# Medicare Program: Changes to the Hospital Outpatient Prospective Payment System and CY 2009 Payment Rates; Changes to the Ambulatory Surgical Center Payment System and CY 2009 Payment Rates; Hospital Conditions of Participation: Requirements for Approval and Re-Approval of Transplant Centers To Perform Organ Transplants-Clarification of Provider and Supplier Termination Policy Medicare and Medicaid Programs: Changes to the Ambulatory Surgical Center Conditions for Coverage > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3AE8-26212 ## Record - **Collection:** Federal Register - **Document type:** Rule - **Published:** November 18, 2008 - **Citation:** 73 FR 68502 ## Text DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 410, 416, and 419 [CMS-1404-FC; CMS-3887-F; CMS-3835-F-1] RIN 0938-AP17; RIN 0938-AL80; RIN 0938-AH17 Medicare Program: Changes to the Hospital Outpatient Prospective Payment System and CY 2009 Payment Rates; Changes to the Ambulatory Surgical Center Payment System and CY 2009 Payment Rates; Hospital Conditions of Participation: Requirements for Approval and Re-Approval of Transplant Centers To Perform Organ Transplants—Clarification of Provider and Supplier Termination Policy Medicare and Medicaid Programs: Changes to the Ambulatory Surgical Center Conditions for Coverage AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Final rule with comment period; final rules. SUMMARY: This final rule with comment period revises the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system, and to implement a number of changes made by the Medicare Improvement for Patients and Providers Act of 2008. In this final rule with comment period, we describe the changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes are applicable to services furnished on or after January 1, 2009. In addition, this final rule with comment period updates 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 final rule with comment period, we set forth the applicable relative payment weights and amounts for services furnished in ASCs, specific HCPCS codes to which these changes apply, and other pertinent ratesetting information for the CY 2009 ASC payment system. These changes are applicable to services furnished on or after January 1, 2009. In this document, we are responding to public comments on a proposed rule and finalizing updates to the ASC Conditions for Coverage to reflect current ASC practices and new requirements in the conditions to promote and protect patient health and safety. Further, this final rule also clarifies policy statements included in responses to public comments set forth in the preamble of the March 30, 2007 final rule regarding the Secretary's ability to terminate Medicare providers and suppliers (that is, transplant centers) during an appeal of a determination that affects participation in the Medicare program. DATES: Effective Dates: The provisions of this rule are effective January 1, 2009, except for amendments to 42 CFR 416.2, 416.41 through 416.43, and 416.49 through 416.52 are effective on May 18, 2009. The policy clarification set forth in section XVIII of the preamble of this rule is effective December 18, 2008. Comment Period: We will consider comments on the payment classifications assigned to HCPCS codes identified in Addenda B, AA, and BB to this final rule with comment period with the “NI” comment indicator, and on other areas specified throughout this rule, received at one of the addresses provided in the ADDRESSES section, no later than 5 p.m. EST on December 29, 2008. Application Deadline —New Class of New Technology Intraocular Lenses: Request for review of applications for a new class of new technology intraocular lenses must be received by 5 p.m. EST on March 2, 2009. ADDRESSES: In commenting, please refer to file code CMS-1404-FC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (no duplicates, please): 1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the instructions for “Comment or Submission” and enter the file code 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-FC, 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-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses: 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. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. Applications for a new class of new technology intraocular lenses: Requests for review of applications for a new class of new technology intraocular lenses must be sent by regular mail to: ASC/NTIOL, Division of Outpatient Care, Mailstop C4-05-17, Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. FOR FURTHER INFORMATION CONTACT: Alberta Dwivedi, (410) 786-0378, Hospital outpatient prospective payment issues. Dana Burley, (410) 786-0378, Ambulatory 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. Jacqueline Morgan, (410) 786-4282, Joan A. Moliki, (410) 786-5526, Steve Miller, (410) 786-6656, and Jeannie Miller, (410) 786-3164, Ambulatory surgical center Conditions for Coverage issues. Marcia Newton, (410) 786-5265, and Karen Tritz, (410) 786-8021, Clarification of provider and supplier termination policy 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 This Federal Register document is also available from the Federal Register online database through GPO Access, a service of the U.S. Government Printing Office. Free public access is available on a Wide Area Information Server (WAIS) through the Internet and via asynchronous dial-in. Internet users can access the database by using the World Wide Web; the Superintendent of Documents' home page address is http://www.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 Final Rule With Comment Period AAAASF American Association for Accreditation of Ambulatory Surgical Facilities AAAHC Accreditation Association for Ambulatory Health Care ACEP American College of Emergency Physicians AHA American Hospital Association AHIMA American Health Information Management Association AMA American Medical Association AMP Average manufacturer price AOA American Osteopathic Association APC Ambulatory payment classification ASC Ambulatory Surgical Center ASP Average sales price AWP Average wholesale price BBA Balanced Budget Act of 1997, Public Law 105-33 BBRA Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999, Public Law 106-113 BCA Blue Cross Association BCBSA Blue Cross and Blue Shield Association BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Public Law 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 CfC Condition for Coverage 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, Public Law 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, Public Law 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, Public Law 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 IPPE Initial preventive physical examination 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, Public Law 109-432 MIPPA Medicare Improvements for Patients and Providers Act of 2008, Public Law 110-275 MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173 MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public Law 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 OIG [HHS] Office of the Inspector General 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 QAPI Quality Assessment and Performance Improvement 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, Public Law 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., XVI., XVII., and XIX. through XXIII. of this final rule with comment period and in Addenda A, B, C (Addendum C is available on the Internet only; we refer readers to section XIX. of this final rule with comment period), D1, D2, E, L, and M to this final rule with comment period. The provisions related to the revised ASC payment system are included in sections XV. and XIX. through XXIII. of this final rule with comment period and in Addenda AA, BB, DD1, DD2, and EE to this final rule with comment period. (Addendum EE is available on the Internet only; we refer readers to section XIX. of this final rule with comment period.) In this document, we also address changes to the ASC Conditions for Coverage (CfCs). The provisions relating to the ASC CfCs are included in sections XV., XIX., XX.B., and XXIII. of this document. In addition, in this document, we clarify policy regarding the Secretary's ability to terminate Medicare providers and suppliers (in this case, transplant centers) during an appeal of a determination that affects participation in the Medicare Program. This clarification is included in section XVIII. of this document. 