Medicare Program; Hospital Outpatient Prospective Payment System and CY 2007 Payment Rates; CY 2007 Update to the Ambulatory Surgical Center Covered Procedures List; Medicare Administrative Contractors; and Reporting Hospital Quality Data for FY 2008 Inpatient Prospective Payment System Annual Payment Update Program-HCAHPS Survey, SCIP, and Mortality
Federal RegisterNov 24, 2006
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 416, 419, 421, 485, and 488
[CMS-1506-FC; CMS-4125-F]
RIN 0938-AO15
Medicare Program; Hospital Outpatient Prospective Payment System and CY 2007 Payment Rates; CY 2007 Update to the Ambulatory Surgical Center Covered Procedures List; Medicare Administrative Contractors; and Reporting Hospital Quality Data for FY 2008 Inpatient Prospective Payment System Annual Payment Update Program—HCAHPS Survey, SCIP, and Mortality
AGENCY:
Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION:
Final rule with comment period and final rule.
SUMMARY:
This final rule with comment period revises the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system, and to implement certain related provisions of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 and the Deficit Reduction Act (DRA) of 2005. In this final rule with comment period, we describe changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes are applicable to services furnished on or after January 1, 2007. In addition, this final rule with comment period implements future CY 2009 required reporting on quality measures for hospital outpatient services paid under the prospective payment system.
This final rule with comment period revises the current list of procedures that are covered when furnished in a Medicare-approved ambulatory surgical center (ASC), which are applicable to services furnished on or after January 1, 2007.
This final rule with comment period revises the emergency medical screening requirements for critical access hospitals (CAHs).
This final rule with comment period supports implementation of a restructuring of the contracting entities responsibilities and functions that support the adjudication of Medicare fee-for-service (FFS) claims. This restructuring is directed by section 1874A of the Act, as added by section 911 of the MMA. The prior separate Medicare intermediary and Medicare carrier contracting authorities under Title XVIII of the Act have been replaced with the Medicare Administrative Contractor (MAC) authority.
This final rule continues to implement the requirements of the DRA that require that we expand the “starter set” of 10 quality measures that we used in FY 2005 and FY 2006 for the hospital inpatient prospective payment system (IPPS) Reporting Hospital Quality Data for the Annual Payment Update (RHQDAPU) program. We began to adopt expanded measures effective for payments beginning in FY 2007. In this rule, we are finalizing additional quality measures for the expanded set of measures for FY 2008 payment purposes. These measures include the HCAHPS survey, as well as Surgical Care Improvement Project (SCIP, formerly Surgical Infection Prevention (SIP)), and Mortality quality measures.
DATES:
Effective Date:
The provisions of these final rules are effective on January 1, 2007.
Comment Period:
We will consider comments on the payment classification assigned to HCPCS codes identified in Addendum B with the NI comment code, and other areas specified throughout the preamble, at the appropriate address, as provided below, no later than 5 p.m. January 23, 2007.
Application Deadline
—New Class of New Technology Intraocular Lens: Requests for review of applications for a new class of new technology intraocular lenses must be received by close of business April 1, 2007.
ADDRESSES:
In commenting, please refer to file code CMS-1506-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates, please):
1.
Electronically.
You may submit electronic comments on specific issues in this regulation to
http://www.cms.hhs.gov/eRulemaking.
Click on the link “Submit electronic comments on CMS regulations with an open comment period.” (Attachments should be in Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft Word.)
2.
By regular mail.
You may mail written comments (one original and two copies) to the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1506-FC, P.O. Box 8011, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received before the close of the comment period.
3.
By express or overnight mail.
You may send written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1506-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4.
By hand or courier.
If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses: Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.
(Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain proof of filing by stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.
For information on viewing public comments, see the beginning of the
SUPPLEMENTARY INFORMATION
section.
Applications for a new class of new technology intraocular lenses:
Requests for review of applications for a new class of new technology intraocular lenses must be sent by regular mail to: ASC/NTIOL, Division of Outpatient Care, Mailstop C4-05-17, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
FOR FURTHER INFORMATION CONTACT:
Alberta Dwivedi, (410) 786-0378, Hospital outpatient prospective payment issues.
Dana Burley, (410) 786-0378, Ambulatory surgery center issues.
Suzanne Asplen, (410) 786-4558, Partial hospitalization and community mental health centers issues.
Mary Collins, (410) 786-3189, Critical access hospital emergency medical planning issues.
Sandra M. Clarke, (410) 786-6975, Medicare Administrative Contractors issues.
Mark Zobel, (410) 786-6905, Medicare Administrative Contractors issues.
Liz Goldstein, (410) 786-6665, FY 2008 IPPS RHQDAPU HCAHPS issues.
Bill Lehrman, (410) 786-1037, FY 2008 IPPS RHQDAPU HCAHPS issues.
Sheila Blackstock, (410) 786-3506, FY 2008 IPPS RHQDAPU SCIP and mortality issues.
SUPPLEMENTARY INFORMATION:
Submitting Comments:
We welcome comments from the public on the payment classification and status indicator assigned to HCPCS codes identified in Addendum B of this final rule with comment period with comment indicator NI and on the ambulatory surgical center procedures that were not proposed for addition to the ambulatory surgical center list in the CY 2007 OPPS proposed rule to assist us in fully considering issues and developing policies. You can assist us by referencing filed code CMS-1506-FC.
Inspection of Public Comments:
All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received:
http://www.cms.hhs.gov/eRulemaking.
Click on the link “Electronic Comments on CMS Regulations” on that Web site to view public comments.
Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday through Friday of each week from 8:30 a.m. to 4:00 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.
Electronic Access
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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.gpoaccess.gov/index.html,
by using local WAIS client software, or by telnet to
swais.access.gpo.gov
, then log in as guest (no password required). Dial-in users should use communications software and modem to call (202) 512-1661; type swais, then log in as guest (no password required).
Alphabetical List of Acronyms Appearing in the Final Rule
ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
APC Ambulatory payment classification
AMP Average manufacturer price
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L. 106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Pub. L. 106-554
CAH Critical access hospital
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition, 2006, copyrighted by the American Medical Association
CRNA Certified registered nurse anesthetist
CY Calendar year
DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies
DMERC Durable medical equipment regional carrier
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Pub. L. 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FY Federal fiscal year
GAO Government Accountability Office
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191
ICD-9-CM International Classification of Diseases, Ninth Edition, Clinical Modification
IDE Investigational device exemption
IOL Intraocular lens
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractors
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OCE Outpatient Code Editor
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PPV Pneumococcal pneumonia (virus)
PRA Paperwork Reduction Act
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RHQDAPU Reporting hospital quality data for annual payment update
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
In this document, we address three payment systems under the Medicare program: the hospital outpatient prospective payment system (OPPS), the hospital inpatient prospective payment system (IPPS), and the ambulatory surgical center (ASC) payment system. The provisions relating to the OPPS are included in sections I. through XIII., XV., XVI., XIX., XXIII., XXIV., XXV., and XXVI. of the preamble and in Addenda A, B, C (Addendum C is available on the Internet only; see section XXIII. of the preamble of this final rule with comment period), D1, D2, and E of this final rule with comment period. The provisions related to the IPPS are included in sections XXII. and XXVI.E. of the preamble. The provisions related to ASCs are included in sections XVII. and XXV., and XXVI.C. of the preamble and in Addenda AA of this final rule with comment period.
In addition, in this document, we address our implementation of the Medicare contracting reform provisions of the MMA that replace the prior Medicare intermediary and carrier authorities formerly found in sections 1816 and 1842 of the Act with Medicare administrative contractor (MAC) authority under a new section 1874A of the Act. The provisions relating to MACs are included in sections XVIII. and XXV.D. of this preamble. To assist readers in referencing sections contained in this document, we are providing the following table of contents:
Table of Contents
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. APC Advisory Panel
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
E. Provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
1. Reduction in Threshold for Separate APCs for Drugs
2. Special Payment for Brachytherapy
F. Provisions of the Deficit Reduction Act (DRA) of 2005
1. 3-Year Transition of Hold Harmless Payments
2. Medicare Coverage of Ultrasound Screening for Abdominal Aortic Aneurysms
3. Colorectal Cancer Screening
G. Summary of the Provisions of the CY 2007 OPPS Proposed Rule
1. Updates to the OPPS Payments for CY 2007
2. Ambulatory Payment Classification (APC) Group Policies
3. Payment Changes for Devices
4. Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals
5. Estimate of Transitional Pass-Through Spending in CY 2007 for Drugs, Biologicals, and Devices
6. Brachytherapy Payment Changes
7. Coding and Payment for Drugs Administration
8. Hospital Coding and Payments for Visits
9. Payment for Blood and Blood Products
10. Payment for Observation Services
11. Procedures That Will Be Paid Only as Inpatient Services
12. Nonrecurring Policy Changes
13. Emergency Medical Screening in Critical Access Hospitals (CAHs)
14. Payment Status and Comment Indicator Assignments
15. OPPS Policy and Payment Recommendations
16. Policies Affecting Ambulatory Surgical Centers (ASCs) for CY 2007
17. Revised ASC Payment System for Implementation January 1, 2008
18. Medicare Contracting Reform Mandate
19. Reporting Quality Data for Improved Quality and Costs Under the OPPS
20. Promoting Effective Use of Health Information Technology
21. Health Care Information Transparency Initiative
22. Additional Quality Measures and Procedures for Hospital Reporting of Quality Data for FY 2008 IPPS Annual Payment Update
23. Impact Analysis
H. Public Comments Received in Response to the CY 2007 OPPS and Reporting Hospital Quality Data for FY 2008 IPPS Annual Payment Update Program—HCAHPS Survey, SCIP, and Mortality Proposed Rules
I. Public Comments Received on the November 10, 2005 OPPS Final Rule with Comment Period
II. Updates Affecting OPPS Payments for CY 2007
A. Recalibration of APC Relative Weights for CY 2007
1. Database Construction
a. Database Source and Methodology
b. Use of Single and Multiple Procedure Claims
c. Revised Overall Cost-to-Charge Ratio (CCR) Calculation
2. Calculation of Median Costs for CY 2007
3. Calculation of Scaled OPPS Payment Weights
4. Changes to Packaged Services
B. Payment for Partial Hospitalization
1. Background
2. PHP APC Update for CY 2007
3. Separate Threshold for Outlier Payments to CMHCs
C. Conversion Factor Update for CY 2007
D. Wage Index Changes for CY 2007
E. Statewide Average Default CCRs
F. OPPS Payments to Certain Rural Hospitals
1. Hold Harmless Transitional Payment Changes Made by Pub. L. 109-171 (DRA)
2. Adjustment for Rural SCHs Implemented in CY 2006 Related to Pub. L. 108-173 (MMA)
G. CY 2007 Hospital Outpatient Outlier Payments
1. CY 2007 Proposal
2. CY 2007 Final Rule Outlier Calculation
H. Calculation of the OPPS National Unadjusted Medicare Payment
I. Beneficiary Copayments for CY 2007
1. Background
2. Copayment for CY 2007
3. Calculation of an Adjusted Copayment Amount for an APC Group for CY 2007
III. OPPS Ambulatory Payment Classification (APC) Group Policies
A. Treatment of New HCPCS and CPT Codes
1. Treatment of New HCPCS Codes Included in the Second and Third Quarterly OPPS Updates for CY 2006
2. Treatment of New CY 2007 Category I and III CPT Codes and Level II HCPCS Codes
3. Treatment of New Mid-Year CPT Codes
B. Variations Within APCs
1. Background
2. Application of the 2 Times Rule
3. Exceptions to the 2 Times Rule
C. New Technology APCs
1. Introduction
2. Movement of Procedures from New Technology APCs to Clinical APCs
a. Nonmyocardial Positron Emission Tomography (PET) Scans (APC 0308)
b. PET/Computed Tomography (CT) Scans (APC 0308)
c. Stereotactic Radiosurgery (SRS) Treatment Delivery Services (APCs 0065, 0066, and 0067)
d. Magnetoencephalography (MEG) Services (APCs 0038 and 0209)
e. Other Services in New Technology APCs
(1) Breast Brachytherapy (APCs 0029 and 0030)
(2) Radiofrequency Ablation (APCs 0050 and 0423)
(3) Extracorporeal Shock Wave Treatment (APC 0050)
(4) Insertion of Venuous Access Device with Two Ports (APC 0623)
(5) Stereoscopic X-Ray Guidance (APC 0257)
(6) Whole Body Tumor Imaging (APC 0408)
(7) Gastroesophageal Reflux Test With pH Electrode (APC 0361)
(8) Home International Normalized Ratio (INR) Monitoring (APC 0604)
(9) Tositumomab Administration and Supply (APC 0442)
(10) Summary of Other New Technology Procedures Assigned to Clinical APCs for CY 2007
D. APC-Specific Policies
1. Radiology Procedures
a. Radiology Procedures (APCs 0333, 0662, and Other Imaging APCs)
b. Computerized Reconstruction (APC 0417)
c. Cardiac Computed Tomography and Computed Tomographic Angiography (APCs 0282, 0376, 0377, and 0398)
d. Radiologic Evaluation of Central Venous Access Device (APC 0340)
2. Nuclear Medicine and Radiation Oncology Procedures
a. Myocardial Positron Emission Tomography (PET) Scans (APC 0307)
b. Complex Interstitial Radiation Source Application (APC 0651)
c. Proton Beam Therapy (APCs 0664 and 0667)
d. Urinary Bladder Residual Study (APC 0340)
e. Hyperthermia Treatment (APC 0314)
f. Unlisted Procedure for Clinical Brachytherpy (APC 0312)
3. Cardiac and Vascular Procedures
a. Electrophysiologic Recording/Mapping (APC 0087)
b. Endovenous Laser Ablation Procedures (APC 0092)
c. Repair/Repositioning of Defibrillator Leads (APC 0106)
d. Thrombectomy Procedures (APCs 0103 and 0653)
4. Gastrointestinal and Genitourinary Procedures
a. Insertion of Mesh or Other Prosthesis (APC 0195)
b. Percutaneous Renal Cryoablation (APC 0423)
c. Ultrasound Ablation of Uterine Fibroids with Magnetic Resonance Guidance (MRgFUS) (APCs 0195 and 0202)
d. Laser Vaporization of Prostate (APC 0429)
e. Gastrointestinal Procedures with Stents (APC 0384)
f. Endoscopy with Thermal Energy to Sphincter (APC 0422)
5. Ocular Procedures
a. Keratoprosthesis (APC 0293)
b. Eye Procedures (APCs 0232, 0235, and 0241)
c. Amniotic Membrane for Ocular Surface Reconstruction
6. Other Procedures
a. Skin Replacement Surgery and Skin Substitutes (APC 0025)
b. Treatment of Fracture/Dislocation (APCs 0062, 0063, and 0064)
c. Complex Skin Repair (APC 0024)
d. Insertion of Posterior Spinous Process Distraction Device
7. Medical Services
a. Medication Therapy Management Services
b. Single Allergy Tests (APC 0381)
c. Hyperbaric Oxygen Therapy (APC 0659)
d. Guidance for Chemodenervation (APC 0215)
e. Pathology Services (APC 0344)
IV. OPPS Payment Changes for Devices
A. Treatment of Device-Dependent APCs
1. Background
2. CY 2007 Payment Policy
3. Devices Billed in the Absence of an Appropriate Procedure Code
4. Payment Policy When Devices are Replaced Without Cost or Where Credit for a Replaced Device is Furnished to the Hospital
B. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
b. Policy for CY 2007
2. Provisions for Reducing Transitional Pass-Through Payments to Offset Costs Packaged into APC Groups
