Medicare Program: Proposed Changes to the Hospital Outpatient Prospective Payment System and CY 2009 Payment Rates; Proposed Changes to the Ambulatory Surgical Center Payment System and CY 2009 Payment Rates
Federal RegisterJul 18, 2008
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410 and 419
[CMS-1404-P]
RIN 0938-AP17
Medicare Program: Proposed Changes to the Hospital Outpatient Prospective Payment System and CY 2009 Payment Rates; Proposed Changes to the Ambulatory Surgical Center Payment System and CY 2009 Payment Rates
AGENCY:
Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION:
Proposed rule.
SUMMARY:
This proposed rule would revise the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system. In this proposed rule, we describe the proposed changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes would be applicable to services furnished on or after January 1, 2009.
In addition, this proposed rule would update the revised Medicare ambulatory surgical center (ASC) payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system. In this proposed rule, we propose the applicable relative payment weights and amounts for services furnished in ASCs, specific HCPCS codes to which these proposed changes would apply, and other pertinent ratesetting information for the CY 2009 ASC payment system. These changes would be applicable to services furnished on or after January 1, 2009.
DATES:
To be assured consideration, comments on all sections of the preamble of this proposed rule must be received at one of the addresses provided in the
ADDRESSES
section no later than 5 p.m. EST on September 2, 2008.
ADDRESSES:
In commenting, please refer to file code CMS-1404-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates, please):
1.
Electronically
. You may submit electronic comments on this regulation to
http://www.regulations.gov
. Follow the instructions for “Comment or Submission” and enter the filecode to find the document accepting comments.
2.
By regular mail
. You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1404-P, 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 (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1404-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4.
By hand or courier
. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses:
a. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201.
(Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)
b. 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address, please call the telephone number (410) 786-9994 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.
Submission of comments on paperwork requirements
. You may submit comments on this document's paperwork requirements by following the instructions at the end of the “Collection of Information Requirements” section in this document.
For information on viewing public comments, see the beginning of the
SUPPLEMENTARY INFORMATION
section.
FOR FURTHER INFORMATION CONTACT:
Alberta Dwivedi, (410) 786-0378—Hospital outpatient prospective payment issues; Dana Burley, (410) 786-0378—Ambulatory surgical center issues; Suzanne Asplen, (410) 786-4558—Partial hospitalization and community mental health center issues; Sheila Blackstock, (410) 786-3502—Reporting of quality data issues.
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 as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday through Friday of each week from 8:30 a.m. to 4 p.m. EST. To schedule an appointment to view public comments, phone 1-800-743-3951.
Electronic Access
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Federal Register
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, a service of the U.S. Government Printing Office. Free public access is available on a Wide Area Information Server (WAIS) through the Internet and via asynchronous dial-in. Internet users can access the database by using the World Wide Web; the Superintendent of Documents' home page address is
http://www.gpoaccess.gov/index.html
, by using local WAIS client software, or by telnet to swais.access.gpo.gov, then login as guest (no password required). Dial-in users should use communications software and modem to call (202) 512-1661; type swais, then login as guest (no password required).
Alphabetical List of Acronyms Appearing in This Proposed Rule
ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
APC Ambulatory payment classification
AMP Average manufacturer price
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L. 106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Pub. L. 106-554
CAH Critical access hospital
CAP Competitive Acquisition Program
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CERT Comprehensive Error Rate Testing
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CoP Condition of participation
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition, 2007, copyrighted by the American Medical Association
CRNA Certified registered nurse anesthetist
CY Calendar year
DMEPOS Durable medical equipment, prosthetics, orthotics, and supplies
DMERC Durable medical equipment regional carrier
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Pub. L. 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FTE Full-time equivalent
FY Federal fiscal year
GAO Government Accountability Office
GME Graduate medical education
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996, Pub. L. 104-191
HOPD Hospital outpatient department
HOP QDRP Hospital Outpatient Quality Data Reporting Program
ICD-9-CM International Classification of Diseases, Ninth Edition, Clinical Modification
IDE Investigational device exemption
IME Indirect medical education
I/OCE Integrated Outpatient Code Editor
IOL Intraocular lens
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractors
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MIEA-TRHCA Medicare Improvements and Extension Act under Division B, Title I of the Tax Relief Health Care Act of 2006, Pub. L. 109-432
MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Pub. L. 108-173
MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Pub. L. 110-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PPV Pneumococcal pneumonia vaccine
PRA Paperwork Reduction Act
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update [Program]
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
WAC Wholesale acquisition cost
In this document, we address two payment systems under the Medicare program: The hospital outpatient prospective payment system (OPPS) and the revised ambulatory surgical center (ASC) payment system. The provisions relating to the OPPS are included in sections I. through XIV., and XVI. through XXI. of this proposed rule and in Addenda A, B, C (Addendum C is available on the Internet only; see section XVIII. of this proposed rule), D1, D2, E, L, and M to this proposed rule. The provisions related to the revised ASC payment system are included in sections XV. and XVII. through XXI. of this proposed rule and in Addenda AA, BB, DD1, DD2, and EE (Addendum EE is available on the Internet only; see section XVIII. of this proposed rule) to this proposed rule.
Table of Contents
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. APC Advisory Panel
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
E. Provisions of the Medicare, Medicaid, and SCHIP Extension Act of 2007
F. Summary of the Major Contents of This Proposed Rule
1. Proposed Updates Affecting OPPS Payments
2. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies
3. Proposed OPPS Payment for Devices
4. Proposed OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals
5. Proposed Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices
6. Proposed OPPS Payment for Brachytherapy Sources
7. Proposed OPPS Payment for Drug Administration Services
8. Proposed OPPS Payment for Hospital Outpatient Visits
9. Proposed Payment for Partial Hospitalization Services
10. Proposed Procedures That Will Be Paid Only as Inpatient Services
11. OPPS Nonrecurring and Policy Clarifications
12. Proposed OPPS Payment Status and Comment Indicators
13. OPPS Policy and Payment Recommendations
14. Proposed Update of the Revised Ambulatory Surgical Center Payment System
15. Proposed Quality Data for Annual Payment Updates
16. Healthcare-Associated Conditions
17. Regulatory Impact Analysis
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
b. Proposed Use of Single and Multiple Procedure Claims
c. Proposed Calculation of CCRs
(1) Development of the CCRs
(2) Charge Compression
2. Proposed Calculation of Median Costs
a. Claims Preparations
b. Splitting Claims and Creation of “Pseudo” Single Claims
c. Completion of Claim Records and Median Cost Calculations
d. Proposed Calculation of Single Procedure APC Criteria-Based Median Costs
(1) Device-Dependent APCs
(2) Blood and Blood Products
(3) Single Allergy Tests
(4) Echocardiography Services
(5) Nuclear Medicine Services
(6) Hyperbaric Oxygen Therapy
(7) Payment for Ancillary Outpatient Services When Patient Expires (-CA Modifier)
e. Proposed Calculation of Composite APC Criteria-Based Median Costs
(1) Extended Assessment and Management Composite APCs (APCs 8002 and 8003)
(2) Low Dose Rate (LDR) Prostate Brachytherapy Composite APC (APC 8001)
(3) Cardiac Electrophysiologic Evaluation and Ablation Composite APC (APC 8000)
(4) Mental Health Services Composite APC (APC 0034)
(5) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)
3. Proposed Calculation of OPPS Scaled Payment Weights
4. Proposed Changes to Packaged Services
a. Background
b. Service-Specific Packaging Issues
(1) Package Services Addressed by APC Panel Recommendations
(2) IVIG Preadministration-Related Services
B. Proposed Conversion Factor Update
C. Proposed Wage Index Changes
D. Proposed Statewide Average Default CCRs
E. Proposed OPPS Payments to Certain Rural Hospitals
1. Hold Harmless Transitional Payment Changes Made by Pub. L. 109-171 (DRA)
2. Proposed Adjustment for Rural SCHs Implemented in CY 2006 Related to Pub. L. 108-173 (MMA)
F. Proposed Hospital Outpatient Outlier Payments
1. Background
2. Proposed Outlier Calculation
3. Outlier Reconciliation
G. Proposed Calculation of an Adjusted Medicare Payment from the National Unadjusted Medicare Payment
H. Proposed Beneficiary Copayments
1. Background
2. Proposed Copayments
3. Calculation of a Proposed Adjusted Copayment Amount for an APC Group
III. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies
A. Proposed OPPS Treatment of New HCPCS and CPT Codes
1. Proposed Treatment of New HCPCS Codes Included in the April and July Quarterly OPPS Updates for CY 2008
2. Proposed Treatment of New Category I and III CPT Codes and Level II HCPCS Codes
B. Proposed OPPS Changes—Variations within APCs
1. Background
2. Application of the 2 Times Rule
3. Proposed Exceptions to the 2 Times Rule
C. New Technology APCs
1. Background
2. Proposed Movement of Procedures from New Technology APCs to Clinical APCs
D. Proposed OPPS APC-Specific Policies
1. Trauma Response Associated with Hospital Critical Care Services (APC 0618)
2. Suprachoroidal Delivery of Pharmacologic Agent (APC 0236)
3. Closed Treatment Fracture of Finger/Toe/Trunk (APC 0043)
4. Individual Psychotherapy (APCs 0322 and 0323)
5. Implant Injection for Vesicoureteral Reflex (APC 0162)
IV. Proposed OPPS Payment for Devices
A. Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain Devices
a. Background
b. Proposed Policy
2. Proposed Provisions for Reducing Transitional Pass-Through Payments to Offset Costs Packaged into APC Groups
a. Background
b. Proposed Policy
B. Proposed Adjustment to OPPS Payments for Partial or Full Credit Devices
1. Background
2. Proposed APCs and Devices Subject to the Adjustment Policy
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals
A. Proposed OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals
1. Background
2. Proposed Drugs and Biologicals with Expiring Pass-Through Status in CY 2008
3. Proposed Drugs, Biologicals, and Radiopharmaceuticals with New or Continuing Pass-Through Status in CY 2009
4. Proposed Reduction of Transitional Pass-Through Payments for Diagnostic Radiopharmaceuticals to Offset Costs Packaged into APC Groups
B. Proposed OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals
a. Drugs, Biologicals, and Therapeutic Radiopharmaceuticals
b. Proposed Payment for Diagnostic Radiopharmaceuticals and Contrast Agents
3. Proposed Payment for Drugs and Biologicals without Pass-Through Status That Are Not Packaged
a. Payment for Specified Covered Outpatient Drugs (SCODs)
b. Proposed Payment Policy
c. Proposed Payment for Blood Clotting Factors
4. Proposed Payment for Therapeutic Radiopharmaceuticals
a. Background
b. Proposed Payment Policy
5. Proposed Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals with HCPCS Codes, but without OPPS Hospital Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Background
B. Proposed Estimate of Pass-Through Spending
VII. Proposed OPPS Payment for Brachytherapy Sources
A. Background
B. Proposed OPPS Payment Policy
VIII. Proposed OPPS Payment for Drug Administration Services
A. Background
B. Proposed Coding and Payment for Drug Administration Services
IX. Proposed OPPS Payment for Hospital Outpatient Visits
A. Background
B. Proposed Policies for Hospital Outpatient Visits
1. Clinic Visits: New and Established Patient Visits
2. Emergency Department Visits
3. Visit Reporting Guidelines
X. Proposed Payment for Partial Hospitalization Services
A. Background
B. Proposed PHP APC Update
C. Proposed Policy Changes
1. Proposal to Deny Payments for Low Intensity Days
2. Proposal to Strengthen PHP Patient Eligibility Criteria
3. Proposed Partial Hospitalization Coding Update
C. Proposed Separate Threshold for Outlier Payments to CMHCs
XI. Proposed Procedures That Will Be Paid Only as Inpatient Procedures
A. Background
B. Proposed Changes to the Inpatient List
XII. OPPS Nonrecurring Technical and Policy Clarifications
A. Physician Supervision of HOPD Services
1. Background
2. Summary
B. Reporting of Pathology Services for Prostrate Saturation Biopsy
XIII. Proposed OPPS Payment Status and Comment Indicators
A. Proposed OPPS Payment Status Indicator Definitions
1. Proposed Payment Status Indicators to Designate Services That Are Paid under the OPPS
2. Proposed Payment Status Indicators to Designate Services That Are Paid under a Payment System Other Than the OPPS
3. Proposed Payment Status Indicators to Designate Services That Are Not Recognized under the OPPS But That May Be Recognized by Other Institutional Providers
4. Proposed Payment Status Indicators to Designate Services That Are Not Payable by Medicare
B. Proposed Comment Indicator Definitions
XIV. OPPS Policy and Payment Recommendations
A. Medicare Payment Advisory Commission (MedPAC) Recommendations
1. March 2008 Report
2. June 2007 Report
B. APC Panel Recommendations
C. OIG Recommendations
XV. Proposed Update of the Revised Ambulatory Surgical Center Payment System
A. Background
1. Legislative Authority for the ASC Payment System
2. Prior Rulemaking
3. Policies Governing Changes to the Lists of HCPCS Codes and Payment Rates for ASC Covered Surgical Procedures and Covered Ancillary Services
B. Proposed Treatment of New Codes
1. Proposed Treatment of New Category I and III CPT Codes and Level II HCPCS Codes
2. Proposed Treatment of New Level II HCPCS Codes Implemented in April and July 2008
C. Proposed Update to the Lists of ASC Covered Surgical Procedures and Covered Ancillary Services
1. Covered Surgical Procedures
a. Proposed Additions to the List of ASC Covered Surgical Procedures
b. Covered Surgical Procedures Designated as Office Based
(1) Background
(2) Proposed Changes to Covered Surgical Procedures Designated as Office-Based for CY 2009
c. Covered Surgical Procedures Designated as Device-Intensive
(1) Background
(2) Proposed Changes to List of Covered Surgical Procedures Designated as Device-Intensive for CY 2009
2. Covered Ancillary Services
D. Proposed ASC Payment for Covered Surgical Procedures and Covered Ancillary Services
1. Proposed Payment for Covered Surgical Procedures
a. Background
b. Proposed Update to ASC Covered Surgical Procedure Payment Rates for CY 2009
c. Proposed Adjustment to ASC Payments for Partial or Full Device Credit
2. Proposed Payment for Covered Ancillary Services
a. Background
b. Proposed Payment for Covered Ancillary Services for CY 2009
E. New Technology Intraocular Lenses
1. Background
2. NTIOL Application Process for Payment Adjustment
3. Classes of NTIOLs Approved and New Request for Payment Adjustment
a. Background
b. Requests to Establish New NTIOL Class for CY 2009 and Deadline for Public Comment
4. Proposed Payment Adjustment
5. Proposed ASC Payment for Insertion of IOLs
F. Proposed ASC Payment and Comment Indicators
1. Background
2. Proposed ASC Payment and Comment Indicators
G. Calculation of the ASC Conversion Factor and ASC Payment Rates
1. Background
2. Proposed Policy Regarding Calculation of the ASC Payment Rates
a. Updating the ASC Relative Payment Weights for CY 2009 and Future Years
b. Updating the ASC Conversion Factor
3. Display of Proposed ASC Payment Rates
XVI. Reporting Quality Data for Annual Payment Rate Updates
A. Background
1. Reporting Hospital Outpatient Quality Data for Annual Payment Update
2. Reporting ASC Quality Data for Annual Payment Update
B. Existing Hospital Outpatient Measures for CY 2009
C. Proposed Quality Measures for CY 2010 and Subsequent Calendar Years and Proposed Process to Update Measures
1. Proposed Quality Measures for CY 2010 Payment Determinations
2. Proposed Process for Updating Measures
3. Possible New Quality Measures for CY 2011 and Subsequent Calendar Years
D. Proposed Payment Reduction for Hospitals That Fail to Meet the HOP QDRP Requirements for the CY 2009 Payment Update
1. Background
2. Proposed Reduction of OPPS Payments for Hospitals That Fail to Meet the HOP QDRP CY 2009 Payment Update Requirements
a. Calculation of Reduced National Unadjusted Payment Rates
b. Calculation of Reduced Minimum Unadjusted and National Unadjusted Beneficiary Copayments
c. Treatment of Other Payment Adjustments
E. Requirements for HOP Quality Data Reporting for CY 2010 and Subsequent Calendar Years
1. Administrative Requirements
2. Data Collection and Submission Requirements
3. HOP QDRP Validation Requirements
a. Proposed Data Validation Requirements for CY 2010
b. Alternative Data Validation Approaches for CY 2011
F. Publication of HOP QDRP Data
G. Proposed HOP QDRP Reconsideration and Appeals Procedures
H. Reporting of ASC Quality Data
XVII. Healthcare-Associated Conditions
A. Background
B. Broadening the Concept of the IPPS Hospital-Acquired Conditions Payment Provision to the OPPS
1. Criteria for Possible Candidate OPPS Conditions
2. Collaboration Process
3. Potential OPPS Healthcare-Associated Conditions
4. OPPS Infrastructure and Payment for Encounters Resulting in Healthcare-Associated Conditions
XVIII. Files Available to the Public Via the Internet
A. Information in Addenda Related to the Proposed CY 2009 Hospital OPPS
B. Information in Addenda Related to the Proposed CY 2009 ASC Payment System
XIX. Collection of Information Requirements
A. Legislative Requirement for Solicitation of Comments
B. Associated Information Collections Not Specified in Regulatory Text
C. Addresses for Submittal of Comments on ICRs
XX. Response to Comments
XXI. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of OPPS Changes in This Proposed Rule
1. Alternatives Considered
2. Limitation of Our Analysis
3. Estimated Effects of This Proposed Rule on Hospitals
4. Estimated Effects of This Proposed Rule on CMHCs
5. Estimated Effects of This Proposed Rule on Beneficiaries
6. Conclusion
7. Accounting Statement
C. Effects of ASC Payment System Changes in This Proposed Rule
1. Alternatives Considered
2. Limitations on Our Analysis
3. Estimated Effects of This Proposed Rule on ASCs
4. Estimated Effects of This Proposed Rule on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of Proposed Requirements for Reporting of Quality Data for Annual Hospital Payment Update
E. Executive Order 12866
Regulation Text
Addenda
Addendum A—Proposed OPPS APCs for CY 2009
Addendum AA—Proposed ASC Covered Surgical Procedures for CY 2009 (Including Surgical Procedures for Which Payment Is Packaged)
Addendum B—Proposed OPPS Payment by HCPCS Code for CY 2009
Addendum BB—Proposed ASC Covered Ancillary Services Integral to Covered Surgical Procedures for CY 2009 (Including Ancillary Services for Which Payment Is Packaged)
Addendum D1—Proposed OPPS Payment Status Indicators
Addendum DD1—Proposed ASC Payment Indicators
Addendum D2—Proposed OPPS Comment Indicators
Addendum DD2—Proposed ASC Comment Indicators
Addendum E—Proposed HCPCS Codes That Would Be Paid Only as Inpatient Procedures for CY 2009
Addendum L—Proposed Out-Migration Adjustment
Addendum M—Proposed HCPCS Codes for Assignment to Composite APCs for CY 2009
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient Prospective Payment System
When the Medicare statute was originally enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the reasonable cost-based payment methodology with a prospective payment system (PPS). The Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33) added section 1833(t) to the Social Security Act (the Act) authorizing implementation of a PPS for hospital outpatient services.
