Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2017 Rates; Quality Reporting Requirements for Specific Providers; Graduate Medical Education; Hospital Notification Procedures Applicable to Beneficiaries Receiving Observation Services; Technical Changes Relating to Costs to Organizations and Medicare Cost Reports; Finalization of Interim Final Rules With Comment Period on LTCH PPS Payments for Severe Wounds, Modifications of Limitations on Redesignation by the Medicare Geographic Classification Review Board, and Extensions of Payments to MDHs and Low-Volume Hospitals

 
CONTENT

Federal Register, Volume 81 Issue 162 (Monday, August 22, 2016)

Federal Register Volume 81, Number 162 (Monday, August 22, 2016)

Rules and Regulations

Pages 56761-57345

From the Federal Register Online via the Government Publishing Office www.gpo.gov

FR Doc No: 2016-18476

Page 56761

Vol. 81

Monday,

No. 162

August 22, 2016

Part II

Book 2 of 2 Books

Pages 56761-57438

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 405, 412, 413, et al.

Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2017 Rates; Quality Reporting Requirements for Specific Providers; Graduate Medical Education; Hospital Notification Procedures Applicable to Beneficiaries Receiving Observation Services; Technical Changes Relating to Costs to Organizations and Medicare Cost Reports; Finalization of Interim Final Rules With Comment Period on LTCH PPS Payments for Severe Wounds, Modifications of Limitations on Redesignation by the Medicare Geographic Classification Review Board, and Extensions of Payments to MDHs and Low-Volume Hospitals; Final Rule

Page 56762

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 412, 413, and 489

CMS-1655-F; CMS-16644-F; CMS-1632-F2

RIN 0938-AS77; 0938-AS88; 0938-AS41

Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Policy Changes and Fiscal Year 2017 Rates; Quality Reporting Requirements for Specific Providers; Graduate Medical Education; Hospital Notification Procedures Applicable to Beneficiaries Receiving Observation Services; Technical Changes Relating to Costs to Organizations and Medicare Cost Reports; Finalization of Interim Final Rules With Comment Period on LTCH PPS Payments for Severe Wounds, Modifications of Limitations on Redesignation by the Medicare Geographic Classification Review Board, and Extensions of Payments to MDHs and Low-Volume Hospitals

AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems for FY 2017. Some of these changes will implement certain statutory provisions contained in the Pathway for Sustainable Growth Reform Act of 2013, the Improving Medicare Post-

Acute Care Transformation Act of 2014, the Notice of Observation Treatment and Implications for Care Eligibility Act of 2015, and other legislation. We also are providing the estimated market basket update to apply to the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits for FY 2017.

We are updating the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) for FY 2017.

In addition, we are making changes relating to direct graduate medical education (GME) and indirect medical education payments; establishing new requirements or revising existing requirements for quality reporting by specific Medicare providers (acute care hospitals, PPS-exempt cancer hospitals, LTCHs, and inpatient psychiatric facilities), including related provisions for eligible hospitals and critical access hospitals (CAHs) participating in the Electronic Health Record Incentive Program; updating policies relating to the Hospital Value-Based Purchasing Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition Reduction Program; implementing statutory provisions that require hospitals and CAHs to furnish notification to Medicare beneficiaries, including Medicare Advantage enrollees, when the beneficiaries receive outpatient observation services for more than 24 hours; announcing the implementation of the Frontier Community Health Integration Project Demonstration; and making technical corrections and changes to regulations relating to costs to related organizations and Medicare cost reports; we are providing notice of the closure of three teaching hospitals and the opportunity to apply for available GME resident slots under section 5506 of the Affordable Care Act.

We are finalizing the provisions of interim final rules with comment period that relate to a temporary exception for certain wound care discharges from the application of the site neutral payment rate under the LTCH PPS for certain LTCHs; application of two judicial decisions relating to modifications of limitations on redesignation by the Medicare Geographic Classification Review Board; and legislative extensions of the Medicare-dependent, small rural hospital program and changes to the payment adjustment for low-volume hospitals.

DATES: Effective Date: These final rules are effective on October 1, 2016.

FOR FURTHER INFORMATION CONTACT: Ing Jye Cheng, (410) 786-4548, and Donald Thompson, (410) 786-44487, Operating Prospective Payment, MS-

DRGs, Wage Index, New Medical Service and Technology Add-On Payments, Hospital Geographic Reclassifications, Graduate Medical Education, Capital Prospective Payment, Excluded Hospitals, Medicare Disproportionate Share Hospital (DSH) Issues, Medicare-Dependent Small Rural Hospital (MDH) Program, and Low-Volume Hospital Payment Adjustment Issues.

Michele Hudson, (410) 786-4487, and Emily Lipkin, (410) 786-3633, Long-Term Care Hospital Prospective Payment System and MS-LTC-DRG Relative Weights Issues.

Mollie Knight (410) 786-7948, and Bridget Dickensheets, (410) 786-

8670, Rebasing and Revising the LTCH Market Basket Issues.

Siddhartha Mazumdar, (410) 786-6673, Rural Community Hospital Demonstration Program Issues.

Jason Pteroski, (410) 786-4681, and Siddhartha Mazumdar, (410) 786-

6673, Frontier Community Health Integration Project Demonstration Issues.

Kathryn McCann Smith, (410) 786-7623, Hospital Notification Procedures for Beneficiaries Receiving Outpatient Observation Services Issues; or Stephanie Simons, (206) 615-2420, only for Related Medicare Health Plans Issues.

Lein Han, (617) 879-0129, Hospital Readmissions Reduction Program--

Readmission Measures for Hospitals Issues.

Delia Houseal, (410) 786-2724, Hospital-Acquired Condition Reduction Program and Hospital Readmissions Reduction Program--

Administration Issues.

Joseph Clift, (410) 786-4165, Hospital-Acquired Condition Reduction Program--Measures Issues.

James Poyer, (410) 786-2261, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing--Program Administration, Validation, and Reconsideration Issues.

Cindy Tourison, (410) 786-1093, Hospital Inpatient Quality Reporting--Measures Issues Except Hospital Consumer Assessment of Healthcare Providers and Systems Issues; and Readmission Measures for Hospitals Issues.

Kim Spaulding Bush, (410) 786-3232, Hospital Value-Based Purchasing Efficiency Measures Issues.

Elizabeth Goldstein, (410) 786-6665, Hospital Inpatient Quality Reporting--Hospital Consumer Assessment of Healthcare Providers and Systems Measures Issues.

James Poyer, (410) 786-2261, PPS-Exempt Cancer Hospital Quality Reporting Issues.

Mary Pratt, (410) 786-6867, Long-Term Care Hospital Quality Data Reporting Issues.

Jeffrey Buck, (410) 786-0407 and Cindy Tourison (410) 786-1093, Inpatient Psychiatric Facilities Quality Data Reporting Issues.

Deborah Krauss, (410) 786-5264, and Lisa Marie Gomez, (410) 786-

1175, EHR Incentive Program Clinical Quality Measure Related Issues.

Elizabeth Myers, (410) 786-4751, EHR Incentive Program Nonclinical Quality Measure Related Issues.

Lauren Wu, (202) 690-7151, Certified EHR Technology Related Issues.

Page 56763

Kellie Shannon, (410) 786-0416, Technical Changes Relating to Costs to Organizations and Medicare Cost Reports Issues.

SUPPLEMENTARY INFORMATION:

Electronic Access

This Federal Register document is available from the Federal Register online database through Federal Digital System (FDsys), a service of the U.S. Government Printing Office. This database can be accessed via the Internet at: http://www.gpo.gov/fdsys.

Tables Available Only Through the Internet on the CMS Web Site

In the past, a majority of the tables referred to throughout this preamble and in the Addendum to the proposed rule and the final rule were published in the Federal Register as part of the annual proposed and final rules. However, beginning in FY 2012, some of the IPPS tables and LTCH PPS tables are no longer published in the Federal Register. Instead, these tables generally will be available only through the Internet. The IPPS tables for this final rule are available through the Internet on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the screen titled, ``FY 2017 IPPS Final Rule Home Page'' or ``Acute Inpatient--Files for Download''. The LTCH PPS tables for this FY 2017 final rule are available through the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation Number CMS-1655-F. For further details on the contents of the tables referenced in this final rule, we refer readers to section VI. of the Addendum to this final rule.

Readers who experience any problems accessing any of the tables that are posted on the CMS Web sites identified above should contact Michael Treitel at (410) 786-4552.

Acronyms

3M 3M Health Information System

AAMC Association of American Medical Colleges

ACGME Accreditation Council for Graduate Medical Education

ACoS American College of Surgeons

AHA American Hospital Association

AHIC American Health Information Community

AHIMA American Health Information Management Association

AHRQ Agency for Healthcare Research and Quality

AJCC American Joint Committee on Cancer

ALOS Average length of stay

ALTHA Acute Long-Term Hospital Association

AMA American Medical Association

AMGA American Medical Group Association

AMI Acute myocardial infarction

AOA American Osteopathic Association

APR DRG All Patient Refined Diagnosis Related Group System

APRN Advanced practice registered nurse

ARRA American Recovery and Reinvestment Act of 2009, Public Law 111-

5

ASCA Administrative Simplification Compliance Act of 2002, Public Law 107-105

ASITN American Society of Interventional and Therapeutic Neuroradiology

ASPE Assistant Secretary for Planning and Evaluation (DHHS)

ATRA American Taxpayer Relief Act of 2012, Public Law 112-240

BBA Balanced Budget Act of 1997, Public Law 105-33

BBRA Medicare, Medicaid, and SCHIP State Children's Health Insurance Program Balanced Budget Refinement Act of 1999, Public Law 106-113

BIPA Medicare, Medicaid, and SCHIP State Children's Health Insurance Program Benefits Improvement and Protection Act of 2000, Public Law 106-554

BLS Bureau of Labor Statistics

CABG Coronary artery bypass graft surgery

CAH Critical access hospital

CARE Medicare Continuity Assessment Record & Evaluation Instrument

CART CMS Abstraction & Reporting Tool

CAUTI Catheter-associated urinary tract infection

CBSAs Core-based statistical areas

CC Complication or comorbidity

CCN CMS Certification Number

CCR Cost-to-charge ratio

CDAC Medicare Clinical Data Abstraction Center

CDAD Clostridium difficile-associated disease

CDC Centers for Disease Control and Prevention

CERT Comprehensive error rate testing

CDI Clostridium difficile C. difficile infection

CFR Code of Federal Regulations

CLABSI Central line-associated bloodstream infection

CIPI Capital input price index

CMI Case-mix index

CMS Centers for Medicare & Medicaid Services

CMSA Consolidated Metropolitan Statistical Area

COBRA Consolidated Omnibus Reconciliation Act of 1985, Public Law 99-272

COLA Cost-of-living adjustment

CoP Hospital condition of participation

COPD Chronic obstructive pulmonary disease

CPI Consumer price index

CQL Clinical quality language

CQM Clinical quality measure

CY Calendar year

DACA Data Accuracy and Completeness Acknowledgement

DPP Disproportionate patient percentage

DRA Deficit Reduction Act of 2005, Public Law 109-171

DRG Diagnosis-related group

DSH Disproportionate share hospital

EBRT External beam radiotherapy

ECE Extraordinary circumstances exemption

ECI Employment cost index

eCQM Electronic clinical quality measure

EDB Medicare Enrollment Database

EHR Electronic health record

EMR Electronic medical record

EMTALA Emergency Medical Treatment and Labor Act of 1986, Public Law 99-272

EP Eligible professional

FAH Federation of American Hospitals

FDA Food and Drug Administration

FFY Federal fiscal year

FPL Federal poverty line

FQHC Federally qualified health center

FR Federal Register

FTE Full-time equivalent

FY Fiscal year

GAF Geographic Adjustment Factor

GME Graduate medical education

HAC Hospital-acquired condition

HAI Healthcare-associated infection

HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems

HCFA Health Care Financing Administration

HCO High-cost outlier

HCP Healthcare personnel

HCRIS Hospital Cost Report Information System

HF Heart failure

HHA Home health agency

HHS Department of Health and Human Services

HICAN Health Insurance Claims Account Number

HIPAA Health Insurance Portability and Accountability Act of 1996, Public Law 104-191

HIPC Health Information Policy Council

HIS Health information system

HIT Health information technology

HMO Health maintenance organization

HPMP Hospital Payment Monitoring Program

HSA Health savings account

HSCRC Maryland Health Services Cost Review Commission

HSRV Hospital-specific relative value

HSRVcc Hospital-specific relative value cost center

HQA Hospital Quality Alliance

HQI Hospital Quality Initiative

HwH Hospital-within-hospital

ICD-9-CM International Classification of Diseases, Ninth Revision, Clinical Modification

ICD-10-CM International Classification of Diseases, Tenth Revision, Clinical Modification

ICD-10-PCS International Classification of Diseases, Tenth Revision, Procedure Coding System

ICR Information collection requirement

ICU Intensive care unit

IGI IHS Global Insight, Inc.

IHS Indian Health Service

IME Indirect medical education

IMPACT Act Improving Medicare Post-Acute Care Transformation Act of 2014, Public Law 113-185

Page 56764

I-O Input-Output

IOM Institute of Medicine

IPF Inpatient psychiatric facility

IPFQR Inpatient Psychiatric Facility Quality Reporting Program

IPPS Acute care hospital inpatient prospective payment system

IRF Inpatient rehabilitation facility

IQR Hospital Inpatient Quality Reporting

LAMCs Large area metropolitan counties

LEP Limited English proficiency

LOC Limitation on charges

LOS Length of stay

LTC-DRG Long-term care diagnosis-related group

LTCH Long-term care hospital

LTCH QRP Long-Term Care Hospital Quality Reporting Program

MA Medicare Advantage

MAC Medicare Administrative Contractor

MACRA Medicare Access and CHIP Reauthorization Act of 2015, Public Law 114-10

MAP Measure Application Partnership

MCC Major complication or comorbidity

MCE Medicare Code Editor

MCO Managed care organization

MDC Major diagnostic category

MDH Medicare-dependent, small rural hospital

MedPAC Medicare Payment Advisory Commission

MedPAR Medicare Provider Analysis and Review File

MEI Medicare Economic Index

MGCRB Medicare Geographic Classification Review Board

MIEA-TRHCA Medicare Improvements and Extension Act, Division B of the Tax Relief and 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

MMEA Medicare and Medicaid Extenders Act of 2010, Public Law 111-309

MMSEA Medicare, Medicaid, and SCHIP Extension Act of 2007, Public Law 110-173

MOON Medicare Outpatient Observation Notice

MRHFP Medicare Rural Hospital Flexibility Program

MRSA Methicillin-resistant Staphylococcus aureus

MSA Metropolitan Statistical Area

MS-DRG Medicare severity diagnosis-related group

MS-LTC-DRG Medicare severity long-term care diagnosis-related group

MU Meaningful Use EHR Incentive Program

MUC Measure under consideration

NAICS North American Industrial Classification System

NALTH National Association of Long Term Hospitals

NCD National coverage determination

NCHS National Center for Health Statistics

NCQA National Committee for Quality Assurance

NCVHS National Committee on Vital and Health Statistics

NECMA New England County Metropolitan Areas

NHSN National Healthcare Safety Network

NOP Notice of Participation

NOTICE Act Notice of Observation Treatment and Implication for Care Eligibility Act, Public Law 114-42

NQF National Quality Forum

NQS National Quality Strategy

NTIS National Technical Information Service

NTTAA National Technology Transfer and Advancement Act of 1991, Public Law 104-113

NUBC National Uniform Billing Code

NVHRI National Voluntary Hospital Reporting Initiative

OACT CMS' Office of the Actuary

OBRA 86 Omnibus Budget Reconciliation Act of 1986, Public Law 99-509

OES Occupational employment statistics

OIG Office of the Inspector General

OMB Executive Office of Management and Budget

ONC Office of the National Coordinator for Health Information Technology

OPM U.S. Office of Personnel Management

OQR Hospital Outpatient Quality Reporting

O.R. Operating room

OSCAR Online Survey Certification and Reporting System

PAC Post-acute care

PAMA Protecting Access to Medicare Act of 2014, Public Law 113-93

PCH PPS-exempt cancer hospital

PCHQR PPS-exempt cancer hospital quality reporting

PMSAs Primary metropolitan statistical areas

POA Present on admission

PPI Producer price index

PPR Potentially Preventable Readmissions

PPS Prospective payment system

PRA Paperwork Reduction Act

PRM Provider Reimbursement Manual

ProPAC Prospective Payment Assessment Commission

PRRB Provider Reimbursement Review Board

PRTFs Psychiatric residential treatment facilities

PSF Provider-Specific File

PSI Patient safety indicator

PS&R Provider Statistical and Reimbursement System

PQRS Physician Quality Reporting System

PUF Public use file

QDM Quality data model

QIES ASAP Quality Improvement Evaluation System Assessment Submission and Processing

QIG Quality Improvement Group CMS

QIO Quality Improvement Organization

QM Quality measure

QRDA Quality Reporting Document Architecture

RFA Regulatory Flexibility Act, Public Law 96-354

RHC Rural health clinic

RHQDAPU Reporting hospital quality data for annual payment update

RIM Reference information model

RNHCI Religious nonmedical health care institution

RPL Rehabilitation psychiatric long-term care (hospital)

RRC Rural referral center

RSMR Risk-standard mortality rate

RSP Risk-standardized payment

RSSR Risk-standard readmission rate

RTI Research Triangle Institute, International

RUCAs Rural-urban commuting area codes

RY Rate year

SAF Standard Analytic File

SCH Sole community hospital

SCHIP State Child Health Insurance Program

SCIP Surgical Care Improvement Project

SFY State fiscal year

SGR Sustainable Growth Rate

SIC Standard Industrial Classification

SIR Standardized infection ratio

SNF Skilled nursing facility

SNF QRP Skilled Nursing Facility Quality Reporting Program

SNF VBP Skilled Nursing Facility Value-Based Purchasing

SOCs Standard occupational classifications

SOM State Operations Manual

SRR Standardized risk ratio

SSI Surgical site infection

SSI Supplemental Security Income

SSO Short-stay outlier

SUD Substance use disorder

TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Public Law 97-248

TEP Technical expert panel

THA/TKA Total hip arthroplasty/total knee arthroplasty

TMA TMA Transitional Medical Assistance, Abstinence Education, and QI Qualifying Individuals Programs Extension Act of 2007, Public Law 110-90

TPS Total Performance Score

UHDDS Uniform hospital discharge data set

UR Utilization review

VBP Hospital Value Based Purchasing Program

VTE Venous thromboembolism

Table of Contents

I. Executive Summary and Background

A. Executive Summary

1. Purpose and Legal Authority

2. Summary of the Major Provisions

3. Summary of Costs and Benefits

B. Summary

1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)

2. Hospitals and Hospital Units Excluded From the IPPS

3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)

4. Critical Access Hospitals (CAHs)

5. Payments for Graduate Medical Education (GME)

C. Summary of Provisions of Recent Legislation Implemented in This Final Rule

1. American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240)

2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)

3. Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185)

4. The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Public Law 114-10)

5. The Consolidated Appropriations Act, 2016 (Public Law 114-

113)

Page 56765

6. The Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act) of 2015 (Public Law 114-42)

D. Issuance of Notice of Proposed Rulemaking

E. Finalization of Interim Final Rule With Comment Period on the Temporary Exception to the Site Neutral Payment Rate Under the LTCH PPS for Certain Severe Wound Discharges From Certain LTCHs as Required by the Consolidated Appropriations Act, 2016; and Modification of Limitation on Redesignation by the Medicare Geographic Classification Review Board

G. Finalization of Interim Final Rule With Comment Period on Medicare Dependent Small Rural Hospital Program and Payment to Low-

Volume Hospitals

II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG) Classifications and Relative Weights

A. Background

B. MS-DRG Reclassifications

C. Adoption of the MS-DRGs in FY 2008

D. FY 2017 MS-DRG Documentation and Coding Adjustment

1. Background on the Prospective MS-DRG Documentation and Coding Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90

2. Adjustment to the Average Standardized Amounts Required by Public Law 110-90

  1. Prospective Adjustment Required by Section 7(b)(1)(A) of Public Law 110-90

  2. Recoupment or Repayment Adjustments in FYs 2010 Through 2012 Required by Section 7(b)(1)(B) of Public Law 110-90

    3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data

    4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by Section 7(b)(1)(A) of Public Law 110-90

    5. Recoupment or Repayment Adjustment Authorized by Section 7(b)(1)(B) of Public Law 110-90

    6. Recoupment or Repayment Adjustment Authorized by Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)

    E. Refinement of the MS-DRG Relative Weight Calculation

    1. Background

    2. Discussion of Policy for FY 2017

    F. Changes to Specific MS-DRG Classifications

    1. Discussion of Changes to Coding System and Basis for MS-DRG Updates

  3. Conversion of MS-DRGs to the International Classification of Diseases, 10th Revision (ICD-10)

  4. Basis for FY 2017 MS-DRG Updates

    2. Pre-Major Diagnostic Category (Pre-MDC): Total Artificial Heart Replacement

    3. MDC 1 (Diseases and Disorders of the Nervous System)

  5. Endovascular Embolization (Coiling) or Occlusion of Head and Neck Procedures

  6. Mechanical Complication Codes

    4. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and Throat)

  7. Reassignment of Diagnosis Code R22.2 (Localized Swelling, Mass and Lump, Trunk)

  8. Pulmonary Embolism With tPA or Other Thrombolytic Therapy

    5. MDC 5 (Diseases and Disorders of the Circulatory System)

  9. Implant of Loop Recorder

  10. Endovascular Thrombectomy of the Lower Limbs

  11. Pacemaker Procedures Code Combinations

  12. Transcatheter Mitral Valve Repair With Implant

  13. MS-DRG 245 (AICD Generator Procedures)

    6. MDC 6 (Diseases and Disorders of the Digestive System): Excision of Ileum

    7. MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas): Bypass Procedures of the Veins

    8. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue)

  14. Updates to MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity With and Without MCC, Respectively)

    (1) Total Ankle Replacement (TAR) Procedures

    (2) Hip Replacements Procedures With Principal Diagnosis of Hip Fracture

  15. Revision of Total Ankle Replacement Procedures

    (1) Revision of Total Ankle Replacement Procedures

    (2) Combination Codes for Removal and Replacement of Knee Joints

  16. Decompression Laminectomy

  17. Lordosis

    9. MDC 13 (Diseases and Disorders of the Female Reproductive System): Pelvic Evisceration

    10. MDC 19 (Mental Diseases and Disorders): Modification of Title of MS-DRG 884 (Organic Disturbances and Mental Retardation)

    11. MDC 23 (Factors Influencing Health Status and Other Contacts With Health Services): Logic of MS-DRGs 945 and 946 (Rehabilitation With and Without CC/MCC, Respectively)

    12. Medicare Code Editor (MCE) Changes

  18. Age Conflict Edit

    (1) Newborn Diagnosis Category

    (2) Pediatric Diagnosis Category

  19. Sex Conflict Edit

  20. Non-Covered Procedure Edit

    (1) Endovascular Mechanical Thrombectomy

    (2) Radical Prostatectomy

  21. Unacceptable Principal Diagnosis Edit

    (1) Liveborn Infant

    (2) Multiple Gestation

    (3) Supervision of High Risk Pregnancy

  22. Other MCE Issues

    (1) Procedure Inconsistent With Length of Stay Edit

    (2) Maternity Diagnoses

    (3) Manifestation Codes Not Allowed as Principal Diagnosis Edit

    (4) Questionable Admission Edit

    (5) Removal of Edits and Future Enhancement

    13. Changes to Surgical Hierarchies

    14. Changes to the MS-DRG Diagnosis Codes for FY 2017

    15. Complications or Comorbidity (CC) Exclusions List

  23. Background of the CC List and the CC Exclusions List

  24. CC Exclusions List for FY 2017

    16. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through 986; and 987 Through 989

  25. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-

    DRGs 987 Through 989 Into MDCs

  26. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984 Through 986, and 987 Through 989

  27. Adding Diagnosis or Procedure Codes to MDCs

    (1) Angioplasty of Extracranial Vessel

    (2) Excision of Abdominal Arteries

    (3) Excision of Retroperitoneal Tissue

    (4) Occlusion of Vessels: Esophageal Varices

    (5) Excision of Vulva

    (6) Lymph Node Biopsy

    (7) Obstetrical Laceration Repair

    17. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems

  28. ICD-10 Coordination and Maintenance Committee

  29. Code Freeze

    18. Replaced Devices Offered Without Cost or With a Credit

  30. Background

  31. Changes for FY 2017

    19. Other Policy Changes

  32. MS-DRG GROUPER Logic

    (1) Operations on Products of Conception

    (2) Other Heart Revascularization

    (3) Procedures on Vascular Bodies: Chemoreceptors

    (4) Repair of the Intestine

    (5) Insertion of Infusion Pump

    (6) Procedures on the Bursa

    (7) Procedures on the Breast

    (8) Excision of Subcutaneous Tissue and Fascia

    (9) Shoulder Replacement

    (10) Reposition

    (11) Insertion of Infusion Device

    (12) Bladder Neck Repair

    (13) Future Consideration

  33. Issues Relating to MS-DRG 999 (Ungroupable)

  34. Other Operating Room (O.R.) and Non-O.R. Issues

    (1) O.R. Procedures to Non-O.R. Procedures

    (a) Endoscopic/Transorifice Insertion

    (b) Endoscopic/Transorifice Removal

    (c) Tracheostomy Device Removal

    (d) Endoscopic/Percutaneous Insertion

    (e) Percutaneous Removal

    (f) Percutaneous Drainage

    (g) Percutaneous Inspection

    (h) Inspection Without Incision

    (i) Dilation of Stomach

    (j) Endoscopic/Percutaneous Occlusion

    (k) Infusion Device

    (2) Non-O.R. Procedures to O.R. Procedures

    (a) Drainage of Pleural Cavity

    (b) Drainage of Cerebral Ventricle

    20. Out of Scope Public Comments Received

    G. Recalibration of the FY 2017 MS-DRG Relative Weights

    1. Data Sources for Developing the Relative Weights

    2. Methodology for Calculation of the Relative Weights

    3. Development of National Average CCRs

    Page 56766

    H. Add-On Payments for New Services and Technologies

    1. Background

    2. Public Input Before Publication of a Notice of Proposed Rulemaking on Add-On Payments

    3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and Technologies

    4. FY 2017 Status of Technologies Approved for FY 2016 Add-On Payments

  35. KcentraTM

  36. Argussupreg II Retinal Prosthesis System

  37. CardioMEMSTM HF (Heart Failure) Monitoring System

  38. MitraClipsupreg System

  39. Responsive Neurostimulator (RNSsupreg) System

  40. Blinatumomab (BLINCYTOTM Trade Brand)

  41. Lutonixsupreg Drug Coated Balloon PTA Catheter and In.PACTTM AdmiralTM Pacliaxel Coated Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter

    5. FY 2017 Applications for New Technology Add-On Payments

  42. MAGECsupreg Spinal Bracing and Distraction System (MAGECsupreg Spine)

  43. MIRODERM Biologic Wound Matrix (MIRODERM)

  44. Idarucizumab

  45. Titan Spine (Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device)

  46. Defiteliosupreg (Defibrotide)

  47. GOREsupreg EXCLUDERsupreg Iliac Branch Endoprosthesis (IBE)

    g VistogardTM (Uridine Triacetate)

    III. Changes to the Hospital Wage Index for Acute Care Hospitals

    A. Background

    1. Legislative Authority

    2. Core-Based Statistical Areas (CBSAs) Revisions for the FY 2017 Hospital Wage Index

    B. Worksheet S-3 Wage Data for the FY 2017 Wage Index

    1. Included Categories of Costs

    2. Excluded Categories of Costs

    3. Use of Wage Index Data by Suppliers and Providers Other Than Acute Care Hospitals Under the IPPS

    C. Verification of Worksheet S-3 Wage Data

    D. Method for Computing the FY 2017 Unadjusted Wage Index

    E. Occupational Mix Adjustment to the FY 2017 Wage Index

    1. Use of 2013 Occupational Mix Survey for the FY 2017 Wage Index

    2. Development of the 2016 Medicare Wage Index Occupational Mix Survey for the FY 2019 Wage Index

    3. Calculation of the Occupational Mix Adjustment for FY 2017

    F. Analysis and Implementation of the Occupational Mix Adjustment and the FY 2017 Occupational Mix Adjusted Wage Index

    G. Transitional Wage Indexes

    1. Background

    2. Transition for Hospitals in Urban Areas That Became Rural

    3. Transition for Hospitals Deemed Urban Under Section 1886(d)(8)(B) of the Act Where the Urban Area Became Rural Under the New OMB Delineations

    4. Budget Neutrality

    H. Application of the Rural, Imputed, and Frontier Floors

    1. Rural Floor

    2. Imputed Floor for FY 2017

    3. State Frontier Floor for FY 2017

    I. FY 2017 Wage Index Tables

    J. Revisions to the Wage Index Based on Hospital Redesignations and Reclassifications

    1. General Policies and Effects of Reclassification and Redesignation

    2. Finalization of Interim Final Rule With Comment Period on Provisions Related to Modification on Limitations on Redesignations by the Medicare Geographic Classification Review Board (MGCRB)

  48. Background

  49. Criteria for an Individual Hospital Seeking Redesignation to Another Area (Sec. 412.103)--Application of Policy Provisions

  50. Final Rule Provisions

  51. Impact

    3. Other MGCRB Reclassification and Redesignation Issues for FY 2017

  52. FY 2017 Reclassification Requirements and Approvals

  53. Requirements for FY 2018 Applications and Revisions Regarding Paper Application Requirements

  54. Other Policy Regarding Reclassifications for Terminated Hospitals

    4. Redesignation of Hospitals Under Section 1886(d)(8)(B) of the Act

    5. Waiving Lugar Redesignation for the Out-Migration Adjustment

    K. Out-Migration Adjustment Based on Commuting Patterns of Hospital Employees for FY 2017

    L. Notification Regarding CMS ``Lock-In'' Date for Urban to Rural Reclassifications Under Sec. 412.103

    M. Process for Requests for Wage Index Data Corrections

    N. Labor Market Share for the FY 2017 Wage Index

    O. Public Comments on Treatment of Overhead and Home Office Costs in the Wage Index Calculation as a Result of Our Solicitation

    IV. Other Decisions and Changes to the IPPS for Operating Costs and Graduate Medical Education (GME) Costs

    A. Changes to Operating Payments for Subsection (d) Puerto Rico Hospitals as a Result of Section 601 of Pub. L. 114-113

    B. Changes in the Inpatient Hospital Updates for FY 2017 (Sec. Sec. 412.64(d) and 412.211(c))

    1. FY 2017 Inpatient Hospital Update

    2. FY 2017 Puerto Rico Hospital Update

    3. Electronic Health Records (EHR) Adjustment to IPPS Market Basket

    C. Rural Referral Centers (RRCs): Annual Updates to Case-Mix Index (CMI) and Discharge Criteria (Sec. 412.96)

    1. Case-Mix Index (CMI)

    2. Discharges

    D. Payment Adjustment for Low-Volume Hospitals (Sec. 412.101)

    E. Indirect Medical Education (IME) Payment Adjustment (Sec. 412.105)

    1. IME Adjustment Factor for FY 2017

    2. Other Policy Changes Affecting IME

    F. Payment Adjustment for Medicare Disproportionate Share Hospitals (DSHs) for FY 2017 and Subsequent Years (Sec. 412.106)

    1. General Discussion

    2. Eligibility for Empirically Justified Medicare DSH Payments and Uncompensated Care Payments

    3. Empirically Justified Medicare DSH Payments

    4. Uncompensated Care Payments

  55. Calculation of Factor 1 for FY 2017

  56. Calculation of Factor 2 for FY 2017

  57. Calculation of Factor 3 for FY 2017

  58. Calculation of Factor 3 for FY 2018 and Subsequent Fiscal Years

    (1) Background

    (2) Proposed and Finalized Data Source and Time Period for FY 2018 and Subsequent Years, Including Methodology for Incorporating Worksheet S-10 Data

    (3) Definition of Uncompensated Care for FY 2018 and Subsequent Fiscal Years

    (4) Other Methodological Considerations for FY 2018 and Subsequent Fiscal Years

    G. Hospital Readmissions Reduction Program: Updates and Changes (Sec. Sec. 412.150 Through 412.154)

    1. Statutory Basis for the Hospital Readmissions Reduction Program

    2. Regulatory Background

    3. Policies for the FY 2017 Hospital Readmissions Reduction Program

    4. Maintenance of Technical Specifications for Quality Measures

    5. Applicable Period for FY 2017

    6. Calculation of Aggregate Payments for Excess Readmissions for FY 2017

    7. Extraordinary Circumstance Exception Policy

    8. Timeline for Public Reporting of Excess Readmission Ratios on Hospital Compare for the FY 2017 Payment Determination

    H. Hospital Value-Based Purchasing (VBP) Program: Policy Changes for the FY 2018 Program Year and Subsequent Years

    1. Background

  59. Statutory Background and Overview of Past Program Years

  60. FY 2017 Program Year Payment Details

    2. PSI 90 Measure in the FY 2018 Program and Future Program Years

  61. PSI 90 Measure Performance Period Change for the FY 2018 Program Year

  62. Intent To Propose in Future Rulemaking To Adopt the Modified PSI 90 Measure

    3. Retention Policy, Domain Name Change, and Updating of Quality Measures for the FY 2019 Program Year

  63. Retention of Previously Adopted Hospital VBP Program Measures

  64. Domain Name Change

  65. Inclusion of Selected Ward Non-Intensive Care Unit (ICU) Locations in Certain NHSN Measures Beginning With the FY 2019 Program Year

  66. Summary of Previously Adopted Measures and Newly Finalized Measure Refinements for the FY 2019 Program Year

    4. Finalized Measures and Measure Refinements for the FY 2021 Program Year and Subsequent Years

    Page 56767

  67. Condition-Specific Hospital Level, Risk-Standardized Payment Measures

  68. Finalized Update to an Existing Measure for the FY 2021 Program Year: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Pneumonia (PN) Hospitalization (NQF #0468) (Updated Cohort)

    5. New Measure for the FY 2022 Program Year: Hospital 30-Day, All-Cause, Risk-Standardized Mortality Rate (RSMR) Following Coronary Artery Bypass Graft (CABG) Surgery (NQF #2558)

    6. Previously Adopted and Newly Finalized Baseline and Performance Periods

  69. Background

  70. Patient- and Caregiver-Centered Experience of Care/Care Coordination Domain (Person and Community Engagement Domain Beginning With the FY 2019 Program Year)

  71. Efficiency and Cost Reduction Domain

  72. Safety Domain

  73. Clinical Care Domain

  74. Summary of Previously Adopted and Newly Finalized Baseline and Performance Periods for the FY 2018, FY 2019, FY 2020, FY 2021, and FY 2022 Program Years

    7. Immediate Jeopardy Policy Changes

  75. Background

  76. Increase of Immediate Jeopardy Citations From Two to Three Surveys

  77. EMTALA-Related Immediate Jeopardy Citations

    8. Performance Standards for the Hospital VBP Program

  78. Background

  79. Previously Adopted and Newly Finalized Performance Standards for the FY 2019 Program Year

  80. Previously Adopted Performance Standards for Certain Measures for the FY 2020 Program Year

  81. Previously Adopted and Newly Finalized Performance Standards for Certain Measures for the FY 2021 Program Year

  82. Performance Standards for Certain Measures for the FY 2022 Program Year

    9. FY 2019 Program Year Scoring Methodology

  83. Domain Weighting for the FY 2019 Program Year for Hospitals That Receive a Score on All Domains

  84. Domain Weighting for the FY 2019 Program Year for Hospitals Receiving Scores on Fewer Than Four Domains

    I. Changes to the Hospital-Acquired Condition (HAC) Reduction Program

    1. Background

    2. Implementation of the HAC Reduction Program for FY 2017

  85. Clarification of Complete Data Requirements for Domain 1

  86. Clarification of NHSN CDC HAI Data Submission Requirements for Newly Opened Hospitals

    3. Implementation of the HAC Reduction Program for FY 2018

  87. Adoption of Modified PSI 90: Patient Safety and Adverse Events Composite (NQF #0531)

  88. Applicable Time Periods for the FY 2018 HAC Reduction Program and the FY 2019 HAC Reduction Program

  89. Changes to the HAC Reduction Program Scoring Methodology

    4. Comments on Additional Measures for Potential Future Adoption

    5. Maintenance of Technical Specifications for Quality Measures

    6. Extraordinary Circumstance Exception Policy for the HAC Reduction Program Beginning in FY 2016 and for Subsequent Years

    J. Payment for Graduate Medical Education (GME) and Indirect Medical Education (IME) Costs (Sec. Sec. 412.105, 413.75 Through 413.83)

    1. Background

    2. Change in New Program Growth From 3 Years to 5 Years

  90. Urban and Rural Hospitals

  91. Policy Changes Relating to Rural Training Tracks at Urban Hospitals

  92. Effective Date

    3. Section 5506 Closed Hospitals

    K. Rural Community Hospital Demonstration Program

    1. Background

    2. Budget Neutrality Offset Adjustments: Fiscal Years 2005 Through 2016

  93. Fiscal Years 2005 Through 2013

  94. Fiscal Years 2014 and 2015

  95. Fiscal Year 2016

    3. Budget Neutrality Methodology for FY 2017 and Reconciliation for FYs 2011 Through 2016

  96. Budget Neutrality Methodology for FY 2017

  97. Budget Neutrality Offset Reconciliation for FYs 2011 Through 2016

    L. Hospital and CAH Notification Procedures for Outpatients Receiving Observation Services

    1. Background

  98. Statutory Authority

  99. Effective Date

    2. Implementation of the NOTICE Act Provisions

  100. Notice Process

  101. Notification Recipients

  102. Timing of Notice Delivery

  103. Requirements for Written Notice

  104. Outpatient Observation Services and Beneficiary Financial Liability

  105. Delivering the Medicare Outpatient Observation Notice

  106. Oral Notice

  107. Signature Requirements

  108. No Appeal Rights Under the NOTICE Act

    M. Technical Changes and Correction of Typographical Errors in Certain Regulations Under 42 CFR Part 413 Relating to Costs to Related Organizations and Medicare Cost Reports

    1. General Background

    2. Technical Change to Regulations at 42 CFR 413.17(d)(1) on Cost to Related Organizations

    3. Changes to 42 CFR 413.24(f)(4)(i) Relating to Electronic Submission of Cost Reports

    4. Technical Changes to 42 CFR 413.24(f)(4)(ii) Relating to Electronic Submission of Cost Reports and Due Dates

    5. Technical Changes to 42 CFR 413.24(f)(4)(iv) Relating to Reporting Entities, Cost Report Certification Statement, Electronic Submission and Cost Reports Due Dates

    6. Technical Correction to 42 CFR 413.200(c)(1)(i) Relating to Medicare Cost Report Due Dates for Organ Procurement Organizations and Histocompatibility Laboratories

    N. Finalization of Interim Final Rule With Comment Period Implementing Legislative Extensions Relating to the Payment Adjustments for Low-Volume Hospitals and the Medicare-Dependent, Small Rural Hospital (MDH) Program

    O. Clarification Regarding the Medicare Utilization Requirement for Medicare-Dependent, Small Rural Hospitals (MDHs) (Sec. 412.108)

    P. Adjustment to IPPS Rates Resulting From 2-Midnight Policy

    V. Changes to the IPPS for Capital-Related Costs

    A. Overview

    B. Additional Provisions

    1. Exception Payments

    2. New Hospitals

    3. Changes in Payments for Hospitals Located in Puerto Rico

    C. Annual Update for FY 2017

    VI. Changes for Hospitals Excluded From the IPPS

    A. Rate-of-Increase in Payments to Excluded Hospitals for FY 2017

    B. Report of Adjustment (Exceptions) Payments

    C. Critical Care Hospitals (CAHs)

    1. Background

    2. Frontier Community Health Integration Project (FCHIP) Demonstration

    VII. Changes to the Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2017

    A. Background of the LTCH PPS

    1. Legislative and Regulatory Authority

    2. Criteria for Classification as a LTCH

  109. Classification as a LTCH

  110. Hospitals Excluded From the LTCH PPS

    3. Limitation on Charges to Beneficiaries

    4. Administrative Simplification Compliance Act (ASCA) and Health Insurance Portability and Accountability Act (HIPAA) Compliance

    B. Modifications to the Application of the Site Neutral Payment Rate (Sec. 412.522)

    1. Background

    2. Technical Correction of Definition of ``Subsection (d) Hospital'' for the Site Neutral Payment Rate (Sec. 412.503)

    3. Finalization of Interim Final Rule With Comment Period: Temporary Exception to the Site Neutral Payment Rate Under the LTCH PPS for Certain Severe Wound Discharges From Certain LTCHs

    C. Medicare Severity Long-Term Care Diagnosis-Related Group (MS-

    LTC-DRG) Classifications and Relative Weights for FY 2017

    1. Background

    2. Patient Classifications Into MS-LTC-DRGs

  111. Background

  112. Changes to the MS-LTC-DRGs for FY 2017

    3. Development of the FY 2017 MS-LTC-DRG Relative Weights

  113. General Overview of the Development of the MS-LTC-DRG Relative Weights

  114. Development of the MS-LTC-DRG Relative Weights for FY 2017

    Page 56768

  115. Data

  116. Hospital-Specific Relative Value (HSRV) Methodology

  117. Treatment of Severity Levels in Developing the MS-LTC-DRG Relative Weights

  118. Low-Volume MS-LTC-DRGs

  119. Steps for Determining the FY 2017 MS-LTC-DRG Relative Weights

    D. Rebasing of the LTCH Market Basket

    1. Background

    2. Overview of the 2013-Based LTCH Market Basket

    3. Development of the 2013-Based LTCH Market Basket Cost Categories and Weights

  120. Use of Medicare Cost Report Data

    (1) Wages and Salaries Costs

    (2) Employee Benefit Costs

    (3) Contract Labor Costs

    (4) Pharmaceutical Costs

    (5) Professional Liability Insurance Costs

    (6) Capital Costs

  121. Final Major Cost Category Computation

  122. Derivation of the Detailed Operating Cost Weights

  123. Derivation of the Detailed Capital Cost Weights

  124. 2013-Based LTCH Market Basket Cost Categories and Weights

    4. Selection of Price Proxies

  125. Price Proxies for the Operating Portion of the 2013-Based LTCH Market Basket

    (1) Wages and Salaries

    (2) Employee Benefits

    (3) Electricity

    (4) Fuel, Oil, and Gasoline

    (5) Water and Sewage

    (6) Professional Liability Insurance

    (7) Pharmaceuticals

    (8) Food: Direct Purchases

    (9) Food: Contract Services

    (10) Chemicals

    (11) Medical Instruments

    (12) Rubber and Plastics

    (13) Paper and Printing Products

    (14) Miscellaneous Products

    (15) Professional Fees: Labor-Related

    (16) Administrative and Facilities Support Services

    (17) Installation, Maintenance, and Repair Services

    (18) All Other: Labor-Related Services

    (19) Professional Fees: Nonlabor-Related

    (20) Financial Services

    (21) Telephone Services

    (22) All Other: Nonlabor-Related Services

  126. Price Proxies for the Capital Portion of the 2013-Based LTCH Market Basket

    (1) Capital Price Proxies Prior to Vintage Weighting

    (2) Vintage Weights for Price Proxies

  127. Summary of Price Proxies of the 2013-Based LTCH Market Basket

  128. FY 2017 Market Basket Update for LTCHs

  129. FY 2017 Labor-Related Share

    E. Changes to the LTCH PPS Payment Rates and Other Changes to the LTCH PPS for FY 2017

    1. Overview of Development of the LTCH PPS Standard Federal Payment Rates

    2. FY 2017 LTCH PPS Standard Federal Payment Rate Annual Market Basket Update

  130. Overview

  131. Market Basket Under the LTCH PPS for FY 2017

  132. Revision of Certain Market Basket Updates as Required by the Affordable Care Act

  133. Adjustment to the LTCH PPS Standard Federal Payment Rate Under the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

  134. Annual Market Basket Update Under the LTCH PPS for FY 2017

    3. Update Under the Payment Adjustment for ``Subclause (II)'' LTCHs

    F. Modifications to the ``25-Percent Threshold Policy'' Payment Adjustments (Sec. Sec. 412.534 and 412.536)

    G. Refinement to the Payment Adjustment for ``Subclause II'' LTCHs

    VIII. Quality Data Reporting Requirements for Specific Providers and Suppliers

    A. Hospital Inpatient Quality Reporting (IQR) Program

    1. Background

  135. History of the Hospital IQR Program

  136. Maintenance of Technical Specifications for Quality Measures

  137. Public Display of Quality Measures

    2. Process for Retaining Previously Adopted Hospital IQR Program Measures for Subsequent Payment Determinations

    3. Removal and Suspension of Hospital IQR Program Measures

  138. Considerations in Removing Quality Measures From the Hospital IQR Program

  139. Removal of Hospital IQR Program Measures for the FY 2019 Payment Determination and Subsequent Years

    4. Previously Adopted Hospital IQR Program Measures for the FY 2018 Payment Determination and Subsequent Years

    5. Expansion and Updating of Quality Measures

    6. Refinements to Existing Measures in the Hospital IQR Program

  140. Expansion of the Cohort for the PN Payment Measure: Hospital-

    Level, Risk-Standardized Payment Associated With a 30-Day Episode-

    of-Care for Pneumonia (NQF #2579)

  141. Adoption of Modified PSI 90: Patient Safety and Adverse Events Composite Measure (NQF #0531)

    7. Additional Hospital IQR Program Measures for the FY 2019 Payment Determinations and Subsequent Years

  142. Adoption of Three Clinical Episode-Based Payment Measures

  143. Adoption of Excess Days in Acute Care After Hospitalization for Pneumonia (PN Excess Days) Measure

  144. Summary of Previously Adopted and Newly Finalized Hospital IQR Program Measures for the FY 2019 Payment Determination and Subsequent Years

    8. Changes to Policies on Reporting of eCQMs

  145. Requirement That Hospitals Report on an Increased Number of eCQMs in the Hospital IQR Program Measure Set for the CY 2017 Reporting Period/FY 2019 Payment Determination and Subsequent Years

  146. Requirement That Hospitals Report a Full Year of eCQM Data

  147. Clarification Regarding Data Submission for ED-1, ED-2, PC-

    01, STK-4, VTE-5, and VTE-6

    9. Possible New Quality Measures and Measure Topics for Future Years

  148. Potential Inclusion of the National Institutes of Health (NIH) Stroke Scale for the Hospital 30-Day Mortality Following Acute Ischemic Stroke Hospitalization Measure Beginning as Early as the FY 2022 Payment Determination

  149. Potential Inclusion of National Healthcare Safety Network (NHSN) Antimicrobial Use Measure (NQF #2720)

  150. Potential Measures for Behavioral Health in the Hospital IQR Program

  151. Potential Public Reporting of Quality Measures Data Stratified by Race, Ethnicity, Sex, and Disability and Future Hospital Quality Measures That Incorporate Health Equity

    10. Form, Manner, and Timing of Quality Data Submission

  152. Background

  153. Procedural Requirements for the FY 2019 Payment Determination and Subsequent Years

  154. Data Submission Requirements for Chart-Abstracted Measures

  155. Alignment of the Hospital IQR Program With the Medicare and Medicaid EHR Incentive Programs for Eligible Hospitals and CAHs

  156. Sampling and Case Thresholds for the FY 2019 Payment Determination and Subsequent Years

  157. HCAHPS Requirements for the FY 2019 Payment Determination and Subsequent Years

  158. Data Submission Requirements for Structural Measures for the FY 2019 Payment Determination and Subsequent Years

  159. Data Submission and Reporting Requirements for HAI Measures Reported via NHSN

    11. Modifications to the Existing Processes for Validation of Hospital IQR Program Data

  160. Background

  161. Modifications to the Existing Processes for Validation of Hospital IQR Program Data

    12. Data Accuracy and Completeness Acknowledgement (DACA) Requirements for the FY 2019 Payment Determination and Subsequent Years

    13. Public Display Requirements for the FY 2019 Payment Determination and Subsequent Years

    14. Reconsideration and Appeal Procedures for the FY 2019 Payment Determination and Subsequent Years

    15. Changes to the Hospital IQR Program Extraordinary Circumstances Extensions or Exemptions (ECE) Policy

  162. Extension of the General ECE Request Deadline for Non-eCQM Circumstances

  163. Establishment of a Separate Submission Deadline for ECE Requests Related to eCQMs

    B. PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

    1. Background

    2. Criteria for Removal and Retention of PCHQR Program Measures

    Page 56769

    3. Retention and Update to Previously Finalized Quality Measures for PCHs Beginning With the FY 2019 Program Year

  164. Background

  165. Update of Oncology: Radiation Dose Limits to Normal Tissues (NQF #0382) Measure for FY 2019 Program Year and Subsequent Years

    4. New Quality Measure Beginning With the FY 2019 Program Year

  166. Considerations in the Selection of Quality Measures

  167. Adoption of the Admissions and Emergency Department (ED) Visits for Patients Receiving Outpatient Chemotherapy Measure

    5. Possible New Quality Measure Topics for Future Years

    6. Maintenance of Technical Specifications for Quality Measures

    7. Public Display Requirements

  168. Background

  169. Additional Public Display Requirements

  170. Public Display of Additional PCHQR Measure

  171. Public Display of Updated Measure

  172. Postponement of Public Display of Two Measures

    8. Form, Manner, and Timing of Data Submission

    9. Exceptions From PCHQR Program Requirements

    C. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

    1. Background and Statutory Authority

    2. General Considerations Used for Selection of Quality, Resource Use, and Other Measures for the LTCH QRP

    3. Policy for Retention of LTCH QRP Measures Adopted for Previous Payment Determinations

    4. Policy for Adopting Changes to LTCH QRP Measures

    5. Quality Measures Previously Finalized for and Currently Used in the LTCH QRP

    6. LTCH QRP Quality, Resource Use and Other Measures for the FY 2018 Payment Determination and Subsequent Years

  173. Measure To Address the IMPACT Act Domain of Resource Use and Other Measures: Total Estimated MSPB--PAC LTCH QRP

  174. Measure To Address the IMPACT Act Domain of Resource Use and Other Measures: Discharge to Community-Post Acute Care (PAC) LTCH QRP

  175. Measure To Address the IMPACT Act Domain of Resource Use and Other Measures: Potentially Preventable 30-Day Post-Discharge Readmission Measure for the LTCH QRP

    7. LTCH QRP Quality Measure Finalized for the FY 2020 Payment Determination and Subsequent Years

  176. Background

  177. Measure To Address the IMPACT Act Domain of Medication Reconciliation: Drug Regimen Review Conducted With Follow-Up for Identified Issues-Post Acute Care LTCH QRP

    8. LTCH QRP Quality Measures and Measure Concepts Under Consideration for Future Years

    9. Form, Manner, and Timing of Quality Data Submission for the FY 2018 Payment Determination and Subsequent Years

  178. Background

  179. Timeline for Data Submission Under the LTCH QRP for the FY 2018 Payment Determination and Subsequent Years

  180. Timeline and Data Submission Mechanisms for the FY 2018 Payment Determination and Subsequent Years for the LTCH QRP Resource Use and Other Measures--Claims-Based Measures

  181. Revisions to the Previously Adopted Data Collection Period and Submission Deadlines for Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short Stay) (NQF #0680) for the FY 2019 Payment Determination and Subsequent Years

  182. Timeline and Data Submission Mechanisms for the Newly Finalized LTCH QRP Quality Measure for the FY 2020 Payment Determination and Subsequent Years

    10. LTCH QRP Data Completion Thresholds for the FY 2016 Payment Determination and Subsequent Years

    11. LTCH QRP Data Validation Process for the FY 2016 Payment Determination and Subsequent Years

    12. Change to Previously Codified LTCH QRP Submission Exception and Extension Policies

    13. Previously Finalized LTCH QRP Reconsideration and Appeals Procedures

    14. Policies Regarding Public Display of Measure Data for the LTCH QRP and Procedures for the Opportunity To Review and Correct Data and Information

  183. Public Display of Measures

  184. Procedures for the Opportunity To Review and Correct Data and Information

    15. Mechanism for Providing Feedback Reports to LTCHs

    D. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

    1. Background

  185. Statutory Authority

  186. Covered Entities

  187. Considerations in Selecting Quality Measures

    2. Retention of IPFQR Program Measures Adopted in Previous Payment Determinations

    3. Update to Previously Finalized Measure: Screening for Metabolic Disorders

    4. New Quality Measures for the FY 2019 Payment Determination and Subsequent Years

  188. SUB-3--Alcohol and Other Drug Use Disorder Treatment Provided or Offered at Discharge and the Subset Measure SUB-3a--Alcohol and Other Drug Use Disorder Treatment at Discharge (NQF #1664) (SUB-3 and SUB3a)

  189. Thirty-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an IPF

    5. Summary of Measures for the FY 2019 Payment Determination and Subsequent Years

    6. Possible IPFQR Program Measures and Topics for Future Consideration

    7. Public Display and Review Requirements

    8. Form, Manner, and Timing of Quality Data Submission

  190. Procedural and Submission Requirements

  191. Change to the Reporting Periods and Submission Timeframes

  192. Population and Sampling

  193. Data Accuracy and Completeness Acknowledgement (DACA) Requirements

    9. Reconsideration and Appeals Procedures

    10. Exceptions to Quality Reporting Requirements

    E. Clinical Quality Measurement for Eligible Hospitals and Critical Access Hospitals (CAHs) Participating in the EHR Incentive Programs in 2017

    1. Background

    2. CQM Reporting for the Medicare and Medicaid EHR Incentive Programs in 2017

  194. Background

  195. CQM Reporting Period for the Medicare and Medicaid EHR Incentive Programs in CY 2017

  196. CQM Reporting Form and Method for the Medicare EHR Incentive Program in 2017

    IX. MedPAC Recommendations

    X. Other Required Information

    A. Requests for Data From the Public

    B. Collection of Information Requirements

    1. Statutory Requirement for Solicitation of Comments

    2. ICRs for Add-On Payments for New Services and Technologies

    3. ICRs for the Occupational Mix Adjustment to the FY 2017 Wage Index (Hospital Wage Index Occupational Mix Survey)

    4. Hospital Applications for Geographic Reclassifications by the MGCRB

    5. ICRs for Applications for GME Resident Slots

    6. ICRs for the Notice of Observation Treatment by Hospitals and CAHs

    7. ICRs for the Hospital Inpatient Quality Reporting (IQR) Program

    8. ICRs for PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

    9. ICRs for Hospital Value-Based Purchasing (VBP) Program

    10. ICRs for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

    11. ICRs for the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

    12. ICRs for the Electronic Health Record (EHR) Incentive Programs and Meaningful Use

    Regulation Text

    Addendum--Schedule of Standardized Amounts, Update Factors, and Rate-

    of-Increase Percentages Effective With Cost Reporting Periods Beginning on or after October 1, 2016 and Payment Rates for LTCHs Effective With Discharges Occurring on or After October 1, 2016

    I. Summary and Background

    II. Changes to the Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2017

    A. Calculation of the Adjusted Standardized Amount

    Page 56770

    B. Adjustments for Area Wage Levels and Cost-of-Living

    C. Calculation of the Prospective Payment Rates

    III. Changes to Payment Rates for Acute Care Hospital Inpatient Capital-Related Costs for FY 2017

    A. Determination of Federal Hospital Inpatient Capital-Related Prospective Payment Rate Update

    B. Calculation of the Inpatient Capital-Related Prospective Payments for FY 2017

    C. Capital Input Price Index

    IV. Changes to Payment Rates for Excluded Hospitals: Rate-of-

    Increase Percentages for FY 2017

    V. Updates to the Payment Rates for the LTCH PPS for FY 2017

    A. LTCH PPS Standard Federal Payment Rate for FY 2017

    B. Adjustment for Area Wage Levels Under the LTCH PPS for FY 2017

    1. Background

    2. Geographic Classifications (Labor Market Areas) for the LTCH PPS Standard Federal Payment Rate

    3. Labor-Related Share for the LTCH PPS Standard Federal Payment Rate

    4. Wage Index for FY 2017 for the LTCH PPS Standard Federal Payment Rate

    5. Budget Neutrality Adjustment for Changes to the LTCH PPS Standard Federal Payment Rate Area Wage Level Adjustment

    C. LTCH PPS Cost-of-Living Adjustment (COLA) for LTCHs Located in Alaska and Hawaii

    D. Adjustment for LTCH PPS High-Cost Outlier (HCO) Cases

    E. Update to the IPPS Comparable/Equivalent Amounts To Reflect the Statutory Changes to the IPPS DSH Payment Adjustment Methodology

    F. Computing the Adjusted LTCH PPS Federal Prospective Payments for FY 2017

    VI. Tables Referenced in This Final Rule and Available Through the Internet on the CMS Web site

    Appendix A--Economic Analyses

    I. Regulatory Impact Analysis

    A. Introduction

    B. Need

    C. Objectives of the IPPS

    D. Limitations of Our Analysis

    E. Hospitals Included in and Excluded From the IPPS

    F. Effects on Hospitals and Hospital Units Excluded From the IPPS

    G. Quantitative Effects of the Policy Changes Under the IPPS for Operating Costs

    1. Basis and Methodology of Estimates

    2. Analysis of Table I

    3. Impact Analysis of Table II

    H. Effects of Other Policy Changes

    1. Effects of Policy Relating to New Medical Service and Technology Add-On Payments

    2. Effect of Changes Relating to Payment Adjustment for Medicare Disproportionate Share Hospitals

    3. Effects of Reduction Under the Hospital Readmissions Reduction Program

    4. Effects of Changes Under the FY 2017 Hospital Value-Based Purchasing (VBP) Program

    5. Effects of the Changes to the HAC Reduction Program for FY 2017

    6. Effects of Policy Changes Relating to Direct GME and IME Payments for Rural Training Tracks at Urban Hospitals

    7. Effects of Implementation of Rural Community Hospital Demonstration Program

    8. Effects of Implementation of the Notice of Observation Treatment and Implications for Care Eligibility Act (NOTICE Act)

    9. Effects of Technical Changes and Correction of Typographical Errors in Certain Regulations Under 42 CFR part 413 Relating to Costs to Related Organizations and Medicare Cost Reports

    10. Effects of Implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration

    I. Effects of Changes in the Capital IPPS

    1. General Considerations

    2. Results

    J. Effects of Payment Rate Changes and Policy Changes Under the LTCH PPS

    1. Introduction and General Considerations

    2. Impact on Rural Hospitals

    3. Anticipated Effects of LTCH PPS Payment Rate Changes and Policy Changes

    4. Effect on the Medicare Program

    5. Effect on Medicare Beneficiaries

    K. Effects of Requirements for Hospital Inpatient Quality Reporting (IQR) Program

    L. Effects of Requirements for the PPS-Exempt Cancer Hospital Quality Reporting (PCHQR) Program

    M. Effects of Requirements for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP) for the FY 2018 Payment Determination and Subsequent Years

    N. Effects of Updates to the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

    O. Effects of Requirements Regarding the Electronic Health Record (EHR) Incentive Programs and Meaningful Use

    P. Alternatives Considered

    Q. Overall Conclusion

    1. Acute Care Hospitals

    2. LTCHs

    II. Accounting Statements and Tables

    A. Acute Care Hospitals

    B. LTCHs

    III. Regulatory Flexibility Act (RFA) Analysis

    IV. Impact on Small Rural Hospitals

    V. Unfunded Mandate Reform Act (UMRA) Analysis

    VI. Executive Order 12866

    Appendix B: Recommendation of Update Factors for Operating Cost Rates of Payment for Inpatient Hospital Services

    I. Background

    II. Inpatient Hospital Update for FY 2017

    A. FY 2017 Inpatient Hospital Update

    B. Update for SCHs and MDHs for FY 2017

    C. FY 2017 Puerto Rico Hospital Update

    D. Update for Hospitals Excluded From the IPPS

    E. Update for LTCHs for FY 2017

    III. Secretary's Recommendation

    IV. MedPAC Recommendation for Assessing Payment Adequacy and Updating Payments in Traditional Medicare

    I. Executive Summary and Background

    A. Executive Summary

    1. Purpose and Legal Authority

    This final rule makes payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capital-

    related costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it makes payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the long-term care hospital prospective payment system (LTCH PPS). It also makes policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs.

    We are establishing new requirements or revising requirements for quality reporting by specific providers (acute care hospitals, PPS-

    exempt cancer hospitals, LTCHs, and inpatient psychiatric facilities) that are participating in Medicare, including related provisions for eligible hospitals and critical access hospitals (CAHs) participating in the Electronic Health Record (EHR) Incentive Program. We are updating policies relating to the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-

    Acquired Condition (HAC) Reduction Program. We are implementing statutory provisions that require hospitals and CAHs to furnish notification to Medicare beneficiaries, including Medicare Advantage enrollees, when the beneficiaries receive outpatient observation services for more than 24 hours; announcing the implementation of the Frontier Community Health Integration Project Demonstration; and making technical corrections and changes to regulations relating to costs to organizations and Medicare cost reports. In addition, in this final rule, we are providing notice of the closure of three teaching hospitals and the opportunity for hospitals to apply for available graduate medical education resident slots under section 5506 of the Affordable Care Act.

    Under various statutory authorities, we are making changes to the Medicare IPPS, to the LTCH PPS, and to other related payment methodologies and programs for FY 2017 and subsequent fiscal years. These statutory authorities include, but are not limited to, the following:

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    Section 1886(d) of the Social Security Act (the Act), which sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires that, instead of paying for capital-related costs of inpatient hospital services on a reasonable cost basis, the Secretary use a prospective payment system (PPS).

    Section 1886(d)(1)(B) of the Act, which specifies that certain hospitals and hospital units are excluded from the IPPS. These hospitals and units are: Rehabilitation hospitals and units; LTCHs; psychiatric hospitals and units; children's hospitals; cancer hospitals; and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS.

    Sections 123(a) and (c) of the BBRA (Pub. L. 106-113) and section 307(b)(1) of the BIPA (Pub. L. 106-554) (as codified under section 1886(m)(1) of the Act), which provide for the development and implementation of a prospective payment system for payment for inpatient hospital services of long-term care hospitals (LTCHs) described in section 1886(d)(1)(B)(iv) of the Act.

    Sections 1814(l), 1820, and 1834(g) of the Act, which specify that payments are made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services and that these payments are generally based on 101 percent of reasonable cost.

    Section 1866(k) of the Act, as added by section 3005 of the Affordable Care Act, which establishes a quality reporting program for hospitals described in section 1886(d)(1)(B)(v) of the Act, referred to as ``PPS-exempt cancer hospitals.''

    Section 1886(a)(4) of the Act, which specifies that costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act.