a. Background
b. Policies for CY 2007
V. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals
A. Transitional Pass-Through Payment for Additional Costs of Drugs and Biologicals
1. Background
2. Drugs and Biologicals With Expiring Pass-Through Status in CY 2006
3. Drugs and Biologicals With Pass-Through Status in CY 2007
B. Payment for Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Status
1. Background
2. Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals
3. Payment for Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Status That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs
(1) Background
(2) Payment Policy for CY 2007
(3) CY 2007 Payment Policy for Radiopharmaceuticals
(a) Background and Proposed CY 2007 Radiopharmaceutical Payment Policy
(b) CY 2007 Final Radiopharmaceutical Payment Policy
b. CY 2007 Payment for Nonpass-Through Drugs, Biologicals, Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital Claims Data
(1) Background
(2) CY 2007 Proposed and Final Payment Policy for Radiopharmaceuticals With HCPCS Codes, But Without Hospital Claims Data
(3) CY 2007 Proposed and Final Payment Policy for Drugs and Biologicals With HCPCS Codes, But Without OPPS Hospital Claims Data
(4) CY 2007 Proposed and Final Payment Policy for Drugs, Biologicals, and Radiopharmaceuticals With HCPCS Codes, But Without OPPS Hospital Claims Data and Without ASP-Related Data
VI. Estimate of OPPS Transitional Pass-Through Spending in CY 2007 for Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Total Allowed Pass-Through Spending
B. Estimate of Pass-Through Spending for CY 2007
VII. Brachytherapy Source Payment Changes
A. Background
B. Government Accountability Office's Final Report on Devices of Brachytherapy
C. Payments for Brachytherapy Sources in CY 2007
VIII. Changes to OPPS Drug Administration Coding and Payment for CY 2007
A. Background
B. CY 2007 Drug Administration Coding Changes
C. CY 2007 Drug Administration Payment Changes
IX. Hospital Coding and Payment for Visits
A. Background
1. Guidelines Based on the Number or Type of Staff Interventions
2. Guidelines Based on the Time Staff Spent with the Patient
3. Guidelines Based on a Point System Where a Certain Number of Points Are Assigned to Each Staff Intervention Based on the Time, Intensity, and Staff Type Required for the Intervention
4. Guidelines Based on Patient Complexity
B. CY 2007 Proposed and Final Coding Policies
1. Clinic Visits
2. Emergency Department Visits
3. Critical Care Services
C. CY 2007 Payment Policy
D. CY 2007 Treatment of Guidelines
1. Background
2. Outstanding Concerns with the AHA/AHIMA Guidelines
a. Three Versus Five Levels of Codes
b. Lack of Clarity for Some Interventions
c. Treatment of Separately Payable Services
d. Some Interventions Appear Overvalued
e. Concerns of Specialty Clinics
f. American with Disabilities Act
g. Differentiation Between New and Established Patients and Between Standard Visits and Consultations
h. Distinction Between Type A and Type B Emergency Departments
X. Payment for Blood and Blood Products
A. Background
B. Policy Changes for CY 2007
XI. OPPS Payment for Observation Services
XII. Procedures That Will be Paid Only as Inpatient Procedures
A. Background
B. Changes to the Inpatient List
C. CY 2007 Payment for Ancillary Outpatient Services When Patient Expires (-CA Modifier)
1. Background
2. Policy for CY 2007
XIII. Nonrecurring Policy Changes
A. Removal of Comprehensive Outpatient Rehabilitation Facility (CORF) Services from the List of Services Paid under the OPPS
B. Addition of Ultrasound Screening for Abdominal Aortic Aneurysms (AAAs) (Section 5112 of Pub. L. 109-171 (DRA))
1. Background
2. Assignment of New HCPCS Code and Payment for Ultrasound Screening for Abdominal Aortic Aneurysm (AAA)
XIV. Emergency Medical Screening in Critical Access Hospitals (CAHs)
A. Background
B. Proposed Policy Change
C. Public Comments Received on the Proposal
D. Final Policy
XV. OPPS Payment Status and Comment Indicators
A. CY 2007 Status Indicator Definitions
1. Payment Status Indicators to Designate Services That Are Paid under the OPPS
2. Payment Status Indicators to Designate Services That Are Paid under a Payment System Other Than the OPPS
3. Payment Status Indicators to Designate Services That Are Not Recognized under the OPPS But That May Be Recognized by Other Institutional Providers
4. Payment Status Indicators to Designate Services That Are Not Payable by Medicare
B. CY 2007 Comment Indicator Definitions
XVI. OPPS Policy and Payment Recommendations
A. MedPAC Recommendations
B. APC Panel Recommendations
C. GAO Recommendations
XVII. Policies Affecting Ambulatory Surgical Centers (ASCs) for CY 2007
A. ASC Background
1. Legislative History
2. Current Payment Method
3. Published Changes to the ASC List
B. ASC List Update Effective for Services Furnished On or After January 1, 2007
1. Criteria for Additions To or Deletions From the ASC List
2. Rationale for Payment Assignment
3. Response to Comments to the May 4, 2005 Interim Final Rule for the ASC Update
4. Procedures Proposed for Additions to the ASC List
5. Specific Requests for Payment Group Changes
6. Requests for Additions to the ASC List from Comments to the August 23, 2006 Proposed Rule
a. Requests Accepted for Additions to the ASC List for CY 2007
b. Requests Not Accepted for Additions to the ASC List for CY 2007
7. Requests for Payment Increases for Procedures on the Current ASC List
8. Other Comments on the May 4, 2005 Interim Final Rule
C. Regulatory Changes for CY 2007
D. Implementation of Section 1834(d) of the Act
E. Implementation of Section 5103 of Pub. L. 109-171 (DRA)
F. Modification of the Current ASC Process for Adjusting Payment for New Technology Intraocular Lenses (NTIOLs)
1. Background
a. Current ASC Payment for Insertion of IOLs
b. Classes of NTIOLs Approved for Payment Adjustment
2. Proposed and Final Changes
a. Process for Recognizing IOLs as Belonging to an Active IOL Class
b. Public Notice and Comment Regarding Adjustments of NTIOL Payment Amounts
c. Factors CMS Considers in Determining Whether an Adjustment of Payment for Insertion of a New Class of NTIOL is Appropriate
d. Revision of the Content of a Request to Review
e. Notice of CMS Determination
f. Payment Adjustment
G. Announcement of CY 2007 Deadline for Submitting Requests for CMS Review of Appropriateness of ASC Payment for Insertion Following Cataract Surgery of an NTIOL
XVIII. Medicare Contracting Reform Mandate
A. Background
B. CMS's Vision for Medicare Fee-for-Service and Medicare Administrative Contractors (MAC)
C. Provider Nomination and the Former Medicare Acquisition Authorities
D. Summary of Changes Made to Section 1816 of the Act
E. Provisions of the Proposed and Final Regulations
1. Definitions
2. Assignments of Providers and Suppliers to MACs
3. Other Technical and Conforming Changes
a. Definition of “Intermediary”
b. Intermediary Functions
c. Options Available to Providers and CMS
d. Nomination for Intermediary
e. Notification of Actions on Nominations, Changes to Another Intermediary or to Direct Payment, and Requirements for Approval of an Agreement
f. Considerations Relating to the Effective and Efficient Administration of the Medicare Program
g. Assignment and Reassignment of Providers by CMS
h. Designation of National or Regional Intermediaries and Designation of Regional and Alternative Designated Regional Intermediaries for Home Health Agencies and Hospices
i. Awarding of Experimental Contracts
XIX. Reporting Quality Data for Improved Quality and Costs under the OPPS
XX. Promoting Effective Use of Health Information Technology
XXI. Health Care Information Transparency Initiative
XXII. Additional Quality Measures and Procedures for Hospital Reporting of Quality Data for the FY 2008 IPPS Annual Payment Update
A. Background
B. Additional Quality Measures for FY 2008
1. Introduction
2. HCAHPS Survey and the Hospital Quality Initiative
3. Surgical Care Improvement Project (SCIP) Quality Measures
4. Mortality Outcome Measures
C. General Procedures and Participation Requirements for the FY 2008 IPPS RHQDAPU Program
D. HCAHPS Procedures and Participation Requirements for the FY 2008 IPPS RHQDAPU Program
1. Introduction
2. HCAHPS Hospital Pledge and Beginning Date for Data Collection
3. HCAHPS Dry Run
4. HCAHPS Data Collection Requirements
5. HCAHPS Registration Requirements
6. Additional Steps for HCAHPS Participation
7. HCAHPS Survey Completion Requirements
8. HCAHPS Public Reporting
9. Reporting HCAHPS Results for Multi-Campus Hospitals
E. SCIP & Mortality Measure Requirements for the FY 2008 RHQDAPU Program
F. Conclusion
XXIII. Files Available to the Public Via the Internet
XXIV. Collection of Information Requirements
XXV. Response to Comments
XXVI. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Final Rule with Comment Period
1. Alternatives Considered
a. Alternatives Considered for Coding and Payment Policy for Visits
b. Alternatives Considered for Brachytherapy Source Payments
c. Alternatives Considered for Payment of Radiopharmaceuticals
2. Limitation of Our Analysis
3. Estimated Impact of This Final Rule with Comment Period on Hospitals
4. Estimated Effect of This Final Rule with Comment Period on Beneficiaries
5. Conclusion
6. Accounting Statement
C. Effects of Changes to the ASC Payment System for CY 2007
1. Alternatives Considered
2. Limitations on Our Analysis
3. Estimated Effects of This Final Rule with Comment Period on ASCs
4. Estimated Effects of This Final Rule with Comment Period on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of the Medicare Contracting Reform Mandate
E. Effects of Additional Quality Measures and Procedures for Hospital Reporting of Quality Data for IPPS FY 2008
1. Alternatives Considered
2. Estimated Effects of This Final Rule with Comment Period
a. Effects on Hospitals
b. Effects on Other Providers
c. Effects on the Medicare and Medicaid Program
F. Executive Order 12866
Regulation Text
Addenda
Addendum A—OPPS List of Ambulatory Payment Classification (APCs) with Status Indicators (SI), Relative Weights, Payment Rates, and Copayment Amounts—CY 2007
Addendum AA—List of Medicare Approved ASC Procedures for CY 2007 With Additions and Payment Rates; Including Rates That Result From Implementation of Section 5103 of the DRA
Addendum B—OPPS Payment Status By HCPCS Code and Related Information CY 2007
Addendum D1—Payment Status Indicators
Addendum D2—Comment Indicators
Addendum E—CPT Codes That Are Paid Only As Inpatient Procedures
Addendum L—Out-Migration Adjustment
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient Prospective Payment System
When the Medicare statute was originally enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the reasonable cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33), added section 1833(t)
to the Social Security Act (the Act) authorizing implementation of a PPS for hospital outpatient services (OPPS).
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Pub. L. 106-113), made major changes in the hospital OPPS. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. L. 106-554), made further changes in the OPPS. Section 1833(t) of the Act was also amended by the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-173). The Deficit Reduction Act (DRA) of 2005 (Pub. L. 109-171), enacted on February 8, 2006, made additional changes in the OPPS. A discussion of the provisions contained in Pub. L. 109-171 that are specific to the calendar year (CY) 2007 OPPS is included in section II.F. of this preamble.
The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR Part 419.
Under the OPPS, we pay for hospital outpatient services on a rate-per-service basis that varies according to the ambulatory payment classification (APC) group to which the service is assigned. We use Healthcare Common Procedure Coding System (HCPCS) codes (which include certain Current Procedural Terminology (CPT) codes) and descriptors to identify and group the services within each APC group. The OPPS includes payment for most hospital outpatient services, except those identified in section I.B. of this preamble. Section 1833(t)(1)(B)(ii) of the Act provides for Medicare payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by community mental health centers (CMHCs)) and hospital outpatient services that are furnished to inpatients who have exhausted their Part A benefits or who are otherwise not in a covered Part A stay. Section 611 of Pub. L. 108-173 added provisions for Medicare coverage of an initial preventive physical examination, subject to the applicable deductible and coinsurance, as an outpatient department service, payable under the OPPS.
The OPPS rate is an unadjusted national payment amount that includes the Medicare payment and the beneficiary copayment. This rate is divided into a labor-related amount and a nonlabor-related amount. The labor-related amount is adjusted for area wage differences using the inpatient hospital wage index value for the locality in which the hospital or CMHC is located.
All services and items within an APC group are comparable clinically and with respect to resource use (section 1833(t)(2)(B) of the Act). In accordance with section 1833(t)(2) of the Act, subject to certain exceptions, services and items within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the APC group is more than 2 times greater than the lowest median cost for an item or service within the same APC group (referred to as the “2 times rule”). In implementing this provision, we use the median cost of the item or service assigned to an APC group.
Special payments under the OPPS may be made for new technology items and services in one of two ways. Section 1833(t)(6) of the Act provides for temporary additional payments which we refer to as “transitional pass-through payments” for at least 2 but not more than 3 years for certain drugs, biological agents, brachytherapy devices used for the treatment of cancer, and categories of other medical devices. For new technology services that are not eligible for transitional pass-through payments and for which we lack sufficient data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as new technology APCs. These new technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a new technology APC is temporary; that is, we retain a service within a new technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.
B. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. Section 614 of Pub. L. 108-173 amended section 1833(t)(1)(B)(iv) of the Act to exclude OPPS payment for screening and diagnostic mammography services. The Secretary exercised the authority granted under the statute to exclude from the OPPS those services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Medicare Physician Fee Schedule (MPFS); laboratory services paid under the clinical diagnostic laboratory fee schedule; services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD composite rate; and, services and procedures that require an inpatient stay that are paid under the hospital inpatient prospective payment system (IPPS). We set forth the services that are excluded from payment under the OPPS in § 419.22 of the regulations.
Under § 419.20(b) of the regulations, we specify the types of hospitals and entities that are excluded from payment under the OPPS. These excluded entities include Maryland hospitals, but only for services that are paid under a cost containment waiver in accordance with section 1814(b)(3) of the Act; critical access hospitals (CAHs); hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; and Indian Health Service hospitals.
C. Prior Rulemaking
On April 7, 2000, we published in the
Federal Register
a final rule with comment period (65 FR 18434) to implement a prospective payment system for hospital outpatient services. The hospital OPPS was first implemented for services furnished on or after August 1, 2000. Section 1833(t)(9) of the Act requires the Secretary to review certain components of the OPPS not less often than annually and to revise the groups, relative payment weights, and other adjustments to take into account changes in medical practice, changes in technology, and the addition of new services, new cost data, and other relevant information and factors.
Since initially implementing the OPPS, we have published final rules in the
Federal Register
annually to implement statutory requirements and changes arising from our experience with this system. We last published such a document on November 10, 2005 (70 FR 68516). In that final rule with comment period, we revised the OPPS to update the payment weights and conversion factor for services payable under the CY 2006 OPPS on the basis of claims data from January 1, 2004, through December 31, 2004, and to implement certain provisions of Pub. L. 108-173. In addition, we responded to public comments received on the provisions of November 15, 2004 final rule with comment period pertaining to
the APC assignment of HCPCS codes identified in Addendum B of that rule with the new interim (NI) comment indicators; and public comments received on the July 25, 2005 OPPS proposed rule for CY 2006 (70 FR 42674).
