# Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Procurement Organization Reporting and Communication; Transplant Outcome Measures and Documentation Requirements; Electronic Health Record (EHR) Incentive Programs; Payment to Nonexcepted Off-Campus Provider-Based Department of a Hospital; Hospital Value-Based Purchasing (VBP) Program; Establishment of Payment Rates Under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by an Off-Campus Provider-Based Department of a Hospital > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A2016-26515 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** November 14, 2016 - **Citation:** 81 FR 79562 ## Text DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 414, 416, 419, 482, 486, 488, and 495 [CMS-1656-FC and IFC] RIN 0938-AS82 Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Organ Procurement Organization Reporting and Communication; Transplant Outcome Measures and Documentation Requirements; Electronic Health Record (EHR) Incentive Programs; Payment to Nonexcepted Off-Campus Provider-Based Department of a Hospital; Hospital Value-Based Purchasing (VBP) Program; Establishment of Payment Rates Under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by an Off-Campus Provider-Based Department of a Hospital AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule with comment period and interim final rule with comment period. SUMMARY: This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2017 to implement applicable statutory requirements and changes arising from our continuing experience with these systems. In this final rule with comment period, we describe the changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. Further, in this final rule with comment period, we are making changes to tolerance thresholds for clinical outcomes for solid organ transplant programs; to Organ Procurement Organizations (OPOs) definitions, outcome measures, and organ transport documentation; and to the Medicare and Medicaid Electronic Health Record Incentive Programs. We also are removing the HCAHPS Pain Management dimension from the Hospital Value-Based Purchasing (VBP) Program. In addition, we are implementing section 603 of the Bipartisan Budget Act of 2015 relating to payment for certain items and services furnished by certain off-campus provider-based departments of a provider. In this document, we also are issuing an interim final rule with comment period to establish the Medicare Physician Fee Schedule payment rates for the nonexcepted items and services billed by a nonexcepted off-campus provider-based department of a hospital in accordance with the provisions of section 603. DATES: Effective date: This final rule with comment period and the interim final rule with comment period are effective on January 1, 2017. Comment period: To be assured consideration, comments on: (1) The payment classifications assigned to new Level II HCPCS codes and recognition of new and revised Category I and III CPT codes in this final rule with comment period; (2) the 20-hour a week minimum requirement for partial hospitalization services in this final rule with comment period; (3) the potential limitation on clinical service line expansion or volume of services by nonexcepted off-campus PBDs in this final rule with comment period; and (4) the Medicare Physician Fee Schedule (MPFS) payment rates for nonexcepted items and services furnished and billed by nonexcepted off-campus provider-based departments of hospitals in the interim final rule with comment period must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EST on December 31, 2016. ADDRESSES: In commenting, please refer to file code CMS-1656-FC when commenting on the issues in the final rule with comment period and CMS-1656-IFC when commenting on issues in the interim final rule with comment period. 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 (and we encourage you to) submit electronic comments on this regulation to http://www.regulations.gov . Follow the instructions under the “submit a comment” tab. 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1656-FC or CMS-1656-IFC (as appropriate), P.O. Box 8013, 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 via express or overnight mail to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1656-FC or CMS-1656-IFC (as appropriate), 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 before the close of the comment period to either of the following addresses: a. For delivery in Washington, DC— Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201. (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 a proof of filing by stamping in and retaining an extra copy of the comments being filed.) b. For delivery in Baltimore, MD— Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. If you intend to deliver your comments to the Baltimore address, please call the telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members. 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, we refer readers to the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact Katherine Eastridge at (410) 786-4474. Ambulatory Surgical Center (ASC) Payment System, contact Elisabeth Daniel at (410) 786-0237. Ambulatory Surgical Center Quality Reporting (ASCQR) Program Administration, Validation, and Reconsideration Issues, contact Anita Bhatia at (410) 786-7236. Ambulatory Surgical Center Quality Reporting (ASCQR) Program Measures, contact Vinitha Meyyur at (410) 786-8819. Blood and Blood Products, contact Lela Strong at (410) 786-3213. Cancer Hospital Payments, contact David Rice at (410) 786-6004. Chronic Care Management (CCM) Hospital Services, contact Twi Jackson at (410) 786-1159. CPT and Level II Alphanumeric HCPCS Codes—Process for Requesting Comments, contact Marjorie Baldo at (410) 786-4617. CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck Braver at (410) 786-9379. Composite APCs (Low Dose Brachytherapy and Multiple Imaging), contact Twi Jackson at (410) 786-1159. Comprehensive APCs, contact Lela Strong at (410) 786-3213. Hospital Observation Services, contact Twi Jackson at (410) 786-1159. Hospital Outpatient Quality Reporting (OQR) Program Administration, Validation, and Reconsideration Issues, contact Elizabeth Bainger at (410) 786-0529. Hospital Outpatient Quality Reporting (OQR) Program Measures, contact Vinitha Meyyur at (410) 786-8819. Hospital Outpatient Visits (Emergency Department Visits and Critical Care Visits), contact Twi Jackson at (410) 786-1159. Hospital Value-Based Purchasing (VBP) Program, contact Grace Im at (410) 786-0700. Inpatient Only Procedures List, contact Lela Strong at (410) 786-3213. Medicare Electronic Health Record (EHR) Incentive Program, contact Kathleen Johnson at (410) 786-3295 or Steven Johnson at (410) 786-3332. New Technology Intraocular Lenses (NTIOLs), contact Elisabeth Daniel at (410) 786-0237. No Cost/Full Credit and Partial Credit Devices, contact Twi Jackson at (410) 786-1159. OPPS Brachytherapy, contact Elisabeth Daniel at (410) 786-0237. OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-Charge Ratios (CCRs), Data Claims, Geometric Mean Calculation, Outlier Payments, and Wage Index), contact David Rice at (410) 786-6004. OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar Products, contact Twi Jackson at (410) 786-1159. OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo at (410) 786-4617. OPPS Packaged Items/Services, contact Lela Strong at (410) 786-3213. OPPS Pass-Through Devices and New Technology Procedures/Services, contact Lela Strong at (410) 786-3213. OPPS Status Indicators (SI) and Comment Indicators (CI), contact Marina Kushnirova at (410) 786-2682. Organ Procurement Organization (OPO) Reporting and Communication, contact Peggye Wilkerson at (410) 786-4857 or Melissa Rice at (410) 786-3270. Partial Hospitalization Program (PHP) and Community Mental Health Center (CMHC) Issues, contact Marissa Kellam at (410) 786-3012 or Katherine Lucas at (410) 786-7723. Rural Hospital Payments, contact David Rice at (410) 786-6004. Section 603 of the Bipartisan Budget Act of 2015—Items and Services Furnished by Off-Campus Departments of a Provider, contact David Rice at (410) 786-6004 or Elisabeth Daniel at (410) 786-0237. Section 603 of the Bipartisan Budget Act of 2015—MPFS Payment Rates for Nonexcepted Off-Campus Provider-Based Departments of Hospitals, contact Geri Mondowney at (410) 786-1172, Patrick Sartini at (410) 786-9252, or Isadora Gil at (410) 786-4532. Transplant Enforcement, contact Paula DiStabile at (410) 786-3039 or Caecilia Blondiaux at (410) 786-2190. All Other Issues Related to Hospital Outpatient and Ambulatory Surgical Center Payments Not Previously Identified, contact Lela Strong at (410) 786-3213. SUPPLEMENTARY INFORMATION: 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.regulations.gov/. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection, generally beginning approximately 3 weeks after publication of the rule, 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. EST. To schedule an appointment to view public comments, phone 1-800-743-3951. Electronic Access This Federal Register document is also available from the Federal Register online database through Federal Digital System (FDsys), a service of the U.S. Government Printing Office. This database can be accessed via the internet at https://www.gpo.gov/fdsys/. Addenda Available Only Through the Internet on the CMS Web Site In the past, a majority of the Addenda referred to in our OPPS/ASC proposed and final rules were published in the Federal Register as part of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC proposed rule, all of the Addenda no longer appear in the Federal Register as part of the annual OPPS/ASC proposed and final rules to decrease administrative burden and reduce costs associated with publishing lengthy tables. Instead, these Addenda are published and available only on the CMS Web site. The Addenda relating to the OPPS are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html . The Addenda relating to the ASC payment system are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html . Alphabetical List of Acronyms Appearing in This Federal Register Document ACOT Advisory Committee on Organ Transplantation AHA American Hospital Association AMA American Medical Association AMI Acute myocardial infarction APC Ambulatory Payment Classification API Application programming interface APU Annual payment update ASC Ambulatory surgical center ASCQR Ambulatory Surgical Center Quality Reporting ASP Average sales price AUC Appropriate use criteria AWP Average wholesale price BBA Balanced Budget Act of 1997, Public Law 105-33 BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999, Public Law 106-113 BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Public Law 106-554 BLS Bureau of Labor Statistics CAH Critical access hospital CAHPS Consumer Assessment of Healthcare Providers and Systems CAP Competitive Acquisition Program C-APC Comprehensive Ambulatory Payment Classification CASPER Certification and Survey Provider Enhanced Reporting CAUTI Catheter-associated urinary tract infection CBSA Core-Based Statistical Area CCM Chronic care management CCN CMS Certification Number CCR Cost-to-charge ratio CDC Centers for Disease Control and Prevention CED Coverage with Evidence Development CERT Comprehensive Error Rate Testing CfC Conditions of coverage CFR Code of Federal Regulations CI Comment indicator CLABSI Central Line [Catheter] Associated Blood Stream Infection CLFS Clinical Laboratory Fee Schedule CMHC Community mental health center CMS Centers for Medicare & Medicaid Services CoP Condition of participation CPI-U Consumer Price Index for All Urban Consumers CPT Current Procedural Terminology (copyrighted by the American Medical Association) CR Change request CRC Colorectal cancer CSAC Consensus Standards Approval Committee CT Computed tomography CV Coefficient of variation CY Calendar year DFO Designated Federal Official DIR Direct or indirect remuneration DME Durable medical equipment DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and Supplies DRA Deficit Reduction Act of 2005, Public Law 109-171 DSH Disproportionate share hospital EACH Essential access community hospital EAM Extended assessment and management ECD Expanded criteria donor EBRT External beam radiotherapy ECG Electrocardiogram ED Emergency department EDTC Emergency department transfer communication EHR Electronic health record E/M Evaluation and management ESRD End-stage renal disease ESRD QIP End-Stage Renal Disease Quality Improvement Program FACA Federal Advisory Committee Act, Public Law 92-463 FDA Food and Drug Administration FFS [Medicare] Fee-for-service FTE Full-time equivalent FY Fiscal year GAO Government Accountability Office GI Gastrointestinal GME Graduate medical education HAI Healthcare-associated infection HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems HCERA Health Care and Education Reconciliation Act of 2010, Public Law 111-152 HCP Health care personnel HCPCS Healthcare Common Procedure Coding System HCRIS Healthcare Cost Report Information System HCUP Healthcare Cost and Utilization Project HEU Highly enriched uranium HH QRP Home Health Quality Reporting Program HHS Department of Health and Human Services HIE Health information exchange HIPAA Health Insurance Portability and Accountability