    Section 1886(b)(3)(B)(viii) of the Act, which requires the Secretary to reduce the applicable percentage increase in payments to a subsection (d) hospital for a fiscal year if the hospital does not submit data on measures in a form and manner, and at a time, specified by the Secretary.

    Section 1886(o) of the Act, which requires the Secretary to establish a Hospital Value-Based Purchasing (VBP) Program under which value-based incentive payments are made in a fiscal year to hospitals meeting performance standards established for a performance period for such fiscal year.

    Section 1886(p) of the Act, as added by section 3008 of the Affordable Care Act, which establishes a Hospital-Acquired Condition (HAC) Reduction Program, under which payments to applicable hospitals are adjusted to provide an incentive to reduce hospital-

    acquired conditions.

    Section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act and amended by section 10309 of the Affordable Care Act, which establishes the ``Hospital Readmissions Reduction Program'' effective for discharges from an ``applicable hospital'' beginning on or after October 1, 2012, under which payments to those hospitals under section 1886(d) of the Act will be reduced to account for certain excess readmissions.

    Section 1886(r) of the Act, as added by section 3133 of the Affordable Care Act, which provides for a reduction to disproportionate share hospital (DSH) payments under section 1886(d)(5)(F) of the Act and for a new uncompensated care payment to eligible hospitals. Specifically, section 1886(r) of the Act requires that, for fiscal year 2014 and each subsequent fiscal year, subsection (d) hospitals that would otherwise receive a DSH payment made under section 1886(d)(5)(F) of the Act will receive two separate payments: (1) 25 percent of the amount they previously would have received under section 1886(d)(5)(F) of the Act for DSH (``the empirically justified amount''), and (2) an additional payment for the DSH hospital's proportion of uncompensated care, determined as the product of three factors. These three factors are: (1) 75 percent of the payments that would otherwise be made under section 1886(d)(5)(F) of the Act; (2) 1 minus the percent change in the percent of individuals under the age of 65 who are uninsured (minus 0.1 percentage points for FY 2014, and minus 0.2 percentage points for FY 2015 through FY 2017); and (3) a hospital's uncompensated care amount relative to the uncompensated care amount of all DSH hospitals expressed as a percentage.

    Section 1886(m)(6) of the Act, as added by section 1206(a)(1) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS with implementation beginning in FY 2016.

    Section 1886(m)(5)(D)(iv) of the Act, as added by section 1206 (c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67), which provides for the establishment of a functional status quality measure under the LTCH QRP for change in mobility among inpatients requiring ventilator support.

    Section 1899B of the Act, as added by the Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act, Pub. L. 113-185), which imposes data reporting requirements for certain post-acute care providers, including LTCHs.

    Section 1886(d)(12) of the Act, as amended by section 204 of the Medicare Access and CHIP Reauthorization Act of 2015, which extends, through FY 2017, changes to the inpatient hospital payment adjustment for certain low-volume hospitals; and section 1886(d)(5)(G) of the Act, as amended by section 205 of the Medicare Access and CHIP Reauthorization Act of 2015, which extends, through FY 2017, the Medicare-dependent, small rural hospital (MDH) program.

    Section 1886(m)(6)(A)(i) and (E) of the Act, as amended and added by section 231 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), which established a temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs occurring prior to January 1, 2017.

    2. Summary of the Major Provisions

  197. MS-DRG Documentation and Coding Adjustment

    Section 631 of the American Taxpayer Relief Act (ATRA, Pub. L. 112-

    240) amended section 7(b)(1)(B) of Pub. L. 110-90 to require the Secretary to make a recoupment adjustment to the standardized amount of Medicare payments to acute care hospitals to account for changes in MS-

    DRG documentation and coding that do not reflect real changes in case-

    mix, totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. This adjustment represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Pub. L. 110-90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Pub. L. 110-90.

    While our actuaries estimated that a -9.3 percent adjustment to the

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    standardized amount would be necessary if CMS were to fully recover the $11 billion recoupment required by section 631 of the ATRA in one year, it is often our practice to delay or phase in rate adjustments over more than one year, in order to moderate the effects on rates in any one year. Therefore, consistent with the policies that we have adopted in many similar cases, we made a -0.8 percent recoupment adjustment to the standardized amount in FY 2014, FY 2015, and FY 2016. For FY 2017, we are making an additional -1.5 percent recoupment adjustment to the standardized amount.

  198. Adjustment to IPPS Rates Resulting From 2-Midnight Policy

    In this final rule, we are making a permanent adjustment of (1/

    0.998) to the standardized amount, the hospital-specific payment rates, and the national capital Federal rate using our authority under sections 1886(d)(5)(I)(i) and 1886(g) of the Act to prospectively remove the 0.2 percent reduction to the rate put in place in FY 2014 to offset the estimated increase in IPPS expenditures as a result of the 2-midnight policy. In addition, we are making a temporary one-time prospective increase to the FY 2017 standardized amount, the hospital-

    specific payment rates, and the national capital Federal rate of 0.6 percent by including a temporary one-time factor of 1.006 in the calculation of the standardized amount, the hospital-specific payment rates, and the national capital Federal rate using our authority under sections 1886(d)(5)(I)(i) and 1886(g) of the Act, to address the effects of the 0.2 percent reduction to the rate for the 2-midnight policy in effect for FYs 2014, 2015, and 2016.

  199. Reduction of Hospital Payments for Excess Readmissions

    We are making changes to policies for the Hospital Readmissions Reduction Program, which is established under section 1886(q) of the Act, as added by section 3025 of the Affordable Care Act, as amended by section 10309 of the Affordable Care Act. The Hospital Readmissions Reduction Program requires a reduction to a hospital's base operating DRG payment to account for excess readmissions of selected applicable conditions. For FY 2017 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/

    total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). In this final rule, to align with other quality reporting programs and allow us to post data as soon as possible, we are clarifying our public reporting policy so that excess readmission rates will be posted to the Hospital Compare Web site as soon as feasible following the preview period, and we are revising the methodology to include the addition of the CABG applicable condition in the calculation of the readmissions payment adjustment for FY 2017.

  200. Hospital Value-Based Purchasing (VBP) Program

    Section 1886(o) of the Act requires the Secretary to establish a Hospital VBP Program under which value-based incentive payments are made in a fiscal year to hospitals based on their performance on measures established for a performance period for such fiscal year. In this final rule, we are updating one previously adopted measure beginning with the FY 2019 program year; indicating our intent to propose to remove one measure beginning with the FY 2019 program year and our intent to propose to adopt one measure in future rulemaking; adopting two new measures beginning with the FY 2021 program year; updating one previously adopted measure beginning with the FY 2021 program year; and adopting one new measure beginning with the FY 2022 program year. We also are changing the performance period for one previously adopted measure for the FY 2018 program year and changing the name of the Patient- and Caregiver-Centered Experience of Care/Care Coordination domain to the Person and Community Engagement domain beginning with the FY 2019 program year. In addition, we are making changes to the immediate jeopardy citation policy.

  201. Hospital-Acquired Condition (HAC) Reduction Program

    Section 1886(p) of the Act, as added under section 3008(a) of the Affordable Care Act, establishes an incentive to hospitals to reduce the incidence of hospital-acquired conditions by requiring the Secretary to make an adjustment to payments to applicable hospitals effective for discharges beginning on October 1, 2014. This 1-percent payment reduction applies to a hospital whose ranking is in the top quartile (25 percent) of all applicable hospitals, relative to the national average, of conditions acquired during the applicable period and on all of the hospital's discharges for the specified fiscal year. In this final rule, we are promulgating the following HAC Reduction Program policies: (1) Establishing NHSN CDC HAI data submission requirements for newly opened hospitals; (2) clarifying data requirements for Domain 1 scoring; (3) establishing performance periods for the FY 2018 and FY 2019 HAC Reduction Programs, including revising our regulations to accommodate variable timeframes; (4) adopting the refined PSI 90: Patient Safety and Adverse Events Composite (NQF #0531); and (5) changing the program scoring methodology from the current decile-based scoring to a continuous scoring methodology.

  202. DSH Payment Adjustment and Additional Payment for Uncompensated Care

    Section 3133 of the Affordable Care Act modified the Medicare disproportionate share hospital (DSH) payment methodology beginning in FY 2014. Under section 1886(r) of the Act, which was added by section 3133 of the Affordable Care Act, starting in FY 2014, DSHs will receive 25 percent of the amount they previously would have received under the statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remaining amount, equal to 75 percent of what otherwise would have been paid as Medicare DSH payments, will be paid as additional payments after the amount is reduced for changes in the percentage of individuals that are uninsured. Each Medicare DSH will receive an additional payment based on its share of the total amount of uncompensated care for all Medicare DSHs for a given time period.

    In this final rule, we are updating our estimates of the three factors used to determine uncompensated care payments for FY 2017 and continuing our methodology of using a hospital's share of insured low-

    income days for purposes of determining Factor 3. For Puerto Rico hospitals, we are using 14 percent of Medicaid days as a proxy for SSI days in the calculation of Factor 3. We are continuing to use the methodology we established in FY 2015 to calculate the uncompensated care payment amounts for merged hospitals such that we combine uncompensated care data for the hospitals that have undergone a merger in order to calculate their relative share of uncompensated care. We are expanding the time period of the data used to calculate the uncompensated care payment amounts to be distributed, from one cost reporting period to three cost reporting periods. At this time, we are not finalizing a future transition to using Worksheet S-10 data to determine the amounts and distribution of uncompensated care payments.

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    Specifically, we had proposed to use a 3-year transition beginning in FY 2018 where we use a combination of Worksheet S-10 and proxy data until FY 2020 when all data used in computing the uncompensated care payment amounts to be distributed would come from Worksheet S-10. In light of public comments, we believe it would be appropriate to institute certain additional quality control and data improvement measures to the Worksheet S-10 instructions and data prior to moving forward with incorporation of Worksheet S-10 data into the calculation of Factor 3. Consequently, we are not finalizing our proposal to begin to incorporate Worksheet S-10 data into the computation of Factor 3 for FY 2018. In light of the significant concerns expressed by commenters regarding the Worksheet S-10 data, we are postponing the decision regarding when to begin incorporating data from Worksheet S-10 and proceeding with revisions to the cost report instructions for Worksheet S-10. We expect data from the revised Worksheet S-10 to be available to use in the calculation of Factor 3 in the near future, and no later than FY 2021. With regard to how Factor 3 will be computed in FY 2018 and subsequent years, we intend to explore whether there is an appropriate proxy for uncompensated care that could be used to calculate Factor 3 until we determine that data from the revised Worksheet S-10 can be used for this purpose. We will undertake further notice-and-comment rulemaking to address the issue of the appropriate data to use to determine Factor 3 for FY 2018 and subsequent fiscal years.

  203. Payments for Capital-Related Costs for Hospitals Located in Puerto Rico

    Capital IPPS payments to hospitals located in Puerto Rico are currently computed based on a blend of 25 percent of the capital IPPS Puerto Rico rate and 75 percent of the capital IPPS Federal rate. Section 601 of the Consolidated Appropriations Act, 2016 (Pub. L. 114-

    113) increased the applicable Federal percentage of the operating IPPS payment for hospitals located in Puerto Rico from 75 percent to 100 percent and decreased the applicable Puerto Rico percentage of the operating IPPS payments for hospitals located in Puerto Rico from 25 percent to zero percent, applicable to discharges occurring on or after January 1, 2016. In this final rule, we are revising the calculation of capital IPPS payments to hospitals located in Puerto Rico to parallel the change in the statutory calculation of operating IPPS payments to hospitals located in Puerto Rico, beginning in FY 2017.

  204. Changes to the LTCH PPS

    In this final rule, we are revising and rebasing the market basket used under the LTCH PPS (currently the 2009-based LTCH-specific market basket) to reflect a 2013 base year. In addition, in this final rule, we are changing our 25-percent threshold policy by sunsetting our existing regulations at 42 CFR 412.534 and 412.536 and replacing them with a single consolidated 25-percent threshold policy at Sec. 412.538. We also are amending our existing regulations limiting allowable charges to beneficiaries for ``subclause (II)'' LTCHs and making technical corrections to Sec. 412.503. In addition, in this document, we are finalizing an April 21, 2016 interim final rule with comment period relating to a temporary exception from the site neutral payment rate under the LTCH PPS for certain severe wound care discharges from certain LTCHs.

  205. Hospital Inpatient Quality Reporting (IQR) Program

    Under section 1886(b)(3)(B)(viii) of the Act, hospitals are required to report data on measures selected by the Secretary for the Hospital IQR Program in order to receive the full annual percentage increase in payments. In past years, we have established measures for reporting data and the process for submittal and validation of the data.

    In this final rule, we are making several changes. First, we are removing 15 measures for the FY 2019 payment determination and subsequent years. Thirteen of these measures are electronic clinical quality measures (eCQMs), two of which we are also removing in their chart-abstracted form, because they are ``topped-out,'' and two others are structural measures.

    Second, we are refining two previously adopted measures beginning with the FY 2018 payment determination: (1) The Hospital-level, Risk-

    standardized Payment Associated with a 30-day Episode-of-Care for Pneumonia (NQF # 2579); and (2) the Patient Safety and Adverse Events Composite (NQF #0531).

    Third, we are adding four new claims-based measures: (1) Aortic Aneurysm Procedure Clinical Episode-Based Payment Measure; (2) Cholecystectomy and Common Duct Exploration Clinical Episode-Based Payment Measure; (3) Spinal Fusion Clinical Episode-Based Payment Measure; and (4) Excess Days in Acute Care after Hospitalization for Pneumonia for the FY 2019 payment determination and subsequent years.

    Fourth, we summarize public comment we received on potential new quality measures under consideration for future inclusion in the Hospital IQR Program: (1) A refined version of the NIH Stroke Scale for the Hospital 30-Day Mortality Following Acute Ischemic Stroke Hospitalization Measure beginning as early as the FY 2022 payment determination; (2) the National Healthcare Safety Network (NHSN) Antimicrobial Use Measure (NQF #2720); and (3) one or more measures of behavioral health for the inpatient hospital setting, including measures previously adopted for the IPFQR Program (80 FR 46417). Also, we summarize public comment we received on the possibility of future stratification of Hospital IQR Program data by race, ethnicity, sex, and disability on Hospital Compare, as well as on potential future hospital quality measures that incorporate health equity.

    Fifth, we are modifying our proposal and requiring hospitals to select and submit 8 of the available eCQMs included in the Hospital IQR Program measure set for four quarters of data, on an annual basis, for the CY 2017 reporting period/FY 2019 payment determination and the CY 2018 reporting period/FY 2020 payment determination, in order to align the Hospital IQR Program with the Medicare and Medicaid EHR Incentive Programs. Also, we are establishing related eCQM submission requirements beginning with the FY 2019 payment determination.

    Sixth, we are modifying the existing validation process for Hospital IQR Program data to include validation of eCQMs beginning with the FY 2020 payment determination.

    Seventh, we are updating our Extraordinary Circumstances Extensions or Exemptions (ECE) policy by: (1) Extending the ECE request deadline for non-eCQM circumstances from 30 to 90 calendar days following an extraordinary circumstance, beginning in FY 2017 as related to extraordinary circumstance events that occur on or after October 1, 2016; and (2) establishing a separate submission deadline of April 1 following the end of the reporting calendar year for ECEs related to eCQMs beginning with an April 1, 2017 deadline and applying for subsequent eCQM reporting years.

  206. Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

    Section 3004(a) of the Affordable Care Act amended section 1886(m)(5) of the Act to require the Secretary to establish the Long-

    Term Care Hospital Quality Reporting Program (LTCH QRP). This

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    program applies to all hospitals certified by Medicare as LTCHs. Beginning with the FY 2014 payment determination and subsequent years, the Secretary is required to reduce any annual update to the LTCH PPS standard Federal rate for discharges occurring during such fiscal year by 2 percentage points for any LTCH that does not comply with the requirements established by the Secretary.

    The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) amended the Act in ways that affect the LTCH QRP. Specifically, section 2(a) of the IMPACT Act amended title XVIII of the Act by adding section 1899B, titled Standardized Post-Acute Care (PAC) Assessment Data for Quality, Payment, and Discharge Planning. The Act requires that each LTCH submit, for FYs beginning on or after the specified application date (as defined in section 1899B(a)(2)(E) of the Act), data on quality measures specified under section 1899B(c)(1) of the Act and data on resource use and other measures specified under section 1899B(d)(1) of the Act in a manner and within the timeframes specified by the Secretary. In addition, each LTCH is required to submit standardized patient assessment data required under section 1899B(b)(1) of the Act in a manner and within the timeframes specified by the Secretary. Sections 1899B(c)(1) and 1899B(d)(1) of the Act require the Secretary to specify quality measures and resource use and other measures with respect to certain domains no later than the specified application date in section 1899B(a)(2)(E) of the Act that applies to each measure domain and PAC provider setting.

    In this final rule, we are specifying three new measures for the FY 2018 payment determination and subsequent years to meet the requirements as set forth by the IMPACT Act. These measures are: (1) MSPB-PAC LTCH QRP; (2) Discharge to Community-PAC LTCH QRP; and (3) Potentially Preventable 30-Day Post-Discharge Readmission Measure for the PAC LTCH QRP. We also are establishing one new quality measure to meet the requirements of the IMPACT Act for the FY 2020 determination and subsequent years. That measure, Drug Regimen Review Conducted with Follow-Up for Identified Issues-PAC LTCH QRP, addresses the IMPACT Act domain of Medication Reconciliation.

    In addition, we will publicly report LTCH quality data beginning in fall 2016, on a CMS Web site, such as Hospital Compare. Initially, we publicly reported quality data on four quality measures. In this final rule, we are providing that we will publicly report data in 2017 on four additional measures. We are promulgating additional details regarding procedures that will allow individual LTCHs to review and correct their data and information on measures that are to be made public before those measure data are made public. We also will provide confidential feedback reports to LTCHs on their performance on the specified measures, beginning 1 year after the specified application date that applies to such measures and LTCHs.

    Finally, we are changing the timing for submission of exception and extension requests from 30 days to 90 days from the date of the qualifying event which is preventing an LTCH from submitting their quality data for the LTCH QRP.

  207. Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program

    Section 1886(s)(4) of the Act, as added and amended by sections 3401(f) and 10322(a) of the Affordable Care Act, requires the Secretary to implement a quality reporting program for inpatient psychiatric hospitals and psychiatric units. Section 1886(s)(4)(C) of the Act requires that, for FY 2014 (October 1, 2013 through September 30, 2014) and each subsequent year, each psychiatric hospital and psychiatric unit must submit to the Secretary data on quality measures as specified by the Secretary. The data must be submitted in a form and manner and at a time specified by the Secretary. In this final rule, for the IPFQR Program, we are making several changes. We are making a technical update to the previously finalized measure, ``Screening for Metabolic Disorders.'' We are finalizing two new measures beginning with the FY 2019 payment determination:

    SUB-3 Alcohol & Other Drug Use Disorder Treatment Provided or Offered at Discharge and SUB-3a Alcohol & Other Drug Use Disorder Treatment at Discharge (NQF #1664); and

    Thirty-Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an IPF.

    In addition, we are finalizing our proposal to include SUB-3: Alcohol & Other Drug Use Disorder Treatment Provided or Offered at Discharge and subset measure SUB-3a: Alcohol & Other Drug Use Disorder Treatment at Discharge (NQF #1664) in the list of measures covered by the global sample for the FY 2019 payment determination and subsequent years as proposed. Also, we are finalizing that we will make the data for the IPFQR Program available as soon as possible and announce both the date of the public display of the program's data and the 30-day preview period, which will be approximately 12 weeks before the public display date, via subregulatory methods, as opposed to rulemaking. For the FY 2017 payment determination only, we also are finalizing our proposal that, if it is technically feasible to display the data in December 2016, we would provide data to IPFs for a 2-week preview period that would start on October 1, 2016, as proposed. Moreover, we are finalizing as proposed that as a courtesy, for the FY 2017 payment determination only, if we are able to display the data in December 2016, we would ensure that IPFs have approximately 30 days for review if they so choose by providing IPFs with their data as early as mid-

    September.

    3. Summary of Costs and Benefits

    Adjustment for MS-DRG Documentation and Coding Changes. We are making a -1.5 percent recoupment adjustment to the standardized amount for FY 2017 to implement, in part, the requirement of section 631 of the ATRA that the Secretary make an adjustment totaling $11 billion over a 4-year period of FYs 2014, 2015, 2016, and 2017. This recoupment adjustment represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Prior to the ATRA, this amount could not have been recovered under Pub. L. 110-90.

    While our actuaries estimated that a -9.3 percent recoupment adjustment to the standardized amount would be necessary if CMS were to fully recover the $11 billion recoupment required by section 631 of the ATRA in FY 2014, it is often our practice to delay or phase in rate adjustments over more than one year, in order to moderate the effects on rates in any one year. Taking into account the cumulative effects of this adjustment and the adjustments made in FYs 2014, 2015, and 2016, we estimate that we will recover the full $11 billion required under section 631 of the ATRA by the end of FY 2017. We note that section 414 of the MACRA (Pub. L. 114-10), enacted on April 16, 2015, requires us to not make the single positive adjustment we intended to make in FY 2018, but instead make a 0.5 percent positive adjustment for each of FYs 2018 through 2023. The provision under section 414 of the MACRA does not impact our FY 2017 recoupment adjustment, and we will address this MACRA provision in future rulemaking.

    Adjustment to IPPS Payment Rates as a Result of the 2-

    Midnight Policy. The adjustment to IPPS rates resulting

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    from the 2-midnight policy will increase IPPS payment rates by (1/

    0.998) * 1.006 for FY 2017. The 1.006 is a one-time factor that will be applied to the standardized amount, the hospital-specific rates, and the national capital Federal rate for FY 2017 only. Therefore, for FY 2018, we will apply a one-time factor of (1/1.006) in the calculation of the rates to remove this one-time prospective increase.

    Changes to the Hospital Readmissions Reduction Program. For FY 2017 and subsequent years, the reduction is based on a hospital's risk-adjusted readmission rate during a 3-year period for acute myocardial infarction (AMI), heart failure (HF), pneumonia, chronic obstructive pulmonary disease (COPD), total hip arthroplasty/

    total knee arthroplasty (THA/TKA), and coronary artery bypass graft (CABG). Overall, in this final rule, we estimate that 2,588 hospitals will have their base operating DRG payments reduced by their determined proxy FY 2017 hospital-specific readmission adjustment. As a result, we estimate that the Hospital Readmissions Reduction Program will save approximately $528 million in FY 2017, an increase of approximately $108 million over the estimated FY 2016 savings. This increase in the estimated savings for the Hospital Readmissions Reduction Program in FY 2017 as compared to FY 2016 is primarily due to the inclusion of the refinement of the pneumonia readmissions measure, which expanded the measure cohort, along with the addition of the CABG readmission measure, in the calculation of the payment adjustment.

    Value-Based Incentive Payments under the Hospital VBP Program. We estimate that there will be no net financial impact to the Hospital VBP Program for the FY 2017 program year in the aggregate because, by law, the amount available for value-based incentive payments under the program in a given year must be equal to the total amount of base operating MS-DRG payment amount reductions for that year, as estimated by the Secretary. The estimated amount of base operating MS-DRG payment amount reductions for the FY 2017 program year and, therefore, the estimated amount available for value-based incentive payments for FY 2017 discharges is approximately $1.8 billion.

    Changes to the HAC Reduction Program. In regard to the five changes to existing HAC Reduction Program policies described earlier, because a hospital's Total HAC score and its ranking in comparison to other hospitals in any given year depends on several different factors, any significant impact due to the HAC Reduction Program changes for FY 2017, including which hospitals will receive the adjustment, will depend on actual experience.

    Medicare DSH Payment Adjustment and Additional Payment for Uncompensated Care. Under section 1886(r) of the Act (as added by section 3133 of the Affordable Care Act), DSH payments to hospitals under section 1886(d)(5)(F) of the Act are reduced and an additional payment for uncompensated care is made to eligible hospitals beginning in FY 2014. Hospitals that receive Medicare DSH payments will receive 25 percent of the amount they previously would have received under the current statutory formula for Medicare DSH payments in section 1886(d)(5)(F) of the Act. The remainder, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, will be the basis for determining the additional payments for uncompensated care after the amount is reduced for changes in the percentage of individuals that are uninsured and additional statutory adjustments. Each hospital that receives Medicare DSH payments will receive an additional payment for uncompensated care based on its share of the total uncompensated care amount reported by Medicare DSHs. The reduction to Medicare DSH payments is not budget neutral.

    For FY 2017, we are providing that the 75 percent of what otherwise would have been paid for Medicare DSH is adjusted to approximately 55.36 percent of the amount to reflect changes in the percentage of individuals that are uninsured and additional statutory adjustments. In other words, approximately 41.52 percent (the product of 75 percent and 55.36 percent) of our estimate of Medicare DSH payments, prior to the application of section 3133 of the Affordable Care Act, is available to make additional payments to hospitals for their relative share of the total amount of uncompensated care. We project that estimated Medicare DSH payments, and additional payments for uncompensated care made for FY 2017, will reduce payments overall by approximately 0.4 percent as compared to overall payments with the estimate of Medicare DSH payments and uncompensated care payments that will be distributed in FY 2016. The additional payments have redistributive effects based on a hospital's uncompensated care amount relative to the uncompensated care amount for all hospitals that are estimated to receive Medicare DSH payments, and the calculated payment amount is not directly tied to a hospital's number of discharges.

    Update to the LTCH PPS Payment Rates and Other Payment Factors. Based on the best available data for the 420 LTCHs in our data base, we estimate that the changes to the payment rates and factors that we are presenting in the preamble and Addendum of this final rule, which includes the second year under the transition of the statutory application of the new site neutral payment rate required by section 1886(m)(6)(A) of the Act, the update to the LTCH PPS standard Federal payment rate for FY 2017, the update to the LTCH PPS adjustment for differences in area wage levels (which includes the update to the labor-related share based on the revised and rebased LTCH PPS market basket) and estimated changes to the site neutral payment rate and short-stay outlier (SSO) and high-cost outlier (HCO) payments will result in an estimated decrease in payments from FY 2016 of approximately $376 million.

    Hospital Inpatient Quality Reporting (IQR) Program. In this final rule, we are removing 15 measures for the FY 2019 payment determination and subsequent years. We are adding 4 new claims-based measures to the Hospital IQR Program for the FY 2019 payment determination and subsequent years. We also are modifying our proposal and requiring hospitals to report on 8 of the available Hospital IQR Program electronic clinical quality measures that align with the Medicare and Medicaid EHR Incentive Programs for four quarters of data on an annual basis for the FY 2019 and FY 2020 payment determination. In addition, we are modifying the existing validation process for the Hospital IQR Program data to include a random sample of up to 200 hospitals for validation of eCQMs. We estimate that our policies for the adoption and removal of measures will result in a total hospital cost decrease of $50.4 million across 3,300 IPPS hospitals.

    Changes Related to the LTCH QRP. In this final rule, we are specifying four quality measures for the LTCH QRP. We estimate that the total cost related to one of these proposed measures, the Drug Regimen Review Conducted with Follow-up for Identified Issues-PAC measure, would be $3,080 per LTCH annually, or $1,330,721 for all LTCHs annually. We also estimate that while there will be some additional burden associated with our expansion of data collection for the measure NQF #0680 Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (77 FR

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    53624 through 53627), this burden has been previously accounted for in PRA submissions approved under OMB control number 0938-1163. For a detailed explanation, we refer readers to section I.M. of Appendix A (Economic Analyses) of this final rule. There is no additional burden for the three other claims-based measures being adopted. Overall, we estimate the total cost for the 13 previously adopted measures and the 4 new measures will be $27,905 per LTCH annually or $12,054,724 for all LTCHs annually. These estimates are based on 432 LTCHs that are currently certified by Medicare. This is an average increase of 14 percent over the burden for FY 2016. This increase includes all quality measures that LTCHs are required to report, with the exception of the four new measures for FY 2017. Section VIII.C. of the preamble of this final rule includes a detailed discussion of the policies.

    Changes to the IPFQR Program. In this final rule, we are adding two new measures beginning with the FY 2019 payment determination and for subsequent years. One of these measures, the 30-

    Day All-Cause Unplanned Readmission Following Psychiatric Hospitalization in an IPF measure, is calculated from administrative claims data. For the second measure, we estimate that our policies will result in total costs of $11,834,748 for 1,684 IPFs nationwide.

    B. Summary

    1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)

    Section 1886(d) of the Social Security Act (the Act) sets forth a system of payment for the operating costs of acute care hospital inpatient stays under Medicare Part A (Hospital Insurance) based on prospectively set rates. Section 1886(g) of the Act requires the Secretary to use a prospective payment system (PPS) to pay for the capital-related costs of inpatient hospital services for these ``subsection (d) hospitals.'' Under these PPSs, Medicare payment for hospital inpatient operating and capital-related costs is made at predetermined, specific rates for each hospital discharge. Discharges are classified according to a list of diagnosis-related groups (DRGs).

    The base payment rate is comprised of a standardized amount that is divided into a labor-related share and a nonlabor-related share. The labor-related share is adjusted by the wage index applicable to the area where the hospital is located. If the hospital is located in Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-

    living adjustment factor. This base payment rate is multiplied by the DRG relative weight.

    If the hospital treats a high percentage of certain low-income patients, it receives a percentage add-on payment applied to the DRG-

    adjusted base payment rate. This add-on payment, known as the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payments to hospitals that qualify under either of two statutory formulas designed to identify hospitals that serve a disproportionate share of low-income patients. For qualifying hospitals, the amount of this adjustment varies based on the outcome of the statutory calculations. The Affordable Care Act revised the Medicare DSH payment methodology and provides for a new additional Medicare payment that considers the amount of uncompensated care beginning on October 1, 2013.

    If the hospital is training residents in an approved residency program(s), it receives a percentage add-on payment for each case paid under the IPPS, known as the indirect medical education (IME) adjustment. This percentage varies, depending on the ratio of residents to beds.

    Additional payments may be made for cases that involve new technologies or medical services that have been approved for special add-on payments. To qualify, a new technology or medical service must demonstrate that it is a substantial clinical improvement over technologies or services otherwise available, and that, absent an add-

    on payment, it would be inadequately paid under the regular DRG payment.

    The costs incurred by the hospital for a case are evaluated to determine whether the hospital is eligible for an additional payment as an outlier case. This additional payment is designed to protect the hospital from large financial losses due to unusually expensive cases. Any eligible outlier payment is added to the DRG-adjusted base payment rate, plus any DSH, IME, and new technology or medical service add-on adjustments.

    Although payments to most hospitals under the IPPS are made on the basis of the standardized amounts, some categories of hospitals are paid in whole or in part based on their hospital-specific rate, which is determined from their costs in a base year. For example, sole community hospitals (SCHs) receive the higher of a hospital-specific rate based on their costs in a base year (the highest of FY 1982, FY 1987, FY 1996, or FY 2006) or the IPPS Federal rate based on the standardized amount. SCHs are the sole source of care in their areas. Specifically, section 1886(d)(5)(D)(iii) of the Act defines an SCH as a hospital that is located more than 35 road miles from another hospital or that, by reason of factors such as isolated location, weather conditions, travel conditions, or absence of other like hospitals (as determined by the Secretary), is the sole source of hospital inpatient services reasonably available to Medicare beneficiaries. In addition, certain rural hospitals previously designated by the Secretary as essential access community hospitals are considered SCHs.

    Under current law, the Medicare-dependent, small rural hospital (MDH) program is effective through FY 2017. Through and including FY 2006, an MDH received the higher of the Federal rate or the Federal rate plus 50 percent of the amount by which the Federal rate was exceeded by the higher of its FY 1982 or FY 1987 hospital-specific rate. For discharges occurring on or after October 1, 2007, but before October 1, 2017, an MDH receives the higher of the Federal rate or the Federal rate plus 75 percent of the amount by which the Federal rate is exceeded by the highest of its FY 1982, FY 1987, or FY 2002 hospital-

    specific rate. MDHs are a major source of care for Medicare beneficiaries in their areas. Section 1886(d)(5)(G)(iv) of the Act defines an MDH as a hospital that is located in a rural area, has not more than 100 beds, is not an SCH, and has a high percentage of Medicare discharges (not less than 60 percent of its inpatient days or discharges in its cost reporting year beginning in FY 1987 or in two of its three most recently settled Medicare cost reporting years).

    Section 1886(g) of the Act requires the Secretary to pay for the capital-related costs of inpatient hospital services in accordance with a prospective payment system established by the Secretary. The basic methodology for determining capital prospective payments is set forth in our regulations at 42 CFR 412.308 and 412.312. Under the capital IPPS, payments are adjusted by the same DRG for the case as they are under the operating IPPS. Capital IPPS payments are also adjusted for IME and DSH, similar to the adjustments made under the operating IPPS. In addition, hospitals may receive outlier payments for those cases that have unusually high costs.

    The existing regulations governing payments to hospitals under the IPPS are located in 42 CFR part 412, subparts A through M.

    2. Hospitals and Hospital Units Excluded From the IPPS

    Under section 1886(d)(1)(B) of the Act, as amended, certain hospitals and hospital units are excluded from the

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    IPPS. These hospitals and units are: inpatient rehabilitation facility (IRF) hospitals and units; long-term care hospitals (LTCHs); psychiatric hospitals and units; children's hospitals; cancer hospitals; and hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa). Religious nonmedical health care institutions (RNHCIs) are also excluded from the IPPS. Various sections of the Balanced Budget Act of 1997 (BBA, Pub. L. 105-33), the Medicare, Medicaid and SCHIP State Children's Health Insurance Program Balanced Budget Refinement Act of 1999 (BBRA, Pub. L. 106-113), and the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA, Pub. L. 106-554) provide for the implementation of PPSs for IRF hospitals and units, LTCHs, and psychiatric hospitals and units (referred to as inpatient psychiatric facilities (IPFs)). (We note that the annual updates to the LTCH PPS are now included as part of the IPPS annual update document. Updates to the IRF PPS and IPF PPS are issued as separate documents.) Children's hospitals, cancer hospitals, hospitals located outside the 50 States, the District of Columbia, and Puerto Rico (that is, hospitals located in the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa), and RNHCIs continue to be paid solely under a reasonable cost-based system subject to a rate-of-

    increase ceiling on inpatient operating costs.

    The existing regulations governing payments to excluded hospitals and hospital units are located in 42 CFR parts 412 and 413.

    3. Long-Term Care Hospital Prospective Payment System (LTCH PPS)

    The Medicare prospective payment system (PPS) for LTCHs applies to hospitals described in section 1886(d)(1)(B)(iv) of the Act effective for cost reporting periods beginning on or after October 1, 2002. The LTCH PPS was established under the authority of sections 123 of the BBRA and section 307(b) of the BIPA (as codified under section 1886(m)(1) of the Act). During the 5-year (optional) transition period, a LTCH's payment under the PPS was based on an increasing proportion of the LTCH Federal rate with a corresponding decreasing proportion based on reasonable cost principles. Effective for cost reporting periods beginning on or after October 1, 2006, all LTCHs are paid 100 percent of the Federal rate. Section 1206(a) of the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) established the site neutral payment rate under the LTCH PPS, which made the LTCH PPS a dual rate payment system beginning in FY 2016. Under this statute, based on a rolling effective date that is linked to the date on which a given LTCH's Federal FY 2016 cost reporting period begins, LTCHs are paid for LTCH discharges at the site neutral payment rate unless the discharge meets the patient criteria for payment at the LTCH PPS standard Federal payment rate. The existing regulations governing payment under the LTCH PPS are located in 42 CFR Part 412, subpart O. Beginning October 1, 2009, we issue the annual updates to the LTCH PPS in the same documents that update the IPPS (73 FR 26797 through 26798).

    4. Critical Access Hospitals (CAHs)

    Under sections 1814(l), 1820, and 1834(g) of the Act, payments made to critical access hospitals (CAHs) (that is, rural hospitals or facilities that meet certain statutory requirements) for inpatient and outpatient services are generally based on 101 percent of reasonable cost. Reasonable cost is determined under the provisions of section 1861(v)(1)(A) of the Act and existing regulations under 42 CFR parts 413 and 415.

    5. Payments for Graduate Medical Education (GME)

    Under section 1886(a)(4) of the Act, costs of approved educational activities are excluded from the operating costs of inpatient hospital services. Hospitals with approved graduate medical education (GME) programs are paid for the direct costs of GME in accordance with section 1886(h) of the Act. The amount of payment for direct GME costs for a cost reporting period is based on the hospital's number of residents in that period and the hospital's costs per resident in a base year. The existing regulations governing payments to the various types of hospitals are located in 42 CFR part 413.

    C. Summary of Provisions of Recent Legislation Implemented in This Final Rule

    1. American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240)

    The American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240), enacted on January 2, 2013, made a number of changes that affect the IPPS. In this final rule, we are making policy changes to implement section 631 of the ATRA, which amended section 7(b)(1)(B) of Public Law 110-90 and requires a recoupment adjustment to the standardized amounts under section 1886(d) of the Act based upon the Secretary's estimates for discharges occurring in FY 2014 through FY 2017 to fully offset $11 billion (which represents the amount of the increase in aggregate payments from FYs 2008 through 2013 for which an adjustment was not previously applied).

    2. Pathway for SGR Reform Act of 2013 (Pub. L. 113-67)

    The Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) introduced new payment rules in the LTCH PPS. Under section 1206 of this law, discharges in cost reporting periods beginning on or after October 1, 2015 under the LTCH PPS will receive payment under a site neutral rate unless the discharge meets certain patient-specific criteria. In this final rule, we are providing clarifications to prior policy changes that implemented provisions under section 1206 of the Pathway for SGR Reform Act.

    3. Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-185)

    The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act (Pub. L. 113-185), enacted on October 6, 2014, made a number of changes that affect the Long-Term Care Quality Reporting Program (LTCH QRP). In this final rule, we are continuing to implement portions of section 1899B of the Act, as added by section 2 of the IMPACT Act, which, in part, requires LTCHs, among other postacute care providers, to report standardized patient assessment data, data on quality measures, and data on resource use and other measures.

    4. The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10)

    The Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 114-10) extended the MDH program and changes to the payment adjustment for low-volume hospitals through FY 2017. In this final rule, we are updating the low-volume hospital payment adjustment for FY 2017 under the extension of the temporary changes to the low-volume hospital payment adjustment provided for by section 204 of Public Law 114-10. We also are finalizing in this FY 2017 IPPS/LTCH PPS final rule the provisions of the FY 2016 IPPS/LTCH PPS interim final rule with comment period (80 FR 49594 through 49597) that implemented sections 204 and 205 of Public Law 114-10.

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    5. The Consolidated Appropriations Act, 2016 (Pub. L. 114-113)

    The Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, made changes that affect the IPPS and the LTCH PPS. Section 231 of Public Law 114-113 amended section 1886(m)(6) of the Act to provide for a temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs occurring prior to January 1, 2017. This provision was implemented in an interim final rule with comment period that appeared in the Federal Register on April 21, 2016 (81 FR 23428 through 23438). We are finalizing that interim final rule with comment period in section VII.B.3. of this FY 2017 IPPS/LTCH PPS final rule. Section 601 of Public Law 114-113 made changes to the payment calculation for operating IPPS payments for hospitals located in Puerto Rico. Section 602 of Public Law 114-113 specifies that Puerto Rico hospitals are eligible for incentive payments for the meaningful use of certified EHR technology, effective beginning FY 2016, and also applies the adjustments to the applicable percentage increase under the statute for Puerto Rico hospitals that are not meaningful EHR users, effective FY 2022. In this final rule, we are making conforming changes to our regulations to reflect the provisions of section 601 of Public Law 114-

    113, which increased the applicable Federal percentage of the operating IPPS payment for hospitals located in Puerto Rico from 75 percent to 100 percent and decreased the applicable Puerto Rico percentage of the operating IPPS payments for hospitals located in Puerto Rico from 25 percent to zero percent, applicable to discharges occurring on or after January 1, 2016.

    6. The Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act) (Pub. L. 114-42)

    The Notice of Observation Treatment and Implication for Care Eligibility Act (the NOTICE Act) (Pub. L. 114-42) enacted on August 6, 2015, amended section 1866(a)(1) of the Act by adding new subparagraph (Y) that requires hospitals and CAHs to provide written notification and an oral explanation of such notification to individuals receiving observation services as outpatients for more than 24 hours at the hospitals or CAHs. In this final rule, we are implementing the provisions of Public Law 114-42.

    D. Issuance of a Notice of Proposed Rulemaking

    In the proposed rule that appeared in the Federal Register on April 27, 2016 (81 FR 24946), we set forth proposed payment and policy changes to the Medicare IPPS for FY 2017 operating costs and for capital-related costs of acute care hospitals and certain hospitals and hospital units that are excluded from IPPS, including proposed changes relating to payments for IME and direct GME to certain hospitals that continue to be excluded from the IPPS and paid on a reasonable cost basis. In addition, we set forth proposed changes to the payment rates, factors, and other payment and policy-related changes to programs associated with payment rate policies under the LTCH PPS for FY 2017.

    Below is a summary of the major changes that we proposed to make:

    1. Proposed Changes to MS-DRG Classifications and Recalibrations of Relative Weights

    In section II. of the preamble of the proposed rule, we included--

    Proposed changes to MS-DRG classifications based on our yearly review for FY 2017.

    Proposed application of the documentation and coding adjustment for FY 2017 resulting from implementation of the MS-DRG system.

    Proposed recalibrations of the MS-DRG relative weights.

    A discussion of the FY 2017 status of new technologies approved for add-on payments for FY 2016 and a presentation of our evaluation and analysis of the FY 2017 applicants for add-on payments for high-cost new medical services and technologies (including public input, as directed by Pub. L. 108-173, obtained in a town hall meeting).

    2. Proposed Changes to the Hospital Wage Index for Acute Care Hospitals

    In section III. of the preamble to the proposed rule, we proposed to make revisions to the wage index for acute care hospitals and the annual update of the wage data. Specific issues addressed included, but were not limited to, the following:

    The proposed FY 2017 wage index update using wage data from cost reporting periods beginning in FY 2013.

    Calculation of the proposed occupational mix adjustment for FY 2017 based on the 2013 Occupational Mix Survey.

    Analysis and implementation of the proposed FY 2017 occupational mix adjustment to the wage index for acute care hospitals.

    Proposed application of the rural floor, the proposed imputed floor, and the proposed frontier State floor.

    Transitional wage indexes relating to the continued use of the revised OMB labor market area delineations based on 2010 Decennial Census data.

    Proposed revisions to the wage index for acute care hospitals based on hospital redesignations and reclassifications under sections 1886(d)(8)(B), (d)(8)(E), and (d)(10) of the Act.

    Notification regarding the proposed CMS ``lock-in'' date for urban to rural reclassifications under Sec. 412.103.

    The proposed adjustment to the wage index for acute care hospitals for FY 2017 based on commuting patterns of hospital employees who reside in a county and work in a different area with a higher wage index.

    Determination of the labor-related share for the proposed FY 2017 wage index.

    Solicitation of Comments on Treatment of Overhead and Home Office Costs in the Wage Index Calculation

    3. Other Decisions and Proposed Changes to the IPPS for Operating Costs and GME Costs

    In section IV. of the preamble of the proposed rule, we discussed proposed changes or clarifications of a number of the provisions of the regulations in 42 CFR parts 412 and 413, including the following:

    Proposed conforming changes to our regulations to reflect the changes to operating payments for subsection (d) Puerto Rico hospitals in accordance with the provisions of section 601 of Public Law 114-113.

    Proposed changes to the inpatient hospital update for FY 2017.

    Proposed updated national and regional case-mix values and discharges for purposes of determining RRC status.

    Proposed payment adjustment for low-volume hospitals for FY 2017.

    The statutorily required IME adjustment factor for FY 2017.

    Proposed changes to the methodologies for determining Medicare DSH payments and the additional payments for uncompensated care.

    Proposed changes to the rules for payment adjustments under the Hospital Readmissions Reduction Program based on hospital readmission measures and the process for hospital review and correction of those rates for FY 2017.

    Proposed changes to the requirements and provision of value-based incentive payments under the Hospital Value-Based Purchasing Program.

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    Proposed requirements for payment adjustments to hospitals under the HAC Reduction Program for FY 2017.

    Proposed changes relating to direct GME and IME payments to urban hospitals with rural track training programs.

    Discussion of the Rural Community Hospital Demonstration Program and a proposal for making a budget neutrality adjustment for the demonstration program.

    Proposed implementation of the Notice of Observation Treatment and Implications for Care Eligibility Act (the NOTICE Act) for hospitals and CAHs.

    Proposed technical changes and corrections to regulations relating to cost to related organizations and Medicare cost reports.

    4. Proposed FY 2017 Policy Governing the IPPS for Capital-Related Costs

    In section V. of the preamble to the proposed rule, we discussed the proposed payment policy requirements for capital-related costs and capital payments to hospitals for FY 2017. In addition, we discussed proposed changes to the calculation of capital IPPS payments to hospitals located in Puerto Rico to parallel the change in the statutory calculation of operating IPPS payments to hospitals located in Puerto Rico, beginning in FY 2017.

    5. Proposed Changes to the Payment Rates for Certain Excluded Hospitals: Rate-of-Increase Percentages

    In section VI. of the preamble of the proposed rule, we discussed--

    Proposed changes to payments to certain excluded hospitals for FY 2017.

    Proposed implementation of the Frontier Community Health Integration Project (FCHIP) Demonstration.

    6. Proposed Changes to the LTCH PPS

    In section VII. of the preamble of the proposed rule, we set forth--

    Proposed changes to the LTCH PPS Federal payment rates, factors, and other payment rate policies under the LTCH PPS for FY 2017.

    Proposals to sunset our existing 25-percent threshold policy regulations, and replace them with single consolidated 25 percent threshold policy regulation.

    Proposed changes to the limitation on charges to beneficiaries and related billing requirements for ``subclause (II)'' LTCHs to align those LTCH PPS payment adjustment policies with the limitation on charges policies applied in the TEFRA payment context.

    Proposed technical corrections to certain definitions to correct and clarify their use under the application of the site neutral payment rate and proposed additional definitions in accordance with our proposed modifications to the 25-percent policy.

    Proposed rebasing and revising of the LTCH market basket to update the LTCH PPS, effective for FY 2017.

    7. Proposed Changes Relating to Quality Data Reporting for Specific Providers and Suppliers

    In section VIII. of the preamble of the proposed rule, we addressed--

    Proposed requirements for the Hospital Inpatient Quality Reporting (IQR) Program as a condition for receiving the full applicable percentage increase.

    Proposed changes to the requirements for the quality reporting program for PPS-exempt cancer hospitals (PCHQR Program).

    Proposed changes to the requirements under the LTCH Quality Reporting Program (LTCH QRP).

    Proposed changes to the requirements under the Inpatient Psychiatric Facility Quality Reporting (IPFQR) Program.

    Proposed changes relating to clinical quality measures for the Medicare Electronic Health Record (EHR) Incentive Program and eligible hospitals and CAHs.

    8. Determining Prospective Payment Operating and Capital Rates and Rate-of-Increase Limits for Acute Care Hospitals

    In section V. of the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2017 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We proposed to establish the threshold amounts for outlier cases. In addition, we addressed the update factors for determining the rate-of-increase limits for cost reporting periods beginning in FY 2017 for certain hospitals excluded from the IPPS.

    9. Determining Prospective Payment Rates for LTCHs

    In the Addendum to the proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2017 LTCH PPS standard Federal payment rate and other factors used to determine LTCH PPS payments under both the LTCH PPS standard Federal payment rate and the site neutral payment rate in FY 2017. We proposed to establish the adjustments for wage levels, the labor-related share, the cost-of-

    living adjustment, and high-cost outliers, including the applicable fixed-loss amounts and the LTCH cost-to-charge ratios (CCRs) for both payment rates. We also provided the estimated market basket update to apply to the ceiling used to determine payments under the existing payment adjustment for ``subclause (II)'' LTCHs for cost reporting periods beginning in FY 2017.

    10. Impact Analysis

    In Appendix A of the proposed rule, we set forth an analysis of the impact that the proposed changes would have on affected acute care hospitals, CAHs, LTCHs, PCHs, and IPFs.

    11. Recommendation of Update Factors for Operating Cost Rates of Payment for Hospital Inpatient Services

    In Appendix B of the proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provided our recommendations of the appropriate percentage changes for FY 2017 for the following:

    A single average standardized amount for all areas for hospital inpatient services paid under the IPPS for operating costs of acute care hospitals (and hospital-specific rates applicable to SCHs and MDHs).

    Target rate-of-increase limits to the allowable operating costs of hospital inpatient services furnished by certain hospitals excluded from the IPPS.

    The LTCH PPS standard Federal payment rate and the site neutral payment rate for hospital inpatient services provided for LTCH PPS discharges.

    12. Discussion of Medicare Payment Advisory Commission Recommendations

    Under section 1805(b) of the Act, MedPAC is required to submit a report to Congress, no later than March 15 of each year, in which MedPAC reviews and makes recommendations on Medicare payment policies. MedPAC's March 2016 recommendations concerning hospital inpatient payment policies address the update factor for hospital inpatient operating costs and capital-related costs for hospitals under the IPPS. We addressed these recommendations in Appendix B of the proposed rule. For further information relating specifically to the MedPAC March 2016 report or to obtain a copy of the report, contact MedPAC at (202) 220-

    3700 or visit MedPAC's Web site at: http://www.medpac.gov.

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    E. Finalization of Interim Final Rule With Comment Period on the Temporary Exception to the Site Neutral Payment Rate Under the LTCH PPS for Certain Severe Wound Discharges From Certain LTCHs Required by the Consolidated Appropriations Act, 2016 and Modification of Limitations on Redesignation by the Medicare Geographic Classification Review Board

    In the interim final rule with comment period that appeared in the Federal Register on April 21, 2016 (CMS-1664-IFC; 81 FR 23428 through 23438), we addressed provisions relating to (1) a temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs; and (2) application of two judicial decisions relating to modifications of the limitations on redesignation by the Medicare Geographic Classification Review Board.

    In response to the section of the interim final rule with comment period on the temporary exception to the site neutral payment rate under the LTCH PPS for certain severe wound discharges from certain LTCHs, we received 22 timely pieces of correspondence. In section VII.B.3. of the preamble of this final rule, we summarize our policies and these public comments, present our responses, and finalize our policies regarding this temporary exception.

    In response to the section of the interim final rule with comment period on modification of limitations on redesignation by the MGCRB, we received 7 timely pieces of correspondence. In section III,J,2. of the preamble of this final rule, we summarize these public comments, present our responses, and finalize these provisions.

    F. Finalization of Interim Final Rule With Comment Period Implementing Legislative Extensions Relating to the Payment Adjustment for Low-

    Volume Hospitals and the Medicare-Dependent, Small Rural Hospital (MDH) Program

    In the interim final rule with comment period that appeared in the Federal Register on August 17, 2015, as part of the FY 2017 IPPS/LTCH PPS final rule, we addressed the legislative extensions relating to the payment adjustment for low-volume hospitals and the MDH program (CMS-

    1632-IFC; 80 FR 49594). In response to this interim final rule with comment period, we received 14 timely pieces of correspondence. However, all of the correspondence included public comments that were outside the scope of the provisions of the interim final rule with comment period. We are finalizing this interim final rule with comment in section IV.N. of the preamble of this final rule.

    II. Changes to Medicare Severity Diagnosis-Related Group (MS-DRG) Classifications and Relative Weights

    A. Background

    Section 1886(d) of the Act specifies that the Secretary shall establish a classification system (referred to as diagnosis-related groups (DRGs)) for inpatient discharges and adjust payments under the IPPS based on appropriate weighting factors assigned to each DRG. Therefore, under the IPPS, Medicare pays for inpatient hospital services on a rate per discharge basis that varies according to the DRG to which a beneficiary's stay is assigned. The formula used to calculate payment for a specific case multiplies an individual hospital's payment rate per case by the weight of the DRG to which the case is assigned. Each DRG weight represents the average resources required to care for cases in that particular DRG, relative to the average resources used to treat cases in all DRGs.

    Congress recognized that it would be necessary to recalculate the DRG relative weights periodically to account for changes in resource consumption. Accordingly, section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually. These adjustments are made to reflect changes in treatment patterns, technology, and any other factors that may change the relative use of hospital resources.

    B. MS-DRG Reclassifications

    For general information about the MS-DRG system, including yearly reviews and changes to the MS-DRGs, we refer readers to the previous discussions in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43764 through 43766) and the FYs 2011, 2012, 2013, 2014, 2015, and 2016 IPPS/LTCH PPS final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 53273; 78 FR 50512; 79 FR 49871; and 80 FR 49342, respectively).

    C. Adoption of the MS-DRGs in FY 2008

    For information on the adoption of the MS-DRGs in FY 2008, we refer readers to the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189).

    D. FY 2017 MS-DRG Documentation and Coding Adjustment

    1. Background on the Prospective MS-DRG Documentation and Coding Adjustments for FY 2008 and FY 2009 Authorized by Public Law 110-90

    In the FY 2008 IPPS final rule with comment period (72 FR 47140 through 47189), we adopted the MS-DRG patient classification system for the IPPS, effective October 1, 2007, to better recognize severity of illness in Medicare payment rates for acute care hospitals. The adoption of the MS-DRG system resulted in the expansion of the number of DRGs from 538 in FY 2007 to 745 in FY 2008. (As a result of this final rule, for FY 2017, there are 757 MS-DRGs.) By increasing the number of MS-DRGs and more fully taking into account patient severity of illness in Medicare payment rates for acute care hospitals, MS-DRGs encourage hospitals to improve their documentation and coding of patient diagnoses.

    In the FY 2008 IPPS final rule with comment period (72 FR 47175 through 47186), we indicated that the adoption of the MS-DRGs had the potential to lead to increases in aggregate payments without a corresponding increase in actual patient severity of illness due to the incentives for additional documentation and coding. In that final rule with comment period, we exercised our authority under section 1886(d)(3)(A)(vi) of the Act, which authorizes us to maintain budget neutrality by adjusting the national standardized amount, to eliminate the estimated effect of changes in coding or classification that do not reflect real changes in case-mix. Our actuaries estimated that maintaining budget neutrality required an adjustment of -4.8 percent to the national standardized amount. We provided for phasing in this -4.8 percent adjustment over 3 years. Specifically, we established prospective documentation and coding adjustments of -1.2 percent for FY 2008, -1.8 percent for FY 2009, and -1.8 percent for FY 2010.

    On September 29, 2007, Congress enacted the TMA Transitional Medical Assistance, Abstinence Education, and QI Qualifying Individuals Programs Extension Act of 2007 (Public Law 110-90). Section 7(a) of Public Law 110-90 reduced the documentation and coding adjustment made as a result of the MS-DRG system that we adopted in the FY 2008 IPPS final rule with comment period to -0.6 percent for FY 2008 and -0.9 percent for FY 2009, and we finalized the FY 2008 adjustment through rulemaking, effective October 1, 2007 (72 FR 66886).

    Page 56781

    For FY 2009, section 7(a) of Public Law 110-90 required a documentation and coding adjustment of -0.9 percent, and we finalized that adjustment through rulemaking effective October 1, 2008 (73 FR 48447). The documentation and coding adjustments established in the FY 2008 IPPS final rule with comment period, which reflected the amendments made by section 7(a) of Public Law 110-90, are cumulative. As a result, the -0.9 percent documentation and coding adjustment for FY 2009 was in addition to the -0.6 percent adjustment for FY 2008, yielding a combined effect of -1.5 percent.

    2. Adjustment to the Average Standardized Amounts Required by Public Law 110-90

  208. Prospective Adjustment Required by Section 7(b)(1)(A) of Public Law 110-90

    Section 7(b)(1)(A) of Public Law 110-90 requires that, if the Secretary determines that implementation of the MS-DRG system resulted in changes in documentation and coding that did not reflect real changes in case-mix for discharges occurring during FY 2008 or FY 2009 that are different than the prospective documentation and coding adjustments applied under section 7(a) of Public Law 110-90, the Secretary shall make an appropriate adjustment under section 1886(d)(3)(A)(vi) of the Act.

    Section 1886(d)(3)(A)(vi) of the Act authorizes adjustments to the average standardized amounts for subsequent fiscal years in order to eliminate the effect of such coding or classification changes. These adjustments are intended to ensure that future annual aggregate IPPS payments are the same as the payments that otherwise would have been made had the prospective adjustments for documentation and coding applied in FY 2008 and FY 2009 reflected the change that occurred in those years.

  209. Recoupment or Repayment Adjustments in FYs 2010 Through 2012 Required by Section 7(b)(1)(B) Public Law 110-90

    If, based on a retroactive evaluation of claims data, the Secretary determines that implementation of the MS-DRG system resulted in changes in documentation and coding that did not reflect real changes in case-

    mix for discharges occurring during FY 2008 or FY 2009 that are different from the prospective documentation and coding adjustments applied under section 7(a) of Public Law 110-90, section 7(b)(1)(B) of Public Law 110-90 requires the Secretary to make an additional adjustment to the standardized amounts under section 1886(d) of the Act. This adjustment must offset the estimated increase or decrease in aggregate payments for FYs 2008 and 2009 (including interest) resulting from the difference between the estimated actual documentation and coding effect and the documentation and coding adjustment applied under section 7(a) of Public Law 110-90. This adjustment is in addition to making an appropriate adjustment to the standardized amounts under section 1886(d)(3)(A)(vi) of the Act as required by section 7(b)(1)(A) of Public Law 110-90. That is, these adjustments are intended to recoup (or repay, in the case of underpayments) spending in excess of (or less than) spending that would have occurred had the prospective adjustments for changes in documentation and coding applied in FY 2008 and FY 2009 matched the changes that occurred in those years. Public Law 110-90 requires that the Secretary only make these recoupment or repayment adjustments for discharges occurring during FYs 2010, 2011, and 2012.

    3. Retrospective Evaluation of FY 2008 and FY 2009 Claims Data

    In order to implement the requirements of section 7 of Public Law 110-90, we performed a retrospective evaluation of the FY 2008 data for claims paid through December 2008 using the methodology first described in the FY 2009 IPPS/LTCH PPS final rule (73 FR 43768 and 43775) and later discussed in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43768 through 43772). We performed the same analysis for FY 2009 claims data using the same methodology as we did for FY 2008 claims (75 FR 50057 through 50068). The results of the analysis for the FY 2011 IPPS/

    LTCH PPS proposed and final rules, and subsequent evaluations in FY 2012, supported that the 5.4 percent estimate accurately reflected the FY 2009 increases in documentation and coding under the MS-DRG system. We were persuaded by both MedPAC's analysis (as discussed in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50064 through 50065)) and our own review of the methodologies proposed by various commenters that the methodology we employed to determine the required documentation and coding adjustments was sound.

    As in prior years, the FY 2008, FY 2009, and FY 2010 MedPAR files are available to the public to allow independent analysis of the FY 2008 and FY 2009 documentation and coding effects. Interested individuals may still order these files through the CMS Web site at: http://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/ by clicking on MedPAR Limited Data Set (LDS)-

    Hospital (National). This CMS Web page describes the file and provides directions and further detailed instructions for how to order.

    Persons placing an order must send the following: a Letter of Request, the LDS Data Use Agreement and Research Protocol (refer to the Web site for further instructions), the LDS Form, and a check (refer to the Web site for the required payment amount) to:

    Mailing address if using the U.S. Postal Service: Centers for Medicare & Medicaid Services, RDDC Account, Accounting Division, P.O. Box 7520, Baltimore, MD 21207-0520.

    Mailing address if using express mail: Centers for Medicare & Medicaid Services, OFM/Division of Accounting--RDDC, 7500 Security Boulevard, C3-07-11, Baltimore, MD 21244-1850.

    4. Prospective Adjustments for FY 2008 and FY 2009 Authorized by Section 7(b)(1)(A) of Public Law 110-90

    In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43767 through 43777), we opted to delay the implementation of any documentation and coding adjustment until a full analysis of case-mix changes based on FY 2009 claims data could be completed. We refer readers to the FY 2010 IPPS/RY LTCH PPS final rule for a detailed description of our proposal, responses to comments, and finalized policy. After analysis of the FY 2009 claims data for the FY 2011 IPPS/

    LTCH PPS final rule (75 FR 50057 through 50073), we found a total prospective documentation and coding effect of 5.4 percent. After accounting for the -0.6 percent and the -0.9 percent documentation and coding adjustments in FYs 2008 and 2009, we found a remaining documentation and coding effect of 3.9 percent. As we have discussed, an additional cumulative adjustment of -3.9 percent would be necessary to meet the requirements of section 7(b)(1)(A) of Public Law 110-90 to make an adjustment to the average standardized amounts in order to eliminate the full effect of the documentation and coding changes that do not reflect real changes in case-mix on future payments. Unlike section 7(b)(1)(B) of Public Law 110-90, section 7(b)(1)(A) does not specify when we must apply the prospective adjustment, but merely requires us to make an ``appropriate'' adjustment. Therefore, as we stated in the FY 2011 IPPS/LTCH

    Page 56782

    PPS final rule (75 FR 50061), we believed the law provided some discretion as to the manner in which we applied the prospective adjustment of -3.9 percent. As we discussed extensively in the FY 2011 IPPS/LTCH PPS final rule, it has been our practice to moderate payment adjustments when necessary to mitigate the effects of significant downward adjustments on hospitals, to avoid what could be widespread, disruptive effects of such adjustments on hospitals. Therefore, we stated that we believed it was appropriate to not implement the -3.9 percent prospective adjustment in FY 2011 because we finalized a -2.9 percent recoupment adjustment for that fiscal year. Accordingly, we did not propose a prospective adjustment under section 7(b)(1)(A) of Public Law 110-90 for FY 2011 (75 FR 23868 through 23870). We noted that, as a result, payments in FY 2011 (and in each future fiscal year until we implemented the requisite adjustment) would be higher than they would have been if we had implemented an adjustment under section 7(b)(1)(A) of Public Law 110-90.

    In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51489 and 51497), we indicated that, because further delay of this prospective adjustment would result in a continued accrual of unrecoverable overpayments, it was imperative that we implement a prospective adjustment for FY 2012, while recognizing CMS' continued desire to mitigate the effects of any significant downward adjustments to hospitals. Therefore, we implemented a -2.0 percent prospective adjustment to the standardized amount instead of the full -3.9 percent.

    In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through 53276), we completed the prospective portion of the adjustment required under section 7(b)(1)(A) of Public Law 110-90 by finalizing a -1.9 percent adjustment to the standardized amount for FY 2013. We stated that this adjustment would remove the remaining effect of the documentation and coding changes that do not reflect real changes in case-mix that occurred in FY 2008 and FY 2009. We believed that it was imperative to implement the full remaining adjustment, as any further delay would result in an overstated standardized amount in FY 2013 and any future fiscal years until a full adjustment was made.

    We noted again that delaying full implementation of the prospective portion of the adjustment required under section 7(b)(1)(A) of Public Law 110-90 until FY 2013 resulted in payments in FY 2010 through FY 2012 being overstated. These overpayments could not be recovered by CMS, as section 7(b)(1)(B) of Public Law 110-90 limited recoupments to overpayments made in FY 2008 and FY 2009.

