997 (Pub. L. 105-33), the Medicare, Medicaid and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-554) provide for the implementation of PPSs for rehabilitation hospitals and units (referred to as inpatient rehabilitation facilities (IRFs)), psychiatric hospitals and units (referred to as inpatient psychiatric facilities (IPFs)), and LTCHs, as discussed below. Children's hospitals and cancer hospitals continue to be paid under reasonable cost-based reimbursement. The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413. a. IRFs Under section 1886(j) of the Act, as amended, rehabilitation hospitals and units (IRFs) have been transitioned from payment based on a blend of reasonable cost reimbursement subject to a hospital-specific annual limit under section 1886(b) of the Act and the adjusted facility Federal prospective payment rate for cost reporting periods beginning on or after January 1, 2002 through September 30, 2002, to payment at 100 percent of the Federal rate effective for cost reporting periods beginning on or after October 1, 2002 (66 FR 41316, August 7, 2001; 67 FR 49982, August 1, 2002; 68 FR 45674, August 1, 2003, and 69 FR 45721, July 30, 2004). The existing regulations governing payments under the IRF PPS are located in 42 CFR part 412, subpart P. b. LTCHs Under the authority of sections 123(a) and (c) of Pub. L. 106-113 and section 307(b)(1) of Pub. L. 106-554, LTCHs are being transitioned from being paid for inpatient hospital services based on a blend of reasonable cost-based reimbursement under section 1886(b) of the Act to 100 percent of the Federal rate during a 5-year period, beginning with cost reporting periods that start on or after October 1, 2002. For cost reporting periods beginning on or after October 1, 2006, LTCHs will be paid 100 percent of the Federal rate (LTCH PPS final rule (70 FR 24168)). LTCHs not meeting the definition in § 412.23(e)(4) of the regulations may elect to be paid based on 100 percent of the Federal rate instead of a blended payment in any year during the 5-year transition period. LTCHs meeting the definition in § 412.23(e)(4) will be paid based on 100 percent of the standard Federal rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR part 412, subpart O. c. IPFs Under the authority of sections 124(a) and (c) of Pub. L. 106-113, inpatient psychiatric facilities (IPFs) (formerly psychiatric hospitals and psychiatric units of acute care hospitals) are paid under the new IPF PPS. Under the IPF PPS, some IPFs are transitioning from being paid for inpatient hospital services based on a blend of reasonable cost-based payment and a Federal per diem payment rate, effective for cost reporting periods beginning on or after January 1, 2005 (November 15, 2004 IPF PPS final rule (69 FR 66921)). For cost reporting periods beginning on or after January 1, 2008, IPFs will be paid 100 percent of the Federal per diem payment amount. The existing regulations governing payment under the IPF PPS are located in 42 CFR 412, subpart N. 3. Critical Access Hospitals (CAHs) Under sections 1814, 1820, and 1834(g) of the Act, payments are made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services based on 101 percent of reasonable cost. Reasonable cost is determined under the provisions of section 1861(v)(1)(A) of the Act and existing regulations under 42 CFR parts 413 and 415. 4. Payments for Graduate Medical Education (GME) Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act; the amount of payment for direct GME costs for a cost reporting period is based on the hospital's number of residents in that period and the hospital's costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413. B. Summary of the Provisions of the FY 2006 IPPS Proposed Rule In the FY 2006 IPPS proposed rule (70 FR 23306), we set forth proposed changes to the Medicare IPPS for operating costs and for capital-related costs in FY 2006. We also set forth proposed changes relating to payments for GME costs, payments to certain hospitals and units that continue to be excluded from the IPPS and paid on a reasonable cost basis, payments for DSHs, and requirements and payments for CAHs. The changes were proposed to be effective for discharges occurring on or after October 1, 2005, unless otherwise noted. The following is a summary of the major changes that we proposed and the issues we addressed in the FY 2006 IPPS proposed rule. 1. Changes to the DRG Reclassifications and Recalibrations of Relative Weights As required by section 1886(d)(4)(C) of the Act, we proposed annual adjustments to the DRG classifications and relative weights. Based on analyses of Medicare claims data, we proposed to establish a number of new DRGs and make changes to the designation of diagnosis and procedure codes under other existing DRGs. We also presented analysis of FY 2006 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by Pub. L. 108-173, obtained in a town hall meeting). We proposed the annual update of the long-term care diagnosis-related group (LTC-DRG) classifications and relative weights for use under the LTCH PPS for FY 2006. 2. Changes to the Hospital Wage Index We proposed revisions to the wage index and the annual update of the wage data. Specific issues addressed included the following: • The FY 2006 wage index update, using wage data from cost reporting periods that began during FY 2002. • The occupational mix adjustment to the wage index that we began to apply effective October 1, 2004. • The revisions to the wage index based on hospital redesignations and reclassifications. • The adjustment to the wage index for FY 2006 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index. • The timetable for reviewing and verifying the wage data that were in effect for the FY 2006 wage index. 3. Revision and Rebasing of the Hospital Market Baskets We proposed rebasing and revising the hospital operating and capital market baskets to be used in developing the FY 2006 update factor for the operating prospective payment rates and the excluded hospital market basket to be used in developing the FY 2006 update factor for the excluded hospital rate-of-increase limits. We also set forth the data sources used to determine the proposed revised market basket relative weights and choice of price proxies. 4. Other Decisions and Changes to the PPS for Inpatient Operating and GME Costs In the proposed rule, we discussed a number of provisions of the regulations in 42 CFR parts 412 and 413 and set forth proposed changes concerning the following: • Solicitation of public comments on two options for possible expansion of the current postacute care transfer policy. • The reporting of hospital quality data as a condition for receiving the full annual payment update increase. • Changes in the application of the budget neutrality adjustment to MDHs and SCHs for computing the hospital-specific rate. • Updated national and regional case-mix values and discharges for purposes of determining rural referral center status. • The payment adjustment for low-volume hospitals. • The IME adjustment for TEFRA hospitals that are converting to IPPS hospitals, and IME FTE resident caps for urban hospitals that are granted rural reclassification and then withdraw that rural classification. • Changes to implement section 951 of Pub. L. 108-173 relating to the provision of patient stay days/SSI data maintained by CMS to hospitals for the purpose of determining their DSH percentage. • Changes relating to hospitals' geographic classifications, including multicampus hospitals and urban group hospital reclassifications. • Changes and clarifications relating to GME, including GME initial residency period limitation, new teaching hospitals' participation in Medicare GME affiliated groups, and the GME FTE cap adjustment for rural hospitals; • Solicitation of public comments on possible changes in requirements for provider-based entities relating to the location requirements for certain neonatal intensive care units as off-campus facilities; • Discussion of the second year of implementation of the Rural Community Hospital Demonstration Program; and • Clarification of the definition of a hospital as it relates to “specialty hospitals” participating in the Medicare program. 5. PPS for Capital-Related Costs In the proposed rule, we did not propose any policy changes to the capital-related prospective payment system. For the readers' benefit, we discussed the payment policy requirements for capital-related costs and capital payments to hospitals. 6. Changes for Hospitals and Hospital Units Excluded from the IPPS In the proposed rule, we discussed the proposed revisions and clarifications concerning excluded hospitals and hospital units, proposed policy changes relating to continued participation by CAHs located in counties redesignated under section 1886(d)(8)(B) of the Act (Lugar counties), and proposed policy changes relating to designation of CAHs as necessary providers. 7. Changes in Payment for Blood Clotting Factor In the proposed rule, we discussed the proposed change in payment for blood clotting factor administered to inpatients with hemophilia for FY 2006. 8. Determining Prospective Payment Operating and Capital Rates and Rate-of-Increase Limits In the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the FY 2006 prospective payment rates for operating costs and capital-related costs. We also established the proposed threshold amounts for outlier cases. In addition, we addressed the proposed update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2006 for hospitals and hospital units excluded from the PPS. 9. Impact Analysis In Appendix A of the proposed rule, we set forth an analysis of the impact that the proposed changes would have on affected hospitals. 10. Recommendation of Update Factor for Hospital Inpatient Operating Costs In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2006 for the following: • A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs (and hospital-specific rates applicable to SCHs and MDHs). • Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by hospitals and hospital units excluded from the IPPS. 11. Discussion of Medicare Payment Advisory Commission Recommendations Under section 1805(b) of the Act, the Medicare Payment Advisory Commission (MedPAC) is required to submit a report to Congress, no later than March 1 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2005 recommendation concerning hospital inpatient payment policies addressed only the update factor for inpatient hospital operating costs and capital-related costs under the IPPS and for hospitals and distinct part hospital units excluded from the IPPS. This recommendation is addressed in Appendix B of the proposed rule. MedPAC issued a second Report to Congress: Physician-Owned Specialty Hospitals, March 2005, which addressed other issues relating to Medicare payments to hospitals for inpatient services. The recommendations on these issues from this second report were addressed in section IX. of the preamble of the proposed rule. For further information relating specifically to the MedPAC March 2005 reports or to obtain a copy of the reports, contact MedPAC at (202) 220-3700 or visit MedPAC's Web site at: http://www.medpac.gov. C. Public Comments Received in Response to the FY 2006 IPPS Proposed Rule We received over 2,000 timely items of correspondence containing multiple comments on the FY 2006 IPPS proposed rule. Summaries of the public comments and our responses to those comments are set forth below under the appropriate heading. II. Changes to DRG Classifications and Relative Weights A. Background Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as DRGs) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. Therefore, under the IPPS, we pay for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs. Congress recognized that it would be necessary to recalculate the DRG relative weights periodically to account for changes in resource consumption. Accordingly, section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources. The changes to the DRG classification system and the recalibration of the DRG weights for discharges occurring on or after October 1, 2005, are discussed below. 