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Pub. L. 106-113) made major changes in the hospital outpatient prospective payment system (OPPS). The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 (Pub. L. 106-554) made further changes in the OPPS. Section 1833(t) of the Act was also amended by the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-173). The Deficit Reduction Act (DRA) of 2005 (Pub. L. 109-171), enacted on February 8, 2006, also made additional changes in the OPPS. In addition, the Medicare Improvements and Extension Act under Division B of Title I of the
Tax Relief and Health Care Act (MIEA-TRHCA) of 2006 (Pub. L. 109-432), enacted on December 20, 2006, made further changes in the OPPS. Further, the Medicare, Medicaid, and SCHIP Extension Act (MMSEA) of 2007 (Pub. L. 110-173), enacted on December 29, 2007, made additional changes in the OPPS. A discussion of these changes is included in sections I.E., II.C., V., and VII. of this proposed rule.
The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR part 419.
Under the OPPS, we pay for hospital outpatient services on a rate-per-service basis that varies according to the ambulatory payment classification (APC) group to which the service is assigned. We use the Healthcare Common Procedure Coding System (HCPCS) codes (which include certain Current Procedural Terminology (CPT) codes) and descriptors to identify and group the services within each APC group. The OPPS includes payment for most hospital outpatient services, except those identified in section I.B. of this proposed rule. Section 1833(t)(1)(B)(ii) of the Act provides for Medicare payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by community mental health centers (CMHCs)) and hospital outpatient services that are furnished to inpatients who have exhausted their Part A benefits, or who are otherwise not in a covered Part A stay. Section 611 of Pub. L. 108-173 added provisions for Medicare coverage of an initial preventive physical examination, subject to the applicable deductible and coinsurance, as an outpatient department service, payable under the OPPS.
The OPPS rate is an unadjusted national payment amount that includes the Medicare payment and the beneficiary copayment. This rate is divided into a labor-related amount and a nonlabor-related amount. The labor-related amount is adjusted for area wage differences using the 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, services and items within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the APC group is more than 2 times greater than the lowest median cost for an item or service within the same APC group (referred to as the “2 times rule”). In implementing this provision, we generally use the median 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 data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as New Technology APCs. These New Technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a New Technology APC is temporary; that is, we retain a service within a New Technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.
B. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. Section 614 of Pub. L. 108-173 amended section 1833(t)(1)(B)(iv) of the Act to exclude payment for screening and diagnostic mammography services from the OPPS. The Secretary exercised the authority granted under the statute to also exclude from the OPPS those services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Medicare Physician Fee Schedule (MPFS); laboratory services paid under the clinical diagnostic laboratory fee schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD composite rate; and services and procedures that require an inpatient stay that are paid under the hospital inpatient prospective payment system (IPPS). We set forth the services that are excluded from payment under the OPPS in § 419.22 of the regulations.
Under § 419.20(b) of the regulations, we specify the types of hospitals and entities that are excluded from payment under the OPPS. These excluded entities include Maryland hospitals, but only for services that are paid under a cost containment waiver in accordance with section 1814(b)(3) of the Act; critical access hospitals (CAHs); hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; and Indian Health Service hospitals.
C. Prior Rulemaking
On April 7, 2000, we published in the
Federal Register
a final rule with comment period (65 FR 18434) to implement a prospective payment system for hospital outpatient services. The hospital OPPS was first implemented for services furnished on or after August 1, 2000. Section 1833(t)(9) of the Act requires the Secretary to review certain components of the OPPS, not less often than annually, and to revise the groups, relative payment weights, and other adjustments 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. We published in the
Federal Register
on November 27, 2007 the CY 2008 OPPS/ASC final rule with comment period (72 FR 66580). In that final rule with comment period, we revised the OPPS to update the payment weights and conversion factor for services payable under the CY 2008 OPPS on the basis of claims data from January 1, 2006, through December 31, 2006, and to implement certain provisions of Pub. L. 108-173 and Pub. L. 109-171. In addition, we responded to public comments received on the provisions of the November 26, 2006 final rule with comment period (71 FR 67960) pertaining to the APC assignment of HCPCS codes identified in Addendum B to that rule with the new interim (NI) comment indicator; and public comments received on the August 2,
2007 OPPS/ASC proposed rule for CY 2008 (72 FR 42628).
Subsequent to publication of the CY 2008 OPPS/ASC final rule with comment period, we published in the
Federal Register
on February 22, 2008, a correction notice (73 FR 9860) to correct certain technical errors in the CY 2008 OPPS/ASC final rule with comment period.
D. APC Advisory Panel
1. Authority of the APC Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of the BBRA, and redesignated by section 202(a)(2) of the BBRA, requires that we consult with an outside panel of experts to review the clinical integrity of the payment groups and their weights under the OPPS. The Act further specifies that the panel will act in an advisory capacity. The Advisory Panel on Ambulatory Payment Classification (APC) Groups (the APC Panel), discussed under section I.D.2. of this proposed rule, fulfills these requirements. The APC Panel is not restricted to using data compiled by CMS, and it may use data collected or developed by organizations outside the Department in conducting its review.
2. Establishment of the APC Panel
On November 21, 2000, the Secretary signed the initial charter establishing the APC Panel. This expert panel, which may be composed of up to 15 representatives of providers subject to the OPPS (currently employed full-time, not as consultants, in their respective areas of expertise), reviews clinical data and advises CMS about the clinical integrity of the APC groups and their payment weights. For purposes of this APC Panel, consultants or independent contractors are not considered to be full-time employees. The APC Panel is technical in nature, and is governed by the provisions of the Federal Advisory Committee Act (FACA). Since its initial chartering, the Secretary has renewed the APC Panel's charter three times: on November 1, 2002; on November 1, 2004; and effective November 21, 2006. The current charter specifies, among other requirements, that the APC Panel continues to be technical in nature; is governed by the provisions of the FACA; may convene up to three meetings per year; has a Designated Federal Officer (DFO); and is chaired by a Federal official designated by the Secretary.
The current APC Panel membership and other information pertaining to the APC Panel, including its charter,
Federal Register
notices, membership, meeting dates, agenda topics, and meeting reports can be viewed on the CMS Web site at:
http://www.cms.hhs.gov/FACA/05_AdvisoryPanelonAmbulatoryPaymentClassificationGroups.asp#TopOfPage.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27, February 28, and March 1, 2001. Since the initial meeting, the APC Panel has held 13 subsequent meetings, with the last meeting taking place on March 5, and March 6, 2008. Prior to each meeting, we publish a notice in the
Federal Register
to announce the meeting, and when necessary, to solicit nominations for APC Panel membership, and to announce new members.
The APC Panel has established an operational structure that, in part, includes the use of three subcommittees to facilitate its required APC review process. At its March 2008 meeting, the APC Panel recommended that the Observation and Visit Subcommittee's name be changed to the “Visits and Observation Subcommittee.” We are accepting this recommendation and will refer to the subcommittee by its new name, as appropriate, throughout this proposed rule. Thus, the three current subcommittees are the Data Subcommittee, the Visits and Observation Subcommittee, and the Packaging Subcommittee. The Data Subcommittee is responsible for studying the data issues confronting the APC Panel, and for recommending options for resolving them. The Visits and Observation Subcommittee reviews and makes recommendations to the APC Panel on all technical issues pertaining to observation services and hospital outpatient visits paid under the OPPS (for example, APC configurations and APC payment weights). The Packaging Subcommittee studies and makes recommendations on issues pertaining to services that are not separately payable under the OPPS, but whose payments are bundled or packaged into APC payments. Each of these subcommittees was established by a majority vote from the full APC Panel during a scheduled APC Panel meeting, and their continuation as subcommittees was last approved at the March 2008 APC Panel meeting. All subcommittee recommendations are discussed and voted upon by the full APC Panel.
Discussions of the recommendations resulting from the APC Panel's March 2008 meeting are included in the sections of this proposed rule that are specific to each recommendation. For discussions of earlier APC Panel meetings and recommendations, we refer readers to previously published hospital OPPS final rules or the Web site mentioned earlier in this section.
E. Provisions of the Medicare, Medicaid, and SCHIP Extension Act of 2007
The Medicare, Medicaid and SCHIP Extension Act (MMSEA) of 2007, (Pub. L. 110-173), enacted on December 29, 2007, included the following provisions that affect the OPPS and the revised APC payment system:
1. Increase in Physician Payment Update
Section 101 of the MMSEA provides a 0.5 percent increase in the physician payment update from January 1, 2008 through June 30, 2008; revises the Physician Assistance and Quality Initiative Fund, and extends through 2009 the physician quality reporting system. We refer readers to section XV. of this proposed rule for discussion of the effect of this provision on services paid under the revised ASC payment system.
2. Extended Expiration Date for Cost-Based OPPS Payment for Brachytherapy Sources and Therapeutic Radiopharmaceuticals
Section 106 of the MMSEA amended section 1833(t)(16)(C) of the Act, as amended by section 107 of the MIEA-TRCHA to extend for an additional 6 months, through June 30, 2008, payment for brachytherapy devices at hospitals' charges adjusted to costs and to mandate that the same cost-based payment methodology apply to therapeutic radiopharmaceuticals for the same extended payment period. We refer readers to sections V. and VII of this proposed rule for discussion of this provision.
3. Alternative Volume Weighting in Computation of Average Sales Price (ASP) for Medicare Part B Drugs
Section 112 of the MMSEA amended section 1847A(b) to provide for application of alternative volume weighting in computing the average sales price (ASP) for payment of Part B multiple source and single source drugs furnished after April 1, 2008, and for a special rule, beginning April 1, 2008, for payment of single source drugs or biologicals treated as a multiple source drug. This provision is discussed in section V. of this proposed rule.
4. Extended Expiration Date for Certain IPPS Wage Index Geographic Reclassifications and Special Exceptions
Section 117 of the MMSEA extended through September 30, 2008, both the reclassifications that were extended by section 106 of MIEA-TRCHA as well as certain special exception wage indices referenced in the FY 2005 IPPS final rule (69 FR 49105 and 49107). This provision also amended section 508 of Pub. L. 108-173 to specify conditions specific to the reclassification of a group of hospitals in a geographic area for discharges occurring during FY 2008. In addition, for hospital reclassifications extended by section 106(a) of the MIEA-TRCHA, that resulted in a lower wage index for the second half of FY 2007 than applicable to such hospitals during the first half of FY 2007, section 117 of the MMSEA directs the Secretary to apply a higher wage index to such hospitals for the entire FY 2007. We refer readers to section II.C. of this proposed rule for discussion of this provision.
F. Summary of the Major Contents of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the Medicare hospital OPPS for CY 2009. These changes would be effective for services furnished on or after January 1, 2009. We are also setting forth proposed changes to the Medicare revised ASC payment system for CY 2009. These changes would be effective for services furnished on or after January 1, 2009. The following is a summary of the major changes that we are proposing to make:
1. Proposed Updates Affecting OPPS Payments
In section II. of this proposed rule, we set forth—
• The methodology used to recalibrate the proposed APC relative payment weights.
• The proposed changes to packaged services.