We published a correction of the November 10, 2005 final rule with comment period on December 23, 2005 (70 FR 76176). This correction document corrected a number of technical errors that appeared in the November 10, 2005 final rule with comment period.
D. APC Advisory Panel
1. Authority of the APC Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of the BBRA, requires that we consult with an outside panel of experts to review the clinical integrity of the payment groups and their weights under the OPPS. The Act further specifies that the panel will act in an advisory capacity. The Advisory Panel on Ambulatory Payment Classification (APC) Groups (the APC Panel), discussed under section I.D.2. of this preamble, fulfills these requirements. The APC Panel is not restricted to using data compiled by CMS and may use data collected or developed by organizations outside the Department in conducting its review.
2. Establishment of the APC Panel
On November 21, 2000, the Secretary signed the initial charter establishing the APC Panel. This expert panel, which may be composed of up to 15 representatives of providers subject to the OPPS (currently employed full-time, not as consultants, in their respective areas of expertise), reviews and advises CMS about the clinical integrity of the APC groups and their weights. For purposes of this Panel, consultants or independent contractors are not considered to be full-time employees. The APC Panel is technical in nature and is governed by the provisions of the Federal Advisory Committee Act (FACA). Since its initial chartering, the Secretary has twice renewed the APC Panel's charter: on November 1, 2002, and on November 1, 2004. The current charter indicates, among other requirements, that the APC Panel continues to be technical in nature; is governed by the provisions of the FACA; may convene up to three meetings per year; has a Designated Federal Officer (DFO); and is chaired by a Federal official who also serves as a CMS medical officer.
The current APC Panel membership and other information pertaining to the Panel, including its charter,
Federal Register
notices, meeting dates, agenda topics, and meeting reports can be viewed on the CMS Web site at
http://www.cms.hhs.gov/FACA/ 05AdvisoryPanelonAmbulatory PaymentClassification Groups.as#TopOFPage.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27, February 28, and March 1, 2001. Since that initial meeting, the APC Panel has held 10 subsequent meetings, with the last meeting taking place on August 23 and 24, 2006. (The APC Panel did not meet on August 25, 2006, as announced in the meeting notice published on June 23, 2006 (71 FR 36118).) Prior to each meeting, we publish a notice in the
Federal Register
to announce the meeting and, when necessary, to solicit and announce nominations for APC Panel membership.
The APC Panel has established an operational structure that, in part, includes the use of three subcommittees to facilitate its required APC review process. The three current subcommittees are the Data Subcommittee, the Observation Subcommittee, and the Packaging Subcommittee. The Data Subcommittee is responsible for studying the data issues confronting the APC Panel and for recommending options for resolving them. The Observation Subcommittee reviews and makes recommendations to the APC Panel on all issues pertaining to observation services paid under the OPPS, such as coding and operational issues. The Packaging Subcommittee studies and makes recommendations on issues pertaining to services that are not separately payable under the OPPS, but are bundled or packaged APC payments. Each of these subcommittees was established by a majority vote of the APC Panel during a scheduled APC Panel meeting and their continuation as subcommittees was approved at the August 2006 APC Panel meeting. All subcommittee recommendations are discussed and voted upon by the full APC Panel.
Discussions of the recommendations resulting from the APC Panel's March 2006 and August 2006 meetings are included in the sections of this preamble that are specific to each recommendation. For discussions of earlier APC Panel meetings and recommendations, we reference previous hospital OPPS final rules or the Web site mentioned earlier in this section.
E. Provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003
The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003, Pub. L. 108-173, made changes to the Act relating to the Medicare OPPS. In the January 6, 2004 interim final rule with comment period and the November 15, 2004 final rule with comment period, we implemented provisions of Pub. L. 108-173 relating to the OPPS that were effective for services provided in CY 2004 and CY 2005, respectively. In the November 10, 2005 final rule with comment period, we implemented provisions of Pub. L. 108-173 relating to the OPPS that went into effect for services provided in CY 2006 (70 FR 68521). We note below those provision of Pub. L. 108-173 that will expire at the end of CY 2006.
1. Reduction in Threshold for Separate APCs for Drugs
Section 621(a)(2) of Pub. L. 108-173 amended section 1833(t)(16) of the Act to set a threshold of $50 per administration for the establishment of separate APCs for drugs and biologicals furnished from January 1, 2005, through December 31, 2006. Because this statutory provision will no longer be in effect for CY 2007, we have included in section V. of this preamble a discussion of the methodology that we will use to determine a threshold for establishing separate APCs for drugs and biologicals for CY 2007.
2. Special Payment for Brachytherapy
Section 621(b)(1) of Pub. L. 108-173 amended section 1833(t)(16) of the Act to require that payment for brachytherapy devices consisting of a seed or seeds (or radioactive source) furnished on or after January 1, 2004, and before January 1, 2007, be paid based on the hospital's charge for each device furnished, adjusted to cost. Because this statutory provision will no longer be in effect for CY 2007, we discuss our methodology for payment for brachytherapy devices for CY 2007 in section VII.B. of this preamble.
F. Provisions of the Deficit Reduction Act (DRA) of 2005
The Deficit Reduction Act (DRA) of 2005, Pub. L. 109-171, enacted on February 8, 2006, included three provisions affecting the OPPS, as discussed below.
1. 3-Year Transition of Hold Harmless Payments
Section 5105 of Pub. L. 109-171 provides a 3-year transition of hold harmless OPPS payments for hospitals
located in a rural area with not more than 100 beds that are not defined as sole community hospitals (SCHs). This provision provides an increased payment for such hospitals for covered OPD services furnished on or after January 1, 2006, and before January 1, 2009, if the OPPS payment they receive is less than the pre-BBA payment amount that they would have received for the same covered OPD services. This provision specifies that, in such cases, the amount of payment to the specified hospitals shall be increased by the applicable percentage of such difference. Section 5105 specifies the applicable percentage as 95 percent for CY 2006, 90 percent for CY 2007, and 85 percent for CY 2008. This provision is discussed in section II.F.1. of the preamble.
2. Medicare Coverage of Ultrasound Screening for Abdominal Aortic Aneurysms (AAAs)
Section 5112 of Pub. L. 109-171 amended section 1861 of the Act to include coverage of ultrasound screening for abdominal aortic aneurysms for certain individuals on or after January 1, 2007. The provision will apply to individuals (a) who receive a referral for such an ultrasound screening as a result of an initial preventive physical examination; (b) who have not been previously furnished with an ultrasound screening under Medicare; and (c) who have a family history of abdominal aortic aneurysm or manifest risk factors included in a beneficiary category recommended for screening (as determined by the United States Preventive Services Task Force). Ultrasound screening for abdominal aortic aneurysm will be included in the initial preventive physical examination. Section 5112 also added ultrasound screening for abdominal aortic aneurysm to the list of services for which the beneficiary deductible does not apply. These amendments apply to services furnished on or after January 1, 2007. See section XIII.B. of this preamble for a detailed discussion of this provision.
3. Colorectal Cancer Screening
Section 5113 of Pub. L. 109-171 amended section 1833(b) of the Act to add colorectal cancer screening to the list of services for which the beneficiary deductible does not apply. This provision applies to services furnished on or after January 1, 2007. See the Medicare Physician Fee Schedule (MPFS) CY 2007 final rule for a detailed discussion of this provision.
G. Summary of the Provisions of the CY 2007 OPPS Proposed Rule
On August 23, 2006, we published a proposed rule in the
Federal Register
(71 FR 49506) that set forth proposed changes to the Medicare hospital OPPS for CY 2007 to implement statutory requirements and changes arising from our continuing experience with the system and to implement certain provisions of Pub. L. 109-171 specified in sections II.F.1. and XIII.B. of this preamble. We also proposed to revise the standard for critical access hospital personnel that are allowed to perform emergency medical screenings. In addition, we proposed changes to the Medicare ASC payment system for CY 2007 and CY 2008 and to the way we process fee-for-service (FFS) claims under Medicare Part A and Part B.
Finally, we set forth a proposed rule seeking comments on the RHQDAPU program under the Medicare hospital IPPS for FY 2008. These changes will be effective for payments beginning with FY 2008. The following is a summary of the major changes included in the CY 2007 OPPS proposed rule:
1. Updates to the OPPS' Payments for CY 2007
In the proposed rule, we set forth—
• The methodology used to recalibrate the proposed APC relative payment weights and the proposed median costs for CY 2007.
• The proposed payment for partial hospitalization, including the proposed separate threshold for outlier payments for CMHCs.
• The proposed update to the conversion factor used to determine payment rates under the OPPS for CY 2007.
• The proposed retention of our current policy to apply the IPPS wage indices to wage adjust the APC median costs in determining the OPPS payment rate and the copayment standardized amount for CY 2007.
• The proposed update of statewide average default cost-to-charge ratios.
• Proposed changes relating to the hold harmless payment provision and § 419.70(d).
• Proposed changes relating to payment for rural SCHs, including Essential Access Community Hospitals (EACHs) for CY 2007.
• The proposed retention of our current policy for calculating hospital outpatient outlier payments for CY 2007.
• Calculation of the proposed national unadjusted Medicare OPPS payment.
• The proposed beneficiary copayment for OPPS services for CY 2007.
2. Ambulatory Payment Classification (APC) Group Policies
In the proposed rule, we discussed establishing a number of new APCs and making changes to the assignment of HCPCS codes under a number of existing APCs based on our analyses of Medicare claims data and recommendations of the APC Panel. We also discussed the application of the 2 times rule and proposed exceptions to it; proposed changes for specific APCs; proposed movement of procedures from the New Technology APCs; and the proposed additions of new procedure codes to the APC groups.
3. Payment Changes for Devices
In the proposed rule, we discussed proposed changes to the device-dependent APCs and to payment for pass-through devices. We also discussed the proposed payment policy for devices that are replaced without cost or credit to the hospital for a replaced device and the proposed related regulation under § 419.45.
4. Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals
In the proposed rule, we discussed proposed payment changes for drugs, biologicals, and radiopharmaceuticals.
5. Estimate of Transitional Pass-Through Spending in CY 2007 for Drugs, Biologicals, and Devices
In the proposed rule, we discussed the proposed methodology for estimating total pass-through spending and whether there should be a pro rata reduction for transitional pass-through drugs, biologicals, radiopharmaceuticals, and categories of devices for CY 2007.
6. Brachytherapy Payment Changes
In the proposed rule, we included a discussion of our proposal concerning coding and payment for the sources of brachytherapy.
7. Coding and Payment for Drugs Administration
In the proposed rule, we discussed our proposed coding and payment changes for drug administration services.
8. Hospital Coding and Payments for Visits
In the proposed rule, we discussed our analyses of various guidelines for coding hospital visits and the proposed HCPCS codes and payment policy for those visits.
9. Payment for Blood and Blood Products
In the proposed rule, we discussed our proposed criteria and coding changes for the blood and blood products.
10. Payment for Observation Services
In the proposed rule, we discussed our proposed continuation of applying the criteria for separate payment for observation services and the coding methodology for observation services implemented in CY 2006.
11. Procedures That Will Be Paid Only as Inpatient Services
In the proposed rule, we discussed the procedures that we proposed to remove from the inpatient list and assign to APCs.
12. Nonrecurring Policy Changes
In the proposed rule, we discussed a proposed technical change to § 419.21(d) of the regulations related to Comprehensive Outpatient Rehabilitation Facility (CORF) services and proposed coding and payment for ultrasound screening for abdominal aortic aneurysms (AAAs) as a new service paid under the OPPS in CY 2007.
13. Emergency Medical Screening in Critical Access Hospitals (CAHs)
In the proposed rule, we discussed our proposal to revise § 485.618(d) of the regulations pertaining to the standards for critical access hospital personnel available to perform emergency medical screening services.
14. Payment Status and Comment Indicator Assignments
In the proposed rule, we discussed our list of status indicators assigned to APCs and presented our comment indicators that we proposed to use in this final rule with comment period.
15. OPPS Policy and Payment Recommendations
In the proposed rule, we addressed recommendations made by MedPAC, the APC Panel, and the GAO regarding the OPPS for CY 2007.
16. Policies Affecting Ambulatory Surgical Centers (ASCs) for CY 2007
In the proposed rule, we discussed changes to the ASC list of covered procedures for CY 2007; implementation of section 5103 of Pub. L. 108-173; our proposal for modifying the current ASC process for adjusting payment for new technology intraocular lenses; and related regulatory changes.
17. Revised ASC Payment System for Implementation January 1, 2008
In the proposed rule, we set forth our proposal to revise the current ASC payment system in accordance with Pub. L. 108-173, effective January 1, 2008. We note that we are not finalizing this proposal in this final rule with comment period. Rather, we will issue a separate document in the
Federal Register
that will address public comments received and finalize the ASC payment system effective January 1, 2008.
18. Medicare Contracting Reform Mandate
In the proposed rule, we set forth changes to the way we process FFS claims under Medicare Part A and Part B.
19. Reporting Quality Data for Improved Quality and Costs Under the OPPS
In the proposed rule, we proposed to adapt the quality improvement mechanism provided by the IPPS RHQDAPU program for use under the OPPS.
20. Promoting Effective Use of Health Information Technology
In the proposed rule, we discussed our plans to promote and adopt effective use of health information technology to improve the quality of care for Medicare beneficiaries.
21. Health Care Information Transparency Initiative
In the proposed rule, we announced our plans to launch a major health care transparency initiative in 2006.
22. Additional Quality Measures and Procedures for Hospital Reporting of Quality Data for FY 2008 IPPS Annual Payment Update
In the proposed rule, we discussed our proposal to expand the IPPS Reporting Hospital Quality Data for Annual Payment program measurement set for FY 2008 beyond the measures adopted for the FY 2007 IPPS update.
23. Impact Analysis
In the proposed rule, we set forth an analysis of the impact that the proposed changes will have on affected entities and beneficiaries.
H. Public Comments Received in Response to the CY 2007 OPPS Proposal Rule and on the Reporting Hospital Quality Data for FY 2008 IPPS Annual Payment Update Program—HCAHPS Survey, SCIP, and Mortality Proposed Rule
We received approximately 1,100 timely items of correspondence containing multiple comments on the CY 2007 OPPS proposed rule. We note that we received some comments that were outside of the scope of the CY 2007 OPPS proposed rule. These comments are not addressed in the CY 2007 final rule. We also received approximately 20 timely items of correspondence on Reporting Hospital Quality Data for FY 2008 Inpatient Prospective Payment System Annual Payment Update Program—HCAHPS Survey, SCIP, and Mortality proposed rule. Summaries of the public comments and our responses to those comments are set forth under the appropriate headings.
I. Public Comments Received on the November 10, 2005 OPPS Final Rule with Comment Period
We received approximately 41 timely items of correspondence on the November 10, 2005 OPPS final rule with comment period, some of which contained multiple comments on the APC assignment of HCPCS codes identified with the NI comment indicator in Addendum B of that final rule with comment period. Summaries of those public comments and our responses to those comments are set forth in the various sections under the appropriate headings.
II. Updates Affecting OPPS Payments for CY 2007
A. Recalibration of APC Relative Weights for CY 2007
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review and revise the relative payment weights for APCs at least annually. In the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000, for each APC group. Except for some reweighting due to a small number of APC changes, these relative payment weights continued to be in effect for CY 2001. This policy is discussed in the November 13, 2000 interim final rule (65 FR 67824 through 67827).