    5. Recoupment or Repayment Adjustment Authorized by Section 7(b)(1)(B) of Public Law 110-90

    Section 7(b)(1)(B) of Public Law 110-90 requires the Secretary to make an adjustment to the standardized amounts under section 1886(d) of the Act to offset the estimated increase or decrease in aggregate payments for FY 2008 and FY 2009 (including interest) resulting from the difference between the estimated actual documentation and coding effect and the documentation and coding adjustments applied under section 7(a) of Public Law 110-90. This determination must be based on a retrospective evaluation of claims data. Our actuaries estimated that there was a 5.8 percentage point difference resulting in an increase in aggregate payments of approximately $6.9 billion. Therefore, as discussed in the FY 2011 IPPS/LTCH PPS final rule (75 FR 50062 through 50067), we determined that an aggregate adjustment of -5.8 percent in FYs 2011 and 2012 would be necessary in order to meet the requirements of section 7(b)(1)(B) of Public Law 110-90 to adjust the standardized amounts for discharges occurring in FYs 2010, 2011, and/or 2012 to offset the estimated amount of the increase in aggregate payments (including interest) in FYs 2008 and 2009.

    It is often our practice to phase in payment rate adjustments over more than one year in order to moderate the effect on payment rates in any one year. Therefore, consistent with the policies that we have adopted in many similar cases, in the FY 2011 IPPS/LTCH PPS final rule, we made an adjustment to the standardized amount of -2.9 percent, representing approximately half of the aggregate adjustment required under section 7(b)(1)(B) of Public Law 110-90, for FY 2011. An adjustment of this magnitude allowed us to moderate the effects on hospitals in one year while simultaneously making it possible to implement the entire adjustment within the timeframe required under section 7(b)(1)(B) of Public Law 110-90 (that is, no later than FY 2012). For FY 2012, in accordance with the timeframes set forth by section 7(b)(1)(B) of Public Law 110-90, and consistent with the discussion in the FY 2011 IPPS/LTCH PPS final rule, we completed the recoupment adjustment by implementing the remaining -2.9 percent adjustment, in addition to removing the effect of the -2.9 percent adjustment to the standardized amount finalized for FY 2011 (76 FR 51489 and 51498). Because these adjustments, in effect, balanced out, there was no year-to-year change in the standardized amount due to this recoupment adjustment for FY 2012. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53276), we made a final +2.9 percent adjustment to the standardized amount, completing the recoupment portion of section 7(b)(1)(B) of Public Law 110-90. We note that with this positive adjustment, according to our estimates, all overpayments made in FY 2008 and FY 2009 have been fully recaptured with appropriate interest, and the standardized amount has been returned to the appropriate baseline.

    6. Recoupment or Repayment Adjustment Authorized by Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)

    Section 631 of the ATRA amended section 7(b)(1)(B) of Public Law 110-90 to require the Secretary to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. This adjustment represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. As discussed earlier, this delay in implementation resulted in overstated payment rates in FYs 2010, 2011, and 2012. The resulting overpayments could not have been recovered under Public Law 110-90.

    Similar to the adjustments authorized under section 7(b)(1)(B) of Public Law 110-90, the adjustment required under section 631 of the ATRA is a one-time recoupment of a prior overpayment, not a permanent reduction to payment rates. Therefore, we anticipated that any adjustment made to reduce payment rates in one year would eventually be offset by a positive adjustment in 2018, once the necessary amount of overpayment was recovered. However, section 414 of the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, Public Law 114-10, enacted on April 16, 2015, replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment for each of FYs 2018 through 2023. We stated in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49345) that we will address this MACRA provision in future rulemaking.

    As we stated in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515 through 50517), our actuaries estimated that a -9.3 percent adjustment to the standardized amount would be necessary if CMS were to fully recover the $11 billion recoupment required by

    Page 56783

    section 631 of the ATRA in FY 2014. It is often our practice to phase in payment rate adjustments over more than one year, in order to moderate the effect on payment rates in any one year. Therefore, consistent with the policies that we have adopted in many similar cases, and after consideration of the public comments we received, in the FY 2014 IPPS/LTCH PPS final rule (78 FR 50515 through 50517), we implemented a -0.8 percent recoupment adjustment to the standardized amount in FY 2014. We stated that if adjustments of approximately -0.8 percent are implemented in FYs 2014, 2015, 2016, and 2017, using standard inflation factors, we estimate that the entire $11 billion will be accounted for by the end of the statutory 4-year timeline. As estimates of any future adjustments are subject to slight variations in total savings, we did not provide for specific adjustments for FYs 2015, 2016, or 2017 at that time. We stated that we believed that this level of adjustment for FY 2014 was a reasonable and fair approach that satisfies the requirements of the statute while mitigating extreme annual fluctuations in payment rates.

    Consistent with the approach discussed in the FY 2014 rulemaking for recouping the $11 billion required by section 631 of the ATRA, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49874) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49345), we implemented additional -0.8 percent recoupment adjustments to the standardized amount in FY 2015 and FY 2016, respectively. We estimated that these adjustments, combined with leaving the prior -0.8 percent adjustments in place, would recover up to $2 billion in FY 2015 and another $3 billion in FY 2016. When combined with the approximately $1 billion adjustment made in FY 2014, we estimated that approximately $5 to $6 billion would be left to recover under section 631 of the ATRA by the end of FY 2016.

    However, as indicated in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24966), due to lower than previously estimated inpatient spending, we determined that an adjustment of -0.8 percent in FY 2017 would not recoup the $11 billion under section 631 of the ATRA. Based on the FY 2017 President's Budget, our actuaries estimated for the proposed rule that FY 2014 through FY 2016 spending subject to the documentation and coding recoupment adjustment in the absence of the -

    0.8 percent adjustments made in FYs 2014 through 2016 would have been $123.783 billion in FY 2014, $124.361 billion in FY 2015, and $127.060 billion in FY 2016. As shown in the following table, the amount recouped in each of those fiscal years is therefore calculated as the difference between those amounts and the amounts determined to have been spent in those years with the -0.8 percent adjustment applied, namely $122.801 billion in FY 2014, $122.395 billion in FY 2015, and $124.059 billion in FY 2016. This yields an estimated total recoupment through the end of FY 2016 of $5.950 billion.

    Recoupment Made Under Section 631 of the American Taxpayer Relief Act of 2012

    ATRA

    ----------------------------------------------------------------------------------------------------------------

    Cumulative Adjusted IPPS Recoupment

    IPPS Spending* adjustment spending amount

    (billions) factor (billions) (billions)

    ----------------------------------------------------------------------------------------------------------------

    FY 2014................................. $122.801 1.00800 $123.783 $0.98

    FY 2015................................. 122.395 1.01606 124.361 1.97

    FY 2016................................. 124.059 1.02419 127.060 3.00

    -----------------------------------------------------------------------

    Total............................... ................ ................ ................ 5.95

    ----------------------------------------------------------------------------------------------------------------

    * Based on FY 2017 President's Budget, including capital, IME, and DSH payments.

    These estimates and the estimate of FY 2017 spending subject to the documentation and coding recoupment adjustment also are included in a memorandum from the Office of the Actuary that we made publicly available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS on the FY 2017 IPPS Proposed Rule Home Page. A description of the President's Budget for FY 2017 is currently available on the OMB Web site at: https://www.whitehouse.gov/omb/budget.

    For the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24967), our actuaries estimated that the FY 2017 spending subject to the documentation and coding recoupment adjustment (including capital, IME, and DSH payment) would be $129.625 billion in the absence of any documentation and recoupment adjustments from FY 2014 through FY 2017. Therefore, at the time of issuance of the FY 2017 proposed rule, our actuaries estimated that, to the nearest tenth of a percent, the FY 2017 documentation and coding adjustment factor that will recoup as closely as possible $11 billion from FY 2014 through FY 2017 without exceeding this amount is -1.5 percent. This adjustment factor yields an estimated spending amount in FY 2017 of $124.693 billion, calculated as $129.625/(1.008*1.008*1.008*1.015). We indicated in the FY 2017 IPPS/

    LTCH PPS proposed rule (81 FR 24967) that this estimated proposed -1.5 percent adjustment factor would be updated for the final rule based on the FY 2017 President's Budget Midsession Review. We noted that, based on updated estimates, the necessary adjustment factor to the nearest tenth of a percent could be different than our actuaries' estimate of -

    1.5 percent.

    Comment: MedPAC reiterated its previous support for the recovery of past overpayments due to documentation and coding. MedPAC stated that the law stipulates the amount of the recovery and the timing of the recovery. MedPAC also stated that CMS has little discretion and is proceeding as required by law.

    Response: We appreciate MedPAC's support for our proposal.

    Comment: The vast majority of commenters urged CMS to use its older estimate of the required adjustment for FY 2017 of -0.8 percentage point, rather than its updated proposed estimate of -1.5 percentage points. Commenters argued that the ATRA does not require CMS to update the initial FY 2017 estimate discussed in the FY 2014 final rule with more recent data, that the law allows CMS to continue using the older analysis, and that revisiting the actual recoupments for the preceding fiscal years is not consistent with the ATRA. The commenters' bases for this argument included that it would be a better interpretation of the statute and it is more consistent with CMS' approach regarding its use of estimates for outlier payments. The commenters also stated

    Page 56784

    that CMS should take into account any savings in Medicare Advantage (MA) payments when determining the $11 billion recoupment or otherwise adjust the $11 billion for policies that have been implemented since the passage of the ATRA. Many commenters also believed that the proposed -1.5 percent adjustment was inconsistent with Congressional intent in the ATRA and the MACRA, which they asserted reflected Congress' expectation that the final reduction would be 0.8 percentage points or at least statutorily limited the difference between the negative recoupment adjustments under the ATRA and the positive adjustments under the MACRA. Commenters further stated that if CMS does finalize its proposed adjustment under the ATRA for FY 2017, it should make an offsetting adjustment in FY 2018 to address the difference between the FY 2017 adjustment and the positive adjustments provided for under the MACRA.

    Response: We believe our proposed adjustment for FY 2017 is most consistent with the requirement under section 631 of the ATRA to make an adjustment to ``fully offset'' $11 billion by FY 2017. While we recognize that the commenters have advocated for alternative interpretations of the legislation, we believe the most straightforward reading is that the ATRA requires us to make a recoupment adjustment or adjustments totaling $11 billion by FY 2017. If we were to use the older estimate of a -0.8 percent adjustment for FY 2017, we would only recoup an estimated $10.1 billion, which we do not believe would be consistent with the requirement under the ATRA to offset $11 billion by FY 2017. As we explained in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49345) and prior rules, because estimates of future adjustments were subject to variations in total estimated savings, we did not address the specific amount of the final adjustment required under section 631 of the ATRA for FY 2017 at that time.

    In response to comments that we should take into account any savings in MA payments when determining the $11 billion recoupment or otherwise adjust the $11 billion for policies that have been implemented since the passage of the ATRA, we note that our approach for estimating the FY 2017 adjustment is consistent with our historic approach for estimating adjustments to address documentation and coding effects. There is no evidence in the legislative language that, in determining the adjustments necessary to achieve the $11 billion offset required under the ATRA, CMS should include impacts on MA payments or make adjustments for policies that have been implemented since the passage of the ATRA. We also believe that the commenters' suggestion should be evaluated in the context of MedPAC's comment and prior comments on this issue that we should recover past overpayments due to changes in documentation and coding. As stated previously, the $11 billion recoupment under the ATRA represents the amount of the increase in aggregate payments as a result of not completing the prospective adjustment authorized under section 7(b)(1)(A) of Public Law 110-90 until FY 2013. Adopting an interpretation that reduces the amount of our proposed FY 2017 adjustment creates a greater differential by the end of FY 2017 between the payment increases that occurred due to documentation and coding and the amount recovered. We do not believe increasing this differential would be an appropriate policy. We also note that it has been our consistent practice in implementing the ATRA to not account for MA discharges or savings and find no indication or expectation under the MACRA to change this approach.

    With respect to the additional issues of Congressional intent raised by commenters, we disagree that the ATRA and the MACRA, in conjunction, somehow ratify a -0.8 percent adjustment for FY 2017 or statutorily limit the difference between the adjustments under the ATRA and adjustments under the MACRA. As commenters have noted, even if we did adopt an adjustment of -0.8 percent for FY 2017, the cumulative effect of our ATRA adjustment would be -3.2 percentage points, while the MACRA only requires cumulative positive adjustments of +3.0 percent, leaving a -0.2 percent gap between our ATRA adjustments and the MACRA adjustments. It is not clear to us that the MACRA provision was intended to augment or limit CMS' separate obligation, pursuant to the ATRA, to fully offset $11 billion by FY 2017 under section 7(b)(1)(A)(ii) of the TMA, when that language was not changed by the MACRA and, as noted, the MACRA would not fully restore even an estimated -3.2 percent adjustment. Moreover, limiting the ATRA adjustment in this manner would create a greater differential by the end of FY 2017 between the payment increases that occurred due to documentation and coding and the amount recovered.

    With regard to the comments stating that if CMS finalizes its proposed adjustment under ATRA for FY 2017, it should make an offsetting adjustment in FY 2018, as we indicated in the proposed rule, we will address the adjustments for FY 2018 and later years in future rulemaking.

    Comment: One commenter objected to CMS' use of actuarial assumptions as the basis for determining the level of adjustment required under ATRA. The commenter questioned the variance in the figures for OACT's 2013 and 2016 estimates and stated that OACT's most recent estimate could not be externally replicated. The commenter stated that there should be much greater certainty in the estimate before imposing the higher adjustment proposed for FY 2017. Other commenters requested that CMS reexamine the assumption and estimates made by OACT.

    Response: While the OACT memorandum containing the estimates acknowledges the uncertainty in the estimates, it also states that the results shown are OACT's latest and best estimates for Medicare payments for FYs 2014-2017, and that OACT believes that the spending estimates presented, as well as the assumptions used to develop the estimates, are reasonable. We also note that, as explained in OACT's memorandum and the proposed rule, the estimate from the proposed rule was based on the FY 2017 President's Budget, subject to certain adjustments. As discussed in the memorandum, the major changes in the projections were due to lower updates to hospital payments than were assumed in 2013, mostly due to the lower than expected market basket adjustments and a lower number of discharges than assumed in 2013. These changes caused the spending levels to be lower than the 2013 projections. However, in 2013, when CMS made the original projections, everything that was included for 2014 through 2017 was a projection (except for the 2014 update). Now when we make the current projection, we have actual updates for the whole period through 2017, and we have complete data for the number of discharges for 2014 and 2015 and for part of 2016. For that reason, the current projections of spending for 2014 through 2017 are calculated with greater precision than the projections that were done in 2013. For additional information on the specific economic assumptions used in the President's FY 2017 Budget, we refer readers to the OMB Web site at: https://www.whitehouse.gov/omb/budget. The estimates for this final rule are similarly based on the Midsession Review of the President's FY 2017 Budget. For additional information on the specific economic assumptions used in the

    Page 56785

    Midsession Review of the President's FY 2017 Budget, we refer readers to the ``Midsession Review of the President's FY 2017 Budget'' available on the OMB Web site at: https://www.whitehouse.gov/sites/default/files/omb/budget/fy2017/assets/17msr.pdf, under ``Economic Assumptions.'' For a general overview of the principal steps involved in projecting future costs and utilization, we refer readers to the ``2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds'' available on the CMS Web site at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/index.html?redirect=/reportstrustfunds/ under ``Downloads.'' As we did with the proposed adjustment, we are making available on the CMS Web site a memorandum containing our actuaries' estimates relating to our finalized adjustment (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS on the FY 2017 IPPS Final Rule Home Page).

    After consideration of the public comments we received, we are finalizing our proposal without modification. For this final rule, based on updated estimates by the Office of the Actuary using the Midsession Review of the President's FY 2017 Budget, we are making an -

    1.5 percent adjustment as the final adjustment required under section 631 of the ATRA, and when combined with the effects of previous adjustments made in FY 2014, FY 2015, and FY 2016, we estimate will satisfy the recoupment under section 631 of the ATRA. In other words, our actuaries currently estimate that, to the nearest tenth of a percent, the FY 2017 documentation and coding adjustment factor that will recoup as closely as possible $11 billion from FY 2014 through FY 2017 without exceeding this amount is -1.5 percent. As we stated earlier, the estimates by our actuaries related to this finalized adjustment are included in a memorandum that we are making publicly available on the CMS Web site.

    The updated table from our actuaries based on the Midsession Review of the President's FY 2017 Budget is below. The interpretation of the table and the calculations are the same as those described in the proposed rule (81 FR 24966 through 24967), except for the update from the FY 2017 President's Budget to the FY 2017 President's Budget Midsession Review.

    Recoupment Made Under Section 631 of the American Taxpayer Relief Act of 2012

    ATRA

    ----------------------------------------------------------------------------------------------------------------

    Cumulative Adjusted IPPS Recoupment

    IPPS Spending* adjustment spending amount

    (billions) factor (billions) (billions)

    ----------------------------------------------------------------------------------------------------------------

    FY 2014......................................... $122.84 1.00800 $123.82 $0.98

    FY 2015......................................... 122.48 1.01606 124.45 1.97

    FY 2016......................................... 124.02 1.02419 127.02 3.00

    FY 2017......................................... 126.40 1.03956 131.40 5.00

    ---------------------------------------------------------------

    Total....................................... .............. .............. .............. 10.95

    ----------------------------------------------------------------------------------------------------------------

    * Based on FY 2017 President's Budget Midsession Review, including capital, IME, and DSH payments.

    For this FY 2017 IPPS/LTCH PPS final rule, our actuaries estimate that the FY 2017 spending subject to the documentation and coding recoupment adjustment (including capital, IME, and DSH payment) would be $131.40 billion in the absence of any documentation and recoupment adjustments from FY 2014 through FY 2017 based on the FY 2017 President's Budget Midsession Review. Therefore our actuaries estimated that, to the nearest tenth of a percent, the FY 2017 documentation and coding adjustment factor that will recoup as closely as possible $11 billion from FY 2014 through FY 2017 without exceeding this amount is -

    1.5 percent. This adjustment factor yields an estimated spending amount in FY 2017 of $126.4 billion, calculated as $131.4/

    (1.008*1.008*1.008*1.015).

    As stated in the proposed rule, once the recoupment was complete, we had anticipated making a single positive adjustment in FY 2018 to offset the reductions required to recoup the $11 billion under section 631 of the ATRA. However, section 414 of the MACRA replaced the single positive adjustment we intended to make in 2018 with a 0.5 percent positive adjustment for each of FYs 2018 through 2023. The provision under section 414 of the MACRA does not impact our FY 2017 adjustment, as discussed above. As noted previously, while we received public comments on adjustments for FY 2018 and later fiscal years, we will address these adjustments in future rulemaking as we indicated in the proposed rule.

    E. Refinement of the MS-DRG Relative Weight Calculation

    1. Background

    Beginning in FY 2007, we implemented relative weights for DRGs based on cost report data instead of charge information. We refer readers to the FY 2007 IPPS final rule (71 FR 47882) for a detailed discussion of our final policy for calculating the cost-based DRG relative weights and to the FY 2008 IPPS final rule with comment period (72 FR 47199) for information on how we blended relative weights based on the CMS DRGs and MS-DRGs.

    As we implemented cost-based relative weights, some public commenters raised concerns about potential bias in the weights due to ``charge compression,'' which is the practice of applying a higher percentage charge markup over costs to lower cost items and services, and a lower percentage charge markup over costs to higher cost items and services. As a result, the cost-based weights would undervalue high-cost items and overvalue low-cost items if a single cost-to-charge ratio (CCR) is applied to items of widely varying costs in the same cost center. To address this concern, in August 2006, we awarded a contract to the Research Triangle Institute, International (RTI) to study the effects of charge compression in calculating the relative weights and to consider methods to reduce the variation in the CCRs across services within cost centers. For a detailed summary of RTI's findings, recommendations, and public comments that we received on the report, we refer readers to the FY 2009 IPPS/LTCH PPS final rule (73 FR 48452 through 48453). In addition, we refer readers to RTI's July 2008 final report titled ``Refining Cost to Charge Ratios for Calculating APC and MS-DRG Relative Payment Weights'' (available at: http://

    www.rti.org/reports/cms/HHSM-

    Page 56786

    500-2005-0029I/PDF/Refining_Cost_to_Charge_Ratios_200807_Final.pdf).

    In the FY 2009 IPPS final rule (73 FR 48458 through 48467), in response to the RTI's recommendations concerning cost report refinements, we discussed our decision to pursue changes to the cost report to split the cost center for Medical Supplies Charged to Patients into one line for ``Medical Supplies Charged to Patients'' and another line for ``Implantable Devices Charged to Patients.'' We acknowledged, as RTI had found, that charge compression occurs in several cost centers that exist on the Medicare cost report. However, as we stated in the FY 2009 IPPS final rule, we focused on the CCR for Medical Supplies and Equipment because RTI found that the largest impact on the MS-DRG relative weights could result from correcting charge compression for devices and implants. In determining the items that should be reported in these respective cost centers, we adopted the commenters' recommendations that hospitals use revenue codes established by the AHA's National Uniform Billing Committee to determine the items that should be reported in the ``Medical Supplies Charged to Patients'' and the ``Implantable Devices Charged to Patients'' cost centers. Accordingly, a new subscripted line for ``Implantable Devices Charged to Patients'' was created in July 2009. This new subscripted cost center has been available for use for cost reporting periods beginning on or after May 1, 2009.

    As we discussed in the FY 2009 IPPS final rule (73 FR 48458) and in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68519 through 68527), in addition to the findings regarding implantable devices, RTI found that the costs and charges of computed tomography (CT) scans, magnetic resonance imaging (MRI), and cardiac catheterization differ significantly from the costs and charges of other services included in the standard associated cost center. RTI also concluded that both the IPPS and the OPPS relative weights would better estimate the costs of those services if CMS were to add standard cost centers for CT scans, MRIs, and cardiac catheterization in order for hospitals to report separately the costs and charges for those services and in order for CMS to calculate unique CCRs to estimate the costs from charges on claims data. In the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080), we finalized our proposal to create standard cost centers for CT scans, MRIs, and cardiac catheterization, and to require that hospitals report the costs and charges for these services under new cost centers on the revised Medicare cost report Form CMS-2552-10. (We refer readers to the FY 2011 IPPS/LTCH PPS final rule (75 FR 50075 through 50080) for a detailed discussion of the reasons for the creation of standard cost centers for CT scans, MRIs, and cardiac catheterization.) The new standard cost centers for CT scans, MRIs, and cardiac catheterization are effective for cost reporting periods beginning on or after May 1, 2010, on the revised cost report Form CMS-2552-10.

    In the FY 2009 IPPS final rule (73 FR 48468), we stated that, due to what is typically a 3-year lag between the reporting of cost report data and the availability for use in ratesetting, we anticipated that we might be able to use data from the new ``Implantable Devices Charged to Patients'' cost center to develop a CCR for ``Implantable Devices Charged to Patients'' in the FY 2012 or FY 2013 IPPS rulemaking cycle. However, as noted in the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43782), due to delays in the issuance of the revised cost report Form CMS 2552-10, we determined that a new CCR for ``Implantable Devices Charged to Patients'' might not be available before FY 2013. Similarly, when we finalized the decision in the FY 2011 IPPS/LTCH PPS final rule to add new cost centers for CT scans, MRIs, and cardiac catheterization, we explained that data from any new cost centers that may be created will not be available until at least 3 years after they are first used (75 FR 50077). In preparation for the FY 2012 IPPS/LTCH PPS rulemaking, we checked the availability of data in the ``Implantable Devices Charged to Patients'' cost center on the FY 2009 cost reports, but we did not believe that there was a sufficient amount of data from which to generate a meaningful analysis in this particular situation. Therefore, we did not propose to use data from the ``Implantable Devices Charged to Patients'' cost center to create a distinct CCR for ``Implantable Devices Charged to Patients'' for use in calculating the MS-DRG relative weights for FY 2012. We indicated that we would reassess the availability of data for the ``Implantable Devices Charged to Patients'' cost center for the FY 2013 IPPS/LTCH PPS rulemaking cycle and, if appropriate, we would propose to create a distinct CCR at that time.

    During the development of the FY 2013 IPPS/LTCH PPS proposed and final rules, hospitals were still in the process of transitioning from the previous cost report Form CMS-2552-96 to the new cost report Form CMS-2552-10. Therefore, we were able to access only those cost reports in the FY 2010 HCRIS with fiscal year begin dates on or after October 1, 2009, and before May 1, 2010; that is, those cost reports on Form CMS-2552-96. Data from the Form CMS-2552-10 cost reports were not available because cost reports filed on the Form CMS-2552-10 were not accessible in the HCRIS. Further complicating matters was that, due to additional unforeseen technical difficulties, the corresponding information regarding charges for implantable devices on hospital claims was not yet available to us in the MedPAR file. Without the breakout in the MedPAR file of charges associated with implantable devices to correspond to the costs of implantable devices on the cost report, we believed that we had no choice but to continue computing the relative weights with the current CCR that combines the costs and charges for supplies and implantable devices. We stated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53281 through 53283) that when we do have the necessary data for supplies and implantable devices on the claims in the MedPAR file to create distinct CCRs for the respective cost centers for supplies and implantable devices, we hoped that we would also have data for an analysis of creating distinct CCRs for CT scans, MRIs, and cardiac catheterization, which could then be finalized through rulemaking. In the FY 2013 IPPS/LTCH PPS final rule (77 FR 53281), we stated that, prior to proposing to create these CCRs, we would first thoroughly analyze and determine the impacts of the data, and that distinct CCRs for these new cost centers would be used in the calculation of the relative weights only if they were first finalized through rulemaking.

    At the time of the development of the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27506 through 27507), we had a substantial number of hospitals completing all, or some, of these new cost centers on the FY 2011 Medicare cost reports, compared to prior years. We stated that we believed that the analytic findings described using the FY 2011 cost report data and FY 2012 claims data supported our original decision to break out and create new cost centers for implantable devices, MRIs, CT scans, and cardiac catheterization, and we saw no reason to further delay proposing to implement the CCRs of each of these cost centers. Therefore, beginning in FY 2014, we proposed a policy to calculate the MS-DRG relative weights using 19 CCRs,

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    creating distinct CCRs from cost report data for implantable devices, MRIs, CT scans, and cardiac catheterization.

    We refer readers to the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27507 through 27509) and final rule (78 FR 50518 through 50523) in which we presented data analyses using distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization. The FY 2014 IPPS/

    LTCH PPS final rule also set forth our responses to public comments we received on our proposal to implement these CCRs. As explained in more detail in the FY 2014 IPPS/LTCH PPS final rule, we finalized our proposal to use 19 CCRs to calculate MS-DRG relative weights beginning in FY 2014--the then existing 15 cost centers and the 4 new CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization. Therefore, beginning in FY 2014, we calculate the IPPS MS-DRG relative weights using 19 CCRs, creating distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization.

    2. Discussion of Policy for FY 2017

    Consistent with our established policy, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24968), we stated that we calculated the proposed MS-DRG relative weights for FY 2017 using two data sources: the MedPAR file as the claims data source and the HCRIS as the cost report data source. We adjusted the charges from the claims to costs by applying the 19 national average CCRs developed from the cost reports. The description of the calculation of the 19 CCRs and the MS-DRG relative weights for FY 2017 is included in section II.G. of the preamble of this final rule.

    Comment: One commenter recommended that CMS work with stakeholders to update cost reporting instructions and improve the accuracy and validity of the national average CCRs. The commenter expressed concern that the differences between hospitals' use of nonstandard cost center codes and CMS' procedures for mapping and rolling up nonstandard codes to the standard cost centers will continue to result in invalid CCRs and inaccurate payments. The commenter stressed the need for flexibility in cost reporting, to accommodate any new or unique services that certain hospitals may provide, which may not be easily captured through the cost reporting software. Finally, the commenter again recommended, as it had done in response to prior IPPS rules, that CMS pay particular attention to data used for CT scanand MRI cost centers; the commenter believed that the hospital payment rates established by CMS from the CT scan and MRI CCRs simply do not correlate with resources used for these capital-intensive services.

    Response: We appreciate the commenter's desire to increase the accuracy and validity of the CCRs. As discussed in the FY 2016 IPPS/

    LTCH PPS final rule (80 FR 49347 through 49350), we noticed inconsistencies in hospital cost reporting of nonstandard cost centers and were concerned about the implication that some of these discrepancies might have on the aspects of the IPPS that rely on CCRs. While we did not propose any changes to the methodology or data sources for the FY 2016 CCRs and relative weights, we stated in that final rule that we would continue to explore ways in which we can improve the accuracy of the cost report data and calculated CCRs used in the cost estimation process and that, to the extent possible, we will continue to seek stakeholder input in efforts to limit the impact on providers. We also note that the concern regarding hospitals' use of nonstandard cost center codes and CMS' procedures for mapping and rolling up nonstandard codes to the standard cost centers does not specifically apply to the standard CT scan and MRI cost centers. Although these centers were previously nonstandard cost centers, they were implemented as standard cost centers in Form CMS-2552-10. Therefore, many of the issues relating to inconsistent coding and issues with information ``rollup'' would not be specifically relevant for the CT scan and MRI standard cost centers. We have previously addressed stakeholder concerns related to the flexibility of cost reporting and accuracy of the CT scan and MRI standard cost centers in setting the IPPS relative weights. For a detailed discussion of the CT scan and MRI standard cost centers, we refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50520 through 50523), and the FY 2011 IPPS/LTCH PPS final rule (7 FR 50077 through 50079).

    Consistent with our established policy, we calculated the final MS-

    DRG relative weights for FY 2017 using two data sources: the MedPAR file as the claims data source and the HCRIS as the cost report data source. We adjusted the charges from the claims to costs by applying the 19 national average CCRs developed from the cost reports. As we did with the FY 2016 IPPS/LTCH PPS final rule, we are providing the version of the HCRIS from which we calculated these 19 CCRs on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Click on the link on the left side of the screen titled, ``FY 2017 IPPS Final Rule Home Page'' or ``Acute Inpatient Files for Download.''

    F. Changes to Specific MS-DRG Classifications

    1. Discussion of Changes to Coding System and Basis for MS-DRG Updates

  210. Conversion of MS-DRGs to the International Classification of Diseases, 10th Revision (ICD-10)

    As of October 1, 2015, providers use the International Classification of Diseases, 10th Revision (ICD-10) coding system to report diagnoses and procedures for Medicare hospital inpatient services under the MS-DRG system instead of the ICD-9-CM coding system, which was used through September 30, 2015. The ICD-10 coding system includes the International Classification of Diseases, 10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding and the International Classification of Diseases, 10th Revision, Procedure Coding System (ICD-10-PCS) for inpatient hospital procedure coding, as well as the Official ICD-10-CM and ICD-10-PCS Guidelines for Coding and Reporting. The ICD-10 coding system was initially adopted for transactions conducted on or after October 1, 2013, as described in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Administrative Simplification: Modifications to Medical Data Code Set Standards to Adopt ICD-10-CM and ICD-10-PCS Final Rule published in the Federal Register on January 16, 2009 (74 FR 3328 through 3362) (hereinafter referred to as the ``ICD-10-CM and ICD-10-PCS final rule''). However, the Secretary of Health and Human Services (the Secretary) issued a final rule that delayed the compliance date for ICD-10 from October 1, 2013, to October 1, 2014. That final rule, entitled ``Administrative Simplification: Adoption of a Standard for a Unique Health Plan Identifier; Addition to the National Provider Identifier Requirements; and a Change to the Compliance Date for ICD-

    10-CM and ICD-10-PCS Medical Data Code Sets,'' CMS-0040-F, was published in the Federal Register on September 5, 2012 (77 FR 54664) and is available for viewing on the Internet at: http://www.gpo.gov/fdsys/pkg/FR-2012-09-05/pdf/2012-21238.pdf. On April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93) was enacted, which specified that the Secretary may not adopt ICD-10 prior to October 1, 2015. Accordingly, the U.S. Department of Health and Human

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    Services released a final rule in the Federal Register on August 4, 2014 (79 FR 45128 through 45134) that included a new compliance date that required the use of ICD-10 beginning October 1, 2015. The rule also required HIPAA-covered entities to continue to use ICD-9-CM through September 30, 2015.

    The anticipated move to ICD-10 necessitated the development of an ICD-10-CM/ICD-10-PCS version of the MS-DRGs. CMS began a project to convert the ICD-9-CM-based MS-DRGs to ICD-10 MS-DRGs. In response to the FY 2011 IPPS/LTCH PPS proposed rule, we received public comments on the creation of the ICD-10 version of the MS-DRGs to be implemented at the same time as ICD-10 (75 FR 50127 and 50128). While we did not propose an ICD-10 version of the MS-DRGs in the FY 2011 IPPS/LTCH PPS proposed rule, we noted that we have been actively involved in converting current MS-DRGs from ICD-9-CM codes to ICD-10 codes and sharing this information through the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee. We undertook this early conversion project to assist other payers and providers in understanding how to implement their own conversion projects. We posted ICD-10 MS-DRGs based on Version 26.0 (FY 2009) of the MS-DRGs. We also posted a paper that describes how CMS went about completing this project and suggestions for other payers and providers to follow. Information on the ICD-10 MS-DRG conversion project can be found on the ICD-10 MS-DRG Conversion Project Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We have continued to keep the public updated on our maintenance efforts for ICD-10-CM and ICD-10-PCS coding systems, as well as the General Equivalence Mappings that assist in conversion through the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee. Information on these committee meetings can be found on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html.

    During FY 2011, we developed and posted Version 28.0 of the ICD-10 MS-DRGs based on the FY 2011 MS-DRGs (Version 28.0) that we finalized in the FY 2011 IPPS/LTCH PPS final rule on the CMS Web site. This ICD-

    10 MS-DRGs Version 28.0 also included the CC Exclusion List and the ICD-10 version of the hospital-acquired conditions (HACs), which was not posted with Version 26. We also discussed this update at the September 15-16, 2010 and the March 9-10, 2011 meetings of the ICD-9-CM Coordination and Maintenance Committee. The minutes of these two meetings are posted on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html.

    We reviewed comments on the ICD-10 MS-DRGs Version 28 and made updates as a result of these comments. We called the updated version the ICD-10 MS-DRGs Version 28-R1. We posted a Definitions Manual of ICD-10 MS-DRGs Version 28-R1 on our ICD-10 MS-DRG Conversion Project Web site. To make the review of Version 28-R1 updates easier for the public, we also made available pilot software on a CD-ROM that could be ordered through the National Technical Information Service (NTIS). A link to the NTIS ordering page was provided on the CMS ICD-10 MS-DRGs Web site. We stated that we believed that, by providing the ICD-10 MS-

    DRGs Version 28-R1 Pilot Software (distributed on CD-ROM), the public would be able to more easily review and provide feedback on updates to the ICD-10 MS-DRGs. We discussed the updated ICD-10 MS-DRGs Version 28-

    R1 at the September 14, 2011 ICD-9-CM Coordination and Maintenance Committee meeting. We encouraged the public to continue to review and provide comments on the ICD-10 MS-DRGs so that CMS could continue to update the system.

    In FY 2012, we prepared the ICD-10 MS-DRGs Version 29, based on the FY 2012 MS-DRGs (Version 29.0) that we finalized in the FY 2012 IPPS/

    LTCH PPS final rule. We posted a Definitions Manual of ICD-10 MS-DRGs Version 29 on our ICD-10 MS-DRG Conversion Project Web site. We also prepared a document that describes changes made from Version 28 to Version 29 to facilitate a review. The ICD-10 MS-DRGs Version 29 was discussed at the ICD-9-CM Coordination and Maintenance Committee meeting on March 5, 2012. Information was provided on the types of updates made. Once again the public was encouraged to review and comment on the most recent update to the ICD-10 MS-DRGs.

    CMS prepared the ICD-10 MS-DRGs Version 30 based on the FY 2013 MS-

    DRGs (Version 30) that we finalized in the FY 2013 IPPS/LTCH PPS final rule. We posted a Definitions Manual of the ICD-10 MS-DRGs Version 30 on our ICD-10 MS-DRG Conversion Project Web site. We also prepared a document that describes changes made from Version 29 to Version 30 to facilitate a review. We produced mainframe and computer software for Version 30, which was made available to the public in February 2013. Information on ordering the mainframe and computer software through NTIS was posted on the ICD-10 MS-DRG Conversion Project Web site. The ICD-10 MS-DRGs Version 30.0 computer software facilitated additional review of the ICD-10 MS-DRGs conversion.

    We provided information on a study conducted on the impact of converting the MS-DRGs to ICD-10. Information on this study is summarized in a paper entitled ``Impact of the Transition to ICD-10 on Medicare Inpatient Hospital Payments.'' This paper was posted on the CMS ICD-10 MS-DRGs Conversion Project Web site and was distributed and discussed at the September 15, 2010 ICD-9-CM Coordination and Maintenance Committee meeting. The paper described CMS' approach to the conversion of the MS-DRGs from ICD-9-CM codes to ICD-10 codes. The study was undertaken using the ICD-9-CM MS-DRGs Version 27.0 (FY 2010), which was converted to the ICD-10 MS-DRGs Version 27.0. The study estimated the impact on aggregate payment to hospitals and the distribution of payments across hospitals. The impact of the conversion from ICD-9-CM to ICD-10 on Medicare MS-DRG hospital payments was estimated using FY 2009 Medicare claims data. The study found a hospital payment increase of 0.05 percent using the ICD-10 MS-DRGs Version 27.

    CMS provided an overview of this hospital payment impact study at the March 5, 2012 ICD-9-CM Coordination and Maintenance Committee meeting. This presentation followed presentations on the creation of ICD-10 MS-DRGs Version 29.0. A summary report of this meeting can be found on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html. At this March 2012 meeting, CMS announced that it would produce an update on this impact study based on an updated version of the ICD-10 MS-DRGs. This update of the impact study was presented at the March 5, 2013 ICD-9-CM Coordination and Maintenance Committee meeting. The study found that moving from an ICD-

    9-CM-based system to an ICD-10 MS-DRG replicated system would lead to DRG reassignments on only 1 percent of the 10 million MedPAR sample records used in the study. Ninety-nine percent of the records did not shift to another MS-DRG when using an ICD-10 MS-DRG system. For the 1 percent of the records that shifted, 45 percent of the shifts were to a higher-weighted MS-DRG, while 55 percent of the shifts were

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    to lower-weighted MS-DRGs. The net impact across all MS-DRGs was a reduction by 4/10000 or minus 4 pennies per $100. The updated paper is posted on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Downloads'' section. Information on the March 5, 2013 ICD-9-CM Coordination and Maintenance Committee meeting can be found on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html. This update of the impact paper and the ICD-10 MS-DRG Version 30 software provided additional information to the public who were evaluating the conversion of the MS-DRGs to ICD-

    10 MS-DRGs.

    CMS prepared the ICD-10 MS-DRGs Version 31 based on the FY 2014 MS-

    DRGs (Version 31) that we finalized in the FY 2014 IPPS/LTCH PPS final rule. In November 2013, we posted a Definitions Manual of the ICD-10 MS-DRGs Version 31 on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that described changes made from Version 30 to Version 31 to facilitate a review. We produced mainframe and computer software for Version 31, which was made available to the public in December 2013. Information on ordering the mainframe and computer software through NTIS was posted on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Related Links'' section. This ICD-

    10 MS-DRGs Version 31.0 computer software facilitated additional review of the ICD-10 MS-DRGs conversion. We encouraged the public to submit to CMS any comments on areas where they believed the ICD-10 MS-DRGs did not accurately reflect grouping logic found in the ICD-9-CM MS-DRGs Version 31.

    We reviewed public comments received and developed an update of ICD-10 MS-DRGs Version 31, which we called ICD-10 MS-DRGs Version 31-R. We posted a Definitions Manual of the ICD-10 MS-DRGs Version 31-R on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that describes changes made from Version 31 to Version 31-R to facilitate a review. We continued to share ICD-10 MS-DRG conversion activities with the public through this Web site.

    CMS prepared the ICD-10 MS-DRGs Version 32 based on the FY 2015 MS-

    DRGs (Version 32) that we finalized in the FY 2015 IPPS/LTCH PPS final rule. In November 2014, we made available a Definitions Manual of the ICD-10 MS DRGs Version 32 on the ICD-10 MS-DRG Conversion Project Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. We also prepared a document that described changes made from Version 31-R to Version 32 to facilitate a review. We produced mainframe and computer software for Version 32, which was made available to the public in January 2015. Information on ordering the mainframe and computer software through NTIS was made available on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html under the ``Related Links'' section. This ICD-10 MS-DRGs Version 32 computer software facilitated additional review of the ICD-10 MS-DRGs conversion. We encouraged the public to submit to CMS any comments on areas where they believed the ICD-10 MS-

    DRGs did not accurately reflect grouping logic found in the ICD-9-CM MS-DRGs Version 32. We discussed five requests from the public to update the ICD-10 MS-DRGs Version 32 to better replicate the ICD-9-CM MS-DRGs in section II.G.3., 4., and 5. of the preamble of the FY 2016 IPPS/LTCH PPS final rule. In the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24351), we proposed to implement the MS-DRG code logic in the ICD-10 MS-DRGs Version 32 along with any finalized updates to the ICD-

    10 MS-DRGs Version 32 for the final ICD-10 MS-DRGs Version 33. In the proposed rule, we proposed the ICD-10 MS-DRGs Version 33 as the replacement logic for the ICD-9-CM based MS-DRGs Version 32 as part of the proposed MS-DRG updates for FY 2016. We invited public comments on how well the ICD-10 MS-DRGs Version 32 replicated the logic of the MS-

    DRGs Version 32 based on ICD-9-CM codes.

    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49356 through 49357 and 49363 through 49407), we addressed the public comments we received on the replication in the ICD-10 MS-DRGs Version 32 of the logic of the MS-DRGs Version 32 based on ICD-9-CM codes. We refer readers to that final rule for a discussion of the changes we made in response to public comments.

  211. Basis for FY 2017 MS-DRG Updates

    CMS encourages input from our stakeholders concerning the annual IPPS updates when that input is made available to us by December 7 of the year prior to the next annual proposed rule update. For example, to be considered for any updates or changes in FY 2017, comments and suggestions should have been submitted by December 7, 2015. The comments that were submitted in a timely manner for FY 2017 are discussed in this section of the final rule. Interested parties should submit any comments and suggestions for FY 2018 by December 7, 2016, via the new CMS MS-DRG Classification Change Requests Mailbox located at: MSDRGClassificationChange@cms.hhs.gov.

    Following are the changes we proposed to the MS-DRGs for FY 2017 in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24971 through 25016). We invited public comment on each of the MS-DRG classification proposed changes as well as our proposals to maintain certain existing MS-DRG classifications discussed in the proposed rule. In some cases, we proposed changes to the MS-DRG classifications based on our analysis of claims data. In other cases, we proposed to maintain the existing MS-

    DRG classification based on our analysis of claims data. For the FY 2017 proposed rule, our MS-DRG analysis was based on claims data from the December 2015 update of the FY 2015 MedPAR file, which contains hospital bills received through September 30, 2015, for discharges occurring through September 30, 2015. In our discussion of the proposed MS-DRG reclassification changes, we referred to our analysis of claims data from the ``December 2015 update of the FY 2015 MedPAR file.''

    In this FY 2017 IPPS/LTCH PPS final rule, we summarize the public comments we received on our proposals, present our responses, and state our final policies. For this FY 2017 final rule, we did not perform any further MS-DRG analysis of claims data. Therefore, all of the data analysis is based on claims data from the December 2015 update of the FY 2015 MedPAR file, which contains hospital bills received through September 30, 2015, for discharges occurring through September 30, 2015.

    As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modification to the MS-DRGs for particular circumstances brought to our attention, we consider whether the resource consumption and clinical characteristics of the patients with a given set of conditions are significantly different than the remaining patients in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay

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    and rely on the judgment of our clinical advisors to decide whether patients are clinically distinct or similar to other patients in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs between the cases we select for review and the remainder of cases in the MS-DRG. We also consider variation in costs within these groups; that is, whether observed average differences are consistent across patients or attributable to cases that are extreme in terms of costs or length of stay, or both. Further, we consider the number of patients who will have a given set of characteristics and generally prefer not to create a new MS-DRG unless it would include a substantial number of cases.

    In our examination of the claims data, we apply the following criteria established in FY 2008 (72 FR 47169) to determine if the creation of a new complication or comorbidity (CC) or major complication or comorbidity (MCC) subgroup within a base MS-DRG is warranted:

    A reduction in variance of costs of at least 3 percent.

    At least 5 percent of the patients in the MS-DRG fall within the CC or MCC subgroup.

    At least 500 cases are in the CC or MCC subgroup.

    There is at least a 20-percent difference in average costs between subgroups.

    There is a $2,000 difference in average costs between subgroups.

    In order to warrant creation of a CC or MCC subgroup within a base MS-DRG, the subgroup must meet all five of the criteria.

    We note that some of the issues evaluated for the FY 2017 MS-DRGs update continue to relate to the need for the ICD-10 MS-DRGs to accurately replicate the logic of the ICD-9-CM based version of the MS-

    DRGs. Replication is important because both the logic for the MS-DRGs and the data source used to calculate and develop proposed relative payment weights are based on the same MedPAR claims data. In other words, as the logic for the proposed and final FY 2017 ICD-10 MS-DRGs is based upon the FY 2015 ICD-9-CM MedPAR claims data, the data source used to calculate and develop the proposed and final FY 2017 relative payment weights is also based on the FY 2015 ICD-9-CM MedPAR claims data, including any MS-DRG classification changes discussed in the proposed rule and this final rule. This is consistent with how the current FY 2016 relative payment weights are based on the ICD-9-CM diagnosis and procedure codes from the FY 2014 MedPAR claims data that were grouped through the ICD-9-CM version of the FY 2016 GROUPER Version 33. We note that we made the MS-DRG GROUPER and Medicare Code Editor (MCE) ICD-9-CM Software Version 33 available to the public for use in analyzing ICD-9-CM data to create relative payment weights using ICD-9-CM data on our CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page.html?DLSort=0&DLEntries=10&DLPage=1&DLSortDir=ascending. Therefore, as discussed in section II.G. of the preamble of this final rule, ICD-9-CM data were used for computing the proposed and final FY 2017 MS-DRG relative payment weights. As we did for FY 2016, we note that, for FY 2017, we have made the MS-DRG GROUPER and Medicare Code Editor (MCE) ICD-9-CM Software Version 34 available to the public for use in analyzing ICD-9-CM data to create relative payment weights using ICD-9-CM data on our CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2017-IPPS-Final-Rule-Home-Page.html. If the ICD-9 and ICD-10 versions of MS-DRGs cease to be replications of each other, the relative payment weights computed using the ICD-9 claims data and MS-DRGs would be inconsistent with the relative payment weights assigned for the ICD-10 MS-DRGs, causing unintended payment redistributions. Thus, if the findings of our data analyses and the recommendations of our clinical advisors supported modifications to the current ICD-10 MS-DRG structure, prior to proposing any changes, we first evaluated whether the requested change could be replicated in the ICD-9-CM MS-DRGs. If the answer was ``yes,'' from a replication perspective, the change was considered feasible. If the answer was ``no,'' we examined whether the change in the ICD-10 MS-

    DRGs was likely to cause a significant number of patient cases to change or ``shift'' ICD-10 MS-DRGs. If relatively few patient cases would be impacted, we evaluated if it would be feasible to propose the change even though it could not be replicated by the ICD-9 MS-DRGs because it would not cause a material payment redistribution. For the ICD-10 MS-DRG classification change requests that could not be replicated in ICD-9-CM and that would cause a significant number of patient cases to shift MS-DRG assignment, we considered other alternatives.

    Comment: Some commenters requested that CMS make the FY 2017 finalized MS-DRG GROUPER logic proposals retroactive to October 1, 2015 for current FY 2016 claims. One commenter stated that if the corrected replication issues were retroactive to October 1, 2015, private payers would be able to appropriately adjust claims that had an inappropriate MS-DRG assignment.

    Response: We acknowledge the commenters' request. However, we note that, in accordance with section 1886(d)(4)(C) of the Act, we adjust the DRG classifications and relative weights at least annually. The FY 2016 ICD-10 MS-DRGs Version 33 were subject to review and comment by the public as part of the FY 2016 IPPS/LTCH PPS proposed and final rulemaking process. We encouraged the public to submit any comments on areas where they believed the ICD-10 MS-DRGs did not accurately reflect the GROUPER logic found in the ICD-9-CM MS-DRGs (80 FR 49356), and discussed in the FY 2016 rulemaking the requests we received to update the ICD-10 MS-DRGs to better replicate the ICD-9 MS-DRGs. In the FY 2017 IPPS/LTCH PPS proposed rule, we proposed further updates to the MS-DRG GROUPER logic, to be effecive October 1, 2016.

    With regard to the ability of private payers to adjust claims affected by replication issues, as noted in the FY 2008 IPPS final rule (72 FR 47152), we have stated many times in the past that we encourage private insurers and other non-Medicare payers to make refinements to Medicare's DRG system to better suit the needs of the patients they serve. Consistent with our general approach for implementing updates to the MS-DRGs, the proposals adopted as final policy in this FY 2017 IPPS/LTCH PPS final rule will apply beginning with the FY 2017 MS-DRGs.

    2. Pre-Major Diagnostic Category (Pre-MDC): Total Artificial Heart Replacement

    An ICD-10 MS-DRG replication issue regarding the assignment of two ICD-10-PCS procedure codes was identified after the October 1, 2015 implementation of the Version 33 ICD-10 MS-DRGs. ICD-10-PCS procedure codes 02RK0JZ (Replacement of right ventricle with synthetic substitute, open approach) and 02RL0JZ (Replacement of left ventricle with synthetic substitute, open approach), when reported together, describe a biventricular heart replacement (artificial heart). Under the Version 32 ICD-9-CM based MS-DRGs, this procedure was described by ICD-9-CM procedure code 37.52 (Implantation

    Page 56791

    of total internal biventricular heart replacement system) and grouped to MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively).

    As discussed in section II.F.1.a. of the preamble of the proposed rule and this final rule, to assist in the conversion from the ICD-9-CM based MS-DRGs to ICD-10, beginning in FY 2011, draft versions of the ICD-10 based MS-DRGs were developed and made available for public comment. The two ICD-10-PCS procedure codes (02RK0JZ and 02RL0JZ) were assigned as a ``cluster'' to the draft ICD-10 based MS-DRGs 001 and 002 in prior draft versions of the ICD-10 MS-DRGs. In ICD-10-PCS, a cluster is the term used to describe when a combination of ICD-10-PCS procedure codes are needed to fully satisfy the equivalent meaning of an ICD-9-CM procedure code for it to be considered a plausible translation. Upon review of prior draft versions of the ICD-10 MS-DRGs, it was determined that Version 30 was the last version to include ICD-10-PCS procedure codes 02RK0JZ and 02RL0JZ as a code cluster (from ICD-9-CM procedure code 37.52) that grouped to the draft ICD-10 based MS-DRGs 001 and 002. Subsequent draft versions of the ICD-10 MS-DRGs inadvertently omitted this code cluster from those MS-DRGs.

    Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24971 through 24972), for FY 2017, we proposed to assign ICD-10-PCS procedure codes 02RK0JZ and 02RL0JZ as a code cluster to ICD-10 Version 34 MS-

    DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively) to accurately replicate the Version 32 ICD-9-CM based MS-DRG logic of procedure code 37.52. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to assign ICD-10-PCS procedure codes 02RK0JZ and 02RL0JZ as a code cluster to ICD-10 Version 34 MS-DRGs 001 and 002. The commenters noted that this code cluster assignment is crucial to assure that all consumers who require a heart replacement with a total artificial heart will have access to care, regardless of whether they are a Medicare beneficiary, a Medicaid recipient, or a privately insured individual. Other commenters noted the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided.

    Response: We appreciate the commenters' support.

    After consideration of the public comments we received, we are finalizing our proposal to assign ICD-10-PCS procedure codes 02RK0JZ (Replacement of right ventricle with synthetic substitute, open approach) and 02RL0JZ (Replacement of left ventricle with synthetic substitute, open approach) as a code cluster to MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively) effective October 1, 2016 for ICD-10 MS-DRGs Version 34.

    3. MDC 1 (Diseases and Disorders of the Nervous System)

  212. Endovascular Embolization (Coiling) or Occlusion of Head and Neck Procedures

    We received a repeat request to change the MS-DRG assignment for procedure codes describing endovascular embolization (coiling) or occlusion of the head and neck. This topic was discussed in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28005 through 28007); the FY 2015 IPPS/LTCH PPS final rule (79 FR 49883 through 49886); the FY 2016 IPPS/

    LTCH PPS proposed rule (80 FR 24351 through 24356); and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49358 through 49363). For these 2 fiscal years, we did not change the MS-DRG assignment for procedure codes describing endovascular embolization (coiling) or occlusion of the head and neck for the reasons discussed in these proposed and final rules.

    For FY 2017, the requestor again asked that CMS change the MS-DRG assignment for procedure codes describing endovascular embolization or occlusion of the head and neck as well as several other codes describing endovascular procedures of the head and neck.

    The ICD-10-PCS procedure codes listed in the following table capture endovascular embolization or occlusion of the head and neck procedures that are assigned to the following MS-DRGs in ICD-10 Version 33 MS-DRGs: MS-DRG 020 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with MCC); MS-DRG 021 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with CC); MS-DRG 022 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage without CC/MCC); MS-DRG 023 (Craniotomy with Major Device Implant/Acute Complex CNS Principal Diagnosis with MCC or Chemo Implant); MS-DRG 024 (Craniotomy with Major Device Implant/Acute Complex CNS Principal Diagnosis without MCC); MS-DRG 025 (Craniotomy and Endovascular Intracranial Procedures with MCC); MS-DRG 026 (Craniotomy and Endovascular Intracranial Procedures with CC); and MS-

    DRG 027 (Craniotomy and Endovascular Intracranial Procedures without CC/MCC):

    ICD-10-PCS Codes for Endovascular Embolization or Occlusion of the Head

    and Neck Procedures Assigned to MS-DRGs 020 Through 027 in ICD-10 MS-

    DRGs Version 33

    ------------------------------------------------------------------------

    ICD-10-PCS code Code description

    ------------------------------------------------------------------------

    03LG3BZ.................. Occlusion of intracranial artery with

    bioactive intraluminal device, percutaneous

    approach.

    03LG3DZ.................. Occlusion of intracranial artery with

    intraluminal device, percutaneous approach.

    03LG4BZ.................. Occlusion of intracranial artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03LG4DZ.................. Occlusion of intracranial artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03LH3BZ.................. Occlusion of right common carotid artery with

    bioactive intraluminal device, percutaneous

    approach.

    03LH3DZ.................. Occlusion of right common carotid artery with

    intraluminal device, percutaneous approach.

    03LH4BZ.................. Occlusion of right common carotid artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03LH4DZ.................. Occlusion of right common carotid artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03LJ3BZ.................. Occlusion of left common carotid artery with

    bioactive intraluminal device, percutaneous

    approach.

    03LJ3DZ.................. Occlusion of left common carotid artery with

    intraluminal device, percutaneous approach.

    03LJ4BZ.................. Occlusion of left common carotid artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03LJ4DZ.................. Occlusion of left common carotid artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03LK3BZ.................. Occlusion of right internal carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03LK3DZ.................. Occlusion of right internal carotid artery

    with intraluminal device, percutaneous

    approach.

    03LK4BZ.................. Occlusion of right internal carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    Page 56792

    03LK4DZ.................. Occlusion of right internal carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03LL3BZ.................. Occlusion of left internal carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03LL3DZ.................. Occlusion of left internal carotid artery

    with intraluminal device, percutaneous

    approach.

    03LL4BZ.................. Occlusion of left internal carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03LL4DZ.................. Occlusion of left internal carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03LM3BZ.................. Occlusion of right external carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03LM3DZ.................. Occlusion of right external carotid artery

    with intraluminal device, percutaneous

    approach.

    03LM4BZ.................. Occlusion of right external carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03LM4DZ.................. Occlusion of right external carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03LN3BZ.................. Occlusion of left external carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03LN3DZ.................. Occlusion of left external carotid artery

    with intraluminal device, percutaneous

    approach.

    03LN4BZ.................. Occlusion of left external carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03LN4DZ.................. Occlusion of left external carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03LP3BZ.................. Occlusion of right vertebral artery with

    bioactive intraluminal device, percutaneous

    approach.

    03LP3DZ.................. Occlusion of right vertebral artery with

    intraluminal device, percutaneous approach.

    03LP4BZ.................. Occlusion of right vertebral artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03LP4DZ.................. Occlusion of right vertebral artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03LQ3BZ.................. Occlusion of left vertebral artery with

    bioactive intraluminal device, percutaneous

    approach.

    03LQ3DZ.................. Occlusion of left vertebral artery with

    intraluminal device, percutaneous approach.

    03LQ4BZ.................. Occlusion of left vertebral artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03LQ4DZ.................. Occlusion of left vertebral artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03LR3DZ.................. Occlusion of face artery with intraluminal

    device, percutaneous approach.

    03LR4DZ.................. Occlusion of face artery with intraluminal

    device, percutaneous endoscopic approach.

    03LS3DZ.................. Occlusion of right temporal artery with

    intraluminal device, percutaneous approach.

    03LS4DZ.................. Occlusion of right temporal artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03LT3DZ.................. Occlusion of left temporal artery with

    intraluminal device, percutaneous approach.

    03LT4DZ.................. Occlusion of left temporal artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03VG3BZ.................. Restriction of intracranial artery with

    bioactive intraluminal device, percutaneous

    approach.

    03VG3DZ.................. Restriction of intracranial artery with

    intraluminal device, percutaneous approach.

    03VG4BZ.................. Restriction of intracranial artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03VG4DZ.................. Restriction of intracranial artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03VH3BZ.................. Restriction of right common carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03VH3DZ.................. Restriction of right common carotid artery

    with intraluminal device, percutaneous

    approach.

    03VH4BZ.................. Restriction of right common carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03VH4DZ.................. Restriction of right common carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03VJ3BZ.................. Restriction of left common carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03VJ3DZ.................. Restriction of left common carotid artery

    with intraluminal device, percutaneous

    approach.

    03VJ4BZ.................. Restriction of left common carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03VJ4DZ.................. Restriction of left common carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03VK3BZ.................. Restriction of right internal carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03VK3DZ.................. Restriction of right internal carotid artery

    with intraluminal device, percutaneous

    approach.

    03VK4BZ.................. Restriction of right internal carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03VK4DZ.................. Restriction of right internal carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03VL3BZ.................. Restriction of left internal carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03VL3DZ.................. Restriction of left internal carotid artery

    with intraluminal device, percutaneous

    approach.

    03VL4BZ.................. Restriction of left internal carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03VL4DZ.................. Restriction of left internal carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03VM3BZ.................. Restriction of right external carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03VM3DZ.................. Restriction of right external carotid artery

    with intraluminal device, percutaneous

    approach.

    03VM4BZ.................. Restriction of right external carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03VM4DZ.................. Restriction of right external carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03VN3BZ.................. Restriction of left external carotid artery

    with bioactive intraluminal device,

    percutaneous approach.

    03VN3DZ.................. Restriction of left external carotid artery

    with intraluminal device, percutaneous

    approach.

    03VN4BZ.................. Restriction of left external carotid artery

    with bioactive intraluminal device,

    percutaneous endoscopic approach.

    03VN4DZ.................. Restriction of left external carotid artery

    with intraluminal device, percutaneous

    endoscopic approach.

    03VP3BZ.................. Restriction of right vertebral artery with

    bioactive intraluminal device, percutaneous

    approach.

    03VP3DZ.................. Restriction of right vertebral artery with

    intraluminal device, percutaneous approach.

    03VP4BZ.................. Restriction of right vertebral artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03VP4DZ.................. Restriction of right vertebral artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03VQ3BZ.................. Restriction of left vertebral artery with

    bioactive intraluminal device, percutaneous

    approach.

    03VQ3DZ.................. Restriction of left vertebral artery with

    intraluminal device, percutaneous approach.

    03VQ4BZ.................. Restriction of left vertebral artery with

    bioactive intraluminal device, percutaneous

    endoscopic approach.

    03VQ4DZ.................. Restriction of left vertebral artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03VR3DZ.................. Restriction of face artery with intraluminal

    device, percutaneous approach.

    03VR4DZ.................. Restriction of face artery with intraluminal

    device, percutaneous endoscopic approach.

    03VS3DZ.................. Restriction of right temporal artery with

    intraluminal device, percutaneous approach.

    03VS4DZ.................. Restriction of right temporal artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03VT3DZ.................. Restriction of left temporal artery with

    intraluminal device, percutaneous approach.

    03VT4DZ.................. Restriction of left temporal artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03VU3DZ.................. Restriction of right thyroid artery with

    intraluminal device, percutaneous approach.

    Page 56793

    03VU4DZ.................. Restriction of right thyroid artery with

    intraluminal device, percutaneous endoscopic

    approach.

    03VV3DZ.................. Restriction of left thyroid artery with

    intraluminal device, percutaneous approach.

    03VV4DZ.................. Restriction of left thyroid artery with

    intraluminal device, percutaneous endoscopic

    approach.

    ------------------------------------------------------------------------

    Cases reporting any of the ICD-10-PCS procedures codes listed in the table above that are assigned to MS-DRGs 020, 021, and 022 under MDC 1 require a principal diagnosis of hemorrhage. Cases reporting any of the ICD-10-PCS procedure codes listed in the table above that are assigned to MS-DRGs 023 and 024 require the insertion of a major implant or an acute complex central nervous system (CNS) principal diagnosis. Cases reporting any of the ICD-10-PCS procedure codes listed in the table above that are assigned to MS-DRGs 025, 026, and 027 do not have a principal diagnosis of hemorrhage, an acute complex CNS principal diagnosis, or a major device implant.

    The requestor expressed concerns about the appropriateness of the MS-DRG assignment for the endovascular embolization or occlusion of head and neck procedures. The requestor stated that past data demonstrated that the cost of cases involving endovascular coils exceeds the average cost of all cases within each of the MS-DRGs to which these procedures are assigned. The requestor pointed out that these procedures were formerly captured by the following ICD-9-CM codes that were assigned to MS-DRGs 020 through 027:

    39.72 (Endovascular (total) embolization or occlusion of head and neck vessels);

    39.75 (Endovascular embolization or occlusion of vessel(s) of head or neck using bare coils); and

    39.76 (Endovascular embolization or occlusion of vessel(s) of head or neck using bioactive coils).

    The commenter also expressed concern about the appropriateness of the current ICD-10 MS-DRG assignment of the following ICD-9-CM codes that describe other endovascular procedures of head and neck that were previously assigned to MS-DRGs 023 through 027 in the ICD-9-CM MS-DRGs Version 32. The commenter stated that these procedures are more clinically complex than other procedures assigned to these MS-DRGs.