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 1. Increase in Physician Payment Update 2. Extended Expiration Date for Cost-Based OPPS Payment for Brachytherapy Sources and Therapeutic Radiopharmaceuticals 3. Alternative Volume Weighting in Computation of Average Sales Price (ASP) for Medicare Part B Drugs 4. Extended Expiration Date for Certain IPPS Wage Index Geographic Reclassification and Special Exceptions F. Provisions of the Medicare Improvements for Patients and Providers Act of 2008 1. Improvements to Coverage of Preventive Services 2. Extended Expiration Date for Certain IPPS Wage Index Geographic Reclassifications and Special Exceptions 3. Increase in Physician Payment Update 4. Extension of Expiration Date for Cost-Based OPPS Payment for Brachytherapy and Therapeutic Radiopharmaceuticals 5. Extension and Expansion of the Medicare Hold Harmless Provision Under the OPPS for Certain Hospitals G. Summary of the Major Contents of the CY 2009 OPPS/ASC Proposed Rule 1. Updates Affecting OPPS Payments 2. OPPS Ambulatory Payment Classification (APC) Group Policies 3. OPPS Payment for Devices 4. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals 5. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices 6. OPPS Payment for Brachytherapy Sources 7. OPPS Payment for Drug Administration Services 8. OPPS Payment for Hospital Outpatient Visits 9. Payment for Partial Hospitalization Services 10. Procedures That Will Be Paid Only as Inpatient Services 11. OPPS Nonrecurring Technical and Policy Clarifications 12. OPPS Payment Status and Comment Indicators 13. OPPS Policy and Payment Recommendations 14. Update of the Revised Ambulatory Surgical Center (ASC) Payment System 15. Reporting Quality Data for Annual Payment Rate Updates 16. Healthcare-Associated Conditions 17. Regulatory Impact Analysis H. Public Comments Received in Response to the CY 2009 OPPS/ASC Proposed Rule I. Public Comments Received in Response to the November 27, 2007 OPPS/ASC Final Rule With Comment Period J. Proposed Rule on ASC Conditions for Coverage K. Medicare Hospital Conditions of Participation: Requirements for Approval and Re-Approval of Transplant Programs To Perform Transplants—Clarification of Provider and Supplier Termination Policy II. Updates Affecting OPPS Payments A. Recalibration of APC Relative Weights 1. Database Construction a. Database Source and Methodology b. Use of Single and Multiple Procedure Claims c. Calculation of CCRs (1) Development of the CCRs (2) Charge Compression 2. Calculation of Median Costs a. Claims Preparations b. Splitting Claims and Creation of “Pseudo” Single Claims (1) Splitting Claims (2) Creation of “Pseudo” Single Claims c. Completion of Claim Records and Median Cost Calculations d. 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. 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. Calculation of OPPS Scaled Payment Weights 4. Changes to Packaged Services a. Background b. Service-Specific Packaging Issues (1) Package Services Addressed by APC Panel Recommendations (2) Intravenous Immune Globulin (IVIG) Preadministration-Related Services (3) Other Service-Specific Packaging Issues B. Conversion Factor Update C. Wage Index Changes D. Statewide Average Default CCRs E. OPPS Payments to Certain Rural and Other Hospitals 1. Hold Harmless Transitional Payment Changes Made by Public Law 110-275 (MIPPA) 2. Adjustment for Rural SCHs Implemented in CY 2006 Related to Public Law 108-173 (MMA) F. Hospital Outpatient Outlier Payments 1. Background 2. Outlier Calculation 3. Outlier Reconciliation G. Calculation of an Adjusted Medicare Payment from the National Unadjusted Medicare Payment H. Beneficiary Copayments 1. Background 2. Copayment Policy 3. Calculation of an Adjusted Copayment Amount for an APC Group III. OPPS Ambulatory Payment Classification (APC) Group Policies A. OPPS Treatment of New HCPCS and CPT Codes 1. Treatment of New HCPCS Codes Included in the April and July Quarterly OPPS Updates for CY 2008 2. Treatment of New Category I and III CPT Codes and Level II HCPCS Codes B. OPPS Changes—Variations Within APCs 1. Background 2. Application of the 2 Times Rule 3. Exceptions to the 2 Times Rule C. New Technology APCs 1. Background 2. Movement of Procedures from New Technology APCs to Clinical APCs D. OPPS APC-Specific Policies 1. Apheresis and Stem Cell Processing Services a. Low Density Lipoprotein (LDL) Apheresis (APC 0112) b. Bone Marrow and Stem Cell Processing Services (APC 0393) 2. Genitourinary Procedures a. Implant Injection for Vesicoureteral Reflex (APC 0163) b. Laparoscopic Ablation of Renal Mass (APC 0132) c. Percutaneous Renal Cryoablation (APC 0423) d. Magnetic Resonance Guided Focused Ultrasound (MRgFus) Ablation of Uterine Fibroids (APC 0067) e. Prostatic Thermotherapy (APC 0429) 3. Nervous System Procedures a. Magnetoencephalography (MEG) (APC 0067) b. Chemodenervation (APC 0204) 4. Ocular Procedures a. Suprachoroidal Delivery of Pharmacologic Agent (APC 0237) b. Scanning Opthalmic Imaging (APC 0230) 5. Orthopedic Procedures a. Closed Treatment Fracture of Finger/Toe/Trunk (APCs 0129, 0138, and 0139) b. Arthroscopic and Other Orthopedic Procedures (APCs 0041 and 0042) c. Surgical Wrist Procedures (APCs 0053 and 0054) d. Intercarpal or Carpometacarpal Arthroplasty (APC 0047) e. Insertion of Posterior Spinous Process Distraction Device (APC 0052) 6. Radiation Therapy Services a. Proton Beam Therapy (APCs 0664 and 0667) b. Implantation of Interstitial Devices (APC 0310) c. Stereotactic Radiosurgery (SRS) Treatment Delivery Services (APCs 0065, 0066, and 0067) 7. Other Procedures and Services a. Negative Pressure Wound Therapy (APC 0013) b. Endovenous Ablation (APCs 0091 and 0092) c. Unlisted Antigen Skin Testing (APC 0341) d. Home International Normalized Ratio (INR) Monitoring (APC 0607) e. Mental Health Services (APCs 0322, 0323, 0324, and 0325) f. Trauma Response Associated With Hospital Critical Care Services (APC 0618) IV. OPPS Payment for Devices A. Pass-Through Payments for Devices 1. Expiration of Transitional Pass-Through Payments for Certain Devices a. Background b. Final Policy 2. Provisions for Reducing Transitional Pass-Through Payments To Offset Costs Packaged Into APC Groups a. Background b. Final Policy B. Adjustment to OPPS Payments for No Cost/Full Credit and Partial Credit Devices 1. Background 2. APCs and Devices Subject to the Adjustment Policy V. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals A. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals 1. Background 2. Drugs and Biologicals With Expiring Pass-Through Status in CY 2008 3. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing Pass-Through Status in CY 2009 4. Reduction of Transitional Pass-Through Payments for Diagnostic Radiopharmaceuticals To Offset Costs Packaged Into APC Groups B. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Status 1. Background 2. Criteria for Packaging Drugs, Biologicals, and Radiopharmaceuticals a. Background b. Drugs, Biologicals, and Therapeutic Radiopharmaceuticals c. Payment for Diagnostic Radiopharmaceuticals and Contrast Agents 3. Payment for Drugs and Biologicals Without Pass-Through Status That Are Not Packaged a. Payment for Specified Covered Outpatient Drugs b. Payment Policy c. Payment for Blood Clotting Factors 4. Payment for Therapeutic Radiopharmaceuticals a. Background b. Payment Policy 5. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals With HCPCS Codes, but Without OPPS Hospital Claims Data VI. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices A. Background B. Estimate of Pass-Through Spending VII. OPPS Payment for Brachytherapy Sources A. Background B. OPPS Payment Policy VIII. OPPS Payment for Drug Administration Services A. Background B. Coding and Payment for Drug Administration Services IX. OPPS Payment for Hospital Outpatient Visits A. Background B. Policies for Hospital Outpatient Visits 1. Clinic Visits: New and Established Patient Visits 2. Emergency Department Visits 3. Visit Reporting Guidelines X. Payment for Partial Hospitalization Services A. Background B. PHP APC Update C. Policy Changes 1. Policy to Deny Payment for Low Intensity Days 2. Policy to Strengthen PHP Patient Eligibility 3. Partial Hospitalization Coding Update D. Separate Threshold for Outlier Payments to CMHCs XI. Procedures That Will Be Paid Only as Inpatient Procedures A. Background B. Changes to the Inpatient List XII. OPPS Nonrecurring Technical and Policy Changes and Clarifications A. Physician Supervision of HOPD Services B. Reporting of Pathology Services for Prostrate Saturation Biopsy C. Changes to the Initial Preventive Physical Examination (IPPE) D. Reporting of Wound Care Services E. Standardized Cognitive Performance Testing XIII. OPPS Payment Status and Comment Indicators A. OPPS Payment Status Indicator Definitions 1. Payment Status Indicators To Designate Services That Are Paid Under the OPPS 2. Payment Status Indicators To Designate Services That Are Paid Under a Payment System Other Than the OPPS 3. Payment Status Indicators To Designate Services That Are Not Recognized Under the OPPS but That May Be Recognized by Other Institutional Providers 4. Payment Status Indicators To Designate Services That Are Not Payable by Medicare on Outpatient Claims B. 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. Ambulatory Surgical Centers: Updates and Revisions to the Ambulatory Surgical Center Conditions for Coverage and Updates to the Revised Ambulatory Surgical Center Payment System A. Legislative and Regulatory Authority for the ASC Conditions for Coverage B. Updates and Revisions to the ASC Conditions for Coverage 1. Background 2. Provisions of the Proposed and Final Regulations a. Definitions (§ 416.2) b. Specific Conditions for Coverage (1) Condition for Coverage: Governing Body and Management (§ 416.41) (2) Condition for Coverage: Quality Assessment and Performance Improvement (QAPI) (§ 416.43) (3) Condition for Coverage: Laboratory and Radiologic Services (§ 416.49) (4) Condition for Coverage: Patients Rights (§ 416.50) (5) Condition for Coverage: Infection Control (§ 416.51) (6) Condition for Coverage: Patient Admission, Assessment and Discharge (§ 416.52) c. Comments Outside the Scope of the Proposed Rule C. Updates of the Revised ASC Payment System 1. Legislative Authority for the ASC Payment System 2. Prior Rulemaking 3. Policies Governing Changes to the Lists of Codes and Payment Rates for ASC Covered Surgical Procedures and Covered Ancillary Services D. Treatment of New Codes 1. Treatment of New Category I and III CPT Codes and Level II HCPCS Codes 2. Treatment of New Level II HCPCS Codes Implemented in April and July 2008 E. Update to the List of ASC Covered Surgical Procedures and Covered Ancillary Services 1. Covered Surgical Procedures a. Additions to the List of ASC Covered Surgical Procedures b. Covered Surgical Procedures Designated as Office-Based (1) Background (2) Changes to Covered Surgical Procedures Designated as Office-Based for CY 2009 c. Covered Surgical Procedures Designated as Device-Intensive (1) Background (2) Changes to List of Covered Surgical Procedures Designated as Device-Intensive for CY 2009 d. Surgical Procedures Removed from the OPPS Inpatient List for CY 2009 2. Covered Ancillary Services F. ASC Payment for Covered Surgical Procedures and Covered Ancillary Services 1. Payment for Covered Surgical Procedures a. Background b. Update to ASC Covered Surgical Procedure Payment Rates for CY 2009 c. Adjustment to ASC Payments for No Cost/Full Credit and Partial Credit Devices 2. Payment for Covered Ancillary Services a. Background b. Payment for Covered Ancillary Services for CY 2009 G. New Technology Intraocular Lenses (NTIOLs) 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 4. Payment Adjustment 5. ASC Payment for Insertion of IOLs 6. Announcement of CY 2009 Deadline for Submitting Requests for CMS Review of Appropriateness of ASC Payment for Insertion of an NTIOL Following Cataract Surgery H. ASC Payment and Comment Indicators 1. Background 2. ASC Payment and Comment Indicators I. Calculation of the ASC Conversion Factor and ASC Payment Rates 1. Background 2. 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 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 3. Reporting Hospital Inpatient Quality Data for Annual Payment Update B. Hospital Outpatient Measures for CY 2009 C. Quality Measures for CY 2010 and Subsequent Calendar Years and the Process To Update Measures 1. Quality Measures for CY 2010 Payment Determinations 2. Process for Updating Measures 3. Possible New Quality Measures for CY 2011 and Subsequent Calendar Years D. Payment Reduction for Hospitals That Fail To Meet the HOP QDRP Requirements for the CY 2009 Payment Update 1. Background 2. 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 HOPD 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. Data Validation Requirements for CY 2010 b. Alternative Data Validation Approaches for CY 2011 F. Publication of HOP QDRP Data G. HOP QDRP Reconsideration and Appeals Procedures H. Reporting of ASC Quality Data I. FY 2010 IPPS Quality Measures under the RHQDAPU Program XVII. Healthcare-Associated Conditions A. Background B. Expanding the Principles 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. Medicare Hospital Conditions of Participation: Requirements for Approval and Re-Approval of Transplant Programs To Perform Transplants; Clarification of Provider and Supplier Termination Policy XIX. Files Available to the Public Via the Internet A. Information in Addenda Related to the CY 2009 Hospital OPPS B. Information in Addenda Related to the CY 2009 ASC Payment System XX. Collection of Information Requirements A. Legislative Requirement for Solicitation of Comments B. ASC Conditions for Coverage Collections 1. Condition for Coverage—Governing Body and Management (§ 416.41) 2. Condition for Coverage—Quality Assessment and Performance Improvement (§ 416.43) 3. Condition for Coverage—Patient Rights (§ 416.50) 4. Condition for Coverage—Patient Admission, Assessment and Discharge (§ 416.52) 5. Revisions to the CfCs on Infection Control in This Final Rule (§ 416.51) C. Associated Information Collections Not Specified in Regulatory Text XXI. Waiver of Proposed Rulemaking XXII. Response to Comments XXIII. Regulatory Impact Analysis A. Overall Impact 1. Executive Order 12866 2. Regulatory Flexibility Act (RFA) 3. Small Rural Hospitals 4. Unfunded Mandates 5. Federalism B. Effects of OPPS Changes in This Final Rule With Comment Period 1. Alternatives Considered a. Alternatives Considered for Payment of Multiple Imaging Procedures b. Alternatives Considered for the HOP QDRP Requirements for the CY 2009 Payment Update c. Alternatives Considered Regarding OPPS Cost Estimation for Relative Payment Weights 2. Limitation of Our Analysis 3. Estimated Effects of This Final Rule With Comment Period on Hospitals 4. Estimated Effects of This Final Rule With Comment Period on CMHCs 5. Estimated Effects of This Final Rule With Comment Period on Beneficiaries 6. Conclusion 7. Accounting Statement C. Effects of ASC Payment System Changes in This Final Rule With Comment Period 1. Alternatives Considered a. Office-Based Procedures b. Covered Surgical Procedures 2. Limitations of Our Analysis 3. Estimated Effects of This Final Rule With Comment Period on ASCs 4. Estimated Effects of This Final Rule With Comment Period on Beneficiaries 5. Conclusion 6. Accounting Statement D. Effects of Final Requirements for Reporting of Quality Data for Annual Hospital Payment Update E. Effects of ASC Conditions for Coverage Changes in This Final Rule 1. Effects on ASCs a. Effects of the Governing Body and Management Provision b. Effects of the QAPI Provision c. Effects of the Laboratory and Radiologic Services Provision d. Effects of the Patient Rights Provision e. Effects of the Infection Control Provision f. Effects of the Patient Admission, Assessment and Discharge Provision 2. Alternatives Considered a. Alternatives to the Governing Body and Management Provision b. Alternatives to the QAPI Provision c. Alternatives to the Patient Rights Provision d. Alternatives to the Discharge Provision 3. Conclusion F. Executive Order 12866 Regulation Text Addenda Addendum A—OPPS APCs for CY 2009 Addendum AA—ASC Covered Surgical Procedures for CY 2009 (Including Surgical Procedures for Which Payment Is Packaged) Addendum B—OPPS Payment by HCPCS Code for CY 2009 Addendum BB—ASC Covered Ancillary Services Integral to Covered Surgical Procedures for CY 2009 (Including Ancillary Services for Which Payment Is Packaged) Addendum D1—OPPS Payment Status Indicators Addendum DD1—ASC Payment Indicators Addendum D2—OPPS Comment Indicators Addendum DD2—ASC Comment Indicators Addendum E—HCPCS Codes That Would Be Paid Only as Inpatient Procedures for CY 2009 Addendum EE—Surgical Procedures Excluded from Payment in ASCs Addendum L—Out-Migration Adjustment Addendum M—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. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 (Pub. L. 108-173) also amended Section 1833(t) of the Act. 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. We also note that the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15, 2008, made further changes to the OPPS. A discussion of these changes related to the MMSEA are included in sections I.E., II.C., V., and VII. of this final rule with comment period and those related to the MIPPA are included in sections I.F., II.C., II.E.1., V., VII., and XII.C. 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 final rule with comment period. 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 Public Law 108-173 added provisions for Medicare coverage for 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 Public Law 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 Public Law 108-173 and Public Law 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. On July 18, 2008, we issued in the Federal Register (73 FR 41416) a proposed rule for the CY 2009 OPPS/ASC payment system to implement statutory requirements and changes arising from our continuing experience with both systems. Subsequent to issuance of the CY 2009 OPPS/ASC proposed rule, we published in the Federal Register on August 11, 2008 a correction notice (73 FR 46575) to replace Table 30 included the CY 2009 OPPS/ASC proposed rule. 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 final rule with comment period, 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 (currently employed full-time, not as consultants, in their respective areas of expertise) subject to the OPPS, reviews clinical data and advises CMS about the clinical integrity of the APC groups and their payment weights. The APC Panel is technical in nature, and it 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 on 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 15 subsequent meetings, with the last meeting taking place on August 27 and 28, 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.” As stated in the CY 2009 OPPS/ASC proposed rule (73 FR 41421), we are accepting this recommendation and are referring to the subcommittee by its new name, as appropriate, throughout this final rule with comment period. 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 August 2008 APC Panel meeting. At that meeting, the Panel recommended that the work of these three subcommittees continue, and we are accepting that recommendation. All subcommittee recommendations are discussed and voted upon by the full APC Panel. Discussions of the recommendations resulting from the APC Panel's March and August 2008 meetings are included in the sections of this final 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, the Web site mentioned earlier in this section, or the FACA database at http://fido.gov/facadatabase/public.asp. During the comment period for the CY 2009 OPPS/ASC proposed rule, we received several public comments regarding representation on the APC Panel. Comment: Several commenters requested that CMS include a designated ASC representative on the APC Panel. The commenters believed that, because the ASC payment system is based on the same APC groups and relative payment weights as the OPPS, ASC representation on the APC Panel would ensure input from representatives of all the care settings providing surgical services whose payment groups and payment weights are affected by the OPPS. Response: We acknowledge that the revised ASC payment system provides Medicare payment to ASCs for surgical procedures that is based, in most cases, on the relative payment weights of the OPPS. However, CMS is statutorily required to have an appropriate selection of representatives of “providers” as members of the APC Panel. Specifically, the current APC Panel charter requires that “Each Panel member must be employed full-time by a hospital, hospital system, or other Medicare provider subject to payment under the OPPS,” which does not include ASCs because ASCs are not providers. We refer readers to section 1833(t)(9)(A) of the Act and § 400.202 of our regulations for specific requirements and definitions. The charter must comply with the statute, which does not include representatives of suppliers on the APC Panel. However, we understand the concerns of commenters regarding their interest in ASC input on the APC Panel now that the ASC payment system is based on the OPPS relative payment weights. 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, includes the following provisions that affect the OPPS and the revised ASC payment system: 1. Increase in Physician Payment Update Section 101 of the MMSEA provided a 0.5 percent increase in the physician payment update from January 1, 2008 through June 30, 2008; revised the Physician Assistance and Quality Initiative Fund, and extended through 2009 the physician quality reporting system. We refer readers to section XV. of this final rule with comment period 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.B.4. and VII. of this final rule with comment period for discussion of this provision. We also note that section 142 of Public Law 110-275 further extended this provision, as discussed in section I.F.4. of this final rule with comment period. 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) of the Act to provide for application of alternative volume weighting in computing the ASP for payment of Medicare 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 final rule with comment period. 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). We refer readers to section II.C. of this final rule with comment for discussion of this provision. We also note that section 124 of Public Law 110-275 further extended this provision through September 30, 2009, as discussed under section I.F.2. of this final rule with comment period. F. Provisions of the Medicare Improvements for Patients and Providers Act of 2008 The Medicare, Improvements for Patients and Providers Act (MIPPA) of 2008 (Pub. L. 110-275), enacted on July 15, 2008, includes the following provisions that affect the OPPS and the revised ASC payment system: 1. Improvements to Coverage of Preventive Services Section 101(b) of the MIPPA amended section 1861 of the Act, as amended by section 114 of the MMSEA, to make several changes to the Initial Preventive Physical Examination (IPPE) benefit, including waiving the deductible and extending the period of eligibility for an IPPE from 6 months to 12 months after the date of the beneficiary's initial enrollment in Medicare Part B. Section 101(b) of the MIPPA also removed the screening electrocardiagram (EKG) as a mandatory requirement that is part of the IPPE and required that there be education, counseling, and referral for an EKG, as appropriate, for a once-in-a-lifetime screening EKG performed as a result of a referral from an IPPE. The facility service for the screening EKG (tracing only) is payable under the OPPS when it is the result of a referral from an IPPE. The amendments apply to services furnished on or after January 1, 2009. We refer readers to section XII.C. of this final rule for discussion of the HCPCS codes to be used for the IPPE and screening EKG and the OPPS payment rates for services under this provision for CY 2009. 