In the CY 2007 OPPS proposed rule, we proposed to use the same basic methodology that we described in the April 7, 2000 final rule with comment period to recalibrate the APC relative payment weights for services furnished on or after January 1, 2007, and before January 1, 2008. That is, we would recalibrate the relative payment weights for each APC based on claims and cost report data for outpatient services. We proposed to use the most recent available data to construct the database for calculating APC group weights. For the purpose of recalibrating the APC relative payment weights for CY 2007, we used approximately 142.5 million final action claims for hospital OPD services furnished on or after January 1, 2005, and before January 1, 2006. Of the 142.5 million final action claims for services provided in hospital outpatient settings, 110.2 million claims were of the type of bill potentially appropriate for use in setting rates for OPPS services (but did not necessarily contain services payable under the OPPS). Of the 110.2 million claims, approximately 51.7 million were not for services paid under the OPPS or were excluded as not appropriate for use (for example, erroneous cost-to-charge ratios or no HCPCS codes reported on the claim). We were able to use 54.1 million whole claims of the remaining 58.5 million claims to set the OPPS APC relative weights for CY 2007 OPPS. From the 54.1 million whole claims, we created 98.5 million single records, of which 68.5 million were “pseudo” single claims (created from multiple procedure claims using the process we discuss in this section).
As proposed, the final APC relative weights and payments for CY 2007 in Addenda A and B to this final rule with comment period were calculated using claims from this period that had been processed before June 30, 2006, and continue to be based on the median hospital costs for services in the APC groups. We selected claims for services paid under the OPPS and matched these claims to the most recent cost report filed by the individual hospitals represented in our claims data.
Comment:
Several commenters supported the use of the most recent claims and cost report data to calculate the median costs for use in the CY 2007 OPPS.
Response:
We appreciate the commenters' support and have used the claims for services paid under the CY 2005 OPPS as processed through the common working file as of June 30, 2006, in the calculation of the median costs on which the CY 2007 OPPS rates are based. In addition, we have used the most recently submitted cost report data as reported to the HCRIS system as of June 30, 2006, to calculate the cost-to-charge ratios (CCRs) used to reduce the billed charges to costs for purposes of calculating the median costs on which the CY 2007 OPPS rates are based.
After carefully considering all comments received, we are finalizing our data source and methodology for the recalibration of CY 2007 APC relative payment weights as proposed without modification, as described in this section.
b. Use of Single and Multiple Procedure Claims
For CY 2007, we proposed to continue to use single procedure claims to set the medians on which the APC relative payment weights would be based. We have received many requests asking that we ensure that the data from claims that contain charges for multiple procedures are included in the data from which we calculate the relative payment weights. Requesters believe that relying solely on single procedure claims to recalibrate APC relative payment weights fails to take into account data for many frequently performed procedures, particularly those commonly performed in combination with other procedures. They believe that, by depending upon single procedure claims, we base relative payment weights on the least costly services, thereby introducing downward bias to the medians on which the weights are based.
We agree that, optimally, it is desirable to use the data from as many claims as possible to recalibrate the APC relative payment weights, including those with multiple procedures. We generally use single procedure claims to set the median costs for APCs because we are, so far, unable to ensure that packaged costs can be appropriately allocated across multiple procedures performed on the same date of service. However, by bypassing specified codes that we believe do not have significant packaged costs, we are able to use more data from multiple procedure claims. In many cases, this enables us to create multiple “pseudo” single claims from claims that, as submitted, contained multiple separately paid procedures on the same claim. For the CY 2007 OPPS, we proposed to use the date of service on the claims and a list of codes to be bypassed to create “pseudo” single claims from multiple procedure claims, as we did in recalibrating the CY 2006 APC relative payment weights. We refer to these newly created single procedure claims as “pseudo” single claims because they were submitted by providers as multiple procedure claims.
For CY 2003, we created “pseudo” single claims by bypassing HCPCS codes 93005 (Electrocardiogram, tracing), 71010 (Chest x-ray), and 71020 (Chest x-ray) on a submitted claim. However, we did not use claims data for the bypassed codes in the creation of the median costs for the APCs to which these three codes were assigned because the level of packaging that would have remained on the claim after we selected the bypass code was not apparent and, therefore, it was difficult to determine if the medians for these codes would be correct.
For CY 2004, we created “pseudo” single claims by bypassing these three codes and also by bypassing an additional 269 HCPCS codes in APCs. We selected these codes based on a clinical review of the services and because it was presumed that these codes had only very limited packaging and could appropriately be bypassed for the purpose of creating “pseudo” single claims. The APCs to which these codes were assigned were varied and included mammography, cardiac rehabilitation, and Level I plain film x-rays. To derive more “pseudo” single claims, we also split the claims where there were dates of service for revenue code charges on that claim that could be matched to a single procedure code on the claim on the same date.
For the CY 2004 OPPS, as in CY 2003, we did not include the claims data for the bypassed codes in the creation of the APCs to which the 269 codes were assigned because, again, we had not established that such an approach was appropriate and would aid in accurately estimating the median costs for those APCs. For CY 2004, from approximately 16.3 million otherwise unusable claims, we used approximately 9.5 million multiple procedure claims to create approximately 27 million “pseudo” single claims. For CY 2005, we identified 383 bypass codes and from approximately 24 million otherwise unusable claims, we used approximately 18 million multiple procedure claims to create approximately 52 million “pseudo” single claims. For CY 2005, we used the claims data for the bypass codes combined with the single procedure claims to set the median costs for the bypass codes.
For CY 2006, we continued using the codes on the CY 2005 OPPS bypass list and expanded it to include 404 bypass codes, including 3 bladder catheterization codes (CPT codes 51701, 51702, and 51703), which did not meet the empirical criteria discussed below for the selection of bypass codes. We added these three codes to the CY 2006
bypass list because a decision to change their payment status from packaged to separately paid would have resulted in a reduction of the number of single bills on which we could base median costs for other major separately paid procedures that were billed on the same claim with these three procedure codes. That is, single bills which contained other procedures would have become multiple procedure claims when these bladder catheterization codes were converted to separately paid status. We believed and continue to believe that bypassing these three codes does not adversely affect the medians for other procedures because we believe that when these services are performed on the same day as another separately paid service, any packaging that appears on the claim would be appropriately associated with the other procedure and not with these codes.
Consequently, for CY 2006, we identified 404 bypass codes for use in creating “pseudo” single claims and used some part of 90 percent of the total claims that were eligible for use in OPPS ratesetting and modeling in developing the final rule with comment period. This process enabled us to use, for the CY 2006 OPPS, 88 million single bills for ratesetting: 55 million “pseudo” singles and 34 million “natural” single bills (bills that were submitted containing only one separately payable major HCPCS code). (These numbers do not sum to 88 million because more than 800,000 single bills were removed when we trimmed at the HCPCS level at +/-3 standard deviations from the geometric mean.)
For CY 2007, we proposed to continue using date-of-service matching as a tool for creation of “pseudo” single claims and to continue the use of a bypass list to create “pseudo” single claims. The process we proposed for the CY 2007 OPPS resulted in our being able to use some part of 92.6 percent of the total claims that are eligible for use in the OPPS ratesetting and modeling in developing this final rule with comment period. This process enabled us to use, for CY 2007, 68.5 million “pseudo” singles and 31.6 million “natural” single bills.
We proposed to bypass the 454 codes identified in Table 1 of the proposed rule (71 FR 49517) to create new single claims and to use the line-item costs associated with the bypass codes on these claims, together with the single procedure claims, in the creation of the median costs for the APCs into which they are assigned. Of the codes on this list, 404 codes were used for bypass in CY 2006. We proposed to continue the use of the codes on the CY 2006 OPPS bypass list and to expand it by adding codes that, using data presented to the APC Panel at its March 2006 meeting, meet the same empirical criteria as those used in CY 2006 to create the bypass list, or which our clinicians believe would contain minimal packaging if the services were correctly coded (for example, ultrasound guidance). (Bypass codes shown in Table 1 with an asterisk indicated the HCPCS codes we proposed to add to the CY 2006 OPPS listed codes for bypass in CY 2007.) Our examination of the data against the criteria for inclusion on the bypass list, as discussed below for the addition of new codes, shows that the empirically selected codes used for bypass for the CY 2006 OPPS generally continue to meet the criteria or come very close to meeting the criteria, and we have received no comments against bypassing them.
As proposed, the following empirical criteria that we used to determine the additional codes to add to the CY 2006 OPPS bypass list to create the bypass list for the CY 2007 OPPS were developed by reviewing the frequency and magnitude of packaging in the single claims for payable codes other than drugs and biologicals. We assumed that the representation of packaging on the single claims for any given code is comparable to packaging for that code in the multiple claims:
• There were 100 or more single claims for the code. This number of single claims ensured that observed outcomes were sufficiently representative of packaging that might occur in the multiple claims.
• Five percent or fewer of the single claims for the code had packaged costs on that single claim for the code. This criterion results in limiting the amount of packaging being redistributed to the payable procedure remaining on the claim after the bypass code is removed and ensures that the costs associated with the bypass code represent the cost of the bypassed service.
• The median cost of packaging observed in the single claims was equal to or less than $50. This limits the amount of error in redistributed costs.
• The code is not a code for an unlisted service.
In addition, we proposed to add to the bypass list codes that our clinicians believe contain minimal packaging and codes for specified drug administration services for which hospitals have requested separate payment but for which it is not possible to acquire median costs unless we add these codes to the bypass list. A more complete discussion of the effects of adding these drug administration codes to the bypass list is contained in the discussion of drug administration payment changes in section VIII.C. of this preamble.
In the CY 2007 OPPS proposed rule, we specifically invited public comment on the “pseudo” single process, including the bypass list and the criteria.
Comment:
The commenters urged CMS to continue to find ways to use all data from multiple procedure claims to set the median costs on which the payment rates are based. Many commenters supported the bypass list as a vehicle to enable use of all claims data. However, some commenters were concerned that placing HCPCS codes on the bypass list would lead to those codes being undervalued because no packaging from the multiple procedure bill is attributed to them. These commenters urged CMS to validate that these services were not being systematically undervalued by being bypassed and thus having many units of the service used for median setting with no attribution of packaging to the code. In many cases, the commenters did not offer specific discussion of what packaging they believe would be appropriately attached to the codes on the bypass list. One commenter suggested that CMS add CPT code 77421 (Steroscopic X-ray guidance for localization of target volume for the delivery of radiation therapy) to secure more single procedure claims data for median setting. Another commenter asked that CMS add CPT code 88307 (Level V-Surgical pathology, gross and microscopic examination) to the bypass list because it would be consistent with the inclusion of CPT codes 88304 (Level III-Surgical pathology, gross and microscopic examination) and 88305 (Level IV-Surgical pathology, gross and microscopic examination) on the bypass list.
Response:
We agree that the bypass list has been very useful in enabling us to use data from multiple procedure claims to set median costs for many services. The use of date of service stratification and the bypass list enabled us to create 68.5 million “pseudo” single claims that would not otherwise have been used to set median costs for the CY 2007 OPPS. However, we recognize that it is necessary to be cautious in this approach to minimize the possibility that we could mistakenly apply packaging on the claim to the wrong service. For that reason, each year we investigate the amount of packaging on natural single bills and consider whether changes should be made to the bypass list. However, in some cases, we know that the natural single bills are incorrect, and it is not
reasonable to base a decision on their level of packaging from what we believe are incorrectly coded claims. In these cases, we use clinical judgment to determine whether, on a correctly coded claim, the packaging would be associated with the code as defined or whether the packaging would more appropriately be associated with other procedures. For example, a single procedure bill for an ultrasound guidance service which is used only for guidance during an associated surgical procedure would not be correctly coded and therefore, clinically, we would not expect the packaged costs observed on these single claims to be correctly attributed to the guidance procedure. We believe that the ultrasound guidance procedure itself could not be the service that required the drugs, devices, or operating room use that would usually also be billed on a correctly coded claim. In these cases, we would place the ultrasound guidance procedure on the bypass list and attribute the packaged costs that appear on the same claim to the surgical procedure on the claim.
We have been actively investigating options for using all claims data in the establishment of median costs, and we intend to be ready to discuss our findings in the CY 2008 OPPS proposed rule. With respect to the suggestions for additions to the bypass list, we will evaluate the potential for adding CPT codes 77421 and 88307 to the bypass list for purposes of the CY 2008 OPPS ratesetting.
Comment:
One commenter asked that CMS use all claims data on multiple procedure claims by allocating the packaging on a claim with multiple surgical procedures based on the currently existing relative weights to create “pseudo” single claims from all multiple procedure claims. The commenter suggested that if CMS is concerned about that process causing the weights being calculated to not reflect changes in cost, CMS might use this process only in cases in which the number of units for HCPCS codes on natural single bills are below some tolerance so that these claims would be used only on low volume procedures.
Response:
We are concerned that use of the current relative weights to allocate the packaging on multiple procedure claims may cause packaging to be allocated inappropriately in some cases. As we indicate above, we are continuing to explore ways that packaging could be allocated on multiple procedure claims in such a way that we would have confidence in the allocation.
Comment:
One commenter requested that CMS remove CPT code 76942 (Ultrasonic guidance for needle placement (eg biopsy, aspiration, injection, localization device), imaging supervision and interpretation) from the bypass list, because the commenter believed it would raise the median cost for APC 0268, the APC where CPT code 76942 is assigned for CY 2007. According to the commenter, the natural single claims for CPT code 76942 have a higher median cost than the “pseudo” single claims. The commenter indicated that when all packaged costs are removed from the natural singles, their median is close to the median for the “pseudo” single claims. If removing this code from the bypass list altogether results in too few “pseudo” single claims, the commenter requested that CMS calculate the median cost for APC 0268 using only natural single claims.
Response:
We agree with the commenter that the median of APC 0268 is higher with the exclusion of “pseudo” singles that are created from claims that include CPT code 76942 than it would be if we only used true single claims that include CPT code 76942. However, we believe that the single bills for CPT code 76942 are miscoded and, therefore, inappropriately attribute the procedural costs (for example, the needle placement for biopsy and injection) to ultrasound guidance rather than the biopsy or aspiration procedures. We note that CPT code 76942 is the code with the highest frequency in APC 0268 and, therefore, contributes greatly to the median cost of the APC. The commenter provided no information regarding the specific packaging associated with CPT code 76942; therefore, we continue to believe that its inclusion on the bypass list, and the resulting calculation of the APC median cost for APC 0268, is appropriate.
After carefully considering all public comments received on our proposal, we are adopting as final the proposed “pseudo” single process and the bypass codes listed in Table 1.
BILLING CODE 4120-01-P
ER24NO06.000
ER24NO06.001
ER24NO06.002
ER24NO06.003
ER24NO06.004
ER24NO06.005
ER24NO06.006
ER24NO06.007
ER24NO06.008
ER24NO06.009
ER24NO06.010
ER24NO06.011
BILLING CODE 4120-01-C
c. Revised Overall Cost-to-Charge Ratio (CCR) Calculation
We calculate both an overall CCR and cost center-specific cost-to-charge ratios (CCRs) for each hospital. For the CY 2007 OPPS, we proposed to change the methodology for calculating the overall CCR. The overall CCR is used in many components of the OPPS. We use the overall CCR to estimate costs from charges on a claim when we do not have an accurate cost center CCR. This does not happen very often. For the vast majority of services, we are able to use a cost center CCR to estimate costs from charges. However, we also use the overall CCR to identify the outlier threshold, to model payments for services that are paid at charges reduced to cost, and, during implementation, to determine outlier payments and payments for other services.