Act of 1996, Public Law 104-191 HOP Hospital Outpatient Payment [Panel] HOPD Hospital outpatient department HOP QDRP Hospital Outpatient Quality Data Reporting Program HPMS Health Plan Management System IBD Inflammatory bowel disease ICC Interclass correlation coefficient ICD Implantable cardioverter defibrillator ICD-9-CM International Classification of Diseases, Ninth Revision, Clinical Modification ICD-10 International Classification of Diseases, Tenth Revision ICH In-center hemodialysis ICR Information collection requirement IME Indirect medical education IDTF Independent diagnostic testing facility IGI IHS Global Insight, Inc. IHS Indian Health Service I/OCE Integrated Outpatient Code Editor IOL Intraocular lens IORT Intraoperative radiation treatment IPFQR Inpatient Psychiatric Facility Quality Reporting IPPS [Hospital] Inpatient Prospective Payment System IQR [Hospital] Inpatient Quality Reporting IRF Inpatient rehabilitation facility IRF QRP Inpatient Rehabilitation Facility Quality Reporting Program IT Information technology LCD Local coverage determination LDR Low dose rate LTCH Long-term care hospital LTCHQR Long-Term Care Hospital Quality Reporting MAC Medicare Administrative Contractor MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public Law 114-10 MAP Measure Application Partnership MDH Medicare-dependent, small rural hospital MedPAC Medicare Payment Advisory Commission MEG Magnetoencephalography MFP Multifactor productivity MGCRB Medicare Geographic Classification Review Board MIEA-TRHCA Medicare Improvements and Extension Act under Division B, Title I of the Tax Relief Health Care Act of 2006, Public Law 109-432 MIPPA Medicare Improvements for Patients and Providers Act of 2008, Public Law 110-275 MLR Medical loss ratio MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173 MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309 MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public Law 110-173 MPFS Medicare Physician Fee Schedule MR Medical review MRA Magnetic resonance angiography MRgFUS Magnetic Resonance Image Guided Focused Ultrasound MRI Magnetic resonance imaging MRSA Methicillin-Resistant Staphylococcus Aures MS-DRG Medicare severity diagnosis-related group MSIS Medicaid Statistical Information System MUC Measure under consideration NCCI National Correct Coding Initiative NEMA National Electrical Manufacturers Association NHSN National Healthcare Safety Network NOTA National Organ and Transplantation Act NOS Not otherwise specified NPI National Provider Identifier NPWT Negative Pressure Wound Therapy NQF National Quality Forum NQS National Quality Strategy NTIOL New technology intraocular lens NUBC National Uniform Billing Committee OACT [CMS] Office of the Actuary OBRA Omnibus Budget Reconciliation Act of 1996, Public Law 99-509 O/E Observed to expected event OIG [HHS] Office of the Inspector General OMB Office of Management and Budget ONC Office of the National Coordinator for Health Information Technology OPD [Hospital] Outpatient Department OPO Organ Procurement Organization OPPS [Hospital] Outpatient Prospective Payment System OPSF Outpatient Provider-Specific File OPTN Organ Procurement and Transplantation Network OQR [Hospital] Outpatient Quality Reporting OT Occupational therapy PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93 PBD Provider-based department PCHQR PPS-Exempt Cancer Hospital Quality Reporting PCR Payment-to-cost ratio PDC Per day cost PDE Prescription Drug Event PE Practice expense PEPPER Program Evaluation Payment Patterns Electronic Report PHP Partial hospitalization program PHSA Public Health Service Act, Public Law 96-88 PN Pneumonia POS Place of service PPI Producer Price Index PPS Prospective payment system PQRI Physician Quality Reporting Initiative PQRS Physician Quality Reporting System QDC Quality data code QIO Quality Improvement Organization RFA Regulatory Flexibility Act RHQDAPU Reporting Hospital Quality Data for Annual Payment Update RTI Research Triangle Institute, International RVU Relative value unit SAD Self-administered drug SAMS Secure Access Management Services SCH Sole community hospital SCOD Specified covered outpatient drugs SES Socioeconomic status SI Status indicator SIA Systems Improvement Agreement SIR Standardized infection ratio SNF Skilled nursing facility SRS Stereotactic radiosurgery SRTR Scientific Registry of Transplant Recipients SSA Social Security Administration SSI Surgical site infection TEP Technical Expert Panel TIP Transprostatic implant procedure TOPs Transitional Outpatient Payments USPSTF United States Preventive Services Task Force VBP Value-based purchasing WAC Wholesale acquisition cost Table of Contents I. Summary and Background A. Executive Summary of This Document 1. Purpose 2. Summary of the Major Provisions 3. Summary of Costs and Benefits B. Legislative and Regulatory Authority for the Hospital OPPS C. Excluded OPPS Services and Hospitals D. Prior Rulemaking E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the Panel) 1. Authority of the Panel 2. Establishment of the Panel 3. Panel Meetings and Organizational Structure F. Public Comments Received in Response to CY 2016 OPPS/ASC Final Rule With Comment Period II. Updates Affecting OPPS Payments A. Recalibration of APC Relative Payment Weights 1. Database Construction a. Database Source and Methodology b. Calculation and Use of Cost-to-Charge Ratios (CCRs) 2. Data Development Process and Calculation of Costs Used for Ratesetting a. Recommendations of the Advisory Panel on Hospital Outpatient Payment (the Panel) Regarding Data Development b. Calculation of Single Procedure APC Criteria-Based Costs (1) Blood and Blood Products (a) Methodology (b) Solicitation of Public Comments (c) Rapid Bacterial Testing for Platelets (2) Brachytherapy Sources c. Comprehensive APCs (C-APCs) for CY 2017 (1) Background (2) C-APCs for CY 2017 (a) Additional C-APCs for CY 2017 (b) New Allogeneic Hematopoietic Stem Cell Transplantation (HSCT) C-APC d. Calculation of Composite APC Criteria-Based Costs (1) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (2) Mental Health Services Composite APC (3) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) 3. Changes to Packaged Items and Services a. Background and Rationale for Packaging in the OPPS b. Clinical Diagnostic Laboratory Test Packaging Policy (1) Background (2) “Unrelated” Laboratory Test Exception (3) Molecular Pathology Test Exception c. Conditional Packaging Status Indicators “Q1” and “Q2” (1) Background (2) Change in Conditional Packaging Status Indicators Logic 4. Calculation of OPPS Scaled Payment Weights B. Conversion Factor Update C. Wage Index Changes D. Statewide Average Default CCRs E. Adjustment for Rural SCHs and EACHs Under Section 1833(t)(13)(B) of the Act 1. Background 2. Proposed and Finalized Policy for CY 2017 F. OPPS Payment to Certain Cancer Hospitals Described by Section 1886(d)(1)(B)(v) of the Act 1. Background 2. Payment Adjustment for Certain Cancer Hospitals for CY 2017 G. Hospital Outpatient Outlier Payments 1. Background 2. Outlier Calculation H. Calculation of an Adjusted Medicare Payment From the National Unadjusted Medicare Payment I. Beneficiary Copayments 1. Background 2. OPPS Copayment Policy 3. Calculation of an Adjusted Copayment Amount for an APC Group III. OPPS Ambulatory Payment Classification (APC) Group Policies A. OPPS Treatment of New CPT and Level II HCPCS Codes 1. Treatment of New Level II HCPCS Codes Effective April 1, 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule 2. Treatment of New CPT and Level II HCPCS Codes Effective July 1, 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule 3. Process for New Level II HCPCS Codes That Became Effective October 1, 2016 and New Level II HCPCS Codes That Will Be Effective January 1, 2017 for Which Are Soliciting Public Comments in This CY 2017 OPPS/ASC Final Rule With Comment Period 4. Treatment of New and Revised CY 2017 Category I and III CPT Codes That Will Be Effective January 1, 2017 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule B. OPPS Changes—Variations Within APCs 1. Background 2. Application of the 2 Times Rule 3. APC Exceptions to the 2 Times Rule C. New Technology APCs 1. Background 2. Additional New Technology APC Groups 3. Procedures Assigned to New Technology APC Groups for CY 2017 a. Overall Proposal b. Retinal Prosthesis Implant Procedure D. OPPS APC-Specific Policies 1. Cardiovascular Procedures and Services a. Cardiac Event Recorder (APC 5071) b. Cardiac Telemetry 2. Eye-Related Services 3. Gastrointestinal Procedures and Services a. Esophageal Sphincter Augmentation (APC 5362) b. Esophagogastroduodenoscopy: Transmural Drainage of Pseudocyst (APC 5303) 4. Musculoskeletal Procedures/Services a. Auditory Osseointegrated Implants/Bone Anchored Hearing Systems (APCs 5114, 5115, 1nd 5116) b. Bunion Correction/Foot Fusion (APC 5114) c. Intervertebral Biomechanical Devices d. Percutaneous Vertebral Augmentation/Kyphoplasty (APC 5114) e. Strapping and Casting Applications (APCs 5101 and 5102) 5. Nervous System Procedures/Services a. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 and 5722) b. Percutaneous Epidural Adhesiolysis (APC 5443) c. Neurostimulator (APC 5463) 6. Radiologic Procedures and Services a. Imaging APCs b. Radiation Oncology (APCs 5092, 5611, and 5627) 7. Skin Substitutes (APCs 5053 Through 5055) 8. Urology System Procedures and Services a. Chemodenervation of the Bladder (APC 5373) b. Temporary Prostatic Urethral Stent (APC 5372) c. Transprostatic Urethral Implant Procedure (TUIP) (APCs 5375 and 5376) 9. Other Procedures and Services a. Cryoablation Procedures (APCs 5114, 5361, 5362, and 5432) b. Comprehensive Dialysis Circuit Procedures (APCs 5181, 5192, and 5193) c. Blood Product Exchange and Related Services (APCs 5241 and 5242) d. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5414) e. Neulasta® On-Body Injector f. Smoking and Tobacco Use Cessation Counseling (APC 5821) g. Radiofrequency Ablation of Uterine Fibroids (APC 5362) h. Intrapulmonary Surfactant Administration (APC 5791) i. Non-Contact Low Frequency Ultrasound (NLFU) Therapy (APC 5051) j. Pulmonary Rehabilitation Services IV. OPPS Payment for Devices A. Pass-Through Payments for Devices 1. Expiration of Transitional Pass-Through for Certain Devices a. Background b. CY 2017 Pass-Through Devices 2. New Device Pass-Through Applications a. Background b. Applications Received for Device Pass-Through Payment for CY 2017 (1) BioBag® (Larval Debridement Therapy in a Contained Dressing) (2) ENCORE TM Suspension System (3) Endophys Pressure Sensing System (Endophys PSS) or Endophys Pressure Sensing Kit 3. Beginning Eligibility Date for Device Pass-Through Payment Status 4. Policy To Make the Transitional Pass-Through Payment Period 3 Years for All Pass-Through Devices and Expire Pass-Through Status on a Quarterly Rather Than Annual Basis a. Background b. CY 2017 Policy 5. Changes to Cost-to-Charge Ratios (CCRs) That Are Used To Determine Device Pass-Through Payment a. Background b. CY 2017 Policy 6. Provisions for Reducing Transitional Pass-Through Payments To Offset Costs Packaged Into APC Groups a. Background b. CY 2017 Policy B. Device-Intensive Procedures 1. Background 2. HCPCS Code-Level Device-Intensive Determination 3. Changes to the Device Edit Policy 4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial Credit Devices a. Background b. Policy for CY 2017 5. Payment Policy for Low-Volume Device-Intensive Procedures V. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals A. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals 1. Background 2. Policy To Make the Transitional Pass-Through Payment Period 3 Years for All Pass-Through Drugs, Biologicals, and Radiopharmaceuticals and Expire Pass-Through Status on a Quarterly Rather Than Annual Basis 3. Drugs and Biologicals With Expiring Pass-Through Payment Status in CY 2016 4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing Pass-Through Status in CY 2017 5. Provisions for Reducing Transitional Pass-Through Payments for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To Offset Costs Packaged Into APC Groups B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Payment Status 1. Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals a. Packaging Threshold b. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals Under the Cost Threshold (“Threshold-Packaged Policy”) c. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals d. High Cost/Low Cost Threshold for Packaged Skin Substitutes e. Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological But Different Dosages 2. Payment for Drugs and Biologicals Without Pass-Through Status That Are Not Packaged a. Payment for Specified Covered Outpatient Drugs (SCODs) and Other Separately Payable and Packaged Drugs and Biologicals b. CY 2017 Payment Policy c. Biosimilar Biological Products 3. Payment Policy for Therapeutic Radiopharmaceuticals 4. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly Enriched Uranium Sources 5. Payment for Blood Clotting Factors 6. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims Data VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices A. Background B. Estimate of Pass-Through Spending VII. OPPS Payment for Hospital Outpatient Visits and Critical Care Services VIII. Payment for Partial Hospitalization Services A. Background B. PHP APC Update for CY 2017 1. PHP APC Changes and Effects on Geometric Mean Per Diem Costs a. Changes to PHP APCs b. Rationale for Changes in PHP APCs c. Alternatives Considered 2. Development of the PHP APC Geometric Mean Per Diem Costs and Payment Rates a. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments b. Hospital-Based PHP Data Preparation: Data Trims and Exclusions 3. PHP Ratesetting Process C. Outlier Policy for CMHCs 1. Estimated Outlier Threshold 2. CMHC Outlier Cap a. Summary of Proposal b. CY 2017 Final Rule Update and Policy 3. Implementation Strategy for the 8-Percent Cap on CMHC Outlier Payments 4. Summary of Policies IX. Procedures That Will Be Paid Only as Inpatient Procedures A. Background B. Changes to the Inpatient Only (IPO) List C. Response to Solicitation of Public Comments on the Possible Removal of Total Knee Arthroplasty (TKA) Procedures From the IPO List 1. Background 2. Discussion of TKA and the IPO List 3. Topics and Questions for Public Comment X. Nonrecurring Policy Changes A. Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services Furnished by Off-Campus Provider-Based Departments of a Hospital 1. Background 2. Defining Applicable Items and Services and Off-Campus Outpatient Department of a Provider as Set Forth in Sections 1833(t)(21)(A) and (B) of the Act a. Background on the Provider-Based Status Rules b. Exemption of Items and Services Furnished in a Dedicated Emergency Department or an On-Campus PBD as Defined at Sections 1833(t)(21)(B)(i)(I) and (II) of the Act (Excepted Off-Campus PBD) (1) Dedicated Emergency Departments (EDs) (2) On-Campus Locations (3) Within the Distance From Remote Locations c. Applicability of Exception at Section 1833(t)(21)(B)(ii) of the Act (1) Relocation of Off-Campus PBDs Excepted Under Section 1833(t)(21)(B)(ii) of the Act (2) Expansion of Clinical Family of Services at an Off-Campus PBD Excepted Under Section 1833(t)(21)(B)(ii) of the Act d. Change of Ownership and Excepted Status e. Public Comments Received in Response to Solicitation on Data Collection Under Section 1833(t)(21)(D) of the Act 3. Payment for Items and Services Furnished in Off-Campus PBDs to Which Sections 1833(t)(1)(B)(v) and 1833(t)(21) of the Act Apply (Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus PBDs) a. Background on Medicare Payment for Services Furnished in an Off-Campus PBD b. Payment for Items and Services Furnished in Off-Campus PBD That Are Subject to Sections 1833(t)(1)(B)(v) and (t)(21)(C) of the Act (1) Definition of “Applicable Payment System” for Nonexcepted Items and Services (2) Definition of Applicable Items and Services and Section 603 Amendments to Section 1833(t)(1)(B) of the Act and Payment for Nonexcepted Items and Services for CY 2017 (3) Public Comments Received in Response to Solicitation on Allowing Direct Billing and Payment for Nonexcepted Items and Services in CY 2018 4. Beneficiary Cost-Sharing 5. Summary of Proposals 6. Final Changes to Regulations B. Interim Final Rule With Comment Period: Establishment of Payment Rates Under the Medicare Physician Fee Schedule for Nonexcepted Items and Services Furnished by an Off-Campus Provider-Based Department of a Hospital 1. Background 2. Payment Mechanisms a. Relevance of the MPFS for Payment for Nonexcepted Items and Services b. Operational Considerations c. General MPFS Coding and Billing Mechanisms 3. Establishment of Payment Rates a. Methodology b. MPFS Relativity Adjuster c. Geographic Adjustments d. Coding Consistency 4. OPPS Payment Adjustments 5. Partial Hospitalization Services 6. Supervision Rules 7. Beneficiary Cost-Sharing 8. CY 2018, CY 2019, and Future Years 9. Waiver of Proposed Rulemaking 10. Collection of Information Requirements 11. Response to Comments 12. Regulatory Impact Statement C. Changes for Payment for Film X-Ray D. Changes to Certain Scope of Service Elements for Chronic Care Management (CCM) Services E. Appropriate Use Criteria for Advanced Diagnostic Imaging Services XI. CY 2017 OPPS Payment Status and Comment Indicators A. CY 2017 OPPS Payment Status Indicator Definitions B. CY 2017 Comment Indicator Definitions XII. Updates to the Ambulatory Surgical Center (ASC) Payment System A. Background 1. Legislative History, Statutory Authority, and Prior Rulemaking for the ASC Payment System 2. Policies Governing Changes to the Lists of Codes and Payment Rates for ASC Covered Surgical Procedures and Covered Ancillary Services B. Treatment of New and Revised Codes 1. Background on Current Process for Recognizing New and Revised Category I and Category III CPT Codes and Level II HCPCS Codes 2. Treatment of New and Revised Level II HCPCS Codes and Category III CPT Codes Implemented in April 2016 and July 2016 for Which We Solicited Public Comments in the CY 2017 OPPS/ASC Proposed Rule 3. Process for Recognizing New and Revised Category I and Category III CPT Codes That Will Be Effective January 1, 2017 for Which We Are Responding to Public Comments in This CY 2017 OPPS/ASC Final Rule With Comment Period 4. Process for New and Revised Level II HCPCS Codes That Will Be Effective October 1, 2016 and January 1, 2017 for Which We Are Soliciting Public Comments in This CY 2017 OPPS/ASC Final Rule with Comment Period C. Update to the List of ASC Covered Surgical Procedures and Covered Ancillary Services 1. Covered Surgical Procedures a. Covered Surgical Procedures Designated as Office-Based (1) Background (2) Changes for CY 2017 to Covered Surgical Procedures Designated as Office-Based b. ASC Covered Surgical Procedures Designated as Device-Intensive—Finalized Policy for CY 2016 and Final Policy for CY 2017 (1) Background (2) ASC Device-Intensive Designation by HCPCS Code (3) Changes to List of ASC Covered Surgical Procedures Designated as Device-Intensive for CY 2017 c. Adjustment to ASC Payments for No Cost/Full Credit and Partial Credit Devices d. Additions to the List of ASC Covered Surgical Procedures 2. Covered Ancillary Services D. ASC Payment for Covered Surgical Procedures and Covered Ancillary Services 1. ASC Payment for Covered Surgical Procedures a. Background b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2017 2. Payment for Covered Ancillary Services a. Background b. Payment for Covered Ancillary Services for CY 2017 E. New Technology Intraocular Lenses (NTIOLs) 1. NTIOL Application Cycle 2. Requests To Establish New NTIOL Classes for CY 2017 3. Payment Adjustment F. ASC Payment and Comment Indicators 1. Background 2. ASC Payment and Comment Indicators G. Calculation of the ASC Conversion Factor and the ASC Payment Rates 1. Background 2. Calculation of the ASC Payment Rates a. Updating the ASC Relative Payment Weights for CY 2017 and Future Years b. Updating the ASC Conversion Factor 3. Display of CY 2017 ASC Payment Rates XIII. Requirements for the Hospital Outpatient Quality Reporting (OQR) Program A. Background 1. Overview 2. Statutory History of the Hospital OQR Program B. Hospital OQR Program Quality Measures 1. Considerations in the Selection of Hospital OQR Program Quality Measures 2. Retention of Hospital OQR Program Measures Adopted in Previous Payment Determinations 3. Removal of Quality Measures From the Hospital OQR Program Measure Set a. Considerations in Removing Quality Measures From the Hospital OQR Program b. Criteria for Removal of “Topped-Out” Measures 4. Hospital OQR Program Quality Measures Adopted in Previous Rulemaking 5. New Hospital OQR Program Quality Measures for the CY 2020 Payment Determinations and Subsequent Years a. OP-35: Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy Measure (1) Background (2) Overview of Measure (3) Data Sources (4) Measure Calculation (5) Cohort (6) Risk Adjustment b. OP-36: Hospital Visits After Hospital Outpatient Surgery Measure (NQF #2687) (1) Background (2) Overview of Measure (3) Data Sources (4) Measure Calculation (5) Cohort (6) Risk Adjustment c. OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey Measures (1) Background (2) Overview of Measures (3) Data Sources (4) Measure Calculations (5) Cohort (6) Exemption (7) Risk Adjustment (8) Public Reporting d. Summary of Previously Adopted and Newly Adopted Hospital OQR Program Measures for the CY 2020 Payment Determinations and Subsequent Years 6. Hospital OQR Program Measures and Topics for Future Consideration a. Future Measure Topics b. Electronic Clinical Quality Measures c. Possible Future eCQM: Safe Use of Opioids-Concurrent Prescribing 7. Maintenance of Technical Specifications for Quality Measures 8. Public Display of Quality Measures C. Administrative Requirements 1. QualityNet Account and Security Administrator 2. Requirements Regarding Participation Status D. Form, Manner, and Timing of Data Submitted for the Hospital OQR Program 1. Hospital OQR Program Annual Payment Determinations 2. Requirements for Chart-Abstracted Measures Where Patient-Level Data Are Submitted Directly to CMS for the CY 2019 Payment Determination and Subsequent Years 3. Claims-Based Measure Data Requirements for the CY 2019 Payment Determination and Subsequent Years and CY 2020 Payment Determination and Subsequent Years 4. Data Submission Requirements for the OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 Payment Determination and Subsequent Years a. Survey Requirements b. Vendor Requirements 5. Data Submission Requirements for Previously Finalized Measures for Data Submitted via a Web-Based Tool for the CY 2019 Payment Determination and Subsequent Years 6. Population and Sampling Data Requirements for the CY 2019 Payment Determination and Subsequent Years 7. Hospital OQR Program Validation Requirements for Chart-Abstracted Measure Data Submitted Directly to CMS for the CY 2019 Payment Determination and Subsequent Years 8. Extension or Exemption Process for the CY 2019 Payment Determination and Subsequent Years 9. Hospital OQR Program Reconsideration and Appeals Procedures for the CY 2019 Payment Determination and Subsequent Years—Clarification E. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR Program Requirements for the CY 2017 Payment Determination 1. Background 2. Reporting Ratio Application and Associated Adjustment Policy for CY 2017 XIV. Requirements for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program A. Background 1. Overview 2. Statutory History of the ASCQR Program 3. Regulatory History of the ASCQR Program B. ASCQR Program Quality Measures 1. Considerations in the Selection of ASCQR Program Quality Measures 2. Policies for Retention and Removal of Quality Measures From the ASCQR Program 3. ASCQR Program Quality Measures Adopted in Previous Rulemaking 4. ASCQR Program Quality Measures for the CY 2020 Payment Determination and Subsequent Years a. ASC-13: Normothermia Outcome (1) Background (2) Overview of Measure (3) Data Sources (4) Measure Calculation (5) Cohort (6) Risk Adjustment b. ASC-14: Unplanned Anterior Vitrectomy (1) Background (2) Overview of Measure (3) Data Sources (4) Measure Calculation (5) Cohort (6) Risk Adjustment c. ASC-15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey Measures (1) Background (2) Overview of Measures (3) Data Sources (4) Measure Calculations (5) Cohort (6) Exemption (7) Risk Adjustment (8) Public Reporting 5. ASCQR Program Measure for Future Consideration 6. Maintenance of Technical Specifications for Quality Measures 7. Public Reporting of ASCQR Program Data C. Administrative Requirements 1. Requirements Regarding QualityNet Account and Security Administrator 2. Requirements Regarding Participation Status D. Form, Manner, and Timing of Data Submitted for the ASCQR Program 1. Requirements Regarding Data Processing and Collection Periods for Claims-Based Measures Using Quality Data Codes (QDCs) 2. Minimum Threshold, Minimum Case Volume, and Data Completeness for Claims-Based Measures Using QDCs 3. Requirements for Data Submitted via an Online Data Submission Tool a. Requirements for Data Submitted via a Non-CMS Online Data Submission Tool b. Requirements for Data Submitted via a CMS Online Data Submission Tool 4. Claims-Based Measure Data Requirements for the CY 2019 Payment Determination and Subsequent Years 5. Data Submission Requirements for ASC-15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 Payment Determination and Subsequent Years a. Survey Requirements b. Vendor Requirements 6. Extraordinary Circumstances Extensions or Exemptions for the CY 2019 Payment Determination and Subsequent Years 7. ASCQR Program Reconsideration Procedures E. Payment Reduction for ASCs That Fail To Meet the ASCQR Program Requirements 1. Statutory Background 2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet the ASCQR Program Requirements for a Payment Determination Year XV. Transplant Outcomes: Restoring the Tolerance Range for Patient and Graft Survival A. Background B. Revisions to Performance Thresholds XVI. Organ Procurement Organizations (OPOs): Changes to Definitions; Outcome Measures; and Documentation Requirements A. Background 1. Organ Procurement Organizations (OPOs) 2. Statutory Provisions 3. HHS Initiatives Related to OPO Services 4. Requirements for OPOs B. Proposed and Finalized Provisions 1. Definition of “Eligible Death” 2. Aggregate Donor Yield for OPO Outcome Performance Measures 3. Organ Preparation and Transport-Documentation With the Organ XVII. Transplant Enforcement Technical Corrections and Other Revisions to 42 CFR 488.61 A. Technical Correction