2. Extended Expiration Date for Certain IPPS Wage Index Geographic Reclassifications and Special Exceptions Section 124 of the MIPPA extended through September 30, 2009 the hospital wage index reclassifications for hospitals reclassified under section 508 of the MMA. MIPPA also extended through the last date of the extension of the reclassifications under section 106(a) of the MIEA-TRHCA certain special exception wage indices referenced in the FY 2005 IPPS final rule (69 FR 49105 and 49107) and that were extended by section 117(a)(2) of the MMSEA. We refer readers to section II.C. of this final rule with comment period for discussion of this provision. 3. Increase in Physician Payment Update Section 131 of MIPPA increased the conversion factor by 1.1 percent for CY 2009 and required that CY 2008 and CY 2009 payment updates have no effect on payment rates for CY 2010 and subsequent years under the MPFS. We refer readers to section XV.F. of this final rule with comment period for discussion of the effect of this provision on payment for covered office-based surgical procedures and covered ancillary services paid under the ASC payment system. 4. Extension of Expiration Date for Cost-Based OPPS Payment for Brachytherapy and Therapeutic Radiopharmaceuticals Section 142 of the MIPPA amended section 1833(t)(16)(C) of the Act, as amended by section 106(a) of the MMSEA, and further extended the payment period for brachytherapy devices sources and therapeutic radiopharmaceuticals based on hospital's charges adjusted to cost through December 31, 2009. We refer readers to sections V.B.4. and VII. of this final rule with comment period for discussions of this provision. We also refer readers to section XV.F. of this final rule with comment period for discussion of the effect of this provision on covered ancillary services paid under the ASC payment system. 5. Extension and Expansion of the Medicare Hold Harmless Provision Under the OPPS for Certain Hospitals Section 147 of the MIPPA amended section 1833(t)(7)(D)(i) of the Act by extending the hold harmless payments (85 percent of the difference between the prospective payment system amount under the OPPS and the pre-BBA amount) for covered OPD services furnished by rural hospitals with 100 beds or less through December 31, 2009. It also expanded the same hold harmless payments to SCHs with 100 beds or fewer for covered OPD services furnished on or after January 1, 2009, and before January 1, 2010. We refer readers to section II.E. of this final rule with comment period for discussion of this provision. G. Summary of the Major Contents of the CY 2009 OPPS/ASC Proposed Rule A proposed rule appeared in the July 18, 2008 Federal Register (73 FR 41416) that set forth proposed changes to the Medicare hospital OPPS for CY 2009 to implement statutory requirements and changes arising from our continuing experience with the system and to implement certain new statutory provisions. In addition, we proposed changes to the revised Medicare ASC payment system for CY 2009, including updated payment weights and covered ancillary services based on the proposed OPPS update. Finally, we set forth proposed quality measures for the Hospital Outpatient Quality Data Reporting Program (HOP QDRP) for reporting quality data for annual payment rate updates for CY 2010 and subsequent calendar years, the requirements for data collection and submission for the annual payment update, and a proposed reduction in the OPPS payment for hospitals that fail to meet the HOP QDRP requirements for CY 2009, in accordance with the statutory requirement. The following is a summary of the major changes included in the CY 2009 OPPS/ASC proposed rule: 1. Updates Affecting OPPS Payments In section II. of the 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. OPPS Ambulatory Payment Classification (APC) Group Policies In section III. of the proposed rule, we discussed 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 discussed the application of the 2 times rule and proposed exceptions to it; proposed changes to specific APCs; and proposed movement of procedures from New Technology APCs to clinical APCs. 3. OPPS Payment for Devices In section IV. of the proposed rule, we discussed 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. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals In section V. of the proposed rule, we discussed 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. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices In section VI. of the proposed rule, we discussed the estimate of CY 2009 OPPS transitional pass-through spending for drugs, biologicals, and devices. 6. OPPS Payment for Brachytherapy Sources In section VII. of the proposed rule, we discussed our proposal concerning coding and payment for brachytherapy sources. 7. OPPS Payment for Drug Administration Services In section VIII. of the proposed rule, we set forth our proposed policy concerning payment and coding for drug administration services. 8. OPPS Payment for Hospital Outpatient Visits In section IX. of the 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. Payment for Partial Hospitalization Services In section X. of the proposed rule, we set forth our proposed payment for partial hospitalization services, including the proposed separate threshold for outlier payments for CMHCs. 10. Procedures That Will Be Paid Only as Inpatient Procedures In section XI. of the proposed rule, we discussed the procedures that we proposed to remove from the inpatient list and assign to APCs. 11. OPPS Nonrecurring Technical and Policy Clarifications In section XII. of the proposed rule, we set forth our nonrecurring technical issues and policy clarifications. 12. OPPS Payment Status and Comment Indicators In section XIII. of the proposed rule, we discussed our proposed changes to the definitions of status indicators assigned to APCs and presented our proposed comment indicators for the final rule with comment period. 13. OPPS Policy and Payment Recommendations In section XIV. of the proposed rule, we addressed 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. Update of the Revised Ambulatory Surgical Center Payment System In section XV. of the proposed rule, we discussed the proposed update of the revised ASC payment system payment rates for CY 2009. 15. Reporting of Hospital Outpatient Quality Data for Annual Hospital Payment Rate Updates and CY 2009 Payment Reduction In section XVI. of the proposed rule, we discussed the proposed quality measures for reporting hospital outpatient quality data for the annual payment update factor for CY 2010 and subsequent calendar years, set forth the requirements for data collection and submission for the annual payment update, and proposed 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 the proposed rule, we discussed 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 the proposed rule, we set forth an analysis of the impact the proposed changes would have on affected entities and beneficiaries. H. Public Comments Received in Response to the CY 2009 OPPS/ASC Proposed Rule We received approximately 2,390 timely pieces of correspondence containing multiple comments on the CY 2009 OPPS/ASC proposed rule. We note that we received some comments that were outside the scope of the CY 2009 OPPS/ASC proposed rule, including public comments on new CY 2009 HCPCS codes that were not presented in the CY 2009 OPPS/ASC proposed rule. These comments are not addressed in this CY 2009 OPPS/ASC final rule with comment period. New CY 2009 HCPCS codes are designated with comment indicator “NI” in Addenda B, AA, and BB to this final rule with comment period, to signify that their CY 2009 interim OPPS and/or ASC treatment is open to public comment on this final rule with comment period. Summaries of the public comments that are within the scope of the proposals and our responses to those comments are set forth in the various sections of this final rule with comment period under the appropriate headings. I. Public Comments Received on the November 27, 2007 OPPS/ASC Final Rule With Comment Period We received approximately 507 timely items of correspondence on the CY 2008 OPPS/ASC final rule with comment period, some of which contained multiple comments on the interim APC assignments and/or status indicators of HCPCS codes identified with comment indicator “NI” in Addendum B to that final rule with comment period. Summaries of those public comments on topics open to comment in the CY 2008 OPPS/ASC final rule with comment period and our responses to them are set forth in the various sections of this final rule with comment period under the appropriate headings. J. Proposed Rule on ASC Conditions for Coverage On August 31, 2007, we published in the Federal Register (72 FR 50470) a proposed rule to update the ASC Conditions for Coverage (CfCs) by revising some of the definitions and revising the CfCs on governing body and management and laboratory and radiologic services to reflect current ASC practices; and to add several new CfCs on quality assessment and performance improvement, patient rights, and patient admission, assessment, and discharge to promote and protect patient health and safety. We received 30 timely items of correspondence on this proposed rule. We present a summary of the provisions of the proposed rule, a summary of the public comments received and our responses, and the final policy provisions in section XV.B. of the preamble of this document. (Hereinafter, we refer to this proposed rule as the 2007 ASC CfCs proposed rule.) K. Medicare Hospital Conditions of Participation: Requirements for Approval and Re-Approval of Transplant Programs To Perform Transplants—Clarification of Provider and Supplier Termination Policy In section XVIII. of this document, we are clarifying policy set forth in responses to public comments on a March 30, 2007 final rule (72 FR 15198) regarding the Secretary's ability to terminate Medicare providers and suppliers (in this case, transplant centers) during an appeal of a determination that affects participation in the Medicare program. II. Updates Affecting OPPS Payments A. 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. For CY 2009, we proposed 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 proposed to recalibrate the relative payment weights for each APC based on claims and cost report data for outpatient services. We proposed to use the most recent available data to construct the database for calculating APC group weights. Therefore, for the purpose of recalibrating the final APC relative payment weights for CY 2009, we used approximately 140 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 final rule with comment period on the CMS Web site at: http://www.cms.hhs.gov/HospitalOutpatientPPS/HORD/. ) Of the 140 million final action claims for services provided in hospital outpatient settings used to calculate the CY 2009 OPPS payment rates for this final rule with comment period, approximately 107 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 107 million claims, approximately 49 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). From the remaining 58 million claims, we created approximately 99 million single records, of which approximately 67 million were “pseudo” single claims (created from 26 million multiple procedure claims using the process we discuss later in this section). Approximately 617,000 claims trimmed out on cost or units in excess of + /−3 standard deviations from the geometric mean, yielding approximately 99 million single bills for median setting. This number of “pseudo” and “natural” single bills is comparable to the 97 million single bills that we used in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66589). In prior rules, we have reported the percentage of claims that we were able to use to estimate APC median costs. However, our refinement to the bypass process to accommodate the multiple imaging composite methodology described in section II.A.2.e.(5) of this final rule with comment period currently prevents us from providing an accurate percentage. Because our refinement increased the number of “pseudo” single bills, we are confident that we are using a high percentage of claims to estimate the final CY 2009 APC median costs. We provide greater detail on this refinement in our claims accounting narrative for this final rule with comment period that is posted on the CMS Web site. As proposed, the APC relative weights and payments for CY 2009 in Addenda A and B to this final rule with comment period were calculated using claims from CY 2007 that were processed on or before June 30, 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 proposed to convert to relative payment weights for purposes of calculating the CY 2009 payment rates. We did not receive any public comments on our proposal to base the CY 2009 APC relative weights on the most currently available cost reports and on claims for services furnished in CY 2007. Therefore, for this reason and the reasons noted above in this section, we are finalizing our data source for the recalibration of the CY 2009 APC relative payment weights as proposed, without modification, as described in this section of this final rule with comment period. b. Use of Single and Multiple Procedure Claims For CY 2009, in general, we proposed 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 (73 FR 41423). We generally use single procedure claims to set the median costs for APCs because we believe that the OPPS relative weights on which payment rates are based should 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 the first 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 final rule with comment period for discussion of the use of claims to establish median costs for composite APCs. In the CY 2009 OPPS/ASC proposed rule (73 FR 41423), we proposed to continue to apply these processes to enable us to use as much claims data as possible for ratesetting for the CY 2009 OPPS. This process enabled us to create, for this final rule with comment period, approximately 67 million “pseudo” single claims, including multiple imaging composite “single session” bills (we refer readers to section II.A.2.e.(5) of this final rule with comment period for further discussion), and approximately 32 million “natural” single bills. For this final rule with comment period, “pseudo” single procedure bills represent 68 percent of all single bills used to calculate median costs. In the CY 2009 OPPS/ASC proposed rule (73FR 41424 through 41429), we proposed to bypass 452 HCPCS codes for CY 2009 that were identified in Table 1 of the proposed rule. We proposed 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) was open to public comment. We removed two HCPCS codes from the CY 2008 bypass list for the 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 proposed to add to the bypass list all HCPCS codes not on the CY 2008 bypass list that, using the APC Panel data, met the same previously established empirical criteria for the bypass list that are summarized below. We assumed that the representation of packaging in the single claims for any given code was comparable to packaging for that code in the multiple claims. The proposed criteria for the bypass list were: • 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 proposed to continue to include on 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. Some of these codes were identified by CMS medical advisors and some were identified in prior years by commenters with specialized knowledge of the services they requested be added to the bypass list. To ensure clinical consistency in our treatment of related services, we also proposed 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 enabled 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 was that the packaged costs associated with add-on drug administration services were 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 also proposed to add HCPCS code G0390 (Trauma response team activation associated with hospital critical care service) because we thought it was 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 had not added HCPCS code G0390 to the bypass list, we would have had 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 had any properly coded “natural” single bills for HCPCS code G0390. Including HCPCS code G0390 on the bypass list allowed 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 were 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 could not assess whether HCPCS code G0390 would meet the empirical criteria for inclusion on the bypass list because we had no “natural” single claims for HCPCS code G0390. As a result of the multiple imaging composite APCs that we proposed to establish for CY 2009 as discussed in section II.A.2.e.