1. General Cases are classified into DRGs for payment under the IPPS based on the principal diagnosis, up to eight additional diagnoses, and up to six procedures performed during the stay. In a small number of DRGs, classification is also based on the age, sex, and discharge status of the patient. The diagnosis and procedure information is reported by the hospital using codes from the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). The process of forming the DRGs was begun by dividing all possible principal diagnoses into mutually exclusive principal diagnosis areas referred to as Major Diagnostic Categories (MDCs). The MDCs were formed by physician panels as the first step toward ensuring that the DRGs would be clinically coherent. The diagnoses in each MDC correspond to a single organ system or etiology and, in general, are associated with a particular medical specialty. Thus, in order to maintain the requirement of clinical coherence, no final DRG could contain patients in different MDCs. Most MDCs are based on a particular organ system of the body. For example, MDC 6 is Diseases and Disorders of the Digestive System. This approach is used because clinical care is generally organized in accordance with the organ system affected. However, some MDCs are not constructed on this basis because they involve multiple organ systems (for example, MDC 22 (Burns)). For FY 2005, cases are assigned to one of 520 DRGs in 25 MDCs. (We note that, in the FY 2006 proposed rule (70 FR 23313), we inadvertently stated that there were 519 DRGs.) The table below lists the 25 MDCs. Major Diagnostic Categories (MDCs) 1 Diseases and Disorders of the Nervous System. 2 Diseases and Disorders of the Eye. 3 Diseases and Disorders of the Ear, Nose, Mouth, and Throat. 4 Diseases and Disorders of the Respiratory System. 5 Diseases and Disorders of the Circulatory System. 6 Diseases and Disorders of the Digestive System. 7 Diseases and Disorders of the Hepatobiliary System and Pancreas. 8 Diseases and Disorders of the Musculoskeletal System and Connective Tissue. 9 Diseases and Disorders of the Skin, Subcutaneous Tissue, and Breast. 10 Endocrine, Nutritional and Metabolic Diseases and Disorders. 11 Diseases and Disorders of the Kidney and Urinary Tract. 12 Diseases and Disorders of the Male Reproductive System. 13 Diseases and Disorders of the Female Reproductive System. 14 Pregnancy, Childbirth, and the Puerperium. 15 Newborns and Other Neonates with Conditions Originating in the Perinatal Period. 16 Diseases and Disorders of the Blood and Blood Forming Organs and Immunological Disorders. 17 Myeloproliferative Diseases and Disorders and Poorly Differentiated Neoplasms. 18 Infectious and Parasitic Diseases (Systemic or Unspecified Sites). 19 Mental Diseases and Disorders. 20 Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders. 21 Injuries, Poisonings, and Toxic Effects of Drugs. 22 Burns. 23 Factors Influencing Health Status and Other Contacts with Health Services. 24 Multiple Significant Trauma. 25 Human Immunodeficiency Virus Infections. In general, cases are assigned to an MDC based on the patient's principal diagnosis before assignment to a DRG. However, for FY 2005, there are nine DRGs to which cases are directly assigned on the basis of ICD-9-CM procedure codes. These DRGs are for heart transplant or implant of heart assist systems, liver and/or intestinal transplants, bone marrow, lung, simultaneous pancreas/kidney, and pancreas transplants and for tracheostomies. Cases are assigned to these DRGs before they are classified to an MDC. The table below lists the current nine pre-MDCs. Pre-Major Diagnostic Categories (Pre-MDCs) DRG 103 Heart Transplant or Implant of Heart Assist System DRG 480 Liver Transplant and/or Intestinal Transplant DRG 481 Bone Marrow Transplant DRG 482 Tracheostomy for Face, Mouth, and Neck Diagnoses DRG 495 Lung Transplant DRG 512 Simultaneous Pancreas/Kidney Transplant DRG 513 Pancreas Transplant DRG 541 Tracheostomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except for Face, Mouth, and Neck Diagnosis with Major Operating Room Procedures DRG 542 Tracheostomy with Mechanical Ventilation 96+ Hours or Principal Diagnosis Except for Face, Mouth, and Neck Diagnosis Without Major Operating Room Procedures Once the MDCs were defined, each MDC was evaluated to identify those additional patient characteristics that would have a consistent effect on the consumption of hospital resources. Since the presence of a surgical procedure that required the use of the operating room would have a significant effect on the type of hospital resources used by a patient, most MDCs were initially divided into surgical DRGs and medical DRGs. Surgical DRGs are based on a hierarchy that orders operating room (O.R.) procedures or groups of O.R. procedures by resource intensity. Medical DRGs generally are differentiated on the basis of diagnosis and age (less than or greater than 17 years of age). Some surgical and medical DRGs are further differentiated based on the presence or absence of a complication or a comorbidity (CC). Generally, nonsurgical procedures and minor surgical procedures that are not usually performed in an operating room are not treated as O.R. procedures. However, there are a few non-O.R. procedures that do affect DRG assignment for certain principal diagnoses, for example, extracorporeal shock wave lithotripsy for patients with a principal diagnosis of urinary stones. Once the medical and surgical classes for an MDC were formed, each class of patients was evaluated to determine if complications, comorbidities, or the patient's age would consistently affect the consumption of hospital resources. Physician panels classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition which, because of its presence with a specific principal diagnosis, would cause an increase in the length of stay by at least one day in at least 75 percent of the patients. Each medical and surgical class within an MDC was tested to determine if the presence of any substantial comorbidities or complications would consistently affect the consumption of hospital resources. A patient's diagnosis, procedure, discharge status, and demographic information is fed into the Medicare claims processing systems and subjected to a series of automated screens called the Medicare Code Editor (MCE). The MCE screens are designed to identify cases that require further review before classification into a DRG. After patient information is screened through the MCE and any further development of the claim is conducted, the cases are classified into the appropriate DRG by the Medicare GROUPER software program. The GROUPER program was developed as a means of classifying each case into a DRG on the basis of the diagnosis and procedure codes and, for a limited number of DRGs, demographic information (that is, sex, age, and discharge status). After cases are screened through the MCE and assigned to a DRG by the GROUPER, the PRICER software calculates a base DRG payment. The PRICER calculates the payments for each case covered by the IPPS based on the DRG relative weight and additional factors associated with each hospital, such as IME and DSH adjustments. These additional factors increase the payment amount to hospitals above the base DRG payment. The records for all Medicare hospital inpatient discharges are maintained in the Medicare Provider Analysis and Review (MedPAR) file. The data in this file are used to evaluate possible DRG classification changes and to recalibrate the DRG weights. However, in the July 30, 1999 IPPS final rule (64 FR 41500), we discussed a process for considering non-MedPAR data in the recalibration process. In order for us to consider using particular non-MedPAR data, we must have sufficient time to evaluate and test the data. The time necessary to do so depends upon the nature and quality of the non-MedPAR data submitted. Generally, however, a significant sample of the non-MedPAR data should be submitted by mid-October for consideration in conjunction with the next year's proposed rule. This allows us time to test the data and make a preliminary assessment as to the feasibility of using the data. Subsequently, a complete database should be submitted by early December for consideration in conjunction with the next year's proposed rule. In the FY 2006 IPPS proposed rule (70 FR 23312), we proposed numerous changes to the DRG classification system for FY 2006 and to the methodology used to recalibrate the DRG weights. The changes we proposed to the DRG classification system, the public comments we received concerning the proposed changes, the final DRG changes, and the methodology used to recalibrate the DRG weights are set forth below. The changes we are implementing in this final rule will be reflected in the FY 2006 GROUPER, version 23.0, and are effective for discharges occurring on or after October 1, 2005. Unless otherwise noted in this final rule, our DRG analysis is based on data from the September 2004 update of the FY 2004 MedPAR file, which contains hospital bills received through September 30, 2004 for discharges in FY 2004. 