to Transplant Enforcement Regulatory References B. Other Revisions to 42 CFR 488.61 XVIII. Changes to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs A. Background B. Summary of Final Policies Included in This Final Rule With Comment Period C. Revisions to Objectives and Measures for Eligible Hospitals and CAHs 1. Removal of the Clinical Decision Support (CDS) and Computerized Provider Order Entry (CPOE) Objectives and Measures for Eligible Hospitals and CAHs 2. Reduction of Measure Thresholds for Eligible Hospitals and CAHs for 2017 and 2018 a. Changes to the Objectives and Measures for Modified Stage 2 (42 CFR 495.22) in 2017 b. Changes to the Objectives and Measures for Stage 3 (42 CFR 495.24) in 2017 and 2018 (1) Objective: Patient Electronic Access to Health Information (42 CFR 495.24(c)(5)) (2) Objective: Coordination of Care Through Patient Engagement (42 CFR 495.24(c)(6)) (3) Objective: Health Information Exchange (HIE) (42 CFR 495.24(c)(7)) (4) Objective: Public Health and Clinical Data Registry Reporting (42 CFR 495.24(c)(8)) D. Revisions to the EHR Reporting Period in 2016 for EPs, Eligible Hospitals and CAHs 1. Definition of “EHR Reporting Period” and “EHR Reporting Period for a Payment Adjustment Year” 2. Clinical Quality Measurement E. Policy To Require Modified Stage 2 for New Participants in 2017 F. Significant Hardship Exception for New Participants Transitioning to MIPS in 2017 G. Modifications To Measure Calculations for Actions Outside the EHR Reporting Period XIX. Additional Hospital Value-Based Purchasing (VBP) Program Policies A. Background B. Removal of the HCAHPS Pain Management Dimension From the Hospital VBP Program 1. Background of the HCAHPS Survey in the Hospital VBP Program 2. Background of the Patient- and Caregiver-Centered Experience of Care/Care Coordination Domain Performance Scoring Methodology 3. Removal of the HCAHPS Pain Management Dimension From the Hospital VBP Program Beginning With the FY 2018 Program Year XX. Files Available to the Public via the Internet XXI. Collection of Information Requirements A. Statutory Requirement for Solicitation of Comments B. ICRs for the Hospital OQR Program C. ICRs for the ASCQR Program D. ICRs Relating to Changes in Transplant Enforcement Performance Thresholds E. ICRs for Changes Relating to Organ Procurement Organizations (OPOs) F. ICRs Relating to Changes to the Electronic Health Record (EHR) Incentive Program G. ICRs Relating to Additional Hospital VBP Program Policies H. ICRs for Payment for Off-Campus Provider-Based Departments Policy Changes for CY 2017 XXII. Waiver of Proposed Rulemaking and Response to Comments A. Waiver of Proposed Rulemaking B. Response to Comments XXIII. Economic Analyses A. Regulatory Impact Analysis 1. Introduction 2. Statement of Need 3. Overall Impacts for the OPPS and ASC Payment Provisions 4. Detailed Economic Analyses a. Estimated Effects of OPPS Changes in This Final Rule With Comment Period (1) Limitations of Our Analysis (2) Estimated Effects of OPPS Changes on Hospitals (3) Estimated Effects of OPPS Changes on CMHCs (4) Estimated Effects of OPPS Changes on Beneficiaries (5) Estimated Effects of OPPS Changes on Other Providers (6) Estimated Effects of OPPS Changes on the Medicare and Medicaid Programs (7) Alternative OPPS Policies Considered b. Estimated Effects of CY 2017 ASC Payment System Policies (1) Limitations of Our Analysis (2) Estimated Effects of CY 2017 ASC Payment System Policies on ASCs (3) Estimated Effects of ASC Payment System Policies on Beneficiaries (4) Alternative ASC Payment Policies Considered c. Accounting Statements and Tables d. Effects of Requirements for the Hospital OQR Program e. Effects of Requirements for the ASCQR Program f. Effects of the Changes to Transplant Performance Thresholds g. Effects of the Changes Relating to Organ Procurement Organizations (OPOs) h. Effects of the Changes to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs i. Effects of Requirements for the Hospital VBP Program j. Effects of Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Departments of a Provider B. Regulatory Flexibility Act (RFA) Analysis C. Unfunded Mandates Reform Act Analysis D. Conclusion XXIV. Federalism Analysis Regulation Text I. Summary and Background A. Executive Summary of This Document 1. Purpose In this document, we are updating the payment policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) beginning January 1, 2017. Section 1833(t) of the Social Security Act (the Act) requires us to annually review and update the payment rates for services payable under the Hospital Outpatient Prospective Payment System (OPPS). Specifically, section 1833(t)(9)(A) 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 that take into account changes in medical practices, changes in technologies, and the addition of new services, new cost data, and other relevant information and factors. In addition, under section 1833(i) of the Act, we annually review and update the ASC payment rates. We describe these and various other statutory authorities in the relevant sections of this final rule with comment period. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program. In addition, we are making changes to the conditions for coverage (CfCs) for organ procurement organizations (OPOs); revisions to the outcome requirements for solid organ transplant programs, transplant enforcement, and for transplant documentation requirements; a technical correction to enforcement provisions for organ transplant centers; modifications to the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs to reduce hospital administrative burden and to allow hospitals to focus more on patient care; and the removal of the HCAHPS Pain Management dimension from the Hospital Value-Based Purchasing (VBP) Program. Further, we are implementing section 603 of the Bipartisan Budget Act of 2015 relating to payment for nonexcepted items and services furnished by nonexcepted off-campus provider-based departments (PBDs) of a hospital. In conjunction with implementation of section 603 in this final rule with comment period, we are issuing in this Federal Register document an interim final rule with comment period that establishes payment rates under the MPFS for nonexcepted items and services furnished by nonexcepted off-campus PBDs of hospitals. 2. Summary of the Major Provisions • OPPS Update: For CY 2017, we are increasing the payment rates under the OPPS by an Outpatient Department (OPD) fee schedule increase factor of 1.65 percent. This increase factor is based on the hospital inpatient market basket percentage increase of 2.7 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS), minus the multifactor productivity (MFP) adjustment of 0.3 percentage point, and minus a 0.75 percentage point adjustment required by the Affordable Care Act. Based on this update, we estimate that total payments to OPPS providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix), for CY 2017 will be approximately $773 million, an increase of approximately $5.0 billion compared to estimated CY 2016 OPPS payments. We are continuing to implement the statutory 2.0 percentage point reduction in payments for hospitals failing to meet the hospital outpatient quality reporting requirements, by applying a reporting factor of 0.980 to the OPPS payments and copayments for all applicable services. • Rural Adjustment: We are continuing the adjustment of 7.1 percent to the OPPS payments to certain rural sole community hospitals (SCHs), including essential access community hospitals (EACHs). This adjustment applies to all services paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to cost. • Cancer Hospital Payment Adjustment: For CY 2017, we are continuing to provide additional payments to cancer hospitals so that the cancer hospital's payment-to-cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data. Based on those data, a target PCR of 0.91 will be used to determine the CY 2017 cancer hospital payment adjustment to be paid at cost report settlement. That is, the payment adjustments will be the additional payments needed to result in a PCR equal to 0.91 for each cancer hospital. • Comprehensive APCs: For CY 2017, we are not making extensive changes to the already established methodology used for C-APCs. However, we are creating 25 new C-APCs that meet the previously established criteria, which, when combined with the existing 37 C-APCs, will bring the total number to 62 C-APCs as of January 1, 2017. • Chronic Care Management (CCM): For CY 2017, we are making some minor changes to certain CCM scope-of-service elements. We refer readers to the CY 2017 MPFS final rule with comment period for a detailed discussion of these changes to the scope of service elements for CCM. We are applying these changes to CCM furnished to hospital outpatients. • Device-Intensive Procedures: For CY 2017, we are finalizing our policy of determining the payment rate for any device-intensive procedure that is assigned to an APC with fewer than 100 total claims for all procedures in the APC to be based on the median cost instead of the geometric mean cost. We believe that this approach will mitigate significant year-to-year payment rate fluctuations while preserving accurate claims-data-based payment rates for low volume device-intensive procedures. In addition, we are revising the device intensive calculation methodology and calculating the device offset amount at the HCPCS code level rather than at the APC level to ensure that device intensive status is properly assigned to all device-intensive procedures. • Outpatient Laboratory Tests: For CY 2017, we are discontinuing the use of the “L1” modifier to identify unrelated laboratory tests on claims. In addition, we are expanding the laboratory packaging exclusion that currently applies to Molecular Pathology tests to all laboratory tests designated as advanced diagnostic laboratory tests (ADLTs) that meet the criteria of section 1834A(d)(5)(A) of the Act. • Packaging Policies: The OPPS currently packages many categories of items and services that are typically provided as part of the outpatient hospital service (for example, operating and recovery room, anesthesia, among others). Packaging encourages hospital efficiency, flexibility, and long-term cost containment, and it also promotes the stability of payment for services over time. In CY 2014 and 2015, we added several new categories of packaged items and services. Among these were laboratory tests, ancillary services, services described by add-on codes, and drugs used in a diagnostic test or surgical procedure. For CY 2017, we are aligning the packaging logic for all of the conditional packaging status indicators so that packaging would occur at the claim level (instead of based on the date of service) to promote consistency and ensure that items and services that are provided during a hospital stay that may span more than one day are appropriately packaged according to OPPS packaging policies. • Payment Modifier for X-Ray Films: Section 502(b) of Division O, Title V of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1833(t)(16) of the Act by adding new subparagraph (F). New section 1833(t)(16)(F)(i) of the Act provides that, effective for services furnished during 2017 or any subsequent year, the payment under the OPPS for imaging services that are X-rays taken using film (including the X-ray component of a packaged service) that would otherwise be made under the OPPS (without application of this paragraph and before application of any other adjustment) shall be reduced by 20 percent. We are requiring that, effective for services furnished on or after January 1, 2017, hospitals are required to use a modifier on claims for X-rays that are taken using film. The use of this modifier will result in a 20-percent payment reduction for the X-ray service, as specified under section 1833(t)(16)(F)(i) of the Act, of the determined OPPS payment amount (without application of paragraph (F) and before any other adjustments under section 1833(t)). • Payment for Nonexcepted Items and Services Furnished by Nonexcepted Off-Campus Departments of a Provider: We are implementing section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74). This provision requires that certain items and services furnished in certain off-campus PBDs shall not be considered covered OPD services for purposes of OPPS payment and those nonexcepted items and services will instead be paid “under the applicable payment system” beginning January 1, 2017. We are finalizing, with modification, the policies we proposed relating to which off-campus PBDs and which items and services furnished by such off-campus PBDs may be excepted from application of payment changes under this provision. In addition, we are establishing that the Medicare Physician Fee Schedule (MPFS) will be the “applicable payment system” for the majority of the nonexcepted items and services furnished by nonexcepted off-campus PBDs. We are establishing new site-of-service payment rates under the MPFS to pay nonexcepted off-campus PBDs for the furnishing of nonexcepted items and services. These nonexcepted items and services must be reported on the institutional claim form and identified with a newly established claims processing modifier. • Ambulatory Surgical Center Payment Update: For CY 2017, we are increasing payment rates