    00.62 (Percutaneous angioplasty of intracranial vessels(s));

    39.74 (Endovascular removal of obstruction from head and neck vessel(s)); and

    39.79 (Other endovascular procedures on other vessels).

    As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24972 through 24976), we examined claims data from the December 2015 update of the FY 2015 MedPAR file for the endovascular embolization or occlusion of the head and neck procedures or other endovascular procedures reported under ICD-9-CM procedure codes 00.62, 39.72, 39.74, 39.75, 39.76, and 39.79 in MS-DRGs 020 through 027. The table below shows our findings.

    Endovascular Embolization or Occlusion of the Head and Neck Procedures and Other Endovascular Procedures

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 020--All cases........................................... 1,213 16.44 $70,716

    MS-DRG 020--Cases with procedure code 00.62, 39.72, 39.74, 895 16.15 72,357

    39.75, 39.76, or 39.79.........................................

    MS-DRG 021--All cases........................................... 350 13.74 53,289

    MS-DRG 021--Cases with procedure code 00.62, 39.72, 39.74, 272 13.21 53,478

    39.75, 39.76, or 39.79.........................................

    MS-DRG 022--All cases........................................... 84 7.83 33,598

    MS-DRG 022--Cases with procedure code 00.62, 39.72, 39.74, 63 7.27 33,606

    39.75, 39.76, or 39.79.........................................

    MS-DRG 023--All cases........................................... 6,360 10.63 38,204

    MS-DRG 023--Cases with procedure code 00.62, 39.72, 39.74, 2,183 8.57 38,935

    39.75, 39.76, or 39.79.........................................

    MS-DRG 024--All cases........................................... 2,376 5.52 28,270

    MS-DRG 024--Cases with procedure code 00.62, 39.72, 39.74, 1,402 5.46 28,543

    39.75, 39.76, or 39.79.........................................

    MS-DRG 025--All cases........................................... 17,756 9.19 29,657

    MS-DRG 025--Cases with procedure code 00.62, 39.72, 39.74, 671 9.20 47,579

    39.75, 39.76 or 39.79..........................................

    MS-DRG 026--All cases........................................... 7,630 5.80 21,441

    MS-DRG 026--Cases with procedure code 00.62, 39.72, 39.74, 825 3.11 27,429

    39.75, 39.76, or 39.79.........................................

    MS-DRG 027--All cases........................................... 9,628 2.99 17,158

    MS-DRG 027--Cases with procedure code 00.62, 39.72, 39.74, 1,847 1.62 22,845

    39.75, 39.76 or 39.79..........................................

    ----------------------------------------------------------------------------------------------------------------

    As can be seen from the table, most of the cases of endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures reported with procedure codes 00.62, 39.72, 39.74, 39.75, 39.76, and 39.79 occur in MS-DRGs 023, 024, and 027. There were 2,183 of these procedure cases reported in MS-DRG 023 with an average length of stay of 8.57 days and average costs of $38,935, compared to an average length of stay of 10.63 days and average costs of $38, 204 for all 6,360 cases reported in MS-DRG 023. There were 1,402 of these cases reported in MS-DRG 024 with an average length of stay of 5.46 days and average costs of $28,543, compared to an average length of stay of 5.52 days and average costs of $28,270 for all 2,376 cases reported in MS-DRG 024. There were 1,847 of these cases reported in MS-DRG 027 with an average length of stay of 1.62 days and average costs of $22,845, compared to an average length of stay of 2.99 days and average costs of $17,158 for all

    Page 56794

    9,628 cases reported in MS-DRG 027. The average costs for endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRGs 023 and 024 are not significantly different from the average costs for all cases reported in MS-DRGs 023 and 024. The average costs for endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 027 are higher ($22,845) than the average costs of all cases reported in MS-DRG 027 ($17,158). However, average costs are not significantly different for the endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 020 ($72,357) compared to the average costs for all cases ($70,716) reported in MS-DRG 020; for the endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 021 ($53,478) compared to the average costs for all cases ($53,289) reported in MS-DRG 021; and for the endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 022 ($33,606) compared to the average costs for all cases ($33,598) reported in MS-DRG 022.

    Average costs were higher for the 671 endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 025 ($47,579) compared to the average costs for all 17,756 cases ($29,657) reported in MS-DRG 025. The average costs also were higher for the 825 endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRG 26 ($27,429) compared to the average costs for all 7,630 cases ($21,441) reported in MS-DRG 26. Given that average costs are similar for most endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases reported in MS-DRGs 020, 021, 022, 023, 024, 025, 026, and 027, we stated in the proposed rule that we did not believe that all endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures should be reassigned from these eight MS-DRGs.

    We also examined the average costs for each specific ICD-9-CM code compared to the average costs of all cases within each of the eight MS-

    DRGs. The following table shows our findings.

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 020--All cases........................................... 1,213 16.44 $70,716

    MS-DRG 020--Cases with code 00.62............................... 11 16.09 95,422

    MS-DRG 020--Cases with code 39.72............................... 422 16.31 74,951

    MS-DRG 020--Cases with code 39.74............................... 9 16.78 71,478

    MS-DRG 020--Cases with code 39.75............................... 424 15.79 69,081

    MS-DRG 020--Cases with code 39.76............................... 39 18.26 71,630

    MS-DRG 020--Cases with code 39.79............................... 25 16.64 73,043

    MS-DRG 021--All cases........................................... 350 13.74 53,289

    MS-DRG 021--Cases with code 00.62............................... 1 11.00 75,492

    MS-DRG 021--Cases with code 39.72............................... 130 13.12 54,715

    MS-DRG 021--Cases with code 39.74............................... 1 11.00 75,492

    MS-DRG 021--Cases with code 39.75............................... 133 13.46 52,819

    MS-DRG 021--Cases with code 39.76............................... 7 10.57 48,749

    MS-DRG 021--Cases with code 39.79............................... 3 12.00 40,458

    MS-DRG 022--All cases........................................... 84 7.83 33,598

    MS-DRG 022--Cases with code 00.62............................... 0 0 0

    MS-DRG 022--Cases with code 39.72............................... 40 6.43 32,598

    MS-DRG 022--Cases with code 39.74............................... 0 0 0

    MS-DRG 022--Cases with code 39.75............................... 21 8.81 32,690

    MS-DRG 022--Cases with code 39.76............................... 3 10.00 62,417

    MS-DRG 022--Cases with code 39.79............................... 0 0 0

    MS-DRG 023--All cases........................................... 6,360 10.63 38,204

    MS-DRG 023--Cases with code 00.62............................... 67 9.30 43,741

    MS-DRG 023--Cases with code 39.72............................... 56 11.14 52,589

    MS-DRG 023--Cases with code 39.74............................... 2,016 8.30 38,047

    MS-DRG 023--Cases with code 39.75............................... 20 12.65 53,837

    MS-DRG 023--Cases with code 39.76............................... 3 23.00 84,947

    MS-DRG 023--Cases with code 39.79............................... 71 13.08 50,720

    MS-DRG 024--All cases........................................... 2,376 5.52 28,270

    MS-DRG 024--Cases with code 00.62............................... 76 6.74 32,415

    MS-DRG 024--Cases with code 39.72............................... 31 6.35 29,977

    MS-DRG 024--Cases with code 39.74............................... 1,284 5.35 28,268

    MS-DRG 024--Cases with code 39.75............................... 8 6.50 50,333

    MS-DRG 024--Cases with code 39.76............................... 2 1.50 19,567

    MS-DRG 024--Cases with code 39.79............................... 27 6.74 28,019

    MS-DRG 025--All cases........................................... 17,756 9.19 29,657

    MS-DRG 025--Cases with code 00.62............................... 17 5.88 29,036

    MS-DRG 025--Cases with code 39.72............................... 380 9.46 51,082

    MS-DRG 025--Cases with code 39.74............................... 55 9.87 45,895

    MS-DRG 025--Cases with code 39.75............................... 139 8.94 52,188

    MS-DRG 025--Cases with code 39.76............................... 25 5.84 38,654

    MS-DRG 025--Cases with code 39.79............................... 82 11.04 39,839

    MS-DRG 026--All cases........................................... 7,630 5.80 21,441

    MS-DRG 026--Cases with code 00.62............................... 31 3.48 25,611

    MS-DRG 026--Cases with code 39.72............................... 481 3.00 27,180

    MS-DRG 026--Cases with code 39.74............................... 16 4.69 27,519

    Page 56795

    MS-DRG 026--Cases with code 39.75............................... 253 2.77 26,863

    MS-DRG 026--Cases with code 39.76............................... 31 3.32 27,891

    MS-DRG 026--Cases with code 39.79............................... 45 5.42 37,410

    MS-DRG 027--All cases........................................... 9,628 2.99 17,158

    MS-DRG 027--Cases with code 00.62............................... 61 2.23 21,337

    MS-DRG 027--Cases with code 39.72............................... 1,159 1.58 22,893

    MS-DRG 027--Cases with code 39.74............................... 13 1.62 69,081

    MS-DRG 027--Cases with code 39.75............................... 580 1.63 23,296

    MS-DRG 027--Cases with code 39.76............................... 61 1.74 27,403

    MS-DRG 027--Cases with code 39.79............................... 30 1.53 17,740

    ----------------------------------------------------------------------------------------------------------------

    As can be seen from the table above, there were a large number of cases reporting procedure code 39.74 in MS-DRGs 023 and 024. There were 2,016 cases that reported procedure code 39.74 in MS-DRG 023 compared to 6,360 total cases reported in the MS-DRG. The cases that reported procedure code 39.74 in MS-DRG 023 had an average length of stay of 8.30 days and average costs of $38,047, compared to an average length of stay of 10.63 days and average costs of $38,204 for all cases reported in MS-DRG 023. There were 1,284 cases that reported procedure code 39.74 in MS-DRG 024 compared to 2,376 total cases reported in MS-

    DRG 024. The cases that reported procedure code 39.74 in MS-DRG 024 had an average length of stay of 5.35 days and average costs of $28,268, compared to an average length of stay of 5.52 days and average costs of $28,270 for all cases reported in MS-DRG 024. The average length of stay and average costs for cases that reported procedure code 39.74 are very similar to the average length of stay and average costs for all cases reported in MS-DRGs 023 and 024. The only other group of endovascular embolization or occlusion of the head and neck procedures and other endovascular procedures cases that exceeded 1,000 in number was reported in MS-DRG 027. There were 1,159 cases that reported procedure code 39.72 in MS-DRG 027, compared to 9,628 total cases reported in MS-DRG 027. The cases that reported procedure code 39.72 in MS-DRG 027 had an average length of stay of 1.58 days and average costs of $22,893, compared to an average length of stay of 2.99 days and average costs of $17,158 for all cases reported in MS-DRG 027. In other words, the cases that reported procedure code 39.72 in MS-DRG 027 had a shorter average length of stay and average costs that were $5,735 higher than the average costs for all cases reported in MS-DRG 027. The cases that reported procedure code 39.72 in MS-DRG 020 had a shorter average length of stay and average costs that were $4,235 higher than the average costs for all cases reported in MS-DRG 020. However, the average costs for the cases that reported procedure code 39.72 in MS-

    DRGs 021, 022, and 024 were close to the average costs for all cases reported in the three MS-DRGs ($54,715 compared to $53,289 in MS-DRG 021; $32,598 compared to $33,598 in MS-DRG 022; and $29,997 compared to $28,270 in MS-DRG 024).

    Our clinical advisors reviewed this issue and advised us that the endovascular embolization or occlusion of head and neck procedures and other endovascular procedures currently are appropriately assigned to MS-DRGs 020 through 027. They did not support reassigning these procedures from MS-DRGs 020 through 027 to another MS-DRG or creating a new MS-DRG for these procedures. Our clinical advisors stated that these procedures are all clinically similar to other procedures in these MS-DRGs. In addition, they stated that the surgical techniques are all designed to correct the same clinical problem and advised us against reassigning the procedures from MS-DRGs 020 through 027.

    Based on the findings from our data analyses and the recommendations from our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule, we did not propose to reassign the cited endovascular embolization or occlusion of head and neck procedures and other endovascular procedures from MS-DRGs 020 through 027 to another MS-DRG or to create a new MS-DRG for these procedures for FY 2017. We invited public comments on our proposal to maintain the current MS-DRG assignments of these procedures in MS-DRGs 020 through 027.

    Comment: Commenters supported the proposal to maintain the current MS-DRG assignments of endovascular embolization or occlusion of head and neck procedures and other endovascular procedures in MS-DRGs 020 through 027. The commenters did not support reassigning these procedures from MS-DRGs 020 through 027 to another MS-DRG or creating a new MS-DRG for these procedures. The commenters stated that the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided. One commenter believed that the cost data and clinical profile of endovascular embolization procedures support MS-DRG refinements. This commenter requested that CMS reexamine the issue when ICD-10 claims data become available.

    Response: We appreciate the commenters' support. We will review this and other related MS-DRG assignments once ICD-10 claims data become available.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG assignments for endovascular embolization or occlusion of head and neck procedures and other endovascular procedures in MS-DRGs 020 through 027.

  213. Mechanical Complication Codes

    We received a request to reassign the following four ICD-10-CM diagnosis codes from MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) under MS-DRGs 919, 920, and 921 (Complications of Treatment with MCC, with CC, and without CC/MCC, respectively) to MDC 1 (Diseases and Disorders of the Nervous System) under MS-DRGs 091, 092, and 093 (Other Disorders of the Nervous System with MCC, with CC, and without CC/MCC, respectively):

    T85.610A (Breakdown (mechanical) of epidural and subdural infusion catheter, initial encounter);

    T85.620A (Displacement of epidural and subdural infusion catheter, initial encounter);

    T85.630A (Leakage of epidural and subdural infusion catheter, initial encounter); and

    T85.690A (Other mechanical complication of epidural and subdural infusion catheter, initial encounter).

    Page 56796

    The requestor stated that these ICD-10-CM diagnosis code titles clearly describe mechanical complications of nervous system devices, implants, or grafts and are unquestionably nervous system codes. Therefore, the requestor recommended that these diagnosis codes be reassigned to MDC 1 under MS-DRGs 091, 092, and 093.

    As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24976), we examined ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A that are currently assigned to MDC 21 under MS-

    DRGs 919, 920, and 921. We noted that the predecessor ICD-9-CM diagnosis code for these four ICD-10-CM diagnosis codes was diagnosis code 996.59 (Mechanical complication due to other implant and internal device, not elsewhere classified), which also was assigned to MDC 21 under MS-DRGs 919, 920, and 921. ICD-9-CM diagnosis code 996.59 did not describe the location of the device. However, ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A provide additional detail that describes the location of the mechanical complication as being within the nervous system.

    Based on the results of our examination, we agreed with the requestor that ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A describe conditions occurring within the nervous system. Within the ICD-9-CM MS-DRGs, codes describing nervous system disorders were assigned to MDC 1. The prior ICD-9-CM codes for mechanical complications did not indicate the type of complication and therefore could not be assigned to a specific MDC. Therefore, the nonspecific complication codes were assigned to MDC 21. These new ICD-10-CM diagnosis codes describe concepts not previously captured by the ICD-9-

    CM codes and capture nervous system conditions. Therefore, ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A should be reassigned from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093. Our clinical advisors reviewed this issue and also agree that the four ICD-10-CM diagnosis codes describe conditions occurring within the nervous system and therefore should be reassigned from MDC 21 to MDC 1. Based on the results of our analysis and the recommendations of our clinical advisors, in the FY 2017 IPPS/

    LTCH PPS proposed rule, we proposed to reassign ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A from MDC 21 under MS-

    DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093.

    We invited public comments on our proposal.

    Comment: Commenters supported the proposal to reassign ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093.

    One commenter who supported the proposal suggested that the proposed MS-DRG assignment for 18 additional diagnosis codes describing similar conditions affecting the nervous system is inaccurate, both clinically and in terms of MS-DRG grouping principles. Specifically, the commenter requested that the 18 ICD-10-CN diagnosis codes in the following table be reassigned from MDC 21 under DRGs 919, 920 and 921, as currently proposed, to MDC 1 under MS-DRGs 091, 092, and 093.

    ICD-10-CM Diagnosis Codes Recommended by Commenter for Reassignment From

    MDC 21 to MDC 1

    ------------------------------------------------------------------------

    -------------------------------------------------------------------------

    T85.615A (Breakdown (mechanical) of other nervous system device, implant

    or graft, initial encounter).

    T85.625A (Displacement of other nervous system device, implant or graft,

    initial encounter).

    T85.635A (Leakage of other nervous system device, implant or graft,

    initial encounter).

    T85.695A (Other mechanical complication of other nervous system device,

    implant or graft, initial encounter).

    T85.730A (Infection and inflammatory reaction due to ventricular

    intracranial (communicating) shunt, initial encounter).

    T85.731A (Infection and inflammatory reaction due to implanted

    electronic neurostimulator of brain, electrode (lead), initial

    encounter).

    T85.732A (Infection and inflammatory reaction due to implanted

    electronic neurostimulator of peripheral nerve, electrode (lead),

    initial encounter).

    T85.733A (Infection and inflammatory reaction due to implanted

    electronic neurostimulator of spinal cord, electrode (lead), initial

    encounter).

    T85.734A (Infection and inflammatory reaction due to implanted

    electronic neurostimulator, generator, initial encounter).

    T85.735A (Infection and inflammatory reaction due to cranial or spinal

    infusion catheter, initial encounter).

    T85.738A (Infection and inflammatory reaction due to other nervous

    system device, implant or graft, initial encounter).

    T85.810A (Embolism due to nervous system prosthetic devices, implants

    and grafts, initial encounter).

    T85.820A (Fibrosis due to nervous system prosthetic devices, implants

    and grafts, initial encounter).

    T85.830A (Hemorrhage due to nervous system prosthetic devices, implants

    and grafts, initial encounter).

    T85.840A (Pain due to nervous system prosthetic devices, implants and

    grafts, initial encounter).

    T85.850A (Stenosis due to nervous system prosthetic devices, implants

    and grafts, initial encounter).

    T85.860A (Thrombosis due to nervous system prosthetic devices, implants

    and grafts, initial encounter).

    T85.890A (Other specified complication of nervous system prosthetic

    devices, implants and grafts, initial encounter).

    ------------------------------------------------------------------------

    Response: We appreciate the commenters' support of our proposal. We also appreciate the commenter's recommendation to reassign the additional 18 ICD-10-CM diagnosis codes describing procedures performed on the nervous system from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS DRGs 091, 092, and 093. Our clinical advisors agree that these 18 diagnosis codes also should be reassigned from MDC 21 under MS-DRGs 919, 920 and 921 to MDC1 under MS-DRGs 091, 092 and 093.

    After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-CM diagnosis codes T85.610A, T85.620A, T85.630A, and T85.690A from MDC 21 under MS-DRGs 919, 920, and 921 to MDC 1 under MS-DRGs 091, 092, and 093. The official code titles for these four codes were revised after publication of the proposed rule. Effective October 1, 2016, the revised code titles are as follows (and are reflected in Table 6E associated with this final rule, which is available via the Internet on the CMS Web site):

    T85.610A (Breakdown (mechanical) of cranial or spinal infusion catheter, initial encounter);

    T85.620A (Displacement of cranial or spinal infusion catheter, initial encounter);

    T85.630A (Leakage of cranial or spinal infusion catheter, initial encounter); and

    T85.690A (Other mechanical complication of cranial or spinal infusion catheter, initial encounter).

    Page 56797

    We also are reassigning the 18 ICD-10-CM diagnosis codes listed in the table above that were recommended by the commenter from MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) under MS-DRGs 919, 920, and 921 (Complications of Treatment with MCC, with CC, and without CC/MCC, respectively) to MDC 1 (Diseases and Disorders of the Nervous System) under MS-DRGs 091, 092, and 093 (Other Disorders of the Nervous System with MCC, with CC, and without CC/MCC, respectively) effective October 1, 2016. These 18 codes also are reflected in Table 6E associated with this final rule, which is available via the Internet on the CMS Web site.

    4. MDC 4 (Diseases and Disorders of the Ear, Nose, Mouth and Throat)

  214. Reassignment of Diagnosis Code R22.2 (Localized Swelling, Mass and Lump, Trunk)

    We received a request to reassign ICD-10-CM diagnosis code R22.2 (Localized swelling, mass and lump, trunk) from MDC 4 (Diseases and Disorders of the Respiratory System) to MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast). The requestor stated that this code is used to capture a buttock mass. The requestor pointed out that the ICD-10-CM index for localized swelling and localized mass directs the coder to diagnosis code R22.2 for both the chest and the trunk as sites.

    We reviewed this issue and note that diagnosis code R22.2 is included in a category of ICD-10-CM codes describing symptoms and signs involving the skin and subcutaneous tissue (categories R20 through R23). Diagnosis code R22.2 is clearly designated within the ICD-10 coding system as a code that describes a condition of the skin and subcutaneous tissue. Therefore, we agree with the requester that ICD-

    10-CM diagnosis code R22.2 should be reassigned from MDC 4 to MDC 9. One of the predecessor ICD-9-CM codes for ICD-10-CM diagnosis code R22.2 was diagnosis code 782.2 (Localized superficial swelling, mass, or lump), which is assigned to MS-DRG 606 and 607 (Minor Skin Disorders with and without MCC, respectively). Our clinical advisors reviewed this issue and agree that ICD-10-CM diagnosis code R22.2 captures a skin diagnosis. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24976), for FY 2017, we proposed to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, respectively).

    We invited public comments on our proposal to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607.

    Comment: Commenters supported the proposal to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-CM diagnosis code R22.2 from MDC 4 to MDC 9 under MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, respectively).

  215. Pulmonary Embolism With tPA or Other Thrombolytic Therapy

    We received a request to create a new MS-DRG or to reassign cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy was administered from MS-DRGs 175 and 176 (Pulmonary Embolism with and without MCC, respectively) to a higher paying MS-DRG. The requestor suggested that CMS review cases reporting the following ICD-9-CM diagnosis codes describing pulmonary embolism: 415.11 (Iatrogenic pulmonary embolism and infarction), 415.12 (Septic pulmonary embolism), 415.13 (Saddle embolus of pulmonary artery), and 415.19 (Other pulmonary embolism and infarction), when reported in combination with ICD-9-CM procedure code 99.10 (Injection or infusion of thrombolytic agent), to identify that thrombolytic therapy was administered.

    The comparable ICD-10-CM diagnosis code translations for the ICD-9-

    CM pulmonary embolism diagnosis codes to which the requestor cited consist of the following:

    ------------------------------------------------------------------------

    ICD-10-CM diagnosis code Description

    ------------------------------------------------------------------------

    I26.01................... Septic pulmonary embolism with acute cor

    pulmonale.

    I26.02................... Saddle embolus of pulmonary artery with acute

    cor pulmonale.

    I26.09................... Other pulmonary embolism with acute cor

    pulmonale.

    I26.90................... Septic pulmonary embolism without acute cor

    pulmonale.

    I26.92................... Saddle embolus of pulmonary artery without

    acute cor pulmonale.

    I26.99................... Other pulmonary embolism without acute cor

    pulmonale.

    ------------------------------------------------------------------------

    Thrombolytic therapy is identified with the following ICD-10-PCS procedure codes:

    ------------------------------------------------------------------------

    ICD-10-PCS procedure code Description

    ------------------------------------------------------------------------

    3E03017.................. Introduction of other thrombolytic into

    peripheral vein, open approach.

    3E03317.................. Introduction of other thrombolytic into

    peripheral vein, percutaneous approach.

    3E04017.................. Introduction of other thrombolytic into

    central vein, open approach.

    3E04317.................. Introduction of other thrombolytic into

    central vein, percutaneous approach.

    3E05017.................. Introduction of other thrombolytic into

    peripheral artery, open approach.

    3E05317.................. Introduction of other thrombolytic into

    peripheral artery, percutaneous approach.

    3E06017.................. Introduction of other thrombolytic into

    central artery, open approach.

    3E06317.................. Introduction of other thrombolytic into

    central artery, percutaneous approach.

    ------------------------------------------------------------------------

    Page 56798

    A pulmonary embolism is an obstruction of pulmonary vasculature most commonly caused by a venous thrombus, and less commonly by fat or tumor tissue or air bubbles or both. Risk factors for a pulmonary embolism include prolonged immobilization from any cause, obesity, cancer, fractured hip or leg, use of certain medications such as oral contraceptives, presence of certain medical conditions such as heart failure, sickle cell anemia, or certain congenital heart defects. Common symptoms of pulmonary embolism include shortness of breath with or without chest pain, tachycardia, hemoptysis, low grade fever, pleural effusion, and depending on the etiology of the embolus, might include lower extremity pain or swelling, syncope, jugular venous distention, and finally a pulmonary embolus could be asymptomatic.

    As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24977 through 24979), we examined the claims data from the December 2015 update of the FY 2015 MedPAR file for ICD-9-CM MS-DRGs 175 and 176 for cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy (procedure code 99.10) was administered and cases of a principal diagnosis of pulmonary embolism where no tPA or other thrombolytic therapy was administered. Our findings are shown in the table below.

    Principal Diagnosis of Pulmonary Embolism With and Without tPA or Other Thrombolytic Therapy Administered

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 175--All MCC cases....................................... 19,274 5.76 $10,479

    MS-DRG 175--MCC cases with principal diagnosis of pulmonary 630 6.31 19,419

    embolism with tPA or other thrombolytic therapy administered...

    MS-DRG 175--MCC cases with principal diagnosis of pulmonary 18,529 5.74 10,181

    embolism without tPA or other thrombolytic therapy administered

    MS-DRG 176--All Without MCC cases............................... 33,565 3.81 6,645

    MS-DRG 176--Without MCC cases with principal diagnosis of 544 5.07 16,345

    pulmonary embolism with tPA or other thrombolytic therapy

    administered...................................................

    MS-DRG 176--Without MCC cases with principal diagnosis of 32,789 3.79 6,483

    pulmonary embolism without tPA or other thrombolytic therapy

    administered...................................................

    ----------------------------------------------------------------------------------------------------------------

    As shown in the table above, for MS-DRG 175, there were a total of 19,274 cases with an average length of stay of 5.76 days and average costs of $10,479. Of the 19,274 cases in MS-DRG 175, there were 630 cases that reported a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy was also reported with an average length of stay of 6.31 days and average costs of $19,419. For MS-DRG 176, there were a total of 33,565 cases with an average length of stay of 3.81 days and average costs of $6,645. Of the 33,565 cases reported in MS-DRG 176, there were 544 cases that reported a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy also was reported with an average length of stay of 5.07 days and average costs of $16,345.

    To address the request we received to create a new MS-DRG, we reviewed the data for the 1,174 total cases (630 and 544, respectively) that reported a principal diagnosis of pulmonary embolism that received tPA or other thrombolytic therapy in MS-DRGs 175 and 176. As shown in the table above, our data analysis demonstrates the average costs for these cases are higher ($19,419 compared to $10,479 for MS-DRG 175, and $16,345 compared to $6,645 for MS-DRG 176) and the length of stay is slightly longer (6.31 days compared to 5.76 days for MS-DRG 175, and 5.07 days compared to 3.81 days for MS-DRG 176) compared to all cases reported in MS-DRGs 175 and 176. Out of a total of 52,492 cases (630 + 18,529 +544 + 32,789) in MS-DRGs 175 and 176 reporting a principal diagnosis of pulmonary embolism, 1,174 (2.24 percent) of these cases also received tPA or other thrombolytic therapy. While we recognize the differences in average costs and length of stay for these cases, the volume of these cases as well as the potential creation of a new MS-DRG for this subset of patients raised some concerns with our clinical advisors. We present our clinical advisors' concerns following the additional data analysis discussions below.

    We then conducted additional data analyses to determine if reassignment of cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy was administered to a higher paying MS-DRG was supported. As displayed in the data findings in the tables below, we explored reassigning cases with a principal diagnosis of pulmonary embolism that received tPA or other thrombolytic therapy from MS-DRG 176 to the higher severity level MS-DRG 175. The data do not adequately support this reassignment, as the cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy is administered would continue to be underpaid.

    As shown in the data findings in the table below, the initial data analysis for MS-DRG 175 found the average costs for cases that reported a principal diagnosis of pulmonary embolism that received tPA or other thrombolytic therapy were $19,419, and for MS-DRG 176, the average costs for these cases were $16,345.

    Principal Diagnosis of Pulmonary Embolism With tPA or Other Thrombolytic Therapy Administered

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 175--All MCC cases....................................... 19,274 5.76 $10,479

    Page 56799

    MS-DRG 175--MCC cases with principal diagnosis of pulmonary 630 6.31 19,419

    embolism with tPA or other thrombolytic therapy administered...

    MS-DRG 176--All without MCC cases............................... 33,565 3.81 6,645

    MS-DRG 176--Without MCC cases with principal diagnosis of 544 5.07 16,345

    pulmonary embolism with tPA or other thrombolytic therapy

    administered...................................................

    ----------------------------------------------------------------------------------------------------------------

    As displayed in the table below, if we reassigned the 544 cases with a principal diagnosis of pulmonary embolism where tPA or other thrombolytic therapy is administered from the ``without MCC'' level, MS-DRG 176, to the ``with MCC'' severity level, MS-DRG 175, the average costs for all cases in MS-DRG 175 would be approximately $10,640. This figure continues to result in a difference of approximately $9,000 for the MCC cases and $6,000 for the without MCC cases when compared to findings for the average costs of these cases from the initial data analysis ($19,419-$10,640 = $8,779 and $16,345-$10,640 = $5,705, respectively). In addition, our clinical advisors had concerns about the prospect of moving the subset of 544 patients from the ``without MCC'' level to the ``with MCC'' level. We present these concerns following the additional data analysis discussion below.

    Option of Reassignment of Cases of Principal Diagnosis of Pulmonary Embolism With and Without tPA

    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 175--Cases with pulmonary embolism with MCC or tPA or 19,818 5.74 $10,640

    other thrombolytic therapy.....................................

    MS-DRG 176--Cases with pulmonary embolism without MCC........... 33,021 3.79 6,486

    ----------------------------------------------------------------------------------------------------------------

    We also reviewed claims data in considering the option of adding another severity level to the current structure of MS-DRGs 175 and 176 and assigning the cases with a principal diagnosis of pulmonary embolism that receive tPA or other thrombolytic therapy to the highest level. This option would involve modifying the current 2-way severity level split of ``with MCC'' and ``without MCC'' to a 3-way severity level split of ``with MCC or tPA, with CC, and without CC/MCC.'' Therefore, it would include proposing new MS-DRGs if the data and our clinical advisors supported creation of new MS-DRGs. However, as displayed in the data findings in the table below, the data did not support this option. In addition to similar results from the previous option's discussion regarding continued differences in average costs for these cases, the data failed to meet the criterion that there be at least a $2,000 difference between the ``with CC'' and ``without CC/

    MCC'' subgroups. Our data analysis shows the average costs in the hypothetical ``with CC'' subgroup of $6,932 and the average costs in the hypothetical ``without CC/MCC'' subgroup of $5,309. The difference only amounts to $1,623 ($6,932 minus $5,309 = $1,623).

    Principal Diagnosis of Pulmonary Embolism With and Without tPA or Other Thrombolytic Therapy

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    Optional new MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG XXX--Pulmonary embolism with MCC or tPA or other 19,819 5.74 $10,641

    thrombolytic therapy...........................................

    MS-DRG XXX--Pulmonary embolism with CC.......................... 23,929 4.04 6,932

    MS-DRG XXX--Pulmonary embolism without CC/MCC................... 9,091 3.13 5,309

    ----------------------------------------------------------------------------------------------------------------

    Lastly, we explored reassigning cases with a principal diagnosis of pulmonary embolism that receive tPA or other thrombolytic therapy to other MS-DRGs within MDC 4. However, our review did not support reassignment of these cases to any other medical MS-DRGs as these cases would not be clinically coherent with the cases assigned to those other MS-DRGs.

    In addition to the results of the various data analyses we performed for creating a new MS-DRG or for reassignment of cases of pulmonary embolism with tPA or other thrombolytic therapy to another higher paying MS-DRG, our clinical advisors also expressed a number of concerns. They pointed out that all patients with a diagnosis of pulmonary embolism are considered high risk and the small subset of patients receiving thrombolytic therapy does not necessarily warrant a separate MS-DRG or reassignment at this time. Our clinical advisors noted that it is unclear if: (1) The higher costs associated with receiving tPA or other thrombolytic therapy are due to a different subset of patients or complications; (2) if those patients treated with tPA or other thrombolytic therapy for pulmonary embolism are indeed sicker patients; (3) if the cost of tPA or other thrombolytic therapy for patients with pulmonary embolism is the reason for the higher costs seen with these cases; or (4) if the increased average costs for cases of pulmonary embolism with tPA or other thrombolytic therapy is a combination of numbers (1) through (3). They recommended maintaining the current structure of MS-DRGs 175 and 176.

    As a result of the data analysis and the concerns expressed by our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24977 through 24979), we did not propose to create a new MS-DRG or to reassign cases with a principal diagnosis of pulmonary embolism with tPA or other

    Page 56800

    thrombolytic therapy for FY 2017. We invited public comment on our proposal.

    Comment: Commenters supported the proposal to not create a new MS-

    DRG or to reassign cases with a principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy. The commenters stated that the proposal was reasonable, given the data, the ICD-10-CM/PCS codes, and information provided.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to not create a new MS-DRG or to reassign cases with a principal diagnosis of pulmonary embolism with tPA or other thrombolytic therapy for FY 2017. The current structure of MS-DRGs 175 and 176 (Pulmonary Embolism with and without MCC, respectively) is maintained in the ICD-10 MS-DRGs Version 34 effective October 1, 2016.

    5. MDC 5 (Diseases and Disorders of the Circulatory System)

  216. Implant of Loop Recorder

    We received a request to examine a potential ICD-9 to ICD-10 replication issue for procedures describing implantation or revision of loop recorder that were reported using ICD-9-CM procedure code 37.79 (Revision or relocation of cardiac device pocket). A loop recorder is also known as an implantable cardiac monitor. It is indicated for patients who experience episodes of unexplained syncope (fainting), heart palpitations, or patients at risk for various types of cardiac arrhythmias, such as atrial fibrillation or ventricular tachyarrhythmia. Loop recorders function by detecting and monitoring potential episodes of these kinds of conditions. The requestor acknowledged that these implantation procedures are frequently performed in the outpatient setting. However, the requestor also noted that the implantation procedures are often performed in the inpatient setting and suggested that they be recognized under the ICD-10 MS-DRGs as they had been under the ICD-9-CM based MS-DRG logic.

    The requestor stated that, under the ICD-9-CM based MS-DRGs, procedure code 37.79 was designated as an operating room (O.R.) procedure in the Definitions Manual under Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index and grouped to MS-DRGs 040, 041, and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or peripheral neurostimulator, and without CC/MCC, respectively); MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/

    MCC, respectively); MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively); and MS-

    DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively).

    Under the current Version 33 ICD-10 MS-DRGs, there are two comparable ICD-10-PCS code translations for ICD-9-CM code 37.79. They are procedure codes 0JWT0PZ (Revision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, open approach) and 0JWT3PZ (Revision of cardiac rhythm related device in trunk subcutaneous tissue and fascia, percutaneous approach), which are designated as O.R. procedures and group to the above listed MS-DRGs.

    According to the requestor, the following six ICD-10-PCS procedure codes identify the implantation or revision of a loop recorder and were not replicated appropriately because they are currently designated as nonoperating room (non-O.R.) procedures under the ICD-10 MS-DRGs. The requestor suggested that these codes be designated as O.R. procedures and assigned to the same MS-DRGs as the former ICD-9-CM procedure code 37.79:

    ------------------------------------------------------------------------

    ICD-10-PCS procedure code Description

    ------------------------------------------------------------------------

    0JH602Z.................. Insertion of monitoring device into chest

    subcutaneous tissue and fascia, open

    approach.

    0JH632Z.................. Insertion of monitoring device into chest

    subcutaneous tissue and fascia, percutaneous

    approach.

    0JH802Z.................. Insertion of monitoring device into abdomen

    subcutaneous tissue and fascia, open

    approach.

    0JH832Z.................. Insertion of monitoring device into abdomen

    subcutaneous tissue and fascia, percutaneous

    approach.

    0JWT02Z.................. Revision of monitoring device in trunk

    subcutaneous tissue and fascia, open

    approach.

    0JWT32Z.................. Revision of monitoring device in trunk

    subcutaneous tissue and fascia, percutaneous

    approach.

    ------------------------------------------------------------------------

    We examined the six ICD-10-PCS procedure codes that the commenter recommended be designated as O.R. procedures and assigned to the same MS-DRGs as ICD-9-CM procedure code 37.79. As discussed in section II.F.1.b. of the preamble of the proposed rule and this final rule, in evaluating requested MS-DRG changes, we determined if they could be replicated in the ICD-9-CM MS-DRGs so as not to affect the FY 2017 relative payment weights. If the answer was ``no,'' we examined whether the change in the ICD-10 MS-DRGs was likely to cause a significant number of patient cases to change or ``shift'' ICD-10 MS-DRGs. If relatively few patient cases would be impacted, we evaluated if it would be feasible to propose the change even though it could not be replicated by the ICD-9 MS-DRGs logic because it would not cause a material payment redistribution.

    Under our review, we recognized that the six ICD-10-PCS procedure codes are currently identified as comparable translations of ICD-9-CM procedure code 86.09 (Other incision of skin and subcutaneous tissue), which was designated as a non-O.R. procedure code under the ICD-9-CM based MS-DRGs. Therefore, changing the designation of the six ICD-10-

    PCS procedure codes from non-O.R. to O.R. for the ICD-10 MS-DRGs cannot be replicated in the ICD-9-CM based MS-DRGs. In other words, we cannot designate ICD-9-CM procedure code 86.09 as an O.R. code. However, we stated in the proposed rule that we believe that if we limit the change in designation to four of the six identified ICD-10-PCS procedure codes from non-O.R. to O.R., the change would not have any impact. We did not include the two ICD-10-PCS procedure codes that describe the insertion of a monitoring device into the abdomen in our proposal because a loop recorder is not inserted into that location and it would not be clinically appropriate.

    Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24979 through 24980), for FY 2017, we proposed to designate the following four ICD-10-PCS codes as O.R. procedures

    Page 56801

    within Appendix E of the Version 34 ICD-10 MS-DRG Definitions Manual:

    0JH602Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, open approach);

    0JH632Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, percutaneous approach);

    0JWT02Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, open approach); and

    0JWT32Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, percutaneous approach).

    We also proposed that the ICD-10 MS-DRG assignment for these four ICD-10-PCS codes replicate the ICD-9-CM based MS-DRG assignment for procedure code 37.79; that is, MS-DRGs 040, 041, 042, 260, 261, 262, 579, 580, 581, 907, 908, 909, 957, 958, and 959 as cited earlier in this section.

    We invited public comments on our proposals.

    Comment: Commenters supported the proposal to designate the four ICD-10-PCS procedure codes listed in this section that describe the insertion or revision of a monitoring device from non-O.R. to O.R. to better reflect the resources involved with these procedures. The commenters also agreed with the proposed MS-DRG assignments for these procedure codes under the ICD-10 MS-DRGs, stating that the proposal was reasonable, given the data, the ICD-10-PCS codes and information provided. One commenter specifically expressed appreciation with CMS' review of this replication issue and agreed that the codes that were proposed to be changed from non-O.R. to O.R. are accurate and that this change will result in better data on claims. This commenter also commended CMS for the proposed MS-DRG assignments under the ICD-10 MS-

    DRGs.

    Alternatively, another commenter noted that while it agreed with the proposal to change the designation of the four ICD-10-PCS procedure codes from non-O.R. to O.R. and supported the proposed MS-DRG assignments, the commenter believed that the two other ICD-10-PCS procedure codes describing insertion of a monitoring device into the abdomen subcutaneous tissue and fascia (ICD-10-PCS procedure codes 0JH802Z and 0JH832Z) also merit redesignation from non-O.R. to O.R. and assignment to the same corresponding surgical MS-DRGs in order to fully address the ICD-9 to ICD-10 replication issue. According to the commenter, the anatomical location of implants involving loop recorders does not affect the level of effort involved in performing such procedures. The commenter recommended that CMS consider ICD-9-CM procedure code 37.79 (Revision or relocation of cardiac device pocket) and its attributes versus ICD-9-CM procedure code 86.09 (Other incision of skin and subcutaneous tissue) as more appropriate for examining all the comparable ICD-10 code translations and MS-DRG assignments.

    Response: We appreciate the commenters' support of our proposals. We agree with the commenters that this modification will better address the resources involved with these procedures.

    With regard to the commenter who recommended that we include the two ICD-10-PCS codes describing insertion of a monitoring device into the abdomen subcutaneous tissue and fascia, we are not clear with respect to the commenter's statement that the anatomical location of implants involving loop recorders does not affect the level of effort involved in performing such procedures because loop recorders are not inserted in that area of the abdomen. As we noted in the FY 2017 IPPS/

    LTCH PPS proposed rule, when we were unable to fully replicate the ICD-

    9 to ICD-10 MS-DRG logic for a specific request, we sought and proposed an alternative option that would not cause MS-DRG shifts or a material payment distribution. For this particular issue, the request was to change the designation of the six ICD-10-PCS procedure codes from non-

    O.R. to O.R. and, as described above, we were not able to finalize that specific request. Rather, we finalized an alternative option, which was to change the designation for four of the six codes requested. We also point out that, currently, under the ICD-10 MS-DRGs Version 33, all six ICD-10-PCS procedure codes that were the subject of our specific proposal are designated as non-O.R. procedures affecting the MS-DRG assignment for MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively). Therefore, while we are not finalizing the proposal to change the two ICD-10-PCS procedure codes describing the insertion of a monitoring device into the abdomen (0JH802Z and 0JH832Z) from non-OR to O.R., we note that these two procedure codes will continue to be recognized as non-O.R. procedures affecting MS-DRGs 579, 580, and 581 under the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    After consideration of the public comments we received, we are finalizing our proposal to designate the following four ICD-10-PCS codes as O.R. procedures within Appendix E of the Version 34 ICD-10 MS-

    DRG Definitions Manual:

    0JH602Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, open approach);

    0JH632Z (Insertion of monitoring device into chest subcutaneous tissue and fascia, percutaneous approach);

    0JWT02Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, open approach); and

    0JWT32Z (Revision of monitoring device in trunk subcutaneous tissue and fascia, percutaneous approach).

    We also are finalizing our proposal that the ICD-10 MS-DRG assignment for the above four ICD-10-PCS procedure codes replicate the ICD-9-CM based MS-DRG assignment for procedure code 37.79; that is, MS-

    DRGs 040, 041, and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or peripheral neurostimulator, and without CC/MCC, respectively); MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively); MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively), effective October 1, 2016.

  217. Endovascular Thrombectomy of the Lower Limbs

    We received a comment stating that the logic for ICD-10 MS-DRGs Version 33 is not compatible with the ICD-9-CM MS-DRGs Version 32 for the assignment of procedures describing endovascular thrombectomy of the lower limbs. The commenter asked CMS to reconfigure the MS-DRG structure within the ICD-10 MS-DRGs for endovascular thrombectomy of the lower limbs, specifically MS-DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC, and without CC/MCC, respectively)). (We note that in the FY 2017 IPPS/LTCH PPS proposed rule, we incorrectly cited the titles for MS-DRGs 270, 271, and 272 as ``(Endovascular Thrombectomy of the Lower Limbs with MCC, with CC, and without CC/MCC, respectively)''. The commenter believed that this requested restructuring would be consistent with the MS-DRG assignments for the other procedures describing lower extremity

    Page 56802

    thrombectomy, and would accurately replicate the logic of the ICD-9-CM MS-DRGs Version 32. Under the ICD-9-CM, endovascular thrombectomy of the lower limbs is described by procedure code 39.79 (Other endovascular procedures on other vessels). The commenter stated that, with deep vein thrombosis (DVT) or any other circulatory system disorders as the principal diagnosis, cases involving procedures described by procedure code 39.79 grouped to ICD-9-CM MS-DRGs 237 and 238 (Major Cardiovascular Procedures with and without MCC, respectively). However, the commenter pointed out that, for FY 2016, ICD-9-CM MS-DRGs 237 and 238 were deleted and replaced with ICD-10 Version 33 MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively), for the higher complexity procedures, and MS-DRGs 270, 271, and 272 for the lower complexity procedures (80 FR 49389). The commenter stated that ICD-9-CM procedure code 39.79 describes the lower complexity procedures assigned to ICD-10-PCS MS-DRGs 270, 271, and 272. The commenter believed that the comparable ICD-10-PCS procedure codes also should have been assigned to MS-DRGs 270, 271, and 272.

    We agreed with the requestor that procedures describing endovascular thrombectomy of the lower limbs should be assigned to ICD-

    10 MS-DRGs 270, 271, and 272. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24980 through 24981), for implementation October 1, 2016, we proposed to restructure the ICD-10-PCS MS-DRG configuration and add the ICD-10-PCS code translations listed in the following chart (which would capture procedures describing endovascular thrombectomy of the lower limbs) to ICD-10 Version 34 MS-DRGs 270, 271, and 272.

    ICD-10-PCS Endovascular Thrombectomy Procedure Codes Proposed To Be

    Assigned to MS-DRGs 270, 271, and 272 for FY 2017

    ------------------------------------------------------------------------

    ------------------------------------------------------------------------

    03C53ZZ.................. Extirpation of matter from right axillary

    artery, percutaneous approach.

    03C63ZZ.................. Extirpation of matter from left axillary

    artery, percutaneous approach.

    03C73ZZ.................. Extirpation of matter from right brachial

    artery, percutaneous approach.

    03C83ZZ.................. Extirpation of matter from left brachial

    artery, percutaneous approach.

    03C93ZZ.................. Extirpation of matter from right ulnar

    artery, percutaneous approach.

    03CA3ZZ.................. Extirpation of matter from left ulnar artery,

    percutaneous approach.

    03CB3ZZ.................. Extirpation of matter from right radial

    artery, percutaneous approach.

    03CC3ZZ.................. Extirpation of matter from left radial

    artery, percutaneous approach.

    03CD3ZZ.................. Extirpation of matter from right hand artery,

    percutaneous approach.

    03CF3ZZ.................. Extirpation of matter from left hand artery,

    percutaneous approach.

    03CY3ZZ.................. Extirpation of matter from upper artery,

    percutaneous approach.

    04CK3ZZ.................. Extirpation of matter from right femoral

    artery, percutaneous approach.

    04CL3ZZ.................. Extirpation of matter from left femoral

    artery, percutaneous approach.

    04CM3ZZ.................. Extirpation of matter from right popliteal

    artery, percutaneous approach.

    04CN3ZZ.................. Extirpation of matter from left popliteal

    artery, percutaneous approach.

    04CP3ZZ.................. Extirpation of matter from right anterior

    tibial artery, percutaneous approach.

    04CQ3ZZ.................. Extirpation of matter from left anterior

    tibial artery, percutaneous approach.

    04CR3ZZ.................. Extirpation of matter from right posterior

    tibial artery, percutaneous approach.

    04CS3ZZ.................. Extirpation of matter from left posterior

    tibial artery, percutaneous approach.

    04CT3ZZ.................. Extirpation of matter from right peroneal

    artery, percutaneous approach.

    04CU3ZZ.................. Extirpation of matter from left peroneal

    artery, percutaneous approach.

    04CV3ZZ.................. Extirpation of matter from right foot artery,

    percutaneous approach.

    04CW3ZZ.................. Extirpation of matter from left foot artery,

    percutaneous approach.

    04CY3ZZ.................. Extirpation of matter from lower artery,

    percutaneous approach.

    05C73ZZ.................. Extirpation of matter from right axillary

    vein, percutaneous approach.

    05C83ZZ.................. Extirpation of matter from left axillary

    vein, percutaneous approach.

    05C93ZZ.................. Extirpation of matter from right brachial

    vein, percutaneous approach.

    05CA3ZZ.................. Extirpation of matter from left brachial

    vein, percutaneous approach.

    05CB3ZZ.................. Extirpation of matter from right basilic

    vein, percutaneous approach.

    05CC3ZZ.................. Extirpation of matter from left basilic vein,

    percutaneous approach.

    05CD3ZZ.................. Extirpation of matter from right cephalic

    vein, percutaneous approach.

    05CF3ZZ.................. Extirpation of matter from left cephalic

    vein, percutaneous approach.

    05CG3ZZ.................. Extirpation of matter from right hand vein,

    percutaneous approach.

    05CH3ZZ.................. Extirpation of matter from left hand vein,

    percutaneous approach.

    05CL3ZZ.................. Extirpation of matter from intracranial vein,

    percutaneous approach.

    05CM3ZZ.................. Extirpation of matter from right internal

    jugular vein, percutaneous approach.

    05CN3ZZ.................. Extirpation of matter from left internal

    jugular vein, percutaneous approach.

    05CP3ZZ.................. Extirpation of matter from right external

    jugular vein, percutaneous approach.

    05CQ3ZZ.................. Extirpation of matter from left external

    jugular vein, percutaneous approach.

    05CR3ZZ.................. Extirpation of matter from right vertebral

    vein, percutaneous approach.

    05CS3ZZ.................. Extirpation of matter from left vertebral

    vein, percutaneous approach.

    05CT3ZZ.................. Extirpation of matter from right face vein,

    percutaneous approach.

    05CV3ZZ.................. Extirpation of matter from left face vein,

    percutaneous approach.

    05CY3ZZ.................. Extirpation of matter from upper vein,

    percutaneous approach.

    06C33ZZ.................. Extirpation of matter from esophageal vein,

    percutaneous approach.

    06CM3ZZ.................. Extirpation of matter from right femoral

    vein, percutaneous approach.

    06CN3ZZ.................. Extirpation of matter from left femoral vein,

    percutaneous approach.

    06CP3ZZ.................. Extirpation of matter from right greater

    saphenous vein, percutaneous approach.

    06CQ3ZZ.................. Extirpation of matter from left greater

    saphenous vein, percutaneous approach.

    06CR3ZZ.................. Extirpation of matter from right lesser

    saphenous vein, percutaneous approach.

    06CS3ZZ.................. Extirpation of matter from left lesser

    saphenous vein, percutaneous approach.

    06CT3ZZ.................. Extirpation of matter from right foot vein,

    percutaneous approach.

    ------------------------------------------------------------------------

    Page 56803

    We invited public comments on our proposal to assign the ICD-10-PCS procedures describing the endovascular thrombectomy of the lower limbs listed in the table above to ICD-10 Version 34 MS-DRGs 270, 271, and 272 for FY 2017.

    Comment: Several commenters supported the proposal to assign the ICD-10-PCS procedures describing the endovascular thrombectomy of the lower limbs listed in the table in the proposed rule to ICD-10 Version 34 MS-DRGs 270, 271 and 272 for FY 2017. The commenters noted it is important that endovascular thrombectomy procedures be assigned to the same MS-DRGs as other procedures describing lower extremity thrombectomy. However, some commenters also noted that a subset of the codes listed in the table in the proposed rule describe non-lower limb procedures. The commenters were concerned that moving the 34 non-lower limb procedure codes displayed in the following table would not support clinical and resource use homogeneity in the MS-DRG.

    ICD-10-PCS Endovascular Thrombectomy Non-Lower Limb Procedure Codes

    Identified by Commenters

    ------------------------------------------------------------------------

    ------------------------------------------------------------------------

    03C53ZZ.................. Extirpation of matter from right axillary

    artery, percutaneous approach.

    03C63ZZ.................. Extirpation of matter from left axillary

    artery, percutaneous approach.

    03C73ZZ.................. Extirpation of matter from right brachial

    artery, percutaneous approach.

    03C83ZZ.................. Extirpation of matter from left brachial

    artery, percutaneous approach.

    03C93ZZ.................. Extirpation of matter from right ulnar

    artery, percutaneous approach.

    03CA3ZZ.................. Extirpation of matter from left ulnar artery,

    percutaneous approach.

    03CB3ZZ.................. Extirpation of matter from right radial

    artery, percutaneous approach.

    03CC3ZZ.................. Extirpation of matter from left radial

    artery, percutaneous approach.

    03CD3ZZ.................. Extirpation of matter from right hand artery,

    percutaneous approach.

    03CF3ZZ.................. Extirpation of matter from left hand artery,

    percutaneous approach.

    03CY3ZZ.................. Extirpation of matter from upper artery,

    percutaneous approach.

    04CT3ZZ.................. Extirpation of matter from right peroneal

    artery, percutaneous approach.

    04CU3ZZ.................. Extirpation of matter from left peroneal

    artery, percutaneous approach.

    05C73ZZ.................. Extirpation of matter from right axillary

    vein, percutaneous approach.

    05C83ZZ.................. Extirpation of matter from left axillary

    vein, percutaneous approach.

    05C93ZZ.................. Extirpation of matter from right brachial

    vein, percutaneous approach.

    05CA3ZZ.................. Extirpation of matter from left brachial

    vein, percutaneous approach.

    05CB3ZZ.................. Extirpation of matter from right basilic

    vein, percutaneous approach.

    05CC3ZZ.................. Extirpation of matter from left basilic vein,

    percutaneous approach.

    05CD3ZZ.................. Extirpation of matter from right cephalic

    vein, percutaneous approach.

    05CF3ZZ.................. Extirpation of matter from left cephalic

    vein, percutaneous approach.

    05CG3ZZ.................. Extirpation of matter from right hand vein,

    percutaneous approach.

    05CH3ZZ.................. Extirpation of matter from left hand vein,

    percutaneous approach.

    05CL3ZZ.................. Extirpation of matter from intracranial vein,

    percutaneous approach.

    05CM3ZZ.................. Extirpation of matter from right internal

    jugular vein, percutaneous approach.

    05CN3ZZ.................. Extirpation of matter from left internal

    jugular vein, percutaneous approach.

    05CP3ZZ.................. Extirpation of matter from right external

    jugular vein, percutaneous approach.

    05CQ3ZZ.................. Extirpation of matter from left external

    jugular vein, percutaneous approach.

    05CR3ZZ.................. Extirpation of matter from right vertebral

    vein, percutaneous approach.

    05CS3ZZ.................. Extirpation of matter from left vertebral

    vein, percutaneous approach.

    05CT3ZZ.................. Extirpation of matter from right face vein,

    percutaneous approach.

    05CV3ZZ.................. Extirpation of matter from left face vein,

    percutaneous approach.

    05CY3ZZ.................. Extirpation of matter from upper vein,

    percutaneous approach.

    06C33ZZ.................. Extirpation of matter from esophageal vein,

    percutaneous approach.

    ------------------------------------------------------------------------

    One commenter suggested adding two additional procedure codes describing thrombectomy of the lower limbs (ICD-10-PCS codes 06CV3Z (Extirpation of matter from left foot vein, percutaneous approach) and 06CY3Z (Extirpation of matter from lower vein, percutaneous approach)) to the list of procedure codes to be moved to MS-DRGs 270, 271 and 272.

    Response: We appreciate the commenters' support for the assignment of ICD-10-PCS procedure codes describing endovascular thrombectomy of the lower limbs to ICD-10 Version 34 MS-DRGs 270, 271 and 272 for FY 2017. We agree with removing the 34 codes that the commenters identified as not describing endovascular thrombectomy of the lower limbs from the list of codes that were proposed to be reassigned to MS-

    DRGs 270, 271 and 272. Our clinical advisors reviewed and also agree with removing these 34 non-lower limb procedure codes from the proposed list of codes to be reassigned to MS-DRGs 270, 271 and 272. These 34 non-lower limb procedure codes will remain assigned to MS-DRGs 252, 253, and 254 (Other vascular procedures with MCC, with CC, and without CC/MCC, respectively) for FY 2017.

    In addition, our clinical advisors agree with the commenter's recommendation to add procedure codes 06CV3Z and 06CY3Z to the list of lower limb procedure codes to be reassigned to MS-DRGs 270, 271, and 272. Therefore, we are reassigning these two procedure codes from MS-

    DRG 263 (Vein ligation and stripping) and MS-DRGs 252, 253, and 254 to MS-DRGs 270, 271, and 272 for FY 2017.

    After consideration of the public comments we received, we are finalizing our proposal with these modifications. We are finalizing the assignment of the ICD-10-PCS procedure codes describing endovascular thrombectomy of the lower limbs listed in the following table to ICD-10 Version 34 MS-DRGs 270, 271 and 272 for FY 2017 (which reflects the removal of the 34 proposed procedure codes and the addition of the 2 procedure codes discussed in our response above).

    Page 56804

    ICD-10-PCS Endovascular Thrombectomy Procedure Codes Reassigned to MS-

    DRGs 270, 271, and 272 for FY 2017

    ------------------------------------------------------------------------

    ------------------------------------------------------------------------

    04CK3ZZ.................. Extirpation of matter from right femoral

    artery, percutaneous approach.

    04CL3ZZ.................. Extirpation of matter from left femoral

    artery, percutaneous approach.

    04CM3ZZ.................. Extirpation of matter from right popliteal

    artery, percutaneous approach.

    04CN3ZZ.................. Extirpation of matter from left popliteal

    artery, percutaneous approach.

    04CP3ZZ.................. Extirpation of matter from right anterior

    tibial artery, percutaneous approach.

    04CQ3ZZ.................. Extirpation of matter from left anterior

    tibial artery, percutaneous approach.

    04CR3ZZ.................. Extirpation of matter from right posterior

    tibial artery, percutaneous approach.

    04CS3ZZ.................. Extirpation of matter from left posterior

    tibial artery, percutaneous approach.

    04CV3ZZ.................. Extirpation of matter from right foot artery,

    percutaneous approach.

    04CW3ZZ.................. Extirpation of matter from left foot artery,

    percutaneous approach.

    04CY3ZZ.................. Extirpation of matter from lower artery,

    percutaneous approach.

    06CM3ZZ.................. Extirpation of matter from right femoral

    vein, percutaneous approach.

    06CN3ZZ.................. Extirpation of matter from left femoral vein,

    percutaneous approach.

    06CP3ZZ.................. Extirpation of matter from right greater

    saphenous vein, percutaneous approach.

    06CQ3ZZ.................. Extirpation of matter from left greater

    saphenous vein, percutaneous approach.

    06CR3ZZ.................. Extirpation of matter from right lesser

    saphenous vein, percutaneous approach.

    06CS3ZZ.................. Extirpation of matter from left lesser

    saphenous vein, percutaneous approach.

    06CT3ZZ.................. Extirpation of matter from right foot vein,

    percutaneous approach.

    06CV3ZZ.................. Extirpation of matter from left foot vein,

    percutaneous approach.

    06CY3ZZ.................. Extirpation of matter from lower vein,

    percutaneous approach.

    ------------------------------------------------------------------------

  218. Pacemaker Procedures Code Combinations

    We received a request that CMS examine the list of ICD-10-PCS procedure code combinations that describe procedures involving pacemakers to determine if some procedure code combinations were excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/MCC). The requestor believed that some ICD-10-PCS procedure code combinations describing procedures involving pacemaker devices and leads are not included in the current list.

    As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981 through 24984), we reviewed the list of ICD-10-PCS procedure code combinations describing procedures involving pacemakers assigned to ICD-10 MS-DRGs 242, 243, and 244, and determined that our initial approach of using specified procedure code combinations to identify procedures involving pacemakers and leads was overly complex and may have led to inadvertent omissions of qualifying procedure code combinations. Under our initial approach, we developed a list of possible ICD-10-PCS procedure code combinations that describe procedures involving pacemaker devices and leads as well as ICD-10-PCS procedure code combinations for procedures describing the removal and replacement of pacemaker devices. We stated that we now believe that a more appropriate approach would be to compile a list of all procedure codes describing procedures involving pacemaker devices and a list of all procedure codes describing procedures involving pacemaker leads. If a procedure code from the list of procedure codes describing procedures involving pacemaker devices and a procedure code from the list of procedure codes describing procedures involving pacemaker leads are reported in combination with one another, the case would be assigned to ICD-10 MS-DRGs 242, 243, and 244. We stated that we believe that this more generic approach would capture a wider range of possible reported procedure codes describing procedures involving pacemaker devices and leads. Therefore, we proposed to modify the ICD-10 MS-DRG logic so that if one of the ICD-10-PCS procedure codes describing procedures involving pacemaker devices listed in column 1 of the table below is reported in combination with one of the ICD-10-PCS procedure codes describing procedures involving leads listed in column 3 of the table below, the case would be assigned to MS-DRGs 242, 243, and 244. We stated that we believe that this proposed simplified approach would capture all possible cases reporting procedure code combinations describing procedures involving pacemaker devices and leads to ensure that these cases would be assigned to MS-DRGs 242, 243, and 244.

    ----------------------------------------------------------------------------------------------------------------

    ICD-10-PCS procedure codes describing ICD-10-PCS procedure codes describing

    procedures involving cardiac pacemaker procedures involving cardiac pacemaker

    devices (any one code reported from this in combination with leads (any one code reported from this

    column list) (1) (2) column list) (3)

    -------------------------------------------- --------------------------------------------

    Procedure code Code description Procedure code Code description

    ----------------------------------------------------------------------------------------------------------------

    0JH604Z............... Insertion of ...................... 02H40JZ............... Insertion of

    pacemaker, single pacemaker lead

    chamber into chest into coronary

    subcutaneous vein, open

    tissue and fascia, approach.

    open approach.

    0JH605Z............... Insertion of ...................... 02H40MZ............... Insertion of

    pacemaker, single cardiac lead into

    chamber rate coronary vein,

    responsive into open approach.

    chest subcutaneous

    tissue and fascia,

    open approach.

    0JH606Z............... Insertion of ...................... 02H43JZ............... Insertion of

    pacemaker, dual pacemaker lead

    chamber into chest into coronary

    subcutaneous vein, percutaneous

    tissue and fascia, approach.

    open approach.

    Page 56805

    0JH607Z............... Insertion of ...................... 02H43MZ............... Insertion of

    cardiac cardiac lead into

    resynchronization coronary vein,

    pacemaker pulse percutaneous

    generator into approach.

    chest subcutaneous

    tissue and fascia,

    open approach.

    0JH60PZ............... Insertion of ...................... 02H44JZ............... Insertion of

    cardiac rhythm pacemaker lead

    related device into coronary

    into chest vein, percutaneous

    subcutaneous endoscopic

    tissue and fascia, approach.

    open approach.

    0JH634Z............... Insertion of ...................... 02H44MZ............... Insertion of

    pacemaker, single cardiac lead into

    chamber into chest coronary vein,

    subcutaneous percutaneous

    tissue and fascia, endoscopic

    percutaneous approach.

    approach.

    0JH635Z............... Insertion of ...................... 02H60JZ............... Insertion of

    pacemaker, single pacemaker lead

    chamber rate into right atrium,

    responsive into open approach.

    chest subcutaneous

    tissue and fascia,

    percutaneous

    approach.