2. Yearly Review for Making DRG Changes; Request for Public Comment Many of the changes to the DRG classifications are the result of specific issues brought to our attention by interested parties. We encourage individuals with concerns about DRG classifications to bring those concerns to our attention in a timely manner so they can be carefully considered for possible inclusion in the next proposed rule and, if included, may be subjected to public review and comment. Therefore, similar to the timetable for interested parties to submit non-MedPAR data for consideration in the DRG recalibration process, concerns about DRG classification issues should be brought to our attention no later than early December in order to be considered and possibly included in the next annual proposed rule updating the IPPS. The actual process of forming the DRGs was, and continues to be, highly iterative, involving a combination of statistical results from test data combined with clinical judgment. In deciding whether to create a separate DRG, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients in the DRG. We evaluate patient care costs using average charges and lengths of stay as proxies for costs and rely on the judgment of our medical officers to decide whether patients are distinct or clinically similar to other patients in the DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average charges between the cases we are selecting for review and the remainder of cases in the DRG. We also consider variation in charges within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of charges or length of stay, or both. Further, we also consider the number of patients who will have a given set of characteristics and generally prefer not to create a new DRG unless it will include a substantial number of cases. As we explain in more detail in section IX. of this preamble, MedPAC has made a number of recommendations regarding the DRG system. To date, we have not used specific statistical standards as part of our guidelines for determining when DRG changes are warranted. However, we could potentially establish objective guidelines that are used in the DRG development process. For instance, such standards could include a minimum percentage or absolute difference in average charges or length of stay and number of cases in order for us to create a DRG or change the DRG assignment of a particular code or service. As part of our review and analysis of MedPAC's recommendations, we will consider whether to establish such guidelines for making DRG reclassification decisions. We welcome public comments on this issue. 3. Pre-MDC: Intestinal Transplantation In the FY 2005 IPPS final rule (69 FR 48976), we moved intestinal transplantation cases that were assigned to ICD-9-CM procedure code 46.97 (Transplant of intestine) out of DRG 148 (Major Small and Large Bowel Procedures with CC) and DRG 149 (Major Small and Large Bowel Procedures Without CC) and into DRG 480 (Liver Transplant). We also changed the title for DRG 480 to “Liver Transplant and/or Intestinal Transplant.” We moved these cases out of DRGs 148 and 149 because our analysis demonstrated that the average charges for intestinal transplants are significantly higher than the average charges for other cases in these DRGs. We stated at that time that we would continue to monitor these cases. Based on our review of the FY 2004 MedPAR data, we found 959 cases assigned to DRG 480 with overall average charges of approximately $165,622. There were only three cases involving an intestinal transplant alone and one case in which both an intestinal transplant and a liver transplant were performed. The average charges for the intestinal transplant cases ($138,922) were comparable to the average charges for the liver transplant cases ($165,314), while the remaining combination of an intestinal transplant and a liver transplant case had much higher charges ($539,841), and would be paid as an outlier case. Therefore, we did not propose any DRG modification for intestinal transplantation cases for FY 2006. We note that an institution that performs intestinal transplantation, in correspondence to us written following the publication of the FY 2005 IPPS final rule, agreed with our decision to move cases assigned to code 46.97 to DRG 480. Comment: Several commenters, including an institute that performs intestinal transplantation, supported our decision to reassign intestinal transplantation cases to DRG 480. One commenter commended CMS for its progress, but urged us to continue to evaluate a separate DRG for intestinal transplantation. While payment has improved, the commenter stated that it is still inadequate, and insufficient reimbursement could ultimately hinder beneficiary access to care. Response: As indicated in the FY 2006 IPPS proposed rule (70 FR 23315), we found only three cases in the Medicare data that included an intestinal transplant. We found that the average charges were less for intestinal transplant cases ($138,922) than liver transplant cases ($165,314). Thus, even though we have a very low number of cases to make these comparisons, the data do not suggest that intestinal transplants are underpaid in DRG 480. We remain committed to assigning procedures to the most appropriate DRG based on clinical coherence and utilization of resources using the most recently available data. As we stated in the FY 2005 IPPS final rule (69 FR 48977), when we receive sufficient additional Medicare data on intestinal transplantation cases, we will again consider the DRG assignment for intestinal transplants. Comment: One commenter concurred with the decision to assign intestinal transplant cases to DRG 480 but recommended that CMS create separate DRGs for liver-intestinal and liver-kidney transplants. The commenter requested that CMS report average charges for these cases in the final rule. The commenter noted that DRGs have been created for double organ transplants such as DRG 512 (Simultaneous Pancreas/Kidney Transplant). Response: While the focus of our review in the proposed rule was limited to whether we should reassign intestinal transplants to DRG 480, we reviewed all cases in this DRG. Based on our review of the FY 2004 MedPAR data, the following table illustrates our findings: DRG Number of cases Average length of stay Average charges DRG 480 959 16.65 $165,622 Liver Transplantation 876 16.5 165,314 Intestinal Transplantation 3 26.0 138,922 Liver-Intestinal Transplantation 1 72.0 539,841 Liver-Kidney Transplantation 79 21.3 237,759 As we stated in the proposed rule (70 FR 23315), while the average charges and length of stay were much higher for the one liver-intestinal transplantation case, for which we had data, than the other cases in DRG 480, the case would likely be paid as an outlier. One case is insufficient to create a new DRG. Similarly, we are reluctant to create a new DRG for such a small number of liver-kidney transplant cases, even though average charges and length of stay are higher for liver-kidney transplants than other cases in DRG 480. As discussed, in section IX.A. of this final rule, we plan in the next year to undertake a comprehensive review of the existing Medicare DRG system and expect to make changes to the DRGs to better reflect the severity of illness. As we study this issue, we will further analyze hospital costs for patients needing multiple organ transplants. At this time, we are not making any further modifications to the DRGs for multiple transplants in FY 2006. 4. MDC 1 (Diseases and Disorders of the Nervous System) a. Strokes In 1996, the Food and Drug Administration (FDA) approved the use of tissue plasminogen activator (tPA), one type of thrombolytic agent that dissolves blood clots. In 1998, the ICD-9-CM Coordination and Maintenance Committee created code 99.10 (Injection or infusion of thrombolytic agent) in order to be able to uniquely identify the administration of thrombolytic agents. Studies have shown that tPA can be effective in reducing the amount of damage the brain sustains during an ischemic stroke, which is caused by blood clots that block blood flow to the brain. tPA is approved for patients who have blood clots in the brain, but not for patients who have a bleeding or hemorrhagic stroke. Thrombolytic therapy has been shown to be most effective when used within the first 3 hours after the onset of a stroke, and it is contraindicated in hemorrhagic stroke. The presence or absence of code 99.10 does not currently influence DRG assignment. Since code 99.10 became effective, CMS has been monitoring the DRGs and cases in which this code can be found, particularly with respect to cardiac and stroke DRGs. Last year, CMS met with representatives from several hospital stroke centers who recommended modification of the existing stroke DRGs 14 (Intracranial Hemorrhage or Cerebral Infarction) and 15 (Nonspecific CVA and Precerebral Occlusion Without Infarction) by using the administration of tPA as a proxy to identify patients who have severe strokes. The representatives stated that using tPA as a proxy would help to identify patients who have strokes that are more severely and costly and would recognize the higher charges that these cases generate because of their higher hospital resource utilization. At that time, the presenters provided evidence that strokes where tPA was used were both more severe and more resource intensive. Specifically, they showed that patients who were given tPA for strokes had higher stroke severity scores at presentation, and that they were more expensive to care for because of increased intensive care unit monitoring requirements, increased diagnostic imaging costs, and increased laboratory and pharmacy costs. They also demonstrated that these patients had markedly better clinical outcomes. The stroke representatives made two suggestions concerning the stroke DRGs. The first proposal suggested modifying DRG 14 by renaming it “Ischemic Stroke Treatment with a Reperfusion Agent”, and including only those cases containing code 99.10. The remainder of stroke cases where the patient was not treated with a reperfusion agent would be included in DRG 15, renamed “Hemorrhagic Stroke or Ischemic Stroke without a Reperfusion Agent”. Hemorrhagic stroke cases now found in DRG 14 that are not treated with a reperfusion agent would migrate to DRG 15. The second suggestion was to leave DRGs 14 and 15 as they currently exist, and create a new DRG, with a recommended title “Ischemic Stroke Treatment with a Reperfusion Agent”. This suggested DRG would include only cases where patients with strokes caused by arterial occlusion (or clot(s)) are also treated with tPA thrombolytic therapy. We have examined the MedPAR data for the cases in DRGs 14 and 15. We divided the cases based on the presence of a principal diagnosis of hemorrhage or occlusive ischemia and the presence of procedure code 99.10. The following table displays the results: DRG Count Average length of stay Average charges 14—All Cases 221,879 5.67 $18,997 14—Cases with intracranial hemorrhage 41,506 5.40 19,193 14—Cases with intracranial hemorrhage with code 99.10 61 7.4 37,045 14—Cases with intracranial hemorrhage without code 99.10 41,445 5.3 19,167 14—Cases without intracranial hemorrhage 180,373 5.74 18,952 14—Cases without intracranial hemorrhage with code 99.10 2,085 7.20 35,128 14—Cases without intracranial hemorrhage without code 99.10 178,288 5.72 18,763 15—All cases 71,335 4.53 14,382 15—Cases with intracranial hemorrhage 0 0 0 15—Cases without intracranial hemorrhage 71,335 4.53 14,382 15—Cases without intracranial hemorrhage with code 99.10 302 5.10 24,876 15—Cases without intracranial hemorrhage without code 99.10 71,033 4.53 14,337 The above table shows that the average standardized charges for cases treated with a reperfusion agent are more than $16,000 and $10,000 higher than all other cases in DRGs 14 