under the ASC payment system by 1.9 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This increase is based on a projected CPI-U update of 2.2 percent minus a multifactor productivity adjustment required by the Affordable Care Act of 0.3 percentage point. Based on this update, we estimate that total payments to ASCs (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix), for CY 2017 will be approximately $4,478 million, an increase of approximately $177 million compared to estimated CY 2016 Medicare payments. • Hospital Outpatient Quality Reporting (OQR) Program: For the Hospital OQR Program, we are establishing measures and policies for the CY 2018 payment determination, the CY 2019 payment determination and the CY 2020 payment determination and subsequent years. For the CY 2018 payment determination and subsequent years, we are finalizing, as proposed, that we will publicly display data on the Hospital Compare Web site, or other CMS Web site, as soon as possible after measure data have been submitted to CMS. In addition, we are finalizing, as proposed, that hospitals will generally have approximately 30 days to preview their data. Lastly, we are finalizing, as proposed, that we also will announce the timeframes for the preview period on a CMS Web site and/or on our applicable listservs. For the CY 2019 payment determination and subsequent years, we are finalizing, as proposed, an extension of the time for filing extraordinary circumstances extensions or exemptions (ECE) requests from 45 days to 90 days from the date that the extraordinary circumstance occurred. For the CY 2020 payment determination and subsequent years, we are finalizing, as proposed, a total of seven measures: Two claims-based measures and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based measures. The two claims-based measures are: (1) OP-35: Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy and (2) OP-36: Hospital Visits after Hospital Outpatient Surgery (NQF #2687). The five survey-based measures are: (1) OP-37a: OAS CAHPS—About Facilities and Staff; (2) OP-37b: OAS CAHPS—Communication About Procedure; (3) OP-37c: OAS CAHPS—Preparation for Discharge and Recovery; (4) OP-37d: OAS CAHPS—Overall Rating of Facility; and (5) OP-37e: OAS CAHPS—Recommendation of Facility. • Ambulatory Surgical Center Quality Reporting (ASCQR) Program: For the ASCQR Program, we are finalizing our proposals for the CY 2018 payment determination, the CY 2019 payment determination, and the CY 2020 payment determination and subsequent years. For the CY 2018 payment determination and subsequent years, we are finalizing, as proposed, that we will publicly display data on the Hospital Compare Web site, or other CMS Web site, as soon as possible after measure data have been submitted to CMS. In addition, we are finalizing, as proposed, that ASCs will generally have approximately 30 days to preview their data. Lastly, we are finalizing, as proposed, that we will announce the timeframes for the preview period on a CMS Web site and/or on our applicable listservs. For the CY 2019 payment determination and subsequent years, we are finalizing our proposal to change the submission deadline to May 15 for all data submitted via a CMS Web-based tool. We also are finalizing, as proposed, the extension of the submission deadline for filing extraordinary circumstances extensions or exemptions (ECE) requests from 45 days to 90 days. For the CY 2020 payment determination and subsequent years, we are finalizing, as proposed, a total of seven measures: Two measures collected via a CMS Web-based tool and five Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-based measures. The two measures that require data to be submitted directly to CMS via a CMS Web-based tool are: (1) ASC-13: Normothermia Outcome and (2) ASC-14: Unplanned Anterior Vitrectomy. The five survey-based measures are: (1) ASC-15a: OAS CAHPS—About Facilities and Staff; (2) ASC-15b: OAS CAHPS—Communication About Procedure; (3) ASC-15c: OAS CAHPS—Preparation for Discharge and Recovery; (4) ASC-15d: OAS CAHPS—Overall Rating of Facility; and (5) ASC-15e: OAS CAHPS—Recommendation of Facility. • Hospital Value-Based Purchasing (VBP) Program Update: Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. In this final rule with comment period, we are removing the HCAHPS Pain Management dimension from the Hospital VBP Program, beginning with the FY 2018 program year. • Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs: In this final rule, we are making changes to the objectives and measures of meaningful use for Modified Stage 2 and Stage 3 starting with the EHR reporting periods in CY 2017. Under both Modified Stage 2 in 2017 and Stage 3 in 2017 and 2018, for eligible hospitals and CAHs attesting to CMS, we are eliminating the Clinical Decision Support (CDS) and Computerized Provider Order Entry (CPOE) objectives and measures, and lowering the reporting thresholds for a subset of the remaining objectives and measures, generally to the Modified Stage 2 thresholds. The reduction of measure thresholds is intended to respond to input we have received from hospitals, hospital associations, health systems, and vendors expressing concerns about the established measures. The revised requirements focus on reducing hospital administrative burden, allowing eligible hospitals and CAHs attesting to CMS to focus more on providing quality patient care, as well as focus on updating and optimizing CEHRT functionalities to sufficiently meet the requirements of the EHR Incentive Program and prepare for Stage 3 of meaningful use. Based on the public comments we received, we are finalizing a policy that these changes to the objectives and measures apply for all eligible hospitals and CAHs that attest to CMS, including eligible hospitals and CAHs that are eligible to participate in both the Medicare and Medicaid EHR Incentive Programs. In addition, we are changing the EHR reporting period in CY 2016 and 2017 for eligible professionals, eligible hospitals, and CAHs; reporting requirements for eligible professionals, eligible hospitals, and CAHs that are new participants in 2017; and the policy on measure calculations for actions outside the EHR reporting period. Finally, we are making a one-time significant hardship exception from the 2018 payment adjustment for certain eligible professionals who are new participants in the EHR Incentive Program in 2017 and are transitioning to the Merit-Based Incentive Payment System in 2017. We believe these changes are responsive to additional stakeholder feedback received through both correspondence and in-person meetings and will result in continued advancement of certified EHR technology utilization, particularly among those eligible professionals, eligible hospitals and CAHs that have not previously achieved meaningful use, and result in a program more focused on supporting interoperability and data sharing for all participants under the Medicare and Medicaid EHR Incentive Programs. • Transplant Performance Thresholds: With respect to solid organ transplant programs, we are restoring the effective tolerance range for clinical outcomes that was allowed in our original 2007 rule. These outcome requirements in the Medicare Conditions of Participation (CoPs) have been affected by the nationwide improvement in transplant outcomes, making it now more difficult for transplant programs to maintain compliance with, in effect, increasingly stringent Medicare standards for patient and graft survival. We expect that our policies will increase access to organ transplants while continuing to protect Medicare beneficiaries. • Organ Procurement Organizations (OPOs) Changes: In this final rule with comment period, we are: Changing the current “eligible death” definition to be consistent with the OPTN definition; modifying CMS current outcome measures to be consistent with yield calculations currently utilized by the SRTR; and modifying current requirements for documentation of donor information which is sent to the transplant center along with the organ. 3. Summary of Costs and Benefits In sections XXIII. and XXIV. of this final rule with comment period, we set forth a detailed analysis of the regulatory and Federalism impacts that these changes will have on affected entities and beneficiaries. Key estimated impacts are described below. a. Impacts of the OPPS Update (1) Impacts of All OPPS Changes Table 52 in section XXIII. of this final rule with comment period displays the distributional impact of all the OPPS changes on various groups of hospitals and CMHCs for CY 2017 compared to all estimated OPPS payments in CY 2016. We estimate that the policies in this final rule with comment period will result in a 1.7 percent overall increase in OPPS payments to providers. We estimate that total OPPS payments for CY 2017, including beneficiary cost-sharing, to the approximate 3,906 facilities paid under the OPPS (including general acute care hospitals, children's hospitals, cancer hospitals, and CMHCs) will increase by approximately $773 million compared to CY 2016 payments, excluding our estimated changes in enrollment, utilization, and case-mix. We estimated the isolated impact of our OPPS policies on CMHCs because CMHCs are only paid for partial hospitalization services under the OPPS. Continuing the provider-specific structure that we adopted beginning in CY 2011 and basing payment fully on the type of provider furnishing the service, we estimate a 15.0 percent decrease in CY 2017 payments to CMHCs relative to their CY 2016 payments. (2) Impacts of the Updated Wage Indexes We estimate that our update of the wage indexes based on the FY 2017 IPPS final rule wage indexes results in no change for urban hospitals and a 0.3 percent increase for rural hospitals under the OPPS. These wage indexes include the continued implementation of the OMB labor market area delineations based on 2010 Decennial Census data. (3) Impacts of the Rural Adjustment and the Cancer Hospital Payment Adjustment There are no significant impacts of our CY 2017 payment policies for hospitals that are eligible for the rural adjustment or for the cancer hospital payment adjustment. We are not making any change in policies for determining the rural and cancer hospital payment adjustments, and the adjustment amounts do not significantly impact the budget neutrality adjustments for these policies. (4) Impacts of the Proposed OPD Fee Schedule Increase Factor We estimate that, for most hospitals, the application of the OPD fee schedule increase factor of 1.65 percent to the conversion factor for CY 2017 will mitigate the impacts of the budget neutrality adjustments. As a result of the OPD fee schedule increase factor and other budget neutrality adjustments, we estimate that rural and urban hospitals will experience increases of approximately 1.7 percent for urban hospitals and 2.2 percent for rural hospitals. Classifying hospitals by teaching status or type of ownership suggests that these hospitals will receive similar increases. b. Impacts of the ASC Payment Update For impact purposes, the surgical procedures on the ASC list of covered procedures are aggregated into surgical specialty groups using CPT and HCPCS code range definitions. The percentage change in estimated total payments by specialty groups under the CY 2017 payment rates compared to estimated CY 2016 payment rates ranges between 12 percent for cardiovascular system procedures and −15 percent for hemic and lymphatic system procedures. c. Impacts of the Hospital OQR Program We do not expect our CY 2017 policies to significantly affect the number of hospitals that do not receive a full annual payment update. d. Impacts of the ASCQR Program We do not expect our CY 2017 policies to significantly affect the number of ASCs that do not receive a full annual payment update. e. Impacts for Implementation of Section 603 of the Bipartisan Budget Act of 2015 We estimate that implementation of section 603 of Public Law 114-74 in this interim final rule with comment period will reduce Medicare Part B expenditures by approximately $50 million in CY 2017, relative to a baseline where section 603 was not implemented in CY 2017. This estimate is a significantly lower impact than the $330 million reduction estimated for the CY 2017 OPPS proposed rule. This lower impact estimate is primarily a result of changes in technical assumptions regarding the impact of this provision, not a result of the change in payment policy. B. Legislative and Regulatory Authority for the Hospital OPPS When Title XVIII of the Social Security Act was 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 of 1997 (BBA) (Pub. L. 105-33) added section 1833(t) to the Act authorizing implementation of a PPS for hospital outpatient services. The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR parts 410 and 419. The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. The following Acts made additional changes to the OPPS: The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 2006; the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), enacted on December 29, 2007; the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-148), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on March 30, 2010 (these two public laws are collectively known as the Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 (MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; the American Taxpayer Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 2015; and the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015. Under the OPPS, we pay for hospital Part B services on a rate-per-service basis that varies according to the APC group to which the service is assigned. We use the Healthcare Common Procedure Coding System (HCPCS) (which includes certain Current Procedural Terminology (CPT) codes) to identify and group the services within each APC. The OPPS includes payment for most hospital outpatient services, except those identified in section I.C. of this final rule with comment period. Section 1833(t)(1)(B) of the Act provides for payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by CMHCs), and certain inpatient hospital services that are paid under Medicare Part B. 