• The proposed update to the conversion factor used to determine payment rates under the OPPS. In this section we set forth changes in the amounts and factors for calculating the full annual update increase to the conversion factor.
• The proposed retention of our current policy to use the IPPS wage indices to adjust, for geographic wage differences, the portion of the OPPS payment rate and the copayment standardized amount attributable to labor-related cost.
• The proposed update of statewide average default CCRs.
• The proposed application of hold harmless transitional outpatient payments (TOPs) for certain small rural hospitals.
• The proposed payment adjustment for rural SCHs.
• The proposed calculation of the hospital outpatient outlier payment.
• The calculation of the proposed national unadjusted Medicare OPPS payment.
• The proposed beneficiary copayments for OPPS services.
2. Proposed OPPS Ambulatory Payment Classification (APC) Group Policies
In section III. of this proposed rule, we discuss the proposed additions of new procedure codes to the APCs; our proposal to establish a number of new APCs; and our analyses of Medicare claims data and certain recommendations of the APC Panel. We also discuss the application of the 2 times rule and proposed exceptions to it; proposed changes to specific APCs; and the proposed movement of procedures from New Technology APCs to clinical APCs.
3. Proposed OPPS Payment for Devices
In section IV. of this proposed rule, we discuss proposed pass-through payment for specific categories of devices and the proposed adjustment for devices furnished at no cost or with partial or full credit.
4. Proposed OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals
In section V. of this proposed rule, we discuss proposed CY 2009 OPPS payment for drugs, biologicals, and radiopharmaceuticals, including the proposed payment for drugs, biologicals, and radiopharmaceuticals with and without pass-through status.
5. Proposed Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices
In section VI. of this proposed rule, we discuss the estimate of CY 2009 OPPS transitional pass-through spending for drugs, biologicals, and devices.
6. Proposed OPPS Payment for Brachytherapy Sources
In section VII. of this proposed rule, we discuss our proposal concerning coding and payment for brachytherapy sources.
7. Proposed OPPS Payment for Drug Administration Services
In section VIII. of this proposed rule, we set forth our proposed policy concerning payment and coding for drug administration services.
8. Proposed OPPS Payment for Hospital Outpatient Visits
In section IX. of this proposed rule, we set forth our proposed policies for the payment of clinic and emergency department visits and critical care services based on claims paid under the OPPS.
9. Proposed Payment for Partial Hospitalization Services
In section X. of this proposed rule, we set forth our proposed payment for partial hospitalization services, including the proposed separate threshold for outlier payments for CMHCs.
10. Proposed Procedures That Will Be Paid Only as Inpatient Procedures
In section XI. of this proposed rule, we discuss the procedures that we are proposing to remove from the inpatient list and assign to APCs.
11. OPPS Nonrecurring Technical and Policy Clarifications
In section XII. of this proposed rule, we set forth our nonrecurring technical and policy clarifications.
12. Proposed OPPS Payment Status and Comment Indicators
In section XIII. of this proposed rule, we discuss our proposed changes to the definitions of status indicators assigned to APCs and present our proposed comment indicators for the CY 2009 OPPS/ASC final rule with comment period.
13. OPPS Policy and Payment Recommendations
In section XIV. of this proposed rule, we address recommendations made by the Medicare Payment Advisory Commission (MedPAC) in its June 2007 and March 2008 reports to Congress, by the APC Panel regarding the OPPS for CY 2009, and by the Office of the Inspector General (OIG) in its June 2007 report.
14. Proposed Update of the Revised Ambulatory Surgical Center Payment System
In section XV. of this proposed rule, we discuss the proposed update of the revised ASC payment system payment rates for CY 2009.
15. Proposed Reporting of Hospital Outpatient Quality Data for Annual Hospital Payment Rate Updates and CY 2009 Payment Reduction
In section XVI. of this proposed rule, we discuss the proposed quality
measures for reporting hospital outpatient quality data for CY 2010 and subsequent calendar years, set forth the requirements for data collection and submission for the annual payment update, and propose a reduction in the OPPS payment for hospitals that fail to meet the HOP QDRP requirements for CY 2009.
16. Healthcare-Associated Conditions
In section XVII. of this proposed rule, we discuss considerations related to potentially extending the principle of Medicare not paying more for the preventable healthcare-associated conditions acquired during inpatient stays paid under the IPPS to other Medicare payment systems for healthcare-associated conditions that occur or result from care in other settings.
17. Regulatory Impact Analysis
In section XXI. of this proposed rule, we set forth an analysis of the impact the proposed changes would have on affected entities and beneficiaries.
II. Proposed Updates Affecting OPPS Payments
A. Proposed Recalibration of APC Relative Weights
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review and revise the relative payment weights for APCs at least annually. In the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000 for each APC group. As discussed in the November 13, 2000 interim final rule (65 FR 67824 through 67827), except for some reweighting due to a small number of APC changes, these relative payment weights continued to be in effect for CY 2001.
We are proposing to use the same basic methodology that we described in the April 7, 2000 OPPS final rule with comment period to recalibrate the APC relative payment weights for services furnished on or after January 1, 2009, and before January 1, 2010 (CY 2009). That is, we are proposing to recalibrate the relative payment weights for each APC based on claims and cost report data for outpatient services. We are proposing to use the most recent available data to construct the database for calculating APC group weights. For the purpose of recalibrating the proposed APC relative payment weights for CY 2009, we used approximately 130 million final action claims for hospital outpatient department (HOPD) services furnished on or after January 1, 2007, and before January 1, 2008. (For exact counts of claims used, we refer readers to the claims accounting narrative under supporting documentation for this proposed rule on the CMS Web site at:
http://www.cms.hhs.gov/HospitalOutpatientPPS/HORD/
).
Of the 130 million final action claims for services provided in hospital outpatient settings used to calculate the CY 2009 OPPS payment rates for this proposed rule, approximately 100 million claims were of the type of bill potentially appropriate for use in setting rates for OPPS services (but did not necessarily contain services payable under the OPPS). Of the 100 million claims, approximately 45 million were not for services paid under the OPPS or were excluded as not appropriate for use (for example, erroneous cost-to-charge ratios (CCRs) or no HCPCS codes reported on the claim). We were able to use approximately 52 million whole claims of the approximately 54 million claims that remained to set the OPPS APC relative weights that we are proposing for the CY 2009 OPPS. From the 52 million whole claims, we created approximately 90 million single records, of which approximately 60 million were “pseudo” single claims (created from multiple procedure claims using the process we discuss in this section). Approximately 627,000 claims trimmed out on cost or units in excess of +/−3 standard deviations from the geometric mean, yielding approximately 89 million single bills used for median setting. Ultimately, we were able to use for proposed CY 2009 ratesetting some portion of the data from 96 percent of the CY 2007 claims containing services payable under the OPPS.
The proposed APC relative weights and payments for CY 2009 in Addenda A and B to this proposed rule were calculated using claims from CY 2007 that were processed before January 1, 2008, and continue to be based on the median hospital costs for services in the APC groups. We selected claims for services paid under the OPPS and matched these claims to the most recent cost report filed by the individual hospitals represented in our claims data. We continue to believe that it is appropriate to use the most current full calendar year claims data and the most recently submitted cost reports to calculate the median costs which we are proposing to convert to relative payment weights for purposes of calculating the CY 2009 payment rates.
b. Proposed Use of Single and Multiple Procedure Claims
For CY 2009, in general, we are proposing to continue to use single procedure claims to set the medians on which the APC relative payment weights would be based, with some exceptions as discussed below. We generally use single procedure claims to set the median costs for APCs because we believe that it is important that the OPPS relative weights on which payment rates are based be appropriate when one and only one procedure is furnished and because we are, so far, unable to ensure that packaged costs can be appropriately allocated across multiple procedures performed on the same date of service. We agree that, optimally, it is desirable to use the data from as many claims as possible to recalibrate the APC relative payment weights, including those claims for multiple procedures. As we have for several years, we continued to use date of service stratification and a list of codes to be bypassed to convert multiple procedure claims to “pseudo” single procedure claims. Through bypassing specified codes that we believe do not have significant packaged costs, we are able to use more data from multiple procedure claims. In many cases, this enables us to create multiple “pseudo” single claims from claims that, as submitted, contained numerous separately paid procedures reported on the same date on one claim. We refer to these newly created single procedure claims as “pseudo” single claims because they were submitted by providers as multiple procedure claims. The history of our use of a bypass list to generate “pseudo” single claims is well documented, most recently in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66590 through 66597). In addition, for CY 2008, we increased packaging and created composite APCs, which also increased the number of bills we were able to use for median calculation by enabling us to use claims that contained multiple major procedures that previously would not have been usable. We refer readers to section II.A.2.e. of this proposed rule for discussion of the use of claims to establish median costs for composite APCs.
We are proposing to continue to apply these processes to enable us to use as much claims data as possible for ratesetting for the CY 2009 OPPS. Application of these processes in development of this proposed rule data resulted in our being able to use some or all of the data from 96 percent of the total claims that are eligible for use in
the OPPS ratesetting and modeling for this proposed rule. This process enabled us to create, for this proposed rule, approximately 60 million “pseudo” single claims, including multiple imaging composite “single session” bills (we refer readers to section II.A.2.e.(5) of this proposed rule for further discussion), and approximately 30 million “natural” single bills. For this proposed rule, “pseudo” single procedure bills represent 67 percent of all single bills used to calculate median costs. This compares favorably to the CY 2008 OPPS/ASC final rule with comment period data in which “pseudo” single bills represented 66 percent of all single bills used to calculate the median costs on which the CY 2008 OPPS payment rates were based.
For CY 2009, we are proposing to bypass 452 HCPCS codes that are identified in Table 1 of this proposed rule. We are proposing to continue the use of the codes on the CY 2008 OPPS bypass list. Since the inception of the bypass list, we have calculated the percent of “natural” single bills that contained packaging for each HCPCS code and the amount of packaging in each “natural” single bill for each code. We have generally retained the codes on the previous year's bypass list and used the update year's data (for CY 2009, data available for the first CY 2008 APC Panel meeting for services furnished on and after January 1, 2007 through and including September 30, 2007) to determine whether it would be appropriate to add additional codes to the previous year's bypass list. The entire list (including the codes that remained on the bypass list from prior years) is open to public comment. We removed two HCPCS codes from the CY 2008 bypass list for this CY 2009 proposal because the codes were deleted on December 31, 2005, specifically C8951 (Intravenous infusion for therapy/diagnosis; each additional hour (List separately in addition to C8950)) and C8955 (Chemotherapy administration, intravenous; infusion technique, each additional hour (List separately in addition to C8954)). We updated HCPCS codes on the CY 2008 bypass list that were mapped to new HCPCS codes for CY 2009 ratesetting. We are proposing to add to the bypass list all HCPCS codes not on the CY 2008 bypass list that, using the APC Panel data, meet the same previously established empirical criteria for the bypass list that are summarized below. We assume that the representation of packaging in the single claims for any given code is comparable to packaging for that code in the multiple claims. The proposed criteria for the bypass list are:
• There are 100 or more single claims for the code. This number of single claims ensures that observed outcomes are sufficiently representative of packaging that might occur in the multiple claims.
• Five percent or fewer of the single claims for the code have packaged costs on that single claim for the code. This criterion results in limiting the amount of packaging being redistributed to the separately payable procedure remaining on the claim after the bypass code is removed and ensures that the costs associated with the bypass code represent the cost of the bypassed service.
• The median cost of packaging observed in the single claims is equal to or less than $50. This limits the amount of error in redistributed costs.
• The code is not a code for an unlisted service.
In addition, we are proposing to add to the bypass list HCPCS codes that CMS medical advisors believe have minimal associated packaging based on their clinical assessment of the complete CY 2009 OPPS proposal. To ensure clinical consistency in our treatment of related services, we are also proposing to add the other CPT add-on codes for drug administration services to the CY 2009 bypass list, in addition to the CPT codes for additional hours of infusion that were previously included on the CY 2008 bypass list, because adding them enables us to use many correctly coded claims for initial drug administration services that would otherwise not be available for ratesetting. The result of this proposal is that the packaged costs associated with add-on drug administration services are packaged into payment for the initial administration service, as has been our payment policy for the past 2 years for the CPT codes for additional hours of infusion. We are also proposing to add HCPCS code G0390 (Trauma response team activation associated with hospital critical care service) because we think it is appropriate to attribute all of the packaged costs that appear on a claim with HCPCS code G0390 and CPT code 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes) to CPT code 99291. If we did not add HCPCS code G0390 to the bypass list, we would have many fewer claims to use to set the median costs for APCs 0617 (Critical Care) and 0618 (Trauma Response with Critical Care). By definition, we could not have any properly coded “natural” single bills for HCPCS code G0390. Including HCPCS code G0390 on the bypass list allows us to create more “pseudo” single bills for CPT code 99291 and HCPCS code G0390, and, therefore, to improve the accuracy of the median costs of APCs 0617 and 0618 to which the two codes are assigned, respectively. The Integrated Outpatient Code Editor (I/OCE) logic rejects a line for HCPCS code G0390 if CPT code 99291 is not also reported on the claim. Therefore, we cannot assess whether HCPCS code G0390 would meet the empirical criteria for inclusion on the bypass list because we have no “natural” single claims for HCPCS code G0390.
As a result of the multiple imaging composite APCs that we are proposing to establish for CY 2009 as discussed in section II.A.2.e.(5) of this proposed rule, the “pseudo” single converter logic for bypassed codes that are also members of multiple imaging composite APCs would change. When creating the set of “pseudo” single claims, claims that contain “overlap bypass codes,” that is, those HCPCS codes that are both on the bypass list and are members of the multiple imaging composite APCs, are identified first. These HCPCS codes are then processed to create multiple imaging composite “single” bills, that is, claims containing HCPCS codes from only one imaging family, thus suppressing the initial use of these codes as bypass codes. However, these “overlap bypass codes” are retained on the bypass list because single unit occurrences of these codes are identified as single bills at the end of the “pseudo” single processing logic. The net effect of using these HCPCS codes in building multiple imaging composite “single session” claims rather than for bypass purposes is a slight reduction in the number of “pseudo” single claims available for the “overlap bypass codes” and a handful of services that would be frequently billed with an “overlap bypass code.” This process also creates multiple imaging composite “single session” bills that can be used for calculating composite APC median costs. “Overlap bypass codes” that would be members of the proposed multiple imaging composite APCs are identified by asterisks (*) in Table 1.
We note that this list contains bypass codes that were appropriate to claims for services in CY 2007 and, therefore, includes codes that were deleted for CY 2008. Moreover, there are codes on the proposed bypass list that are new for CY 2008 and which are appropriate additions to the bypass list in preparation for use of the CY 2008 claims for creation of the CY 2010 OPPS. Table 1 below includes a list of the bypass codes that we are proposing
for CY 2009. We specifically request public comment on this proposed list of bypass codes for CY 2009.