and 15, respectively. While these data suggest that patients treated with a reperfusion agent are more expensive than all other stroke patients, this conclusion is based on a small number of cases. In the FY 2006 IPPS proposed rule, we did not propose a change to the stroke DRGs because of the small number of reperfusion cases reported. However, we stated that we believe it is possible that more patients are being treated with a reperfusion agent than indicated by our data because the presence of code 99.10 does not affect DRG assignment and may be underreported. In the FY 2006 IPPS proposed rule, we invited public comment on the changes to DRGs 14 and 15 suggested by the hospital representatives. In addition, we solicited public comment on the number of patients currently being treated with a reperfusion agent as well as the potential costs of these patients relative to others with strokes that are also included in DRGs 14 and 15. Comment: Forty commenters supported the creation of a new DRG to recognize the group of patients who presented with stroke and who also received thrombolytic therapy. The commenters cited the following reasons for supporting this proposal: Increased costs of caring for these patients, specifically in intensive care unit, more diagnostic imaging studies, and laboratory and pharmacy resources. In addition, the commenters noted that the proposal is also supported by evidence that patients receiving thrombolytic therapy have strokes of increased severity. The commenters also stated that the proposal demonstrates the need for hospitals to have an incentive to establish the infrastructure necessary to provide stroke patients with aggressive evaluation and management services, such as thrombolytic therapy, which have become the standard of care. Response: We appreciate the commenters' responses in reply to our solicitation for public comment on the changes to DRGs 14 and 15 as suggested in the proposed rule. The level of detail provide in the responses helped us to formulate a change to the medical stroke DRGs. We agree with the commenters that there is an increased cost in caring for these patients including increased use of the intensive care unit, more diagnostic imaging studies, and laboratory and pharmacy resources. We also agree that—(1) the data indicate that patients receiving thrombolytic therapy have increased severity; and (2) reperfusion therapy is a good means to segregate these patients into a separate DRG. Comment: One commenter encouraged CMS to modify DRGs 14 and 15 using one of two options. The first option would be to create DRG “A” where hemorrhagic and ischemic strokes were combined, but only supportive care was given, while DRG “B” would contain those hemorrhagic and ischemic stroke cases in which reperfusion or hemostatic agents were administered. Alternatively, the commenter suggested that DRGs 14 and 15 could be modified by creating four new DRGs. DRG “A” would contain cases of hemorrhagic stroke and supportive care, DRG “B” would contain cases of hemorrhagic stroke treated with hemostatic agents, DRG “C” would contain cases of ischemic stroke and supportive care, and DRG “D” would contain cases of ischemic stroke treated with reperfusion agents. Response: This commenter is suggesting that the DRG system recognize treatment of hemorrhage strokes with hemostatic agents as well as ischemic strokes with reperfusion agents. While we anticipate great industry strides in the treatment of stroke, currently no approved hemostatic agent is on the market. According to the manufacturer(s) of hemostatic agents, it is unlikely that these agents will be available for use during FY 2006. Therefore, we do not have any Medicare charge information that supports creating separate DRGs for hemorrhagic stroke patients treated with hemostatic agents as we do for ischemic stroke patients treated with thrombolytic therapy. When hemostatic agents are available on the market, we will reevaluate this issue. Comment: One commenter believed that the two potential changes to the stroke DRGs as set forth in the proposed rule are too limited as written. The commenter believed that the descriptor, “reperfusion agent”, is not broad enough to encompass other promising pharmacotherapies for stroke that are in late stages of clinical development. The commenter pointed out that these therapies include treatment for both ischemic stroke and hemorrhagic stroke. The commenter further noted that it is unlikely that any of the potential therapies will be approved for use during FY 2006. The commenter recommended that CMS broaden the title for the proposed new DRG to include a wider range of any newly approved therapies. Response: While we look forward to improved therapies for treating patients with strokes, we are unable to create DRGs that recognize as yet unapproved treatment modalities. When the FDA has approved additional pharmaceuticals for the treatment of either ischemic or hemorrhagic stroke, we will evaluate the data and make DRG changes as appropriate. We point out that the DRG titles cannot possibly acknowledge all the codes located therein. The important part of the DRG is the structure of the logic; that is, what codes are assigned to the DRG. Comment: One commenter recommended that CMS commit to creating a surgical DRG for ischemic stroke patients who are treated with surgical interventions. The commenter included several scenarios of possible diagnosis and procedure coding combinations that CMS could use to identify stroke cases and increase the scope of our analysis. Response: Our goal was not to review all stroke cases within the MedPAR database, but to identify those cases in medical DRG 14, and possibly DRG 15, that might have included the administration of tPA as identified by procedure code 99.10. DRGs that identify a precise surgical procedure already exist; all of the combinations of procedure codes suggested by the commenter already appropriately group to DRGs within MDC 1. Comment: One commenter stated that because code 99.10 was not reimbursable [did not have an impact on DRG assignment], hospital coders often did not use it. Some hospitals in which reperfusion therapy was commonplace never used this code. Response: We would like to take this opportunity to reiterate that all cases should be accurately and completely coded, irrespective of the DRG implications of a specific code or codes. By coding accurately and completely, we will have more information on patient care costs for different services and treatments that better enable us to research further changes to the DRG system. Comment: One commenter noted that, because only a single type of reperfusion agent is presently approved for stroke treatment, the proposed change would create a DRG that is, de facto, product specific. In addition, the commenter stated that the DRG change on which CMS requested comment would improve access to therapy for only a small fraction of all stroke patients. The commenter added that implementation of a narrowly-defined change [by creating a specific stroke-plus-tPA DRG] may necessitate further changes to the stroke DRGs in the near future to ensure patient access to emerging drug therapies once approved. Response: While we did not propose a specific change to the stroke DRGs in the proposed notice, we have decided to modify the DRGs to distinguish those cases in which tPA is used as a treatment modality based on the strong support for this change voiced by commenters. When we reviewed the data represented in the above table, we noted that the average standardized charges for all cases in DRG 14 were $18,997, but that the subset of 2,085 cases in which tPA was used had average standardized charges of $35,128. We noted that the cases in DRG 14 without hemorrhage that did not report the use of tPA had average standardized charges of $18,763, which was comparable with the figures for all cases in the DRG. Given that these cases are easily identifiable through the use of procedure code 99.10, and that the average standardized charges are $16,131 higher for the cases using tPA, we decided to carve these cases out of the existing DRGs 14 and 15, and represent them in a new DRG. We are changing the structure of stroke DRGs not to award higher payment for a specific drug but to recognize the need for better overall care for this group of patients. Even though a tPA is indicated only for a small proportion of stroke patients (only those experiencing ischemic strokes treated within 3 hours of the onset of symptoms), our data suggest that there are enough patients to support the DRG change. While our goal is to make payment relate more closely to resource use, we also note that use of a tPA in a carefully selected patient population will lead to better outcomes and overall care and may lessen the need for postacute care. With regard to the potential need to modify stroke DRGs in the future, we note that we perform an update to the DRGs and modify DRGs every year. We reiterate that should additional types of therapy be approved, we will evaluate them, and after judicious study, will make appropriate DRG title and/or logic changes as required. In this final rule, after consideration of public comments received and based on our analysis of MedPAR data that supports the creation of a DRG that identifies embolic stroke combined with tPA treatment, we are creating new DRG 559 (Acute Ischemic Stroke with Use of Thrombolytic Agent). From a data consistency standpoint, we believe that adding a new DRG identifying these cases will be less disruptive to our stakeholders than creating three new DRGs, two of which would mimic existing DRGs 14 and 15. The GROUPER logic for DRGs 14 and 15 will not be affected by this change; that is, the GROUPER content of DRGs 14 and 15 will be the same in FY 2006 as it was in FY 2005. The structure of the new DRG 559 includes the following codes: Principal Diagnosis • 433.01, Occlusion and stenosis of basilar artery, with cerebral infarction • 433.11, Occlusion and stenosis of carotid artery, with cerebral infarction • 433.21, Occlusion and stenosis of vertebral artery, with cerebral infarction • 433.31, Occlusion and stenosis of multiple and bilateral arteries, with cerebral infarction • 433.81, Occlusion and stenosis of other specified precerebral artery, with cerebral infarction • 433.91, Occlusion and stenosis of unspecified precerebral artery, with cerebral infarction • 434.01, Cerebral thrombosis, with cerebral infarction • 434.11, Cerebral embolism, with cerebral infarction • 434.91, Cerebral artery occlusion, unspecified, with cerebral infarction and Nonoperating Room Procedure • 99.10, Injection or infusion of thrombolytic agent We will continue to monitor stroke DRGs in the future. As noted above, should treatment modalities change, we will be open to making changes to the DRG structure that will recognize improvements in treatment and technology. b. Unruptured Cerebral Aneurysms In the FY 2004 IPPS final rule (68 FR 45353), we created DRG 528 (Intracranial Vascular Procedures With a Principal Diagnosis