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 hospital inpatient 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, items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median cost (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 (or mean cost, if elected by the Secretary) for an item or service within the same APC group (referred to as the “2 times rule”). In implementing this provision, we generally use the cost of the item or service assigned to an APC group. For new technology items and services, special payments under the OPPS may be made 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 clinical information and cost 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. C. 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. It also excludes screening mammography, diagnostic mammography, and effective January 1, 2011, an annual wellness visit providing personalized prevention plan services. The Secretary exercises the authority granted under the statute to also exclude from the OPPS certain 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); certain laboratory services paid under the Clinical Laboratory Fee Schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD prospective payment system; and services and procedures that require an inpatient stay that are paid under the hospital IPPS. In addition, section 1833(t)(1)(B)(v) of the Act authorizes that applicable items and services furnished by nonexcepted off-campus provider-based departments of a hospital on or after January 1, 2017, will not be considered covered outpatient department services as defined under section 1833(t)(1)(B) of the Act for purposes of payment under the OPPS. We set forth the services that are excluded from payment under the OPPS in regulations at 42 CFR 419.22, which was amended by adding paragraph (v) to implement exclusion of items and services furnished by nonexcepted off-campus provider-based departments from the definition of covered outpatient department services. Under § 419.20(b) of the regulations, we specify the types of hospitals that are excluded from payment under the OPPS. These excluded hospitals include: Critical access hospitals (CAHs); hospitals located in Maryland and paid under the Maryland All-Payer Model; hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; and Indian Health Service (IHS) hospitals. D. 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)(A) 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 that take into account changes in medical practices, changes in technologies, 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 continuing experience with this system. These rules can be viewed on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html . E. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the Panel) 1. Authority of the Panel Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 106-113, requires that we consult with an external advisory panel of experts to annually review the clinical integrity of the payment groups and their weights under the OPPS. In CY 2000, based on section 1833(t)(9)(A) of the Act, the Secretary established the Advisory Panel on Ambulatory Payment Classification Groups (APC Panel) to fulfill this requirement. In CY 2011, based on section 222 of the PHS Act which gives discretionary authority to the Secretary to convene advisory councils and committees, the Secretary expanded the panel's scope to include the supervision of hospital outpatient therapeutic services in addition to the APC groups and weights. To reflect this new role of the panel, the Secretary changed the panel's name to the Advisory Panel on Hospital Outpatient Payment (the HOP Panel, or the Panel). The Panel is not restricted to using data compiled by CMS, and in conducting its review, it may use data collected or developed by organizations outside the Department. 2. Establishment of the Panel On November 21, 2000, the Secretary signed the initial charter establishing the HOP Panel, and at that time named the APC Panel. This expert panel is composed of appropriate representatives of providers (currently employed full-time, not as consultants, in their respective areas of expertise), reviews clinical data, and advises CMS about the clinical integrity of the APC groups and their payment weights. Since CY 2012, the Panel also is charged with advising the Secretary on the appropriate level of supervision for individual hospital outpatient therapeutic services. The Panel is technical in nature, and it is governed by the provisions of the Federal Advisory Committee Act (FACA). The current charter specifies, among other requirements, that: The Panel continues to be technical in nature; is governed by the provisions of the FACA; may convene up to three meetings per year; has a Designated Federal Official (DFO); and is chaired by a Federal Official designated by the Secretary. The Panel's charter was amended on November 15, 2011, renaming the Panel and expanding the Panel's authority to include supervision of hospital outpatient therapeutic services and to add Critical Access Hospital (CAH) representation to its membership. The current charter was renewed on November 6, 2014 (80 FR 23009) and the number of panel members was revised from up to 19 to up to 15 members. The current Panel membership and other information pertaining to the Panel, including its charter, Federal Register notices, membership, meeting dates, agenda topics, and meeting reports, can be viewed on the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html . 3. Panel Meetings and Organizational Structure The Panel has held multiple meetings, with the last meeting taking place on August 22, 2016. Prior to each meeting, we publish a notice in the Federal Register to announce the meeting and, when necessary, to solicit nominations for Panel membership, to announce new members and to announce any other changes that the public should be aware of. Beginning in CY 2017, we will transition to one meeting per year, which will be scheduled in the summer (81 FR 31941). The Panel has established an operational structure that, in part, currently includes the use of three subcommittees to facilitate its required review process. The three current subcommittees are the Data Subcommittee, the Visits and Observation Subcommittee, and the Subcommittee for APC Groups and Status Indicator (SI) Assignments. The Data Subcommittee is responsible for studying the data issues confronting the Panel and for recommending options for resolving them. The Visits and Observation Subcommittee reviews and makes recommendations to the Panel on all technical issues pertaining to observation services and hospital outpatient visits paid under the OPPS (for example, APC configurations and APC relative payment weights). The Subcommittee for APC Groups and SI Assignments advises the Panel on the following issues: The appropriate status indicators to be assigned to HCPCS codes, including but not limited to whether a HCPCS code or a category of codes should be packaged or separately paid; and the appropriate APC assignment of HCPCS codes regarding services for which separate payment is made. Each of these subcommittees was established by a majority vote from the full Panel during a scheduled Panel meeting, and the Panel recommended at the August 22, 2016 meeting that the subcommittees continue. We accepted this recommendation. Discussions of the other recommendations made by the Panel at the March 14, 2016 and August 22, 2016 Panel meetings are included in the sections of this final rule with comment period that are specific to each recommendation. For discussions of earlier Panel meetings and recommendations, we refer readers to previously published OPPS/ASC proposed and final rules, the CMS Web site mentioned earlier in this section, and the FACA database at: http://facadatabase.gov/ . F. Public Comments Received on the CY 2016 OPPS/ASC Final Rule With Comment Period We received 25 timely pieces of correspondence on the CY 2016 OPPS/ASC final rule with comment period that appeared in the Federal Register on November 13, 2015 (80 FR 70298), some of which contained comments on the interim APC assignments and/or status indicators of new or replacement Level II HCPCS codes (identified with comment indicator “NI” in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that final rule). Summaries of the public comments on new or replacement Level II HCPCS codes are set forth in this CY 2017 final rule with comment period under the appropriate subject matter headings. II. Updates Affecting OPPS Payments A. Recalibration of APC Relative Payment Weights 1. Database Construction a. Database Source and Methodology Section 1833(t)(9)(A) of the Act requires that the Secretary review not less often than annually and revise the relative payment weights for APCs. 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. In the CY 2017 OPPS/ASC proposed rule (81 FR 45615), for CY 2017, we proposed to recalibrate the APC relative payment weights for services furnished on or after January 1, 2017, and before January 1, 2018 (CY 2017), using the same basic methodology that we described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70309 through 70321). That is, we proposed to recalibrate the relative payment weights for each APC based on claims and cost report data for hospital outpatient department (HOPD) services, using the most recent available data to construct a database for calculating APC group weights. For the purpose of recalibrating the proposed APC relative payment weights for CY 2017, we used approximately 163 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2015, and before January 1, 2016. Addendum N to the proposed rule included the proposed list of bypass codes for CY 2017. The proposed list of bypass codes contains codes that were reported on claims for services in CY 2015 and, therefore, includes codes that were in effect in CY 2015 and used for billing, but were deleted for CY 2016. We retained these deleted bypass codes on the proposed CY 2017 bypass list because these codes existed in CY 2015 and were covered OPD services in that period, and CY 2015 claims data are used to calculate CY 2017 payment rates. Keeping these deleted bypass codes on the bypass list potentially allows us to create more “pseudo” single procedure claims for ratesetting purposes. “Overlap bypass codes” that are members of the proposed multiple imaging composite APCs were identified by asterisks (*) in the third column of Addendum N to the proposed rule. HCPCS codes that we proposed to add for CY 2017 were identified by asterisks (*) in the fourth column of Addendum N. We did not receive any public comments on our general proposal to recalibrate the relative payment weights for each APC based on claims and cost report data for HOPD services or on our proposed bypass code process. Therefore, we are adopting as final the proposed “pseudo” single claims process and the final CY 2017 bypass list of 194 HCPCS codes, as displayed in Addendum N to this final rule with comment period (which is available via the Internet on the CMS Web site). For this final rule with comment period, for the purpose of recalibrating the final APC relative payment weights for CY 2017, we used approximately 86 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2015, and before January 1, 2016. For exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for this CY 2017 OPPS/ASC final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Table 1 below contains the list of codes that we are removing from the CY 2017 bypass list. Table 1—HCPCS Codes Removed From the CY 2017 Bypass List HCPCS code HCPCS short descriptor 95925 Somatosensory testing. 95808 Polysom any age 1-3> param. 90845 Psychoanalysis. 96151 Assess hlth/behave subseq. 31505 Diagnostic laryngoscopy. 