    0JH636Z............... Insertion of ...................... 02H60MZ............... Insertion of

    pacemaker, dual cardiac lead into

    chamber into chest right atrium, open

    subcutaneous approach.

    tissue and fascia,

    percutaneous

    approach.

    0JH637Z............... Insertion of ...................... 02H63JZ............... Insertion of

    cardiac pacemaker lead

    resynchronization into right atrium,

    pacemaker pulse percutaneous

    generator into approach.

    chest subcutaneous

    tissue and fascia,

    percutaneous

    approach.

    0JH63PZ............... Insertion of ...................... 02H63MZ............... Insertion of

    cardiac rhythm cardiac lead into

    related device right atrium,

    into chest percutaneous

    subcutaneous approach.

    tissue and fascia,

    percutaneous

    approach.

    0JH804Z............... Insertion of ...................... 02H64JZ............... Insertion of

    pacemaker, single pacemaker lead

    chamber into into right atrium,

    abdomen percutaneous

    subcutaneous endoscopic

    tissue and fascia, approach.

    open approach.

    0JH805Z............... Insertion of ...................... 02H64MZ............... Insertion of

    pacemaker, single cardiac lead into

    chamber rate right atrium,

    responsive into percutaneous

    abdomen endoscopic

    subcutaneous approach.

    tissue and fascia,

    open approach.

    0JH806Z............... Insertion of ...................... 02H70JZ............... Insertion of

    pacemaker, dual pacemaker lead

    chamber into into left atrium,

    abdomen open approach.

    subcutaneous

    tissue and fascia,

    open approach.

    0JH807Z............... Insertion of ...................... 02H70MZ............... Insertion of

    cardiac cardiac lead into

    resynchronization left atrium, open

    pacemaker pulse approach.

    generator into

    abdomen

    subcutaneous

    tissue and fascia,

    open approach.

    0JH80PZ............... Insertion of ...................... 02H73JZ............... Insertion of

    cardiac rhythm pacemaker lead

    related device into left atrium,

    into abdomen percutaneous

    subcutaneous approach.

    tissue and fascia,

    open approach.

    0JH834Z............... Insertion of ...................... 02H73MZ............... Insertion of

    pacemaker, single cardiac lead into

    chamber into left atrium,

    abdomen percutaneous

    subcutaneous approach.

    tissue and fascia,

    percutaneous

    approach.

    0JH835Z............... Insertion of ...................... 02H74JZ............... Insertion of

    pacemaker, single pacemaker lead

    chamber rate into left atrium,

    responsive into percutaneous

    abdomen endoscopic

    subcutaneous approach.

    tissue and fascia,

    percutaneous

    approach.

    0JH836Z............... Insertion of ...................... 02H74MZ............... Insertion of

    pacemaker, dual cardiac lead into

    chamber into left atrium,

    abdomen percutaneous

    subcutaneous endoscopic

    tissue and fascia, approach.

    percutaneous

    approach.

    0JH837Z............... Insertion of ...................... 02HK0JZ............... Insertion of

    cardiac pacemaker lead

    resynchronization into right

    pacemaker pulse ventricle, open

    generator into approach.

    abdomen

    subcutaneous

    tissue and fascia,

    percutaneous

    approach.

    0JH83PZ............... Insertion of ...................... 02HK0MZ............... Insertion of

    cardiac rhythm cardiac lead into

    related device right ventricle,

    into abdomen open approach.

    subcutaneous

    tissue and fascia,

    percutaneous

    approach.

    02HK3JZ............... Insertion of

    pacemaker lead

    into right

    ventricle,

    percutaneous

    approach.

    02HK3MZ............... Insertion of

    cardiac lead into

    right ventricle,

    percutaneous

    approach.

    02HK4JZ............... Insertion of

    pacemaker lead

    into right

    ventricle,

    percutaneous

    endoscopic

    approach.

    02HK4MZ............... Insertion of

    cardiac lead into

    right ventricle,

    percutaneous

    endoscopic

    approach.

    02HL0JZ............... Insertion of

    pacemaker lead

    into left

    ventricle, open

    approach.

    02HL0MZ............... Insertion of

    cardiac lead into

    left ventricle,

    open approach.

    Page 56806

    02HL3JZ............... Insertion of

    pacemaker lead

    into left

    ventricle,

    percutaneous

    approach.

    02HL3MZ............... Insertion of

    cardiac lead into

    left ventricle,

    percutaneous

    approach.

    02HL4JZ............... Insertion of

    pacemaker lead

    into left

    ventricle,

    percutaneous

    endoscopic

    approach.

    02HL4MZ............... Insertion of

    cardiac lead into

    left ventricle,

    percutaneous

    endoscopic

    approach.

    02HN0JZ............... Insertion of

    pacemaker lead

    into pericardium,

    open approach.

    02HN0MZ............... Insertion of

    cardiac lead into

    pericardium, open

    approach.

    02HN3JZ............... Insertion of

    pacemaker lead

    into pericardium,

    percutaneous

    approach.

    02HN3MZ............... Insertion of

    cardiac lead into

    pericardium,

    percutaneous

    approach.

    02HN4JZ............... Insertion of

    pacemaker lead

    into pericardium,

    percutaneous

    endoscopic

    approach.

    02HN4MZ............... Insertion of

    cardiac lead into

    pericardium,

    percutaneous

    endoscopic

    approach.

    ----------------------------------------------------------------------------------------------------------------

    We invited public comments on our proposal to modify the MS-DRG logic for MS-DRGs 242, 243, and 244 to establish that cases reporting one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker devices and one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker leads in combination with one another would qualify the case for assignment to MS-DRGs 242, 243, and 244.

    Comment: Commenters supported the proposed updates for MS-DRGs 242, 243, and 244. The commenters stated that the proposed logic is simpler than the prior logic. One commenter stated that the proposal was logical and less complicated and appeared to be able to correctly capture procedures involving pacemaker devices. Several commenters recommended that CMS continue to monitor the impact of this change in future years to determine whether further modifications will be necessary.

    Response: We appreciate the commenters' support for our proposed updates to MS-DRGs 242, 243, and 244. We agree that this is a simpler approach to the MS-DRG GROUPER logic. We will continue to monitor this and other related MS-DRGs as we receive ICD-10 claims data.

    After consideration of the public comments we received, we are finalizing our proposal to modify the MS-DRG logic for MS-DRGs 242, 243, and 244 to establish that cases reporting one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker devices and one ICD-10-PCS code from the list of procedure codes describing procedures involving pacemaker leads in combination with one another will qualify the case for assignment to MS-DRGs 242, 243, and 244.

    We also examined our GROUPER logic for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively). Assignments of cases to these MS-DRGs also include qualifying ICD-10-

    PCS procedure code combinations describing procedures that involve the removal of pacemaker devices and the insertion of new devices. We believe that this logic may also be overly complex. Moreover, we believe that a more simplified approach would be to compile a list of all ICD-10-PCS procedure codes describing procedures involving cardiac pacemaker device insertions. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24983 through 24984), we proposed this approach for FY 2017. Under the proposed approach, if one of the procedure codes describing procedures involving pacemaker device insertions is reported, and there are no other procedure codes describing procedures involving the insertion of a pacemaker lead reported in combination with one of these procedures, the case would be assigned to MS-DRG 258 and 259. We included in the proposed rule the following listing of ICD-

    10-PCS procedure codes describing procedures involving pacemaker device insertions that would be assigned to MS-DRG 258 and 259.

    Procedure Codes Describing Procedures Involving Cardiac Pacemaker Device

    Insertions Reported Without Any Other Pacemaker Device Procedure Code

    Proposed To Be Assigned to ICD-10 MS-DRGs 258 and 259 for FY 2017

    ------------------------------------------------------------------------

    Procedure code Description

    ------------------------------------------------------------------------

    0JH604Z.................. Insertion of pacemaker, single chamber into

    chest subcutaneous tissue and fascia, open

    approach.

    0JH605Z.................. Insertion of pacemaker, single chamber rate

    responsive into chest subcutaneous tissue

    and fascia, open approach.

    0JH606Z.................. Insertion of pacemaker, dual chamber into

    chest subcutaneous tissue and fascia, open

    approach.

    0JH607Z.................. Insertion of cardiac resynchronization

    pacemaker pulse generator into chest

    subcutaneous tissue and fascia, open

    approach.

    0JH60PZ.................. Insertion of cardiac rhythm related device

    into chest subcutaneous tissue and fascia,

    open approach.

    Page 56807

    0JH634Z.................. Insertion of pacemaker, single chamber into

    chest subcutaneous tissue and fascia,

    percutaneous approach.

    0JH635Z.................. Insertion of pacemaker, single chamber rate

    responsive into chest subcutaneous tissue

    and fascia, percutaneous approach.

    0JH636Z.................. Insertion of pacemaker, dual chamber into

    chest subcutaneous tissue and fascia,

    percutaneous approach.

    0JH637Z.................. Insertion of cardiac resynchronization

    pacemaker pulse generator into chest

    subcutaneous tissue and fascia, percutaneous

    approach.

    0JH63PZ.................. Insertion of cardiac rhythm related device

    into chest subcutaneous tissue and fascia,

    percutaneous approach.

    0JH804Z.................. Insertion of pacemaker, single chamber into

    abdomen subcutaneous tissue and fascia, open

    approach.

    0JH805Z.................. Insertion of pacemaker, single chamber rate

    responsive into abdomen subcutaneous tissue

    and fascia, open approach.

    0JH806Z.................. Insertion of pacemaker, dual chamber into

    abdomen subcutaneous tissue and fascia, open

    approach.

    0JH807Z.................. Insertion of cardiac resynchronization

    pacemaker pulse generator into abdomen

    subcutaneous tissue and fascia, open

    approach.

    0JH80PZ.................. Insertion of cardiac rhythm related device

    into abdomen subcutaneous tissue and fascia,

    open approach.

    0JH834Z.................. Insertion of pacemaker, single chamber into

    abdomen subcutaneous tissue and fascia,

    percutaneous approach.

    0JH835Z.................. Insertion of pacemaker, single chamber rate

    responsive into abdomen subcutaneous tissue

    and fascia, percutaneous approach.

    0JH836Z.................. Insertion of pacemaker, dual chamber into

    abdomen subcutaneous tissue and fascia,

    percutaneous approach.

    0JH837Z.................. Insertion of cardiac resynchronization

    pacemaker pulse generator into abdomen

    subcutaneous tissue and fascia, percutaneous

    approach.

    0JH83PZ.................. Insertion of cardiac rhythm related device

    into abdomen subcutaneous tissue and fascia,

    percutaneous approach.

    ------------------------------------------------------------------------

    We invited public comments on our proposal to modify the GROUPER logic for MS-DRGs 258 and 259 to establish that a case reporting one procedure code from the proposed rule list of ICD-10-PCS procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported would be assigned to MS-DRGs 258 and 259.

    Comment: Commenters supported the proposed updates to MS-DRGs 258 and 259. The commenters stated that the proposed updates appeared to be logical and less complicated and appeared to be able to correctly capture these circumstances.

    Response: We appreciate the commenters' support for our proposed updates to MS-DRGs 258 and 259. We agree this approach is logical and less complicated.

    After consideration of the public comments we received, we are finalizing our proposal to modify the MS-DRG logic for MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively) to establish that a case reporting one ICD-10-PCS procedure code describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported is assigned to MS-DRGs 258 and 259 for FY 2017. We are finalizing the table above (which was included in the proposed rule) that lists the ICD-10-PCS procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported that are assigned to MS-DRGs 258 and 259 for FY 2017.

    We also point out that the ICD-10-PCS pacemaker codes listed in the following table are classified as non-operating room (non-O.R.) codes within the MS-DRGs. The GROUPER logic will continue to classify these codes as non-O.R. codes. However, a case reporting one of these non-

    O.R. procedure codes describing procedures involving pacemaker device insertions without any other procedure codes describing procedures involving pacemaker leads reported is assigned to MS-DRGs 258 and 259 within MDC 5 in our final policy.

    ------------------------------------------------------------------------

    ICD-10-PCS code (non-

    O.R.) Description

    ------------------------------------------------------------------------

    0JH604Z.................. Insertion of pacemaker, single chamber into

    chest subcutaneous tissue and fascia, open

    approach.

    0JH605Z.................. Insertion of pacemaker, single chamber rate

    responsive into chest subcutaneous tissue

    and fascia, open approach.

    0JH606Z.................. Insertion of pacemaker, dual chamber into

    chest subcutaneous tissue and fascia, open

    approach.

    0JH634Z.................. Insertion of pacemaker, single chamber into

    chest subcutaneous tissue and fascia,

    percutaneous approach.

    0JH635Z.................. Insertion of pacemaker, single chamber rate

    responsive into chest subcutaneous tissue

    and fascia, percutaneous approach.

    0JH636Z.................. Insertion of pacemaker, dual chamber into

    chest subcutaneous tissue and fascia,

    percutaneous approach.

    0JH637Z.................. Insertion of cardiac resynchronization

    pacemaker pulse generator into chest

    subcutaneous tissue and fascia, percutaneous

    approach.

    0JH804Z.................. Insertion of pacemaker, single chamber into

    abdomen subcutaneous tissue and fascia, open

    approach.

    0JH805Z.................. Insertion of pacemaker, single chamber rate

    responsive into abdomen subcutaneous tissue

    and fascia, open approach.

    0JH806Z.................. Insertion of pacemaker, dual chamber into

    abdomen subcutaneous tissue and fascia, open

    approach.

    0JH834Z.................. Insertion of pacemaker, single chamber into

    abdomen subcutaneous tissue and fascia,

    percutaneous approach.

    0JH835Z.................. Insertion of pacemaker, single chamber rate

    responsive into abdomen subcutaneous tissue

    and fascia, percutaneous approach.

    0JH836Z.................. Insertion of pacemaker, dual chamber into

    abdomen subcutaneous tissue and fascia,

    percutaneous approach.

    ------------------------------------------------------------------------

    Page 56808

    We also examined our GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device with MCC, with CC, and without CC/MCC, respectively). Cases assigned to MS-DRGs 260, 261, and 262 also include lists of procedure code combinations describing procedures involving the removal of pacemaker leads and the insertion of new leads, in addition to lists of single procedure codes describing procedures involving the insertion of pacemaker leads, removal of devices, and revision of devices. We stated in the proposed rule that we believe that this logic may also be overly complex. Moreover, we believe that a more simplified approach would be to provide a single list of procedure codes describing procedures involving cardiac pacemaker lead insertions and other related procedures involving device insertions that would be assigned to MS-DRGs 260, 261, and 262. If one of these procedure codes describing procedures involving the insertion of pacemaker leads is reported, and there are no other procedure codes describing procedures involving the insertion of a device reported, the case would be assigned to MS-DRGs 260, 261, and 262. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24984 through 24985), we proposed that the list of ICD-10-PCS procedure codes describing procedures involving pacemaker lead insertion, removal, or revisions and insertion of hemodynamic devices in a table included in the proposed rule (81 FR 24984 through 24985) would be assigned to MS-DRGs 260, 261, and 262. We simply proposed to use a single list of ICD-10-PCS procedure codes to determine the MS-DRG assignment.

    We invited public comments on our proposal to modify the GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices listed in the table in the proposed rule would be assigned to MS-DRGs 260, 261, and 262.

    Comment: Commenters supported the proposal to modify the GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices listed in the table in the proposed rule would be assigned to MS DRGs 260, 261, and 262. The commenters stated that the proposed updates were logical and less complicated and appeared to be able to correctly capture cardiac pacemaker revisions. However, several of the commenters supporting the proposal pointed out that there were errors in the code titles for codes included in the table labeled ``List of Procedure Codes Proposed to be Assigned to MS-DRGs 260, 261, and 262'' in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24984 through 24985). The commenters stated that the table included errors such as referring to a ``pacemaker'' lead instead of a ``cardiac'' lead in code 02H60MZ (Insertion of Cardiac Lead into Right Atrium, Open Approach) and referring to a ``cardiac'' lead instead of a ``pacemaker'' lead in code 02H63JZ (Insertion of Pacemaker Lead into Right Atrium, Percutaneous Approach). The commenters recommended that CMS correct the code titles to align with the official ICD-10-PCS code titles.

    Response: We appreciate the commenter's support for our proposal. In addition, we reviewed the list of codes in the table included in the proposed rule and agree that there were errors in some of the code titles (ICD-10-PCS codes 02H60MZ through 02HN4MZ) in that table. We have corrected these title errors and are finalizing a corrected table below.

    After consideration of the public comments we received, we are finalizing our proposal to modify the GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices listed in the corrected table below are assigned to MS DRGs 260, 261, and 262.

    List of Procedure Codes Assigned to MS-DRGs 260, 261, and 262

    ------------------------------------------------------------------------

    Procedure code Description

    ------------------------------------------------------------------------

    02H40JZ.................. Insertion of pacemaker lead into coronary

    vein, open approach.

    02H40MZ.................. Insertion of cardiac lead into coronary vein,

    open approach.

    02H43JZ.................. Insertion of pacemaker lead into coronary

    vein, percutaneous approach.

    02H43MZ.................. Insertion of cardiac lead into coronary vein,

    percutaneous approach.

    02H44JZ.................. Insertion of pacemaker lead into coronary

    vein, percutaneous endoscopic approach.

    02H44MZ.................. Insertion of cardiac lead into coronary vein,

    percutaneous endoscopic approach.

    02H60MZ.................. Insertion of Cardiac Lead into Right Atrium,

    Open Approach.

    02H63JZ.................. Insertion of Pacemaker Lead into Right

    Atrium, Percutaneous Approach.

    02H63MZ.................. Insertion of Cardiac Lead into Right Atrium,

    Percutaneous Approach.

    02H64JZ.................. Insertion of Pacemaker Lead into Right

    Atrium, Percutaneous Endoscopic Approach.

    02H64MZ.................. Insertion of Cardiac Lead into Right Atrium,

    Percutaneous Endoscopic Approach.

    02H70JZ.................. Insertion of Pacemaker Lead into Left Atrium,

    Open Approach.

    02H70MZ.................. Insertion of Cardiac Lead into Left Atrium,

    Open Approach.

    02H73JZ.................. Insertion of Pacemaker Lead into Left Atrium,

    Percutaneous Approach.

    02H73MZ.................. Insertion of Cardiac Lead into Left Atrium,

    Percutaneous Approach.

    02H74JZ.................. Insertion of Pacemaker Lead into Left Atrium,

    Percutaneous Endoscopic Approach.

    02H74MZ.................. Insertion of Cardiac Lead into Left Atrium,

    Percutaneous Endoscopic Approach.

    02HK00Z.................. Insertion of Pressure Sensor Monitoring

    Device into Right Ventricle, Open Approach.

    02HK02Z.................. Insertion of Monitoring Device into Right

    Ventricle, Open Approach.

    02HK0JZ.................. Insertion of Pacemaker Lead into Right

    Ventricle, Open Approach.

    02HK0MZ.................. Insertion of Cardiac Lead into Right

    Ventricle, Open Approach.

    02HK30Z.................. Insertion of Pressure Sensor Monitoring

    Device into Right Ventricle, Percutaneous

    Approach.

    02HK32Z.................. Insertion of Monitoring Device into Right

    Ventricle, Percutaneous Approach.

    02HK3JZ.................. Insertion of Pacemaker Lead into Right

    Ventricle, Percutaneous Approach.

    02HK3MZ.................. Insertion of Cardiac Lead into Right

    Ventricle, Percutaneous Approach.

    02HK40Z.................. Insertion of Pressure Sensor Monitoring

    Device into Right Ventricle, Percutaneous

    Endoscopic Approach.

    02HK42Z.................. Insertion of Monitoring Device into Right

    Ventricle, Percutaneous Endoscopic Approach.

    02HK4JZ.................. Insertion of Pacemaker Lead into Right

    Ventricle, Percutaneous Endoscopic Approach.

    02HK4MZ.................. Insertion of Cardiac Lead into Right

    Ventricle, Percutaneous Endoscopic Approach.

    02HL0JZ.................. Insertion of Pacemaker Lead into Left

    Ventricle, Open Approach.

    Page 56809

    02HL0MZ.................. Insertion of Cardiac Lead into Left

    Ventricle, Open Approach.

    02HL3JZ.................. Insertion of Pacemaker Lead into Left

    Ventricle, Percutaneous Approach.

    02HL3MZ.................. Insertion of Cardiac Lead into Left

    Ventricle, Percutaneous Approach.

    02HL4JZ.................. Insertion of Pacemaker Lead into Left

    Ventricle, Percutaneous Endoscopic Approach.

    02HL4MZ.................. Insertion of Cardiac Lead into Left

    Ventricle, Percutaneous Endoscopic Approach.

    02HN0JZ.................. Insertion of cardiac lead into left

    ventricle, percutaneous endoscopic approach.

    02HN0MZ.................. Insertion of pacemaker lead into pericardium,

    open approach.

    02HN3JZ.................. Insertion of cardiac lead into pericardium,

    open approach.

    02HN3MZ.................. Insertion of pacemaker lead into pericardium,

    percutaneous approach.

    02HN4JZ.................. Insertion of cardiac lead into pericardium,

    percutaneous approach.

    02HN4MZ.................. Insertion of pacemaker lead into pericardium,

    percutaneous endoscopic approach.

    02PA0MZ.................. Insertion of cardiac lead into pericardium,

    percutaneous endoscopic approach.

    02PA3MZ.................. Removal of cardiac lead from heart, open

    approach.

    02PA4MZ.................. Removal of cardiac lead from heart,

    percutaneous approach.

    02PAXMZ.................. Removal of cardiac lead from heart,

    percutaneous endoscopic approach.

    02WA0MZ.................. Revision of cardiac lead in heart, open

    approach.

    02WA3MZ.................. Revision of cardiac lead in heart,

    percutaneous approach.

    02WA4MZ.................. Revision of cardiac lead in heart,

    percutaneous endoscopic approach.

    0JH600Z.................. Insertion of hemodynamic monitoring device

    into chest subcutaneous tissue and fascia,

    open approach.

    0JH630Z.................. Insertion of hemodynamic monitoring device

    into chest subcutaneous tissue and fascia,

    percutaneous approach.

    0JH800Z.................. Insertion of hemodynamic monitoring device

    into abdomen subcutaneous tissue and fascia,

    open approach.

    0JH830Z.................. Insertion of hemodynamic monitoring device

    into abdomen subcutaneous tissue and fascia,

    percutaneous approach.

    0JPT0PZ.................. Removal of cardiac rhythm related device from

    trunk subcutaneous tissue and fascia, open

    approach.

    0JPT3PZ.................. Removal of cardiac rhythm related device from

    trunk subcutaneous tissue and fascia,

    percutaneous approach.

    0JWT0PZ.................. Revision of cardiac rhythm related device in

    trunk subcutaneous tissue and fascia, open

    approach.

    0JWT3PZ.................. Revision of cardiac rhythm related device in

    trunk subcutaneous tissue and fascia,

    percutaneous approach.

    ------------------------------------------------------------------------

  219. Transcatheter Mitral Valve Repair With Implant

    As we did for the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28008 through 28010), for FY 2017, we received a request to modify the MS-DRG assignment for transcatheter mitral valve repair with implant procedures. We refer readers to detailed discussions of the MitraClipsupreg System (hereafter referred to as MitraClipsupreg) for transcatheter mitral valve repair in previous rulemakings, including the FY 2012 IPPS/LTCH PPS proposed rule (76 FR 25822) and final rule (76 FR 51528 through 51529) and the FY 2013 IPPS/LTCH PPS proposed rule (77 FR 27902 through 27903) and final rule (77 FR 53308 through 53310), in response to requests for MS-DRG reclassification, as well as the FY 2014 IPPS/LTCH PPS proposed rule (78 FR 27547 through 27552), under the new technology add-on payment policy. In the FY 2014 IPPS/LTCH PPS final rule (78 FR 50575), the application for a new technology add-on payment for MitraClipsupreg was unable to be considered further due to lack of FDA approval by the July 1, 2013 deadline.

    In the FY 2015 IPPS/LTCH PPS final rule, we finalized our proposal to not create a new MS-DRG or to reassign cases reporting procedures involving the MitraClipsupreg to another MS-DRG (79 FR 49890 through 49892). Under a separate process, the request for a new technology add-

    on payment for the MitraClipsupreg System was approved (79 FR 49941 through 49946). As discussed in section II.I.4.e. of the preamble of the proposed rule and this final rule, we proposed to discontinue the new technology add-on payment for MitraClipsupreg for FY 2017 and are finalizing our proposal in this final rule.

    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49371), we finalized a modification to the MS-DRGs to which the procedure involving the MitraClipsupreg System was assigned. For the ICD-10 based MS-DRGs to fully replicate the ICD-9-CM based MS-DRGs, ICD-10-PCS code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach), which identifies the use of the MitraClipsupreg technology and is the ICD-10-PCS code translation for ICD-9-CM procedure code 35.97 (Percutaneous mitral valve repair with implant), was assigned to new MS-DRGs 273 and 274 (Percutaneous Intracardiac Procedures with and without MCC, respectively) and continued to be assigned to MS-DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively). According to the requestor, there are substantial clinical and resource differences between the transcatheter mitral valve repair procedure and other procedures currently grouping to MS-

    DRGs 273 and 274, which are the focus of the request.

    The requestor submitted three options for CMS to consider for FY 2017. The first option was to create a new MS-DRG for endovascular cardiac valve repair with implant; the second option was to reassign cases for the MitraClipsupreg implant from MS-DRGs 273 and 274 to MS-

    DRGs 266 and 267 (Endovascular Cardiac Valve Replacement with and without MCC, respectively); and the third option was to reassign cases involving the MitraClipsupreg system to another higher paying MS-DRG.

    As discussed in the FY 2017 IPPS/LTCH PPS proposed rule, we analyzed claims data from the December 2015 update of the FY 2015 MedPAR file on reported cases of percutaneous mitral valve repair with implant (ICD-9-CM procedure code 35.97) in MS-DRGs 273 and 274. Our findings are shown in the table below.

    Page 56810

    Percutaneous Mitral Valve Repair with Implant

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 273--All cases........................................... 6,620 8.01 $27,625

    MS-DRG 273--Cases with procedure code 35.97..................... 457 7.57 50,560

    MS-DRG 274--All cases........................................... 14,220 3.46 19,316

    MS-DRG 274--Cases with procedure code 35.97..................... 693 2.67 37,686

    ----------------------------------------------------------------------------------------------------------------

    As shown in the table, the total number of cases reported in MS-DRG 273 was 6,620 and had an average length of stay of 8.01 days and average costs of $27,625. The number of cases reporting the ICD-9-CM procedure code 35.97 in MS-DRG 273 totaled 457 and had an average length of stay of 7.57 days and average costs of $50,560. For MS-DRG 274, there were a total of 14,220 cases with an average length of stay of 3.46 days and average costs of $19,316. There were a total of 693 cases in MS-DRG 274 that reported procedure code 35.97; these cases had an average length of stay of 2.67 days and average costs of $37,686. We recognize that the cases reporting procedure code 35.97 had a shorter length of stay and higher average costs in comparison to all the cases within MS-DRGs 273 and 274.

    As stated above, the first option of the requestor was that we create a new MS-DRG for endovascular cardiac valve repair with implant procedures for all cardiac valve repairs. We reviewed the following list of ICD-10-PCS procedure codes that the requestor submitted to comprise this proposed new MS-DRG.

    ------------------------------------------------------------------------

    ICD-10-PCS code Description

    ------------------------------------------------------------------------

    02UF37Z.................. Supplement aortic valve with autologous

    tissue substitute, percutaneous approach.

    02UF38Z.................. Supplement aortic valve with zooplastic

    tissue, percutaneous approach.

    02UF3JZ.................. Supplement aortic valve with synthetic

    substitute, percutaneous approach.

    02UF3KZ.................. Supplement aortic valve with nonautologous

    tissue substitute, percutaneous approach.

    02UG37Z.................. Supplement mitral valve with autologous

    tissue substitute, percutaneous approach.

    02UG38Z.................. Supplement mitral valve with zooplastic

    tissue, percutaneous approach.

    02UG3JZ.................. Supplement mitral valve with synthetic

    substitute, percutaneous approach.

    02UG3KZ.................. Supplement mitral valve with nonautologous

    tissue substitute, percutaneous approach.

    02UH37Z.................. Supplement pulmonary valve with autologous

    tissue substitute, percutaneous approach.

    02UH38Z.................. Supplement pulmonary valve with zooplastic

    tissue, percutaneous approach.

    02UH3JZ.................. Supplement pulmonary valve with synthetic

    substitute, percutaneous approach.

    02UH3KZ.................. Supplement pulmonary valve with nonautologous

    tissue substitute, percutaneous approach.

    02UJ37Z.................. Supplement tricuspid valve with autologous

    tissue substitute, percutaneous approach.

    02UJ38Z.................. Supplement tricuspid valve with zooplastic

    tissue, percutaneous approach.

    02UJ3JZ.................. Supplement tricuspid valve with synthetic

    substitute, percutaneous approach.

    02UJ3KZ.................. Supplement tricuspid valve with nonautologous

    tissue substitute, percutaneous approach.

    ------------------------------------------------------------------------

    The above list of ICD-10-PCS procedure codes are currently assigned to MS-DRGs 216 through 221 (Cardiac Valve and Other Major Cardiovascular Procedures with and without Cardiac Catheterization with MCC, with CC, and without CC/MCC, respectively), with the exception of procedure code 02UG3JZ, which is assigned to MS-DRGs 273 and 274, as noted earlier in this section.

    All 16 of the ICD-10-PCS procedure codes submitted by the requester are comparable translations of ICD-9-CM procedure code 35.33 (Annuloplasty), which also grouped to MS-DRGs 216 through 221. However, ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) is the comparable translation for both ICD-9-CM procedure code 35.33 and ICD-9-CM procedure code 35.97 (Percutaneous mitral valve repair with implant), which group to MS-DRGs 273 and 274 as mentioned previously.

    Upon review of the 16 ICD-10-PCS procedure codes submitted for consideration by the requestor, we stated in the proposed rule that we determined that we could not propose the suggestion of a new MS-DRG because the resulting ICD-10 MS-DRG logic would not be an accurate replication of the ICD-9-CM based MS-DRG logic. Specifically, it is not possible to replicate reassigning the percutaneous annuloplasty codes from ICD-9-CM based MS-DRGs 216 through 221 to a new MS-DRG because we cannot isolate those cases from procedure code 35.33. Under ICD-9-CM, procedure code 35.33 does not differentiate the specific type of approach used to perform the procedure. This is in contrast to the 60 comparable ICD-10 code translations that do differentiate among various approaches (open, percutaneous, and percutaneous endoscopic).

    As stated previously, if the ICD-9-CM and ICD-10 versions of the MS-DRGs cease to be replications of each other, the relative payment weights (computed using the ICD-9-CM based MS-DRGs) would be inconsistent with the ICD-10 MS-DRG assignment, which may cause unintended payment redistribution. Therefore, we did not propose to create a new MS-DRG for transcatheter mitral valve repair with implant procedures for FY 2017.

    The second option in the request was to evaluate reassigning cases involving the MitraClipsupreg to MS-DRGs 266 and 267. This option is not supported for the same reasons provided in previous rulemaking regarding differences between valve replacements and valve repairs. Our clinical advisors did not believe that these procedures are clinically coherent or similar in terms of resource consumption because the MitraClipsupreg technology is utilized for a percutaneous mitral valve repair, while the other technologies assigned to MS-DRGs 266 and 267 are utilized for transcatheter/endovascular cardiac valve replacements. In addition, if cases involving the MitraClipsupreg were

    Page 56811

    reassigned to MS-DRGs 266 and 267, they would be overpaid by approximately $10,000 as shown in the table below. Our clinical advisors agreed that we should not propose to reassign endovascular cardiac valve repair procedures to the endovascular cardiac valve replacement MS-DRGs.

    Endovascular Cardiac Valve Replacement With and Without MCC

    ----------------------------------------------------------------------------------------------------------------

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 266--All cases........................................... 7,436 8.54 $59,675

    MS-DRG 267--All cases........................................... 8,480 4.45 47,013

    ----------------------------------------------------------------------------------------------------------------

    Next, for the proposed rule, we analyzed claims data from the December 2015 update of the FY 2015 MedPAR file relating to the possible reassignment of cases involving the MitraClipsupreg (identified by ICD-9-CM procedure code 35.97) to MS-DRGs 228, 229, and 230 (Other Cardiothoracic Procedures with MCC, with CC, and without CC/

    MCC, respectively). However, as shown in the findings in the table below, the claims data did not support this option under the current 3-

    way severity level split. That is, the data findings based on reassignment of MitraClipsupreg cases (ICD-9-CM procedure code 35.97) to MS-DRGs 228, 229, and 230 did not support the required criterion that there be at least a $2,000 difference between subgroups. A reassignment would not meet the requirement for the ``with CC'' and ``without CC/MCC'' subgroups ($34,461 minus $33,216 = $1,245).

    Other Cardiothoracic Procedures (with Procedure Code 35.97)

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 228--with MCC............................................ 1,966 11.53 $51,634

    MS-DRG 229--with CC............................................. 2,318 6.28 34,461

    MS-DRG 230--without CC/MCC...................................... 709 3.76 33,216

    ----------------------------------------------------------------------------------------------------------------

    We then performed additional analysis consisting of the base DRG report for MS-DRGs 228, 229 and 230. As shown in the table below, the average costs between the ``with CC'' and the ``without CC/MCC'' subgroups no longer meet the criterion that there be at least a 20-

    percent difference in average costs between subgroups. These data findings support collapsing MS-DRGs 228, 229, and 230 from a 3-way severity level split into a 2-way severity level split (with MCC and without MCC) based on 2 years (FY 2014 and FY 2015) of MedPAR data. This option would involve the deletion of an MS-DRG.

    Other Cardiothoracic Procedures

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    Average length Average length

    MS-DRG Number of of stay FY Average costs Number of of stay FY Average costs

    cases FY 2015 2015 FY 2015 cases FY 2014 2014 FY 2014

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    MS-DRG 228--with MCC.................................... 1,509 12.73 $51,960 1,486 12.75 $50,688

    MS-DRG 229--with CC..................................... 1,835 7.16 33,786 1,900 7.46 33,277

    MS-DRG 230--without CC/MCC.............................. 499 4.52 30,697 443 4.84 31,053

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    In the additional analysis, we evaluated if reassignment of cases reporting ICD-9-CM procedure code 35.97 to this proposed 2-way severity split was supported. We confirmed that the reassignment of ICD-9-CM procedure code 35.97 could be replicated under the ICD-9 MS-DRGs. We believe that deleting MS-DRG 230, revising MS-DRG 229, and reassigning cases with procedure code 35.97 from MS-DRGs 273 and 274 to this new structure would reflect these procedures more accurately in the ICD-10 MS-DRGs. Our clinical advisors agreed with a proposal to delete MS-DRG 230 and reassign cases involving percutaneous mitral valve repair with implant (MitraClipsupreg) to MS-DRG 228 and revised MS-DRG 229. We believe that this approach would maintain clinical coherence for these MS-DRGs and reflect more appropriate payment for procedures involving percutaneous mitral valve repair. The proposed revisions to the MS-

    DRGs, which include the MitraClipsupreg cases, are shown in the table below.

    Other Cardiothoracic Procedures

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    Proposed revised MS-DRGs cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 228--with MCC............................................ 1,966 11.53 $51,634

    MS-DRG 229--without MCC......................................... 3, 027 5.69 34,169

    ----------------------------------------------------------------------------------------------------------------

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24987 through 24988), for FY 2017, we proposed to collapse MS-DRGs 228, 229, and 230 from three severity levels to two severity levels by deleting MS-DRG 230 and revising MS-DRG 229. We also proposed to reassign ICD-9-CM procedure code 35.97 and the cases

    Page 56812

    reporting ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) from MS-DRGs 273 and 274 to MS-DRG 228 and proposed revised MS-DRG 229. The title of MS-DRG 229 would be modified as follows to reflect the ``without MCC'' designation. The title of proposed revised MS-DRG 229 would be ``Other Cardiothoracic Procedures without MCC''. The title for MS-DRG 228 would remain the same: MS-DRG 228 (Other Cardiothoracic Procedures with MCC). We invited public comments on our proposals.

    We also note that, as discussed earlier in this section of the proposed rule and this final rule, in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49371), ICD-10-PCS code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) was assigned to MS-

    DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively), in addition to new MS-DRGs 273 and 274, to fully replicate the ICD-9-CM based MS-DRG logic for ICD-9-CM procedure code 35.97. We stated that if our proposal in the FY 2017 proposed rule to reassign ICD-10-PCS code 02UG3JZ to MS-DRG 228 and proposed revised MS-

    DRG 229 was finalized in this FY 2017 IPPS/LTCH PPS final rule, it would eliminate the need to continue having ICD-10-PCS code 02UG3JZ and ICD-9-CM code 35.97 group to MS-DRGs 231 and 232. This is due to the fact that, currently, MS-DRGs 228, 229, and 230 are listed higher than MS-DRGs 231 through 236 in the surgical hierarchy, as shown in the ICD-

    9 and ICD-10 MS-DRGs Definitions Manual Files in Appendix D--MS-DRG Surgical Hierarchy by MDC and MS-DRG, which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. Therefore, we stated in the proposed rule that if the proposal is finalized for FY 2017, cases reporting ICD-10-PCS procedure code 02UG3JZ will group to MS-DRG 228 and revised MS-DRG 229 versus MS-DRGs 231 and 232 because of the surgical hierarchy GROUPER logic.

    As a result, in the FY 2017 IPPS/LTCH PPS proposed rule, we proposed to remove ICD-10-PCS procedure code 02UG3JZ and ICD-9-CM procedure code 35.97 from the PTCA list in MS-DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively) for FY 2017 if the proposal to reassign ICD-9-CM procedure code 35.97 and the cases reporting ICD-10-PCS procedure codes 02UG3JZ from MS-DRGs 273 and 274 to MS-DRG 228 and proposed revised MS-DRG 229 is finalized. We invited public comments on our proposals.

    Comment: A large number of commenters supported the proposal to reassign ICD-9-CM procedure code 35.97 and ICD-10-PCS procedure code 02UG3JZ, which describe a mitral valve repair procedure involving the MitraClipsupreg, from MS-DRGs 273 and 274 to MS-DRG 228 and proposed revised MS-DRG 229. Commenters stated that patient access to the procedure has been very restricted at their institutions due to the financial hardship that results from the current payment inadequacies. Several commenters noted that mitral valve interventions are an integral part of their organizations structural heart disease programs and stated that, with the expiration of the new technology add-on payment effective September 30, 2016, the insufficient payment amount and issues with patient access would only increase.

    Other commenters reported that these high-risk degenerative mitral valve patients have no alternative options, are not surgical candidates for open procedures, are generally older, more complex to treat and require greater resources by a multidisciplinary heart team; therefore, the commenters urged CMS to finalize the proposal. According to the commenters, the procedure is labor and time intensive with a higher complexity than traditional percutaneous procedures. Commenters also stated the proposed modifications to the MS-DRG structure will enable more patients to have an improved quality of life. These commenters stated that, for the patients who actually receive a mitral valve repair procedure with the MitraClipsupreg, they have witnessed improved clinical outcomes, such as improvements in their NYHA class designation and walk distances. Other commenters described how patients' families shared the impact of what it meant for their family member to have a new outlook on life after having undergone the procedure. A number of commenters also pointed out the cost savings to Medicare with the procedure, which they stated were evidenced by reduced lengths of stay and decreased heart failure readmissions.

    Conversely, a few commenters opposed the proposal to modify the structure of MS-DRGs 228, 229, and 230. These commenters recommended that the only changes made should be for replication of the ICD-9-CM MS-DRG logic. These commenters suggested that, because FY 2016 is the first year of implementation in which CMS will have ICD-10 claims data, CMS allow the data to stabilize prior to evaluating for any proposed changes. The commenters stated that replication is important because both the logic for the proposed MS-DRGs and the data source used to calculate and develop the proposed relative payment weights are based on the same ICD-9-CM MedPAR claims data.

    Response: We appreciate the commenters' support of our proposal. With regard to the commenters who opposed the proposal to modify the structure of MS-DRGs 228, 229, and 230 and recommended that the only changes made should be for replication of the ICD-9-CM MS-DRG logic as noted and illustrated in the tables above, the proposal to revise the structure of MS-DRGs 228, 229, and 230 was based on the analysis of claims data from the December 2015 update of the FY 2015 MedPAR file on reported cases of percutaneous mitral valve repair with implant (ICD-9-

    CM procedure code 35.97) in the ICD-9 based MS-DRGs 273 and 274. The ICD-9-CM data and our clinical advisors supported the reassignment of ICD-9-CM procedure code 35.97 from ICD-9-CM MS-DRGs 273 and 274 to restructured ICD-9-CM MS-DRGs 228 and 229. Therefore, the proposal for restructuring the ICD-10 MS-DRGs is in fact replicating the ICD-9-CM MS-DRG logic that was finalized.

    Consistent with how the current FY 2016 relative payment weights are based on the ICD-9-CM diagnosis and procedure codes from the FY 2014 MedPAR claims data that were grouped through the ICD-9-CM version of the FY 2016 GROUPER Version 33, the FY 2017 relative payment weights are based on the ICD-9-CM diagnosis and procedure codes from the FY 2015 MedPAR claims data that were grouped through the ICD-9-CM version of the FY 2017 GROUPER Version 34. We note that we have made the MS-DRG GROUPER and MCE ICD-9-CM Software Version 34 available to the public for use in analyzing ICD-9-CM data to create relative payment weights using ICD-9-CM data on our CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page.html?DLSort=0&DLEntries=10&DLPage=1&DLSortDir=ascending.

    After consideration of the public comments we received, we are finalizing our proposal to collapse MS-DRGs 228, 229, and 230 from three severity levels to two severity levels by

    Page 56813

    deleting MS-DRG 230 and revising MS-DRG 229. We also are finalizing our proposal to reassign ICD-9-CM procedure code 35.97 and the cases reporting ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach) from MS-DRGs 273 and 274 to MS-DRG 228 and revised MS-DRG 229. The title of revised MS-DRG 229 is finalized as follows to reflect the ``without MCC'' designation, ``Other Cardiothoracic Procedures without MCC''. The title for MS-DRG 228 is finalized as ``MS-DRG 228 (Other Cardiothoracic Procedures with MCC)''. In addition, we are finalizing our proposal to remove ICD-10-

    PCS procedure code 02UG3JZ and ICD-9-CM procedure code 35.97 from the PTCA list in MS-DRGs 231 and 232 (Coronary Bypass with PTCA with MCC and without MCC, respectively) for FY 2017. All of these finalized modifications are effective October 1, 2016.

  220. MS-DRG 245 (AICD Generator Procedures)

    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49369), we stated that we would continue to monitor MS-DRG 245 (AICD Generator Procedures) to determine if the data supported subdividing this base MS-DRG into severity levels. As displayed in the table below, the results of the FY 2015 data analysis showed there were a total of 1,464 cases, with an average length of stay of 5.5 days and average costs of $34,564 for MS-DRG 245.

    AICD Generator Procedures

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 245................................................... 1,464 5.5 $34,564

    ----------------------------------------------------------------------------------------------------------------

    We applied the five criteria established in the FY 2008 IPPS final rule (72 FR 47169), as described in section II.F.1.b. of the preamble of the proposed rule and this final rule to determine if it was appropriate to subdivide MS-DRG 245 into severity levels. The table below illustrates our findings.

    AICD Generator Procedures

    ----------------------------------------------------------------------------------------------------------------

    Number of Average

    MS-DRG by suggested severity level cases length of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 245--with MCC............................................ 449 8.37 $40,175

    MS-DRG 245--with CC............................................. 861 4.59 32,518

    MS-DRG 245--without CC/MCC...................................... 154 2.86 29,646

    ----------------------------------------------------------------------------------------------------------------

    As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24988 through 24989), based on our analysis of claims data from the December 2015 update of the FY 2015 MedPAR file, the data findings did not support creating new severity levels. The findings showed that the data do not meet the criteria for a 3-way severity level split as the criterion that there be at least a 20-percent difference in average costs between subgroups is not met for the ``with CC'' and ``without CC/MCC'' severity levels. We also looked at the prospect of a 2-way severity level split.

    AICD Generator Procedures

    ----------------------------------------------------------------------------------------------------------------

    Number of Average length

    MS-DRG by suggested severity level cases of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 245--with MCC............................................ 449 8.37 $40,175

    MS-DRG 245--without MCC......................................... 1,015 4.33 32,081

    ----------------------------------------------------------------------------------------------------------------

    The findings did show that the data are close to meeting the criteria for a 2-way severity level split of ``with MCC and without MCC.'' However, the required criterion that there must be at least 500 cases in the MCC group is not met.

    Therefore, for FY 2017, we did not propose to subdivide MS-DRG 245 into severity levels. We invited public comments on our proposal to maintain the current structure for MS-DRG 245.

    Comment: Commenters supported the proposal not to subdivide MS-DRG 245 into severity levels. One commenter agreed that volumes were not sufficient to justify a three-way split in the AICD generator procedures, but neared meeting the levels required for a two-way split (with MCC and without MCC). The commenter requested that we examine the issue for a two-way split again next year.

    Response: We appreciate the commenters' support. We agree that the criteria were not met to support the subdivision of MS-DRG 245 into severity levels for FY 2017. We will continue to monitor MS-DRG 245 claim data as we analyze issues for the FY 2018 IPPS/LTCH PPS proposed rule.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRG 245 (AICD Generator Procedures) for FY 2017.

    6. MDC 6 (Diseases and Disorders of the Digestive System): Excision of Ileum

    We received a request to analyze an MS-DRG replication issue from the ICD-9-CM based MS-DRGs to the ICD-10 based MS-DRGs for excision procedures performed on the ileum. Under ICD-9-CM, procedure code 45.62 (Other partial resection of small intestine) was assigned to MS-DRGs 329, 330 and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively). Under the current ICD-10 MS-DRGs

    Page 56814

    Version 33, ICD-10-PCS procedure code 0DBB0ZZ (Excision of ileum, open approach) is assigned to MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively). The requestor indicated that, despite the variation in terms for ``excision'' and ``resection'' between the two code sets, the surgical procedure to remove a portion of the small intestine, whether it is the ileum, duodenum, or jejunum, has not changed and should not result in different MS-DRG assignments when translated from ICD-9-CM to ICD-10.

    We agree that this is a replication error. In addition to ICD-10-

    PCS code 0DBB0ZZ, we also reviewed the MS-DRG assignments for ICD-10-

    PCS code 0DBA0ZZ (Excision of jejunum, open approach) and determined the MS-DRG assignment for this code resulted in the same replication error. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989), we proposed to reassign ICD-10-PCS codes 0DBB0ZZ and 0DBA0ZZ from MS-DRGs 347, 348, and 349 to MS-DRGs 329, 330, and 331, effective with the ICD-10 MS-DRGs Version 34 on October 1, 2016.

    We invited public comments on our proposal.

    Comment: Many commenters supported our proposal to reassign two ICD-10-PCS procedure codes that identify excision procedures performed on the ileum and jejunum. The commenters believed that the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided. One commenter recommended that CMS reassign ICD-10-PCS procedure code 0DB90ZZ (Excision of duodenum, open approach) to ICD-10 MS-DRGs 329, 330, and 331, noting that, as stated in the proposed rule, the requester indicated the surgical procedure to remove a portion of the small intestine, whether it is the ileum, duodenum, or jejunum, has not changed and should not result in different MS-DRG assignments when translated from ICD-9-CM to ICD-10.

    Response: We appreciate the commenters' support of our proposal. In response to the commenter's recommendation that we also reassign ICD-

    10-PCS procedure code 0DB90ZZ to ICD-10 MS-DRGs 329, 330, and 331, we note that, under ICD-9-CM, procedure code 45.31 (Other local excision of lesion of duodenum) is the comparable translation and was assigned to ICD-9 based MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal Procedures with MCC, with CC and without CC/MCC, respectively). We did not include ICD-10-PCS procedure code 0DB90ZZ in our proposal because, upon review, we determined that this code is currently assigned to ICD-10 MS-DRGs 326, 327, and 328 (Stomach, Esophageal and Duodenal Procedures with MCC, with CC and without CC/

    MCC, respectively), and therefore, is accurately replicating the ICD-9 based MS-DRG logic.

    After consideration of the public comments we received, we are finalizing our proposal to reassign ICD-10-PCS procedure codes 0DBB0ZZ (Excision of ileum, open approach) and 0DBA0ZZ (Excision of jejunum, open approach) from MS-DRGs 347, 348, and 349 (Anal and Stomal Procedures with MCC, with CC, and without CC/MCC, respectively) to MS-

    DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) effective with the ICD-

    10 MS-DRGs Version 34 on October 1, 2016.

    7. MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas): Bypass Procedures of the Veins

    We received a request to assign ICD-10-PCS code 06183DY (Bypass portal vein to lower vein with intraluminal device, percutaneous approach) to MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas) under MS-DRGs 405, 406, and 407 (Pancreas Liver and Shunt Procedures with MCC, with CC, and without CC/MCC, respectively). The requestor described this code as capturing a transjugular intrahepatic portosystem shunt procedure. The requestor stated that, under ICD-9-CM, when a procedure for cirrhosis of the liver was performed, the procedure was assigned to ICD-9-CM code 39.1 (Intra-abdominal venous shunt). The requestor noted that when ICD-9-CM procedure code 39.1 is reported with a principal diagnosis of cirrhosis of the liver, the procedure was assigned to MS-DRG 405, 406, or 407 in the ICD-9-CM MS-

    DRGs.

    Currently, ICD-10-PCS procedure code 06183DY is assigned to only MDC 5 (Diseases and Disorders of the Circulatory System) and MS-DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC, and without CC/MCC, respectively) under ICD-10 MS-DRGs Version 33. The requestor stated that ICD-10-PCS procedure code 06183DY should also be assigned to MDC 7 and MS-DRGs 405, 406, and 407 to be consistent with the ICD-9-CM MS-DRGs Version 32.

    We analyzed this issue and agreed that the ICD-10 MS-DRGs do not fully replicate the ICD-9-CM MS-DRGs. We agree that ICD-10-PCS procedure code 06183DY should be assigned to MDC 7 and MS-DRGs 405, 406, and 407 to replicate the ICD-9-CM MS-DRGs. Our clinical advisors reviewed this issue and also agreed that ICD-10-PCS procedure code 06183DY should be assigned to MDC 7 and MS-DRGs 405, 406, and 407. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989), we proposed to assign ICD-10-PCS procedure code 06183DY to MDC 7 and MS-

    DRGs 405, 406, and 407 for FY 2017.

    We invited public comments on our proposal.

    Comment: Commenters supported the proposal to assign ICD-10-PCS procedure code 06183DY to MDC 7 under MS-DRGs 405, 406, and 407. One commenter stated that the proposed change to MDC 7 and MS-DRGs 405, 406, and 407 is a more appropriate fit for ICD-10-PCS procedure code 06183DY.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to assign ICD-10-PCS code 06183DY (Bypass portal vein to lower vein with intraluminal device, percutaneous approach) to MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas) under MS-DRGs 405, 406, and 407 (Pancreas Liver and Shunt Procedures with MCC, with CC, and without CC/MCC, respectively).

    8. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue)

  221. Updates to MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity With and Without MCC, Respectively)

    (1) Total Ankle Replacement (TAR) Procedures

    We received a request to create a new MS-DRG for total ankle replacement (TAR) procedures, which are currently assigned to MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity with and without MCC, respectively). We previously discussed requested changes to the MS-DRG assignment for TAR procedures in the FY 2015 IPPS/LTCH PPS proposed rule (79 FR 28013 through 28015) and in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49896 through 49899). For FY 2015, we did not change the MS-DRG assignment for total ankle replacements. The requestor stated that reassigning total ankle replacement procedures from MS-DRGs 469 and 470 to a new MS-DRG would have an important benefit for the new

    Page 56815

    Medicare Comprehensive Care for Joint Replacement (CJR) model. The commenter noted that because total ankle replacement cases currently are assigned to MS-DRGs 469 and 470, they are included in the model.

    Ankle replacement procedures were captured by ICD-9-CM code 81.56 (Total ankle replacement). As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989 through 24990), we examined claims data for total ankle procedures using the December 2015 update of the FY 2015 MedPAR file. Our findings are displayed in the table below.

    Total Ankle Replacement Cases Reported in MS-DRGs 469 and 470

    ----------------------------------------------------------------------------------------------------------------

    Number of Average

    MS-DRG cases length of stay Average costs

    ----------------------------------------------------------------------------------------------------------------

    MS-DRG 469--All cases........................................... 25,729 6.92 $22,358

    MS-DRG 469--Total ankle replacement cases....................... 30 5.40 34,889

    MS-DRG 470--All cases........................................... 421,149 2.92 14,834

    MS-DRG 470--Total ankle replacement cases....................... 1,626 1.94 20,019

    ----------------------------------------------------------------------------------------------------------------

    As the total ankle replacement claims data analysis showed, these procedures represent a small fraction of the total number of cases reported in MS-DRGs 469 and 470. There were 30 total ankle replacement cases reported in MS-DRG 469 and 1,626 total ankle replacement cases in MS-DRG 470, compared to 25,729 total cases reported in MS-DRG 469 and 421,149 total cases reported in MS-DRG 470. The average length of stay for total ankle replacement cases was 5.40 days and average costs for total ankle replacement cases were $34,889 reported in MS-DRG 469, compared to average length of stay of 6.92 days and average costs of $22,358 for all cases reported in MS-DRG 469. The average length of stay for total ankle replacement cases was 1.94 days and average costs of total ankle replacement cases were $20,019 reported in MS-DRG 470, compared to an average length of stay of 2.92 days and average costs of $14,834 for all cases reported in MS-DRG 470.

    Given the low volume of cases, we stated in the proposed rule that we believe these cost data may not be a complete measure of actual differences in inpatient resource utilization for beneficiaries receiving total ankle replacements. In addition, these total ankle replacement cases may have been impacted by other factors such as complication or comorbidities. Several expensive cases could impact the average costs for a very small number of patients. The average cost of total ankle replacement cases reported in MS-DRG 469 was $12,531 higher than all cases reported in MS-DRG 469 ($34,889 compared to $22,358 for all reported cases), but there were only 30 cases compared to a total of 25,729 cases reported in MS-DRG 469. The average cost of total ankle replacement cases reported in MS-DRG 470 was $5,185 higher than all cases reported in MS-DRG 470. There were 1,626 total ankle replacement cases out of a total of 421,149 cases reported in MS-DRG 470. The average costs of the total ankle replacement cases were higher than those for all cases reported in MS-DRG 469 and 470. However, some cases have higher and some cases have lower average costs within any MS-DRG. MS-DRGs are groups of clinically similar cases that have similar overall costs. Within a group of cases, one would expect that some cases have costs that are higher than the overall average and some cases have costs that are lower than the overall average.

    The data did not support creating a new total ankle replacement MS-

    DRG for this small number of cases. Also, our clinical advisors pointed out that creating a new MS-DRG for total ankle replacements would result in combining cases reporting an MCC with an average length of stay of 5.40 days and cases not reporting an MCC with an average length of stay of 1.94 days. Our clinical advisors did not recommend the creation of a new MS-DRG for this single procedure with such a small number of cases. They also stated that patients undergoing total ankle replacement have similar clinical features compared to other patients undergoing procedures included in MS-DRGs 469 and 470. Furthermore, we believe that the volume of total ankle replacement procedures performed relative to hip and knee replacement procedures minimizes the benefit that a new MS-DRG would have on the Medicare CJR model. Our clinical advisors determined that the cases involving total ankle replacements are more appropriately assigned to MS-DRGs 469 and 470 with the two severity levels.

    Based on the findings from our data analysis and the recommendations from our clinical advisors, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24989 through 24990), we did not propose to create a new MS-DRG for total ankle replacement procedures. We proposed to maintain the current MS-DRG structure for MS-DRGs 469 and 470.

    We invited public comments on this proposal.

    Comment: Some commenters supported the proposal to maintain the current MS-DRG structure for revision of total ankle replacement procedures within MS-DRGs 469 and 470 and not create a new MS-DRG for total ankle replacements. Several of the commenters stated that the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided.

    Response: We appreciate the commenters' support for our proposal.

    Comment: Several commenters disagreed with the proposal not to create a new MS-DRG for total ankle replacement procedures and to maintain the current MS-DRG structure for MS-DRGs 469 and 470 for total ankle replacement procedures. The commenters stated that the current MS-DRG assignment for TAR procedures was inadequate to reflect the actual cost and complexity of these procedures. The commenters stated that the combined total ankle replacement cases in MS-DRGs 469 and 470 exceeds the minimum number of cases (500) in the criterion which CMS established for consideration of a distinct MS-DRG group. Therefore, the commenters believed that CMS should create a new MS-DRG for total ankle replacements.

    The commenters stated that the MS-DRG assignment was impacting Medicare beneficiary access to total ankle replacement as an alternative to an arthrodesis (fusion) of the ankle joint. The commenters further stated that there were significant dissimilarities in the inpatient hospital costs and length of stay, and different postoperative and postdischarge care and rehabilitation protocols for total ankle replacement procedures.

    Page 56816

    One commenter objected to CMS' comparison of the volume of total ankle replacement cases to total hip and knee cases within MS-DRG 469 and 470 and the statement that, within the inpatient prospective payment system framework, some cases have higher and some cases have lower average costs within any MS-DRG. The commenter stated that CMS' statements about possible explanations for the higher costs of total ankle replacement cases within MS-DRGs 469 and 470 does not change the fact that the total ankle replacement cases have higher costs than all cases within MS-DRGs 469 and 470. The commenter stated that total ankle replacement cases have a greater clinical complexity compared to other procedures within MS-DRGs 469 and 470. The commenter stated that a total ankle replacement procedure was a complicated surgery that involved the replacement of the damaged parts of the three bones that make up the ankle joint, as compared to two bones in hip and knee replacement procedures. Furthermore, as the smallest weight-bearing large joint in the body, the commenter stated that total ankle replacement demanded a complexity of implant device design, engineering, and manufacture to exacting functional specifications that is vastly different from that of total hip and total knee replacement devices. In addition, the commenter stated that the unique anatomical characteristics and function of the ankle joint requires a specialized surgical skill set, operative technique, and level of operating room resource utilization that is vastly dissimilar from that of total hip and total ankle replacement procedures.

    Another commenter stated that accurate representation of patients within each MS-DRG is an important step for fair payment and analysis. The commenter believed that reassigning fractures and ankle procedures from MS-DRGs 469 and 470 would help to accomplish that purpose. Another commenter asked that CMS reexamine the appropriate MS-DRG assignment for total ankle replacement procedures once ICD-10 claims data are available.

    Response: We disagree with the commenters' statement that the number of total ankle replacement cases in MS-DRGs 469 and 470 justifies the creation of a new MS-DRG based on the criterion of there being more than 500 cases. The criterion the commenters mentioned is part of criteria established in FY 2008 (72 FR 47169) to determine if the creation of a new CC or MCC subgroup within a base MS-DRG was warranted (which was discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24971)), but is not determinative of whether a new MS-DRG should be created.

    As stated earlier, the data showed that the average costs of total ankle replacement cases were higher than the average costs for all cases reported in MS-DRG 469 and 470. We found that the average costs of total ankle replacement procedures were higher in MS-DRG 469 ($34,889 compared to $22,358 for all cases) and in MS-DRG 470 ($20,019 compared to $14,834 for all cases). However, there were only 30 total ankle replacement cases in MS-DRG 469 out of 25,729 total cases. There were only 1,626 cases in MS-DRG 470 out of 421,149 cases.

    As we explained in the proposed rule, given the low volume of cases, we believe that these cost data may not be a complete measure of actual differences in inpatient resource utilization for beneficiaries receiving total ankle replacements. Several expensive cases could impact the average costs for a very small number of patients. MS-DRGs are groups of clinically similar cases that have similar overall costs. Within a group of cases, one would expect that some cases have costs that are higher than the overall average and some cases have costs that are lower than the overall average. While the commenters disagreed with this approach to classifying similar procedures within a set of MS-

    DRGs, our clinical advisors reviewed the procedures assigned within MS-

    DRGs 469 and 470 and determined that patients undergoing total ankle replacement have similar clinical features compared to other patients undergoing procedures included in MS-DRGs 469 and 470. The clinical differences are not great enough to justify the creation of a new MS-

    DRG. While the ankle may be the smallest weight-bearing joint in the body and the devices used may be more costly, the joint repairs of the lower extremity are clinically similar. The clinical expertise used by surgeons performing ankle procedures versus the clinical expertise required to perform other lower joint procedures does not justify creating a new MS-DRG. Our clinical advisors determined that the cases involving total ankle replacements are appropriately assigned to MS-

    DRGs 469 and 470 with the two severity levels.

    In response to the commenter's request that CMS reexamine the appropriate MS-DRG assignment for total ankle replacement procedures once ICD-10 claims data are available, we encourage requests for MS-DRG updates to be submitted by December 7 of each year via the new CMS MS-

    DRG Classification Change Requests Mailbox located at: MSDRGClassificationChange@cms.hhs.gov. Once ICD-10 claims dara are received, we will use these data to evaluate MS-DRG assignments.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG assignment for total ankle replacements in MS-DRGs 469 and 470 and not create a new MS-DRG for total ankle replacements.

    (2) Hip Replacement Procedures With Principal Diagnosis of Hip Fracture

    We received several requests to remove hip replacement procedures with a principal diagnosis of hip fracture from MS-DRGs 469 and 470 (Major Joint Replacement or Reattachment of Lower Extremity with and without MCC, respectively) and to create a new MS-DRG for assignment of these hip replacement procedures. One requestor suggested that if such a new MS-DRG could not be created, CMS consider reassigning all hip replacement procedures with a principal diagnosis of hip fracture only to MS-DRG 469, even if there were no reported MCC.

    The requestors stated that hip replacement procedures performed on patients with hip fractures involve a more fragile population of patients than the typical patient population who undergo elective hip or knee replacement and that these more fragile patient cases also are assigned to MS-DRGs 469 and 470. The requestors stated that cases of patients who have hip replacements with hip fractures may have significant comorbidities not present in patients who undergo elective hip replacements. One requestor stated that the absolute number of hospitalizations for hip fractures in the United States is currently more than 350,000 and the number is rising. The requestor stated that 90 percent of hip fractures result from a simple fall, and that hip fracture rates increase with age. According to the requestor, the 1-

    year mortality rate for patients who undergo hip replacement procedures after a hip fracture was approximately 20 percent, and the 3-year mortality rate was up to 50 percent. The requestor also stated that one out of three adults who lived independently before their hip fracture remains in a nursing home for at least a year after the hip fracture. In contrast, the requestor noted that patients under elective hip replacement procedures for arthritis have fewer comorbidities, improved health after the procedure, low rates of readmission, and less postacute needs. The requestor believed that there are

    Page 56817

    many factors that impact the outcome of hip replacements for hip fractures, including patient factors, fracture type, surgeon and hospital factors, treatment decisions, complication rates, and rehabilitation factors/access. The requestor added that, despite the commitment to standardization, the use of protocol-driven care, early surgery ( Map the new ICD-10-PCS ankle revision procedure codes to MS-DRGs 466, 467, and 468 and rename these MS-DRGs Revision of Hip, Knee or Ankle with MCC, with CC, and without CC/MCC, respectively;

    Map the new ICD-10-PCS ankle revision procedure codes to MS-DRG 469 to more appropriately recognize higher hospital procedure costs associated with revision of TAR; or

    Establish a new MS-DRG for the new ICD-10-PCS ankle revision codes and ankle joint revision cases.