of Hemorrhage) in MDC 1. We received a comment at that time that suggested we create another DRG for intracranial vascular procedures for unruptured cerebral aneurysms. For the FY 2004 IPPS final rule (68 FR 45353) and the FY 2005 IPPS final rule (69 FR 48957), we evaluated the data for cases in the MedPAR file involving unruptured cerebral aneurysms assigned to DRG 1 (Craniotomy Age >17 With CC) and DRG 2 (Craniotomy Age >17 Without CC) and concluded that the average charges were consistent with those for other cases found in DRGs 1 and 2. Therefore, we did not propose a change to the DRG assignment for unruptured cerebral aneurysms. We have reviewed data for unruptured cerebral aneurysms cases in DRGs 1 and 2. In our analysis of these FY 2004 MedPAR data, we found 1,136 unruptured cerebral aneurysm cases assigned to DRG 1 and 964 unruptured cerebral aneurysm cases assigned to DRG 2. Although the average charges for the unruptured cerebral aneurysm cases in DRG 1 ($53,455) and DRG 2 ($34,028) were slightly higher than the average charges for all cases in DRG 1 ($51,466) and DRG 2 ($30,346), we do not believe these differences are significant enough to warrant a change in these two DRGs at this time. Therefore, we did not propose a change in the structure of these DRGs relating to unruptured cerebral aneurysm cases for FY 2006. Comment: Several commenters agreed that the minimal differences in charges for unruptured cerebral aneurysms cases compared to all cases assigned to DRGs 1 and 2 do not justify a change in the DRG assignment for these cases. One commenter stated that unruptured cerebral aneurysm cases should be reclassified into a new DRG. The commenter stated that a new DRG is warranted to understand the true weight of these procedures and to establish reimbursement that recognizes the cost of medical devices used to treat unruptured cerebral aneurysms. Response: Our analysis is based on the most recent charge information available reflecting the overall resources used to treat unruptured cerebral aneurysms in Medicare patients. We concur with the commenters that there are minimal differences in the charges for the unruptured cerebral aneurysm cases compared to all cases assigned to DRGs 1 and 2 and that the results of the data do not justify creation of a new DRG. We believe that unruptured cerebral aneurysms are appropriately assigned to DRGs 1 and 2. Therefore, we are not making any modifications to the DRG assignment for unruptured cerebral aneurysms. 5. MDC 5 (Diseases and Disorders of the Circulatory System) a. Severity Adjusted Cardiovascular Procedures In response to the FY 2006 IPPS proposed rule, one commenter noted that section 507(c) of Pub. L. 108-173 required MedPAC to conduct a study to determine how the DRG system should be updated to better reflect the cost of delivering care in a hospital setting. The commenter noted that MedPAC reported that the “cardiac surgery DRGs had high relative profitability ratios.” While the commenter noted that it may take time to conduct and complete a thorough evaluation of the MedPAC payment recommendations for all DRGs, the commenter strongly encouraged CMS to revise the cardiac DRGs through patient severity refinements as part of the final rule to be effective for FY 2006. In section IX.A. of the preamble to this final rule, we are responding in detail to this comment by making significant revisions to a number of cardiovascular DRGs that currently contain patients with a wide range of severity and resource consumption in order to reflect more accurately the resources required to care for different kinds of cardiovascular patients. Accordingly, in response to the issues raised by the commenter and as an interim step until we can complete a comprehensive review of MedPAC's recommendations, we are deleting current DRGs 107, 109, 111, 116, 478, 516, 517, 526, and 527, and creating new DRGs 547 through 558 in their place. We received several comments on the FY 2006 IPPS proposed rule that recommended that we split additional cardiovascular DRGs based on the presence or absence of heart failure, acute myocardial infarction, and shock. As indicated in section IX.A. of this final rule, we conducted a focused review of a number of different cardiovascular DRGs and are making revisions to them based on a newly designated list of “major cardiovascular conditions.” We believe these new DRGs will help to address a number of the concerns raised by these commenters. We intend to monitor these DRGs carefully in upcoming years and welcome input regarding the success of these DRGs in reflecting patient severity and resource use. b. Automatic Implantable Cardioverter/Defibrillator As part of our annual review of DRGs, for FY 2006, we performed a review of cases in the FY 2004 MedPAR file involving the implantation of a defibrillator in the following DRGs: DRG 515 (Cardiac Defibrillator Implant Without Cardiac Catheterization) DRG 535 (Cardiac Defibrillator Implant With Cardiac Catheterization With Acute Myocardial Infarction, Heart Failure, or Shock) DRG 536 (Cardiac Defibrillator Implant With Cardiac Catheterization Without Acute Myocardial Infarction, Heart Failure, or Shock) While conducting our review, we noted that there had been considerable comments from hospital coders on code 37.26 (Cardiac electrophysiologic stimulation and recording studies (EPS)), which is included in these DRGs. These comments from hospital coders were directed to both CMS and the American Hospital Association. The procedure codes for these three DRGs describe the procedures that are considered to be a cardiac catheterization. Code 37.26 is classified as a cardiac catheterization within these DRGs. Therefore, the submission of code 37.26 affects the DRG assignment for defibrillator cases and leads to the assignment of DRGs 535 or 536. When a cardiac catheterization is performed, the case is assigned to DRGs 535 or 536, depending on whether or not the patient also had an acute myocardial infarction, heart failure, or shock. The following chart shows the number of cases in each DRG, along with their average length of stay and average charges, found in the data: DRG Number of cases Average length of stay Average charges 515 25,236 4.32 $83,659.76 535 12,118 8.27 113,175.43 536 18,305 5.39 94,453.62 We have received a number of questions from hospital coders regarding the correct use of code 37.26. There is considerable confusion about whether or not code 37.26 should be reported when the procedure is performed as part of the defibrillator implantation. Currently, the ICD-9-CM instructs the coder not to report code 37.26 when a defibrillator is inserted. There is an inclusion term under the defibrillator code 37.94 (Implantation or replacement of automatic cardioverter/defibrillator, total system [AICD]) which states that EPS is included in code 37.94. We discussed modifying this instruction at the October 7-8, 2004 meeting of the ICD-9-CM Coordination and Maintenance Committee. We received a number of comments opposing a modification to the use of code 37.26 that would also allow it to be reported with an AICD insertion. A report of this meeting can be found on the Web site: http://www.cms.hhs.gov/paymentsystem/icd9 . We performed an analysis of cases within DRGs 535 and 536 with cardiac catheterization and with and without code 37.26 and with code 37.26 only reported without cardiac catheterization and found the following: DRG Number of cases Average length-of-stay Average charges 535—Cardiac Catheterization Without Code 37.26 5,060 10.63 $127,130.79 535—With Code 37.26 Only Without Cardiac Catheterization 5,264 5.61 98,900.13 535—With Cardiac Catheterization and Code 37.26 1,794 9.44 115,701.09 536—Cardiac Catheterization Without Code 37.26 4,799 8.11 110,493.86 536—With Code 37.26 Only Without Cardiac Catheterization 10,829 3.85 85,390.88 536—With Cardiac Catheterization and Code 37.26 2,677 6.76 102,359.21 The data show that when code 37.26 is the only procedure reported from the list of cardiac catheterizations, the average charges and the average length of stay are considerably lower. For example, the average standardized charges for a defibrillator implant with only an EPS are $85,390.88 in DRG 536, while the average standardized charges for DRG 536 with a cardiac catheterization, but not an EPS, are $110,493.86. The average standardized charges for all cases in DRG 536 are $94,453.62. The data show similar findings for DRG 535, with lower lengths of stay and average charges when the only code reported from the cardiac catheterization list is an EPS. When we also consider the acknowledged coding problems in the use of code 37.26, we believe it is inappropriate to base a defibrillator DRG assignment on the EPS code. Cases identified with this code capture patients who require less resource use than patients who have a cardiac catheterization. Data reflected in the chart above show that the average standardized charges for DRG 515 were $83,659.76. These average charges are closer to those in DRG 536 with code 37.26 and without any other cardiac catheterization code reported. While the cases in DRG 535 with code 37.26 and without a cardiac catheterization have higher average charges than the average charges for cases in DRG 515, these cases have much lower average charges than the average charges for overall cases in DRG 535. For these reasons, we proposed to remove code 37.26 from the list of cardiac catheterizations for DRGs 535 and 536. If a defibrillator is implanted and an EPS is performed with no other type of cardiac catheterization, the case would be assigned to DRG 515. CMS issued a National Coverage Determination for implantable cardioverter defibrillators, effective January 27, 2005, that expands coverage and requires, in certain cases, that patient data be reported when the defibrillator is implanted for the clinical indication of primary prevention of sudden cardiac death. The submission of data on patients receiving an implantable cardioverter defibrillator for primary prevention to a data collection system is needed for the determination that the implantable cardioverter defibrillator is reasonable and necessary and for quality improvement. These data will be made available in some form to providers and practitioners to inform their decisions, monitor performance quality, and benchmark and identify best practices. We made a temporary registry available for use when the policy became effective and used the Quality Net Exchange for data submission because Medicare-participating hospitals already use the Exchange to report data. We intend to transition from the temporary registry using the Quality Net Exchange to a more sophisticated follow-on registry that will have the ability to collect longitudinal data. Some providers have suggested that CMS increase reimbursement for implantable cardioverter defibrillators to compensate the provider for reporting data. ICD data reporting includes elements of patient demographics, clinical characteristics and indications, medications, provider information, and