As stated in the CY 2007 OPPS proposed rule (71 FR 49528), we have discovered that the calculation of the overall CCR that the fiscal intermediaries are using to determine outlier payments and payments for services paid at charges reduced to cost differs from the overall CCR that we use to model the OPPS. In Program Transmittal A-03-04 on “Calculating Provider-Specific Outpatient Cost-to-Charge Ratios (CCRs) and Instructions on Cost Report Treatment of Hospital Outpatient Services Paid on a Reasonable Cost Basis” (January 17, 2003), we revised the overall CCR calculation that the fiscal intermediaries use in determining outlier and other cost payments. Until this point, each fiscal intermediary had used an overall CCR provided by CMS, or calculated an updated CCR at the provider's request using the same calculation. The calculation in Program Transmittal A-03-04, that is, the fiscal intermediary calculation, diverged from the “traditional” overall CCR that we used for modeling. It should be noted that the fiscal intermediary overall CCR calculation noted in Program Transmittal A-03-04 was created with feedback and input from the fiscal intermediaries.
CMS' “traditional” calculation consists of summing the total costs from Worksheet B, Part I (Column 27), after removing the costs for nursing and paramedical education (Columns 21 and 24), for those ancillary cost centers that we believe contain most OPPS services, summing the total charges from Worksheet C, Part I (Columns 6 and 7) for the same set of ancillary cost centers, and dividing the former by the latter. We exclude selected ancillary cost centers from our overall CCR calculation, such as 5700 Renal Dialysis, because we believe that the costs and
charges in these cost centers are largely paid for under other payment systems. The specific list of ancillary cost centers, both standard and nonstandard, included in our overall CCR calculation is available on our Web site in the revenue center-to-cost center crosswalk workbook:
http://www.cms.hhs.gov/HospitalOutpatientPPS.
The overall CCR calculation provided in Program Transmittal A-03-04, on the other hand, takes the CCRs from Worksheet C, Part I, Column 9, for each specified ancillary cost center; multiplies them by the Medicare Part B outpatient specific charges in each corresponding ancillary cost center from Worksheet D, Part V (Columns 2, 3, 4, and 5 and subscripts thereof); and then divides the sum of these costs by the sum of charges for the specified ancillary cost centers from Worksheet D, Part V (Columns 2, 3, 4, and 5 and subscripts thereof). The elimination of the reference to Part VI in this final rule with comment period is not a change from the proposed methodology. We used only data from Worksheet D, Part V of the HCRIS electronic cost report to calculate the overall CCRs for both the proposed rule and final rule with comment period. We previously referenced both Part V and Part VI in the proposed rule and in prior rules because both Part V and Part VI appear on the same page in Worksheet D on the paper cost report, although no data from Part VI on the electronic cost report were used in the calculation.
Compared with our “traditional” overall CCR calculation that has been used for modeling OPPS and to calculate the median costs, this fiscal intermediary calculation of overall CCR fails to remove allied health costs and adds weighting by Medicare Part B charges.
In comparing these two calculations, we discovered that, on average, the overall CCR calculation being used by the fiscal intermediaries resulted in higher overall CCRs than under our “traditional” calculation. Using the most recent cost report data available for every provider with valid claims for CY 2004 as of November 2005, we estimated the median overall CCR using the traditional calculation to be 0.3040 (mean 0.3223) and the median overall CCR using the fiscal intermediary calculation to be 0.3309 (mean 0.3742). There also was much greater variability in the fiscal intermediary calculation of the overall CCR. The standard deviation under the “traditional” calculation was 0.1318, while the standard deviation using the fiscal intermediary's calculation was 0.2143. In part, the higher median estimate for the fiscal intermediary calculation is attributable to the inclusion of allied health costs for the over 700 hospitals with allied health programs. It is inappropriate to include these costs in the overall CCR calculation, because CMS already reimburses hospitals for the costs of these programs through cost report settlement. The higher median estimate and greater variability also is a function of the weighting by Medicare Part B charges. Because the fiscal intermediary overall CCR calculation is higher, on average, CMS has underestimated the outlier payment thresholds and, therefore, overpaid outlier payments. We also have underestimated spending for services paid at charges reduced to cost in our budget neutrality estimates.
In examining the two different calculations, we decided that elements of each methodology had merit. Clearly, as noted above, allied health costs should not be included in an overall CCR calculation. However, weighting by Medicare Part B charges from Worksheet D, Part V, makes the overall CCR calculation more specific to OPPS. Therefore, we proposed to adopt a single overall CCR calculation that incorporates weighting by Medicare Part B charges but excludes allied health costs for modeling and payment. Specifically, the proposed calculation removes allied health costs from cost center CCR calculations for specified ancillary cost centers, as discussed above, multiplies them by the Medicare Part B charges on Worksheet D, Part V, and sums these estimated Medicare costs. This sum is then divided by the sum of the same Medicare Part B charges for the same specified set of ancillary cost centers.
As we indicated in the proposed rule (71 FR 49528), using the same cost report data in this study, we estimated a median overall CCR for the proposed calculation of 0.3081 (mean 0.3389) with a standard deviation of 0.1583. The similarity to the median and standard deviation of the “traditional” overall CCR calculation noted above (median 0.3040 and standard deviation of 0.1318) masks some sizeable changes in overall CCR calculations for specific hospitals due largely to the inclusion of Medicare Part B weighting.
In order to isolate the overall impact of adopting this methodology on APC medians, we used the first 9 months of CY 2005 claims data to estimate APC median costs varying only the two methods of determining overall CCR. As stated in the CY 2007 OPPS proposed rule (71 FR 49528), we expected the impact to be limited because the majority of costs are estimated using a cost center-specific CCR and not the overall. As predicted, we observed minor changes in APC median costs from the adoption of the proposed overall CCR calculation. We largely observed differences of no more than 5 percent in either direction. The median overall percent change in APC cost estimates was −0.3 percent. We typically observe comparable changes in APC medians when we update our cost report data. Using updated cost report data for the calculations in this final rule with comment period, we estimate a median overall CCR across all hospitals of 0.3015 using the new overall CCR calculation.
We believe that a single overall CCR calculation should be used for all components of the OPPS for both modeling and payment. Therefore, we proposed to use the modified overall CCR calculation as discussed above when the hospital-specific overall CCR is used for any of the following calculations: in the CMS calculation of median costs for OPPS ratesetting, in the CMS calculation of the outlier threshold, in the fiscal intermediary calculation of outlier payments, in the CMS calculation of statewide CCRs, in the fiscal intermediary calculation of pass-through payments for devices, and for any other fiscal intermediary payment calculation in which the current hospital-specific overall CCR may be used now or in the future.
Comment:
Several commenters supported the proposed change to the calculation of the overall CCR to be weighted by Part B charges and to exclude the costs of nursing and allied health professional education programs. One commenter asked that CMS provide examples at the line level of how the revenue code to cost center crosswalk is applied to sample claims to illustrate to hospitals how selection of the revenue code for any particular item or service controls the resulting cost that is used in median calculation. The commenter also asked that CMS instruct fiscal intermediaries to allow hospitals to reclassify expense and revenue whenever the hospital believes it is appropriate, to ensure that the charges on the claim result in appropriate costs for median setting and order the fiscal intermediaries not to reverse reclassification of costs in audit adjustments. The commenter also suggested that CMS should have fiscal intermediaries conduct a survey of their audit staff with regard to the validity of the revenue code to cost center crosswalk.
Response:
We continue to believe that the proposed change to the CCR calculation is appropriate, and we have used the revised formula to calculate the
overall CCRs used to set the medians on which the CY 2007 payment rates are based.
With respect to the request for detailed examples to illustrate how selection of a revenue code will control the cost that is used in the median calculation, we believe that hospitals, like any business, are responsible for performing their own analysis regarding issues that affect their revenue stream. We have gone to great lengths in the preamble of our proposed and final rules to discuss how we derive costs from charges and how we crosswalk the charge from the revenue code reported for the charge to the cost center on the cost report. Moreover, the revenue code to cost center crosswalk has been on the CMS Web site for several years, open continuously to public comment. We do not believe it is necessary to create and publish examples at the claim-line level to further elaborate on how we convert charges to costs for purposes of establishing median costs. Hospitals that are interested should have sufficient information available already on this topic. Moreover, Medicare auditing rules have been well-established and standardized over many years, and we rely on our contractors to enforce them appropriately.
Comment:
One commenter suggested that CMS study the crosswalk that is used in the completion of the Provider Statistical and Reimbursement Report (PS&R) to determine whether changes to the CMS crosswalk of revenue codes to cost centers might be appropriate. Specifically, the commenter suggested the following revisions: Revenue code 0413 (hyperbaric oxygen therapy) should be crosswalked to the hospital overall CCR; Revenue code 026X (IV therapy) could have cost center 5600 (Drugs charges to patients) as the secondary default CCR before defaulting to the overall CCR; Revenue code 046X (Pulmondary therapy) should have cost center 4600 (respiratory therapy) as secondary and cost center 3160 as tertiary; and Revenue code 074X (EEG) should have cost center 5400 (EEG) as primary and cost center 3280 (EKG and EEG) as secondary.
Response:
We have not made any changes in response to the commenter's suggestions for CY 2007. However, we will carefully examine the commenter's suggestions with regard to the calculation of CCRs for the CY 2008 OPPS.
After carefully considering all the public comments received, we are adopting our proposal for CY 2007 without modification. As stated in the CY 2007 proposed rule (71 FR 49529), we will issue a Medicare program instruction to fiscal intermediaries that will instruct them to recalculate and use the hospital-specific overall CCR as we have finalized for the above stated purposes.
2. Calculation of Median Costs for CY 2007
In this section of the preamble, we discuss the use of claims to calculate the proposed OPPS payment rates for CY 2007. The hospital outpatient prospective payment page on the CMS Web site on which this final rule with comment period is posted provides an accounting of claims used in the development of the final rates:
http://www.cms.hhs.gov/HospitalOutpatientPPS.
The accounting of claims used in the development of this final rule with comment period is included on the Web site under supplemental materials for the CY 2007 final rule with comment period. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, below we discuss the files of claims that comprise the data sets that are available for purchase under a CMS data user contract. Our CMS Web site,
http://www.cms.hhs.gov/HospitalOutpatientPPS,
includes information about purchasing the following two OPPS data files: “OPPS Limited Data Set” and “OPPS Identifiable Data Set.”
As proposed, we used the following methodology to establish the relative weights to be used in calculating the OPPS payment rates for CY 2007 shown in Addenda A and B to this final rule with comment period. This methodology is as follows:
We used outpatient claims for the full CY 2005, processed before June 30, 2006, to set the relative weights for CY 2007. To begin the calculation of the relative weights for CY 2007, we pulled all claims for outpatient services furnished in CY 2005 from the national claims history file. This is not the population of claims paid under the OPPS, but all outpatient claims (including, for example, CAH claims, and hospital claims for clinical laboratory services for persons who are neither inpatients nor outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77. These are claims that providers submitted to Medicare knowing that no payment will be made. For example, providers submit claims with a condition code 21 to elicit an official denial notice from Medicare and document that a service is not covered. We then excluded claims for services furnished in Maryland, Guam, and the U.S. Virgin Islands, American Samoa, and the Northern Marianas because hospitals in those geographic areas are not paid under the OPPS.
We divided the remaining claims into the three groups shown below. Groups 2 and 3 comprise the 110 million claims that contain hospital bill types paid under the OPPS.
1. Claims that were not bill types 12X, 13X, 14X (hospital bill types), or 76X (CMHC bill types). Other bill types are not paid under the OPPS and, therefore, these claims were not used to set OPPS payment.
2. Claims that were bill types 12X, 13X, or 14X (hospital bill types). These claims are hospital outpatient claims.
3. Claims that were bill type 76X (CMHC). (These claims are later combined with any claims in item 2 above with a condition code 41 to set the per diem partial hospitalization rate determined through a separate process.)
For the CCR calculation process, we used the same general approach as we used in developing the final APC rates for CY 2006 (70 FR 68537), with a change to the development of the overall CCR as discussed above. That is, we first limited the population of cost reports to only those for hospitals that filed outpatient claims in CY 2005 before determining whether the CCRs for such hospitals were valid.
We then calculated the CCRs at a cost center level and overall for each hospital for which we had claims data. We did this using hospital-specific data from the Healthcare Cost Report Information System (HCRIS). We used the most recent available cost report data, in most cases, cost reports for CY 2004. As proposed, for this final rule with comment period, we used the most recently submitted cost report to calculate the CCRs to be used to calculate median costs for the CY 2007 OPPS. If the most recent available cost report was submitted but not settled, we looked at the last settled cost report to determine the ratio of submitted to settled cost using the overall CCR, and we then adjusted the most recent available submitted but not settled cost report using that ratio. We calculated both an overall CCR and cost center-specific CCRs for each hospital. We used the final overall CCR calculation discussed in II.A.1.c. of this preamble for all purposes that require use of an overall CCR.
We then flagged CAH claims, which are not paid under the OPPS, and claims from hospitals with invalid CCRs. The latter included claims from hospitals without a CCR; those from hospitals paid an all-inclusive rate; those from
hospitals with obviously erroneous CCRs (greater than 90 or less than .0001); and those from hospitals with CCRs that were identified as outliers (3 standard deviations from the geometric mean after removing error CCRs). In addition, we trimmed the CCRs at the cost center level by removing the CCRs for each cost center as outliers if they exceeded ±3 standard deviations from the geometric mean. This is the same methodology that we used in developing the final CY 2006 CCRs. For CY 2007, we proposed to trim at the departmental CCR level to eliminate aberrant CCRs that, if found in high volume hospitals, could skew the medians. We used a four-tiered hierarchy of cost center CCRs to match a cost center to every possible revenue code appearing in the outpatient claims, with the top tier being the most common cost center and the last tier being the default CCR. If a hospital's cost center CCR was deleted by trimming, we set the CCR for that cost center to “missing,” so that another cost center CCR in the revenue center hierarchy could apply. If no other departmental CCR could apply to the revenue code on the claim, we used the hospital's overall CCR for the revenue code in question. For example, if a visit was reported under the clinic revenue code, but the hospital did not have a clinic cost center, we mapped the hospital-specific overall CCR to the clinic revenue code. The hierarchy of CCRs is available for inspection and comment at the CMS Web site:
http://www.cms.hhs.gov/HospitalOutpatientPPS
.
We then converted the charges to costs on each claim by applying the CCR that we believed was best suited to the revenue code indicated on the line with the charge. Table 2 of the proposed rule (71 FR 49532) contained a list of the allowed revenue codes. Revenue codes not included in Table 2 are those not allowed under the OPPS because their services cannot be paid under the OPPS (for example, inpatient room and board charges) and thus, charges with those revenue codes were not packaged for creation of the OPPS median costs. One exception is the calculation of median blood costs, as discussed in section X. of this preamble.
Thus, we applied CCRs as described above to claims with bill types 12X, 13X, or 14X, excluding all claims from CAHs and hospitals in Maryland, Guam, and the U.S. Virgin Islands, American Samoa, and the Northern Marianas and claims from all hospitals for which CCRs were flagged as invalid.
We identified claims with condition code 41 as partial hospitalization services of hospitals and moved them to another file. These claims were combined with the 76X claims identified previously to calculate the partial hospitalization per diem rate.