    The commenter requested that CMS consider one of these three options in FY 2017 if these data were available, but if these data are not available, the commenter requested that CMS use ICD-10 claims data to revise the MS-DRG assignment for revision of total ankle replacement procedures in FY 2018.

    Another commenter also recommended that CMS review this MS-DRG assignment again once ICD-10 claims data are available.

    Response: We agree with the commenter that ICD-10-PCS claims data will provide more detail to evaluate the MS-DRG assignment for revision of total ankle replacement procedures. Once ICD-10 claims data become available, we will use these claims data to evaluate this and other MS-

    DRG updates.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the current MS-DRG assignment for revision of total ankle replacement procedures.

    (2) Combination Codes for Removal and Replacement of Knee Joints

    We received several requests asking CMS to examine whether additional combinations of procedure codes for the removal and replacements of knee joints should be added to MS-DRGs 466, 467, and 468 (Revision of Hip or Knee Replacement with MCC, with CC, and without CC/MCC, respectively). This topic was discussed in the FY 2016 IPPS/

    LTCH PPS proposed rule (80 FR 24379 through 24395) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49390 through 49406). One requestor stated that the procedure codes in the following table were not included in the code pairs that group to MS-DRGs 466, 467, and 468 in the ICD-10 MS-DRGs Version 33.

    Page 56821

    ------------------------------------------------------------------------

    ICD-10-PCS procedure code Description

    ------------------------------------------------------------------------

    0SPD08Z....................... Removal of spacer from left knee joint,

    open approach.

    0SPD38Z....................... Removal of spacer from left knee joint,

    percutaneous approach.

    0SPD48Z....................... Removal of spacer from left knee joint,

    percutaneous endoscopic approach.

    0SPC08Z....................... Removal of spacer from right knee joint,

    open approach.

    0SPC38Z....................... Removal of spacer from right knee joint,

    percutaneous approach.

    0SPC48Z....................... Removal of spacer from right knee joint,

    percutaneous approach.

    ------------------------------------------------------------------------

    Other requestors stated that the procedure codes in the following table are not included in the list of combinations that group to MS-

    DRGs 466, 467, and 468 when reported in conjunction with an ICD-10-PCS code for the removal of synthetic substitute from the joint in the ICD-

    10 MS-DRGs Version 33.

    ------------------------------------------------------------------------

    ICD-10-PCS Procedure code Description

    ------------------------------------------------------------------------

    0SRC0J9....................... Replacement of right knee joint with

    synthetic substitute, cemented, open

    approach.

    0SRC0JA....................... Replacement of right knee joint with

    synthetic substitute, uncemented, open

    approach.

    0SRC0JZ....................... Replacement of right knee joint with

    synthetic substitute, open approach.

    0SRC07Z....................... Replacement of right knee joint with

    autologous tissue substitute, open

    approach.

    0SRC0KZ....................... Replacement of right knee joint with

    nonautologous tissue substitute, open

    approach.

    ------------------------------------------------------------------------

    We agree that the joint revision cases involving the removal of a spacer and subsequent insertion of a new knee joint prosthesis should be assigned to MS-DRGs 466, 467, and 468. We examined knee joint revision combination codes that are not currently assigned to MS-DRGs 466, 467, and 468 in ICD-10 MS-DRGs Version 33 and identified 58 additional combinations that also should be included so that the same logic is used in the ICD-10 version of the MS-DRGs as is used in the ICD-9-CM version. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24993 through 24996), we proposed to add the following 58 new code combinations that capture the joint revisions to the Version 34 MS DRG structure for MS-DRGs 466, 467, and 468, effective October 1, 2016.

    ICD-10-PCS Code Pairs Proposed To Be Added to Version 34 ICD-10 MS-DRGs 466, 467, and 468: Proposed New Knee

    Revision ICD-10-PCS Combinations

    ----------------------------------------------------------------------------------------------------------------

    Code Code description Code Code description

    ----------------------------------------------------------------------------------------------------------------

    0SPC08Z.................. Removal of Spacer from and 0SRC0J9 Replacement of Right

    Right Knee Joint, Open Knee Joint with

    Approach. Synthetic Substitute,

    Cemented, Open

    Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRC0JA Replacement of Right

    Right Knee Joint, Open Knee Joint with

    Approach. Synthetic Substitute,

    Uncemented, Open

    Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRC0JZ Replacement of Right

    Right Knee Joint, Open Knee Joint with

    Approach. Synthetic Substitute,

    Open Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRT0J9 Replacement of Right

    Right Knee Joint, Open Knee Joint, Femoral

    Approach. Surface with Synthetic

    Substitute, Cemented,

    Open Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRT0JA Replacement of Right

    Right Knee Joint, Open Knee Joint, Femoral

    Approach. Surface with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRT0JZ Replacement of Right

    Right Knee Joint, Open Knee Joint, Femoral

    Approach. Surface with Synthetic

    Substitute, Open

    Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRV0J9 Replacement of Right

    Right Knee Joint, Open Knee Joint, Tibial

    Approach. Surface with Synthetic

    Substitute, Cemented,

    Open Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRV0JA Replacement of Right

    Right Knee Joint, Open Knee Joint, Tibial

    Approach. Surface with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPC08Z.................. Removal of Spacer from and 0SRV0JZ Replacement of Right

    Right Knee Joint, Open Knee Joint, Tibial

    Approach. Surface with Synthetic

    Substitute, Open

    Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRC0J9 Replacement of Right

    Right Knee Joint, Knee Joint with

    Percutaneous Approach. Synthetic Substitute,

    Cemented, Open

    Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRC0JA Replacement of Right

    Right Knee Joint, Knee Joint with

    Percutaneous Approach. Synthetic Substitute,

    Uncemented, Open

    Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRC0JZ Replacement of Right

    Right Knee Joint, Knee Joint with

    Percutaneous Approach. Synthetic Substitute,

    Open Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRT0J9 Replacement of Right

    Right Knee Joint, Knee Joint, Femoral

    Percutaneous Approach. Surface with Synthetic

    Substitute, Cemented,

    Open Approach.

    Page 56822

    0SPC38Z.................. Removal of Spacer from and 0SRT0JA Replacement of Right

    Right Knee Joint, Knee Joint, Femoral

    Percutaneous Approach. Surface with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRT0JZ Replacement of Right

    Right Knee Joint, Knee Joint, Femoral

    Percutaneous Approach. Surface with Synthetic

    Substitute, Open

    Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRV0J9 Replacement of Right

    Right Knee Joint, Knee Joint, Tibial

    Percutaneous Approach. Surface with Synthetic

    Substitute, Cemented,

    Open Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRV0JA Replacement of Right

    Right Knee Joint, Knee Joint, Tibial

    Percutaneous Approach. Surface with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPC38Z.................. Removal of Spacer from and 0SRV0JZ Replacement of Right

    Right Knee Joint, Knee Joint, Tibial

    Percutaneous Approach. Surface with Synthetic

    Substitute, Open

    Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRC0J9 Replacement of Right

    Right Knee Joint, Knee Joint with

    Percutaneous Endoscopic Synthetic Substitute,

    Approach. Cemented, Open

    Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRC0JA Replacement of Right

    Right Knee Joint, Knee Joint with

    Percutaneous Endoscopic Synthetic Substitute,

    Approach. Uncemented, Open

    Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRC0JZ Replacement of Right

    Right Knee Joint, Knee Joint with

    Percutaneous Endoscopic Synthetic Substitute,

    Approach. Open Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRT0J9 Replacement of Right

    Right Knee Joint, Knee Joint, Femoral

    Percutaneous Endoscopic Surface with Synthetic

    Approach. Substitute, Cemented,

    Open Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRT0JA Replacement of Right

    Right Knee Joint, Knee Joint, Femoral

    Percutaneous Endoscopic Surface with Synthetic

    Approach. Substitute, Uncemented,

    Open Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRT0JZ Replacement of Right

    Right Knee Joint, Knee Joint, Femoral

    Percutaneous Endoscopic Surface with Synthetic

    Approach. Substitute, Open

    Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRV0J9 Replacement of Right

    Right Knee Joint, Knee Joint, Tibial

    Percutaneous Endoscopic Surface with Synthetic

    Approach. Substitute, Cemented,

    Open Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRV0JA Replacement of Right

    Right Knee Joint, Knee Joint, Tibial

    Percutaneous Endoscopic Surface with Synthetic

    Approach. Substitute, Uncemented,

    Open Approach.

    0SPC48Z.................. Removal of Spacer from and 0SRV0JZ Replacement of Right

    Right Knee Joint, Knee Joint, Tibial

    Percutaneous Endoscopic Surface with Synthetic

    Approach. Substitute, Open

    Approach.

    0SPC4JZ.................. Removal of Synthetic and 0SRT0JZ Replacement of Right

    Substitute from Right Knee Joint, Femoral

    Knee Joint, Surface with Synthetic

    Percutaneous Endoscopic Substitute, Open

    Approach. Approach.

    0SPC4JZ.................. Removal of Synthetic and 0SRV0JZ Replacement of Right

    Substitute from Right Knee Joint, Tibial

    Knee Joint, Surface with Synthetic

    Percutaneous Endoscopic Substitute, Open

    Approach. Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRD0J9 Replacement of Left Knee

    Left Knee Joint, Open Joint with Synthetic

    Approach. Substitute, Cemented,

    Open Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRD0JA Replacement of Left Knee

    Left Knee Joint, Open Joint with Synthetic

    Approach. Substitute, Uncemented,

    Open Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRD0JZ Replacement of Left Knee

    Left Knee Joint, Open Joint with Synthetic

    Approach. Substitute, Open

    Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRU0JA Replacement of Left Knee

    Left Knee Joint, Open Joint, Femoral Surface

    Approach. with Synthetic

    Substitute, Cemented,

    Open Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRU0JA Replacement of Left Knee

    Left Knee Joint, Open Joint, Femoral Surface

    Approach. with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRU0JZ Replacement of Left Knee

    Left Knee Joint, Open Joint, Femoral Surface

    Approach. with Synthetic

    Substitute, Open

    Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRW0J9 Replacement of Left Knee

    Left Knee Joint, Open Joint, Tibial Surface

    Approach. with Synthetic

    Substitute, Cemented,

    Open Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRW0JA Replacement of Left Knee

    Left Knee Joint, Open Joint, Tibial Surface

    Approach. with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPD08Z.................. Removal of Spacer from and 0SRW0JZ Replacement of Left Knee

    Left Knee Joint, Open Joint, Tibial Surface

    Approach. with Synthetic

    Substitute, Open

    Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRD0J9 Replacement of Left Knee

    Left Knee Joint, Joint with Synthetic

    Percutaneous Approach. Substitute, Cemented,

    Open Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRD0JA Replacement of Left Knee

    Left Knee Joint, Joint with Synthetic

    Percutaneous Approach. Substitute, Uncemented,

    Open Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRD0JZ Replacement of Left Knee

    Left Knee Joint, Joint with Synthetic

    Percutaneous Approach. Substitute, Open

    Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRU0JA Replacement of Left Knee

    Left Knee Joint, Joint, Femoral Surface

    Percutaneous Approach. with Synthetic

    Substitute, Cemented,

    Open Approach.

    Page 56823

    0SPD38Z.................. Removal of Spacer from and 0SRU0JA Replacement of Left Knee

    Left Knee Joint, Joint, Femoral Surface

    Percutaneous Approach. with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRU0JZ Replacement of Left Knee

    Left Knee Joint, Joint, Femoral Surface

    Percutaneous Approach. with Synthetic

    Substitute, Open

    Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRW0J9 Replacement of Left Knee

    Left Knee Joint, Joint, Tibial Surface

    Percutaneous Approach. with Synthetic

    Substitute, Cemented,

    Open Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRW0JA Replacement of Left Knee

    Left Knee Joint, Joint, Tibial Surface

    Percutaneous Approach. with Synthetic

    Substitute, Uncemented,

    Open Approach.

    0SPD38Z.................. Removal of Spacer from and 0SRW0JZ Replacement of Left Knee

    Left Knee Joint, Joint, Tibial Surface

    Percutaneous Approach. with Synthetic

    Substitute, Open

    Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRD0J9 Replacement of Left Knee

    Left Knee Joint, Joint with Synthetic

    Percutaneous Endoscopic Substitute, Cemented,

    Approach. Open Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRD0JA Replacement of Left Knee

    Left Knee Joint, Joint with Synthetic

    Percutaneous Endoscopic Substitute, Uncemented,

    Approach. Open Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRD0JZ Replacement of Left Knee

    Left Knee Joint, Joint with Synthetic

    Percutaneous Endoscopic Substitute, Open

    Approach. Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRU0JA Replacement of Left Knee

    Left Knee Joint, Joint, Femoral Surface

    Percutaneous Endoscopic with Synthetic

    Approach. Substitute, Cemented,

    Open Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRU0JA Replacement of Left Knee

    Left Knee Joint, Joint, Femoral Surface

    Percutaneous Endoscopic with Synthetic

    Approach. Substitute, Uncemented,

    Open Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRU0JZ Replacement of Left Knee

    Left Knee Joint, Joint, Femoral Surface

    Percutaneous Endoscopic with Synthetic

    Approach. Substitute, Open

    Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRW0J9 Replacement of Left Knee

    Left Knee Joint, Joint, Tibial Surface

    Percutaneous Endoscopic with Synthetic

    Approach. Substitute, Cemented,

    Open Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRW0JA Replacement of Left Knee

    Left Knee Joint, Joint, Tibial Surface

    Percutaneous Endoscopic with Synthetic

    Approach. Substitute, Uncemented,

    Open Approach.

    0SPD48Z.................. Removal of Spacer from and 0SRW0JZ Replacement of Left Knee

    Left Knee Joint, Joint, Tibial Surface

    Percutaneous Endoscopic with Synthetic

    Approach. Substitute, Open

    Approach.

    0SPD4JZ.................. Removal of Synthetic and 0SRU0JZ Replacement of Left Knee

    Substitute from Left Joint, Femoral Surface

    Knee Joint, with Synthetic

    Percutaneous Endoscopic Substitute, Open

    Approach. Approach.

    ----------------------------------------------------------------------------------------------------------------

    We invited public comments on our proposal to add the joint revision code combinations listed above to the ICD-10 Version 34 MS-

    DRGs 466, 467, and 468.

    Comment: A number of commenters supported the proposal to add the joint revision code combinations listed in the table in the proposed rule to the ICD-10 Version 34 MS-DRGs 466, 467, and 468. Several commenters stated that these proposed updates better replicate the logic of the prior ICD-9-CM version of the MS-DRGs. Another commenter stated that adding the 58 new combinations of procedure codes for the removal and replacement of knee joints to MS-DRGs 466, 467, and 468 improves the alignment of these cases under the ICD-10 MS-DRGs. One commenter stated that it appreciated CMS' proposed updates to MS-DRGs 466, 467, and 468. Several of the commenters requested that the update be made retroactive to FY 2016 because this was a replication error of the ICD-9-CM MS-DRGs.

    Response: We appreciate the commenters' support for our proposal. We agree that this addition better replicates the prior ICD-9-CM MS-

    DRGs. The FY 2016 MS-DRGs were subject to review and comment by the public as part of the FY 2016 IPPS/LTCH PPS rulemaking. As stated earlier, this topic was discussed in the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24379 through 24395) and the FY 2016 IPPS/LTCH PPS final rule (80 FR 49390 through 49406). We proposed to add the 58 new combinations of procedure codes for the removal and replacement of knee joints to MS-DRGs 466, 467, and 468 in the FY 2017 IPPS/LTCH PPS proposed rule for the FY 2017 MS-DRGs, effective October 1, 2016. Therefore, consistent with our general approach for implementing updates to the MS-DRGs, these updates apply beginning with the FY 2017 MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add the 58 new code combinations listed above that capture the joint revisions to the Version 34 MS DRG structure for MS-DRGs 466, 467, and 468, effective October 1, 2016.

  222. Decompression Laminectomy

    Currently, under ICD-10-PCS, the procedure describing a decompression laminectomy is coded for the ``release'' of a specified area of the spinal cord. These decompression codes are assigned to MS-

    DRGs 028, 029, and 030 (Spinal Procedures with MCC, with CC or Spinal Neurostimulators, or without CC/MCC, respectively) and to MS-DRGs 518, 519, and 520 (Back and Neck Procedures Except Spinal Fusion with MCC or Disc Device or Neurostimulator, with CC, or without CC/MCC, respectively) in the ICD-10 MS-DRGs Version 33. A commenter brought to our attention that codes describing release of specific peripheral nerve are assigned to MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). The commenter suggested that a subset of these codes also be assigned to MS-DRGs 028 through 030 and MS-DRGs 518 through 520 for clinical coherence purposes. The commenter stated, for example, that ICD-10-PCS procedure code 00NY0ZZ (Release lumbar spinal

    Page 56824

    cord, open approach) is assigned to MS-DRGs 028 through 030 and MS-DRGs 518 through 520. However, ICD-10-PCS procedure code 01NB0ZZ (Release lumbar nerve, open approach) is assigned to MS-DRGs 515 through 517.

    We stated in the FY 2017 IPPS/LTCH PPS proposed rule that we agreed with the commenter's suggestion. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24996), for FY 2017, we proposed to reassign the ICD-10-PCS procedure codes listed in the following table from MS-

    DRGs 515 through 517 to MS-DRGs 028 through 030 and MS-DRGs 518 through 520 under the ICD-10 MS-DRGs Version 34.

    ------------------------------------------------------------------------

    ICD-10-PCS procedure code Description

    ------------------------------------------------------------------------

    01N00ZZ....................... Release cervical plexus, open approach.

    01N03ZZ....................... Release cervical plexus, percutaneous

    approach.

    01N04ZZ....................... Release cervical plexus, percutaneous

    endoscopic approach.

    01N10ZZ....................... Release cervical nerve, open approach.

    01N13ZZ....................... Release cervical nerve, percutaneous

    approach.

    01N14ZZ....................... Release cervical nerve, percutaneous

    endoscopic approach.

    01N80ZZ....................... Release thoracic nerve, open approach.

    01N83ZZ....................... Release thoracic nerve, percutaneous

    approach.

    01N84ZZ....................... Release thoracic nerve, percutaneous

    endoscopic approach.

    01N90ZZ....................... Release lumbar plexus, open approach.

    01N93ZZ....................... Release lumbar plexus, percutaneous

    approach.

    01N94ZZ....................... Release lumbar plexus, percutaneous

    endoscopic approach.

    01NA0ZZ....................... Release lumbosacral plexus, open

    approach.

    01NA3ZZ....................... Release lumbosacral plexus, percutaneous

    approach.

    01NA4ZZ....................... Release lumbosacral plexus, percutaneous

    approach.

    01NB0ZZ....................... Release lumbar nerve, open approach.

    01NB3ZZ....................... Release lumbar nerve, percutaneous

    approach.

    01NB4ZZ....................... Release lumbar nerve, percutaneous

    endoscopic approach.

    ------------------------------------------------------------------------

    We invited public comments on our proposal.

    Comment: Several commenters supported the proposal to reassign the ICD-10-PCS procedure codes listed in the table in the proposed rule from MS-DRGs 515, 516 and 517 to MS-DRGs 028, 029, 030 and MS-DRGs 518, 519 and 520 under the ICD-10 MS-DRGs Version 34.

    One commenter recommended that CMS delay reassigning the codes listed in the table in the proposed rule from MS-DRGs 515, 516 and 517 to MS-DRGs 028, 029, 030 and MS-DRGs 518, 519 and 520 until the FY 2016 MedPAR data are available, which would include ICD-10 coded claims. According to the commenter, it was difficult to assess the impact of the proposal in the absence of ICD-10 claims data. The commenter conducted its own data analysis of ICD-9-CM procedure code 04.49 (Other peripheral nerve or ganglion decompression or lysis of adhesions), which is a comparable translation of the ICD-10-PCS codes listed in the table in the proposed rule. The commenter stated that under Version 32 of the ICD-9-CM MS-DRGs, procedure code 04.49 grouped to MS-DRGs 515, 516, and 517. Based on its analysis, the commenter suggested that if CMS were to proceed with this proposal without ICD-10 claims data, CMS consider reassigning the entire list of ICD-10-PCS codes in the 01N (Release/Peripheral Nervous System) category to ICD-10 MS-DRGs 028, 029, and 030 for length of stay and average cost alignment purposes. The commenter did not make any recommendation for reassignment of the listed ICD-10-PCS procedure codes to MS-DRGs 518, 519, and 520.

    Response: We appreciate the commenters' support of our proposal. With regard to the commenter who did not support the proposal and recommended we not finalize it in the absence of ICD-10 claims data, we acknowledge that it can be somewhat challenging to fully assess the impact of a proposal without the coded data to analyze. We note that the proposal was based on clinical coherence of the listed ICD-10-PCS codes with other codes describing procedures on the neck and spine currently assigned to MS-DRGs 028, 029, 030 in MDC 1 (Diseases and Disorders of the Nervous System) and MS-DRGs 518, 519, and 520 in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). We also note that the ICD-9-CM code 04.49 lacks the detail and specificity of the corresponding ICD-10-PCS codes proposed for reassignment. For example, the ICD-9-CM code does not specify which peripheral nerve is being treated or what approach was utilized. Therefore, we cannot fully evaluate and rely upon the commenter's analysis results for the ICD-9-CM data to accurately determine the impact of reassigning all the cited ICD-10-PCS codes, which do specify the nerve being treated, and the approach that was used to MS-DRGs 028, 029, and 030. In addition, it is not clear which list of ICD-10-PCS codes the commenter was requesting us to consider for reassignment to MS-DRGs 028, 029, and 030 based on its submitted comment. It is unclear if the commenter was suggesting that we reassign the entire list of ICD-10-PCS codes that appeared in the proposed rule or if the commenter was suggesting that we reassign the entire list of available code options in Table 01N (Release/Peripheral Nervous System) of the ICD-10-

    PCS classification because the commenter's languge referred to the 01N ``category'' and that is not a standard term used in ICD-10-PCS.

    Therefore, we agree that we should delay this proposed change until the ICD-10 claims data are available, because we will have the ability to better analyze the impact of reassigning the specified codes according to their anatomic location, as well as receive clarification regarding which specific codes should be taken under consideration for reassignment. Our clinical advisors reviewed this issue and recommended maintaining the current structure of MS-DRGs 515, 516, and 517 for FY 2017. They agreed that we should not finalize our proposal to reassign the ICD-10-PCS codes discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24996 through 24997) to MS-DRGs 028, 029, and 030 and MS-

    DRGs 518, 519, and 520 until ICD-10-PCS data are available for analysis because we will have the opportunity to examine the detailed ICD-10-PCS codes and assess their impact on MS-DRGs 028, 029, and 030 and determine the specific codes

    Page 56825

    that were suggested for reassignment (the list of ICD-10-PCS codes displayed in the proposed rule and this final rule above or the entire list of codes available from Table 01N of the ICD-10-PCS classification). We also will have the coded claims data to assess the impact for MS-DRGs 518, 519, and 520 to better evaluate if that reassignment is supported.

    After consideration of the public comments we received and based on the recommendations from our clinical advisors, we are not finalizing our proposal to reassign the ICD-10-PCS procedure codes listed in the table in the proposed rule and above from MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC and without CC/MCC) to MS-DRGs 028, 029, 030 (Spinal Procedures with MCC, with CC or Spinal Neurostimulators and without CC/

    MCC, respectively) and MS-DRGs 518, 519, and 520 (Back and Neck Procedures Except Spinal Fusion with MCC or Disc Device or Neurostimulator, with CC and without CC/MCC, respectively) under the ICD-10 MS-DRGs Version 34. The ICD-10-PCS codes that were listed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24996 through 24997) will remain in their current assignment to MS-DRGs 515, 516, and 517.

  223. Lordosis

    An ICD-10 replication issue involving four diagnosis codes related to lordosis (excessive curvature of the lower spine) was discovered in MS-DRGs 456, 457, and 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC, with CC, and without CC/MCC). These MS-DRGs contain specific logic that requires a principal diagnosis describing a spinal curvature, a malignancy, or infection or a secondary diagnosis that describes a spinal curvature disorder related to another condition.

    Under the ICD-10 MS-DRGs Version 33, the following diagnosis codes were listed on the principal diagnosis list and the secondary diagnosis list for MS-DRGs 456, 457, and 458:

    M40.50 (Lordosis, unspecified, site unspecified);

    M40.55 (Lordosis, unspecified, thoracolumbar region);

    M40.56 (Lordosis, unspecified, lumbar region); and

    M40.57 (Lordosis, unspecified, lumbosacral region).

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24997), we proposed to remove the above four diagnosis codes from the secondary diagnosis list. We also proposed to maintain these same four codes in the logic for the principal diagnosis list. We proposed that this proposed change for MS-DRGs 456, 457, and 458 would be effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    We invited public comments on our proposals.

    Comment: Commenters supported the proposal to remove diagnoses codes M40.50, M40.55, M40.56, and M40.57 from the secondary diagnosis list for MS DRGs 456, 457, and 458. Commenters also supported the proposal to maintain these same four codes in the logic for the principal diagnosis list for MS-DRGs 456, 457, and 458.

    Response: We appreciate the commenters' support of our proposal to remove the above four diagnosis codes from the secondary diagnosis list and to maintain these same four codes in the logic for the principal diagnosis list for MS DRGs 456, 457, and 458.

    After consideration of the public comments we received, we are finalizing our proposal to remove diagnoses codes M40.50 (Lordosis, unspecified, site unspecified); M40.55 (Lordosis, unspecified, thoracolumbar region); M40.56 (Lordosis, unspecified, lumbar region); and M40.57 (Lordosis, unspecified, lumbosacral region) from the secondary diagnosis list for MS DRGs 456, 457, and 458. These four codes are retained in the logic for the principal diagnosis list. This change for MS-DRGs 456, 457, and 458 (Spinal fusion except cervical with spinal curvature or malignancy or infection or extensive fusions with MCC, with CC and without CC/MCC) is effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    9. MDC 13 (Diseases and Disorders of the Female Reproductive System): Pelvic Evisceration

    In the ICD-10 MS-DRG Definitions Manual Version 33, the GROUPER logic for ICD-10 MS-DRGs 332, 333, and 334 (Rectal Resection with MCC, with CC and without CC/MCC, respectively) under MDC 6 (Diseases and Disorders of the Digestive System) and the GROUPER logic for MS-DRGs 734 and 735 (Pelvic Evisceration, Radical Hysterectomy and Radical Vulvectomy with CC/MCC and without CC/MCC, respectively) under MDC 13 (Diseases and Disorders of the Female Reproductive System) include a ``cluster'' of ICD-10-PCS procedure codes that describe pelvic evisceration. A ``cluster'' is the term used to describe a circumstance when a combination of ICD-10-PCS procedure codes is needed to fully satisfy the equivalent meaning of an ICD-9-CM procedure code for it to be considered a plausible code translation. The code cluster in MS-DRGs 332, 333, and 334 and MS-DRGs 734 and 735 is shown in the table below.

    ------------------------------------------------------------------------

    ICD-10-PCS procedure code in cluster Description

    ------------------------------------------------------------------------

    0TTB0ZZ............................... Resection of bladder, open

    approach.

    0TTD0ZZ............................... Resection of urethra, open

    approach.

    0UT20ZZ............................... Resection of bilateral ovaries,

    open approach.

    0UT70ZZ............................... Resection of bilateral fallopian

    tubes, open approach.

    0UT90ZZ............................... Resection of uterus, open

    approach.

    0UTC0ZZ............................... Resection of cervix, open

    approach.

    0UTG0ZZ............................... Resection of vagina, open

    approach.

    ------------------------------------------------------------------------

    Pelvic evisceration (or exenteration) is a procedure performed to treat gynecologic cancers (cervical, uterine, vulvar, and vaginal, among others) and involves resection of pelvic structures such as the procedures described by the cluster of procedure codes listed above.

    Under the ICD-9-CM MS-DRGs Version 32, procedure code 68.8 (Pelvic evisceration) was used to report pelvic evisceration. ICD-9-CM procedure code 68.8 also was assigned to ICD-9-CM MS-DRGs 332, 333, and 334 and MS-DRGs 734 and 735 in MDCs 6 and 13, respectively. The inclusion term in the ICD-9-CM Tabular List of Diseases for pelvic evisceration (procedure code 68.8) was ``Removal of ovaries, tubes, uterus, vagina, bladder, and urethra (with removal of sigmoid colon and rectum).'' In the ICD-9-CM Tabular List, the terms shown in parentheses are called a ``non-essential modifier''. A ``non-essential modifier'' is used in the classification to identify a supplementary word that may, or may not, be present in the statement of a disease or procedure. In other words, the terms in parentheses do not have to be documented to report the code.

    Because the removal of sigmoid colon and the removal of rectum were classified as non-essential modifiers under ICD-9-CM, documentation that identified that removal of those body sites occurred was not required to report the procedure code describing pelvic evisceration (procedure code 68.8). In other words, when a pelvic evisceration procedure was performed and included removal of other body sites (ovaries and tubes, among others) listed in the inclusion term, absent the terms in parentheses, procedure code 68.8 could

    Page 56826

    be reported and grouped appropriately to MDC 13 under MS-DRGs 734 and 735. When a pelvic evisceration procedure was performed and removal of the body sites listed in the inclusion term occurred, including the terms in parentheses, procedure code 68.8 could be reported and grouped appropriately to MDC 6 under MS-DRGs 332 through 334.

    Under ICD-10-PCS, users are instructed to code separately the organs or structures that are actually removed and for which there is a distinctly defined body part. Therefore, the case of a patient who undergoes a pelvic evisceration (exenteration) that involves the removal of the sigmoid colon and rectum would have each of those procedure sites (sigmoid colon and rectum) coded and reported separately (in addition to the procedure codes displayed in the cluster). In this scenario, if the principal diagnosis is a condition from the MDC 6 diagnosis list, the case would group to MS-DRGs 332, 333, and 334, regardless of the code cluster. In other words, it would not be necessary to retain the code cluster describing procedures performed on female pelvic organs in MDC 6.

    Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24997 through 24998), for FY 2017, we proposed to remove the procedure code cluster for pelvic evisceration procedures from MDC 6 under the ICD-10 MS-DRGs Version 34. The cluster would remain in ICD-10 MDC 13 under MS-

    DRGs 734 and 735 only. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to remove the procedure code cluster for pelvic evisceration procedures currently under MDC 6 in ICD-10 MS-DRGs 332, 333, and 334 for the ICD-10 MS-DRGs Version 34. The commenters stated the proposal was reasonable, given the data, the ICD-10-PCS codes, and the information provided.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to remove the following procedure codes currently listed as a ``cluster'' in MDC 6 under MS-DRGs 332, 333, and 334 effective October 1, 2016 under the ICD-10 MS-DRGs Version 34. The codes will remain as a cluster in MDC 13 under MS-DRGs 734 and 735 (Pelvic Evisceration, Radical Hysterectomy and Radical Vulvectomy with CC/MCC and without CC/MCC, respectively)

    ------------------------------------------------------------------------

    ICD-10-PCS procedure code in cluster Description

    ------------------------------------------------------------------------

    0TTB0ZZ............................... Resection of bladder, open

    approach.

    0TTD0ZZ............................... Resection of urethra, open

    approach.

    0UT20ZZ............................... Resection of bilateral ovaries,

    open approach.

    0UT70ZZ............................... Resection of bilateral fallopian

    tubes, open approach.

    0UT90ZZ............................... Resection of uterus, open

    approach.

    0UTC0ZZ............................... Resection of cervix, open

    approach.

    0UTG0ZZ............................... Resection of vagina, open

    approach.

    ------------------------------------------------------------------------

    10. MDC 19 (Mental Diseases and Disorders): Proposed Modification of Title of MS-DRG 884 (Organic Disturbances and Mental Retardation)

    We received a request to change the title of MS-DRG 884 (Organic Disturbances and Mental Retardation) under MDC 19 (Mental Diseases and Disorders) to ``MS-DRG 884 (Organic Disturbances and Intellectual Disability)'' to reflect more recent terminology used to appropriately describe the latter medical condition in the MDC.

    We agree with the requestor that the reference to the phrase ``Mental Retardation'' should be changed to ``Intellectual Disability'', to reflect the current terminology used to describe the condition. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24988), we proposed to change the title of MS-DRG 884 as requested by the requestor.

    We invited public comments on our proposal to change the title of MS-DRG 884 from ``Organic Disturbances and Mental Retardation'' to ``Organic Disturbances and Intellectual Disability'', effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Commenters supported the proposal to modify the title for ICD-10 MS-DRG 884. The commenters stated that the proposal was reasonable, given the data and information provided.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to modify the title for ICD-10 MS-DRG 884. The finalized title for MS-DRG 884 for the FY 2017 ICD-10 MS-DRGs Version 34 is ``MS-DRG 884 (Organic Disturbances and Intellectual Disability),'' effective October 1, 2016.

    11. MDC 23 (Factors Influencing Health Status and Other Contacts With Health Services): Logic of MS-DRGs 945 and 946 (Rehabilitation With and Without CC/MCC, Respectively)

    As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24998 through 25000), we received several requests to examine the MS-

    DRG logic for MS-DRGs 945 and 946 (Rehabilitation with CC/MCC and without CC/MCC, respectively). The requestors were concerned that ICD-

    9-CM codes that clearly identify an encounter for rehabilitation services such as diagnosis codes V57.89 (Care involving other specified rehabilitation procedure) and V57.9 (Care involving unspecified rehabilitation procedure) were not included in ICD-10-CM Version 33. In addition, the requestors pointed out that ICD-10-CM has significantly changed the guidelines for coding of admissions/encounters for rehabilitation. The requestors pointed out that under ICD-9-CM, Section I.B.15. of the Official Guidelines for Coding and Reporting indicates that ``when the purpose for the admission/encounter is rehabilitation, sequence the appropriate V code from category V57, Care involving use of rehabilitation procedures, as the principal/first listed diagnosis.'' The requestors stated that the concept of the ICD-9-CM category V57 codes is no longer valid in ICD-10-CM and the guidelines have been revised to provide greater specificity. Instead, the requestors added, the ICD-10-CM guidelines state in Section II.K., ``When the purpose for the admission/encounter is rehabilitation, sequence first the code for the condition for which the service is being performed. For example, for an admission/encounter for rehabilitation for right-sided dominant hemiplegia following a cerebrovascular infarction, report code I69.351, Hemiplegia and hemiparesis following cerebral infarction affecting right dominant side, as the first-listed or principal diagnosis.''

    Given this lack of ICD-10-CM codes to indicate that the reason for the encounter was for rehabilitation, some requesters asked that CMS review ICD-10-CM codes for conditions requiring rehabilitation (such as codes from category I69) and add them to MS-DRGs 945 and 946 when rehabilitation services are provided in order to replicate the logic found in the ICD-9-CM MS-DRG GROUPER. The requestors did not suggest any specific ICD-10-CM codes to add to MS-DRGs 945 and 946.

    One requestor made a specific recommendation for updating MS-DRGs 945 and 946. The requestor previously

    Page 56827

    recommended that CMS review diagnosis codes in ICD-10-CM category I69 for possible addition to MS-DRGs 945 and 946. The requestor stated that, upon further review, it believed that a great number of diagnosis codes beyond sequelae of stroke (ICD-10-CM category I69) would need to be added in order to replicate the logic of the ICD-9-CM MS-DRGs. Therefore, the requestor modified its recommendation as follows:

    Designate MS-DRGs 945 and 946 as pre-major diagnostic categories (Pre-MDC) MS-DRGs so that cases are grouped to these MS-DRGs on the basis of the procedure code rather than the principal diagnosis. The requestor stated that the ICD-10-PCS rehabilitation codes (Section F, Physical Rehabilitation and Diagnostic Audiology, Body system 0, Rehabilitation) should be used to group cases to MS-DRGs 945 and 946 similar to how the MS-DRG GROUPER logic currently treats lung transplants and tracheostomies. This would ensure that the rehabilitation procedure codes drive the MS-DRG assignment.

    Revise ICD-10-PCS Official Guidelines for Coding and Reporting and designate that the ICD-10-PCS rehabilitation codes be used only for admissions for rehabilitation therapy.

    We acknowledge that ICD-10-CM does not have clear diagnosis codes that indicate the reason for the encounter was for rehabilitation services. For that reason, CMS had to modify the MS-DRG logic using ICD-10-PCS procedure codes to assign these cases to MS-DRGs 945 and 946. The logic used in MS-DRGs 945 and 946 is shown in the Definitions Manual Version 33, which is posted on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending. We also posted a Frequently Asked Question section to explain how inpatient admissions are assigned to MS-DRGs 945 and 946, which is posted on the CMS Web site at: https://questions.cms.gov/faq.php?id=5005&faqId=12548. As indicated in the Frequently Asked Question section, the ICD-10-CM codes required a different approach to make sure the same cases captured with ICD-9-CM codes would be captured with ICD-10-CM codes. As stated earlier, ICD-10-CM does not contain specific codes for encounters for rehabilitation such as ICD-9-CM procedure codes V57.89 and V57.9. In order to replicate the ICD-9-CM MS-DRG logic using ICD-

    10-CM and ICD-10-PCS codes, CMS developed the new logic included in the MS-DRG Version 33 Definitions Manual.

    The Frequently Asked Question section explains that, in order to be assigned to ICD-10 MS-DRG 945 or 946, a case must first have a principal diagnosis from MDC 23 (Factors Influencing Health Status and Other Contacts with Health Services), where MS-DRGs 945 and 946 are assigned. This is currently the logic with the ICD-9-CM MS-DRGs Version 33 where one would first have to have a MDC 23 principal diagnosis. A complete list of ICD-10-CM principal diagnoses for MDC 23 can be found in the ICD-10 MS-DRGs Version 33 Definitions Manual which is posted on the FY 2016 IPPS Final Rule Home Page under the link for the FY 2016 Final Rule Data Files at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Data-Files.html. Look under the Related Links section and select the ICD-10-CM/PCS MS-DRG v33 Definitions Manual Table of Contents Full Titles HTML Version file. Open this file and the Table of Contents page will appear. Click on the link for MDC 23 (Factors Influencing Health Status and Other Contacts with Health Services). On the next page that opens (MDC 23), click on the link titled ``MDC 23 Assignment of Diagnosis Codes'' on the upper left side of the screen. By using the navigation arrows at the top right hand side of the page, users can review the 24 pages listing all of the principal diagnosis codes assigned to MDC 23, including many injury codes for subsequent encounters.

    Under the GROUPER Logic, cases are assigned to MS-DRGs 945 and 946 in one of two ways as described in the Definitions Manual as follows:

    The encounter has a principal diagnosis code Z44.8 (Encounter for fitting and adjustment of other external prosthetic devices) or Z44.9 (Encounter for fitting and adjustment of unspecified external prosthetic device). Both of these codes are included in the list of principal diagnosis codes assigned to MDC 23.

    The encounter has an MDC 23 principal diagnosis code and one of the rehabilitation procedure codes listed under MS-DRGs 945 and 946.

    If the case does not have a principal diagnosis code from the MDC 23 list, but does have a procedure code from the list included under the Rehabilitation Procedures for MS-DRGs 945 and 946, the case will not be assigned to MS-DRGs 945 or 946. The case will instead be assigned to a MS-DRG within the MDC where the principal diagnosis code is found.

    Example: The encounter has a principal diagnosis code of S02119D (Unspecified fracture of occiput, subsequent encounter for fracture with routine healing). This code is included in MDC 8. Therefore, diagnosis code S02119D and a procedure code from the MS-DRG 945 and 946 Rehabilitation Procedure list, such as procedure code F0706GZ (Therapeutic Exercise Treatment of Neurological System--Head and Neck using Aerobic Endurance and Conditioning Equipment) would not lead to assignment of the case to MS-DRGs 945 and 946 because the principal diagnosis code is not included in MDC 23.

    Diagnosis code S02119D is included in MDC 8 as was the ICD-9-CM predecessor code, V54.19 (Aftercare for healing traumatic fracture of other bone). Therefore, these cases would be assigned to MS-DRGs 559, 560, and 561 (Aftercare, Musculoskeletal System and Connective Tissue with MCC, with CC, and without MCC/CC, respectively) within MDC 8.

    At the time of development of the proposed rule, we did not have any claims data that indicate how well this MS-DRG logic is working. We stated in the proposed rule that we were hesitant to simply add more codes from category I69 without evaluating the impact of doing so using claims data. We also did not have claims data to indicate whether or not there have been changes in the types or numbers of cases assigned to MS-DRGs 945 and 946. We welcomed specific suggestions of codes to be added to MS-DRGs 945 and 946 based on hospitals' experience in coding these cases. We stated that we would evaluate these suggestions once we have claims data to study the impact. Based on the lack of ICD-10 claims data, we proposed to maintain the current logic of MS-DRGs 945 and 946 and not make updates until these claims data become available.

    Comment: A number of commenters supported the proposal to maintain the current structure of MS-DRGs 945 and 946 and reconsider the issue when ICD-10 claims data become available and prior to proposing any updates. Several commenters who agreed with this proposal stated that additional analysis should be undertaken in order to fully understand the industry impact of the current logic of MS-DRGs 945 and 946. The commenters stated that it was not clear to what extent the current logic for these MS-DRGs has created actual payment issues or what the nature of any identified problems might be.

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    One commenter suggested that if an analysis of ICD-10 claims data indicate that the current logic of MS-DRGs 945 and 946 is creating significant payment issues, CMS consider reclassifying MS-DRGs 945 and 946 as pre-MDC MS-DRGs as a possible solution.

    Response: We agree with the commenters that, without ICD-10 claims data, it is not possible to evaluate the impact of the logic using ICD-

    10 codes within MS-DRGs 945 and 946. We agree that it is appropriate to wait for the claims data prior to proposing any MS-DRG updates.

    We stated in the proposed rule that we have major concerns about the recommendation to revise the ICD-10-PCS Official Guidelines for Coding and Reporting and designate that the ICD-10-PCS rehabilitation codes be assigned and reported only for admissions for rehabilitation therapy. This would be a major and new process for developing coding and reporting guidelines based on one specific payer's payment polices, in this case Medicare inpatient acute care prospective payment system policies. Hospitals would need to know who the payer was prior to knowing whether or not they could assign a code for a rehabilitation service that they provided. If those payment policies change, the hospital coder would need to be aware of those changes in order to determine whether or not they could submit a code that captures the fact that a rehabilitation service was provided. CMS has worked with the Centers for Disease Control and Prevention (CDC), the American Hospital Association (AHA), and the American Health Information Management Association (AHIMA) to make ICD-10-PCS guidelines generic and applicable to all types of inpatient facilities and for all payer types. The current ICD-10-PCS Guidelines for Coding and Reporting do not support this recommendation that rehabilitation services could only be coded and reported if the admission was specifically for rehabilitation therapy. The ICD-10-PCS codes were created to accurately capture services provided.

    We also have concerns about designating MS-DRGs 945 and 946 as pre-

    MDCs so that cases are grouped to these MS-DRGs on the basis of a rehabilitation procedure code rather than a principal diagnosis. Pre-

    MDCs were an addition to Version 8 of the Diagnosis Related Groups. This was the first departure from the use of principal diagnosis as the initial variable in DRG and subsequently MS-DRG assignment. For Pre-MDC DRGs, the initial step in DRG assignment was not the principal diagnosis, but was instead certain surgical procedures with extremely high costs such as heart transplant, liver transplant, bone marrow transplant, and tracheostomies performed on patients on long-term ventilation. These types of services were viewed as being very resource intensive. Recognizing these resource intensive services and assigning them to one of the high-cost MS-DRGs assures appropriate payment even if the patient is admitted for a variety of principal diagnoses. We believe it is inappropriate to consider rehabilitation services in the same group as high-cost procedures such as heart transplants. There is the significant potential of patients being classified out of higher paying surgical MS-DRGs in other MDCs and into the lower paying MS-DRGs 945 and 946 based on the reporting of a rehabilitation procedure code if these MS-DRGs are moved to the Pre-MDCs. We examined claims data for cases reporting a rehabilitation therapy code and found cases assigned to a wide variety of both medical and surgical MS-DRGs. The current coding and reporting of rehabilitation procedure codes for services provided suggest the potential of significant payment problems if MS-

    DRGs 945 and 946 were assigned to the Pre-MDC section and the reporting of cases with a rehabilitation code led to an inappropriate reassignment to the lower paying medical MS-DRGs 945 and 946.

    The following are only a few examples of current claims data that showed the hospital reported a rehabilitation therapy procedure code for services provided which did not impact the MS-DRG assignment. Under the suggested approach of making MS-DRGs 945 and 946 a Pre-MDC, these cases would move from the appropriately assigned MS-DRGs which may have significantly higher average costs, to MS-DRGs 945 and 946, which have much lower average costs. Based on claims data from the December 2015 update of the FY 2015 MedPAR file, the average costs for cases reported in MS-DRGs 945 and 946 were $8,531 and $8,411, respectively.

    Examples of cases reporting a rehabilitation therapy code that would move to MS-DRGs 945 and 946 based on the suggested logic change are as follows:

    An MS-DRG 460 (Spinal Fusion Except Cervical with MCC) case with average costs of $42,390;

    An MS-DRG 464 (Wound Debridement and Skin Graft Excluding Hand, for Musculoskeletal Tissue Disease with CC) case with average costs of $55,633;

    An MS-DRG 579 (Other Skin, Subcutaneous Tissue and Breast Procedure with MCC) case with average costs of $63,834;

    An MS-DRG 854 (Infectious and Parasitic Diseases with O.R. procedure with MCC) case with average costs of $62,455; and

    An MS-DRG 021 (Intracranial Vascular Procedures with Principal Diagnosis of Hemorrhage with CC) case with average costs of $90,522.

    Our clinical advisors reviewed this issue and agreed that we should wait for ICD-10 claims data to become available prior to proposing updates to MS-DRGs 945 and 946. They did not support adding MS-DRGs 945 and 946 to the Pre-MDCs because the rehabilitation services are not as resource intensive as are the other MS-DRGs in the Pre-MDC section.

    Considering these ICD-10-PCS guideline concerns, the structure of the pre-MDC section, and the lack of any ICD-10 claims data for MS-DRGs 945 and 946, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24998 through 25000), we proposed to maintain the current structure of MS-

    DRGs 945 and 946 and reconsider the issue when ICD-10 claims data become available and prior to proposing any updates.

    We invited public comments on our proposal to maintain the current structure of MS-DRGs 945 and 946.

    Comment: One commenter agreed with CMS that, given there is no ICD-

    10-CM code describing encounters for rehabilitation, it was reasonable that identification of admissions for rehabilitation had to rely on ICD-10-PCS procedure codes. One commenter believed that it was not appropriate for the MS-DRG logic to require a principal diagnosis from MDC 23 to be assigned to MS-DRGs 945 and 946 because most admissions for rehabilitation would appropriately have any number of diagnosis codes sequenced as the principal diagnosis rather than a diagnosis code from MDC 23. The commenter did not believe it was feasible to identify all of the ICD-10-CM codes for which rehabilitation services might be provided, due to the range and number of diagnoses that could potentially be involved.

    Response: We agree with the commenter that there is no ICD-10-CM code describing encounters for rehabilitation. Given this lack of an ICD-10-CM code describing encounters for rehabilitation, we used ICD-

    10-PCS procedure codes as a means of identifying these cases. Therefore, the ICD-10 MS-DRG logic cannot be the same as the ICD-9-CM code logic. We also agree with the commenter that it is not feasible to identify all of the ICD-10-CM codes for which rehabilitation

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    services might be provided, due to the range and number of diagnoses that could potentially be involved. Therefore, it is necessary to wait for ICD-10 claims data in order to evaluate and propose MS-DRG updates.

    Comment: One commenter disagreed with CMS' proposal to maintain the current structure of MS-DRGs 945 and 946 and to only reconsider the issue when ICD-10 claims data become available. The commenter stated that further research of claims data was not necessary as there was enough evidence and clinical knowledge to identify the majority of appropriate principal diagnoses that frequently require an inpatient admission for rehabilitation. The commenter advised adding the codes and code categories in the following table to MDC 23.

    Code/Code Category and Description

    ------------------------------------------------------------------------

    -------------------------------------------------------------------------

    G20 Parkinson's disease.

    G21.0 Malignant neuroleptic syndrome.

    G21.11 Neuroleptic induced parkinsonism.

    G21.19 Other drug induced secondary parkinsonism.

    G21.2 Secondary parkinsonism due to other external agents.

    G21.3 Postencephalitic parkinsonism.

    G21.4 Vascular parkinsonism.

    G21.8 Other secondary parkinsonism.

    G21.9 Secondary parkinsonism, unspecified.

    G31.84 Mild cognitive impairment, so stated.

    G35 Multiple sclerosis.

    G37.3 Acute transverse myelitis in demyelinating disease of central

    nervous system.

    G61.0 Guillain-Barre syndrome.

    G61.81 Chronic inflammatory demyelinating polyneuritis.

    G62.81 Critical illness polyneuropathy.

    G62.9 Polyneuropathy, unspecified.

    G65.0 Sequelae of Guillain-BarrAtilde(copyright) syndrome.

    G70.00 Myasthenia gravis without (acute) exacerbation.

    G70.01 Myasthenia gravis with (acute) exacerbation.

    G72.81 Critical illness myopathy.

    G91.0 Communicating hydrocephalus.

    G91.1 Obstructive hydrocephalus.

    G91.2 (Idiopathic) normal pressure hydrocephalus.

    G91.3 Post-traumatic hydrocephalus, unspecified.

    G91.4 Hydrocephalus in diseases classified elsewhere.

    G91.8 Other hydrocephalus.

    G91.9 Hydrocephalus, unspecified.

    G92 Toxic encephalopathy.

    G93.1 Anoxic brain damage, not elsewhere classified.

    G93.40 Encephalopathy, unspecified.

    G93.41 Metabolic encephalopathy.

    G93.49 Other encephalopathy.

    I50.22 Chronic systolic (congestive) heart failure.

    I50.23 Acute on chronic systolic (congestive) heart failure.

    I50.32 Chronic diastolic (congestive) heart failure.

    I50.33 Acute on chronic diastolic (congestive) heart failure.

    I50.42 Chronic combined systolic (congestive) and diastolic (congestive)

    heart failure.

    I50.43 Acute on chronic combined systolic (congestive) and diastolic

    (congestive) heart failure.

    I50.9 Heart failure, unspecified.

    M62.81 Muscle weakness (generalized).

    M62.82 Rhabdomyolysis.

    R26.0 Ataxic gait.

    R26.1 Paralytic gait.

    R26.2 Difficulty in walking, not elsewhere classified.

    R26.81 Unsteadiness on feet.

    R26.89 Other abnormalities of gait and mobility.

    R26.9 Unspecified abnormalities of gait and mobility.

    R27.0 Ataxia, unspecified.

    R27.8 Other lack of coordination.

    R27.9 Unspecified lack of coordination.

    R41.84 Cognitive communication deficit.

    R41.842 Visuospatial deficit.

    R41.843 Psychomotor deficit.

    R41.844 Frontal lobe and executive function deficit.

    R41.89 Other symptoms and signs involving cognitive functions and

    awareness.

    Z47.1 Aftercare following joint replacement surgery.

    Z47.81 Encounter for orthopedic aftercare following surgical amputation.

    Z47.89 Encounter for other orthopedic aftercare.

    Z48.21 Encounter for aftercare following heart transplant.

    Z48.22 Encounter for aftercare following kidney transplant.

    Z48.23 Encounter for aftercare following liver transplant.

    Z48.24 Encounter for aftercare following lung transplant.

    Z48.280 Encounter for aftercare following heart-lung transplant.

    Z48.288 Encounter for aftercare following multiple organ transplant.

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    Z48.290 Encounter for aftercare following bone marrow transplant.

    Z48.298 Encounter for aftercare following other organ transplant.

    Z48.3 Aftercare following surgery for neoplasm.

    Code categories G81, G82, and G83.

    Code Category I69.

    Code Category M84.3-M84.6 with 7th digit ``D''.

    Code Categories S32.4-S32.9 with 7th digit ``D''.

    Code Categories S72.0-S72.3 with 7th digit ``D'', ``E'', or ``F''.

    ------------------------------------------------------------------------

    Response: We disagree with the recommendation to add the list of ICD-10-CM codes shown in the table above to MS-DRGs 945 and 946. As stated previously, we do not have claims data to evaluate how this suggested update would impact MS-DRG assignments. We agree with the other commenters who recommended that CMS wait for claims data in order to evaluate updates to MS-DRGs 945 and 946. While this commenter took the position that further research of claims data was not necessary because there is enough evidence and clinical knowledge to identify the majority of principal diagnoses that frequently require an inpatient admission for rehabilitation, and, as noted, submitted the above list of ICD-10-CM codes and code categories to add to MDC 23, we believe that ICD-10 claims data are necessary to evaluate this recommended change; without claims data, we cannot determine the number of cases that might be reassigned and if this reassignment was appropriate.

    Comment: Commenters who agreed with waiting until claims data become available to evaluate MS-DRG updates stated that they understood that the current pre-MDC structure is limited to resource-intensive surgical procedures. However, they believed that there are some similarities between the existing pre-MDCs and MS-DRGs 945 and 946. The commenters stated that, similar to the existing pre-MDCs, the driver for the rehabilitation MS-DRGs is a specific type of service, and this service may be provided for a wide variety of principal diagnoses. Therefore, the commenters suggested the creation of a guideline that limits the use of the ICD-10-PCS rehabilitation codes to rehabilitation admissions would address the potential for patient cases to be reassigned from higher paying surgical MS-DRGs in other MDCs to the lower paying MS-DRGs 945 and 946 based on the reporting of a rehabilitation procedure code if these MS-DRGs were reassigned to the pre-MDCs. One commenter stated that, after the establishment of a new ICD-10-PCS coding guideline, the reporting of ICD-10-PCS rehabilitation codes for nonrehabilitation hospitalizations would be considered coding errors and, as with any coding error, could lead to inappropriate MS-

    DRG assignment. However, the commenter recommended that edits and reminders would likely be needed to minimize this type of coding error.

    Response: We agree with the commenters that the issue of any updates to ICD-10-PCS guidelines should be considered along with any proposed MS-DRG updates because updated guidelines may impact code reporting.

    We welcome any suggestions on how to update the ICD-10-PCS guidelines. These suggestions should be sent to ICDProcedureCodeRequest@cms.hhs.gov. We plan to take any proposed ICD-

    10-PCS rehabilitation guideline updates to a future meeting of the ICD-

    10 Coordination and Maintenance Committee so that the public can provide input on any new rehabilitation guideline. We continue to be concerned about creating a new ICD-10-PCS guideline whose purpose is to restrict assignment to certain MS-DRGs. Over time, the MS-DRGs are updated as part of the annual IPPS rulemaking. To create a guideline on a current MS-DRG structure as opposed to a means of capturing national data for all payers is not consistent with past guideline development. However, we look forward to working with the public on examining the need to improve the ICD-10-PCS guidelines for rehabilitation services reporting.

    Comment: Other commenters who agreed with CMS' proposal to maintain the current structure of MS-DRGs 945 and 946 until such time as ICD-10 claims data become available recommended that the ICD-10 Coordination and Maintenance Committee address the creation of a single, new ICD-10-

    CM diagnosis code in Section Z of ICD-10-CM to replicate the ICD-9-CM code category V57 (Care involving use of rehabilitation procedures). The commenters recommended that if the CDC created this new code, the new ICD-10-CM code be added to MS-DRGs 945 and 946 when reported as a secondary diagnosis. The commenters urged CMS to obtain industry input from experts in rehabilitation on possible coding and MS-DRG updates.

    Several commenters recommended that the existing ICD-10-CM Official Guidelines for Coding and Reporting be maintained to allow the sequencing of the diagnosis code for the condition for which the service is being performed as the principal diagnosis when the purpose for the admission/encounter is rehabilitation. Several commenters recommended a revision of the ICD-10-CM Official Guidelines for Coding and Reporting if a new ICD-10-CM code for care involving use of rehabilitation procedures were created. Some of the commenters recommended that the new diagnosis code be reported as a secondary diagnosis when the purpose for the admission/encounter was rehabilitation while others recommended that the new code be reported as the principal diagnosis.

    One commenter objected to the development of coding guidelines based on Medicare payment policies. However, the commenter stated that any such guideline should be applied to all payers. The commenter stated that creating such a guideline that would restrict the use of these procedure codes such that they could only be used to identify rehabilitation admissions for the purpose of appropriately assigning MS-DRGs 945 and 946 merited serious consideration.

    Response: We have referred the requests for a new ICD-10-CM code for care involving the use of rehabilitation procedures to the CDC for consideration at a future ICD-10 Coordination and Maintenance Committee meeting. Requests for ICD-10-CM code updates should be sent to the CDC at nchsicd10CM@cdc.gov. Information on submitting proposals for new diagnosis codes can be found on CDC's Web site at http://www.cdc.gov/nchs/icd/icd10_maintenance.htm. Should such a new diagnosis code be created, CMS would examine the possibility of using this new diagnosis code in the MS-DRGs 945 and 946 logic, as was the case in the ICD-9-CM version of the MS-DRGs. The public is also encouraged to send any specific recommendations for

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    updates to the ICD-10-CM coding guidelines to CDC at: nchsicd10CM@cdc.gov. Updates that are made to ICD-10-CM, ICD-10-PCS, and the relevant coding guidelines will be considered along with claims data in evaluating any proposed updates to MS-DRGs 945 and 946.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure of MS-DRGs 945 and 946. We look forward to working with the public on updates to the ICD-10-PCS guidelines or updates to ICD-10-CM to better capture these services. Once we receive ICD-10 claims data, we will again examine this issue.

    12. Medicare Code Editor (MCE) Changes

    The Medicare Code Editor (MCE) is a software program that detects and reports errors in the coding of Medicare claims data. Patient diagnoses, procedure(s), and demographic information are entered into the Medicare claims processing systems and are subjected to a series of automated screens. The MCE screens are designed to identify cases that require further review before classification into an MS-DRG.

    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49409 through 49412), we finalized the ICD-10 Definitions of Medicare Code Edits (ICD-10 MCE) Version 33. ICD-10 MCE Version 33 was based on the FY 2015 ICD-9-CM MCE Version 32 and the draft ICD-10 MCE Version 32 that had been made publicly available for comments in November 2014 on the ICD-

    10 MS-DRG Conversion Project Web site at: https://www.cms.gov/Medicare/Coding/ICD10/ICD-10-MS-DRG-Conversion-Project.html. In August 2015, we posted the finalized FY 2016 ICD-10 MCE Version 33 manual file and an ICD-9-CM MCE Version 33.0A manual file (for analysis purposes only). The links to these MCE manual files, along with the links to purchase the mainframe and computer software for the MCE Version 33 (and ICD-10 MS-DRGs) were posted on the CMS Web site through the FY 2016 IPPS Final Rule Home Page at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page.html?DLSort=0&DLEntries=10&DLPage=1&DLSortDir=ascending.

    After implementation of the ICD-10 MCE Version 33, we received several requests to examine specific code edit lists that the requestors believed were incorrect and that affected claims processing functions. We received requests to review the MCE relating specifically to the Age conflict edit, the Sex conflict edit, the Non-covered procedure edit, and the Unacceptable principal diagnosis code edit. We discuss these code edit issues below. In addition, as a result of new and modified code updates approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting, we routinely make changes to the MCE. In the past, in both the IPPS proposed and final rules, we only provided the list of changes to the MCE that were brought to our attention after the prior year's final rule. We historically have not listed the changes we have made to the MCE as a result of the new and modified codes approved after the annual spring ICD-10 Coordination and Maintenance Committee meeting. These changes are approved too late in the rulemaking schedule for inclusion in the proposed rule. Furthermore, although our MCE policies have been described in our proposed and final rules, we have not provided the detail of each new or modified diagnosis and procedure code edit in the final rule. However, we make available the finalized Definitions of Medicare Code Edits (MCE) file. Therefore, we have made available the FY 2017 ICD-10 MCE Version 34 manual file and an ICD-9-CM MCE Version 34.0A manual file (for analysis purposes only). The links to these MCE manual files, along with the links to purchase the mainframe and computer software for the MCE Version 34 (and ICD-10 MS-DRGs) are posted on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html through the FY 2017 IPPS Final Rule Home Page.

  224. Age Conflict Edit

    In the MCE, the Age conflict edit exists to detect inconsistencies between a patient's age and any diagnosis on the patient's record; for example, a 5-year-old patient with benign prostatic hypertrophy or a 78-year-old patient coded with a delivery. In these cases, the diagnosis is clinically and virtually impossible for a patient of the stated age. Therefore, either the diagnosis or the age is presumed to be incorrect. Currently, in the MCE, the following four age diagnosis categories appear under the Age conflict edit and are listed in the manual and written in the software program:

    Newborn--Age of 0 years; a subset of diagnoses intended only for newborns and neonates (for example, fetal distress, perinatal jaundice).

    Pediatric--Age is 0-17 years inclusive (for example, Reye's syndrome, routine child health exam).

    Maternity--Age range is 12-55 years inclusive (for example, diabetes in pregnancy, antepartum pulmonary complication).

    Adult--Age range is 15-124 years inclusive (for example, senile delirium, mature cataract).

    (1) Newborn Diagnosis Category

    Under the ICD-10-CM Official Guidelines for Coding and Reporting (available on the Web site at: https://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-CM-and-GEMs.html), there are general guidelines and chapter-specific coding guidelines. The chapter-specific guidelines state that diagnosis codes from Chapter 16 (Certain Conditions Originating in the Perinatal Period) may be reported throughout the life of the patient if the condition is still present. The requestors noted that several codes from this Chapter 16 appear on the ICD-10 MCE Version 33 Age conflict edit for the newborn diagnosis category. Codes from this chapter are included in the P00 through P96 code range. Therefore, the requestors believed that because the chapter-specific guidelines state that codes within this chapter may be reported throughout the life of a patient, all codes within this range (P00 through P96) should be removed from the newborn diagnosis category on the Age conflict edit code list.