(5) of this final rule with comment period, we noted that 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, were identified first. These HCPCS codes were 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” were 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. For this final rule with comment period, we then reassessed the claims without suppression of the “overlap bypass codes” under our longstanding “pseudo” single process to determine whether we could convert additional claims to “pseudo” single claims. (We refer readers to section II.A.2.c. of this final rule with comment period for further discussion of the treatment of “overlap bypass codes.”) This process also created multiple imaging composite “single session” bills that could be used for calculating composite APC median costs. “Overlap bypass codes” that would be members of the proposed multiple imaging composite APCs were identified by asterisks (*) in Table 1 of the CY 2009 OPPS/ASC proposed rule. Table 1 published in the CY 2009 OPPS/ASC proposed rule included the proposed list of bypass codes for CY 2009. As noted in that proposed rule (73 FR 41424 through 41429), that list contained bypass codes that were appropriate to claims for services in CY 2007 and, therefore, included codes that were deleted for CY 2008. Moreover, there were codes on the proposed bypass list that were new for CY 2008 and which we indicated were appropriate additions to the bypass list in preparation for use of the CY 2008 claims for creation of the CY 2010 OPPS. We specifically requested public comment on the proposed CY 2009 bypass list. Comment: Several commenters indicated that review of the CY 2007 claims data on which the CY 2009 proposed OPPS was based revealed that fewer than 10 percent of the billed lines for radiation oncology guidance codes were used in setting the proposed CY 2009 OPPS payment rates. They also asserted that more than a third of the billed lines for Image Guided Radiation Therapy (IGRT) services were being packaged into the single bills for services that are totally unrelated to radiation oncology services, such as clinic visits. They believed that this misassignment may have occurred in part as a result of the inclusion of radiation oncology services on the bypass list. Response: We examined the combinations of codes that occurred on claims that contained guidance codes for radiation oncology services, specifically CPT codes 76950 (Ultrasonic guidance for placement of radiation therapy fields); 76965 (Ultrasonic guidance for interstitial radioelement application); 77014 (Computed tomography guidance for placement of radiation therapy fields); 77417 (Therapeutic radiology port film(s)); and 77421 (Stereoscopic X-ray guidance for localization of target volume for the delivery of radiation therapy), in our proposed rule data. We found that, on some claims, the costs of image guidance for radiation therapy services were being packaged into the costs of other services such as visits, or were not available to be correctly packaged. Therefore, those costs were not being appropriately packaged into the radiation oncology services to which they were incidental and supportive. Our analysis indicated that the inclusion of radiation oncology codes that failed to meet the empirical criteria for inclusion of the codes on the bypass list was the most likely source of the problem. We were unable to ensure that the radiation oncology codes that failed the empirical criteria could be retained on the bypass list with confidence that they would not result in incorrect or missing packaging for guidance services. We therefore removed from the proposed CY 2009 bypass list all codes in the radiation oncology series of CPT, specifically ranging from CPT code 77261 (Therapeutic radiology treatment planning; simple) through and including CPT code 77799 (Unlisted procedure, clinical brachytherapy), that did not meet the empirical criteria for inclusion on the bypass list based on CY 2009 proposed rule data. We had added many of these codes to the bypass list after reviewing and accepting the recommendations of several commenters to past OPPS proposed rules who believed that the codes were appropriate for inclusion on the bypass list (71 FR 67970 and 72 FR 66591), although they failed to meet the empirical criteria for inclusion on the bypass list. Removing these codes from the bypass list for the CY 2009 OPPS resulted in a reduction of approximately 1 million “pseudo” single procedure claims but we believe that it resulted in more appropriate assignment of packaged costs. In some cases, the removal of these codes from the bypass list increased the median costs of APCs to which radiation oncology services are assigned (for example, APC 0412 (IMRT Treatment Delivery) and APC 0304 (Level I Therapeutic Radiation Treatment Preparation)) and in other cases it reduced the “pseudo” single bills that were available to be used to set median costs and led to decreases in medians that were calculated using the smaller set of single procedure claims (for example, APC 8001 (LDR Prostate Brachytherapy Composite)). On balance, we believe that removing these codes from the bypass list is the most appropriate approach for this final rule with comment period to ensure that packaged costs are correctly captured in ratesetting. Although we have removed all codes in the radiation oncology series that do not meet the empirical criteria for inclusion on the bypass list for this CY 2009 final rule with public comment period, we will continue to examine the claims data for these codes, and particularly for the APCs for which the number of usable claims declined. We hope to determine if there are specific codes in the radiation oncology series that do not meet the empirical bypass list criteria but which could be safely added back to the bypass list without resulting in inappropriate packaging, in order to enable the use of more claims data for radiation oncology services. Comment: One commenter expressed support for the ratesetting methodology using single and “pseudo” single claims and recommended that CMS continue to use methodologies that improve the overall accuracy of the cost estimate calculations. Response: We appreciate the commenter's support. We will continue to use our established methodologies and continue to evaluate additional refinements and improvements to our methodologies, with the goal of achieving appropriate and accurate estimates of the costs of services in the HOPD. Comment: One commenter supported inclusion of HCPCS code G0340 (Image-guided robotic linear accelerator-based stereotactic radiosurgery, delivery including collimator changes and custom plugging, fractionated treatment, all lesion, per session, second through fifth session, maximum) on the bypass list. Response: We appreciate the commenter's support and have continued to include HCPCS code G0340 on the CY 2009 bypass list. Comment: One commenter requested clarification regarding the standards by which codes are added to the bypass list, believing that CMS' proposal to include HCPCS code G0390 on the bypass list would affect the billing of the code. Response: The purpose of the bypass list is to isolate resource costs associated with an individual service through identifying the costs of HCPCS codes with little or no packaging and using that cost data to create “pseudo” single claims. The remaining costs of other services on the claim are then evaluated to determine if the claim qualifies as a single bill that can be used for ratesetting. The use of empirical criteria and clinical assessment ensure that there is minimal and infrequent packaging associated with services on the bypass list, making additional “pseudo” single claims for the bypass services available for ratesetting and potentially making the claims with the bypass code's costs removed appropriate for ratesetting for other services on the same claim. In the case of HCPCS code G0390 and CPT code 99291, as described above, inclusion of HCPCS