We then excluded claims without a HCPCS code. We also moved claims for observation services to another file. We moved to another file claims that contained nothing but influenza and pneumococcal pneumonia (“PPV”) vaccine. Influenza and PPV vaccines are paid at reasonable cost and, therefore, these claims are not used to set OPPS rates. We note that the two above mentioned separate files containing partial hospitalization claims and observation services claims are included in the files that are available for purchase as discussed above.
We next copied line-item costs for drugs, blood, and devices (the lines stay on the claim, but are copied off onto another file) to a separate file. No claims were deleted when we copied these lines onto another file. These line-items are used to calculate a per unit mean and median and a per day mean and median for drugs, radiopharmaceutical agents, blood and blood products, and devices, including but not limited to brachytherapy sources, as well as other information used to set payment rates, including a unit to day ratio for drugs.
We then divided the remaining claims into the following five groups:
1.
Single Major Claims:
Claims with a single separately payable procedure (that is, status indicator S, T, V, or X), all of which would be used in median setting.
2.
Multiple Major Claims:
Claims with more than one separately payable procedure (that is, status indicator S, T, V, or X), or multiple units for one payable procedure. As discussed below, some of these can be used in median setting.
3.
Single Minor Claims:
Claims with a single HCPCS code that is packaged (that is, status indicator N) and not separately payable.
4.
Multiple Minor Claims:
Claims with multiple HCPCS codes that are packaged (that is, status indicator N) and not separately payable.
5.
Non-OPPS Claims:
Claims that contain no services payable under the OPPS (that is, all status indicators other than S, T, V, X, or N). These claims are excluded from the files used for the OPPS. Non-OPPS claims have codes paid under other fee schedules, for example, durable medical equipment or clinical laboratory, and do not contain either a code for a separately paid service or a code for a packaged service.
In previous years, we made a determination of whether each HCPCS code was a major code, or a minor code, or a code other than a major or minor code. We used those code-specific determinations to sort claims into these five identified groups. For the CY 2007 OPPS, we proposed to use status indicators, as described above, to sort the claims into these groups. We believed that using status indicators was an appropriate way to sort the claims into these groups and also to make our process more transparent to the public. We further believed that this proposed method of sorting claims would enhance the public's ability to derive useful information and become a more informed commenter on the proposed rule.
We note that the claims listed in numbers 1, 2, 3, and 4 above are included in the data files that can be purchased as described above.
We set aside the single minor, multiple minor claims and the non-OPPS claims (numbers 3, 4, and 5 above) because we did not use these claims in calculating median costs. We then examined the multiple major claims for date of service to determine if we could break them into single procedure claims using the dates of service on all lines on the claim. If we could create claims with single major procedures by using date of service, we created a single procedure claim record for each separately paid procedure on a different date of service (that is, a “pseudo” single).
We then used the “bypass codes” listed in Table 1 of the proposed rule (71 FR 49517) and discussed in section II.A.1.b. of this preamble to remove separately payable procedures that we determined contain limited costs or no packaged costs, or were otherwise suitable for inclusion on the bypass list, from a multiple procedure bill. When one of the two separately payable procedures on a multiple procedure claim was on the bypass code list, we split the claim into two single procedure claims records. The single procedure claim record that contained the bypass code did not retain packaged services. The single procedure claim record that contained the other separately payable procedure (but no bypass code) retained the packaged revenue code charges and the packaged HCPCS charges.
We also removed lines that contained multiple units of codes on the bypass list and treated them as “pseudo” single claims by dividing the cost for the multiple units by the number of units on the line. Where one unit of a single separately paid procedure code remained on the claim after removal of the multiple units of the bypass code, we created a “pseudo” single claim
from that residual claim record, which retained the costs of packaged revenue codes and packaged HCPCS codes. This enabled us to use claims that would otherwise be multiple procedure claims and could not be used. We excluded those claims that we were not able to convert to singles even after applying all of the techniques for creation of “pseudo” singles.
We then packaged the costs of packaged HCPCS codes (codes with status indicator “N” listed in Addendum B to this proposed rule) and packaged revenue codes into the cost of the single major procedure remaining on the claim. The list of packaged revenue codes was shown in Table 2 of the CY 2007 OPPS proposed rule (71 FR 49532) and below.
After removing claims for hospitals with error CCRs, claims without HCPCS codes, claims for immunizations not covered under the OPPS, and claims for services not paid under the OPPS, 58.4 million claims were left. Of these 58.4 million claims, we were able to use some portion of 54.1 million whole claims (92.6 percent of the 58.4 million potentially usable claims) to create the 98.5 million single and “pseudo” single claims for use in the CY 2007 median development and for ratesetting.
We also excluded (1) claims that had zero costs after summing all costs on the claim and (2) claims containing packaging flag 3. Effective for services furnished on or after July 1, 2004, the Outpatient Code Editor (OCE) assigns packaging flag number 3 to claims on which hospitals submitted token charges for a service with status indicator “S” or “T” (a major separately paid service under OPPS) for which the fiscal intermediary is required to allocate the sum of charges for services with a status indicator equaling “S” or “T” based on the weight for the APC to which each code is assigned. We do not believe that these charges, which were token charges as submitted by the hospital, are valid reflections of hospital resources. Therefore, we deleted these claims. In the proposed rule, we deleted claims with payment flag 3 (not packaging flag 3) because we believed that payment flag 3 identified claims for which the charges were not as submitted by the provider as described above. As we were processing claims for this final rule with comment period, we realized that this was not the case and corrected the process to eliminate claims which, as described above, have charges that are not as submitted by the provider. See the CY 2007 final rule claims accounting under supporting documentation posted on our Web site,
http://www.cms.hhs.gov/HospitalOutpatientPPS
, for this final rule with comment period for further explanation. We note that in this final rule with comment period, as stated in both the proposed rule and here, we have excluded those claims that we believed were not valid reflections of hospital resources.
We also deleted claims for which the charges equal the revenue center payment (that is, the Medicare payment) on the assumption that where the charge equals the payment, to apply a CCR to the charge would not yield a valid estimate of relative provider cost.
For the remaining claims, we then standardized 60 percent of the costs of the claim (which we have previously determined to be the labor-related portion) for geographic differences in labor input costs. We made this adjustment by determining the wage index that applied to the hospital that furnished the service and dividing the cost for the separately paid HCPCS code furnished by the hospital by that wage index. As has been our policy since the inception of the OPPS, we proposed to use the pre-reclassified wage indices for standardization because we believed that they better reflect the true costs of items and services in the area in which the hospital is located than the post-reclassification wage indices, and would result in the most accurate adjusted median costs.
We also excluded claims that were outside 3 standard deviations from the geometric mean of units for each HCPCS code on the bypass list (because, as discussed above, we used claims that contain multiple units of the bypass codes). We then deleted 438,440 single bills reported with modifier 50 that were assigned to APCs that contained HCPCS codes that are considered to be conditional or independent bilateral procedures under the OPPS and that are subject to special payment provisions implemented through the OCE. Modifier 50 signifies that the procedure was performed bilaterally. Although these are apparently single claims for a separately payable service and although there is only one unit of the code reported on the claim, the presence of modifier 50 signifies that two services were furnished. Therefore, costs reported on these claims are for two procedures and not for a single procedure. Hence, we deleted these multiple procedure records, which we would have treated as single procedure claims in prior OPPS updates.
We used the remaining claims to calculate median costs for each separately payable HCPCS code and each APC. The comparison of HCPCS and APC medians determines the applicability of the “2 times” rule. As stated previously, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the group is more than 2 times greater than the lowest median cost for an item or service within the same group (“the 2 times rule”). Finally, we reviewed the medians and reassigned HCPCS codes to different APCs as deemed appropriate. Section III.B. of this preamble includes a discussion of the HCPCS code assignment changes that resulted from examination of the medians and for other reasons. The APC medians were recalculated after we reassigned the affected HCPCS codes. Both the HCPCS medians and the APC medians were weighted to account for the inclusion of multiple units of the bypass codes in the creation of pseudo single bills.
A detailed discussion of the medians for blood and blood products is included in section X. of this preamble. A discussion of the medians for APCs that require one or more devices when the service is performed is included in section IV.A. of this preamble. A discussion of the median for observation services is included in section XI. of this preamble, and a discussion of the median for partial hospitalization is included below in section II.B. of this preamble.
We specifically invited public comment on the relative benefits of deleting claims reported with modifier 50 signifying two procedures were performed versus dividing the costs for the two procedures by two to create two “pseudo” single claims. We received one comment on this issue.
Comment:
One commenter supported deletion of the conditional or independent bilateral service claims because the commenter believes that the total cost of a bilateral procedure (including packaged costs) is generally less than 2 times the total cost of a unilateral procedure, and such cost savings are already reflected in each hospital's CCR. The commenter stated that to divide the cost of the bilateral procedure by two would result in “pseudo” singles that would underrepresent the full cost of a single procedure.
Response:
We have excluded claims for conditional and independent bilateral procedures from the claims we used to calculate the median costs for the CY 2007 OPPS. We will carefully consider how to treat these claims for future years.
For the final CY 2007 OPPS ratesetting process, we deleted these claims, as we did for the proposed rule.
We received many comments on our proposed CY OPPS data process. A summary of the comments and our responses follows:
Comment:
The commenters objected to what they view as wide fluctuations in the APC payment rates from CY 2006 to CY 2007, because such variability makes it difficult to plan and budget for the services that the hospital will provide in the upcoming year. The commenters objected to changes in proposed OPPS rates that are greater than 5 percent from the prior year's rates and urged CMS to adjust rates so that no payment rate in CY 2007 declined by more than 5 percent compared to its payment in CY 2006. The commenters stated that more than 250 APC rates declined compared to their CY 2006 rates, some by 10 to 20 percent or more. In contrast, they noted that over 300 APC rates increased, many substantially and by up to 30 percent compared to their CY 2006 rates. The commenters stated that they did not believe that the changes in the median costs were reflective of changes in hospital costs, because hospital costs do not vary so widely from year to year. The commenters indicated that they expected that after more than 5 years of experience, the rates would no longer show such significant volatility and urged CMS to use more multiple claims data to set the median costs.
Response:
There are a number of factors pertinent to the OPPS that cause median costs to change from one year to the next. These include reassignment of HCPCS codes to APCs to rectify 2 times violations and to respond to public comments; the need to split costs derived from claims data among the many different HCPCS codes, which results in very few usable claims for some services; and annual changes in reported hospital charges and costs that provide the source of the cost data on which the system is based.
Although the APC number and title may remain the same from year to year, we routinely reassign HCPCS codes to different APCs to resolve violations of the 2 times rule as required by law or reconfigure APCs to create more levels in a series. We also reassign codes in response to public comments when we believe that the requested reassignment will result in improved clinical homogeneity and more similar resource use for a particular service or group of services. To the extent that there has been a reassignment either into or out of an APC or a reconfiguration of an APC into multiple levels, a comparison of the APC median from 1 year to the next is often not a valid comparison of the costs for the same services. In addition, every year new HCPCS codes that were initially assigned to clinical APCs for payment purposes may begin to contribute claims data to those APC median costs, also leading to ill-founded comparisons across years.
Moreover, many of the claims we receive for OPPS services are multiple procedure claims that must be fragmented for use in establishing the median costs for single procedures. Unlike other prospective payment systems in which the costs of multiple services are aggregated into a single payment for a defined encounter (for example, inpatient stay and home health episode of care), under the OPPS the costs that reflect the charges on Medicare claims that contain more than a single service on the same date must be fragmented into pieces to provide costs at a unit level, rather than being aggregated to provide the total cost for a set of services furnished in a single encounter. The more the costs on claims are split to accommodate payment for individual items and services described by HCPCS codes, and the fewer single bills that are available for ratesetting because the costs cannot be fragmented into unique services, the more variability is introduced into the cost. Because of the difficulty in assigning the revenue code charge data that hospitals submit on multiple procedure claims to the separately payable HCPCS codes that form the basis of payment in the OPPS, we must often use small numbers of claims to set the median costs for some services. We believe that the small numbers of single claims are the source of much of the volatility in the payment system. When we examine claims data for APCs like the Visit APCs, for which we have large and stable numbers of services, we do not see the median cost fluctuations that typically occur in those APCs for which we regularly have small numbers of single bills.
However, we are rarely asked for larger APCs that contain more codes or for more packaging of payment for HCPCS codes into the APC rates, both of which would enable us to use more claims and, we believe, provide more stable payment rates. Indeed, payment in the OPPS has become more specific each year, largely in response to our willingness to accommodate the requests of stakeholders when we believe they are justified and supported by the data. Each year, we are asked for increasingly more APCs that contain fewer HCPCS codes, as well as more precise costing of particular services. Generally, the comments received in response to our proposed rule asked for more separate payment, less packaging, and greater service-specific precision in the calculation of median costs for specifically identified services in the OPPS. We are also often asked to specifically recalculate median costs by using subsets of claims that meet specific criteria or by applying alternative methodologies for identified services. While these special approaches are generally intended to increase payments for their particular services of interest, they likely contribute to less stability in the system in general. Inevitably, such specificity would lead to more, not less, volatility as it would reduce the number of claims that can be used to set median costs.
Lastly, hospital charges and costs are the foundation of the payment weights, but hospitals change the mix of services they furnish and thereby also change their cost structure to some extent each year. Moreover, hospitals increase, sometimes decrease, or hold steady their charges each year based on a variety of business reasons, but these changes to charges often vary across the different services they furnish. Thus, hospital decisions to change their mix of services or to change their charges for some services differentially also contribute to the volatility in payment rates.
We recognize that it could be desirable for a payment system's rates to not vary by a certain percentage from the prior year's payment rates, but there is no reason to believe that limiting the changes in payment rates to prevent a decline by any percentage each year would be accurately reflective of changes in relative costs. Although the commenters asked that no payment for any service decline by more than 5 percent, none addressed a limitation for a payment increase. We do not believe that it is appropriate to artificially impose limits on a payment rate's increase or decrease from one year to the next, because, as noted above, comparisons between APC payment rates from year to year have little meaning for the many APCs that have experienced HCPCS migration. Moreover, to limit the increases or decreases in payment to a set amount for all services would conflict with the statutory requirement that at least annually we revise APCs and other components of the OPPS using new cost data and other relevant information. Therefore, we are not adjusting the rates as requested to account for a decline of more than 5 percent from CY 2006 in the final CY 2007 OPPS payment rates. We will continue to explore ways to use the data from multiple procedure claims because we agree that a high level of
volatility is not desirable in the OPPS, and we also believe that the most viable long term solution to instability is the use of all the claims data. However, we also believe that changes in median costs from one year to the next are unavoidable in a relative weight payment system which also depends on hospital charges and costs and in which reassignment of HCPCS codes from one APC to another is required by law in cases of 2 times violations. As the commenters noted, some CY 2007 APC payment rates decrease but others increase in comparison with the CY 2006 rates, consistent with expectations for a budget neutral payment system like the OPPS.
Comment:
One commenter objected to the inclusion of charges from the following revenue codes as packaged services under the OPPS: (1) Revenue code 274 (Prosthetic/orthotic devices) on the basis that the revenue code is for nonimplanted devices that require a HCPCS code, are paid under the MPFS, and have a status indicator of “A” under the OPPS; (2) Revenue code 280 (Oncology) on the basis that there is no oncology service that would not be coded by a HCPCS code, and, therefore, any charge without a HCPCS code should not be packaged; (3) Revenue code 290 (Durable Medical Equipment (DME)) on the basis that DME is for use in the home and not in the outpatient setting; (4) Revenue codes 343 and 344 (Diagnostic radiopharmaceuticals and therapeutic radiopharmaceuticals) on the basis that they are required to be billed with a HCPCS code, and, therefore, charges without a HCPCS code should not be packaged; and (5) Revenue code 560 (Medical Social Services) on the basis that they are separately billable only by home health agencies and are, therefore, suspect and should not be packaged.