complications. Since these data elements are commonly found in patient medical records, it is CMS' expectation that these data are readily available to the individuals abstracting and reporting data. Therefore, we believe that increased reimbursement is not needed at this time. Comment: One commenter stated that there has been considerable confusion surrounding the use of code 37.26. The commenter indicated that coders are unclear whether code 37.26 should be reported when an electrophysiologic study (EPS) is performed as part of a defibrillator implantation or only when defibrillator device checks are performed. The commenter pointed out that the continuing efforts of the Editorial Advisory Board for Coding Clinic to clarify the use of this code have led to changes in coding advice published in Coding Clinic for ICD-9-CM by the American Hospital Association. However, the commenter stated, while the change in coding advice was intended to clarify use of code 37.26, coders continue to have questions about it. The commenter supported our proposal to remove code 37.26 from the list of cardiac catheterizations for DRGs 535 and 536 and agreed with CMS' plans to continue working to clarify use of this code or modify the code through the ICD-9-CM Coordination and Maintenance Committee. The commenter suggested that, once the coding issues are resolved and consistent data are collected, CMS should reexamine the DRG assignment(s) for code 37.26. Other commenters opposed our proposal to remove code 37.26 from DRGs 535 and 536. These commenters stated that code 37.26 is used to capture a variety of disparate procedures with varying purposes, sites of service, and intensity, and that the resultant data are not representative of any one of these. Other commenters stated that the code contains three separate procedures of varying intensity: Electrophysiology study, intraoperative device interrogation, and noninvasive programmed stimulation. Several commenters believed that the payment change would have a severe financial impact on their hospitals. They believed it is inappropriate to make the change without the data to justify the change. Several commenters stated that the change would have a significant impact on the use of CRT-D implants because the devices are more costly. The commenters suggested that, before considering a revision to DRGs 535 and 536 for code 37.26, CMS should resolve the coding confusion. The commenters asked that the code be discussed at the September 29, 2005 ICD-9-CM Coordination and Maintenance Committee meeting and suggested that separate codes be created for the different procedures currently captured by code 37.26. According to the commenters, the new codes that are created could go into effect on October 1, 2006. The commenters suggested that, once data are available, CMS should consider a revision to DRGs 535 and 536 for EPS procedures. Response: We agree with the commenter that there is considerable confusion regarding the use of code 37.26. It is possible that code 37.26 is being used for a variety of electrophysiologic procedures such as EPS, noninvasive programmed electrical stimulation, and programmed electrical stimulation. However, as indicated in the proposed rule and above in this final rule, our data show that the cases coded with 37.26 that were not separately coded with a cardiac catheterization had average charges of $98,900.13 in DRG 535 and $85,390.88 in DRG 536 compared to $127,130.79 and $110,493.86, respectively, for all other cases in these DRGs. For this reason, we believe it is appropriate to include code 37.26 in DRG 515 and no longer assign it to DRGs 535 and 536 that are for patients who receive a cardiac catheterization. As we discussed earlier in this section of the preamble, Medicare significantly expanded coverage of implantable defibrillators on January 27, 2005 (Pub. No. 100-3, section 20.4) to patients who have a prior history of heart disease but are not in acute heart failure. These prophylactic defibrillator implants are expected to significantly increase the number of patients in DRGs 515, 535, and 536. It is our experience that most of these patients will not be receiving a cardiac catheterization and will be less resource-intensive than the acute heart failure patients receiving an implantable defibrillator. We note that the Bernstein Research Call publication of April 27, 2005 stated that this DRG change could “dampen the elective implantation of de-novo CRT-D or dual chamber devices into relatively stable patients.” The article further states that CMS “realizes that the new prophylactic ICD [implantable cardioverter defibrillators] eligibility requirements do not require an EP test, and that EP tests per se do not consume sufficient resources to justify the reimbursement differentials seen between DRGs 515 versus 535 and 536.” We believe it is particularly important to make the change to DRGs 515, 535, and 536 at this time, given the expansion of Medicare coverage of implantable defibrillators and the evidence that suggests that patients who receive an EP test, but not a cardiac catheterization, are less expensive than other patients receiving these devices. We will address code 37.26 at our September 29-30, 2005 meeting of the ICD-9-CM Coordination and Maintenance Committee meeting. The public is encouraged to participate in this meeting and offer suggestions for code modifications. Information on this meeting can be found at: http://www.cms.hhs.gov/paymentsystems/icd9. Comment: Five commenters stated that CMS' data show that the average charges for cases with code 37.26 are significantly higher than those in DRG 515. The commenters suggested that the volume of cases is significant enough to create a new DRG for cases with cardiac defibrillator implant without cardiac catheterization, but with code 37.26. Response: Given the extensive comments concerning coding problems with code 37.26, we do not believe it is appropriate to create a new DRG that would specifically capture defibrillator implants with this code. Therefore, we are not creating the suggested new DRG at this time. As stated earlier, we will continue to work with the coding and health care community to modify code 37.26 so that it will lead to more consistent reporting. Once we have better data, we will evaluate additional DRG modifications. After consideration of the public comments received on the proposed rule, in this final rule, we are implementing the modification of DRGs 535 and 536 as proposed for FY 2006. We are removing code 37.26 from the list of cardiac catheterizations for DRGs 535 and 536 and adding the code in DRG 515. c. Coronary Artery Stents In the FY 2005 IPPS final rule (69 FR 48971 through 48974), we addressed two comments from industry representatives about the DRG assignments for coronary artery stents. These commenters had expressed concern about whether the reimbursement for stents is adequate, especially for insertion of multiple stents. They also expressed concern about whether the current DRG structure represents the most clinically coherent classification of stent cases. In the FY 2006 proposed rule (70 FR 23318 through 23319), we included the following discussion regarding the commenter's concerns: The current DRG structure incorporates stent cases into the following two pairs of DRGs, depending on whether bare metal or drug-eluting stents are used and whether acute myocardial infarction (AMI) is present: • DRG 516 (Percutaneous Cardiovascular Procedures with AMI) • DRG 517 (Percutaneous Cardiovascular Procedures with Nondrug-Eluting Stent without AMI) • DRG 526 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent with AMI) • DRG 527 (Percutaneous Cardiovascular Procedures with Drug-Eluting Stent without AMI) The commenters presented two recommendations for refinement and restructuring of the current coronary stent DRGs. One of the recommendations involved restructuring these DRGs to create two additional stent DRGs that are closely patterned after the existing pairs, and would reflect insertion of multiple stents with and without AMI. The commenters recommended incorporating either stenting code 36.06 (Insertion of nondrug-eluting coronary artery stent(s)) or code 36.07 (Insertion of drug-eluting coronary artery stent(s)) when they are reported along with code 36.05 (Multiple vessel percutaneous transluminal coronary angioplasty [PTCA] or coronary atherectomy performed during the same operation, with or without mention of thrombolytic agent). The commenter's first concern was that hospitals may be steering patients toward coronary artery bypass graft surgery in place of stenting in order to avoid significant financial losses due to what it considered the inadequate reimbursement for inserting multiple stents. In our response to comments in the FY 2005 IPPS final rule, we indicated that it was premature to act on this recommendation because the current coding structure for coronary artery stents cannot distinguish cases in which multiple stents are inserted from those in which only a single stent is inserted. Current codes are able to identify performance of PTCA in more than one vessel by use of code 36.05. However, while this code indicates that PTCA was performed in more than one vessel, its use does not reflect the exact number of procedures performed or the exact number of vessels treated. Similarly, when codes 36.06 and 36.07 are used, they document the insertion of at least one stent. However, these stenting codes do not identify how many stents were inserted in a procedure, nor distinguish insertion of a single stent from insertion of multiple stents. Even the use of one of the stenting codes in conjunction with multiple-PTCA code 36.05 does not distinguish insertion of a single stent from multiple stents. The use of code 36.05 in conjunction with code 36.06 or code 36.07 indicates only performance of PTCA in more than one vessel, along with insertion of at least one stent. The precise numbers of PTCA-treated vessels, the number of vessels into which stents were inserted, and the total number of stents inserted in all treated vessels cannot be determined. Therefore, the capabilities of the current coding structure do not permit the distinction between single and multiple vessel stenting that would be required under the recommended restructuring of the coronary stent DRGs. We agree that the DRG classification of cases involving coronary stents must be clinically coherent and provide for adequate reimbursement, including those cases requiring multiple stents. For this reason, we created four new ICD-9-CM codes identifying multiple stent insertion (codes 00.45, 00.46, 00.47, and 00.48) and four new codes identifying multiple vessel treatment (codes 00.40, 00.41, 00.42, and 00.43) at the October 7, 2004 ICD-9-CM Coordination and Maintenance Committee Meeting. These eight new codes can be found in Table 6B of this proposed rule. We have worked closely with the coronary stent industry and the clinical community to identify the most logical code structure to identify new codes for both