Table 1.—Proposed CY 2009 Bypass Codes for Creating “Pseudo” Single Claims for Calculating Median Costs
HCPCS code
Short descriptor
“Overlap bypass codes”
11056
Trim skin lesions, 2 to 4
11057
Trim skin lesions, over 4
11300
Shave skin lesion
11301
Shave skin lesion
11719
Trim nail(s)
11720
Debride nail, 1-5
11721
Debride nail, 6 or more
11954
Therapy for contour defects
17000
Destruct premalg lesion
17003
Destruct premalg les, 2-14
29220
Strapping of low back
31231
Nasal endoscopy, dx
31579
Diagnostic laryngoscopy
51798
Us urine capacity measure
53661
Dilation of urethra
54240
Penis study
56820
Exam of vulva w/scope
57150
Treat vagina infection
67820
Revise eyelashes
69210
Remove impacted earwax
69220
Clean out mastoid cavity
70030
X-ray eye for foreign body
70100
X-ray exam of jaw
70110
X-ray exam of jaw
70120
X-ray exam of mastoids
70130
X-ray exam of mastoids
70140
X-ray exam of facial bones
70150
X-ray exam of facial bones
70160
X-ray exam of nasal bones
70200
X-ray exam of eye sockets
70210
X-ray exam of sinuses
70220
X-ray exam of sinuses
70250
X-ray exam of skull
70260
X-ray exam of skull
70328
X-ray exam of jaw joint
70330
X-ray exam of jaw joints
70336
Magnetic image, jaw joint
*
70355
Panoramic x-ray of jaws
70360
X-ray exam of neck
70370
Throat x-ray & fluoroscopy
70371
Speech evaluation, complex
70450
Ct head/brain w/o dye
*
70480
Ct orbit/ear/fossa w/o dye
*
70486
Ct maxillofacial w/o dye
*
70490
Ct soft tissue neck w/o dye
*
70544
Mr angiography head w/o dye
*
70551
Mri brain w/o dye
*
71010
Chest x-ray
71015
Chest x-ray
71020
Chest x-ray
71021
Chest x-ray
71022
Chest x-ray
71023
Chest x-ray and fluoroscopy
71030
Chest x-ray
71034
Chest x-ray and fluoroscopy
71035
Chest x-ray
71100
X-ray exam of ribs
71101
X-ray exam of ribs/chest
71110
X-ray exam of ribs
71111
X-ray exam of ribs/chest
71120
X-ray exam of breastbone
71130
X-ray exam of breastbone
71250
Ct thorax w/o dye
*
72010
X-ray exam of spine
72020
X-ray exam of spine
72040
X-ray exam of neck spine
72050
X-ray exam of neck spine
72052
X-ray exam of neck spine
72069
X-ray exam of trunk spine
72070
X-ray exam of thoracic spine
72072
X-ray exam of thoracic spine
72074
X-ray exam of thoracic spine
72080
X-ray exam of trunk spine
72090
X-ray exam of trunk spine
72100
X-ray exam of lower spine
72110
X-ray exam of lower spine
72114
X-ray exam of lower spine
72120
X-ray exam of lower spine
72125
Ct neck spine w/o dye
*
72128
Ct chest spine w/o dye
*
72131
Ct lumbar spine w/o dye
*
72141
Mri neck spine w/o dye
*
72146
Mri chest spine w/o dye
*
72148
Mri lumbar spine w/o dye
*
72170
X-ray exam of pelvis
72190
X-ray exam of pelvis
72192
Ct pelvis w/o dye
*
72202
X-ray exam sacroiliac joints
72220
X-ray exam of tailbone
73000
X-ray exam of collar bone
73010
X-ray exam of shoulder blade
73020
X-ray exam of shoulder
73030
X-ray exam of shoulder
73050
X-ray exam of shoulders
73060
X-ray exam of humerus
73070
X-ray exam of elbow
73080
X-ray exam of elbow
73090
X-ray exam of forearm
73100
X-ray exam of wrist
73110
X-ray exam of wrist
73120
X-ray exam of hand
73130
X-ray exam of hand
73140
X-ray exam of finger(s)
73200
Ct upper extremity w/o dye
*
73218
Mri upper extremity w/o dye
*
73221
Mri joint upr extrem w/o dye
*
73510
X-ray exam of hip
73520
X-ray exam of hips
73540
X-ray exam of pelvis & hips
73550
X-ray exam of thigh
73560
X-ray exam of knee, 1 or 2
73562
X-ray exam of knee, 3
73564
X-ray exam, knee, 4 or more
73565
X-ray exam of knees
73590
X-ray exam of lower leg
73600
X-ray exam of ankle
73610
X-ray exam of ankle
73620
X-ray exam of foot
73630
X-ray exam of foot
73650
X-ray exam of heel
73660
X-ray exam of toe(s)
73700
Ct lower extremity w/o dye
*
73718
Mri lower extremity w/o dye
*
73721
Mri jnt of lwr extre w/o dye
*
74000
X-ray exam of abdomen
74010
X-ray exam of abdomen
74020
X-ray exam of abdomen
74022
X-ray exam series, abdomen
74150
Ct abdomen w/o dye
*
74210
Contrst x-ray exam of throat
74220
Contrast x-ray, esophagus
74230
Cine/vid x-ray, throat/esoph
74246
Contrst x-ray uppr gi tract
74247
Contrst x-ray uppr gi tract
74249
Contrst x-ray uppr gi tract
76100
X-ray exam of body section
76510
Ophth us, b & quant a
76511
Ophth us, quant a only
76512
Ophth us, b w/non-quant a
76513
Echo exam of eye, water bath
76514
Echo exam of eye, thickness
76516
Echo exam of eye
76519
Echo exam of eye
76536
Us exam of head and neck
76645
Us exam, breast(s)
76700
Us exam, abdom, complete
*
76705
Echo exam of abdomen
*
76770
Us exam abdo back wall, comp
*
76775
Us exam abdo back wall, lim
*
76776
Us exam k transpl w/doppler
*
76801
Ob us <14 wks, single fetus
76805
Ob us ≥14 wks, sngl fetus
76811
Ob us, detailed, sngl fetus
76816
Ob us, follow-up, per fetus
76817
Transvaginal us, obstetric
76830
Transvaginal us, non-ob
76856
Us exam, pelvic, complete
*
76857
Us exam, pelvic, limited
*
76870
Us exam, scrotum
*
76880
Us exam, extremity
76970
Ultrasound exam follow-up
76977
Us bone density measure
76999
Echo examination procedure
77072
X-rays for bone age
77073
X-rays, bone length studies
77074
X-rays, bone survey, limited
77075
X-rays, bone survey complete
77076
X-rays, bone survey, infant
77077
Joint survey, single view
77078
Ct bone density, axial
77079
Ct bone density, peripheral
77080
Dxa bone density, axial
77081
Dxa bone density/peripheral
77082
Dxa bone density, vert fx
77083
Radiographic absorptiometry
77084
Magnetic image, bone marrow
77280
Set radiation therapy field
77285
Set radiation therapy field
77290
Set radiation therapy field
77295
Set radiation therapy field
77300
Radiation therapy dose plan
77301
Radiotherapy dose plan, imrt
77315
Teletx isodose plan complex
77326
Brachytx isodose calc simp
77327
Brachytx isodose calc interm
77328
Brachytx isodose plan compl
77331
Special radiation dosimetry
77332
Radiation treatment aid(s)
77333
Radiation treatment aid(s)
77334
Radiation treatment aid(s)
77336
Radiation physics consult
77370
Radiation physics consult
77401
Radiation treatment delivery
77402
Radiation treatment delivery
77403
Radiation treatment delivery
77404
Radiation treatment delivery
77407
Radiation treatment delivery
77408
Radiation treatment delivery
77409
Radiation treatment delivery
77411
Radiation treatment delivery
77412
Radiation treatment delivery
77413
Radiation treatment delivery
77414
Radiation treatment delivery
77416
Radiation treatment delivery
77418
Radiation tx delivery, imrt
77470
Special radiation treatment
77520
Proton trmt, simple w/o comp
77523
Proton trmt, intermediate
80500
Lab pathology consultation
80502
Lab pathology consultation
85097
Bone marrow interpretation
86510
Histoplasmosis skin test
86850
RBC antibody screen
86870
RBC antibody identification
86880
Coombs test, direct
86885
Coombs test, indirect, qual
86886
Coombs test, indirect, titer
86890
Autologous blood process
86900
Blood typing, ABO
86901
Blood typing, Rh (D)
86903
Blood typing, antigen screen
86904
Blood typing, patient serum
86905
Blood typing, RBC antigens
86906
Blood typing, Rh phenotype
86930
Frozen blood prep
86970
RBC pretreatment
86977
RBC pretreatment, serum
88104
Cytopath fl nongyn, smears
88106
Cytopath fl nongyn, filter
88107
Cytopath fl nongyn, sm/fltr
88108
Cytopath, concentrate tech
88112
Cytopath, cell enhance tech
88160
Cytopath smear, other source
88161
Cytopath smear, other source
88162
Cytopath smear, other source
88172
Cytopathology eval of fna
88173
Cytopath eval, fna, report
88182
Cell marker study
88184
Flowcytometry/ tc, 1 marker
88185
Flowcytometry/tc, add-on
88300
Surgical path, gross
88302
Tissue exam by pathologist
88304
Tissue exam by pathologist
88305
Tissue exam by pathologist
88307
Tissue exam by pathologist
88311
Decalcify tissue
88312
Special stains
88313
Special stains
88321
Microslide consultation
88323
Microslide consultation
88325
Comprehensive review of data
88331
Path consult intraop, 1 bloc
88342
Immunohistochemistry
88346
Immunofluorescent study
88347
Immunofluorescent study
88348
Electron microscopy
88358
Analysis, tumor
88360
Tumor immunohistochem/manual
88361
Tumor immunohistochem/comput
88365
In situ hybridization (FISH)
88368
Insitu hybridization, manual
88399
Surgical pathology procedure
89049
Chct for mal hyperthermia
89230
Collect sweat for test
89240
Pathology lab procedure
90472
Immunization admin, each add
90474
Immune admin oral/nasal addl
90761
Hydrate iv infusion, add-on
90766
Ther/proph/dg iv inf, add-on
90767
Tx/proph/dg addl seq iv inf
90770
Sc ther infusion, addl hr
90771
Sc ther infusion, reset pump
90775
Tx/pro/dx inj new drug add-on
90801
Psy dx interview
90802
Intac psy dx interview
90804
Psytx, office, 20-30 min
90805
Psytx, off, 20-30 min w/e&m
90806
Psytx, off, 45-50 min
90807
Psytx, off, 45-50 min w/e&m
90808
Psytx, office, 75-80 min
90809
Psytx, off, 75-80, w/e&m
90810
Intac psytx, off, 20-30 min
90811
Intac psytx, 20-30, w/e&m
90812
Intac psytx, off, 45-50 min
90816
Psytx, hosp, 20-30 min
90818
Psytx, hosp, 45-50 min
90826
Intac psytx, hosp, 45-50 min
90845
Psychoanalysis
90846
Family psytx w/o patient
90847
Family psytx w/patient
90853
Group psychotherapy
90857
Intac group psytx
90862
Medication management
90899
Psychiatric service/therapy
92002
Eye exam, new patient
92004
Eye exam, new patient
92012
Eye exam established pat
92014
Eye exam & treatment
92020
Special eye evaluation
92025
Corneal topography
92081
Visual field examination(s)
92082
Visual field examination(s)
92083
Visual field examination(s)
92135
Ophth dx imaging post seg
92136
Ophthalmic biometry
92225
Special eye exam, initial
92226
Special eye exam, subsequent
92230
Eye exam with photos
92240
Icg angiography
92250
Eye exam with photos
92275
Electroretinography
92285
Eye photography
92286
Internal eye photography
92520
Laryngeal function studies
92541
Spontaneous nystagmus test
92546
Sinusoidal rotational test
92548
Posturography
92552
Pure tone audiometry, air
92553
Audiometry, air & bone
92555
Speech threshold audiometry
92556
Speech audiometry, complete
92557
Comprehensive hearing test
92567
Tympanometry
92582
Conditioning play audiometry
92585
Auditor evoke potent, compre
92603
Cochlear implt f/up exam 7 >
92604
Reprogram cochlear implt 7 >
92626
Eval aud rehab status
93005
Electrocardiogram, tracing
93017
Cardiovascular stress test
93225
ECG monitor/record, 24 hrs
93226
ECG monitor/report, 24 hrs
93231
Ecg monitor/record, 24 hrs
93232
ECG monitor/report, 24 hrs
93236
ECG monitor/report, 24 hrs
93270
ECG recording
93271
Ecg/monitoring and analysis
93278
ECG/signal-averaged
93727
Analyze ilr system
93731
Analyze pacemaker system
93732
Analyze pacemaker system
93733
Telephone analy, pacemaker
93734
Analyze pacemaker system
93735
Analyze pacemaker system
93736
Telephonic analy, pacemaker
93741
Analyze ht pace device sngl
93742
Analyze ht pace device sngl
93743
Analyze ht pace device dual
93744
Analyze ht pace device dual
93786
Ambulatory BP recording
93788
Ambulatory BP analysis
93797
Cardiac rehab
93798
Cardiac rehab/monitor
93875
Extracranial study
93880
Extracranial study
93882
Extracranial study
93886
Intracranial study
93888
Intracranial study
93922
Extremity study
93923
Extremity study
93924
Extremity study
93925
Lower extremity study
93926
Lower extremity study
93930
Upper extremity study
93931
Upper extremity study
93965
Extremity study
93970
Extremity study
93971
Extremity study
93975
Vascular study
93976
Vascular study
93978
Vascular study
93979
Vascular study
93990
Doppler flow testing
94015
Patient recorded spirometry
94690
Exhaled air analysis
95115
Immunotherapy, one injection
95117
Immunotherapy injections
95165
Antigen therapy services
95250
Glucose monitoring, cont
95805
Multiple sleep latency test
95806
Sleep study, unattended
95807
Sleep study, attended
95808
Polysomnography, 1-3
95812
Eeg, 41-60 minutes
95813
Eeg, over 1 hour
95816
Eeg, awake and drowsy
95819
Eeg, awake and asleep
95822
Eeg, coma or sleep only
95869
Muscle test, thor paraspinal
95872
Muscle test, one fiber
95900
Motor nerve conduction test
95921
Autonomic nerv function test
95925
Somatosensory testing
95926
Somatosensory testing
95930
Visual evoked potential test
95950
Ambulatory eeg monitoring
95953
EEG monitoring/computer
95970
Analyze neurostim, no prog
95972
Analyze neurostim, complex
95974
Cranial neurostim, complex
95978
Analyze neurostim brain/1h
96000
Motion analysis, video/3d
96101
Psycho testing by psych/phys
96111
Developmental test, extend
96116
Neurobehavioral status exam
96118
Neuropsych tst by psych/phys
96119
Neuropsych testing by tec
96150
Assess hlth/behave, init
96151
Assess hlth/behave, subseq
96152
Intervene hlth/behave, indiv
96153
Intervene hlth/behave, group
96402
Chemo hormon antineopl sq/im
96411
Chemo, iv push, addl drug
96415
Chemo, iv infusion, addl hr
96417
Chemo iv infus each addl seq
96423
Chemo ia infuse each addl hr
96900
Ultraviolet light therapy
96910
Photochemotherapy with UV-B
96912
Photochemotherapy with UV-A
96913
Photochemotherapy, UV-A or B
96920
Laser tx, skin <250 sq cm
98925
Osteopathic manipulation
98926
Osteopathic manipulation
98927
Osteopathic manipulation
98940
Chiropractic manipulation
98941
Chiropractic manipulation
98942
Chiropractic manipulation
99204
Office/outpatient visit, new
99212
Office/outpatient visit, est
99213
Office/outpatient visit, est
99214
Office/outpatient visit, est
99241
Office consultation
99242
Office consultation
99243
Office consultation
99244
Office consultation
99245
Office consultation
0144T
CT heart wo dye; qual calc
G0008
Admin influenza virus vac
G0101
CA screen; pelvic/breast exam
G0127
Trim nail(s)
G0130
Single energy x-ray study
G0166
Extrnl counterpulse, per tx
G0175
OPPS Service,sched team conf
G0340
Robt lin-radsurg fractx 2-5
G0344
Initial preventive exam
G0365
Vessel mapping hemo access
G0367
EKG tracing for initial prev
G0376
Smoke/tobacco counseling >10
G0389
Ultrasound exam AAA screen
G0390
Trauma response w/hosp criti
M0064
Visit for drug monitoring
Q0091
Obtaining screen pap smear
c. Proposed Calculation of CCRs
(1) Development of the CCRs
We calculated hospital-specific overall CCRs and hospital-specific departmental CCRs for each hospital for which we had CY 2007 claims data. For CY 2009 OPPS ratesetting, we used the set of claims processed during CY 2007. 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.hhs.gov/HospitalOutpatientPPS/03_crosswalk.asp#TopOfPage.