95872 Muscle test one fiber. b. Calculation and Use of Cost-to-Charge Ratios (CCRs) For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45616), we proposed to continue to use the hospital-specific overall ancillary and departmental cost-to-charge ratios (CCRs) to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk. To calculate the APC costs on which the CY 2017 APC payment rates are based, we calculated hospital-specific overall ancillary CCRs and hospital-specific departmental CCRs for each hospital for which we had CY 2015 claims data by comparing these claims data to the most recently available hospital cost reports, which, in most cases, are from CY 2014. For the proposed CY 2017 OPPS payment rates, we used the set of claims processed during CY 2015. We applied the hospital-specific CCR to the hospital's charges at the most detailed level possible, based on a revenue code-to-cost center crosswalk that contains a hierarchy of CCRs used to estimate costs from charges for each revenue code. That crosswalk is available for review and continuous comment on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. To ensure the completeness of the revenue code-to-cost center crosswalk, we reviewed changes to the list of revenue codes for CY 2015 (the year of claims data we used to calculate the proposed CY 2017 OPPS payment rates) and found that the National Uniform Billing Committee (NUBC) did not add any new revenue codes to the NUBC 2015 Data Specifications Manual. In accordance with our longstanding policy, we calculated CCRs for the standard and nonstandard cost centers accepted by the electronic cost report database. In general, the most detailed level at which we calculated CCRs was the hospital-specific departmental level. For a discussion of the hospital-specific overall ancillary CCR calculation, we refer readers to the CY 2007 OPPS/ASC final rule with comment period (71 FR 67983 through 67985). The calculation of blood costs is a longstanding exception (since the CY 2005 OPPS) to this general methodology for calculation of CCRs used for converting charges to costs on each claim. This exception is discussed in detail in the CY 2007 OPPS/ASC final rule with comment period and discussed further in section II.A.2.b.(1) of the proposed rule (81 FR 45617) and of this final rule with comment period. Comment: One commenter supported the CY 2014 final rule transitional policy of excluding providers that use a “square foot” methodology to calculate CCRs used to estimate costs associated with the CT and MRI APCs for CYs 2014-2017, as discussed in the CY 2017 OPPS proposed rule claims accounting narrative on pages 33 through 37, that was made available under supporting documentation for the CY 2017 OPPS/ASC proposed rule on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. However, the commenter opposed the provision of the CY 2014 final rule policy that was discussed in the CY 2017 OPPS proposed rule claims accounting narrative that sunsets this transitional policy after CY 2017. Response: We thank the commenter for its support of our proposed CY 2017 policy. In response to the commenter's concern about the sunset of the transitional policy after CY 2017, while CY 2018 payment policies will be addressed in the CY 2018 OPPS/ASC proposed rule, we note that the sunset of this transitional policy for CY 2018 was discussed in the CY 2014 OPPS/ASC final rule with comment period. We believe that 4 years is sufficient time for hospitals that have not done so to transition to a more accurate cost allocation method and for the related data to be available for ratesetting purposes. After consideration of the public comment we received on the general CCR process, we are finalizing using the hospital-specific overall ancillary and departmental CCRs to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk and the established methodology for CY 2017. 2. Data Development Process and Calculation of Costs Used for Ratesetting In this section of this final rule with comment period, we discuss the use of claims to calculate the OPPS payment rates for CY 2017. The Hospital OPPS page on the CMS Web site on which this final rule with comment period is posted ( http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html ) provides an accounting of claims used in the development of the final payment rates. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, below in this section we discuss the file of claims that comprises the data set that is available for purchase under a CMS data use agreement. The CMS Web site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about purchasing the “OPPS Limited Data Set,” which now includes the additional variables previously available only in the OPPS Identifiable Data Set, including ICD-9-CM diagnosis codes and revenue code payment amounts. This file is derived from the CY 2015 claims that were used to calculate the payment rates for the CY 2017 OPPS. In the history of the OPPS, we have traditionally established the scaled relative weights on which payments are based using APC median costs, which is a process described in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). However, as discussed in more detail in section II.A.2.f. of the CY 2013 OPPS/ASC final rule with comment period (77 FR 68259 through 68271), we finalized the use of geometric mean costs to calculate the relative weights on which the CY 2013 OPPS payment rates were based. While this policy changed the cost metric on which the relative payments are based, the data process in general remained the same, under the methodologies that we used to obtain appropriate claims data and accurate cost information in determining estimated service cost. For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45616), we proposed to continue to use geometric mean costs to calculate the relative weights on which the CY 2017 OPPS payment rates are based. We did not receive any public comments on this proposed process and are finalizing our proposed methodology for calculating geometric mean costs for purposes of creating relative payment weights and subsequent APC payment rates for the CY 2017 OPPS. We used the methodology described in sections II.A.2.a. through II.A.2.d. of this final rule with comment period to calculate the costs we used to establish the relative payment weights used in calculating the final OPPS payment rates for CY 2017 shown in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site). We refer readers to section II.A.4. of this final rule with comment period for a discussion of the conversion of APC costs to scaled payment weights. For details of the claims process used in this final rule with comment period, we refer readers to the claims accounting narrative under supporting documentation for this CY 2017 OPPS/ASC final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. a. Recommendations of the Advisory Panel on Hospital Outpatient Payment (the Panel) Regarding Data Development As we discussed in the CY 2017 OPPS/ASC proposed rule (81 FR 45616 through 45617), at the March 14, 2016 meeting of the Panel, we presented our standard analysis of APCs, specifically those APCs for which geometric mean costs in the CY 2015 claims data through September 2015 varied significantly from the CY 2014 claims data used for the CY 2016 OPPS/ASC final rule with comment period. At the March 14, 2016 Panel meeting, the Panel made three recommendations related to the data process. The Panel's data-related recommendations and our responses follow. Recommendation: The Panel recommends that CMS provide the Data Subcommittee a list of APCs fluctuating significantly in costs prior to each Panel meeting. CMS Response: We accepted this recommendation. Recommendation: The Panel recommends that the work of the Data Subcommittee continue. CMS Response: We accepted this recommendation. Recommendation: The Panel recommends that Michael Schroyer continue serving as subcommittee Chair for the August 2016 HOP Panel. CMS Response: We accepted this recommendation. At the August 22, 2016 meeting of the Panel, we provided the Data Committee a list of APCs for CY 2017 for which geometric mean costs in the CY 2015 claims data varied significantly from the CY 2014 claims data used for the CY 2016 OPPS/ASC final rule with comment period. At the August 22, 2016 Panel meeting, the Panel made four recommendations related to the data process. The Panel's data-related recommendations and our responses follow. Recommendation: The Panel recommends that CMS provide the Data Subcommittee a list of APCs fluctuating significantly in costs prior to each Panel meeting. CMS Response: We are accepting this recommendation. Recommendation: The Panel recommends that CMS provide the Data Subcommittee a presentation on the claims accounting process prior to each HOP Panel meeting. CMS Response: We are accepting this recommendation. Recommendation: The Panel recommends that the work of the data subcommittee continue. CMS Response: We are accepting this recommendation. Recommendation: The Panel recommends that Michael Schroyer continue serving as Chair of the Data Subcommittee. CMS Response: We are accepting this recommendation. b. Calculation of Single Procedure APC Criteria-Based Costs (1) Blood and Blood Products (a) Methodology Since the implementation of the OPPS in August 2000, we have made separate payments for blood and blood products through APCs rather than packaging payment for them into payments for the procedures with which they are administered. Hospital payments for the costs of blood and blood products, as well as for the costs of collecting, processing, and storing blood and blood products, are made through the OPPS payments for specific blood product APCs. For CY 2017, in the CY 2017 OPPS/ASC proposed rule (81 FR 45617), we proposed to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. This methodology has been our standard ratesetting methodology for blood and blood products since CY 2005. It was developed in response to data analysis indicating that there was a significant difference in CCRs for those hospitals with and without blood-specific cost centers, and past public comments indicating that the former OPPS policy of defaulting to the overall hospital CCR for hospitals not reporting a blood-specific cost center often resulted in an underestimation of the true hospital costs for blood and blood products. Specifically, in order to address the differences in CCRs and to better reflect hospitals' costs, we proposed to continue to simulate blood CCRs for each hospital that does not report a blood cost center by calculating the ratio of the blood-specific CCRs to hospitals' overall CCRs for those hospitals that do report costs and charges for blood cost centers. We also proposed to apply this mean ratio to the overall CCRs of hospitals not reporting costs and charges for blood cost centers on their cost reports in order to simulate blood-specific CCRs for those hospitals. We proposed to calculate the costs upon which the CY 2017 payment rates for blood and blood products are based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital-specific, simulated blood-specific CCR for hospitals that did not report costs and charges for a blood cost center. We continue to believe that the hospital-specific, simulated blood-specific CCR methodology better responds to the absence of a blood-specific CCR for a hospital than alternative methodologies, such as defaulting to the overall hospital CCR or applying an average blood-specific CCR across hospitals. Because this methodology takes into account the unique charging and cost accounting structure of each hospital, we believe that it yields more accurate estimated costs for these products. We continue to believe that this methodology in CY 2017 would result in costs for blood and blood products that appropriately reflect the relative estimated costs of these products for hospitals without blood cost centers and, therefore, for these blood products in general. We note that, as discussed in section II.A.2.e. of the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 74910), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66798 through 66810), and the CY 2016 OPPS/ASC final rule with comment period (80 FR 70325 through 70339), we defined a comprehensive APC (C-APC) as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. Under this policy, we include the costs of blood and blood products when calculating the overall costs of these C-APCs. We proposed to continue to apply the blood-specific CCR methodology described in this section when calculating the costs of the blood and blood products that appear on claims with services assigned to the C-APCs. Because the costs of blood and blood products will be reflected in the overall costs of the C-APCs (and, as a result, in the payment rates of the C-APCs), we proposed to not make separate payments for blood and blood products when they appear on the same claims as services assigned to the C-APCs (we refer readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR 66796)). We invited public comments on these proposals. We also referred readers to Addendum B to the proposed rule (which was available via the Internet on the CMS Web site) for the proposed CY 2017 payment rates for blood and blood products (which were identified with status indicator “R”). For a more detailed discussion of the blood-specific CCR methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full history of OPPS payment for blood and blood products, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 through 66810). Comment: Commenters supported the proposal to continue to separately pay for blood and blood products using a blood-specific CCR methodology. Response: We appreciate the commenters' support. After consideration of the public comments we received, we are finalizing our CY 2017 proposal to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology. The final CY 2017 payment rates for blood and blood products (which are identified with status indicator “R”) are