multiple vessel and multiple stent use. Effective October 1, 2005, code 36.05 will be deleted and the eight new codes will be used in its place. Coders are encouraged to use as many codes as necessary to describe each case, using one code to describe the angioplasty or atherectomy, and one code each for the number of vessels treated and the number of stents inserted. Coders are encouraged to record codes accurately, as these data will potentially be the basis for future DRG restructuring. While we agree that use of multiple vessel and stent codes will provide useful information in the future on hospital costs associated with percutaneous coronary procedures, we believe it remains premature to proceed with a restructuring of the current coronary stent DRGs on the basis of the number of vessels treated or the number of stents inserted, or both, in the absence of data reflecting use of this new coding structure. The commenter's second recommendation was that we distinguish “complex” from “noncomplex” cases in the stent DRGs by expanding the higher weighted DRGs (516 and 526) to include conditions other than AMI. The commenter recommended recognizing certain comorbid and complicating conditions, including hypertensive renal failure, congestive heart failure, diabetes, arteriosclerotic cardiovascular disease, cerebrovascular disease, and certain procedures such as multiple vessel angioplasty or atherectomy (as evidenced by the presence of procedure code 36.05), as indicators of complex cases for this purpose. Specifically, the commenters recommended replacing the current structure with the following four DRGs: • Recommended restructured DRG 516 (Complex percutaneous cardiovascular procedures with non-drug-eluting stents). • Recommended restructured DRG 517 (Noncomplex percutaneous cardiovascular procedures with non-drug-eluting stents). • Recommended restructured DRG 526 (Complex percutaneous cardiovascular procedures with drug-eluting stents). • Recommended restructured DRG 527 (Noncomplex percutaneous cardiovascular procedures with drug-eluting stents). The commenter argued that this structure would provide an improvement in both clinical and resource coherence over the current structure that classifies cases according to the type of stent inserted and the presence or absence of AMI alone, without considering other complicating conditions. The commenter also presented an analysis, based on previous MedPAR data, that evaluated charges and lengths of stay for cases with expected high resource use and reclassified cases into its recommended new structure of paired “complex” and “noncomplex” DRGs. The commenter's analysis showed some evidence of clinical and resource coherence in the recommended DRG structure. However, we did not adopt the proposal in the FY 2005 IPPS final rule. First, the data presented by the commenter still represented preliminary experience under a relatively new DRG structure. Second, the analysis did not reveal significant gains in resource coherence compared to existing DRGs for stenting cases. Therefore, we were reluctant to adopt this approach because of comments and concern about whether the overall level of payment in the coronary stent DRGs was adequate. However, we indicated that this issue deserved further study and consideration, and that we would conduct an analysis of this recommendation and other approaches to restructuring these DRGs with updated data in the FY 2006 proposed rule.” In response to those comments, we analyzed the MedPAR data to determine the impact of certain secondary diagnoses or complicating conditions on the four stent DRGs. Specifically, we examined the data in DRGs 516, 517, 526, and 527, based on the presence of coronary stents (codes 36.06 and 36.07) and the following additional diagnoses: • Congestive heart failure (represented by codes 398.91 (Rheumatic heart failure (congestive)), 402.01 (Hypertensive heart disease, malignant, with heart failure), 402.11, (Hypertensive heart disease, benign, with heart failure), 402.91 (Hypertensive heart disease, unspecified, with heart failure), 404.01 (Hypertensive heart and renal disease, malignant, with heart failure), 404.03 (Hypertensive heart and renal disease, malignant, with heart failure and renal failure), 404.11 (Hypertensive heart and renal disease, benign, with heart failure), 404.13 (Hypertensive heart and renal disease, benign, with heart failure and renal failure), 404.91 (Hypertensive heart and renal disease, unspecified, with heart failure), 404.93 (Hypertensive heart and renal disease, unspecified, with heart failure and renal failure), 428.0 (Congestive heart failure, unspecified), and 428.1 (Left heart failure)). • Arteriosclerotic cardiovascular disease (represented by code 429.2 (Cardiovascular disease, unspecified)). • Cerebrovascular disease (represented by codes 430 (Subarachnoid hemorrhage), 431 (Intracerebral hemorrhage), 432.0 (Nontraumatic extradural hemorrhage), 432.1, Subdural hemorrhage, 432.9, (Unspecified intracranial hemorrhage), 433.01 (Occlusion and stenosis of basilar artery, with cerebral infarction), 433.11 (Occlusion and stenosis of carotid artery, with cerebral infarction), 433.21 (Occlusion and stenosis of vertebral artery, with cerebral infarction), 433.31 (Occlusion and stenosis of multiple and bilateral precerebral arteries, with cerebral infarction), 433.81 (Occlusion and stenosis of other specified precerebral artery, with cerebral infarction), 434.01 (Cerebral thrombosis with cerebral infarction), 434.11 (Cerebral embolism with cerebral infarction), 434.91 (Cerebral artery occlusion with cerebral infarction, unspecified), 436 (Acute, but ill-defined, cerebrovascular disease)). • Secondary diagnosis of acute myocardial infarction (represented by codes 410.01 (Acute myocardial infarction of anterolateral wall, initial episode of care), 410.11 (Acute myocardial infarction of other anterior wall, initial episode of care), 410.21 (Acute myocardial infarction of inferolateral wall, initial episode of care), 410.31 (Acute myocardial infarction of inferoposterior wall, initial episode of care), 410.41 (Acute myocardial infarction of other inferior wall, initial episode of care), 410.51 (Acute myocardial infarction of other lateral wall, initial episode of care), 410.61 (True posterior wall infarction, initial episode of care), 410.71 (Subendocardial infarction, initial episode of care), 410.81 (Acute myocardial infarction of other specified sites, initial episode of care), 410.91 (Acute myocardial infarction of unspecified site, initial episode of care)). • Renal failure (represented by codes 403.01 (Hypertensive renal disease, malignant, with renal failure), 403.11 (Hypertensive renal disease, benign, with renal failure), 403.91 (Hypertensive renal disease, unspecified, with renal failure), 585 (Chronic renal failure), V42.0 (Organ or tissue replaced by transplant, kidney), V45.1 (Renal dialysis status), V56.0 (Extracorporeal dialysis), V56.1 (Fitting and adjustment of extracorporeal dialysis catheter), V56.2 (Fitting and adjustment of peritoneal dialysis catheter)). Any renal failure with congestive heart failure will be captured in the 404.xx codes listed above. We reviewed the cases in the four coronary stent DRGs and found that most of the additional or “complicated” cases did, in fact, have higher average charges in most instances. However, these results could potentially be duplicated for many DRGs, or sets of DRGs, within the PPS structure. That is, cases with selected complicating factors will tend to have higher average lengths of stay and average charges than cases without those complicating factors. Because cases with the selected complicating factors necessarily contain sicker patients, longer lengths of stay and higher average charges are to be expected. For example, cases in which patients with a cardiac condition also have renal failure are quite likely to consume higher resources than patients only with a cardiac condition. The presence of code 403.11 (Hypertensive renal disease, malignant, with renal failure) may distinguish cases with higher average charges, but the same argument could be raised for many other procedures across other MDCs. Generally, we have taken into account the higher costs of cases with complications by maintaining a general list of comorbidities and complications (the CC) list), and, where appropriate, distinguishing pairs of DRGs by “with and without CCs.” (This system also specifies exclusions from each pair, to account for cases where a condition on the CC list is an expected and normal constituent of the diagnoses reflected in the paired DRGs.) Thus, we proposed to restructure the coronary stent DRGs on the basis of the standard CC list to differentiate cases that require greater resources. We believed this list to be more inclusive of true comorbid or complicating conditions than selection of specific secondary diagnosis codes. Therefore, we anticipated that restructuring these DRGs on this basis would result in a logical arrangement of cases with regard to both clinical coherence and resource consumption. We compared the existing CC list with the list of the codes recommended by the commenter as secondary diagnoses. All of the recommended codes already appear on the CC list except for codes 429.2, 432.9, V56.1, and V56.2. Code 429.2 represents a very vague diagnosis (arteriosclerotic cardiovascular disease (ASCVD)). Code 432.9 represents a nonspecific principal diagnosis that is rejected by the MCE when reported as the principal diagnosis. Codes V56.1 and V56.2 describe conditions relating to dialysis for renal failure. Therefore, we believe that our proposal to utilize the existing CC list encompassed most of the cases on the recommended list, as well as other cases with additional CCs requiring additional resources. We examined the MedPAR data for the cases in the coronary stent DRGs, distinguishing cases that include CCs and those that do not. The following table displays the results: DRG Number of cases Average length-of-stay Average charges DRG 516—All Cases 37,325 4.79 $40,278 DRG 516 Cases With CC 25,806 5.5 43,691 DRG 516 Cases Without CC 11,519 3.0 32,631 DRG 517—All Cases 64,022 2.58 32,145 DRG 517 Cases With CC 50,960 2.8 33,178 DRG 517 Cases Without CC 13,062 1.5 28,113 DRG 526—All Cases 51,431 4.36 45,924 DRG 526 Cases With CC 32,904 5.2 49,751 DRG 526 Cases Without CC 18,527 2.8 39,126 DRG 527—All Cases 176,956 2.23 36,087 DRG 527 Cases With CC 137,641 2.4 37,142 DRG 527 Cases Without CC 39,315 1.3 32,392 The data show a clear differentiation in average charges between the cases in DRG 516 and 526 “with CC” and those “without CC.” Therefore, the data suggested that a “with and without CC” split in DRG 516 and 526 was warranted. At the same time, the data did not show such a clear differentiation, in either average charges or lengths of stay, among the cases in DRGs 517 and 527. As a result of this analysis, in the proposed rule, we had originally proposed to delete DRGs 516 and 526, and to substitute four new DRGs in their place. These new DRGs were