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.
We are proposing to make a change to the revenue code-to-cost center crosswalk for the CY 2009 OPPS. Specifically, for revenue code 0904 (Activity Therapy), we are proposing to make cost center 3550 (Psychiatric/Psychological Services) the primary cost center and to make cost center 6000 (Clinic services) the secondary cost center. For CY 2008, for revenue code 0904, the primary cost center is 3580 (Recreational Therapy), cost center 3550 is secondary; and cost center 6000 is tertiary. We are proposing this change to conform the OPPS methodology for hospital claims to the crosswalk that is being used to calculate partial hospitalization costs for CMHCs.
We would like to affirm that the longstanding Medicare principles of cost apportionment at § 413.53 convey that, under the departmental method of apportionment, the cost of each ancillary department is to be apportioned separately rather than being combined with another department. However, CMS does not specify a revenue code-to-cost center crosswalk that hospitals must adopt to prepare the cost report, but instead, requires hospitals to submit their individual crosswalk to the Medicare contractor when the cost report is filed. The proposed CY 2009 OPPS revenue code-to-cost center crosswalk contains several potential cost center locations for a revenue code because it is an attempt to best represent the association of revenue codes with cost centers across all hospitals for modeling purposes. Assignment to cost centers is mutually exclusive and only defaults to the next level when the cost center with higher priority is unavailable. The changes to the crosswalk for revenue code 0904 mentioned above are used by CMS for modeling purposes only, and we fully expect hospitals to comply with the Medicare reimbursement policies when reporting their costs and charges on the cost report.
At the March 2008 APC Panel meeting, we reviewed with the APC Panel's Data Subcommittee the current revenue code-to-cost center crosswalk, as well as other data in preparation for the CY 2009 rulemaking cycle. At this meeting, the APC Panel recommended that the Data Subcommittee continue its work and we are accepting that recommendation. We will continue to work with the APC Panels' Data Subcommittee to prepare and review data and analyses relevant to the APC configurations and OPPS payment policies for hospital outpatient items and services.
(2) Charge Compression
Since the implementation of the OPPS, some commenters have raised concerns about potential bias in the OPPS cost-based weights due to “charge compression,” which is the practice of applying a lower charge markup to higher-cost services and a higher charge markup to lower-cost services. As a result, the cost-based weights suffer from aggregation bias, undervaluing high cost items and overvaluing low cost items if an estimate of average markup embodied in a single CCR is applied to items of widely varying costs in the same cost center. Commenters expressed increased concern about the impact of charge compression when, partially in response to recommendations of the Medicare Payment Advisory Commission (MedPAC), CMS proposed to set the relative weights for payment under the IPPS based on the costs of inpatient hospital services, rather than the charges for the services.
To explore this issue, in August 2006 we awarded a contract to RTI International (RTI) to study the effects of charge compression in calculating the IPPS relative weights, particularly with regard to the impact on inpatient diagnosis-related group (DRG) payments, and to consider methods to reduce the variation in the CCRs used to calculate costs for the IPPS relative weights across services within cost centers. Of specific note was RTI's analysis of a regression-based methodology estimating an average adjustment for CCR by type of revenue code from an observed relationship between provider cost center CCRs and proportional billing of high and low cost services in the cost center. RTI issued a report in March 2007 with its findings on charge compression. The report is available on the CMS Web site at:
http://www.cms.hhs.gov/reports/downloads/Dalton.pdf.
Although this report was focused largely on charge compression in the context of the IPPS cost-based relative weights, several of the findings were relevant to the OPPS. Therefore, we discussed the findings and our responses to that interim draft report in the CY 2008 OPPS/ASC proposed rule (72 FR 42641 through 42643) and reiterated them in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66599 through 66602).
As RTI noted in its 2007 report that its research was limited to IPPS DRG cost-based weights and that it did not examine potential areas of charge compression specific to hospital outpatient services, we were concerned
that the analysis was too limited in scope because typically hospital cost report CCRs encompass both inpatient and outpatient services for each cost center. Further, because both the IPPS and OPPS rely on cost-based weights, we preferred to introduce any methodological adjustments to both payment systems at the same time. We believe that because charge compression affects the cost estimates for services paid under both IPPS and OPPS in the same way, it is appropriate that we would use the same approach to address the issue. Finally, we noted that we wished to assess the educational activities being undertaken by the hospital community to improve cost reporting accuracy in response to RTI's findings, either as an adjunct to or in lieu of regression-based adjustments to CCRs.
We have since expanded RTI's analysis of charge compression to incorporate outpatient services. In August 2007, we again contracted with RTI. Under this contract, we asked RTI to evaluate the cost estimation process for the OPPS relative weights. This research included a reassessment of the regression-based CCR models using hospital outpatient and inpatient charge data, as well as a detailed review of the OPPS revenue code-to-cost center crosswalk and the OPPS' hospital-specific CCR methodology. In evaluating cost-based estimation, in general, the results of RTI's analyses impact both the OPPS APC relative weights and the IPPS MS-DRG (Medicare-Severity) relative weights. With the release of the IPPS FY 2009 proposed rule in April 2008, CMS also posted an interim report discussing RTI's research findings for the IPPS MS-DRG relative weights to be available during the public comment period on the FY 2009 IPPS proposed rule. This report can be found on RTI's Web site at:
http://www.rti.org/reports/cms/HHSM-500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200804.pdf.
The IPPS-specific chapters, which were separately displayed in the April 2008 interim report, as well as the more recent OPPS chapters, are included in the July 2008 RTI final report entitled, “Refining Cost to Charge Ratios for Calculating APC and DRG Relative Payment Weights,” that became available at the time of the development of this proposed rule. The RTI final report can be found on RTI's Web site at:
http://www.rti.org.
RTI's final report distinguished between two types of research findings and recommendations, those pertaining to the accounting or cost report data itself and those related to statistical regression analysis. Because the OPPS uses a hospital-specific CCR methodology, employs detailed cost report data, and estimates costs at the claim level, CMS asked RTI to closely evaluate the accounting component of the cost-based weight methodology, specifically the revenue code-to-cost center crosswalk. In reviewing the cost report data for nonstandard cost centers used in the crosswalk, RTI discovered some problems concerning the classification of nonstandard cost centers, and reclassified nonstandard cost centers by reading providers' cost center labels. Standard cost centers are preprinted in the CMS-approved cost report software, while nonstandard cost centers are identified and updated periodically through analysis of frequently used labels. RTI also evaluated the revenue code-to-cost center crosswalk after examining hospitals' cost report and revenue code billing patterns in order to reduce aggregation bias inherent in defaulting to the overall ancillary CCR and generally to improve the empirical accuracy of the crosswalk.
With regard to the statistical adjustments, RTI confirmed the findings of its March 2007 report that regression models are a valid approach for diagnosing potential aggregation bias within selected services for the IPPS and found that regression models are equally valid for setting payments under the OPPS. RTI also suggested that regression-based CCRs could provide a short-term correction until accounting data could be refined to support more accurate CCR estimates under both the IPPS and the OPPS. RTI again found aggregation bias in devices, drugs, and radiology and, using combined outpatient and inpatient claims, expanded the number of recommended regression-adjusted CCRs.
In almost all cases, RTI observed that potential distortions in the APC relative weights were proportionally much greater than for MS-DRGs for both accounting-based and statistical adjustments because APC groups are small and generally price a single service. However, just as the overall impacts on MS-DRGs were more moderate because MS-DRGs experienced offsetting effects of changes in cost estimation, a given hospital outpatient visit might include more than one service, leading to offsetting effects in cost estimation for services provided in the outpatient episode as a whole. In general, APC relative weights are more volatile than MS-DRG relative weights from year to year yet OPPS provider impacts are typically quite modest and, in light of this experience, we expect that overall provider impacts could be much more moderate than those suggested by individual APC impacts from the RTI analysis.
Notwithstanding likely offsetting effects at the provider-level, RTI asserted that, while some averaging is appropriate for a prospective payment system, extreme distortions in APC payments for individual services bias perceptions of service profitability and may lead hospitals to inappropriately set their charge structure. RTI noted that this may not be true for “core” hospital services, such as oncology, but has a greater impact in evolving areas with greater potential for provider-induced demand, such as specialized imaging services. RTI also noted that cost-based weights are only one component of a final prospective payment rate. There are other rate adjustments (wage index, indirect medical education (IME), and disproportionate share hospital (DSH)) to payment derived from the revised cost-based weights and the cumulative effect of these components may not improve the ability of final payment to reflect resource cost. With regard to APCs and MS-DRGs that contain substantial device costs, RTI cautioned that other prospective payment system adjustments (wage index, IME, and DSH) largely offset the effects of charge compression among hospitals that receive these adjustments. RTI endorsed short-term regression-based adjustments, but also concluded that more refined and accurate accounting data are the preferred long-term solution to mitigate charge compression and related bias in hospital cost-based weights.
As a result of this research, RTI made 11 recommendations, 2 of which are specific to IPPS MS-DRGs and are not discussed in this proposed rule. The first set of non-IPPS-specific recommendations concentrates on short-term accounting changes to current cost report data; the second set addresses short-term regression-based and other statistical adjustments. RTI concluded its recommendations with longer-term accounting changes to the cost report. (RTI report, “Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights,” July 2008). Given the magnitude and scope of impacts on APC relative weights that would result from adopting both accounting and statistical changes, as specifically observed in Chapter 6 of RTI's July 2008 final report and Attachments 4a, 4b, and 5 (RTI report, “Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights,” July 2008), we are not proposing to adopt any short-term adjustments to OPPS payment rate
calculations for CY 2009. Furthermore, the numerous and substantial changes that RTI recommends have significantly complex interactions with one another and we believe that we should proceed cautiously. In a budget neutral payment system, increases in payment for some services must be countered by reductions to payment for other services.
We are, however, specifically seeking public comments on several of RTI's recommended accounting-based changes pertaining to the cost report as discussed below because we plan to consider these public comments in our current revision to the Medicare hospital cost report and in our decisions pertaining to the CY 2010 OPPS. We believe that improved and more precise cost reporting is the best way to improve the accuracy of all cost-based payment weights, including relative weights for the IPPS MS-DRGs. Because both the IPPS and the OPPS rely on cost-based weights derived, in part, from data on the Medicare hospital cost report form, public comments on recommended changes to the cost report should address any impact on both the inpatient and outpatient payment systems.
We noted in the FY 2009 IPPS proposed rule that we are updating the cost report form to eliminate outdated requirements in conjunction with the Paperwork Reduction Act (PRA), and that we plan to propose actual changes to the cost reporting form, the attending cost reporting software, and the cost report instructions in Chapter 36 of the Medicare Provider Reimbursement Manual (PRM), Part II (73 FR 23546 through 23547). We anticipate proposing these revisions shortly. We would consider any public comments on our proposals for cost report changes, as well as any public comments on RTI's cost estimation findings and recommendations for revising the cost report in general, in updating the cost report. We expect the revised cost report may be available for hospitals to use when submitting cost reports during FY 2010, that is, for cost reporting periods beginning after October 1, 2008, and we expect that we would be able to use some of these data for setting payment rates for future OPPS updates.
RTI's first set of four recommendations for accounting changes addressed improved use of existing cost report and claims data. RTI recommended: (1) Immediately using text searches of providers' line descriptions to more appropriately classify nonstandard cost centers in current hospital cost report data; (2) changing cost report preparation software to impose fixed descriptions on nonstandard cost centers; (3) slightly revising CMS' cost center aggregation table to eliminate duplicative or misplaced nonstandard cost centers and to add nonstandard cost centers for common services without one; and (4) adopting RTI's recommended changes to the revenue code-to-cost center crosswalk.
Given the magnitude and scope of impacts resulting from RTI's recommended revisions, we are not proposing to adopt any of the short-term accounting changes, including text searches of providers' line descriptions to more appropriately classify nonstandard cost centers and recommended changes to the revenue code-to-cost center crosswalk. We will modify the cost report preparation software that will accompany the revised Medicare cost report form to print a brief fixed description with a nonstandard cost center number, while continuing to allow the hospital to enter a line description.
With regard to revisions to the cost center aggregation table, we are specifically inviting public comment on whether several identified cost centers are duplicative (RTI report, “Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights,” July 2008). We are also specifically requesting public comment on creation of new nonstandard cost centers for services that are well represented in line descriptions associated with “other ancillary services” cost centers, but for which no distinct nonstandard cost center currently exists and for which UB-04 revenue codes do exist, including cardiac rehabilitation, hyperbaric oxygen therapy, and patient education (RTI report, “Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights,” July 2008). We will consider these comments as we continue our work on revising the Medicare hospital cost report form.
Furthermore, we are interested in public comment on RTI's recommended changes to the OPPS revenue code-to-cost center crosswalk, and we may propose to adopt crosswalk changes for CY 2010 based on RTI's analyses and related public comments received on this issue. Although available on the CMS Web site for continuous public comment, we have received relatively few public comments over the last several years on the OPPS revenue code-to-cost center crosswalk, which has undergone only minimal change since the inception of the OPPS. RTI's revised crosswalk in Attachment 2b of its final report reflected all accounting changes, including reclassification of nonstandard cost centers from text searches, removal of duplicative cost centers, and addition of new nonstandard cost centers for common services. Throughout the July 2008 final report, RTI used a subscripting nomenclature developed from CMS' aggregation table to identify cost centers. To disentangle the combined impact of these changes and clearly communicate RTI's recommended changes in current cost center numbers, we have made available on the CMS Web site a revised (RTI-recommended) crosswalk using current standard and nonstandard cost centers in the same format as the crosswalk proposed for the CY 2009 OPPS. This revised (RTI-recommended) crosswalk may be found on the CMS Web site under supporting documentation for this proposed rule at:
http://www.cms.hhs.gov/HospitalOutpatientPPS/HORD/list.asp#TopOfPage.