Response:
With a few limited exceptions, CMS does not specify the revenue codes hospitals must use to report their charges. Therefore, we selected a generous set of revenue codes to maximize the likelihood that we would capture all of the costs of a particular service for purposes of calculating the median costs on which the OPPS payment rates are based. To cease packaging costs under these revenue codes where there is no HCPCS code reported on the line may result in erroneous reductions in median costs and, therefore, in the related OPPS payment rates. With regard to the specific concerns of the commenter, our responses regarding the rationale for packaging the revenue code charges for each revenue code of interest follow: (1) Revenue code 274 is one of the revenue codes we previously instructed hospitals to use to report devices that had been paid as pass-through devices; (2) Revenue code 280 is packaged because we believe that it is possible that a hospital could have costs related to packaged OPPS services for which it would choose not to bill a HCPCS code, and we want to ensure that those costs are not lost in median calculation; (3) Revenue code 290 (DME) is governed by the statute which explicitly states that implantable DME provided in hospitals is paid under the OPPS, and we believe that it is possible that hospitals may charge for implantable DME but not bill a HCPCS code for the items; (4) Revenue codes 343 and 344 (diagnostic and therapeutic radiopharmaceuticals) are included as hospitals may charge for these items without placing a HCPCS code on the line; (5) Revenue code 560 (Medical Social Services) is included because hospitals may charge without billing a HCPCS code for the services of a medical social worker that are related to a visit service and thus would otherwise not be packaged into the median cost for the visit. We note that National Uniform Billing Committee guidelines on use of revenue code 560 recognize that it may be reported by hospitals in some circumstances.
Comment:
One commenter asked that CMS implement an indirect medical education adjustment under the CY 2007 OPPS to address what the commenter states is a 23-percent shortfall to the market basket for OPPS services. The commenter indicated that this adjustment was needed to reimburse hospitals for the higher costs incurred by major teaching hospitals to provide outpatient care to Medicare beneficiaries.
Response:
We do not believe an indirect medical education add-on payment is appropriate in a budget neutral payment system where such changes would result in reduced payments to all other hospitals. Moreover, in this final rule with comment period, we have developed payment weights that we believe resolve many of the public concerns regarding appropriate payments for new technology services and device-dependent procedures that we believe are furnished largely by teaching hospitals. We believe this and other payment changes should help ensure adequate and appropriate payment for teaching hospitals.
Comment:
One commenter supported CMS' proposal to discard claims that contain token charges for packaged devices but opposed discarding claims when there is only one separately paid procedure on the claim, although there are other packaged services billed with token charges on other lines of the claim.
Response:
We have not discarded claims that contain token charges where there is only one separately paid procedure on the claim if there are other packaged services billed with token charges on other lines of the claim. We discarded claims with token charges only when such claims included token charges for devices with procedure codes that are assigned to device-dependent APCs, because we instructed hospitals to bill token charges for devices that were replaced without cost to the provider due for example, to warranty, field action or recall. We also discarded claims that, as submitted, contained token charges for separately paid (not packaged) procedure codes, which during claims processing were converted to imputed charges for purposes of applying the outlier policy and which came to us through the national claims history with the imputed charges. These claims are identified with a packaging flag 3 and are excluded because the charges shown on the claim we receive were not the charges submitted by the provider. We discuss this in more detail in the CY 2007 final rule claims accounting on the CMS OPPS Web page at
http://www.cms.hhs.gov/HospitalOutpatientPPS/
.
After carefully considering all public comments received, we are finalizing the list of packaged services by revenue code shown in Table 2 and our data process for calculating the median costs for OPPS services furnished on or after January 1, 2007, without modification. Table 2 below contains the list of packaged services by revenue code that we used in developing the APC relative weights listed in Addenda A and B of this final rule with comment period.
Table 2.—CY 2007 Packaged Services by Revenue Code
Revenue code
Description
250
PHARMACY.
251
GENERIC.
252
NONGENERIC.
254
PHARMACY INCIDENT TO OTHER DIAGNOSTIC.
255
PHARMACY INCIDENT TO RADIOLOGY.
257
NONPRESCRIPTION DRUGS.
258
IV SOLUTIONS.
259
OTHER PHARMACY.
260
IV THERAPY, GENERAL CLASS.
262
IV THERAPY/PHARMACY SERVICES.
263
SUPPLY/DELIVERY.
264
IV THERAPY/SUPPLIES.
269
OTHER IV THERAPY.
270
M&S SUPPLIES.
271
NONSTERILE SUPPLIES.
272
STERILE SUPPLIES.
274
PROSTHETIC/ORTHOTIC DEVICES.
275
PACEMAKER DRUG.
276
INTRAOCULAR LENS SOURCE DRUG.
278
OTHER IMPLANTS.
279
OTHER M&S SUPPLIES.
280
ONCOLOGY.
289
OTHER ONCOLOGY.
290
DURABLE MEDICAL EQUIPMENT.
343
DIAGNOSTIC RADIOPHARMS.
344
THERAPEUTIC RADIOPHARMS.
370
ANESTHESIA.
371
ANESTHESIA INCIDENT TO RADIOLOGY.
372
ANESTHESIA INCIDENT TO OTHER DIAGNOSTIC.
379
OTHER ANESTHESIA.
390
BLOOD STORAGE AND PROCESSING.
399
OTHER BLOOD STORAGE AND PROCESSING.
560
MEDICAL SOCIAL SERVICES.
569
OTHER MEDICAL SOCIAL SERVICES.
621
SUPPLIES INCIDENT TO RADIOLOGY.
622
SUPPLIES INCIDENT TO OTHER DIAGNOSTIC.
624
INVESTIGATIONAL DEVICE (IDE).
630
DRUGS REQUIRING SPECIFIC IDENTIFICATION, GENERAL CLASS.
631
SINGLE SOURCE.
632
MULTIPLE.
633
RESTRICTIVE PRESCRIPTION.
681
TRAUMA RESPONSE, LEVEL I.
682
TRAUMA RESPONSE, LEVEL II.
683
TRAUMA RESPONSE, LEVEL III.
684
TRAUMA RESPONSE, LEVEL IV.
689
TRAUMA RESPONSE, OTHER.
700
CAST ROOM.
709
OTHER CAST ROOM.
710
RECOVERY ROOM.
719
OTHER RECOVERY ROOM.
720
LABOR ROOM.
721
LABOR.
762
OBSERVATION ROOM.
810
ORGAN ACQUISITION.
819
OTHER ORGAN ACQUISITION.
942
EDUCATION/TRAINING.
3. Calculation of Scaled OPPS Payment Weights
Using the median APC costs discussed previously, we calculated the final relative payment weights for each APC for CY 2007 shown in Addenda A and B of this final rule with comment period. In prior years, we scaled all the relative payment weights to APC 0601 (Mid Level Clinic Visit) because it is one of the most frequently performed services in the hospital outpatient setting. We assigned APC 0601 a relative payment weight of 1.00 and divided the median cost for each APC by the median cost for APC 0601 to derive the relative payment weight for each APC.
As proposed, for the CY 2007 OPPS, we scaled all of the relative payment weights to APC 0606 (Level 3 Clinic Visits) because we deleted APC 0601, as part of the reconfiguration of the visit APCs. We chose APC 0606 as the scaling base because under our proposal to reconfigure the APCs where clinic visits are assigned for CY 2007, APC 0606 is the middle level clinic visit APC (that is, Level 3 of five levels). We have historically used the median cost of the middle level clinic visit APC (that is APC 0601 through CY 2006) to calculate unscaled weights because mid-level clinic visits are among the most frequently performed services in the hospital outpatient setting. Therefore, to maintain consistency in using a median
for calculating unscaled weights representing the median cost of some of the most frequently provided services, we proposed to continue to use the median cost of the middle level clinic APC, proposed APC 0606, to calculate unscaled weights. Following our standard methodology, but using the CY 2007 median for APC 0606, we assigned APC 0606 a relative payment weight of 1.00 and divided the median cost of each APC by the median cost for APC 0606 to derive the unscaled relative payment weight for each APC. The choice of the APC on which to base the relative weights for all other APCs does not affect the payments made under the OPPS because we scale the weights for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification and recalibration changes, wage index changes, and other adjustments be made in a manner that assures that aggregate payments under the OPPS for CY 2007 are neither greater than nor less than the aggregate payments that would have been made without the changes. To comply with this requirement concerning the APC changes, we compared aggregate payments using the CY 2006 relative weights to aggregate payments using the CY 2007 final relative payment weights. Based on this comparison, we adjusted the relative weights for purposes of budget neutrality. The unscaled relative payment weights were adjusted by 1.364598352 for budget neutrality. We recognize the scaler, or weight scaling factor, for budget neutrality that we proposed for CY 2007 is higher than any previous OPPS weight scaler as a result of our proposal to use APC 0606 as the base for calculation of relative weights. Our use of the median cost for APC 0606 of $83.39 based on final rule with comment period data causes the unscaled weights to be lower than they would have been if we had chosen APC 0605 (Level 2 Clinic Visits; median $60.13 as the scaling base. The CY 2007 median cost of APC 0606 is significantly higher than the CY 2006 median cost of APC 0601 for mid-level clinic visits, which was used in CY 2006 and earlier years to calculate unscaled weights. Historically, the median cost for APC 0601 has been similar to the CY 2007 proposed median cost for APC 0605. In order to appropriately scale the total weight estimated for OPPS in CY 2007 to be similar to the total weight in OPPS for CY 2006, we calculated a scaler of 1.364598352 for this final rule with comment period, which is higher using APC 0606 as the base than it would be if we used APC 0605 as the base. In addition to adjusting for increases and decreases in weight due the recalibration of APC medians, the scaler also accounts for any change in the base.
The final relative payment weights listed in Addenda A and B of this final rule with comment period incorporate the recalibration adjustments discussed in sections II.A.1. and 2. of this preamble.
Section 1833(t)(14)(H) of the Act, as added by section 621(a)(1) of Pub. L. 108-173, states that “Additional expenditures resulting from this paragraph shall not be taken into account in establishing the conversion factor, weighting and other adjustment factors for 2004 and 2005 under paragraph (9) but shall be taken into account for subsequent years.” Section 1833(t)(14) of the Act provides the payment rates for certain “specified covered outpatient drugs.” Therefore, the cost of those specified covered outpatient drugs (as discussed in section V. of this preamble) is now included in the budget neutrality calculations for CY 2007 OPPS.
Under section 1833(t)(16)(C) of the Act, as added by section 621(b)(1) of Pub. L. 108-173, payment for devices of brachytherapy consisting of a seed or seeds (or radioactive source) is to be made at charges adjusted to cost for services furnished on or after January 1, 2004, and before January 1, 2007. As we stated in our January 6, 2004 interim final rule, charges for the brachytherapy sources were not used in determining outlier payments, and payments for these items were excluded from budget neutrality calculations for the CY 2006 OPPS. We excluded these payments from budget neutrality calculations, in part, because of the challenge posed by estimating hospital-specific cost payment. As proposed, for CY 2007, we calculated specific payment rates for brachytherapy sources, which were subjected to scaling for budget neutrality. (We provide a discussion of brachytherapy payment issues, including their CY 2007 treatment with respect to outlier payments, under section VII. of this preamble.) Therefore, the costs of brachytherapy sources are accounted for in the scaler of 1.364598352.
4. Changes to Packaged Services
Payments for packaged services under the OPPS are bundled into the payments providers receive for separately payable services provided on the same day. Packaged services are identified by the status indicator “N.” Hospitals include charges for packaged services on their claims, and the costs associated with these packaged services are then bundled into the costs for separately payable procedures on those same claims in establishing payment rates for the separately payable services. This is consistent with the principles of a prospective payment system based upon groupings of services and in contrast to a fee schedule that provides individual payment for each service billed. Hospitals may use CPT codes to report any packaged services that were performed, consistent with CPT coding guidelines.
As a result of requests from the public, a Packaging Subcommittee to the APC Panel was established to review all the procedural CPT codes with a status indicator of “N.” Providers have often suggested that many packaged services could be provided alone, without any other separately payable services on the claim, and requested that these codes not be assigned status indicator “N.” In deciding whether to package a service or pay for a code separately, we consider a variety of factors, including whether the service is normally provided separately or in conjunction with other services; how likely it is for the costs of the packaged code to be appropriately mapped to the separately payable codes with which it was performed; and whether the expected cost of the service is relatively low.
The Packaging Subcommittee identified areas for change for some packaged CPT codes that it believed could frequently be provided to patients as the sole service on a given date and that required significant hospital resources as determined from hospital claims data.
Based on the comments received, additional issues, and new data that we shared with the Packaging Subcommittee concerning the packaging status of codes for CY 2007, the Packaging Subcommittee reviewed the packaging status of numerous HCPCS codes and reported its findings to the APC Panel at its March 2006 meeting. The APC Panel accepted the report of the Packaging Subcommittee, heard several presentations on certain packaged services, discussed the deliberations of the Packaging Subcommittee, and recommended that—
• CMS pay separately for HCPCS code 0069T (Acoustic heart sound recording and computer analysis; acoustic heart sound and computer analysis only).
• CMS maintain the packaged status of HCPCS code 0152T (Computer aided detection with further physician review for interpretation, with or without digitization of films radiographic images; chest radiograph(s)).
• CMS maintain the packaged status of CPT code 36500 (Venous catheterization for selective blood organ sampling).
• CMS pay separately for CPT code 36540 (Collection of blood specimen from a completely implantable venous access device) if there are no separately payable OPPS services on the claim.
• CMS pay separately for CPT code 36600 (Arterial puncture; withdrawal of blood for diagnosis) if there are no separately payable OPPS services on the claim.
• CMS pay separately for CPT code 38792 (Injection procedure for identification of sentinel node) if there are no separately payable OPPS services on the claim.
• CMS maintain the packaged status of CPT codes 74328 (Endoscopic catheterization of the biliary ductal system, radiological supervision and interpretation), 74329 (Endoscopic catheterization of the pancreatic ductal system, radiological supervision and interpretation), and 74330 (Combined endoscopic catheterization of the biliary and pancreatic ductal systems, radiological supervision and interpretation).
• CMS pay separately for CPT code 75893 (Venous sampling through catheter, with or without angiography (eg, for parathyroid hormone, rennin), radiological supervision and interpretation) if there are no separately payable OPPS services on the claim.
• CMS continue to separately pay for CPT code 76000 (Fluoroscopy (separate procedures), up to one hour physician time, other than 71023 or 71024 (eg, cardiac fluoroscopy)).
• CMS maintain the packaged status of CPT codes 76001 (Fluoroscopy, physician time more than one hour, assisting a non-radiologic physician (eg, nephrostolithotomy, ERCP, bronchoscopy, transbronchial biopsy)), 76003 (Fluoroscopic guidance for needle placement (eg, biopsy, aspiration, injection, localization device)), and 76005 (Fluoroscopic guidance and localization of needle or catheter tip for spine or paraspinous diagnostic or therapeutic injection procedures (epidural, transforaminal epidural, subarachnoid, paravertebral fact joint, paravertebral facet joint nerve or sacroiliac joint), including neurolytic agent destruction).