    As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25000 through 25001), we examined the newborn diagnosis category on the age conflict edit list in the ICD-9-CM MCE Version 32 in comparison to the ICD-9-CM chapter-specific guidelines. Under ICD-9-CM, Chapter 15 (Certain Conditions Originating in the Perinatal Period) includes codes within the 760 through 779 range. We found that the same chapter-

    specific guideline under ICD-10 exists under ICD-9-CM: Diagnosis codes from Chapter 15 may be reported throughout the life of the patient if the condition is still present. Similar to the ICD-10 MCE Version 33 newborn diagnosis category in the Age conflict edit code list, we noted that several codes from this Chapter 15 appear on the ICD-9-CM MCE Version 32 Age conflict edit for the newborn diagnosis category.

    Because the full definition of the chapter-specific guideline for ``Certain Conditions Originating in the Perinatal Period'' clearly states the codes within the chapter may be reported throughout the life of the patient if the condition is still present, we believe that,

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    historically, under ICD-9-CM, this was the rationale for inclusion of the diagnosis codes that were finalized for the newborn diagnosis category under the Age conflict edit (in code range 760 through 779). For example, under ICD-9-CM, there are four diagnosis codes in the 760.6x series that specifically include the term ``newborn'' in the title. These diagnosis codes are:

    760.61 (Newborn affected by amniocentesis);

    760.62 (Newborn affected by other in utero procedure);

    760.63 (Newborn affected by other surgical operations on mother during pregnancy); and

    760.64 (Newborn affected by previous surgical procedure on mother not associated with pregnancy).

    Under the ICD-9-CM classification, the chapter-specific guidelines in Chapter 15 (Certain Conditions Originating in the Perinatal Period) state that, for coding and reporting purposes, the perinatal period is defined as before birth through the 28th day following birth. As such, for coding and reporting purposes, a patient that is beyond the 28th day of life is no longer considered a newborn. Therefore, we believe that the diagnosis codes listed on the newborn diagnosis category in the Age conflict edit code list are, in fact, appropriate because they identify what the title of Chapter 15 describes (certain conditions specific to beginning in the perinatal period); that is, a newborn. The intent of the diagnosis codes included on the Age conflict edit code list is to identify claims where any one of the listed diagnoses is reported for a patient who is beyond the 28th day of life. If that definition is met according to the patient's date of birth, the edit is correctly triggered in those cases.

    Transitioning to the ICD-10 MCE was based on replication of the ICD-9-CM based MCE (in parallel with the transition to the ICD-10 MS-

    DRGs, which was based on replication of the ICD-9-CM MS-DRGs). Therefore, the diagnosis codes included in the newborn diagnosis category on the Age conflict edit code list in the ICD-10 MCE are a replication of the diagnosis code descriptions included on the newborn diagnosis category on the Age conflict edit code list under the ICD-9-

    CM MCE. However, the chapter-specific guideline in ICD-10-CM Chapter 16, section C.16.e. (Low birth weight and immaturity status), specifies that codes within category P07 (Disorders of newborn related to short gestation and low birth weight, not elsewhere classified) are for use for a child or adult who was premature or had a low birth weight as a newborn and this condition is affecting the patient's current health status. Therefore, we agree that codes within the range of P07.00 through P07.39 should not be listed under newborn diagnosis category on the Age conflict edit code list in the ICD-10 MCE. It is unclear why this range of codes within category P07 is distinguished separately when under the General Perinatal Rules for Chapter 16 (Certain Conditions Originating in the Perinatal Period), section I.C.16.a.1. states that diagnosis codes from Chapter 16 may be reported throughout the life of the patient if the condition is still present. In addition, the guideline at section I.C.16.a.4. states that ``should a condition originate in the perinatal period, and continue throughout the life of the patient, the perinatal code should continue to be used regardless of the patient's age.'' According to these general guidelines, we could assume that potentially all codes within Chapter 16 in the code range of P00 through P96 should be considered for removal from the newborn diagnosis category on the Age conflict edit code list. However, a subsequent section of Chapter 16, section 1.C.16.c.2. (Codes for conditions specified as having implication for future health care needs), instructs users to assign codes for conditions that have been specified by the provider as having implications for future health care needs. Immediately below that instruction is a note which states: ``This guideline should not be used for adult patients.''

    The ICD-10-CM Official Guidelines for Coding and Reporting are updated separately from the IPPS rulemaking process. Due to the confusion with the chapter-specific guidelines for codes in Chapter 16 and how they impact the newborn diagnosis category on the Age conflict edit code list, we believe it would be beneficial to fully evaluate the intent of these guidelines with the Centers for Disease Control's (CDC's) National Center for Health Statistics (NCHS) because NCHS has the lead responsibility for the ICD-10-CM diagnosis codes.

    In the meantime, to address claims processing concerns related to the newborn diagnosis category on the Age conflict edit code list, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25001), we proposed to remove all the ICD-10-CM diagnoses in the code range of P00 through P96 from the newborn diagnosis category in the Age conflict code edit list for the ICD-10 MCE for FY 2017. We invited public comments on our proposal. We also solicited public comments on the appropriateness of the other diagnosis codes currently listed under the newborn diagnosis category in the Age conflict edit in the ICD-10 MCE Version 33. We refer readers to Table 6P.1a. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for review of the diagnosis codes we proposed to remove.

    In addition, for FY 2017, we indicated that we were examining the need to revise the description for the newborn diagnosis category in the Age conflict edit under the MCE. The current description as written, Newborn--Age of 0 years; a subset of diagnoses intended only for newborns and neonates (e.g., fetal distress, perinatal jaundice), is not consistent with the instructions for reporting the diagnosis codes in Chapter 16. We invited public comments on our proposal to revise the description of the newborn diagnosis category in the Age conflict edit under the MCE.

    Comment: Several commenters supported the proposal to remove all the ICD-10-CM diagnoses in the code range of P00 through P96 from the newborn diagnosis category in the Age conflict code edit list. The commenters did not believe the newborn guidelines were in conflict with each other or required any modifications, as the specific references noted in the proposed rule address unrelated reporting issues. However, the commenters indicated that they planned to submit recommendations directly to the CDC to revise an instructional note that appears at the beginning of Chapter 16 which they believe may be a contributing factor to confusion surrounding the proper application of codes within the chapter.

    Response: We appreciate the commenters' support. We also appreciate the commenters' review of the newborn guidelines and their plan to submit a recommendation to the CDC regarding the instructional note that appears at the beginning of Chapter 16.

    We wish to clarify for the commenters that the focus of our proposal was on the removal of codes from the newborn diagnosis category in the Age conflict code edit list. Our discussion involving the references to the guidelines was to simply note the confusion with the guidelines and how those guidelines impact the codes listed under newborn diagnosis category in the Age conflict code edit list. Following that discussion, we stated our belief that it would be beneficial to discuss the intent of the guidelines with CDC.

    Comment: Many commenters supported the proposal for the MCE

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    changes related to the Age conflict edit description.

    Response: We appreciate the commenters' support and believe a revised description of the newborn edit better defines the diagnoses that are subject to it.

    After consideration of the public comments we received, we are finalizing our proposal to remove all the ICD-10-CM diagnoses in the code range of P00 through P96 from the newborn diagnosis category in the Age conflict code edit list for the ICD-10 MCE for FY 2017. The procedure codes listed in Table 6P.1a. associated with this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) are the finalized list of procedure codes that will be removed from the newborn diagnosis category in the Age conflict code edit list in the ICD-10 MCE Version 34 effective October 1, 2016.

    We also are finalizing our proposal to revise the description of the newborn diagnosis category under the ICD-10 MCE from ``Newborn. Age of 0 years; a subset of diagnoses intended only for newborns and neonates (e.g., fetal distress, perinatal jaundice)'' to ``Perinatal/

    Newborn. Age 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 (e.g., tetanus neonatorum, health examination for newborn under 8 days old)'' in the ICD-10 MCE Version 34, effective October 1, 2016.

    (2) Pediatric Diagnosis Category

    Under the ICD-10 MCE Version 33, the pediatric diagnosis category for the Age conflict edit considers the age range of 0 to 17 years inclusive. For that reason, the diagnosis codes on this Age conflict edit list would be expected to apply to conditions or disorders specific to that age group only. The code list for the pediatric diagnosis category in the Age conflict edit currently includes 12 diagnosis codes that fall within the F90 through F98 code range. These codes were included as a result of replication from the ICD-9-CM MCE Version 32 and the draft ICD-10 MCE Version 32.

    We received a request to review the 12 ICD-10-CM diagnosis codes listed in the following table because they appear to conflict with guidance in the ICD-10-CM classification.

    ------------------------------------------------------------------------

    ICD-10-CM diagnosis code Description

    ------------------------------------------------------------------------

    F93.0.................... Separation anxiety disorder of childhood.

    F93.8.................... Other childhood emotional disorders.

    F93.9.................... Childhood emotional disorder, unspecified.

    F94.1.................... Reactive attachment disorder of childhood.

    F94.2.................... Disinhibited attachment disorder of

    childhood.

    F94.8.................... Other childhood disorders of social

    functioning.

    F94.9.................... Childhood disorder of social functioning,

    unspecified.

    F98.21................... Rumination disorder of infancy.

    F98.29................... Other feeding disorders of infancy and early

    childhood.

    F98.3.................... Pica of infancy and childhood.

    F98.8.................... Other specified behavioral and emotional

    disorders with onset usually occurring in

    childhood and adolescence.

    F98.9.................... Unspecified behavioral and emotional

    disorders with onset usually occurring in

    childhood and adolescence.

    ------------------------------------------------------------------------

    Under the ICD-10-CM Tabular List of Diseases and Injuries, Chapter 5 (Mental, Behavioral and Neurodevelopmental Disorders) contains a section titled ``Behavioral and emotional disorders with onset usually occurring in childhood and adolescence'' which includes codes for the F90 to F98 code range. At the beginning of this tabular section is an instructional ``note'' that states: ``Codes within categories F90-F98 may be used regardless of the age of a patient. These disorders generally have onset within the childhood or adolescent years, but may continue throughout life or not be diagnosed until adulthood.''

    Because the note specifically states that these codes may be used regardless of the age of a patient, we believe they should not be included on the pediatric diagnosis category on the Age conflict edit code list. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25001 through 25002), we proposed to remove the 12 codes that fall within the F90 through F98 code range currently listed for the pediatric diagnosis category on the ICD-10 MCE age conflict edit code list, effective October 1, 2016, for FY 2017. We invited public comments on our proposal.

    Comment: Several commenters supported the proposal to address the replication issue for the pediatric diagnosis category on the ICD-10 MCE Age conflict edit code list by removing the 12 ICD-10-CM diagnosis codes in the F90 through F98 code range currently listed.

    Response: We appreciate the commenters' support of our proposal. We also agree that removal of the specified ICD-10-CM diagnosis codes from the edit code list will resolve the replication issue and enable proper reporting of the conditions regardless of the patient's age.

    After consideration of the public comments we received, we are finalizing our proposal to remove the 12 ICD-10-CM diagnosis codes in the F90 through F98 code range displayed earlier in this section from the pediatric diagnosis category Age conflict edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

    We also received a request to review whether another group of diagnosis codes is clinically incorrect for the ICD-10 MCE Version 33 pediatric diagnosis category in the Age conflict edit. The requestor stated that ICD-10-CM diagnosis codes describing infantile and juvenile cataracts, by their titles, appear to merit inclusion on the pediatric diagnosis category on the Age conflict edit code list. However, according to the requestor, the diagnosis is not constrained to a patient's age, but rather the ``infantile'' versus ``juvenile'' reference is specific to the type of cataract the patient has. These diagnosis codes that are currently listed for the pediatric diagnosis category in the ICD-10 MCE Age conflict edit code list are as follows:

    Page 56834

    ------------------------------------------------------------------------

    ICD-10-CM diagnosis code Description

    ------------------------------------------------------------------------

    H26.001.................. Unspecified infantile and juvenile cataract,

    right eye.

    H26.002.................. Unspecified infantile and juvenile cataract,

    left eye.

    H26.003.................. Unspecified infantile and juvenile cataract,

    bilateral.

    H26.009.................. Unspecified infantile and juvenile cataract,

    unspecified eye.

    H26.011.................. Infantile and juvenile cortical, lamellar, or

    zonular cataract, right eye.

    H26.012.................. Infantile and juvenile cortical, lamellar, or

    zonular cataract, left eye.

    H26.013.................. Infantile and juvenile cortical, lamellar, or

    zonular cataract, bilateral.

    H26.019.................. Infantile and juvenile cortical, lamellar, or

    zonular cataract, unspecified eye.

    H26.031.................. Infantile and juvenile nuclear cataract,

    right eye.

    H26.032.................. Infantile and juvenile nuclear cataract, left

    eye.

    H26.033.................. Infantile and juvenile nuclear cataract,

    bilateral.

    H26.039.................. Infantile and juvenile nuclear cataract,

    unspecified eye.

    H26.041.................. Anterior subcapsular polar infantile and

    juvenile cataract, right eye.

    H26.042.................. Anterior subcapsular polar infantile and

    juvenile cataract, left eye.

    H26.043.................. Anterior subcapsular polar infantile and

    juvenile cataract, bilateral.

    H26.049.................. Anterior subcapsular polar infantile and

    juvenile cataract, unspecified eye.

    H26.051.................. Posterior subcapsular polar infantile and

    juvenile cataract, right eye.

    H26.052.................. Posterior subcapsular polar infantile and

    juvenile cataract, left eye.

    H26.053.................. Posterior subcapsular polar infantile and

    juvenile cataract, bilateral.

    H26.059.................. Posterior subcapsular polar infantile and

    juvenile cataract, unspecified eye.

    H26.061.................. Combined forms of infantile and juvenile

    cataract, right eye.

    H26.062.................. Combined forms of infantile and juvenile

    cataract, left eye.

    H26.063.................. Combined forms of infantile and juvenile

    cataract, bilateral.

    H26.069.................. Combined forms of infantile and juvenile

    cataract, unspecified eye.

    H26.09................... Other infantile and juvenile cataract.

    ------------------------------------------------------------------------

    Our clinical advisors reviewed the list of diagnoses presented above and confirmed that these diagnosis codes are appropriate to include in the ICD-10 MCE for the pediatric diagnosis category in the Age conflict edit because the diseases described by these codes are typically diagnosed in early childhood and treated very rapidly to prevent amblyopia. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25002), for FY 2017, we did not propose to remove these codes under the pediatric diagnosis category in the Age conflict edit. We proposed to maintain this list in the ICD-10 MCE Version 34, effective October 1, 2016. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to retain the list of ICD-10-CM diagnosis codes describing infantile and juvenile cataracts in the pediatric diagnosis category for the Age conflict edit.

    Response: We appreciate the commenters' support.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the ICD-10-CM diagnosis codes displayed earlier in this section describing infantile and juvenile cataracts in the pediatric diagnosis category for the Age conflict edit in the ICD-10 MCE Version 34, effective October 1, 2016.

    As stated earlier, for the pediatric diagnosis category in the Age conflict edit, the MCE considers the age range of 0 through 17 years inclusive. In the ICD-10 MCE Version 33, there are four diagnosis codes describing the body mass index (BMI) for pediatric patients in the pediatric diagnosis category on the Age conflict edit code list. The four ICD-10-CM diagnosis codes describing the BMI percentiles for pediatric patients are as follows:

    ------------------------------------------------------------------------

    ICD-10-CM diagnosis code Description

    ------------------------------------------------------------------------

    Z68.51................... Body mass index (BMI) pediatric, less than

    5th percentile for age.

    Z68.52................... Body mass index (BMI) pediatric, 5th

    percentile to less than 85th percentile for

    age.

    Z68.53................... Body mass index (BMI) pediatric, 85th

    percentile to less than 95th percentile for

    age.

    Z68.54................... Body mass index (BMI) pediatric, greater than

    or equal to 95th percentile for age.

    ------------------------------------------------------------------------

    Under the ICD-10-CM Tabular List of Diseases and Injuries, the BMI pediatric diagnosis codes are designated for use in persons 2 through 20 years of age. The percentiles are based on the growth charts published by the CDC. As a result of the age discrepancy between the MCE pediatric diagnosis category in the Age conflict edit (ages 0 through 17) and the Tabular reference for the BMI pediatric codes (ages 2 through 20), in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25003), we proposed to remove ICD-10-CM diagnosis codes Z68.51, Z68.52, Z68.53, and Z68.54 from the ICD-10 MCE pediatric diagnosis category on the Age conflict edit code list for Version 34, effective FY 2017. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to remove the four ICD-

    10-CM diagnosis codes describing body mass index (BMI) for pediatric patients from the pediatric diagnosis category on the Age conflict edit code list in the MCE. The commenters stated that this proposal would enable proper reporting of these codes.

    Response: We appreciate the commenters' support. We agree that removal of the specified ICD-10-CM diagnosis codes discussed previously from the edit code list will resolve any age discrepancy issues in the reporting of the conditions regardless of the patient's age.

    After consideration of the public comments we received, we are finalizing our proposal to remove the four ICD-10-CM diagnosis codes displayed earlier in this section that identify the body mass index for pediatric patients from the pediatric diagnosis category on the Age conflict

    Page 56835

    edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

    One requestor also asked that CMS review the ICD-10-CM diagnosis codes currently included in ICD-10-CM category R62 (Lack of expected normal physiological development in childhood and adults) series. Specifically, the requestor noted that there are adult patients diagnosed with the conditions in subcategory R62.5 (Other and unspecified lack of expected normal physiological development in childhood) and that three of these conditions also were listed in the ICD-10 MCE Version 33 pediatric diagnosis category on the Age conflict edit code list. These three diagnosis codes are:

    R62.50 (Unspecified lack of expected normal physiological development in childhood);

    R62.52 (Short stature (child)); and

    R62.59 (Other lack of expected normal physiological development in childhood).

    We acknowledge that subcategory R62.5 can be confusing with regard to how to appropriately report a condition diagnosed for an adult when the titles reference the terms ``child'' or ``childhood''. Therefore, we consulted with the ICD-10-CM classification staff at the NCHS to determine the intended use and reporting of the diagnosis codes R62.50, R62.52, and R62.59. The NCHS staff agreed that the three diagnosis codes should not be restricted to the pediatric ages as defined by the MCE. The NCHS staff stated the codes are appropriate to report for adult patients, noting that if a patient is diagnosed with short stature as a child, the patient could very well carry over that diagnosis into adulthood.

    During our review of the issue relating to the subcategory R62.5 pediatric diagnosis category on the Age conflict edit code list, we identified another diagnosis code that also appeared appropriate to report for an adult patient. ICD-10-CM diagnosis code Y93.6A (Activity, physical games generally associated with school recess, summer camp and children) is one of several activity codes included in ICD-10-CM Chapter 20 (External Causes of Morbidity). This diagnosis code includes games such as dodge ball and capture the flag, which one can reasonably expect an adult to be engaged in for physical activity.

    We discussed this diagnosis code with the NCHS staff to receive their input on the intent for coding and reporting the code. They agreed that ICD-10-CM diagnosis code Y93.6A is applicable for adults as well as children. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25003), for FY 2017, we proposed to remove ICD-10-CM diagnosis codes R62.50, R62.52, and R62.59 in subcategory R62.5 and ICD-10-CM diagnosis code Y93.6A from the ICD-10 MCE pediatric diagnosis category on the Age conflict edit code list. We invited public comment on our proposal.

    Comment: Commenters supported the proposal to remove ICD-10-CM diagnosis codes R62.50, R62.52, and R62.59 in subcategory R62.5 and to also remove ICD-10-CM diagnosis code Y93.6A from the ICD-10 MCE pediatric diagnosis category on the Age conflict edit code list.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to remove the following four ICD-10-CM diagnosis codes from the pediatric diagnosis category on the Age conflict edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

    R62.50 (Unspecified lack of expected normal physiological development in childhood);

    R62.52 (Short stature (child));

    R62.59 (Other lack of expected normal physiological development in childhood); and

    Y93.6A (Activity, physical games generally associated with school recess, summer camp and children).

  225. Sex Conflict Edit

    In the MCE, the Sex conflict edit detects inconsistencies between a patient's sex and any diagnosis or procedure on the patient's record; for example, a male patient with cervical cancer (diagnosis) or a female patient with a prostatectomy (procedure). In both instances, the indicated diagnosis or the procedure conflicts with the stated sex of the patient. Therefore, the patient's diagnosis, procedure, or sex is presumed to be incorrect.

    We received a request to review ICD-10-CM diagnosis code Z79.890 (Hormone replacement therapy (postmenopausal)). This code is listed on the Diagnoses for females only edit code list. Therefore, when the diagnosis is reported for a male patient, the edit will be triggered. However, the requester noted that the term ``postmenopausal'' is enclosed in parentheses and is a ``non-essential modifier.'' A ``non-

    essential modifier'' is used in the ICD-10-CM classification to identify a supplementary word that may, or may not be present in the statement of a disease or procedure. In other words, the term in parentheses does not have to be documented to report the code. If the medical record documentation states a female patient is undergoing hormone replacement therapy, the documentation supports assignment of the case to ICD-10-CM diagnosis code Z79.890 (Hormone replacement therapy (postmenopausal)). There does not need to be a diagnostic statement that the patient is postmenopausal to assign the code. The requester asked that CMS review why this diagnosis code is being classified as applicable to females only because, in the absence of the non-essential modifier (postmenopausal), the code could also apply to males.

    We note that the ICD-9-CM equivalent code, V07.4 Hormone replacement therapy (postmenopausal) has been on the female only edit since October 1, 1992 in the ICD-9-CM MCE. We consulted with the ICD-

    10-CM classification staff at the NCHS to determine the intended use and reporting of this diagnosis code. The staff at NCHS acknowledged that, historically, the intent of the ICD-9-CM diagnosis code was for females only. However, they agreed that, under ICD-10-CM, the diagnosis code Z79.890 can be reported for both men and women. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25003), we proposed to remove this diagnosis code from the Diagnoses for females only edit code list effective October 1, 2016. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to remove the ICD-10-CM diagnosis code describing hormone replacement therapy from the Diagnosis for females only edit code list in the ICD-10 MCE.

    Response: We appreciate the commenters' support for our proposal. We agree it is appropriate to allow the reporting of the ICD-10-CM diagnosis code describing hormone replacement therapy for both male and female patients.

    After consideration of the public comments we received, we are finalizing our proposal to remove ICD-10-CM diagnosis code Z79.890 (Hormone replacement therapy (postmenopausal)) from the Diagnosis for females only edit code list from the ICD-10 MCE Version 34, effective October 1, 2016.

    We also considered the ICD-10-CM diagnosis codes listed in the table below that are included on the Diagnoses for females only edit code list.

    Page 56836

    ------------------------------------------------------------------------

    ICD-10-CM diagnosis code Description

    ------------------------------------------------------------------------

    Z44.30................... Encounter for fitting and adjustment of

    external breast prosthesis, unspecified

    breast.

    Z44.31................... Encounter for fitting and adjustment of

    external right breast prosthesis.

    Z44.32................... Encounter for fitting and adjustment of

    external left breast prosthesis.

    Z45.811.................. Encounter for adjustment or removal of right

    breast implant.

    Z45.812.................. Encounter for adjustment or removal of left

    breast implant.

    Z45.819.................. Encounter for adjustment or removal of

    unspecified breast implant.

    ------------------------------------------------------------------------

    These codes describe encounters for breast implants or prostheses. Our clinical advisors and the NCHS staff agree that diagnosis codes Z44.30, Z44.31, Z44.32, Z45.811, Z45.812, and Z45.819 are clinically appropriate to report for male patients and should not be restricted to females. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25004), we proposed to remove these diagnosis codes from the Diagnoses for females only edit code list in the ICD-10 MCE, effective October 1, 2016. We invited public comments on our proposal.

    Comment: Commenters agreed that the ICD-10-CM diagnosis codes describing encounters for breast implants or prostheses are appropriate to report for male patients and should not be limited to females.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to remove the six ICD-10-CM diagnosis codes displayed earlier in this section that identify an encounter for fitting or adjustment of a breast implant or prosthesis from the Diagnoses for females only edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

  226. Non-Covered Procedure Edit

    In the MCE, the Non-covered procedure edit identifies procedures for which Medicare does not provide payment. Payment is not provided due to specific criteria that are established in the National Coverage Determination (NCD) process. We refer readers to the Web site at: https://www.cms.gov/Medicare/Coverage/DeterminationProcess/howtorequestanNCD.html for additional information on this process. In addition, there are procedures that would normally not be paid by Medicare but, due to the presence of certain diagnoses, are paid.

    (1) Endovascular Mechanical Thrombectomy

    We received several requests to review ICD-10-PCS procedure code 03CG3ZZ (Extirpation of matter from intracranial artery, percutaneous approach) which is currently listed as a non-covered procedure in the ICD-10 MCE Non-covered procedure edit code list. The comparable ICD-9-

    CM code translations for ICD-10-PCS code 03CG3ZZ are ICD-9-CM codes 17.54 (Percutaneous atherectomy of intracranial vessel(s)) and 39.74 (Endovascular removal of obstruction from head and neck vessel(s)).

    The requestors noted that, under ICD-9-CM, endovascular mechanical thrombectomy of a cerebral artery to remove a clot that is causing an ischemic stroke was reported with procedure code 39.74 (Endovascular removal of obstruction from head and neck vessel(s)) and is a well-

    recognized procedure that has been covered by Medicare. After implementation of ICD-10 on October 1, 2015, claims that were correctly submitted for endovascular mechanical thrombectomy procedures with ICD-

    10-PCS procedure code 03CG3ZZ were triggering the Non-covered procedure edit. The requestors sought clarification as to whether there was a change in coverage or if there was a replication issue.

    Under the ICD-9-CM MCE Version 32, procedure code 00.62 is listed on the Non-covered procedure edit code list. Percutaneous angioplasty of an intracranial vessel procedure (with and without stent) may be reported under ICD-10 with the ICD-10-PCS procedure codes listed in the following table:

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    037G34Z.................. Dilation of intracranial artery with drug-

    eluting intraluminal device, percutaneous

    approach.

    037G3DZ.................. Dilation of intracranial artery with

    intraluminal device, percutaneous approach.

    037G3ZZ.................. Dilation of intracranial artery, percutaneous

    approach.

    037G44Z.................. Dilation of intracranial artery with drug-

    eluting intraluminal device, percutaneous

    endoscopic approach.

    037G4DZ.................. Dilation of intracranial artery with

    intraluminal device, percutaneous endoscopic

    approach.

    037G4ZZ.................. Dilation of intracranial artery, percutaneous

    endoscopic approach.

    057L3DZ.................. Dilation of intracranial vein with

    intraluminal device, percutaneous approach.

    057L4DZ.................. Dilation of intracranial vein with

    intraluminal device, percutaneous endoscopic

    approach.

    ------------------------------------------------------------------------

    We discovered that a replication error occurred due to an outdated ICD-9-CM entry for procedure code 00.62. This error led to ICD-10-PCS procedure codes 03CG3ZZ (Extirpation of matter from intracranial artery, percutaneous approach) and 05CL3ZZ (Extirpation of matter from intracranial vein, percutaneous approach) being listed as comparable translations for ICD-9-CM code 00.62. As a result, ICD-10-PCS procedure code 03CG3ZZ was included on the ICD-10 MCE Version 33 Non-covered procedure edit code list.

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25004), for FY 2017, we proposed to remove the ICD-10-PCS procedure codes listed in the following table from the ICD-10 MCE Version 34.0 Non-covered procedure edit code list.

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    03CG3ZZ.................. Extirpation of matter from intracranial

    artery, percutaneous approach.

    03CG4ZZ.................. Extirpation of matter from intracranial

    artery, percutaneous endoscopic approach.

    Page 56837

    05CL3ZZ.................. Extirpation of matter from intracranial vein,

    percutaneous approach.

    05CL4ZZ.................. Extirpation of matter from intracranial vein,

    percutaneous endoscopic approach.

    ------------------------------------------------------------------------

    We invited public comments on our proposal.

    Comment: Many commenters supported the proposal to remove the four ICD-10-PCS procedure codes describing mechanical thrombectomy from the Non-covered procedure edit code list in the ICD-10 MCE to prevent further claims processing issues. Some commenters also recommended that CMS instruct the MACs to reprocess claims that were denied as a result of the codes being listed in the MCE. Other commenters suggested changes to the National Coverage Determination (NCD) for Intracranial Percutaneous Transluminal Angioplasty (PTA) with Stenting (20.7).

    Response: We appreciate the commenters' support for our proposal. We agree that removal of the four ICD-10-PCS procedure codes that describe mechanical thrombectomy procedures from the non-covered procedure edit code list in the ICD-10 MCE will help resolve future claims processing and denial issues associated with the reporting of these codes.

    In response to the comment that we instruct the MACs to reprocess any affected claims, we note that contractors began reprocessing affected claims at providers' request in March 2016. We recommend that providers who have experienced claims processing issues work with their local MACs to resolve any outstanding claims.

    With regard to the commenters who suggested that changes be made to the NCD for Intracranial PTA with Stenting, we note that we issued instructions with updated changes on June 3, 2016 as a One-Time Notification, Pub. No. 100-20, Transmittal 1672, Change Request 9631, effective October 1, 2016.

    After consideration of the public comments we received, we are finalizing our proposal to remove the four ICD-10-PCS procedure codes displayed earlier in this section from the non-covered procedure edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

    (2) Radical Prostatectomy

    We received a request to review ICD-10-PCS procedure codes related to a radical prostatectomy. Specifically, the requestor noted that when coding cases where the removal of the vas deferens is also performed, a Non-covered procedure edit is triggered. The requestor suggested that the edit for this procedure may be intended for cases where the removal of the vas deferens is being performed for sterilization (vasectomy) purposes. According to the requester, removal of the vas deferens also may be involved with removing the prostate in the radical prostatectomy procedure. The requestor suggested that CMS address this issue by revising the ICD-10 MCE Non-covered procedure edit code list to reflect noncoverage of the procedure codes when the removal of vas deferens procedure is being performed solely for sterilization (vasectomy) purposes.

    Because radical procedures can have different meanings, depending on the procedure, the term ``radical'' is not always reliable information for coding and reporting the procedure. Under ICD-10-PCS, users are instructed to code separately the organs or structures that were actually removed and for which there is a distinctly defined body part. A radical prostatectomy is coded as a ``cluster'' under ICD-10-

    PCS. A ``cluster'' is the term used to describe the circumstance when a combination of ICD-10-PCS procedure codes are needed to fully satisfy the equivalent meaning of an ICD-9-CM procedure code for it to be considered a plausible translation.

    The cluster definition for a radical prostatectomy in ICD-10-PCS currently consists of one of the following codes:

    0VT00ZZ (Resection of prostate, open approach);

    0VT04ZZ (Resection of prostate, percutaneous endoscopic approach);

    0VT07ZZ (Resection of prostate, via natural or artificial opening); or

    0VT08ZZ Resection of prostate, via natural or artificial opening endoscopic; in combination with one of the following codes:

    0VT30ZZ (Resection of bilateral seminal vesicles, open approach); or

    0VT34ZZ (Resection of bilateral seminal vesicles, percutaneous endoscopic approach).

    As stated earlier, under ICD-10-PCS, users are instructed to code separately the organs or structures that were actually removed and for which there is a distinctly defined body part. Therefore, a patient who undergoes a radical prostatectomy that involves removal of the vas deferens would have this procedure reported separately, in addition to the options displayed in the ``cluster.''

    The ICD-10-PCS procedure codes that may be reported for sterilization and involve the bilateral vas deferens include the following:

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    0V5Q0ZZ.................. Destruction of bilateral vas deferens, open

    approach.

    0V5Q3ZZ.................. Destruction of bilateral vas deferens,

    percutaneous approach.

    0V5Q4ZZ.................. Destruction of bilateral vas deferens,

    percutaneous endoscopic approach.

    0VBQ0ZZ.................. Excision of bilateral vas deferens, open

    approach.

    0VBQ3ZZ.................. Excision of bilateral vas deferens,

    percutaneous approach.

    0VBQ4ZZ.................. Excision of bilateral vas deferens,

    percutaneous endoscopic approach.

    0VTQ0ZZ.................. Resection of bilateral vas deferens, open

    approach.

    0VTQ4ZZ.................. Resection of bilateral vas deferens,

    percutaneous endoscopic approach.

    ------------------------------------------------------------------------

    The eight procedure codes listed above describing various methods to remove the bilateral vas deferens are currently listed on the ICD-10 MCE Version 33 Non-covered procedure edit code list.

    The requester is correct in stating that the codes related to removal of the bilateral vas deferens are included on the ICD-10 MCE Version 33 Non-covered procedure edit code list to reflect a sterilization procedure. While the vast majority of sterilization procedures will involve reporting the

    Page 56838

    bilateral procedure codes, there are instances where one vas deferens may have been previously removed for other reasons and the remaining vas deferens requires sterilization. Therefore, the procedure codes describing removal of a unilateral vas deferens are also included on the ICD-10 MCE Version 33 Non-covered procedure edit code list to reflect a sterilization procedure. We agree that revising the language in the edit will resolve the issue of covered procedures being inappropriately subject to the edit.

    In addition, while reviewing the Non-covered procedure edit list of codes that may be reported to identify sterilization procedures for males, we considered the procedure codes that may be reported to identify sterilization procedures for females. We examined the list of ICD-10-PCS procedure codes included on the ICD-10 MCE Version 33 Non-

    covered procedure edit code list that could reflect female sterilization (removal of fallopian tubes) and determined those codes also could be reported for other conditions and could be inappropriately subject to the current edit as well.

    Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25005), for FY 2017, we proposed to create a new ICD-10 MCE Version 34 Non-covered procedure edit to reflect that procedures performed on males involving the unilateral or bilateral vas deferens and procedures performed on females involving the fallopian tubes are not covered procedures for sterilization purposes. The proposed new ICD-10 MCE Version 34 Non-covered procedure edit would be displayed as follows: ``G. Non-covered procedure. The procedure codes shown below are identified as non-covered procedures only when ICD-10-CM diagnosis code Z30.2 (Encounter for sterilization) is listed as the principal diagnosis.''

    We referred readers to Table 6P.1b. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) to review the proposed list of noncovered procedure codes describing sterilization procedures for males and females for this proposed Non-covered procedure edit. We invited public comments on our proposal to create this new Non-covered procedure edit and also invited public comments on the proposed list of codes to describe sterilization procedures for the proposed edit.

    Comment: Commenters supported the proposal to create a new ICD-10 MCE Version 34 Non-covered procedure edit to reflect that procedures performed on males involving the unilateral or bilateral vas deferens and procedures performed on females involving the fallopian tubes are not covered procedures for sterilization purposes. One commenter noted that there could be situations in which a patient is admitted for another condition and a sterilization procedure is performed during that episode of care. For example, the commenter stated a female may be admitted for a cesarean section and have a tubal ligation procedure during that same hospitalization. The commenter suggested that the proposed list of procedure codes be considered as non-covered when ICD-

    10-CM diagnosis code Z30.2 is reported as a principal or secondary diagnosis on the claim.

    Response: We appreciate the commenters' support for our proposal. We also agree with the commenter that it is appropriate to list ICD-10-

    CM diagnosis code Z30.2 (Encounter for sterilization) as a principal or secondary diagnosis for purposes of the non-covered procedure edit.

    After consideration of the public comments we received, we are finalizing our proposal to create a new ICD-10 MCE Version 34 Non-

    covered procedure edit. The new edit will be defined as follows: ``G. Non-covered procedure. The procedure codes shown below are identified as non-covered procedures only when ICD-10-CM diagnosis code Z30.2 (Encounter for sterilization) is listed as the principal diagnosis or secondary diagnosis.'' The procedure codes listed in Table 6P.1b. associated with this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) are the finalized list of non-covered procedure codes describing sterilization procedures for males and females for this finalized Non-covered procedure edit in the ICD-10 MCE Version 34, effective October 1, 2016.

  227. Unacceptable Principal Diagnosis Edit

    In the MCE, there are select codes that describe a circumstance which influences an individual's health status but does not actually describe a current illness or injury. There also are codes that are not specific manifestations but may be due to an underlying cause. These codes are considered unacceptable as a principal diagnosis. In limited situations, there are a few codes on the MCE Unacceptable principal diagnosis edit code list that are considered ``acceptable'' when a specified secondary diagnosis is also coded and reported on the claim.

    (1) Liveborn Infant

    We received a request to examine ICD-10-CM diagnosis codes Z38.1 (Single liveborn infant, born outside hospital), Z38.4 (Twin liveborn infant, born outside hospital), and Z38.7 (Other multiple liveborn infant, born outside hospital), all of which are currently listed on the Unacceptable principal diagnosis edit code list for the ICD-10 MCE Version 33. The requestor believed that these codes are listed in error and suggested their removal.

    The ICD-10-CM diagnosis code descriptions for liveborn infants differ from the ICD-9-CM diagnosis code descriptions for liveborn infants. The ICD-9-CM codes differentiate between a liveborn infant that was born prior to admission and hospitalized versus a liveborn infant that was born prior to admission and not hospitalized. The following codes in the ICD-9-CM MCE Version 32 included on the Unacceptable principal diagnosis edit code list are those that describe a liveborn infant that was born outside the hospital and not hospitalized:

    ------------------------------------------------------------------------

    ICD-9-CM diagnosis code Description

    ------------------------------------------------------------------------

    V30.2.................... Single liveborn, born outside hospital and

    not hospitalized.

    V31.2.................... Twin birth, mate liveborn, born outside

    hospital and not hospitalized.

    V32.2.................... Twin birth, mate stillborn, born outside

    hospital and not hospitalized.

    V33.2.................... Twin birth, unspecified whether mate liveborn

    or stillborn, born outside hospital and not

    hospitalized.

    V34.2.................... Other multiple birth (three or more), mates

    all liveborn, born outside hospital and not

    hospitalized.

    V35.2.................... Other multiple birth (three or more), mates

    all stillborn, born outside of hospital and

    not hospitalized.

    V36.2.................... Other multiple birth (three or more), mates

    liveborn and stillborn, born outside

    hospital and not hospitalized.

    V37.2.................... Other multiple birth (three or more),

    unspecified whether mates liveborn or

    stillborn, born outside of hospital.

    V39.1.................... Liveborn, unspecified whether single, twin or

    multiple, born before admission to hospital.

    Page 56839

    V39.2.................... Liveborn, unspecified whether single, twin or

    multiple, born outside hospital and not

    hospitalized.

    ------------------------------------------------------------------------

    For replication purposes, the comparable ICD-10-CM diagnosis codes for the above listed codes are: Z38.1 (Single liveborn infant, born outside hospital); Z38.4 (Twin liveborn infant, born outside hospital); and Z38.7 (Other multiple liveborn infant, born outside hospital). There are no other ICD-10-CM diagnosis codes that describe a liveborn infant born outside a hospital.

    The liveborn infant codes are an example of where a particular concept involving the place of birth is not the same between the ICD-9-

    CM and ICD-10-CM classification systems. Because the ICD-10-CM diagnosis codes do not include the same concept as the ICD-9-CM diagnosis codes regarding whether the liveborn infant was hospitalized or not, we agree it would not be appropriate to continue to include the ICD-10-CM diagnosis codes on the Unacceptable principal diagnosis list.

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25006), for FY 2017, we proposed to remove ICD-10-CM diagnosis codes Z38.1, Z38.4, and Z38.7 from the Unacceptable principal diagnosis edit in the ICD-10 MCE Version 34. We invited public comments on our proposal.

    Comment: Several commenters supported the proposal to remove the three ICD-10-CM diagnosis codes describing a liveborn infant born outside of the hospital from the Unacceptable principal diagnosis edit code list in the ICD-10 MCE.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to remove codes Z38.1 (Single liveborn infant, born outside hospital); Z38.4 (Twin liveborn infant, born outside hospital); and Z38.7 (Other multiple liveborn infant, born outside hospital) from the Unacceptable principal diagnosis edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

    (2) Multiple Gestation

    As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25006 through 25007), we received a request to review the ICD-10-CM diagnosis codes related to multiple gestation that are currently listed on the ICD-10 MCE Version 33 Unacceptable principal diagnosis edit code list. The requestor expressed concern that these codes were included in the edit and suggested that CMS evaluate further to determine if they were appropriate.

    In the ICD-10-CM classification, a single diagnosis code describes a multiple gestation and contains information pertaining to the placenta. This differs from the ICD-9-CM classification, where two diagnosis codes are required to separately report (1) multiple gestation with a delivery or complication and (2) multiple gestation with the status of the placenta.

    In the ICD-9-CM MCE Version 32, only the ICD-9-CM diagnosis codes describing the status of the placenta are listed on the Unacceptable principal diagnosis edit code list. These ICD-9-CM diagnosis codes are:

    ------------------------------------------------------------------------

    ICD-9-CM diagnosis code Description

    ------------------------------------------------------------------------

    V91.00................... Twin gestation, unspecified number of

    placenta, unspecified number of amniotic

    sacs.

    V91.01................... Twin gestation, monochorionic/monoamniotic

    (one placenta, one amniotic sac).

    V91.02................... Twin gestation, monochorionic/diamniotic (one

    placenta, two amniotic sacs).

    V91.03................... Twin gestation, dichorionic/diamniotic (two

    placentae, two amniotic sacs).

    V91.09................... Twin gestation, unable to determine number of

    placenta and number of amniotic sacs.

    V91.10................... Triplet gestation, unspecified number of

    placenta and unspecified number of amniotic

    sacs.

    V91.11................... Triplet gestation, with two or more

    monochorionic fetuses.

    V91.12................... Triplet gestation, with two or more

    monoamniotic fetuses.

    V91.19................... Triplet gestation, unable to determine number

    of placenta and number of amniotic sacs.

    V91.20................... (Quadruplet gestation, unspecified number of

    placenta and unspecified number of amniotic

    sacs.

    V91.21................... Quadruplet gestation, with two or more

    monochorionic fetuses.

    V91.22................... Quadruplet gestation, with two or more

    monoamniotic fetuses.

    V91.29................... Quadruplet gestation, unable to determine

    number of placenta and number of amniotic

    sacs.

    V91.90................... Other specified multiple gestation,

    unspecified number of placenta and

    unspecified number of amniotic sacs.

    V91.91................... Other specified multiple gestation, with two

    or more monochorionic fetuses.

    V91.92................... Other specified multiple gestation, with two

    or more monoamniotic fetuses.

    V91.99................... Other specified multiple gestation, unable to

    determine number of placenta and number of

    amniotic sacs.

    ------------------------------------------------------------------------

    There are 68 ICD-10-CM diagnosis codes included on the ICD-10 MCE Version 33 Unacceptable principal diagnosis edit code list as comparable translations that describe multiple gestation and status of the placenta. The list of these codes was included in Table 6P.1c. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

    Because only one, and not both, concepts from the ICD-9-CM classification was considered to be an unacceptable principal diagnosis (status of placenta) in the ICD-9-CM MCE, we agree this was a replication error that incorrectly included the ICD-10-CM diagnosis codes that identify both concepts (multiple gestation and status of placenta) in a single code on the ICD-10 MCE. The edit cannot isolate the status of placenta for the ICD-10 MCE because it is reported in combination with the multiple gestation as a single code. Therefore, it is inappropriate to include these codes on the Unacceptable principal diagnosis edit code list.

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25007), for FY 2017, we proposed to remove the ICD-10-CM diagnosis codes listed in Table 6P.1c. associated with the proposed rule (which is available via Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) from the ICD-10 MCE

    Page 56840

    Version 34 Unacceptable principal diagnosis list. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to remove the ICD-10-CM diagnosis codes listed describing multiple gestation from the Unacceptable principal diagnosis edit code list in the ICD-10 MCE.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to remove the ICD-10-CM diagnosis codes listed in Table 6P.1c. associated with this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) from the ICD-10 MCE Version 34 Unacceptable principal diagnosis list, effective October 1, 2016.

    (3) Supervision of High Risk Pregnancy

    We received a request to review the ICD-10-CM diagnosis codes related to supervision of high risk pregnancy (elderly primigravida and multigravida) that are currently listed on the ICD-10 MCE Version 33 Unacceptable principal diagnosis edit code list. The requestor stated that these codes were not included in the edit under the ICD-9-CM MCE. According to the requester, the codes describing these conditions should be allowed for reporting as a principal diagnosis based on the ICD-10-CM Tabular List of Diseases instructions for Chapter 15 (Certain Conditions Originating in the Perinatal Period). The chapter-specific guidelines for ICD-10-CM state that ``diagnosis code O80 (Encounter for full-term uncomplicated delivery) should be assigned when a woman is admitted for a full-term normal delivery and delivers a single, healthy infant without any complications antepartum, during the delivery, or postpartum during the delivery episode. Code O80 is always a principal diagnosis. It is not to be used if any other code from Chapter 15 is needed to describe a current complication of the antenatal, delivery, or perinatal period.'' The requestor stated that obstetric patients admitted as inpatients often meet the definition of an elderly primigravida or elderly multigravida,\1\ which is the appropriate condition to be reported as the principal diagnosis. However, because the codes describing this condition are listed on the Unacceptable principal diagnosis edit code list, they are unable to be reported.

    ---------------------------------------------------------------------------

    \1\ The ICD-10-CM classification defines an elderly primigravida or elderly multigravida as a complication of the pregnancy since the management and care of the expectant mother is affected by the fact they are an older patient.

    ---------------------------------------------------------------------------

    The diagnosis codes describing high-risk patients admitted for delivery differ between the ICD-10-CM and ICD-9-CM classifications. Under ICD-9-CM, two diagnosis codes are required to separately report concept 1 of elderly primigravida or elderly multigravida and whether a delivery occurred and concept 2 of supervision of high-risk pregnancy with elderly primigravida or elderly multigravida. We display the codes that correspond to these concepts below and titled them as Code List 1 and Code List 2. A code from each list would be reported to fully describe the circumstances of the admission and the patient.

    Code List 1--We note that the following codes are listed on the ICD-9-CM MCE Version 32 Unacceptable principal diagnosis edit code list:

    ------------------------------------------------------------------------

    ICD-9-CM diagnosis code Description

    ------------------------------------------------------------------------

    V23.81................... Supervision of high-risk pregnancy with

    elderly primigravida.

    V23.82................... Supervision of high-risk pregnancy with

    elderly multigravida.

    ------------------------------------------------------------------------

    Code List 2--We note that the following codes are not listed on the ICD-9-CM MCE Version 32 Unacceptable principal diagnosis edit code list. However, we display them here for the benefit of the reader in the discussion that follows.

    ------------------------------------------------------------------------

    ICD-9-CM diagnosis code Description

    ------------------------------------------------------------------------

    659.50................... Elderly primigravida, unspecified as to

    episode of care or not applicable.

    659.51................... Elderly primigravida, delivered, with or

    without mention of antepartum condition.

    659.53................... Elderly primigravida, antepartum condition or

    complication.

    659.60................... Elderly multigravida, unspecified as to

    episode of care or not applicable.

    659.61................... Elderly multigravida, delivered with or

    without mention of antepartum condition.

    659.63................... Elderly multigravida, antepartum condition or

    complication.

    ------------------------------------------------------------------------

    As noted above, in the ICD-9-CM MCE Version 32, only the ICD-9-CM diagnosis codes describing the supervision of high-risk pregnancy are listed on the Unacceptable principal diagnosis edit code list.

    There are eight ICD-10-CM diagnosis codes included on the ICD-10 MCE Version 33 Unacceptable principal diagnosis edit code list that describe the concept of elderly primigravida or elderly multigravida and supervision of high-risk pregnancy, in a single code. As shown below, the concept of whether a delivery occurred is not included in the code description for the eight codes.

    ------------------------------------------------------------------------

    ICD-10-CM diagnosis code Description

    ------------------------------------------------------------------------

    O09.511.................. Supervision of elderly primigravida, first

    trimester.

    O09.512.................. Supervision of elderly primigravida, second

    trimester.

    O09.513.................. Supervision of elderly primigravida, third

    trimester.

    O09.519.................. Supervision of elderly primigravida,

    unspecified trimester.

    Page 56841

    O09.521.................. Supervision of elderly multigravida, first

    trimester.

    O09.522.................. Supervision of elderly multigravida, second

    trimester.

    O09.523.................. Supervision of elderly multigravida, third

    trimester.

    O09.529.................. Supervision of elderly multigravida,

    unspecified trimester.

    ------------------------------------------------------------------------

    Because the concepts and coding guidelines between the ICD-9-CM and ICD-10-CM classifications differ greatly in how they define this subset of patients, in the FY 2017 IPPS/LTCH PPS proposed rule, we acknowledged that the eight ICD-10-CM diagnosis codes listed above should be removed from the ICD-10 MCE Unacceptable principal diagnosis edit code list to permit the reporting of these codes as principal diagnosis when the documentation supports such assignment.

    We also note that during our analysis of the eight diagnosis codes describing elderly primigravida and elderly multigravida high risk pregnancy patients, we found additional codes on the ICD-10 MCE Version 33 Unacceptable principal diagnosis edit code list related to high-risk pregnancy that we believe should also be removed so as to permit the reporting of these codes as principal diagnosis when the documentation supports such assignment.

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25007 through 25008), for FY 2017, we proposed to remove all the ICD-10-CM diagnosis codes related to high-risk pregnancy currently listed in Table 6P.1d. associated with the proposed rule (which is available via Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) from the ICD-10 MCE Version 34 Unacceptable principal diagnosis edit code list. We invited public comment on our proposal.

    Comment: Many commenters supported the proposal to remove the ICD-

    10-CM diagnosis codes related to high-risk pregnancy from the ICD-10 MCE Unacceptable principal diagnosis edit code list. However, some commenters did not support the proposal. The commenters stated their understanding that the codes from category O09, Supervision of high-

    risk pregnancy, should only be used for routine prenatal outpatient visits.

    Response: We appreciate the commenters' support of our proposal. With regard to the commenters who did not support the proposal to remove the diagnosis codes related to high-risk pregnancy from the ICD-

    10 MCE Unacceptable principal diagnosis edit code list, we note that there is confusion with the correct reporting of these diagnosis codes. For example, in the Alphabetic Index to Diseases, the following entry is displayed:

    Pregnancy (childbirth) (labor) (puerperium) (see also Delivery and Puerperal)

    squsqu complicated by (care of) (management affected by)

    squsqu elderly

    squsqusqu multigravida O09.52-

    squsqusqu primigravida O09.51-.

    Therefore, the classification is defining an elderly multigravida or elderly primigravida as a complication of the pregnancy. This entry could relate to Chapter 15, Section I.C.15.b.3 of the guidelines for episodes when no delivery occurs, which instructs users that the principal diagnosis should correspond to the principal complication of the pregnancy which necessitated the encounter for care. In other words, if an elderly primigravida is admitted to the hospital with no other complications and does not deliver during that admission, the classification appears to allow the reporting of a code from category O09, Supervision of high-risk pregnancy, as a principal diagnosis based on the Index entry. However, in Chapter 15, Section I.C.15.b.2. of the guidelines, the language instructs users that a code from category O90, Supervision of high-risk pregnancy, should be used as the first-listed diagnosis to report prenatal outpatient visits for high-risk patients.

    We consulted with the staff at the CDC's NCHS to clarify the intent of the ICD-10-CM Alphabetic Index to Diseases entry and the Chapter 15 guidelines related to these codes. According to the CDC NCHS staff, the ICD-10-CM Guidelines have been updated for FY 2017 to explain the appropriate reporting of category O09 codes. The FY 2017 ICD-10-CM Official Guidelines for Coding and Reporting are available via the Internet on the CDC Web site at: http://www.cdc.gov/nchs/icd/icd10cm.htm. We note that, historically, we have not provided coding advice in rulemaking with respect to policy. We collaborate with the American Hospital Association (AHA) through the Coding Clinic for ICD-

    10-CM and ICD-10-PCS to promote proper coding. In addition, a proposal to revise the ICD-10-CM Alphabetic Index to Diseases will be discussed at the September 13-14, 2016 ICD-10 Coordination and Maintenance Committee meeting.

    After consideration of the public comments we received and the updated FY 2017 ICD-10-CM Official Guidelines for Coding and Reporting, we are not finalizing our proposal to remove all the ICD-10-CM diagnosis codes related to high-risk pregnancy currently listed in Table 6P.1d. associated with the proposed rule and this final rule (which is available via Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) from the ICD-10 MCE Version 34 Unacceptable principal diagnosis edit code list. The ICD-10-CM diagnosis codes listed in Table 6P.1d. will continue to be subject to the Unacceptable principal diagnosis edit in the ICD-10 MCE Version 34, effective October 1, 2016.

  228. Other MCE Issues

    The following MCE discussion, proposals, and final policies are the result of internal review of other MCE issues.

    (1) Procedure Inconsistent With Length of Stay Edit

    In the FY 2016 IPPS/LTCH PPS final rule (80 FR 49411), we finalized a revision for the language of the ICD-10 MCE Version 33 edit for ``Procedure inconsistent with length of stay'' with regard to ICD-10-

    PCS procedure code 5A1955Z (Respiratory ventilation, greater than 96 consecutive hours). The current description of the code edit reads as follows: ``The following procedure code should only be coded on claims with a length of stay greater than four days.''

    As we strive to assist providers with correct coding and reporting of this service, we proposed to further revise the description of this code edit. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25008), for FY 2017, we proposed to modify the edit description to read as follows: ``The following procedure code should only be coded on claims when the respiratory ventilation is provided for greater than

    Page 56842

    four consecutive days during the length of stay.''

    We stated that we believe this proposed modification would further clarify the appropriate circumstances in which ICD-10-PCS code 5A1955Z may be reported. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to modify the description for the ``Procedure inconsistent with length of stay'' edit for ICD-10-PCS code 5A1955Z in the ICD-10 MCE.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are adopting as final the proposed revision of the description of the ``Procedure inconsistent with length of stay'' edit for ICD-10-PCS code 5A1955Z (Respiratory ventilation, greater than 96 consecutive hours) under the ICD-10 MCE from ``The following procedure code should only be coded on claims with a length of stay greater than four days'' to ``The following procedure code should only be coded on claims when the respiratory ventilation is provided for greater than four consecutive days during the length of stay'' in the ICD-10 MCE Version 34, effective October 1, 2016.

    Also, consistent with the discussion in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49411 through 49412), we believe it would be beneficial to revise the title for ICD-10 MS-DRG 208 (Respiratory System Diagnosis with Ventilator Support C58 (Malignant neoplasm of placenta);

    D39.2 (Neoplasm of uncertain behavior of placenta); and

    F53 (Puerperal psychosis).

    To be consistent with other related conditions currently included on the Age conflict edit code list for maternity diagnoses, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25008), we proposed to add ICD-

    10-CM diagnosis codes C58 (Malignant neoplasm of placenta), D39.2 (Neoplasm of uncertain behavior of placenta), and F53 (Puerperal psychosis) to the Age conflict edit code list for maternity diagnoses.

    We invited public comments on our proposals for changes to the FY 2017 ICD-10 MCE Version 34.

    Comment: Many commenters supported the proposal to add ICD-10-CM diagnosis codes C58, D39.2, and F53 to the Age conflict edit code list for maternity diagnosis in the ICD-10 MCE. The commenters stated that the addition of these diagnosis codes is appropriate and consistent with related conditions currently on the edit code list for maternity diagnoses.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis codes C58 (Malignant neoplasm of placenta), D39.2 (Neoplasm of uncertain behavior of placenta), and F53 (Puerperal psychosis) to the Age conflict edit code list for maternity diagnosis in the ICD-10 MCE Version 34, effective October 1, 2016.

    (3) Manifestation Codes Not Allowed as Principal Diagnosis Edit

    Section I.A.13. of the FY 2016 ICD-10-CM Official Guidelines for Coding and Reporting states that certain conditions have both an underlying etiology and multiple body system manifestations due to the underlying etiology. For such conditions, the classification has a coding convention that requires the underlying condition be sequenced first followed by the manifestation. Wherever such a combination exists, there is a ``use additional code'' note at the etiology code, and a ``code first'' note at the manifestation code. These instructional notes indicate proper sequencing order of the codes, etiology followed by manifestation.

    We found that in the ICD-10-CM Tabular List of Diseases at category M02 (Postinfective and reactive arthropathies), a ``Code first underlying disease'' note exists. This would indicate that there are codes in that category that are manifestations of an underlying etiology. We then examined the ICD-10 MCE Version 33 to determine if diagnosis codes from that category were included on the Manifestation codes not allowed as principal diagnosis edit code list. Only three ICD-10-CM diagnosis codes from that category were listed:

    M02.88 (Other reactive arthropathies, vertebrae);

    M02.89 (Other reactive arthropathies, multiple sites); and

    M02.9 (Reactive arthropathy, unspecified).

    Based on the instructional note at the M02 category level, the title at subcategory M02.8 (Other reactive arthropathies), and the three diagnosis codes listed above on the current ICD-10 MCE Version 33 Manifestation codes not allowed as principal diagnosis edit code list, it seems appropriate that all of the diagnosis codes in subcategory M02.8 should be identified as manifestation codes.

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25008 through 25009), we proposed to add the ICD-10-CM diagnosis codes listed in the following table to the ICD-10 MCE Version 34 Manifestation codes not allowed as principal diagnosis edit code list.

    ------------------------------------------------------------------------

    ICD-10-CM diagnosis code Description

    ------------------------------------------------------------------------

    M02.80................... Other reactive arthropathies, unspecified

    site.

    Page 56843

    M02.811.................. Other reactive arthropathies, right shoulder.

    M02.812.................. Other reactive arthropathies, left shoulder.

    M02.819.................. Other reactive arthropathies, unspecified

    shoulder.

    M02.821.................. Other reactive arthropathies, right elbow.

    M02.822.................. Other reactive arthropathies, left elbow.

    M02.829.................. Other reactive arthropathies, unspecified

    elbow.

    M02.831.................. Other reactive arthropathies, right wrist.

    M02.832.................. Other reactive arthropathies, left wrist.

    M02.839.................. Other reactive arthropathies, unspecified

    wrist.

    M02.841.................. Other reactive arthropathies, right hand.

    M02.842.................. Other reactive arthropathies, left hand.

    M02.849.................. Other reactive arthropathies, unspecified

    hand.

    M02.851.................. Other reactive arthropathies, right hip.

    M02.852.................. Other reactive arthropathies, left hip.

    M02.859.................. Other reactive arthropathies, unspecified

    hip.

    M02.861.................. Other reactive arthropathies, right knee.

    M02.862.................. Other reactive arthropathies, left knee.

    M02.869.................. Other reactive arthropathies, unspecified

    knee.

    M02.871.................. Other reactive arthropathies, right ankle and

    foot.

    M02.872.................. Other reactive arthropathies, left ankle and

    foot.

    M02.879.................. Other reactive arthropathies, unspecified

    ankle and foot.

    ------------------------------------------------------------------------

    We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the ICD-10-CM codes in the table included in the proposed rule describing other reactive arthropathies to the Manifestation codes not allowed as principal diagnosis edit code list in the ICD-10 MCE.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to add the diagnosis codes in subcategory M02.8 as displayed in the table in the proposed rule and above to the Manifestation codes not allowed as principal diagnosis edit code list in the ICD-10 MCE Version 34, effective October 1, 2016.

    (4) Questionable Admission Edit

    In the MCE, some diagnoses are not usually sufficient justification for admission to an acute care hospital. For example, if a patient is assigned ICD-10-CM diagnosis code R03.0 (Elevated blood pressure reading, without diagnosis of hypertension), the patient would have a questionable admission because an elevated blood pressure reading is not normally sufficient justification for admission to a hospital.

    Upon review of the ICD-10-CM diagnosis codes listed under the ICD-

    10 MCE Version 33 Questionable Admission edit, our clinical advisors determined that certain diagnoses clinically warrant hospital admission. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25009), we proposed to remove the following diagnosis codes from the ICD-10 MCE Version 34.0 Questionable admission edit.

    T81.81XA (Complication of inhalation therapy, initial encounter);

    T88.4XXA (Failed or difficult intubation, initial encounter);

    T88.7XXA (Unspecified adverse effect of drug or medicament, initial encounter);

    T88.8XXA (Other specified complications of surgical and medical care, not elsewhere classified, initial encounter); and

    T88.9XXA (Complication of surgical and medical care, unspecified, initial encounter).

    We invited public comments on our proposal.

    Comment: A number of commenters supported the proposal to remove the ICD-10-CM diagnosis codes listed in the proposed rule from the Questionable admission edit in the ICD-10 MCE.

    Response: We appreciate the commenters' support for our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to remove the five ICD-10-CM diagnosis codes listed in the proposed rule and above (T81.81XA, T88.4XXA, T88.7XXA, T88.8XXA, and T88.9XXA) from the ICD-10 MCE Questionable admission edit for the ICD-10 MCE Version 34, effective October 1, 2016.

    (5) Removal of Edits and Future Enhancement

    With the implementation of ICD-10, it is clear that there are several concepts that differ from the ICD-9-CM classification. These differences are evident in the MCE as discussed earlier in this section. Looking ahead to the needs and uses of coded data as the data continue to evolve from the reporting, collection, processing, coverage, payment and analysis aspect, we believe the need to ensure the accuracy of the coded data becomes increasingly significant.

    The purpose of the MCE is to ensure that errors and inconsistencies in the coded data are recognized during Medicare claims processing. As shown in the FY 2016 ICD-10 MCE Version 33 manual file and an ICD-9-CM MCE Version 33.0A manual file (developed for analysis only), an edit code list exists according to the definition or criteria set forth for each specified type of edit. Over time, certain edits under the ICD-9-

    CM MCE became discontinued as they were no longer needed. However, the MCE manual has continued to make reference to these discontinued edits, including through the replication process with transitioning to ICD-10.

    Currently, the FY 2016 ICD-10 MCE Version 33 manual file displays the following edits:

    12. Open biopsy check. Effective October 1, 2010, the Open biopsy check edit was discontinued and will appear for claims processed using MCE Version 2.0-26.0 only.

    13. Bilateral procedure. Effective with the ICD-10 implementation, the bilateral procedure edit will be discontinued.

    Because these edits are no longer valid, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25009), we proposed to remove the reference to them, effective with the ICD-10 MCE manual and software Version 34, for FY 2017. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to remove the language referencing discontinued edits for the

    Page 56844

    open biopsy check and the bilateral procedure edit from the ICD-10 MCE.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to remove the references to the open biopsy check and the bilateral procedure edit from the ICD-10 MCE Version 34, effective October 1, 2016.

    As we continue to evaluate the purpose and function of the MCE with respect to the transition to ICD-10, we encourage public input for future discussion. For instance, we recognize a need to further examine the current list of edits and the definitions of those edits. We encourage public comments on whether there are additional concerns with the current edits, including specific edits or language that should be removed or revised, edits that should be combined, or new edits that should be added to assist in detecting errors or inaccuracies in the coded data.

    13. Changes to Surgical Hierarchies

    Some inpatient stays entail multiple surgical procedures, each one of which, occurring by itself, could result in assignment of the case to a different MS-DRG within the MDC to which the principal diagnosis is assigned. Therefore, it is necessary to have a decision rule within the GROUPER by which these cases are assigned to a single MS-DRG. The surgical hierarchy, an ordering of surgical classes from most resource-

    intensive to least resource-intensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS-DRG associated with the most resource-intensive surgical class.