We did not include RTI's recommended new or collapsed nonstandard cost centers in this revised crosswalk.
We are specifically inviting public comment on the numerous changes included in this crosswalk. Areas of specific interest include the addition of “default” CCRs for clinic, cardiology, and therapy services before defaulting to the overall ancillary CCR, as is our current policy. The overall ancillary CCR is charge-weighted and heavily influenced by the relationship between costs and charges for surgical and imaging services. RTI also introduced cost center 4300 (Radioisotope) as a primary cost converter for the nuclear medicine revenue codes (034X). Further, RTI added secondary and tertiary crosswalk maps for services that frequently appear together, such as CCRs for Computed Tomography (CT) Scan as a secondary cost converter for the Magnetic Resonance Imaging (MRI) revenue codes (061X) (RTI report, “Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights,” July 2008).
RTI's second set of recommendations concentrated on short-term statistical regression-based adjustments to address aggregation bias. RTI recommended: (1) Adopting regression-adjusted OPPS CCRs for Devices, Other Supplies Sold, Additional Detail Coded Drugs, and Intravenous (IV) Solutions and Other Drugs Sold; and (2) adopting a set of CCRs that blend corrected cost report and regression-adjusted CCRs for CT scanning, MRI, therapeutic radiology, nuclear medicine, and other diagnostic radiology services for hospitals that did not report these standard and nonstandard cost centers. We agree that
improved data for cost estimation in these areas is a desirable goal. However, we have chosen to concentrate our efforts on concrete steps to improve the quality of cost report accounting data that ultimately would be used to calculate both hospital inpatient and outpatient prospective payment system relative weights. In the proposed rule for the FY 2009 IPPS (73 FR 23544), for which the public comment period closed on June 13, 2008, we emphasize this fundamental goal of improving cost report accounting data rather than making short-term statistical adjustments.
RTI's third and final set of recommendations focused on long-term accounting revisions to the cost report and educational efforts to improve the overall accuracy of accounting data. RTI recommended: (1) Clarifying cost report instructions and requiring hospitals to use all standard lines in the cost report if their facility offers the described services; (2) creating new standard lines on the cost report for CT Scanning, MRI, Cardiac Catheterization, Devices, and Drugs Requiring Additional Coding; and (3) educating hospitals through industry-led educational initiatives directed at methods for capital cost finding, specifically encouraging providers to use direct assignment of equipment depreciation and lease costs wherever possible, or at least to allocate moveable equipment depreciation based on dollar value of assigned depreciation costs.
We will consider the best means to clarify the principle of departmental apportionment of costs at § 413.53, which states that hospitals should apportion separately the costs and charges of each ancillary department for which charges are customarily made separately rather than combining those costs and charges with another ancillary department. RTI noted that many hospitals combine costs and charges for therapeutic radiology and nuclear medicine services under the diagnostic radiology cost center, when these are services with their own specific and distinct charges and cost centers (RTI report, “Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights,” July 2008). We seek to better understand the reason for this aggregation and other relatively common scenarios, such as a failure to report the standard cost center 4700 (Blood Storing, Processing & Transp.) when the hospital bills Medicare for blood products that always have storage and processing costs and charges, as well as any concerns hospitals may have about reporting all appropriate standard cost centers.
With regard to creating new standard lines on the cost report, we are proposing standard lines on the cost report for Devices and Drugs Requiring Additional Coding. In the FY 2009 IPPS proposed rule (73 FR 23546), we proposed to create two new cost centers, Medical Supplies Charged to Patients and Implantable Devices Charged to Patients, to replace the current cost center called Supplies Charged to Patients as part of our initiative to revise and update the Medicare hospital cost report form. In our discussion of pharmacy overhead cost in section V.B.3. of this proposed rule, we are proposing to create two other new cost centers, Drugs with High Overhead Costs Charged to Patients and Drugs with Low Overhead Costs Charged to Patients, to replace the current cost center called Drugs Charged to Patient. Public comment on the proposal for these two other new cost centers included in this proposed rule should be made in reference to that detailed discussion.
We believe that standard cost centers for CT Scanning, MRI, and Cardiac Catheterization also may be appropriate as we revise the Medicare hospital cost report form. CMS already has established nonstandard cost centers for these services and many, but not all, hospitals currently report costs and charges in these cost centers. As noted earlier in this section, cost center coding is a way to standardize cost reporting across hospitals. Standard cost centers are preprinted through CMS-approved cost report software, and nonstandard cost centers are identified and updated periodically through analysis of frequently used labels. While we currently use available nonstandard cost center CCRs for cost estimation under the OPPS, creating standard lines for CT Scanning, MRI, and Cardiac Catheterization would do more to require hospitals to break out their costs and charges for services in these clinical areas, especially as we pursue clarifying our departmental apportionment regulations requiring reporting of distinct charge types in separate ancillary cost centers. We are specifically inviting public comment on the appropriateness of creating standard cost centers for CT Scanning, MRI, and Cardiac Catheterization, rather than continuing the established nonstandard cost centers for these services.
The accuracy of capital cost allocation under Medicare allocation methods remains an issue when discussing the accuracy of CCRs for radiology and other capital-intensive services. We are supportive of industry-led educational initiatives to improve the quality of reporting capital costs on the cost report and, as we explained in the FY 2008 IPPS final rule with comment period (72 FR 47196), we are willing to work with the hospital industry to further such initiatives.
In summary, for CY 2009, we are proposing to adopt or support several of RTI's accounting recommendations that would improve the accuracy of cost report data, including educational initiatives on reporting capital costs, additional standard cost centers on the cost report for Drugs with High Overhead Costs and Drugs with Low Overhead Costs, adding fixed descriptions to the cost report software, and clarifying instructions requiring hospitals to report all standard cost centers if they offer services of the appropriate type. We are interested in significant public discussion of some of RTI's short-term and long-term recommendations, including RTI's suggested revisions to the revenue code-to-cost center crosswalk and recommended creation of standard cost centers for CT Scanning, MRI, and Cardiac Catheterization. We believe our CY 2009 proposals and certain short-term and long-term recommendations included in RTI's July 2008 final report would further our pursuit of concrete steps for CY 2009 and future years to improve the overall accuracy of cost report accounting data and, therefore, hospital cost-based relative weights.
2. Proposed Calculation of Median Costs
In this section of this proposed rule, we discuss the use of claims to calculate the proposed OPPS payment rates for CY 2009. The hospital OPPS page on the CMS Web site on which this proposed rule is posted provides an accounting of claims used in the development of the proposed rates at:
http://www.cms.hhs.gov/HospitalOutpatientPPS.
The accounting of claims used in the development of this proposed rule is included on the Web site under supplemental materials for the CY 2009 proposed rule. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, below we discuss the files of claims that comprise the data sets that are available for purchase under a CMS data user contract. Our CMS Web site,
http://www.cms.hhs.gov/HospitalOutpatientPPS,
includes information about purchasing the following two OPPS data files: “OPPS Limited Data Set” and “OPPS Identifiable Data Set.” These files are available for the claims that were used to calculate the proposed payment rates for the CY 2009 OPPS.
We used the following methodology to establish the relative weights used in calculating the proposed OPPS payment rates for CY 2009 shown in Addenda A and B to this proposed rule.
a. Claims Preparation
We used the CY 2007 hospital outpatient claims processed before January 1, 2008, to set the proposed relative weights for CY 2009. To begin the calculation of the relative weights for CY 2009, we pulled all claims for outpatient services furnished in CY 2007 from the national claims history file. This is not the population of claims paid under the OPPS, but all outpatient claims (including, for example, CAH claims and hospital claims for clinical laboratory services for persons who are neither inpatients nor outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77. These are claims that providers submitted to Medicare knowing that no payment would be made. For example, providers submit claims with a condition code 21 to elicit an official denial notice from Medicare and document that a service is not covered. We then excluded claims for services furnished in Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands because hospitals in those geographic areas are not paid under the OPPS.
We divided the remaining claims into the three groups shown below. Groups 2 and 3 comprise the 100 million claims that contain hospital bill types paid under the OPPS.
1. Claims that were not bill types 12X, 13X (hospital bill types), or 76X (CMHC bill types). Other bill types are not paid under the OPPS and, therefore, these claims were not used to set OPPS payment. In prior years, we also used claims of bill type 14X to set payment rates under the OPPS. However, bill type 14X ceased to be used to report any services for which payment is made under the OPPS effective April 1, 2006. Therefore, we did not use these claims in development of the proposed CY 2009 OPPS rates.
2. Claims that were bill types 12X or 13X (hospital bill types). These claims are hospital outpatient claims.
3. Claims that were bill type 76X (CMHC). (These claims are later combined with any claims in item 2 above with a condition code 41 to set the per diem partial hospitalization rate determined through a separate process.)
For the CCR calculation process, we used the same general approach as we used in developing the final APC rates for CY 2007 using the revised CCR calculation which excluded the costs of paramedical education programs and weighted the outpatient charges by the volume of outpatient services furnished by the hospital. We refer readers to the CY 2007 OPPS/ASC final rule with comment period for more information (71 FR 67983 through 67985). We first limited the population of cost reports to only those for hospitals that filed outpatient claims in CY 2007 before determining whether the CCRs for such hospitals were valid.
We then calculated the CCRs for each cost center and the overall CCR for each hospital for which we had claims data. We did this using hospital-specific data from the Healthcare Cost Report Information System (HCRIS). We used the most recent available cost report data, in most cases, cost reports for CY 2006. For this proposed rule, we used the most recently submitted cost reports to calculate the CCRs to be used to calculate median costs for the proposed CY 2009 OPPS rates. If the most recent available cost report was submitted but not settled, we looked at the last settled cost report to determine the ratio of submitted to settled cost using the overall CCR, and we then adjusted the most recent available submitted but not settled cost report using that ratio. We calculated both an overall CCR and cost center-specific CCRs for each hospital. We used the overall CCR calculation discussed in section II.A.1.c. of this proposed rule for all purposes that require use of an overall CCR.
We then flagged CAH claims, which are not paid under the OPPS, and claims from hospitals with invalid CCRs. The latter included claims from hospitals without a CCR; those from hospitals paid an all-inclusive rate; those from hospitals with obviously erroneous CCRs (greater than 90 or less than .0001); and those from hospitals with overall CCRs that were identified as outliers (3 standard deviations from the geometric mean after removing error CCRs). In addition, we trimmed the CCRs at the cost center (that is, departmental) level by removing the CCRs for each cost center as outliers if they exceeded ± 3 standard deviations from the geometric mean. We used a four-tiered hierarchy of cost center CCRs to match a cost center to every possible revenue code appearing in the outpatient claims, with the top tier being the most common cost center and the last tier being the default CCR. If a hospital's cost center CCR was deleted by trimming, we set the CCR for that cost center to “missing” so that another cost center CCR in the revenue center hierarchy could apply. If no other cost center CCR could apply to the revenue code on the claim, we used the hospital's overall CCR for the revenue code in question. For example, if a visit was reported under the clinic revenue code, but the hospital did not have a clinic cost center, we mapped the hospital-specific overall CCR to the clinic revenue code. The hierarchy of CCRs is available for inspection and comment on the CMS Web site:
http://www.cms.hhs.gov/HospitalOutpatientPPS.
We note that as discussed in section II.A.1.c.(1) of this proposed rule, we are proposing to remove cost center 3580 (Recreational Therapy) from the hierarchy of CCRs for revenue code 0904 (Activity Therapy).
We then converted the charges to costs on each claim by applying the CCR that we believed was best suited to the revenue code indicated on the line with the charge. Table 2 of this proposed rule contains a list of the revenue codes we are proposing to package. Revenue codes not included in Table 2 are those not allowed under the OPPS because their services could not be paid under the OPPS (for example, inpatient room and board charges), and thus charges with those revenue codes were not packaged for creation of the OPPS median costs. One exception to this general methodology for converting charges to costs on each claim is the calculation of median blood costs, as discussed in section II.A.2.d.(2) of this proposed rule.
Thus, we applied CCRs as described above to claims with bill type 12X or 13X, excluding all claims from CAHs and hospitals in Maryland, Guam, the U.S. Virgin Islands, American Samoa, and the Northern Mariana Islands and claims from all hospitals for which CCRs were flagged as invalid.
We identified claims with condition code 41 as partial hospitalization services of hospitals and moved them to another file. These claims were combined with the 76X claims identified previously to calculate the partial hospitalization per diem rate.
We then excluded claims without a HCPCS code. We moved to another file claims that contained nothing but influenza and pneumococcal pneumonia (PPV) vaccines. Influenza and PPV vaccines are paid at reasonable cost and, therefore, these claims are not used to set OPPS rates. We note that the separate file containing partial hospitalization claims is included in the files that are available for purchase as discussed above.
We next copied line-item costs for drugs, blood, and brachytherapy sources (the lines stay on the claim, but are copied onto another file) to a separate file. No claims were deleted when we copied these lines onto another file.
These line-items are used to calculate a per unit mean and median cost and a per day mean and median cost for drugs, radiopharmaceutical agents, blood and blood products, and brachytherapy sources, as well as other information used to set payment rates, such as a unit-to-day ratio for drugs.
b. Splitting Claims and Creation of “Pseudo” Single Claims
We then split the remaining claims into five groups: single majors, multiple majors, single minors, multiple minors, and other claims. (Specific definitions of these groups follow below.) We are proposing to continue our current policy of defining major procedures as any procedure having a status indicator of “S,” “T,” “V,” or “X;” defining minor procedures as any code having a status indicator of “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N,” and classifying “other” procedures as any code having a status indicator other than one that we have classified as major or minor. For CY 2009, we are proposing that status indicator “R” would be assigned to blood and blood products; status indicator “U” would be assigned to brachytherapy sources; status indicator “Q1” would be assigned to all “STVX-packaged codes;” status indicator “Q2” would be assigned to all “T-packaged codes;” and status indicator “Q3” would be assigned to all codes that may be paid through a composite APC based on composite-specific criteria or paid separately through single code APCs when the criteria are not met. The codes with proposed status indicators “Q1,” “Q2,” and “Q3” were previously assigned status indicator “Q” for the CY 2008 OPPS. As we discuss in section XIII.A.1. of this proposed rule, we are proposing to assign these new status indicators to facilitate identification of the different categories of codes. We are proposing to treat these codes in the same manner for data purposes for CY 2009 as we treated them for CY 2008. Specifically, we are proposing to continue to evaluate whether the criteria for separate payment of codes with status indicator “Q1” or “Q2” are met in determining whether they are treated as major or minor codes. Codes with status indicator “Q1” or “Q2” are carried through the data either with status indicator “N” as packaged or, if they meet the criteria for separate payment, they are given the status indicator of the APC to which they are assigned and are considered as “pseudo” single major codes. Codes assigned status indicator “Q3” are paid under individual APCs unless they occur in the combinations that qualify for payment as composite APCs and, therefore, they carry the status indicator of the individual APC to which they are assigned through the data process and are treated as major codes during both the split and “pseudo” single creation process. The calculation of the median costs for composite APCs from multiple major claims is discussed in section II.A.2.e. of this proposed rule.