to have been patterned after existing DRGs 516 and 526, except that they would be split based on the presence or absence of a secondary diagnosis on the existing CC list. Specifically, we intended to create DRG 547 (Percutaneous Cardiovascular Procedure with AMI with CC), DRG 548 (Percutaneous Cardiovascular Procedure with AMI without CC), DRG 549 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with AMI with CC), and DRG 550 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent with AMI without CC). As we noted above, the MedPAR data did not support restructuring DRGs 517 and 527 based on the presence or absence of a CC. Therefore, we proposed to retain these two DRGs in their current forms. We believed this revised structure would result in a more inclusive and comprehensive array of cases within MDC 5 without selectively recognizing certain secondary diagnoses as “complex.” We received a number of comments on the proposed restructuring of DRGs 516, 517, 526, and 527 in the FY 2006 IPPS proposed rule. Comment: All of the commenters approved of the proposed restructuring of these DRGs, especially with regard to dividing DRGs 516 and 526 on the basis of the presence or absence of complicating secondary diagnoses. Response: We appreciate the comments submitted in support of this proposal. Comment: One commenter noted that the average patient receives 1.5 stents, and expressed the desire for CMS to begin “appropriate reimbursement” in FY 2006, consistent with the additional expense involved when multiple stents are inserted. One commenter remained concerned that the DRG weights significantly underestimate the true costs of performing drug-eluting stent procedures, especially for multiple vessel, multiple stent procedures, and expressed concern that the proposed relative weights could result in financial losses for hospitals, with the result that access to stent procedures is discouraged. Response: We created new ICD-9-CM procedure codes effective for discharges on or after October 1, 2005, to capture both the number of stents inserted and the number of vessels treated. Absent accurate charge data, we cannot predict the correct relative weight for a DRG containing more than one stent. We reiterate that we will continue to monitor the MedPAR data, and will make future evidence-based changes to the DRG structure and logic as warranted. Comment: Several commenters supported the maintenance of separate reimbursement structures for drug-eluting stents and recommended that we continue to separate drug-eluting and bare metal stents in different DRGs until such time as the bare metal stents represent an insignificant proportion of the total coronary stent discharges. Response: We recognize that the resources surrounding bare metal stents and drug-eluting stents differ appreciably and will continue to keep these cases separate from each other until such time as it is appropriate, according to the evidence provided in our MedPAR data, that these cases can be combined. Comment: Several commenters supported CMS' proposal to create eight new procedure codes; four codes describing the number of vessels treated and four codes describing the number of stents inserted. In addition, two commenters suggested that CMS should issue a separate communication reiterating the correct use of these codes. Response: We take this opportunity to clear up a misconception. The codes published in Tables 6A through 6F are not proposed codes. They are final codes, and as such, are not subject to comment. Absent any typographical errors or late changes to the codes, they may be considered available for use on October 1 of the following fiscal year. This year, because of the changes made by the March 31, 2005 and April 1, 2005 ICD-9-CM Coordination and Maintenance Committee, the codes in the proposed rule were not as complete as those codes published in this final rule. The codes contained in Tables 6A through 6F of this final rule include all new codes for FY 2006, which will go into effect on October 1, 2005. CMS partners with the American Hospital Association with regard to correct coding advice published in the Coding Clinic for ICD-9-CM. AHA's fourth edition of the year always includes the new codes for the upcoming year and includes examples on their proper use. In addition, CMS' MedLearn site at http://www.cms.hhs.gov/medlearn/icd9code.asp#top contains coding information. Comment: One commenter recommended that the use of the eight new codes describing number of vessels and number of stents be used on both coronary and peripheral vessels. Response: The note that will appear at the top of the 00.4 (Adjunct Vascular System Procedures) section of Tabular section of the ICD-9-CM Procedure Coding Book will read as follows: “These codes can apply to both coronary and peripheral vessels. These codes are to be used in conjunction with other therapeutic procedure codes to provide additional information on the number of vessels upon which a procedure was performed or the number of stents inserted, or both. As appropriate, hospitals should code both the number of vessels operated on (00.40 through 00.43) and the number of stents inserted (00.45 through 00.48). Comment: One commenter stated that by the time CMS gets data on the eight new codes, it will be FY 2008, and hospitals will have had inadequate reimbursement for multiple stents until then. The commenter suggested that CMS incorporated additional payment for multiple stents and multiple vessels treated into the FY 2007 weights. Response: We will follow the use of these codes, but may not be prepared to make any DRG changes based on their use with only one year's worth of data. Comment: One commenter stated that DRGs should not be restructured for multiple stent insertion without adequate data to support our decisionmaking process. Response: We agree and intend to closely follow the use of these eight new codes in the MedPAR data. Comment: One commenter was not convinced that the proposed new structure of DRGs 516 and 526, with and without comorbidities and complications should be the permanent solution for all coronary stent DRGs. This commenter agreed that the new structure of these DRGs should not preclude subsequent restructuring of the stent DRGs. Response: We agree that restructuring DRGs 516 and 526 in the proposed manner might not be a permanent solution for classifying all stent DRGs. However, we have now decided not to adopt the proposed restructuring of DRGs 516 and 526 that was described in the proposed rule. We have now determined that it is appropriate to restructure nine DRGs in MDC 5, including DRGs 516, 517, 526, and 527, on the basis of the presence or absence of a major cardiovascular condition. We are making this change in the DRG structure in response to public comments concerning our response to MedPAC's recommendations to better recognize severity in the DRG system. The full text of the changes we are making to the cardiovascular DRG, including the coronary artery stent DRGs, can be found in section IX.A. of this final rule. Comment: One commenter requested that CMS adopt an ICD-9-CM code that was discussed at the October 7, 2004 ICD-9-CM Coordination and Maintenance Committee. That code, had it been adopted, would have been 00.44 (Procedure on bifurcated vessels) in the new series of codes describing the number of vessels treated. The commenter stated that the creation of this code is critical to understanding the contemporary approaches to treatment of coronary artery disease. The commenter further stated that treatment of stenosis [of a blood vessel] at a bifurcation represents 25 to 30 percent of percutaneous coronary interventions and recommended that coders use one code for number of vessels, one code for number of stents, and an additional code to note that a bifurcated vessel was treated. According to the commenter, a new code for the treatment of a bifurcated vessel is necessary because the existing codes that describe the number of vessels treated (codes 00.40 through 00.43) will only be used by coders for the counting of uninterrupted, straight vessels. Response: We did not choose to create a new code for procedure on a bifurcated vessel for two reasons. First, we do not believe that level of granularity is needed in order to accurately code stent insertion for bifurcated vessels. We believe that the codes for multiple stents and vessels will provide the necessary information about resource use for the procedure. Second, we are concerned that coders will not have sufficient information documented in the medical record to identify procedures on bifurcated vessels as opposed to a specific number of procedures on a specific number of vessels. Because procedures on bifurcated vessels are so prevalent (25 to 30 percent, according to the commenter), they should be considered technical variants rather than distinct entities to be coded separately. We solicited input from the industry when creating the new coronary stent codes, and we believe that the new codes as they exist adequately capture resource utilization. We also note that this level of detail is not present in the Current Procedural Terminology (CPT) coding structure, which is the basis upon which physicians are paid. Accordingly, in this final rule, for FY 2006, we are deleting DRGs 516, 517, 526, and 527 for percutaneous placement of both drug-eluting and nondrug-eluting stents. We are creating four new DRGs in their places. Rather than divide these DRG pairs based on whether the patient had an acute myocardial (AMI), we are splitting each pair of DRGs based on the presence or absence of a major cardiovascular condition. Although, as discussed in the proposed rule, in the past we have expressed concerns regarding selectively recognizing secondary diagnoses or complicating conditions, particularly conditions from other MDCs, in making DRG assignments, we believe these concerns are not relevant to the new cardiovascular DRGs. While we are adopting an approach for distinguishing patients with complex conditions, with a few exceptions, our approach uses complex cardiovascular conditions (or diagnoses within the MDC) to decide whether a patient should be assigned to the higher weighted DRG. In those cases where we have used a diagnosis from another MDC in assigning a patient to the MCV DRG, the condition is generally a closely related vascular condition that is linked to the patient's cardiovascular illness. We believe that this revised structure identifies subgroups of significantly more severe patients who use greater hospital resources more accurately than was possible under the previous DRGs. The new DRG titles are: • DRG 555 (Percutaneous Cardiovascular Procedure With Major Cardiovascular Diagnosis (formerly DRG 516) • DRG 556 (Percutaneous Cardiovascular Procedure With Non-Drug-Eluting Stent Without Major Cardiovascular Diagnosis (formerly DRG 517) • DRG 557 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent With Major Car [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%3A05-15406. Public record. Not legal advice.