reflective of the use of the hospital-specific simulated blood-specific CCR methodology and can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site). (b) Solicitation of Public Comments As discussed in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323), we are in the process of examining the current set of HCPCS P-codes for blood products, which became effective many years ago. Because these HCPCS P-codes were created many years ago, we are considering whether this code set could benefit from some code descriptor revisions, updating, and/or consolidation to make these codes properly reflect current product descriptions and utilization while minimizing redundancy and potentially outdated descriptors. In the CY 2017 OPPS/ASC proposed rule (81 FR 45617 through 45618), we requested public comments regarding the adequacy and necessity (in terms of the existing granularity) of the current descriptors for the HCPCS P-codes describing blood products. Specifically, there are three main categories of blood products: Red blood cells; platelets; and plasma. In each of these categories, there are terms that describe various treatments or preparations of the blood products, with each, in several cases, represented individually and in combination. For example, for pheresis platelets, there are codes for “leukocyte reduced,” “irradiated,” “leukocyte reduced + irradiated,” and “leukocyte reduced + irradiated + CMV-negative,” among others. We asked the blood product stakeholder community whether the current blood product HCPCS P-code descriptors with the associated granularity best describe the state of the current technology for blood products that hospitals currently provide to hospital outpatients. In several cases, the hospital costs as calculated from the CMS claims data are similar for blood products of the same type (for example, pheresis platelets) that have different code descriptors, which indicates to us that there is not a significant difference in the resources needed to produce the similar products. Again, we invited public comments on the current set of active HCPCS P-codes that describe blood products regarding how the code descriptors could be revised and updated (if necessary) to reflect the current blood products provided to hospital outpatients. The current set of active HCPCS P-codes that describe blood products can be found in Addendum B to the proposed rule and this final rule with comment period (which is available via the Internet on the CMS Web site). Comment: Several commenters responded to the solicitation for public comments and supported a thorough examination of the current set of HCPCS P-codes for blood products as a necessary undertaking because the HCPCS P-codes were created several years ago. Several commenters recommended that CMS convene a stakeholder group that includes representatives of hospitals, blood banks, the American Red Cross, and others to discuss a framework to systematically review and revise the HCPCS P-codes for blood products. Commenters also encouraged CMS to retain individual HCPCS P-codes for unique blood products with significant therapeutic distinctions, as opposed to creating modifiers to be applied to the existing HCPCS P-codes. Commenters also suggested that CMS establish a “not otherwise classified (NOC)” code for blood products, which would allow hospitals to begin immediately billing for a new blood product that is not described by a specific HCPCS P-code. One commenter supported the use of broader descriptions for HCPCS P-codes when more granular language is no longer meaningful for differentiating between different types of blood and blood products, and where the costs and volume of the HCPCS P-codes are similar. Other commenters suggested specific modifications to the order, classification, and code descriptors of the blood and blood product HCPCS P-codes. Response: We appreciate the commenters' detailed responses. These comments will be taken into consideration in the development of proposals to update the HCPCS P-codes that describe blood products. (c) Rapid Bacterial Testing for Platelets In March 2016, the Food and Drug Administration (FDA) issued draft guidance for the health care industry entitled, “Bacterial Risk Control Strategies for Blood Collection Establishments and Transfusion Services to Enhance the Safety and Availability of Platelets for Transfusion” (available at: http://www.fda.gov/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/default.htm ). This guidance encourages the use of rapid bacterial testing devices or pathogen-reduction technology for platelets to adequately control the risk of bacterial contamination of platelets. In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322), CMS established three HCPCS P-codes for pathogen-reduced blood products, which became effective January 1, 2016. These codes included: HCPCS code P9070 (Plasma, pooled multiple donor, pathogen reduced, frozen, each unit); HCPCS code P9071 (Plasma (single donor), pathogen reduced, frozen, each unit); and HCPCS code P9072 (Platelets, pheresis, pathogen reduced, each unit). The HCPCS Workgroup has decided to revise the HCPCS code established in CY 2016 for pathogen-reduced platelets (HCPCS code P9072) to include the use of pathogen-reduction technology or rapid bacterial testing. Specifically, the descriptor for this code will be revised, effective January 1, 2017, to read as follows: HCPCS code P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit). The payment rate for HCPCS code P9072 is based on a crosswalk to HCPCS code P9037 (Platelets, pheresis, leukocyte reduced, irradiated, each unit). We refer readers to the CY 2016 OPPS/ASC final rule with comment period for a further discussion of crosswalks for pathogen-reduced blood products (80 FR 70323). When claims data become available for HCPCS code P9072, we will establish a payment rate for this code using that data and our blood-specific CCR methodology. The revised HCPCS code descriptor and final payment rate for this service can be found in Addendum B of this final rule with comment period (which is available via the Internet on the CMS Web site). (2) Brachytherapy Sources Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of covered OPD services that classify devices of brachytherapy consisting of a seed or seeds (or radioactive source) (“brachytherapy sources”) separately from other services or groups of services. The statute provides certain criteria for the additional groups. For the history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 through 68241). As we have stated in prior OPPS updates, we believe that adopting the general OPPS prospective payment methodology for brachytherapy sources is appropriate for a number of reasons (77 FR 68240). The general OPPS methodology uses costs based on claims data to set the relative payment weights for hospital outpatient services. This payment methodology results in more consistent, predictable, and equitable payment amounts per source across hospitals by averaging the extremely high and low values, in contrast to payment based on hospitals' charges adjusted to costs. We believe that the OPPS methodology, as opposed to payment based on hospitals' charges adjusted to cost, also would provide hospitals with incentives for efficiency in the provision of brachytherapy services to Medicare beneficiaries. Moreover, this approach is consistent with our payment methodology for the vast majority of items and services paid under the OPPS. We refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 through 70325) for further discussion of the history of OPPS payment for brachytherapy sources. In the CY 2017 OPPS/ASC proposed rule (81 FR 45618), for CY 2017, we proposed to use the costs derived from CY 2015 claims data to set the CY 2017 payment rates for brachytherapy sources because CY 2015 is the same year of data we proposed to use to set the proposed payment rates for most other items and services that would be paid under the CY 2017 OPPS. We proposed to base the payment rates for brachytherapy sources on the geometric mean unit costs for each source, consistent with the methodology that we proposed for other items and services paid under the OPPS, as discussed in section II.A.2. of the proposed rule. We also proposed to continue the other payment policies for brachytherapy sources that we finalized and first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). We proposed to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 and C2699, at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per source basis (as opposed to, for example, a per mCi), which is based on the policy we established in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). For CY 2017 and subsequent years, we also proposed to continue the policy we first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding payment for new brachytherapy sources for which we have no claims data, based on the same reasons we discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66786; which was delayed until January 1, 2010 by section 142 of Pub. L. 110-275). Specifically, this policy is intended to enable us to assign new HCPCS codes for new brachytherapy sources to their own APCs, with prospective payment rates set based on our consideration of external data and other relevant information regarding the expected costs of the sources to hospitals. The proposed CY 2017 payment rates for brachytherapy sources were included in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site) and were identified with status indicator “U”. We note that, for CY 2017, we proposed to assign new proposed status indicator “E2” (Items and Services for Which Pricing Information and Claims Data Are Not Available) to HCPCS code C2644 (Brachytherapy cesium-131 chloride) because this code was not reported on CY 2015 claims. Therefore, we are unable to calculate a payment rate based on the general OPPS ratesetting methodology described earlier. Although HCPCS code C2644 became effective July 1, 2014, and although we would expect that if a hospital furnished a brachytherapy source described by this code in CY 2015, HCPCS code C2644 should appear on the CY 2015 claims, there are no CY 2015 claims reporting this code. In addition, unlike new brachytherapy sources HCPCS codes, we will not consider external data to determine a proposed payment rate for HCPCS code C2644 for CY 2017. Therefore, we proposed to assign new proposed status indicator “E2” to HCPCS code C2644. We invited public comments on this proposed policy. We also requested recommendations for new HCPCS codes to describe new brachytherapy sources consisting of a radioactive isotope, including a detailed rationale to support recommended new sources. Comment: One commenter requested that CMS establish a new HCPCS code to specifically describe the use of CivaString®, a linear, low dose rate polymer encapsulated palladium-103 brachytherapy source. The commenter stated that CivaString® became commercially available in CY 2013, and providers began reporting charges for the brachytherapy source using HCPCS code C2636 (Brachytherapy linear, non-stranded, palladium-103). However, the commenter believed that providers experienced confusion regarding the appropriate reporting of HCPCS code C2636. The commenter stated that six hospitals reported charges using HCPCS code C2636 over the past 6 years, without purchasing a linear, non-stranded palladium-103 brachytherapy source. Moreover, the commenter believed that providers may have inappropriately reported charges using HCPCS code C2636, including instances where providers reported charges for the use of HCPCS code 2636 although acquisition of CivaString® had not been obtained when it became commercially available in CY 2013. In addition, the commenter stated that the National Correct Coding Initiative (NCCI) established a medically unlikely edit (MUE) for HCPCS code C2636 in the outpatient hospital setting for 150 mm, effective April 1, 2010. Subsequently, in November 2015, the manufacturer of CivaString® requested that the MUE be increased to 900 mm based on the recommended clinical usage of CivaString®. In response to that request, the NCCI increased the MUE to 600 mm, effective April 1, 2016. However, the commenter further stated that claims for the use of CivaString® with the appropriate number of units continued to be denied based on the MUE. Because of these concerns, the commenter requested that CMS establish a new HCPCS code to specifically describe the use of CivaString®, as well as an increase in the payment rate proposed to adequately pay for the costs of this brachytherapy source. Response: Section 1833(t)(2)(h) of the Act requires that the Secretary create additional groups of covered outpatient department services that classify brachytherapy sources separately from other services in a manner reflecting the number, isotope, and radioactive intensity of such sources. As such, we believe that HCPCS code C2636 adequately describes the clinical properties of CivaString®. Therefore, it is not necessary and would be duplicative to create a separate group for another linear, non-stranded palladium-103 source. HCPCS code C2636 has been active since January 1, 2005. In response to the commenter's conce [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2016-26515. Public record. Not legal advice.