Specifically, we divided the remaining claims into the following five groups:
1.
Single Major Claims:
Claims with a single separately payable procedure (that is, status indicator “S,” “T,” “V,” or “X,” which includes codes with status indicator “Q3”); claims with one unit of a status indicator “Q1” code (“STVX-packaged”) where there was no code with status indicator “S,” “T,” “V,” or “X” on the same claim on the same date; or claims with one unit of a status indicator “Q2” code (“T-packaged”) where there was no code with a status indicator “T” on the same claim on the same date.
2.
Multiple Major Claims:
Claims with more than one separately payable procedure (that is, status indicator “S,” “T,” “V,” or “X,” which includes codes with status indicator “Q3”), or multiple units of one payable procedure. These claims include those codes with a status indicator “Q2” code (“T-packaged”) where there was no procedure with a status indicator “T” on the same claim on the same date of service but where there was another separately paid procedure on the same claim with the same date of service (that is, another code with status indicator “S,” “V,” or “X”). We also include in this set claims that contained one unit of one code when the bilateral modifier was appended to the code and the code was conditionally or independently bilateral. In these cases, the claims represented more than one unit of the service described by the code, notwithstanding that only one unit was billed.
3.
Single Minor Claims:
Claims with a single HCPCS code that was assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N” and not status indicator “Q1” (“STVX-packaged”) or status indicator “Q2” (“T-packaged”) code.
4.
Multiple Minor Claims:
Claims with multiple HCPCS codes that are assigned status indicator “F,” “G,” “H,” “K,” “L,” “R,” “U,” or “N;” claims that contain more than one code with status indicator “Q1” (“STVX-packaged”) or more than one unit of a code with status indicator “Q1” but no codes with status indicator “S,” “T,” “V,” or “X” on the same date of service; or claims that contain more than one code with status indicator “Q2” (T-packaged), or “Q2” and “Q1,” or more than one unit of a code with status indicator “Q2” but no code with status indicator “T” on the same date of service.
5.
Non-OPPS Claims:
Claims that contain no services payable under the OPPS (that is, all status indicators other than those listed for major or minor status). These claims were excluded from the files used for the OPPS. Non-OPPS claims have codes paid under other fee schedules, for example, durable medical equipment or clinical laboratory tests, and do not contain either a code for a separately paid OPPS service or a code for a packaged service. Non-OPPS claims include claims for “sometimes” therapy HCPCS codes for wound care paid sometimes under the OPPS but billed, in these non-OPPS cases, with revenue codes indicating that the therapy services would be paid under the Medicare Physician Fee Schedule (MPFS).
The claims listed in numbers 1, 2, 3, and 4 above are included in the data files that can be purchased as described above. Claims that contain codes to which we are proposing to assign status indicators “Q1” (“STVX-packaged”) and “Q2” (“T-packaged”) appear in the data for the single major file, the multiple major file, and the multiple minor file used in this proposed rule. Claims that contain codes to which we are proposing to assign status indicator “Q3” (composite APC members) appear in both the data of the single and multiple major files used in this proposed rule, depending on the specific composite calculation.
To develop “pseudo” single claims for this proposed rule, we examined both the multiple major claims and the multiple minor claims. We first examined the multiple major claims for dates of service to determine if we could break them into “pseudo” single procedure claims using the dates of service for all lines on the claim. If we could create claims with single major procedures by using dates of service, we created a single procedure claim record for each separately paid procedure on a different date of service (that is, a “pseudo” single).
We also used the bypass codes listed earlier in Table 1 and discussed in section II.A.1.b. of this proposed rule to remove separately payable procedures that we determined contained limited or no packaged costs or that were otherwise suitable for inclusion on the bypass list from a multiple procedure bill. When one of the two separately payable procedures on a multiple procedure claim was on the bypass list, we split the claim into two “pseudo”
single procedure claim records. The single procedure claim record that contained the bypass code did not retain packaged services. The single procedure claim record that contained the other separately payable procedure (but no bypass code) retained the packaged revenue code charges and the packaged HCPCS code charges. We also removed lines that contained multiple units of codes on the bypass list and treated them as “pseudo” single claims by dividing the cost for the multiple units by the number of units on the line. Where one unit of a single, separately paid procedure code remained on the claim after removal of the multiple units of the bypass code, we created a “pseudo” single claim from that residual claim record, which retained the costs of packaged revenue codes and packaged HCPCS codes. This enabled us to use claims that would otherwise be multiple procedure claims and could not be used.
However, where only one unit of one of an “overlap bypass code” appeared on a claim with only one unit of another separately paid code, we used the line-item cost of the “overlap bypass code” to create a “pseudo” single procedure claim for the “overlap bypass code” but did not use the remaining costs on the claim for the other separately paid procedure. We did not incorporate the changes to create “pseudo” single claims from the remaining information on these claims in the data development process for this proposed rule. We believe this simplifies our communication of the claims development process to the public by not adding unnecessary complexity. Furthermore, the limited increase of only 1 percent in the number of “pseudo” single claims that would be created from the remaining data made it impractical to include the changes to the data development process that would be required, taking into consideration the complexity of making such changes.
We also examined the multiple minor claims to determine whether we could create “pseudo” single procedure claims. Specifically, where the claim contained multiple codes with status indicator “Q1” (“STVX-packaged”) on the same date of service or contained multiple units of a single code with status indicator “Q1,” we selected the status indicator “Q1” HCPCS code that had the highest CY 2008 relative weight, moved the units to one on that HCPCS code, and packaged all costs for other codes with status indicator “Q1,” as well as all other packaged HCPCS code and packaged revenue code costs, into a total single cost for the claim to create a “pseudo” single claim for the selected code. We changed the status indicator for selected codes from the data status indicator of “N” to the status indicator of the APC to which the selected procedure was assigned for further data processing and considered this claim as a major procedure claim. We used this claim in the calculation of the APC median cost for the status indicator “Q1” HCPCS code.
Similarly, where a multiple minor claim contained multiple codes with status indicator “Q2” (“T-packaged”) or multiple units of a single code with status indicator “Q2,” we selected the status indicator “Q2” HCPCS code that had the highest CY 2008 relative weight, moved the units to one on that HCPCS code, and packaged all costs for other codes with status indicator “Q2,” as well as all other packaged HCPCS code and packaged revenue code costs into a total single cost for the claim to create a “pseudo” single claim for the selected code. We changed the status indicator for the selected code from a data status indicator of “N” to the status indicator of the APC to which the selected code was assigned, and we considered this claim as a major procedure claim.
Lastly, where a multiple minor claim contained multiple codes with status indicator “Q2” (“T-packaged”) and status indicator “Q1” (“STVX-packaged”), we selected the status indicator “Q2” HCPCS code (“T-packaged”) that had the highest relative weight for CY 2008, moved the units to one on that HCPCS code, and packaged all costs for other codes with status indicator “Q2,” costs of all codes with status indicator “Q1” (“STVX-packaged”), other packaged HCPCS code and packaged revenue code costs into a total single cost for the claim to create a “pseudo” single claim for the selected (“T-packaged”) code. We favor status indicator “Q2” over “Q1” HCPCS codes because “Q2” HCPCS codes have higher CY 2008 relative weights. If a status indicator “Q1” HCPCS code had a higher CY 2008 relative weight, it would become the primary code for the simulated single bill process. We changed the status indicator for the selected status indicator “Q2” (“T-packaged”) code from a data status indicator of “N” to the status indicator of the APC to which the selected code was assigned and we considered this claim as a major procedure claim.
After we assessed the conditional packaging of HCPCS codes with proposed status indicators “Q1” and “Q2,” we then assessed the claims to determine if the proposed criteria for the multiple imaging composite APCs, discussed in section II.A.2.e.(5) of this proposed rule, were met. Where the criteria for the proposed imaging composite APCs were met, we created a “single session” claim for the applicable imaging composite service and determined whether we could use the claim in ratesetting. For HCPCS codes that are both conditionally packaged and are proposed members of a multiple imaging composite APC, we first assessed whether the code would be packaged and if so, the code ceased to be available for further assessment as part of the composite APC. Because the code would not be a separately payable procedure, we considered it to be unavailable for use in setting the composite APC median cost.
We excluded those claims that we were not able to convert to single claims even after applying all of the techniques for creation of “pseudo” singles to multiple majors and to multiple minors. As has been our practice in recent years, we also excluded claims that contained codes that were viewed as independently or conditionally bilateral and that contained the bilateral modifier (Modifier 50 (Bilateral procedure)) because the line-item cost for the code represented the cost of two units of the procedure, notwithstanding that the code appeared with a unit of one.
c. Completion of Claim Records and Median Cost Calculations
We then packaged the costs of packaged HCPCS codes (codes with status indicator “N” listed in Addendum B to this proposed rule and the costs of those lines for codes with status indicator “Q1” or “Q2” when they are not separately paid) and packaged revenue codes into the cost of the single major procedure remaining on the claim.
The list of packaged revenue codes is shown in Table 2 below. As noted in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66606), for the CY 2008 OPPS, we adopted an APC Panel recommendation that requires CMS to review the final list of packaged revenue codes for consistency with OPPS policy and ensure that future versions of the I/OCE edit accordingly. We compared the packaged revenue codes in the I/OCE to the final list of packaged revenue codes for the CY 2008 OPPS (72 FR 66608 through 66609) that we used for packaging costs in median calculation. As a result of that analysis, we are proposing to use the packaged revenue codes for CY 2009 displayed in Table 2 below.
We also excluded (1) claims that had zero costs after summing all costs on the claim and (2) claims containing packaging flag number 3. Effective for
services furnished on or after July 1, 2004, the I/OCE assigned packaging flag number 3 to claims on which hospitals submitted token charges for a service with status indicator “S” or “T” (a major separately paid service under the OPPS) for which the fiscal intermediary was required to allocate the sum of charges for services with a status indicator equaling “S” or “T” based on the weight of the APC to which each code was assigned. We do not believe that these charges, which were token charges as submitted by the hospital, are valid reflections of hospital resources. Therefore, we deleted these claims. We also deleted claims for which the charges equaled the revenue center payment (that is, the Medicare payment) on the assumption that where the charge equaled the payment, to apply a CCR to the charge would not yield a valid estimate of relative provider cost.
For the remaining claims, we then standardized 60 percent of the costs of the claim (which we have previously determined to be the labor-related portion) for geographic differences in labor input costs. We made this adjustment by determining the wage index that applied to the hospital that furnished the service and dividing the cost for the separately paid HCPCS code furnished by the hospital by that wage index. As has been our policy since the inception of the OPPS, we are proposing to use the pre-reclassified wage indices for standardization because we believe that they better reflect the true costs of items and services in the area in which the hospital is located than the post-reclassification wage indices and, therefore, would result in the most accurate unadjusted median costs.
We also excluded claims that were outside 3 standard deviations from the geometric mean of units for each HCPCS code on the bypass list (because, as discussed above, we used claims that contain multiple units of the bypass codes).
After removing claims for hospitals with error CCRs, claims without HCPCS codes, claims for immunizations not covered under the OPPS, and claims for services not paid under the OPPS, approximately 54 million claims were left for this proposed rule. Of these 54 million claims, we were able to use some portion of approximately 52 million whole claims (96 percent of approximately 54 million potentially usable claims) to create approximately 90 million single and “pseudo” single claims, of which we used 89 million single bills (after trimming out approximately 627,000 claims as discussed below) in the CY 2009 median development and ratesetting.
We used the remaining claims to calculate the proposed CY 2009 median costs for each separately payable HCPCS code and each APC. The comparison of HCPCS and APC medians determines the applicability of the 2 times rule. Section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median (or mean cost, if elected by the Secretary) for an item or service in the group is more than 2 times greater than the lowest median cost for an item or service within the same group (the 2 times rule). Finally, we reviewed the medians and reassigned HCPCS codes to different APCs where we believed that it was appropriate. Section III. of this proposed rule includes a discussion of certain proposed HCPCS code assignment changes that resulted from examination of the medians and for other reasons. The APC medians were recalculated after we reassigned the affected HCPCS codes. Both the HCPCS medians and the APC medians were weighted to account for the inclusion of multiple units of the bypass codes in the creation of “pseudo” single bills.
In some cases, APC median costs are calculated using variations of the process outlined above. Section II.A.2.d. of this proposed rule that follows addresses the calculation of single APC criteria-based median costs. Section II.A.2.e. of this proposed rule discusses the calculation of composite APC criteria-based median costs.
Section X.B. of this proposed rule addresses the methodology for calculating the median cost for partial hospitalization services.
Table 2.—Proposed CY 2009 Packaged Revenue Codes
Revenue
code
Description
0250
PHARMACY.
0251
GENERIC.
0252
NONGENERIC.
0254
PHARMACY INCIDENT TO OTHER DIAGNOSTIC.
0255
PHARMACY INCIDENT TO RADIOLOGY.
0257
NONPRESCRIPTION DRUGS.
0258
IV SOLUTIONS.
0259
OTHER PHARMACY.
0260
IV THERAPY, GENERAL CLASS.
0262
IV THERAPY/PHARMACY SERVICES.
0263
SUPPLY/DELIVERY.
0264
IV THERAPY/SUPPLIES.
0269
OTHER IV THERAPY.
0270
M&S SUPPLIES.
0271
NONSTERILE SUPPLIES.
0272
STERILE SUPPLIES.
0273
TAKE HOME SUPPLIES.
0275
PACEMAKER DRUG.
0276
INTRAOCULAR LENS SOURCE DRUG.
0278
OTHER IMPLANTS.
0279
OTHER M&S SUPPLIES.
0280
ONCOLOGY.
0289
OTHER ONCOLOGY.
0343
DIAGNOSTIC RADIOPHARMS.
0344
THERAPEUTIC RADIOPHARMS.
0370
ANESTHESIA.
0371
ANESTHESIA INCIDENT TO RADIOLOGY.
0372
ANESTHESIA INCIDENT TO OTHER DIAGNOSTIC.
0379
OTHER ANESTHESIA.
0390
BLOOD STORAGE AND PROCESSING.
0399
OTHER BLOOD STORAGE AND PROCESSING.
0560
MEDICAL SOCIAL SERVICES.
0569
OTHER MEDICAL SOCIAL SERVICES.
0621
SUPPLIES INCIDENT TO RADIOLOGY.
0622
SUPPLIES INCIDENT TO OTHER DIAGNOSTIC.
0624
INVESTIGATIONAL DEVICE (IDE).
0630
DRUGS REQUIRING SPECIFIC IDENTIFICATION, GENERAL CLASS.
0631
SINGLE SOURCE.
0632
MULTIPLE.
0633
RESTRICTIVE PRESCRIPTION.
0681
TRAUMA RESPONSE, LEVEL I.
0682
TRAUMA RESPONSE, LEVEL II.
0683
TRAUMA RESPONSE, LEVEL III.
0684
TRAUMA RESPONSE, LEVEL IV.
0689
TRAUMA RESPONSE, OTHER.
0700
CAST ROOM.
0709
OTHER CAST ROOM.
0710
RECOVERY ROOM.
0719
OTHER RECOVERY ROOM.