code G0390 on the bypass list allows us to develop more accurate estimates of the median costs of CPT code 99291 and HCPCS code G0390 than otherwise would be possible. However, the bypass list is only used for data purposes and has no effect on how hospitals report services on claims. We fully expect hospitals to continue reporting HCPCS code G0390 when a critical care visit qualifies for trauma activation, in accordance with our instructions in the Medicare Claims Processing Manual, Pub. 100-04, Chapter 4, Section 160.1. Comment: One commenter recommended that CPT code 90768 (Intravenous infusion, for therapy, prophylaxis, or diagnosis (specify substance or drug): Concurrent infusion (List separately in addition to code for primary procedure)) be included on the bypass list in order to ensure consistency with the treatment of other drug administration codes. Response: We have not added CPT code 90768 to the bypass list because our CY 2009 policy unconditionally packages payment for this service and, therefore, it is not a candidate for the bypass list. The purpose of the bypass list is to develop “pseudo” single claims so that there are more data available to determine the median costs of separately payable services for ratesetting purposes. Including packaged codes would be contrary to the purpose of the bypass list. For further discussion of packaged payment in CY 2009 for CPT code 90768, we refer readers to section VIII.B. of this final rule with comment period. Comment: One commenter suggested that CMS claims data for CY 2007 showed a number of guidance and radiological supervision and interpretation “dependent” HCPCS codes are not on claims with paid procedures in many cases, due in part to the interaction with the bypass list, and therefore, their costs are not used in ratesetting. They urged CMS to ensure that the packaging and composite methodologies are meeting the goals of capturing accurate multiple claims data. Response: The empirical criteria through which most codes are added to the bypass list are set to limit bypass codes to those codes which seldom have packaging, and when packaging exists, ensure limited packaging associated with the code. This is to ensure that any remaining packaging left after removal of the bypass codes would be minimal and uncommon. As discussed above in response to the comment on image guidance for radiation oncology services, we have made some changes to the final CY 2009 bypass list to remove certain radiation oncology codes from the bypass list that do not meet the empirical criteria. Those bypass list changes ensure that the packaged costs of image guidance services for radiation therapy are not lost or misdirected to payment for other unrelated services. Furthermore, we have reviewed the other guidance HCPCS codes that are unconditionally packaged under the CY 2009 OPPS, and we do not believe that there are other HCPCS codes included on the bypass list that fail to meet the empirical criteria and to which the packaged costs of these other guidance services would be appropriately assigned. Thus, we do not believe that other changes to the bypass list to appropriately capture and assign the costs of other guidance services are necessary. With regard to the radiological supervision and interpretation HCPCS codes, these codes are conditionally packaged codes assigned status indicator “Q2” (“T-packaged”) to reflect that their payment would be packaged when one or more surgical procedures (status indicator “T”) are provided on the same day, but otherwise they would be separately paid. The determination of packaged versus separately payable status is made for radiological supervision and interpretation codes prior to application of the bypass list to develop “pseudo” single claims. Of note, there are only 22 “T” status codes on the bypass list, out of a total of 424 final bypass codes, and many of the “T” status codes on the bypass list are minor skin treatment procedures. Most of these “T” status procedures currently meet the empirical criteria for inclusion on the bypass list, so we do not believe that radiological supervision and interpretation services generally appear on claims with only those “T” status procedures or would be appropriately packaged with those procedures. Therefore, we continue to believe that the costs of packaged radiological supervision and interpretation services are being appropriately captured for purposes of ratesetting, and those costs are not being lost or misassigned due to an interaction with the bypass list. After consideration of the public comments received, we are adopting, as final, the proposed “pseudo” single claims process and the final CY 2009 bypass list of 424 HCPCS codes, as displayed in Table 1 below. This list has been modified from the CY 2009 proposed list, with the removal of certain HCPCS codes as discussed above in this section. Table 1—Final CY 2009 Bypass Codes for Creating “Pseudo” Single Claims for Calculating Median Costs HCPCS code Short descriptor “Overlap bypass codes” 0144T CT heart w/o dye; qual calc 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 ear wax 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 77301 Radiotherapy dose plan, imrt 77315 Teletx isodose plan complex 77336 Radiation physics consult 77401 Radiation treatment delivery 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 Insitu 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 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 Respons w/hosp criti M0064 Visit for drug monitoring Q0091 Obtaining screen pap smear c. 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. In the CY 2009 OPPS/ASC proposed rule (73 FR 41429), we proposed 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 proposed 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 proposed 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 in the cost report. At the August 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. We received no public comments on this proposal and, therefore, we are finalizing our proposal for CY 2009, without modification, to calculate hospital-specific overall and departmental CCRs as described above in this section. (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 incorporate aggregation bias, undervaluing high cost items and overvaluing low cost items when 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 CMS began setting 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 capture better the variation in cost and charges for individual services when calculating costs for the IPPS relative weights across services in the same cost center. 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 revenue codes associated with the cost center in the claims data. 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). We did not propose any changes to address charge compression for CY 2008. 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 or, at least, similar approaches 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 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,” which became available at the time of the publication of the CY 2009 OPPS/ASC proposed rule. The RTI final 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_200807_Final.pdf . 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 and constitute the minimum set of cost centers that must be reported on the Medicare hospital cost report if a hospital includes that cost center in its own internal accounts. Nonstandard cost centers are additional common cost centers available to hospitals for reporting when preparing their Medicare hospital cost report. To the extent hospitals provide services captured by nonstandard cost centers, they should report the relevant nonstandard cost centers as well, if the service is captured in a separate account and qualifies as a cost center in accordance with the Provider Reimbursement Manual (PRM)-I, Section 2302.8. 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 for charge compression 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 these distortions may have 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 adj [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3AE8-26212. Public record. Not legal advice.