• CMS maintain the packaged status of CPT codes 76937 (Ultrasound guidance for vascular access requiring ultrasound evaluation of potential access sites, documentation of selected vessel patency, concurrent realtime ultrasound visualization of vascular needle entry, with permanent recording and reporting) and 75998 (Fluoroscopic guidance for central venous access device placement, replacement (catheter only or complete), or removal (includes fluoroscopic guidance for vascular access and catheter manipulation, any necessary contrast injections through access site or catheter with related venography radiologic supervision and interpretation, and radiographic documentation of final catheter position)).
• CMS provide separate payment for CPT codes 94760 (Noninvasive ear or pulse oximetry for oxygen saturation; single determination), 94761 (Noninvasive ear or pulse oximetry for oxygen saturation; multiple determinations), and 94762 (Noninvasive ear or pulse oximetry for oxygen saturation by continuous overnight monitoring) if there are no separately payable OPPS services on the claim.
• CMS pay separately for CPT code 96523 (Irrigation of implanted venous access device for drug delivery systems) if there are no separately payable OPPS services on the claim.
• CMS maintain the packaged status of HCPCS code G0269 (Placement of occlusive device into either a venous or arterial access site).
• CMS pay separately for HCPCS code P9612 (Catheterization for collection of specimen, single patient) if there are no separately payable OPPS services on the claim.
• CMS bring data to the next APC Panel meeting that show the following: (a) how the costs of packaged items and services are incorporated into the median costs of APCs and (b) how the costs of these packaged items and services influence payments for associated procedures.
• The Packaging Subcommittee continue until the next APC Panel meeting.
At its August 2006 meeting, the Packaging Subcommittee further discussed the packaging status of several of the HCPCS codes described above and reported its findings to the APC Panel. The APC Panel accepted the report of the Packaging Subcommittee, heard one presentation, reviewed one written comment, and discussed the deliberations of the Packaging Subcommittee. The APC Panel made the following recommendations for CY 2007:
+ That CMS package new CPT codes 0174T, Computer aided detection (CAD) (computer algorithm analysis of digital image data for lesion detection) with further physician review for interpretation and report, with or without digitization of film radiographic images, chest radiograph(s), performed concurrent with primary interpretation (List separately in addition to code for primary procedure), and 0175T, Computer aided detection (CAD ) (computer algorithm analysis of digital image data for lesion detection) with further physician review for interpretation and report, with or without digitization of film radiographic images, chest radiograph(s), performed remote from primary interpretation).
+ That CMS continue to package revised CPT code 0069T (Acoustic heart sound recording and computer analysis; acoustic heart sound recording and computer analysis only).
+ That CMS assign CPT code 96523 (Irrigation of implanted venous access device for drug delivery systems) status indicator “Q” as a “special” packaged code.
For CY 2007, we proposed to maintain CPT code 0069T as a packaged service and not adopt the APC Panel's March 2006 recommendation to pay separately for this code. The service uses signal processing technology to detect, interpret, and document acoustical activities of the heart through special sensors applied to a patient's chest. This code was a new Category III CPT code implemented in the CY 2005 OPPS and assigned a new interim status indicator of “N” in the CY 2005 OPPS final rule with comment period. The APC Panel recommended packaging CPT code 0069T for CY 2006, and we accepted that recommendation when we finalized the status indicator “N” assignment to 0069T for CY 2006. CPT code 0069T is an add-on code to an electrocardiography (ECG) service for CYs 2005 and 2006. However on July 1, 2006, the AMA released to the public a code descriptor change to remove the add-on code designation for CPT code 0069T. The effective date of this change is January 1, 2007, at which point the descriptor will be “Acoustic heart sound recording and computer analysis; acoustic heart sound recording and computer analysis only.” We do not include Category III CPT codes that are released in July of a given year in the OPPS proposed rule for the following calendar year because of timing restraints. We include these codes in the OPPS final rule where they are assigned interim comment indicator “NI” to denote that they are open for public comment.
In its March 2006 presentation to the APC Panel, a manufacturer requested that we pay separately for CPT code 0069T and assign it to APC 0099 (Electrocardiograms), based on its estimated cost and clinical characteristics. The manufacturer stated
that the acoustic heart sound recording and analysis service may be provided with or without a separately reportable electrocardiogram. Members of the APC Panel engaged in extensive discussion of clinical scenarios as they considered whether CPT code 0069T could or could not be appropriately reported alone or in conjunction with several different procedure codes.
During the August 2006 meeting, the Packaging Subcommittee further discussed CMS's proposal to package CPT 0069T for CY 2007 and the CY 2007 code descriptor change, and ultimately recommended to the APC Panel that CMS continue to package this code for CY 2007. The APC Panel accepted this recommendation.
Comment:
One commenter requested that CMS pay separately for CPT code 0069T for CY 2007, mapping the code to an APC paying between $63 and $97. The commenter clarified that this service is sometimes provided with an ECG and sometimes provided without an ECG, according to its revised descriptor for CY 2007. The commenter could not explain the low median cost that was calculated from the claims data, but suggested that the nine claims used to calculate the median were miscoded. The commenter estimated the cost of the service to be approximately $80 per procedure, significantly higher than the median cost for APC 0099 (Electrocardiograms), which was $23.60 based on the CY 2005 data that were used to calculate the CY 2007 proposed median costs. Though the commenter agreed that it would be rare for the acoustic heart sound procedure to be performed alone without any other OPPS services, the commenter disagreed that the procedure would be “associated” with other services. Instead, the commenter clarified that it could be provided with a broad range of services, such as an emergency department visit, clinic visit, chest x-ray, or ECG. In addition, the commenter did not expect this service to have a meaningful impact on the median costs of those services because acoustic heart services are expected to be provided infrequently, compared to the total number of emergency department and clinic visits, chest x-rays, and ECGs.
Response:
Despite the change in add-on status for CPT code 0069T for CY 2007, based on the clinical uses that were described during the March 2006 APC Panel meeting and in the public comments, we believe that it is highly unlikely that CPT code 0069T would be performed in the hospital outpatient department as a sole service without other separately payable OPPS services. Payment for CPT code 0069T could always be packaged into payments for those other services. Therefore, we believe that CPT code 0069T is appropriately packaged because it would usually be closely linked to the performance of an ECG, and would rarely, if ever, be the only OPPS service provided to a patient. We understand that the commenter is clarifying that this service is not required to be provided in conjunction with an ECG. However, we continue to believe that it is likely that an ECG or other separately payable service would be performed on the patient in conjunction with the acoustic heart sound service. Therefore, we believe that it is appropriate to continue packaging CPT code 0069T for CY 2007. In addition, this service is estimated to require only minimal hospital resources. Using CY 2005 claims that have been updated with more recent CCRs, we had only nine single claims for CPT code 0069T, with a median line-item cost of $2.45, consistent with its low expected cost. Packaging payment for CPT code 0069T is consistent with the principles of a prospective payment system that provides payments for groups of services. To the extent that the acoustic heart sounding recording service may be more frequently provided in the future in association with ECGs or other OPPS services as its clinical indications evolve, we expect that its cost would also be increasingly reflected in the median costs for those other services, particularly ECG procedures.
After carefully considering all comments received, we are adopting the APC Panel's August 2006 recommendation to continue to package this code for CY 2007. Therefore we are finalizing our proposal without modification to maintain CPT code 0069T as a packaged service for CY 2007.
For CY 2007, we proposed to accept the APC Panel's recommendation to maintain the packaged status of CPT code 0152T. The service involves the application of computer algorithms and classification technologies to chest x-ray images to acquire and display information regarding chest x-ray regions that may contain indications of cancer. This code was a new Category III CPT code implemented in the CY 2006 OPPS and assigned a new interim status indicator of “NI” in the CY 2006 OPPS final rule with comment period. For CY 2006, the code is indicated as an add-on code to chest x-ray CPT codes, according to the AMA's CY 2006 CPT book. However, on July 1, 2006, the AMA released to the public an update that deletes code 0152T for CY 2007 and replaces it with two new Category III CPT codes, 0174T and 0175T. Effective January 1, 2007, the descriptor for CPT code 0174T will be “Computer aided detection (CAD) (computer algorithm analysis of digital image data for lesion detection) with further physician review for interpretation and report, with or without digitization of film radiographic images, chest radiograph(s), performed concurrent with primary interpretation (List separately in addition to code for primary procedure) and the descriptor for 0175T will be “Computer aided detection (CAD) (computer algorithm analysis of digital image data for lesion detection) with further physician review for interpretation and report, with or without digitization of film radiographic images, chest radiograph(s), performed remote from primary interpretation.”
As indicated above, we do not include Category III CPT codes that are released in July of a given year in the OPPS proposed rule for the following calendar year because of timing restraints. We include these codes in the OPPS final rule, where they are assigned new interim comment indicator “NI” to denote that they are open to comment.
In its March 2006 presentation to the APC Panel, before the AMA had released the CY 2007 changes to this code, the manufacturer requested that we pay separately for this service and assign it to a New Technology APC with a payment rate of $15, based on its estimated cost, clinical considerations, and similarity to other image post-processing services that are paid separately. We proposed to accept the APC Panel's recommendation to package CPT code 0152T for CY 2007.
In its August 2006 presentation to the APC Panel, after the AMA had released the CY 2007 code changes, the manufacturer requested that we assign both of these two new codes to a New Technology APC with a payment rate of $15. The APC Panel members discussed these codes extensively. They considered the possibility of treating CPT code 0175T as a “special” packaged code, thereby assigning payment to the code only when it was performed by a hospital without any other separately payable OPPS service also provided on the same day. They questioned the meaning of the word “remote” in the code descriptor for CPT code 0175T, noting that is was unclear as to whether “remote” referred to time, geography, or a specific provider. They thought it was likely that a hospital without a CAD system that performed a chest x-ray and sent the x-ray to another hospital for performance of the CAD would be providing the CAD service under arrangement and, therefore, would be providing at least one other
service (chest x-ray) that would be separately paid. Thus, even in these cases, payment for the CAD service could be appropriately packaged. After significant deliberation, the Panel recommended that we package both of the new CPT codes, 0174T and 0175T, for CY 2007.
Comment:
One commenter requested that CMS pay separately for CPT codes 0174T and 0175T, mapping them to New Technology APC 1492, with a payment rate of $15. The commenter indicated that there is no basis for believing that chest x-ray computer-aided detection (CAD) will increase the number of chest x-rays performed in the outpatient setting, because chest x-ray CAD is not a screening tool and should only be applied to chest x-rays that are suspicious for lung cancer. The commenter also indicated that separate resources are required for chest x-ray CAD that are not required for a standard chest x-ray. In addition, the commenter stated that chest x-ray CAD can be performed at a different time or location or by a different provider than the chest x-ray. In these cases, the commenter believed that separate payment would be appropriate. The commenter was concerned that if hospitals are not paid separately for this technology, they will not be able to provide it, thereby limiting beneficiary access to chest x-ray CAD.
Response:
We agree with the APC Panel that packaged payment for chest x-ray CAD under a prospective payment methodology for outpatient hospital services is appropriate because of the close relationship of chest x-ray CAD to chest x-ray services and its projected modest cost. We do not believe that CPT code 0174T would ever be performed as a sole service without other separately payable OPPS services, based on the code definition as an add-on service performed concurrent with the primary interpretation of a chest x-ray. We believe that payment for CPT code 0174T is appropriately packaged into payment for the chest x-ray services it accompanies. Payment for chest x-rays is provided through APC 0260 (Level I Plain Film Except Teeth), with a CY 2007 median cost of $43.35. The median costs for the individual x-ray services that can be reported with the CAD technology range from $36.00 to $56.11, easily overlapping the modest additional costs of providing chest x-ray CAD services. Although CPT code 0175T applies to chest x-ray CAD that is “remote” from the primary interpretation, the definition of “remote” as used in the code descriptor is vague, with respect to time, geography, or a specific provider, so the circumstances in which it would be the only service provided by a hospital are also unclear. As discussed by the APC Panel if an x-ray were sent to another hospital for performance of the CAD, the CAD service would likely be provided under arrangement, in which case the hospital that performed the x-ray would bill for both the x-ray and the CAD service. It is unnecessary to treat CPT code 0175T as a “special” packaged code because generally the payment for the x-ray CAD would be bundled into the payment for the chest x-ray. While we have no costs from claims data because 0152T was a new CPT code for CY 2006, and 0174T and 0175T are new codes for CY 2007, we estimate that the CAD service requires only modest resources. We expect that a hospital's cost per chest x-ray CAD service would largely depend on the volume of CAD services provided. To the extent that CAD may be more frequently provided in the future to aid in the review of diagnostic chest x-rays as its clinical indications evolve, we expect that its cost would also be increasingly reflected in the median costs for chest x-ray procedures.
After carefully considering all public comments received on this proposal, we are accepting the APC Panel's August 2006 recommendation to package new CPT codes 0174T and 0175T for CY 2007 on an interim final basis.
For CY 2007, we proposed to accept the recommendation of the APC Panel and maintain the packaged status of CPT code 36500. As noted in the CY 2007 OPPS proposed rule (71 FR 49535) we have heard that CPT code 36500 is sometimes billed only with its corresponding radiological supervision and interpretation code, 75893, but with no other separately payable OPPS services. In those cases, the provider would not receive any payment. For CY 2006, we accepted the APC Panel's recommendation to package both CPT codes 36500 and 75893 and to examine claims data. Our initial review of several clinical scenarios submitted by the public seemed to suggest that other separately payable procedures, such as venography, would likely be billed on the same claim. Our claims data indicate that there are usually separately payable codes that are billed on claims with CPT codes 36500 and 75893. However, we acknowledge that these two codes may occasionally be provided without any separately payable procedures. In these uncommon instances, the provider historically has not received any payment under the OPPS. We also understand that there is a cost associated with registering a patient and providing these services. Using CY 2005 claims, we have approximately 200 single claims for CPT code 75893, with a median cost of $269.13. As proposed for CY 2007 and described below for “special” packaged codes, when CPT codes 36500 and 75893 are billed on a claim with no separately payable OPPS services, CPT code 75893 would become separately payable and would receive payment for APC 0668. In this circumstance, payment for CPT code 36500 would be packaged into the separate payment for CPT code 75893.
We received no public comments on our proposal. Therefore, we are finalizing our proposal to accept the APC Panel's recommendation to maintain the packaged status of CPT code 36500 without modification.
For CY 2007, we proposed to accept the APC Panel's recommendation and pay separately for CPT codes 36540, 36600, 38792, 75893, 94762, and 96523 when any of these codes appear on a claim with no separately payable OPPS services also reported for the same date of service. We will refer to this subset of codes as “special” packaged codes. We acknowledge that there is a cost to the hospital associated with registering and treating a patient, regardless of whether the specific service provided requires minimal or significant hospital resources. While we continue to believe that these “special” packaged codes are almost always provided along with a separately payable service, our claims analyses indicate that there are rare instances when one of these services is provided without another separately payable OPPS service on the claim for the same date of service. In these instances, providers do not currently receive any payment. Therefore, we proposed to provide payment for the “special” packaged codes listed above when they are billed on a claim without another separately payable OPPS service on the same date. When any of the “special” packaged codes are billed with other codes that are separately payable under the OPPS on the same date of service, the “special” packaged code would be treated as a packaged code, and t
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