0720
LABOR ROOM.
0721
LABOR.
0732
TELEMETRY.
0762
OBSERVATION ROOM.
0801
HEMODIALYSIS.
0802
PERITONEAL DIALYSIS.
0803
CAPD.
0804
CCPD.
0809
OTHER INPATIENT DIALYSIS.
0810
ORGAN ACQUISITION.
0819
OTHER ORGAN ACQUISITION.
0821
HEMODIALYSIS COMP OR OTHER RATE.
0824
MAINTENANCE 100%.
0825
SUPPORT SERVICES.
0829
OTHER HEMO OUTPATIENT.
0942
EDUCATION/TRAINING.
d. Proposed Calculation of Single Procedure APC Criteria-Based Median Costs
(1) Device-Dependent APCs
Device-dependent APCs are populated by HCPCS codes that usually, but not always, require that a device be implanted or used to perform the procedure. For a full history of how we have calculated payment rates for device-dependent APCs in previous years, and a detailed discussion of how we developed the standard device-dependent APC ratesetting methodology, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66739 through 66742). Overviews of the procedure-to-device edits and device-to-procedure edits used in ratesetting for device-dependent APCs are available in the CY 2005 OPPS final rule with comment period (69 FR 65761 through 65763) and the CY 2007 OPPS/ASC final rule with comment period (71 FR 68070 through 68071).
For CY 2009, we are proposing to continue using our standard methodology for calculating median costs for device-dependent APCs, which utilizes claims data that generally represent the full cost of the required device. Specifically, we are proposing to calculate the medians for device-dependent APCs for CY 2009 using only the subset of single bills from CY 2007 claims data that pass the procedure-to-device edits; do not contain token charges for devices; and do not contain the “FB” modifier signifying that the device was furnished without cost to the provider, supplier, or practitioner, or where a full credit was received. We continue to believe that this methodology gives us the most appropriate median costs for device-dependent APCs in which the hospital incurs the full cost of the device.
While the median costs for the majority of device-dependent APCs show increases from CY 2008 based on the CY 2009 proposed rule claims data, the median costs for three APCs involving electrode/lead implantation decreased significantly compared to the CY 2008 final rule with comment period median costs. Specifically, APCs 0106 (Insertion/Replacement of Pacemaker Leads and/or Electrodes), 0225 (Implantation of Neurostimulator Electrodes, Cranial Nerve), and 0418 (Insertion of Left Ventricular Pacing Electrode), demonstrate median decreases of 26 percent, 52 percent, and 47 percent, respectively. We believe these decreases reflect hospitals' correction of inaccurate and incomplete billing practices for these services due to the implementation of device-to-procedure edits beginning in CY 2007. As discussed in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68070 through 68071), in the course of examining claims data for calculation of the CY 2007 payment rates, we identified circumstances in which hospitals billed a device code but failed to bill any procedure code with which the device could be used correctly. For APCs 0106, 0225, and 0418 in particular, we saw that hospitals frequently billed a procedure code for
lead/electrode implantation with device HCPCS codes for a lead/electrode and the more expensive pulse generator, but failed to report a procedure code for generator implantation. These errors in billing led to the costs of the pulse generator being packaged incorrectly into the procedure codes for lead/electrode implantation. Hospitals that coded and billed in this manner received no payment for the procedure to implant the pulse generator, but these erroneous claims caused the payment rate for the lead/electrode implantation APCs to be inappropriately high. To address this problem, we implemented edits to correct the coding for CY 2007, and the decreases to the median costs of APCs 0106, 0225, and 0418 for CY 2009 are consistent with what we expect, based on what we understand to be the nature of the services and the costs of correctly coded devices. We also note an anticipated decrease in our frequency of single bills for the services assigned to APCs 0106, 0225, and 0418, most likely because the device-to-procedure edits led hospitals to include the pulse generator implantation HCPCS codes on the same claims, resulting in fewer single claims for the lead/electrode implantation procedures.
APC 0625 (Level IV Vascular Access Procedures) as configured for CY 2008 and calculated based on CY 2007 claims data also demonstrates a significant decrease in median cost (approximately 59 percent) relative to CY 2008 (based on CY 2006 claims data). We believe this decrease is attributable to the implementation of procedure-to-device edits on January 1, 2007, for the only CPT code assigned to this APC, specifically CPT code 36566 (Insertion of tunneled centrally inserted central venous access device, requiring two catheters via two separate venous access sites; with subcutaneous port(s)). Because the procedure described by CPT code 36566 involves the insertion of a dialysis access system, our edits require that the HCPCS code for that device be present on the claim any time a hospital bills CPT code 36566. Prior to January 1, 2007, we believe that hospitals often reported CPT code 36566 without also reporting the device HCPCS code for the dialysis access system, or incorrectly billed CPT code 36566 for procedures that do not require the use of the device. Therefore, with the implementation of procedure-to-device edits, the volume of total CY 2007 claims for CPT code 36566 decreased as hospitals corrected their claims to report this service only under the appropriate circumstances, while the correctly coded claims reporting the required device (and available for CY 2009 ratesetting) increased significantly from CY 2006 to CY 2007. We believe that the CY 2009 proposed rule median cost of $2,092 calculated for CPT code 36566 from those claims is accurate and appropriately reflects correct hospital reporting of the procedure and the associated device. Furthermore, because of the decrease in the median cost for CPT code 36566, we are proposing for CY 2009 to reassign the code to APC 0623 (Level III Vascular Access Procedures), which has a median cost of approximately $1,939. We also are proposing to delete APC 0625 because no other procedures would map to this APC once CPT code 36566 is reassigned.
In addition, we note a decrease of approximately 19 percent for APC 0681 (Knee Arthroplasty) relative to CY 2008, which we believe is attributable to a low volume of services being performed by a small number of providers. As we have stated in the past, some fluctuation in relative costs from year to year is to be expected in a prospective payment system for low volume device-dependent APCs such as APC 0681, for which the median cost increased approximately 37 percent from CY 2007 to CY 2008.
Table 3 lists the APCs for which we are proposing to use our standard device-dependent APC ratesetting methodology for CY 2009. We refer readers to Addendum A to this proposed rule for the proposed payment rates for these APCs.
Table 3.—Proposed CY 2009 Device-Dependent APCs
APC
Status
indicator
APC title
0039
S
Level I Implantation of Neurostimulator.
0040
S
Percutaneous Implantation of Neurostimulator Electrodes, Excluding Cranial Nerve.
0061
S
Laminectomy, Laparoscopy, or Incision for Implantation of Neurostimulator Electrodes, Excluding Cranial Nerve.
0082
T
Coronary or Non Coronary Atherectomy.
0083
T
Coronary or Non Coronary Angioplasty and Percutaneous Valvuloplasty.
0084
S
Level I Electrophysiologic Procedures.
0085
T
Level II Electrophysiologic Procedures.
0086
T
Level III Electrophysiologic Procedures.
0089
T
Insertion/Replacement of Permanent Pacemaker and Electrodes.
0090
T
Insertion/Replacement of Pacemaker Pulse Generator.
0104
T
Transcatheter Placement of Intracoronary Stents.
0106
T
Insertion/Replacement of Pacemaker Leads and/or Electrodes.
0107
T
Insertion of Cardioverter-Defibrillator.
0108
T
Insertion/Replacement/Repair of Cardioverter-Defibrillator Leads.
0115
T
Cannula/Access Device Procedures.
0202
T
Level VII Female Reproductive Procedures.
0222
S
Level II Implantation of Neurostimulator.
0225
S
Implantation of Neurostimulator Electrodes, Cranial Nerve.
0227
T
Implantation of Drug Infusion Device.
0229
T
Transcatheter Placement of Intravascular Shunts.
0259
T
Level VII ENT Procedures.
0293
T
Level V Anterior Segment Eye Procedures.
0315
S
Level III Implantation of Neurostimulator.
0384
T
GI Procedures with Stents.
0385
S
Level I Prosthetic Urological Procedures.
0386
S
Level II Prosthetic Urological Procedures.
0418
T
Insertion of Left Ventricular Pacing Elect.
0425
T
Level II Arthroplasty with Prosthesis.
0427
T
Level II Tube or Catheter Changes or Repositioning.
0622
T
Level II Vascular Access Procedures.
0623
T
Level III Vascular Access Procedures.
0648
T
Level IV Breast Surgery.
0652
T
Insertion of Intraperitoneal and Pleural Catheters.
0653
T
Vascular Reconstruction/Fistula Repair with Device.
0654
T
Insertion/Replacement of a permanent dual chamber pacemaker.
0655
T
Insertion/Replacement/Conversion of a permanent dual chamber pacemaker.
0656
T
Transcatheter Placement of Intracoronary Drug-Eluting Stents.
0674
T
Prostate Cryoablation.
0680
S
Insertion of Patient Activated Event Recorders.
0681
T
Knee Arthroplasty.
(2) Blood and Blood Products
Since the implementation of the OPPS in August 2000, separate payments have been made for blood and blood products through APCs rather than packaging them into payments for the procedures with which they are administered. Hospital payments for the costs of blood and blood products, as well as the costs of collecting, processing, and storing blood and blood products, are made through the OPPS payments for specific blood product APCs.
For the CY 2009 OPPS, we are proposing 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 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 difference in CCRs and to better reflect hospitals' costs, we are proposing 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 would then 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 calculated the proposed median costs upon which the proposed CY 2009 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 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 provider, we believe that it yields more accurate estimated costs for these products. We believe that continuing with this methodology in CY 2009 would result in median costs for blood and blood products that accurately reflect the relative estimated costs of these products for hospitals without blood cost centers, and, therefore, for these products in general.
As discussed in section XIII.A.1. of this proposed rule, we are also proposing to create status indicator “R” (Blood and Blood Products), to denote blood and blood products for publication and payment purposes in CY 2009. We believe that it is necessary to create a status indicator that is specific to blood and blood products to facilitate development of blood product median costs under the blood-specific CCR methodology and to facilitate implementation of the reduced payments that would be made to hospitals that fail to report the hospital outpatient quality data, as discussed in section XVI.D.2. of this proposed rule.
We refer readers to Addendum B to this proposed rule for the CY 2009 proposed payment rates for blood and blood products, which are identified with proposed status indicator “R.” For 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).
(3) Single Allergy Tests
We are proposing to continue with our methodology of differentiating single allergy tests (“per test”) from multiple allergy tests (“per visit”) by assigning these services to two different APCs to provide accurate payments for these tests in CY 2009. Multiple allergy tests are currently assigned to APC 0370 (Allergy Tests), with a median cost calculated based on the standard OPPS methodology. We provided billing guidance in CY 2006 in Program Transmittal 804 (issued on January 3, 2006) specifically clarifying that hospitals should report charges for the CPT codes that describe single allergy tests to reflect charges “per test” rather than “per visit” and should bill the appropriate number of units of these CPT codes to describe all of the tests provided. However, our CY 2007 claims data available for this CY 2009 proposed rule for APC 0381 do not reflect improved and more consistent hospital billing practices of “per test” for single allergy tests. The median cost of APC 0381, calculated for this proposed rule according to the standard single claims OPPS methodology, is approximately $51, significantly higher than the CY 2008 median cost of APC 0381 of approximately $17 calculated according to the “per unit” methodology, and greater than we would expect for these procedures that are to be reported “per test” with the appropriate number of units. Some claims for single allergy tests still appear to provide charges that represent a “per visit” charge, rather than a “per test” charge.
Therefore, consistent with our payment policy for CYs 2006, 2007, and
2008, we are proposing to calculate a “per unit” median cost for APC 0381, based upon 520 claims containing multiple units or multiple occurrences of a single CPT code. The CY 2009 proposed median cost for APC 0381 using the “per unit” methodology is approximately $25. For a full discussion of this methodology, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66737).
(4) Echocardiography Services
For the CY 2009 OPPS, we are proposing to continue the packaging of payment for all contrast agents into the payment for the associated imaging procedure, as we did in CY 2008. For echocardiography services, we are proposing to estimate median costs using the same methodology that we used to set medians for these services for CY 2008. In CY 2008, we finalized a policy to package payment for all contrast agents into the payment for the associated imaging procedure regardless of whether the contrast agent met the OPPS drug packaging threshold. Section 1833(t)(2)(G) of the Act requires us to create additional APC groups of services for procedures that use contrast agents that classify them separately from those procedures that do not utilize contrast agents. To reconcile this statutory provision with our final policy of packaging all contrast agents, for CY 2008, we calculated HCPCS-specific median costs for all separately payable echocardiography procedures that may be performed with contrast agents by isolating single and “pseudo” single claims with the following CPT codes where a contrast agent was also billed on the claim: 93303 (Transthoracic echocardiography for congenital cardiac anomalies; complete), 93304 (Transthoracic echocardiography for congenital cardiac anomalies; follow-up or limited study), 93307 (Echocardiography, transthoracic, real-time with image documentation (2D) with or without M-mode recording; complete), 93308 (Echocardiography, transthoracic, real-time with image documentation (2D) with or without M-mode recording; follow-up or limited study), 93312 ( Echocardiography, transesophageal, real time with image documentation (2D) (with or without M-mode recording); including probe placement, image acquisition, interpretation and report), 93315 (Transesophageal echocardiography for congenital cardiac anomalies; including probe placement, image acquisition, interpretation and report), 93318 (Echocardiography, transesophageal (TEE) for monitoring purposes, including probe placement, real time 2-dimensional image acquisition and interpretation leading to ongoing (continuous) assessment of (dynamically changing) cardiac pumping function and to therapeutic measures on an immediate time basis), and 93350 (Echocardiography, transthoracic, real-time with image documentation (2D), with or without M-mode recording, during rest and cardiovascular stress test using treadmill, bicycle exercise and/or pharmacologically induced stress, with interpretation and report). As noted in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66644), our analysis indicated that all echocardiography procedures that may be performed with contrast agents are reasonably similar both clinically and in terms of resource use, as evidenced by similar HCPCS median costs.
Pursuant to the statute, for CY 2008, we created APC 0128 (Echocardiogram With Contrast) to provide payment for echocardiography procedures that are performed with a contrast agent. In addition, as discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66644 through 66646), in order for hospitals to identify separately and receive appropriate payment for echocardiography procedures performed with contrast beginning in CY 2008, we created eight new HCPCS codes (C8921 through C8928) that corresponded to the related CPT echocardiography codes and assigned them to the newly created APC 0128. We instructed hospitals performing echocardiography procedures without contrast to continue to report the CPT codes and to report the new C-codes when performing echocardiography procedures with contrast or without contrast followed by with contrast.
Claims data from CY 2008 are not yet available for ratesetting, so we do not yet have claims data specific to HCPCS codes C8921 through C8928 in order to determine the CY 2009 payment rate for APC 0128. Therefore, for CY 2009, we are proposing to again use the methodology that we used to set the CY 2008 payment rate for APC 0128 (72 FR 66645). That is, we isolate single and “pseudo” single claims in our database that include those CPT codes in the range of 93303 through 93350 as described above that correspond to the contrast studies described by HCPCS codes C8921 through C8928. For claims where one of these echocardiography procedures was billed with a contrast agent, we packaged the cost of the contrast agent into the cost of the echocardiography procedure a
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