    Because the relative resource intensity of surgical classes can shift as a function of MS-DRG reclassification and recalibrations, for FY 2017, we reviewed the surgical hierarchy of each MDC, as we have for previous reclassifications and recalibrations, to determine if the ordering of classes coincides with the intensity of resource utilization.

    A surgical class can be composed of one or more MS-DRGs. For example, in MDC 11, the surgical class ``kidney transplant'' consists of a single MS-DRG (MS-DRG 652) and the class ``major bladder procedures'' consists of three MS-DRGs (MS-DRGs 653, 654, and 655). Consequently, in many cases, the surgical hierarchy has an impact on more than one MS-DRG. The methodology for determining the most resource-intensive surgical class involves weighting the average resources for each MS-DRG by frequency to determine the weighted average resources for each surgical class. For example, assume surgical class A includes MS-DRGs 001 and 002 and surgical class B includes MS-

    DRGs 003, 004, and 005. Assume also that the average costs of MS-DRG 001 are higher than that of MS-DRG 003, but the average costs of MS-

    DRGs 004 and 005 are higher than the average costs of MS-DRG 002. To determine whether surgical class A should be higher or lower than surgical class B in the surgical hierarchy, we would weigh the average costs of each MS-DRG in the class by frequency (that is, by the number of cases in the MS-DRG) to determine average resource consumption for the surgical class. The surgical classes would then be ordered from the class with the highest average resource utilization to that with the lowest, with the exception of ``other O.R. procedures'' as discussed in this rule.

    This methodology may occasionally result in assignment of a case involving multiple procedures to the lower-weighted MS-DRG (in the highest, most resource-intensive surgical class) of the available alternatives. However, given that the logic underlying the surgical hierarchy provides that the GROUPER search for the procedure in the most resource-intensive surgical class, in cases involving multiple procedures, this result is sometimes unavoidable.

    We note that, notwithstanding the foregoing discussion, there are a few instances when a surgical class with a lower average cost is ordered above a surgical class with a higher average cost. For example, the ``other O.R. procedures'' surgical class is uniformly ordered last in the surgical hierarchy of each MDC in which it occurs, regardless of the fact that the average costs for the MS-DRG or MS-DRGs in that surgical class may be higher than those for other surgical classes in the MDC. The ``other O.R. procedures'' class is a group of procedures that are only infrequently related to the diagnoses in the MDC, but are still occasionally performed on patients with cases assigned to the MDC with these diagnoses. Therefore, assignment to these surgical classes should only occur if no other surgical class more closely related to the diagnoses in the MDC is appropriate.

    A second example occurs when the difference between the average costs for two surgical classes is very small. We have found that small differences generally do not warrant reordering of the hierarchy because, as a result of reassigning cases on the basis of the hierarchy change, the average costs are likely to shift such that the higher-

    ordered surgical class has lower average costs than the class ordered below it.

    Based on the changes that we proposed to make for FY 2017, as discussed in section II.F.4.c. of the preamble of the FY 2017 IPPS/LTCH PPS proposed rule, we proposed to maintain the existing surgical hierarchy in MDC 5 for proposed revised MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with MCC and without MCC, respectively) (81 FR 25010).

    We invited public comments on our proposal.

    Comment: A number of commenters supported the proposal to maintain the current surgical hierarchy in MDC 5 for proposed revised MS-DRGs 228 and 229.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the current surgical hierarchy in MDC 5 for FY 2017. As discussed in section II.F.5.d. in the preamble of this final rule, we finalized the modification of MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively), effective with the ICD-10 MS-DRGs Version 34 on October 1, 2016.

    14. Changes to the MS-DRG Diagnosis Codes for FY 2017

    As discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25010), the tables identifying the proposed additions and deletions to the MCC severity levels list and the proposed additions and deletions to the CC severity levels list for FY 2017 were made available via the Internet on the CMS Web site at: http://cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as follows:

    Table 6I.1--Proposed Additions to the MCC List--FY 2017;

    Table 6I.2--Proposed Deletions to the MCC List--FY 2017;

    Table 6J.1--Proposed Additions to the CC List--FY 2017; and

    Table 6J.2--Proposed Deletions to the CC List--FY 2017.

    We did not receive any public comments on the proposed additions or deletions to the MCC and CC lists and, therefore, are adopting them as final, effective October 1, 2016. The final version of these four tables for FY 2017 are available via the Internet on the same CMS Web site cited above.

    As we stated in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49414), certain ICD-10-CM diagnosis codes express conditions that, when coded in

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    ICD-9-CM, use two or more ICD-9-CM diagnosis codes. In the interest of ensuring that the ICD-10 MS-DRGs place a patient in the same MS-DRG, regardless of whether the patient claim was to be coded in ICD-9-CM or ICD-10, whenever one of these ICD-10-CM combination codes is used as principal diagnosis, the cluster of ICD-9-CM codes that would be coded on an ICD-9-CM claim is considered. If one of the ICD-9-CM codes in the cluster is a CC or an MCC, the single ICD-10-CM combination code used as a principal diagnosis must also imply that the CC or MCC is present. Appendix J of the ICD-10 MS-DRG Definitions Manual Version 33 includes two lists. Part 1 is the list of principal diagnosis codes where the ICD-10-CM code is its own MCC. Part 2 is the list of principal diagnosis codes where the ICD-10-CM code is its own CC. Appendix J of the ICD-10 MS-DRG Definitions Manual Version 33 is available via the internet on the CMS Web site at: http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

    For FY 2017, the ICD-10-CM diagnoses for which this implication must be made were listed in Table 6L (Proposed Principal Diagnosis Is Its Own MCC List--FY 2017), Table 6M (Proposed Principal Diagnosis Is Its Own CC List--FY 2017), and Table 6M.1 (Proposed Additions to the Principal Diagnosis is Its Own CC List--FY 2017) associated with the proposed rule, which were made available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, as described in section VI. of the Addendum to the proposed rule. We note that there were no proposed changes to Table 6L for FY 2017 and the list of ICD-10-CM diagnoses that will act as its own MCC when reported as a principal diagnosis remains unchanged from the FY 2016 list. Therefore, we did not develop Table 6L.1 (Additions to the Principal Diagnosis Is Its Own MCC List) or Table 6L.2 (Deletions to the Principal Diagnosis Is Its Own MCC List) for FY 2017.

    As discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49414), ICD-9-CM diagnosis code 591 (Hydronephrosis) is classified as a CC. Under ICD-10-CM, hydronephrosis is reported with a combination code if the hydronephrosis is due to another condition, such as with new ICD-

    10-CM code N13.0 (Hydronephrosis with ureteropelvic junction obstruction), effective October 1, 2016. In ICD-10-CM, this finalized code is classified as a CC and, similar to existing ICD-10-CM codes N13.1 (Hydronephrosis with ureteral stricture, not elsewhere classified) and N13.2 (Hydronephrosis with renal and ureteral calculous obstruction), should be recognized as a principal diagnosis that acts as its own CC. Accordingly, ICD-10-CM code N13.0 (Hydronephrosis with ureteropelvic junction obstruction) was inclujded in Table 6M (Proposed Principal Diagnosis Is Its Own CC List--FY 2017) and Table 6M.1 (Proposed Additions to the Principal Diagnosis Is Its Own CC List--FY 2017), which were made available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. We did not receive any public comments regarding this specific proposal and, therefore, are adopting it as final, effective October 1, 2016.

    15. Complications or Comorbidity (CC) Exclusions List

  229. Background of the CC List and the CC Exclusions List

    Under the IPPS MS-DRG classification system, we have developed a standard list of diagnoses that are considered CCs. Historically, we developed this list using physician panels that classified each diagnosis code based on whether the diagnosis, when present as a secondary condition, would be considered a substantial complication or comorbidity. A substantial complication or comorbidity was defined as a condition that, because of its presence with a specific principal diagnosis, would cause an increase in the length of stay by at least 1 day in at least 75 percent of the patients. However, depending on the principal diagnosis of the patient, some diagnoses on the basic list of complications and comorbidities may be excluded if they are closely related to the principal diagnosis. In FY 2008, we evaluated each diagnosis code to determine its impact on resource use and to determine the most appropriate CC subclassification (non-CC, CC, or MCC) assignment. We refer readers to sections II.D.2. and 3. of the preamble of the FY 2008 IPPS final rule with comment period for a discussion of the refinement of CCs in relation to the MS-DRGs we adopted for FY 2008 (72 FR 47152 through 47171).

  230. CC Exclusions List for FY 2017

    In the September 1, 1987 final notice (52 FR 33143) concerning changes to the DRG classification system, we modified the GROUPER logic so that certain diagnoses included on the standard list of CCs would not be considered valid CCs in combination with a particular principal diagnosis. We created the CC Exclusions List for the following reasons: (1) To preclude coding of CCs for closely related conditions; (2) to preclude duplicative or inconsistent coding from being treated as CCs; and (3) to ensure that cases are appropriately classified between the complicated and uncomplicated DRGs in a pair. As previously indicated, we developed a list of diagnoses, using physician panels, to include those diagnoses that, when present as a secondary condition, would be considered a substantial complication or comorbidity. In previous years, we made changes to the list of CCs, either by adding new CCs or deleting CCs already on the list.

    In the May 19, 1987 proposed notice (52 FR 18877) and the September 1, 1987 final notice (52 FR 33154), we explained that the excluded secondary diagnoses were established using the following five principles:

    Chronic and acute manifestations of the same condition should not be considered CCs for one another;

    Specific and nonspecific (that is, not otherwise specified (NOS)) diagnosis codes for the same condition should not be considered CCs for one another;

    Codes for the same condition that cannot coexist, such as partial/total, unilateral/bilateral, obstructed/unobstructed, and benign/malignant, should not be considered CCs for one another;

    Codes for the same condition in anatomically proximal sites should not be considered CCs for one another; and

    Closely related conditions should not be considered CCs for one another.

    The creation of the CC Exclusions List was a major project involving hundreds of codes. We have continued to review the remaining CCs to identify additional exclusions and to remove diagnoses from the master list that have been shown not to meet the definition of a CC. We refer readers to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50541) for detailed information regarding revisions that were made to the CC Exclusion Lists under the ICD-9-CM MS-DRGs.

    The ICD-10 MS-DRGs Version 33 CC Exclusion List is included as Appendix C in the ICD-10 MS-DRG Definitions Manual, which is available via the Internet on the CMS Web site at: http://cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, and includes two lists identified as Part 1 and Part 2. Part 1 is the list of all diagnosis codes that are defined as a CC or an MCC when

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    reported as a secondary diagnosis. If the code designated as a CC or an MCC is allowed with all principal diagnoses, the phrase ``NoExcl'' (for no exclusions) follows the CC or MCC designation. For example, ICD-10-

    CM diagnosis code A17.83 (Tuberculous neuritis) has this ``NoExcl'' entry. For all other diagnosis codes on the list, a link is provided to a collection of diagnosis codes which, when used as the principal diagnosis, would cause the CC or MCC diagnosis to be considered as a non-CC. Part 2 is the list of diagnosis codes designated as an MCC only for patients discharged alive; otherwise, they are assigned as a non-

    CC.

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25011), for FY 2017, we proposed changes to the ICD-10 MS-DRGs Version 34 CC Exclusion List. Therefore, we developed Table 6G.1.--Proposed Secondary Diagnosis Order Additions to the CC Exclusions List--FY 2017; Table 6G.2.--

    Proposed Principal Diagnosis Order Additions to the CC Exclusions List--FY 2017; Table 6H.1.--Proposed Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2017; and Table 6H.2.--Proposed Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2017. Each of these principal diagnosis codes for which there is a CC exclusion was shown in Table 6G.2. with an asterisk and the conditions that will not count as a CC are provided in an indented column immediately following the affected principal diagnosis. Beginning with discharges on or after October 1 of each year, the indented diagnoses are not recognized by the GROUPER as valid CCs for the asterisked principal diagnoses. Tables 6G and 6H associated with the proposed rule are available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

    Comment: Several commenters supported the proposed changes to the CC Exclusion List as displayed in Table 6G.1., Table 6G.2., Table 6H.1., and Table 6H.2. that were associated with the proposed rule and made available via the Internet on the CMS Web site.

    Response: We appreciate the commenters' support of our proposals.

    We note that, for this FY 2017 IPPS/LTCH PPS final rule, we have developed Table 6K.--Complete List of CC Exclusions, which is available via the Internet at the same CMS Web site as Tables 6G and 6H. Table 6K. corresponds to the Part 1 list of Appendix C in the ICD-10 MS-DRG Definitions Manual as described above.

    The complete documentation of the ICD-10 MS-DRG Version 34 GROUPER logic, including the current CC Exclusions List, is available via the Internet on the CMS Acute Inpatient PPS Web page at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

    To capture new and deleted diagnosis and procedure codes, for FY 2017, we developed Table 6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, and Table 6C--Invalid Diagnosis Codes to the proposed rule. However, they were not published in the Addendum to the proposed rule but were available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, as described in section VI. of the Addendum to the proposed rule.

    For this final rule, we have developed Table 6D.--Invalid Procedure Codes, to reflect the deletion of 12 ICD-10-PCS procedure codes, effective October 1, 2016, as a result of public comments received after the March 9-10, 2016 ICD-10 Coordination and Maintenance Committee meeting.

    We note that while we did not specifically develop a Table 6E.--

    Revised Diagnosis Code Titles for the proposed rule, a document containing the FY 2017 revised diagnosis code titles, as well as new diagnosis codes that have been finalized to date since implementation of the partial code freeze, was made available in advance in response to requests from the health care industry. During the March 9-10, 2016 ICD-10 Coordination and Maintenance Committee meeting, a discussion regarding this document was presented. Participants were informed that the document titled ``FY 2017 New Released ICD-10-CM Codes'' would contain the information that would otherwise be included for this table. This document has been posted along with the other March 9-10, 2016 ICD-10 Coordination and Maintenance Committee meeting materials on the CDC Web site at: http://www.cdc.gov/nchs/icd/icd9cm_maintenance.htm.

    In addition, we did not specifically develop a Table 6F.--Revised Procedure Code Titles for the proposed rule. However, a document containing the FY 2017 revised procedure code titles, as well as new procedure codes that have been finalized to date since implementation of the partial code freeze, was made available in advance in response to requests from the health care industry. During the March 9-10, 2016 ICD-10 Coordination and Maintenance Committee meeting, a discussion regarding this document was presented. Participants were informed that the document titled ``FY 2017 New Revised ICD-10-PCS Codes'' would contain the information that would otherwise be included for this table. This document is posted on the CMS Web site at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials-Items/2016-03-09-MeetingMaterials.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=descending.

    After consideration of the public comments we received, we are making available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html the following final tables associated with this final rule:

    Table 6A.--New Diagnosis Codes--FY 2017;

    Table 6B.--New Procedure Codes--FY 2017;

    Table 6C.--Invalid Diagnosis Codes--FY 2017;

    Table 6D.--Invalid Procedure Codes--FY 2017;

    Table 6E.--Revised Diagnosis Code Titles--FY 2017;

    Table 6F.--Revised Procedure Code Titles--FY 2017;

    Table 6G.1.--Secondary Diagnosis Order Additions to the CC Exclusions List--FY 2017;

    Table 6G.2.--Principal Diagnosis Order Additions to the CC Exclusions List--FY 2017;

    Table 6H.1.--Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2017;

    Table 6H.2.--Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2017;

    Table 6I.--Complete MCC List--FY 2017;

    Table 6I.1.--Additions to the MCC List--FY 2017;

    Table 6I.2.-Deletions to the MCC List--FY 2017;

    Table 6J.--Complete CC List--FY 2017;

    Table 6J.1.--Additions to the CC List--FY 2017;

    Table 6J.2.--Deletions to the CC List --FY 2017;

    Table 6K.--Complete List of CC Exclusions--FY 2017;

    Table 6L.--Principal Diagnosis Is Its Own MCC List--FY 2017;

    Table 6M.--Principal Diagnosis Is Its Own CC List--FY 2017; and

    Table 6M.1.--Additions to the Principal Diagnosis Is Its Own CC List--FY 2017

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    16. Review of Procedure Codes in MS DRGs 981 Through 983; 984 Through 986; and 987 Through 989

    Each year, we review cases assigned to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 984, 985, and 986 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively); and MS-DRGs 987, 988, and 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) to determine whether it would be appropriate to change the procedures assigned among these MS-

    DRGs. MS-DRGs 981 through 983, 984 through 986, and 987 through 989 are reserved for those cases in which none of the O.R. procedures performed are related to the principal diagnosis. These MS-DRGs are intended to capture atypical cases, that is, those cases not occurring with sufficient frequency to represent a distinct, recognizable clinical group. Under ICD-9-CM, MS-DRGs 984 through 986 are assigned to those discharges in which one or more of the following prostatic procedures are performed and are unrelated to the principal diagnosis:

    60.0 (Incision of prostate);

    60.12 (Open biopsy of prostate);

    60.15 (Biopsy of periprostatic tissue);

    60.18 (Other diagnostic procedures on prostate and periprostatic tissue);

    60.21 (Transurethral prostatectomy);

    60.29 (Other transurethral prostatectomy);

    60.61 (Local excision of lesion of prostate);

    60.69 (Prostatectomy, not elsewhere classified);

    60.81 (Incision of periprostatic tissue);

    60.82 (Excision of periprostatic tissue);

    60.93 (Repair of prostate);

    60.94 (Control of (postoperative) hemorrhage of prostate);

    60.95 (Transurethral balloon dilation of the prostatic urethra);

    60.96 (Transurethral destruction of prostate tissue by microwave thermotherapy);

    60.97 (Other transurethral destruction of prostate tissue by other thermotherapy); and

    60.99 (Other operations on prostate).

    Under the ICD-10 MS-DRGs Version 33, the comparable ICD-10-PCS code translations for the above list of codes are available in Table 6P.2. associated with the FY 2017 proposed rule and this final rule (which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). All remaining O.R. procedures are assigned to MS-DRGs 981 through 983 and 987 through 989, with MS-DRGs 987 through 989 assigned to those discharges in which the only procedures performed are nonextensive procedures that are unrelated to the principal diagnosis.

    We refer the reader to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50544 through 50545) for detailed information regarding modifications that were made to the former ICD-9-CM CMS DRG 468 (MS-DRGs 981 through 983), CMS DRG 476 (MS-DRGs 984 through 986), and CMS DRG 477 (MS-DRGs 987 through 989) with regard to the movement of procedure codes. We note that no procedure codes were moved from these DRGs from FY 2008 through FY 2016.

    Our review of MedPAR claims data showed that there are no cases that merited movement or should logically be reassigned from ICD-10 MS-

    DRGs 984 through 986 to any of the other MDCs. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25012), for FY 2017, we did not propose to change the procedures assigned among these MS-DRGs. We invited public comments on our proposal to maintain the current structure of these MS-DRGs.

    Comment: Many commenters supported the proposal to maintain the current structure of MS-DRGs 984, 985, and 986 under the ICD-10 MS-

    DRGs.

    Response: We appreciate the commenters' support of our proposal. We note that while the comparable ICD-10-PCS code translations for the above list of ICD-9-CM codes were made available in Table 6P.2. associated with the FY 2017 proposed rule (which is available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html), we wish to clarify that the table was not intended to be a representation of the current ICD-10 MS-DRG GROUPER Version 33 logic. Rather, it was to simply demonstrate what the ICD-9-CM to ICD-10-PCS code translations were for purposes of review and comment. For example, the translations that were listed in Table 6P.2 of the FY 2017 proposed rule included six ICD-10-PCS procedure codes that are not included in the current ICD-10 MS-DRG GROUPER Version 33 logic for MS-DRGs 984, 985, and 986. Although these six ICD-10-PCS procedure codes are considered comparable translations of the corresponding ICD-9-CM procedure codes, these ICD-

    10-PCS procedure codes are currently designated as non-O.R. codes and, therefore, are not defined as prostatic O.R. codes for purposes of MS-

    DRG assignment under the ICD-10 MS-DRG Version 33 Definitions Manual under Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index.

    In addition, as discussed in section II.F.19.c.1.b. of the FY 2017 proposed rule (81 FR 25025), we proposed to change the status of a number of ICD-10-PCS procedure codes from O.R. to non-O.R. Among the list in Table 6P.4b. associated with the proposed rule were procedures describing the endoscopic/transorifice removal of drainage, infusion, intraluminal or monitoring devices. Four of these codes (which were proposed to change from an O.R. to non-O.R. status) identify procedures performed on the prostate and seminal vesicles and are currently included in the ICD-10 MS-DRG GROUPER Version 33 logic for MS-DRGs 984, 985, and 986. These four procedure codes were also listed in Table 6P.2.--List of ICD-10-PCS code translations for prostatic procedures in MS-DRGs 984, 985, and 986 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively), are currently designated as O.R. codes, and were proposed to change to a non-O.R. status. As discussed in section II.F.19.c.(1)(b) of the preamble of this final rule, we received public support for changing the status of the codes listed in Table 6P.4b. and are finalizing our proposal.

    To reflect our finalized policy to designate these four codes as non-O.R. codes, as discussed in section II.F.19.c.(1)(b) of the preamble of this final rule, and also to remove the six ICD-10-PCS procedure codes that are not included in the current ICD-10 MS-DRG GROUPER Version 33 logic for MS-DRGs 984, 985 and 986, we are removing the following 10 ICD-10-PCS procedure codes from Table 6P.2 (which was associated with the FY 2017 proposed rule and available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-FeeforServicePayment/AcuteInpatientPPS/index.html):

    0T7D7ZZ (Dilation of urethra, via natural or artificial opening);

    0T7D8ZZ (Dilation of urethra, via natural or artificial opening endoscopic);

    0VB03ZX (Excision of prostate, percutaneous approach, diagnostic);

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    0VB04ZX (Excision of prostate, percutaneous endoscopic approach, diagnostic);

    0VB07ZX (Excision of prostate, via natural or artificial opening, diagnostic);

    0VB08ZX (Excision of prostate, via natural or artificial opening endoscopic, diagnostic);

    0VP470Z (Removal of drainage device from prostate and seminal vesicles, via natural or artificial opening);

    0VP473Z (Removal of infusion device from prostate and seminal vesicles, via natural or artificial opening);

    0VP480Z (Removal of drainage device from prostate and seminal vesicles, via natural or artificial opening endoscopic); and

    0VP483Z (Removal of infusion device from prostate and seminal vesicles, via natural or artificial opening endoscopic).

    In addition, we are finalizing the list of ICD-10-PCS procedure codes that are assigned to MS-DRGs 984, 985, and 986 for FY 2017. The list of codes displayed in Table 6P.2 associated with this final rule represents the ICD-10 MS-DRG GROUPER logic for MS-DRGs 984, 985, and 986 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

  231. Moving Procedure Codes From MS-DRGs 981 Through 983 or MS-DRGs 987 Through 989 Into MDCs

    We annually conduct a review of procedures producing assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987 through 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) on the basis of volume, by procedure, to see if it would be appropriate to move procedure codes out of these MS-DRGs into one of the surgical MS-DRGs for the MDC into which the principal diagnosis falls. The data are arrayed in two ways for comparison purposes. We look at a frequency count of each major operative procedure code. We also compare procedures across MDCs by volume of procedure codes within each MDC.

    We identify those procedures occurring in conjunction with certain principal diagnoses with sufficient frequency to justify adding them to one of the surgical MS-DRGs for the MDC in which the diagnosis falls. As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25012), upon review of the claims data from the December 2015 update of the FY 2015 MedPAR file, we did not find any cases that merited movement or that should logically be assigned to any of the other MDCs. Therefore, in the proposed rule for FY 2017, we did not propose to remove any procedures from MS-DRGs 981 through 983 or MS-DRGs 987 through 989 into one of the surgical MS-DRGs for the MDC into which the principal diagnosis is assigned. We invited public comments on our proposal to maintain the current structure of these MS-DRGs.

    Comment: Several commenters supported our proposal to not move any procedure codes out of MS-DRGs 981, 982, 983, 987, 988, or 989.

    Response: We appreciate the commenters' support of our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to not move any procedures from MS-DRGs 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively), or from MS-DRGs 987, 988, or 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) into one of the surgical MS-DRGs for the MDC into which the principal diagnosis is assigned for ICD-10 MS-DRGs Version 34, effective October 1, 2016.

  232. Reassignment of Procedures Among MS-DRGs 981 Through 983, 984 Through 986, and 987 Through 989

    We also reviewed the list of ICD-10-PCS procedures that, when in combination with their principal diagnosis code, result in assignment to MS-DRGs 981 through 983, 984 through 986, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those three groups of MS-DRGs to another of the three groups of MS-

    DRGs based on average costs and the length of stay. We look at the data for trends such as shifts in treatment practice or reporting practice that would make the resulting MS-DRG assignment illogical. If we find these shifts, we would propose to move cases to keep the MS-DRGs clinically similar or to provide payment for the cases in a similar manner. Generally, we move only those procedures for which we have an adequate number of discharges to analyze the data.

    As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25012), there are no cases representing shifts in treatment practice or reporting practice that would make the resulting MS-DRG assignment illogical, or that merited movement so that cases should logically be assigned to any of the other MDCs. Therefore, for FY 2017, we did not propose to move any procedure codes among these MS-DRGs. We invited public comments on our proposal.

    Comment: Several commenters supported our proposal to not move any procedure codes among MS-DRGs 981, 982, 983, 984, 985, 986, 987, 988, or 989.

    Response: We appreciate the commenters' support for our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to maintain the current structure for MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively); MS-DRGs 984, 985, and 986 (Prostatic O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively); and MS-

    DRGs 987, 988, and 989 (Nonextensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) with regard to not reassigning any procedure codes among these MS-DRGs for FY 2017. As discussed in section II.F.16. of the preamble of this final rule, we are removing four procedure codes from MS-DRGs 984, 985, and 986, as they were included in the codes listed in Table 6P.4b that were finalized to change from being designated as O.R. codes to non-O.R. status in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

  233. Adding Diagnosis or Procedure Codes to MDCs

    As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25012 through 25016), based on the review of cases in the MDCs, we proposed to add multiple diagnosis and procedure codes to MDCs for FY 2017 to address replication issues. We discuss each of these proposals below.

    (1) Angioplasty of Extracranial Vessel

    In the ICD-9-CM MS-DRGs Version 32, procedures describing angioplasty of an extracranial vessel were assigned to MDC 1 (Diseases and Disorders of the Nervous System) under MS-DRGs 037, 038, and 039 (Extracranial Procedures with MCC, with CC, or without CC/MCC, respectively). Under ICD-9-CM, more than one ICD-9-CM code could be reported for these procedures, depending on the approach that was documented. For example, ICD-9-CM procedure code 00.61 (Percutaneous angioplasty of extracranial vessel(s)) would have been appropriately reported

    Page 56849

    if the percutaneous approach was documented, and procedure code 39.50 (Angioplasty of other non-coronary vessel(s)) would have been appropriately reported if a specified approach was not documented.

    A replication issue for 41 ICD-10-PCS procedure codes describing angioplasty with the open approach was identified after implementation of the ICD-10 MS-DRGs Version 33. In the code translation, these 41 ICD-10-PCS procedure codes were grouped and assigned to ICD-10 MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively). However, these procedure codes should have been grouped to ICD-10 MS-

    DRGs 037 through 039 when a principal diagnosis was reported under MDC 1.

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25012 through 25013), we proposed to add the 41 ICD-10-PCS procedure codes listed in the following table to ICD-10 MS-

    DRGs 037 through 039 under MDC 1.

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    037H04Z.................. Dilation of right common carotid artery with

    drug-eluting intraluminal device, open

    approach.

    037H0DZ.................. Dilation of right common carotid artery with

    intraluminal device, open approach.

    037H0ZZ.................. Dilation of right common carotid artery, open

    approach.

    037J04Z.................. Dilation of left common carotid artery with

    drug-eluting intraluminal device, open

    approach.

    037J0DZ.................. Dilation of left common carotid artery with

    intraluminal device, open approach.

    037J0ZZ.................. Dilation of left common carotid artery, open

    approach.

    037K04Z.................. Dilation of right internal carotid artery

    with drug-eluting intraluminal device, open

    approach.

    037K0DZ.................. Dilation of right internal carotid artery

    with intraluminal device, open approach.

    037K0ZZ.................. Dilation of right internal carotid artery,

    open approach.

    037L04Z.................. Dilation of left internal carotid artery with

    drug-eluting intraluminal device, open

    approach.

    037L0DZ.................. Dilation of left internal carotid artery with

    intraluminal device, open approach.

    037L0ZZ.................. Dilation of left internal carotid artery,

    open approach.

    037M04Z.................. Dilation of right external carotid artery

    with drug-eluting intraluminal device, open

    approach.

    037M0DZ.................. Dilation of right external carotid artery

    with intraluminal device, open approach.

    037M0ZZ.................. Dilation of right external carotid artery,

    open approach.

    037N04Z.................. Dilation of left external carotid artery with

    drug-eluting intraluminal device, open

    approach.

    037N0DZ.................. Dilation of left external carotid artery with

    intraluminal device, open approach.

    037N0ZZ.................. Dilation of left external carotid artery,

    open approach.

    037P04Z.................. Dilation of right vertebral artery with drug-

    eluting intraluminal device, open approach.

    037P0DZ.................. Dilation of right vertebral artery with

    intraluminal device, open approach.

    037P0ZZ.................. Dilation of right vertebral artery, open

    approach.

    037Q04Z.................. Dilation of left vertebral artery with drug-

    eluting intraluminal device, open approach.

    037Q0DZ.................. Dilation of left vertebral artery with

    intraluminal device, open approach.

    037Q0ZZ.................. Dilation of left vertebral artery, open

    approach.

    037Y04Z.................. Dilation of upper artery with drug-eluting

    intraluminal device, open approach.

    037Y0DZ.................. Dilation of upper artery with intraluminal

    device, open approach.

    037Y0ZZ.................. Dilation of upper artery, open approach.

    057M0DZ.................. Dilation of right internal jugular vein with

    intraluminal device, open approach.

    057M0ZZ.................. Dilation of right internal jugular vein, open

    approach.

    057N0DZ.................. Dilation of left internal jugular vein with

    intraluminal device, open approach.

    057N0ZZ.................. Dilation of left internal jugular vein, open

    approach.

    057P0DZ.................. Dilation of right external jugular vein with

    intraluminal device, open approach.

    057P0ZZ.................. Dilation of right external jugular vein, open

    approach.

    057Q0DZ.................. Dilation of left external jugular vein with

    intraluminal device, open approach.

    057Q0ZZ.................. Dilation of left external jugular vein, open

    approach.

    057R0DZ.................. Dilation of right vertebral vein with

    intraluminal device, open approach.

    057R0ZZ.................. Dilation of right vertebral vein, open

    approach.

    057S0DZ.................. Dilation of left vertebral vein with

    intraluminal device, open approach.

    057S0ZZ.................. Dilation of left vertebral vein, open

    approach.

    057T0DZ.................. Dilation of right face vein with intraluminal

    device, open approach.

    057T0ZZ.................. Dilation of right face vein, open approach.

    ------------------------------------------------------------------------

    We invited public comments on our proposal to add the above listed codes to ICD-10 MS-DRGs 037, 038, and 039 (Extracranial Procedures with MCC, with CC, or without CC/MCC, respectively) under MDC 1, effective October 1, 2016, for the ICD-10 MS-DRGs Version 34.

    Comment: Several commenters supported the proposal to add the codes listed in the table in the proposed rule to ICD-10 MS-DRGs 037, 038, and 039. The commenters also acknowledged CMS' continued efforts for accurate replication.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze the replication issues between the ICD-9 and ICD-10 based MS-DRGs brought to our attention.

    After consideration of the public comments we received, we are finalizing our proposal to add the above listed codes to ICD-10 MS-DRGs 037, 038, and 039 (Extracranial Procedures with MCC, with CC, or without CC/MCC, respectively) under MDC 1 for the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (2) Excision of Abdominal Arteries

    In the ICD-9-CM MS-DRGs Version 32, procedures involving excision of a vessel and anastomosis, such as those performed for the treatment of an abdominal artery aneurysm (aneurysmectomy), are identified with procedure code 38.36 (Resection of vessel with anastomosis, abdominal arteries) and are assigned to the following MDCs and MS-DRGs:

    MDC 5 (Diseases and Disorders of the Circulatory System): MS-DRGs 270 through 272 (Other Major Cardiovascular Procedures with MCC,

    Page 56850

    with CC and without CC/MCC, respectively);

    MDC 6 (Diseases and Disorders of the Digestive System): MS-DRGs 356 through 358 (Other Digestive System O.R. Procedures with MCC, with CC and without CC/MCC, respectively);

    MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): MS-DRGs 673 through 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC and without CC/MCC, respectively);

    MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): MS-DRGs 907 through 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively); and

    MDC 24 (Multiple Significant Trauma): MS-DRG 957 through 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC and without CC/MCC, respectively).

    A replication issue for 34 ICD-10-PCS procedure codes describing aneurysmectomy procedures with the open and percutaneous endoscopic approach was identified after implementation of the ICD-10 MS-DRGs Version 33. For example, cases with a principal diagnosis of I72.2 (Aneurysm of renal artery) and procedure code 04BA0ZZ (Excision of left renal artery, open approach) are resulting in assignment to ICD-10 MS-

    DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) instead of to MDC 11 in MS-DRGs 673 through 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC, and without CC/MCC, respectively).

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25013 through 25014), we proposed to add the 34 ICD-10-PCS procedure codes listed in the following table that are comparable translations of ICD-9-CM procedure code 38.36 to ICD-10 MDCs 6, 11, 21, and 24. We noted that there is no replication issue related to MDC 5 as the ICD-10-PCS procedure codes listed in the table below group there appropriately.

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    04B10ZZ.................. Excision of celiac artery, open approach.

    04B14ZZ.................. Excision of celiac artery, percutaneous

    endoscopic approach.

    04B20ZZ.................. Excision of gastric artery, open approach.

    04B24ZZ.................. Excision of gastric artery, percutaneous

    endoscopic approach.

    04B30ZZ.................. Excision of hepatic artery, open approach.

    04B34ZZ.................. Excision of hepatic artery, percutaneous

    endoscopic approach.

    04B40ZZ.................. Excision of splenic artery, open approach.

    04B44ZZ.................. Excision of splenic artery, percutaneous

    endoscopic approach.

    04B50ZZ.................. Excision of superior mesenteric artery, open

    approach.

    04B54ZZ.................. Excision of superior mesenteric artery,

    percutaneous endoscopic approach.

    04B60ZZ.................. Excision of right colic artery, open

    approach.

    04B64ZZ.................. Excision of right colic artery, percutaneous

    endoscopic approach.

    04B70ZZ.................. Excision of left colic artery, open approach.

    04B74ZZ.................. Excision of left colic artery, percutaneous

    endoscopic approach.

    04B80ZZ.................. Excision of middle colic artery, open

    approach.

    04B84ZZ.................. Excision of middle colic artery, percutaneous

    endoscopic approach.

    04B90ZZ.................. Excision of right renal artery, open

    approach.

    04B94ZZ.................. Excision of right renal artery, percutaneous

    endoscopic approach.

    04BA0ZZ.................. Excision of left renal artery, open approach.

    04BA4ZZ.................. Excision of left renal artery, percutaneous

    endoscopic approach.

    04BB0ZZ.................. Excision of inferior mesenteric artery, open

    approach.

    04BB4ZZ.................. Excision of inferior mesenteric artery,

    percutaneous endoscopic approach.

    04BC0ZZ.................. Excision of right common iliac artery, open

    approach.

    04BC4ZZ.................. Excision of right common iliac artery,

    percutaneous endoscopic approach.

    04BD0ZZ.................. Excision of left common iliac artery, open

    approach.

    04BD4ZZ.................. Excision of left common iliac artery,

    percutaneous endoscopic approach.

    04BE0ZZ.................. Excision of right internal iliac artery, open

    approach.

    04BE4ZZ.................. Excision of right internal iliac artery,

    percutaneous endoscopic approach.

    04BF0ZZ.................. Excision of left internal iliac artery, open

    approach.

    04BF4ZZ.................. Excision of left internal iliac artery,

    percutaneous endoscopic approach.

    04BH0ZZ.................. Excision of right external iliac artery, open

    approach.

    04BH4ZZ.................. Excision of right external iliac artery,

    percutaneous endoscopic approach.

    04BJ0ZZ.................. Excision of left external iliac artery, open

    approach.

    04BJ4ZZ.................. Excision of left external iliac artery,

    percutaneous endoscopic approach.

    ------------------------------------------------------------------------

    We stated that adding these procedures to those MDCs in the ICD-10 MS-DRGs Version 34 will result in a more accurate replication for the same procedure under the ICD-9-CM MS-DRGs Version 32. We also proposed that these procedure codes be assigned to the corresponding MS-DRGs in each respective MDC as listed above. We stated that the proposed changes would eliminate erroneous assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for these procedures.

    We invited public comments on our proposal to add the above listed codes to MDCs 6, 11, 21, and 24 in the corresponding MS-DRGs, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Several commenters supported the proposal to add the codes listed in the table in the proposed rule to MDCs 6, 11, 21 and 24 in the corresponding ICD-10 MS-DRGs. The commenters also acknowledged CMS' continued efforts for accurate replication.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze the replication issues between the ICD-9 and ICD-10 based MS-DRGs brought to our attention.

    After consideration of the public comments we received, we are finalizing our proposal to add the codes

    Page 56851

    listed in the table in the proposed rule and above to the following MDCs and MS-DRGs for the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    MDC 6 (Diseases and Disorders of the Digestive System): MS-DRGs 356 through 358 (Other Digestive System O.R. Procedures with MCC, with CC and without CC/MCC, respectively);

    MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): MS-DRGs 673 through 675 (Other Kidney and Urinary Tract Procedures with MCC, with CC and without CC/MCC, respectively);

    MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): MS-DRGs 907 through 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively); and

    MDC 24 (Multiple Significant Trauma): MS-DRG 957 through 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC and without CC/MCC, respectively).

    (3) Excision of Retroperitoneal Tissue

    In the ICD-9-CM MS-DRGs Version 32, procedures involving excision of a retroperitoneal lesion (or tissue), such as those performed for the treatment of a neoplasm, are identified with procedure code 54.4 (Excision or destruction of peritoneal tissue) and are assigned to a number of MDCs and MS-DRGs across a variety of body systems, some of which include the following:

    MDC 6 (Diseases and Disorders of the Digestive System): MS-DRGs 356 through 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively);

    MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas): MS-DRGs 423 through 425 (Other Hepatobiliary or Pancreas O.R. Procedures with MCC, with CC, and without CC/MCC, respectively); and

    MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders): MS-DRGs 628 through 630 (Other Endocrine, Nutritional and Metabolic O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for the ICD-10-PCS procedure codes describing excision of retroperitoneum that involves MDC 6 was identified after implementation of the ICD-10 MS-DRGs Version 33. These procedure codes are ICD-10-PCS codes 0WBH0ZZ (Excision of retroperitoneum, open approach), 0WBH3ZZ (Excision of retroperitoneum, percutaneous approach), and 0WBH4ZZ (Excision of retroperitoneum, percutaneous endoscopic approach). For example, when an ICD-10-CM diagnosis code such as D20.0 (Benign neoplasm of soft tissue of retroperitoneum) is reported with any one of these three ICD-10-PCS procedure codes, the case is assigned to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively).

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25014), we proposed to add the three ICD-10-PCS procedure codes to MDC 6 in MS-DRGs 356 through 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively). We stated that this would result in a more accurate replication of the comparable procedure under the ICD-9-CM MS-DRGs Version 32. The proposed changes also would eliminate erroneous assignment to MS-DRGs 981 through 983 for these procedures.

    We invited public comments on our proposal to add the three ICD-10-

    PCS codes describing excision of retroperitoneum to MDC 6 in MS-DRGs 356 through 358, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Several commenters supported the proposal to add ICD-10-

    PCS procedure codes 0WBH0ZZ, 0WBH3ZZ, and 0WBH4ZZ describing excision of retroperitoneum to MDC 6 in MS-DRGs 356 through 358. The commenters also acknowledged CMS' continued efforts for accurate replication.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze the replication issues between the ICD-9 and ICD-10 based MS-DRGs brought to our attention.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS codes 0WBH0ZZ (Excision of retroperitoneum, open approach), 0WBH3ZZ (Excision of retroperitoneum, percutaneous approach), and 0WBH4ZZ (Excision of retroperitoneum, percutaneous endoscopic approach) to MDC 6 in MS-DRGs 356 through 358 (Other Digestive System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) for the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (4) Occlusion of Vessels: Esophageal Varices

    In the ICD-9-CM MS-DRGs Version 32, procedures including ligation or surgical occlusion of esophageal varices are identified with procedure code 42.91 (Ligation of esophageal varices) and are assigned to MDC 6 (Diseases and Disorders of the Digestive System) under MS-DRGs 326 through 328 (Stomach, Esophageal and Duodenal Procedures with MCC, with CC, and without CC/MCC, respectively) and MDC 7 (Diseases and Disorders of the Hepatobiliary System and Pancreas) under MS-DRGs 423 through 425 (Other Hepatobiliary or Pancreas O.R. procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for MDC 7 involving ICD-10-PCS procedure codes 06L30CZ (Occlusion of esophageal vein with extraluminal device, open approach) and 06L30DZ (Occlusion of esophageal vein with intraluminal device, open approach) was identified in the ICD-10 MS-DRGs Version 33 after implementation on October 1, 2015. For instance, when an ICD-10-

    CM diagnosis code such as K70.30 (Alcoholic cirrhosis of liver without ascites) is reported with either one of the ICD-10-PCS procedure codes, it results in assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively).

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25015), we proposed to add the two ICD-10-PCS procedure codes describing occlusion of esophageal vein to MDC 7 under MS-DRGs 423 through 425. We stated that this would result in a more accurate replication of the comparable procedure under the ICD-9-CM MS-

    DRGs Version 32. We stated that the proposed changes also would eliminate erroneous assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) for these procedures.

    We invited public comments on our proposal to add ICD-10-PCS procedure codes 06L30CZ and 06L30DZ to MDC 7 under MS-DRGs 423 through 425, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Several commenters supported the proposal to add ICD-10-

    PCS procedure codes 06L30CZ and 06L30DZ to MDC 7 under MS-DRGs 423 through 425. The commenters also acknowledged CMS' continued efforts for accurate replication.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze the replication issues between the ICD-9 and ICD-10 based MS-DRGs brought to our attention.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS procedure codes 06L30CZ

    Page 56852

    (Occlusion of esophageal vein with extraluminal device, open approach) and 06L30DZ (Occlusion of esophageal vein with intraluminal device, open approach) to MDC 7 under MS-DRGs 423 through 425 (Other Hepatobiliary or Pancreas O.R. procedures with MCC, with CC, and without CC/MCC, respectively) for the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (5) Excision of Vulva

    In the ICD-9-CM MS-DRGs Version 32, procedures involving excision of the vulva are identified with procedure code 71.3 (Other local excision or destruction of vulva and perineum) and are assigned to the following MDCs and MS-DRGs:

    MDC 9 (Diseases & Disorders of the Skin, Subcutaneous Tissue and Breast): MS-DRGs 579 through 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC, and without CC/MCC, respectively); and

    MDC 13 (Diseases & Disorders of the Female Reproductive System): MS-DRG 746 (Vagina, cervix and vulva procedures with CC/MCC) and MS-DRG 747 (Vagina, Cervix and Vulva procedures without CC/MCC).

    A replication issue involving ICD-10-PCS procedure code 0UBMXZZ (Excision of vulva, external approach) was identified after implementation of the ICD-10 MS-DRGs Version 33. For example, when cases with an ICD-10-CM principal diagnosis of code D07.1 (Carcinoma in situ of vulva) are reported with ICD-10-PCS procedure code 0UBMXZZ (Excision of vulva, external approach), they are resulting in assignment to MS-DRGs 981 through 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively).

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25015), we proposed to add ICD-10-PCS procedure code 0UBMXZZ to MDC 13 under MS-DRGs 746 and 747. We stated that adding procedure code 0UBMXZZ to MDC 13 in MS-DRGs 746 and 747 would result in a more accurate replication of the comparable procedure under the ICD-

    9-CM MS-DRGs Version 32. The proposed changes also would eliminate erroneous assignment to MS-DRGs 981 through 983 for these procedures. In addition, the proposed changes would be consistent with the assignment of other clinically similar procedures, such as ICD-10-PCS procedure code 0WBNXZZ (Excision of female perineum, external approach). Finally, we noted that there is no replication issue for MDC 9 regarding this procedure code.

    We invited public comment on our proposal to add ICD-10-PCS procedure code 0UBMXZZ to MDC 13 in MS-DRGs 746 and 747, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Several commenters supported the proposal to add ICD-10-

    PCS procedure code 0UBMXZZ to MDC 13 under MS-DRGs 746 and 747. The commenters also acknowledged CMS' continued efforts for accurate replication.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze the replication issues between the ICD-9 and ICD-10 based MS-DRGs brought to our attention.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS procedure code 0UBMXZZ (Excision of vulva, external approach) to MDC 13 under MS-DRG 746 (Vagina, cervix and vulva procedures with CC/MCC) and MS-DRG 747 (Vagina, Cervix and Vulva procedures without CC/MCC) for the ICD-10 MS-

    DRGs Version 34, effective October 1, 2016.

    (6) Lymph Node Biopsy

    In the ICD-9-CM MS-DRGs Version 32, procedures involving a lymph node biopsy are identified with procedure code 40.11 (Biopsy of lymphatic structure), which may be assigned to several MDCs representing various body systems. Under the ICD-10 MS-DRGs Version 33, this procedure has 114 ICD-10-PCS procedure codes considered to be comparable translations that describe diagnostic drainage or excision of specified lymphatic structures and also warrant assignment to the same MDCs across various body systems.

    A replication issue for the lymph node biopsy procedure involving MDC 4 (Diseases and Disorders of the Respiratory System) under the ICD-

    10 MS-DRGs Version 33 was identified after implementation on October 1, 2015. For example, when a respiratory system diagnosis is reported with the comparable ICD-10-PCS procedure code 07B74ZX (Excision of thorax lymphatic, percutaneous endoscopic approach, diagnostic), the case is assigned to MS-DRGs 987 through 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively).

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25015 through 25016), we proposed to add ICD-10-

    PCS procedure code 07B74ZX to MDC 4 under MS-DRGs 166 through 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) to more accurately replicate assignment of the comparable procedure code under the ICD-9-CM MS-DRGs Version 32.

    While reviewing that specific example, we also identified two other comparable ICD-10-PCS procedure code translations of ICD-9-CM procedure code 40.11 (Biopsy of lymphatic structure) describing diagnostic excision of thoracic lymphatic structures that were not replicated consistent with the ICD-9-CM MS-DRGs Version 32. These are ICD-10-PCS procedure codes 07B70ZX (Excision of thorax lymphatic, open approach, diagnostic) and 07B73ZX (Excision of thorax lymphatic, percutaneous approach, diagnostic). Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25015 through 25016), we proposed to add these two ICD-10-

    PCS procedure codes to MDC 4 in MS-DRGs 166 through 168 as well.

    We stated that adding ICD-10-PCS procedure codes 07B74ZX, 07B70ZX, and 07B73ZX that describe diagnostic excision of thoracic lymphatic structures to MDC 4 under MS-DRGs 166 through 168 would result in a more accurate replication of the comparable procedure under ICD-9-CM MS-DRGs Version 32. We also stated that the proposed changes would eliminate erroneous assignment to MS-DRGs 987 through 989 for these procedures.

    We invited public comments on our proposal to add ICD-10-PCS procedure codes 07B74ZX, 07B70ZX, and 07B73ZX to MDC 4 under MS-DRGs 166 through 168, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Several commenters expressed support for our proposal to add ICD-10-PCS procedure codes 07B74ZX, 07B70ZX, and 07B73ZX to MDC 4 under MS-DRGs 166 through 168. The commenters also acknowledged CMS' continued efforts for accurate replication.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze the replication issues between the ICD-9 and ICD-10 based MS-DRGs brought to our attention.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS procedure codes 07B74ZX (Excision of thorax lymphatic, percutaneous endoscopic approach, diagnostic), 07B70ZX (Excision of thorax lymphatic, open approach, diagnostic) and 07B73ZX (Excision of

    Page 56853

    thorax lymphatic, percutaneous approach, diagnostic) to MDC 4 under MS-

    DRGs 166 through 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) for the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (7) Obstetrical Laceration Repair

    A replication issue for eight ICD-10-PCS procedure codes describing procedures that may be performed for the repair of obstetrical lacerations was identified after implementation of the ICD-10 MS-DRGs Version 33. These codes are:

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    0DQQ0ZZ.................. Repair anus, open approach.

    0DQQ3ZZ.................. Repair anus, percutaneous approach.

    0DQQ4ZZ.................. Repair anus, percutaneous endoscopic

    approach.

    0DQQ7ZZ.................. Repair anus, via natural or artificial

    opening.

    0DQQ8ZZ.................. Repair anus, via natural or artificial

    opening endoscopic.

    0DQR0ZZ.................. Repair anal sphincter, open approach.

    0DQR3ZZ.................. Repair anal sphincter, percutaneous approach.

    0DQR4ZZ.................. Repair anal sphincter, percutaneous

    endoscopic approach.

    ------------------------------------------------------------------------

    We discovered that the ICD-10 MDC and MS-DRG assignment are not consistent with other ICD-10-PCS procedure codes that identify and describe clinically similar procedures for the repair of obstetrical lacerations which are coded and reported based on the extent of the tear. For example, ICD-10-PCS procedure code 0DQP0ZZ (Repair rectum, open approach) is appropriately assigned to MDC 14 (Pregnancy, Childbirth and the Puerperium) under MS-DRG 774 (Vaginal Delivery with Complicating Diagnoses). This procedure may be performed in the treatment of a fourth-degree perineal laceration involving the rectal mucosa. In contrast, ICD-10-PCS procedure code 0DQR0ZZ (Repair anal sphincter, open approach), when reported for repair of a perineal laceration, currently results in assignment to MS-DRGs 987 through 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis).

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25016), we proposed to add these eight ICD-10-PCS procedure codes to MDC 14 in MS-DRG 774. We stated that the proposed changes would eliminate erroneous assignment to MS-DRGs 987 through 989 for these procedures.

    We invited public comments on our proposal to add the eight listed codes to MDC 14 under MS-DRG 774, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Several commenters supported the proposal to add the eight ICD-10-PCS procedure codes listed in the proposed rule to MDC 14 under MS-DRG 774. The commenters also acknowledged CMS' continued efforts for accurate replication.

    One commenter who agreed with the proposal to add the eight ICD-10-

    PCS procedure codes to MDC 14 under MS-DRG 774 also recommended that CMS consider adding the following six ICD-10-PCS procedure codes to MDC 14 in MS-DRG 774:

    0UQJ0ZZ (Repair clitoris, open approach);

    0UQJXZZ (Repair clitoris, external approach);

    0TQDXZZ (Repair urethra, external approach);

    0KQM0ZZ (Repair perineum muscle, open approach);

    0KQM3ZZ (Repair perineum muscle, percutaneous approach); and

    0KQM4ZZ (Repair perineum muscle, percutaneous endoscopic approach).

    The commenter acknowledged that, although procedures involving repair of clitoral and urethral lacerations during delivery are rare, they do occur and require intervention. The commenter noted that its organization observed cases grouping to the Unrelated MS-DRG when reporting any one of these six procedure codes.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze the replication issues between the ICD-9 and ICD-10 based MS-DRGs brought to our attention.

    With regard to the recommendation that we consider the addition of ICD-10-PCS procedure codes describing repair of the clitoris, urethra, and perineum muscle to MDC 14 in MS-DRG 774, we note that the code describing repair of the urethra (0TQDXZZ) is currently listed under MDC 14 in MS-DRG 774 as displayed under the list titled ``Third Condition,'' as well as in the ICD-10 MS-DRG Version 33 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-

    DRG Index. However, the codes describing repair of the perineum muscle and repair of the clitoris with various approaches are not listed in the two above-mentioned locations. The three codes describing repair of the perineum muscle (0KQM0ZZ, 0KQM3ZZ, and 0KQM4ZZ) are currently assigned to the following MDCs and MS-DRGs:

    MDC 1 (Diseases and Disorders of the Nervous System): MS-

    DRGs 040 through 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC, with CC or Peripheral Neurostimulator, and without CC/MCC, respectively);

    MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue): MS-DRG 500 through 502 (Soft Tissue Procedures with MCC, with CC and without CC/MCC, respectively);

    MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast): MS-DRGs 579 through 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC, and without CC/MCC, respectively);

    MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): MS-DRGs 907 through 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively); and

    MDC 24 (Multiple Significant Trauma): MS-DRG 957 through 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC and without CC/MCC).

    The two ICD-10-PCS procedure codes describing repair of the clitoris (0UQJ0ZZ and 0UQJXZZ) are currently assigned to MDC 13 (Diseases and Disorders of the Female Reproductive System) in MS-DRGs 746 and 747 (Vagina, Cervix and Vulva Procedures with CC/MCC and without CC/MCC, respectively).

    As the codes describing repair of the perineum muscle and repair of the clitoris are not currently listed in the Definitions Manual under MDC 14 in MS-DRG 774, it is understandable that, depending on what ICD-

    10-CM

    Page 56854

    diagnosis code was entered, a case could accurately result in assignment to one of the Unrelated MS-DRGs based on the current GROUPER logic. Because it is unclear what ICD-10-CM diagnosis codes the commenter entered into the ICD-10 MS-DRG GROUPER along with the specified ICD-10-PCS procedure codes describing repair of the clitoris, urethra or perineum, we were not able to fully duplicate the commenter's exact issue with respect to the Unrelated MS-DRG assignment. We ran test cases through the ICD-10 MS-DRG Version 33 GROUPER software which resulted in an Unrelated MS-DRG assignment for repair of the urethra, while repair of the perineum muscle codes resulted in appropriate assignment to MS-DRG 774 (Vaginal Delivery with Complicating Diagnoses) when a listed diagnosis code from that specific MS-DRG (which is defined as a complicating diagnosis) was entered. Thus, it appears that there may be a discrepancy between the code list in the ICD-10 MS-DRG Version 33 Definitions Manual and the GROUPER software for those specific codes describing repair of the urethra and repair of the perineum muscle. However, we agree that the codes describing repair of urethra and repair of perineum muscle could be performed during an episode of care involving a vaginal delivery and merit assignment to MS-DRG 774.

    In our review of the commenter's recommendation to add the two codes describing repair of the clitoris (0UQJ0ZZ and 0UQJXZZ), we examined whether or not these procedures could be performed during the course of an admission involving a delivery. Our medical advisors agreed that, clinically, a tear involving the clitoris may occur during a vaginal delivery and, therefore, it is appropriate to add these procedures to MS-DRG 774.

    We note that the code lists as currently displayed in the ICD-10 MS-DRG Version 33 Definitions Manual for MS-DRG 774 require further analysis to clarify what constitutes a vaginal delivery to satisfy the ICD-10 MS-DRG logic. For example, the Definitions Manual currently states that three conditions must be met, the first of which is a vaginal delivery. To satisfy this first condition, codes that describe conditions or circumstances from among three lists of codes must be reported. The first list is comprised of ICD-10-CM diagnosis codes that may be reported as a principal or secondary diagnosis. These diagnosis codes describe conditions in which it is assumed that a vaginal delivery has occurred. The second list of codes are a list of ICD-10-

    PCS procedure codes that also describe circumstances in which it is assumed that a vaginal delivery occurred. The third list of codes identifies diagnoses describing the outcome of the delivery. Therefore, if any code from one of those three lists is reported, the first condition (vaginal delivery) is considered to be met for assignment to MS-DRG 774.

    Our concern with the first list of ICD-10-CM diagnosis codes as currently displayed in the Definitions Manual under the first condition is that not all of the conditions necessarily reflect that a vaginal delivery occurred. Several of the diagnosis codes listed could also reflect that a cesarean delivery occurred. For example, ICD-10-CM diagnosis code O10.02 (Pre-existing essential hypertension complicating childbirth) does not specify that a vaginal delivery took place; yet it is included in the list of conditions that may be reported as a principal or secondary diagnosis in the GROUPER logic for a vaginal delivery. The reporting of this code could also be appropriate for a delivery that occurred by cesarean section. Therefore, we plan to conduct further analysis of the diagnosis code lists in MS-DRG 774 for FY 2018.

    As noted above, the second list of codes for the first condition are comprised of ICD-10-PCS procedure codes. We acknowledge that the current list of procedure codes in MS-DRG 774 appropriately describe that a vaginal delivery occurred. In addition, there are unique procedure codes in ICD-10-PCS that distinguish a vaginal delivery from a cesarean delivery.

    After consideration of the public comments we received, we are finalizing our proposal and the commenters' recommendation to add the list of ICD-10-PCS procedure codes in the following table to MS-DRG 774 effective October 1, 2016, for the ICD-10 MS-DRGs Version 34. We also are clarifying that the procedure codes describing repair of perineum muscle currently group to MS-DRG 774 and will continue this assignment for FY 2017.

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    0DQQ0ZZ.................. Repair anus, open approach.

    0DQQ3ZZ.................. Repair anus, percutaneous approach.

    0DQQ4ZZ.................. Repair anus, percutaneous endoscopic

    approach.

    0DQQ7ZZ.................. Repair anus, via natural or artificial

    opening.

    0DQQ8ZZ.................. Repair anus, via natural or artificial

    opening endoscopic.

    0DQR0ZZ.................. Repair anal sphincter, open approach.

    0DQR3ZZ.................. Repair anal sphincter, percutaneous approach.

    0DQR4ZZ.................. Repair anal sphincter, percutaneous

    endoscopic approach.

    0TQDXZZ.................. Repair urethra, external approach.

    0UQJ0ZZ.................. Repair clitoris, open approach.

    0UQJXZZ.................. Repair clitoris, external approach.

    ------------------------------------------------------------------------

    17. Changes to the ICD-10-CM and ICD-10-PCS Coding Systems

  234. ICD-10 Coordination and Maintenance Committee

    In September 1985, the ICD-9-CM Coordination and Maintenance Committee was formed. This is a Federal interdepartmental committee, co-chaired by the National Center for Health Statistics (NCHS), the Centers for Disease Control and Prevention, and CMS, charged with maintaining and updating the ICD-9-CM system. The final update to ICD-

    9-CM codes was to be made on October 1, 2013. Thereafter, the name of the Committee was changed to the ICD-10 Coordination and Maintenance Committee, effective with the March 19-20, 2014 meeting. The ICD-10 Coordination and Maintenance Committee addresses updates to the ICD-10-

    CM and ICD-10-PCS coding systems. The Committee is jointly responsible for approving coding changes, and developing errata, addenda, and other modifications to the coding systems to reflect newly developed procedures and technologies and newly identified diseases. The Committee is also responsible for promoting the use of Federal and non-

    Federal educational programs and other

    Page 56855

    communication techniques with a view toward standardizing coding applications and upgrading the quality of the classification system.

    The official list of ICD-9-CM diagnosis and procedure codes by fiscal year can be found on the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/codes.html. The official list of ICD-10-CM and ICD-10-PCS codes can be found on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/index.html.

    The NCHS has lead responsibility for the ICD-10-CM and ICD-9-CM diagnosis codes included in the Tabular List and Alphabetic Index for Diseases, while CMS has lead responsibility for the ICD-10-PCS and ICD-

    9-CM procedure codes included in the Tabular List and Alphabetic Index for Procedures.

    The Committee encourages participation in the previously mentioned process by health-related organizations. In this regard, the Committee holds public meetings for discussion of educational issues and proposed coding changes. These meetings provide an opportunity for representatives of recognized organizations in the coding field, such as the American Health Information Management Association (AHIMA), the American Hospital Association (AHA), and various physician specialty groups, as well as individual physicians, health information management professionals, and other members of the public, to contribute ideas on coding matters. After considering the opinions expressed at the public meetings and in writing, the Committee formulates recommendations, which then must be approved by the agencies.

    The Committee presented proposals for coding changes for implementation in FY 2017 at a public meeting held on September 22-23, 2015, and finalized the coding changes after consideration of comments received at the meetings and in writing by November 13, 2015.

    The Committee held its 2016 meeting on March 9-10, 2016. It was announced at this meeting that any new ICD-10-CM/PCS codes for which there was consensus of public support and for which complete tabular and indexing changes would be made by May 2016 would be included in the October 1, 2016 update to ICD-10-CM/ICD-10-PCS. As discussed in earlier sections of this preamble, there are new and deleted ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that are captured in Table 6A.--New Diagnosis Codes, Table 6B.--New Procedure Codes, and Table 6C.--Invalid Diagnosis Codes for the proposed rule and this final rule, which are available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. Because of the length of these tables, they were not published in the Addendum to the proposed rule or this final rule. Rather, they are available via the Internet as discussed in section VI. of the Addendum to the proposed rule and this final rule.

    Live Webcast recordings of the discussions of procedure codes at the Committee's September 22-23, 2015 meeting and March 9-10, 2016 meeting can be obtained from the CMS Web site at: http://cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/icd9ProviderDiagnosticCodes/03_meetings.asp. The minutes of the discussions of diagnosis codes at the September 23-24, 2015 meeting and March 9-10, 2016 meeting are found at: http://www.cdc.gov/nchs/icd/icd9cm_maintenance.html. These Web sites also provide detailed information about the Committee, including information on requesting a new code, attending a Committee meeting, and timeline requirements and meeting dates.

    We encourage commenters to address suggestions on coding issues involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-10 Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo Road, Hyattsville, MD 20782. Comments may be sent by Email to: nchc@cdc.gov.

    Questions and comments concerning the procedure codes should be addressed to: Patricia Brooks, Co-Chairperson, ICD-10 Coordination and Maintenance Committee, CMS, Center for Medicare Management, Hospital and Ambulatory Policy Group, Division of Acute Care, C4-08-06, 7500 Security Boulevard, Baltimore, MD 21244-1850. Comments may be sent by Email to: ICDProcedureCodeRequest@cms.hhs.gov.

    In the September 7, 2001 final rule implementing the IPPS new technology add-on payments (66 FR 46906), we indicated we would attempt to include proposals for procedure codes that would describe new technology discussed and approved at the Spring meeting as part of the code revisions effective the following October.

    Section 503(a) of Public Law 108-173 included a requirement for updating diagnosis and procedure codes twice a year instead of a single update on October 1 of each year. This requirement was included as part of the amendments to the Act relating to recognition of new technology under the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by adding a clause (vii) which states that the Secretary shall provide for the addition of new diagnosis and procedure codes on April 1 of each year, but the addition of such codes shall not require the Secretary to adjust the payment (or diagnosis-related group classification) until the fiscal year that begins after such date. This requirement improves the recognition of new technologies under the IPPS system by providing information on these new technologies at an earlier date. Data will be available 6 months earlier than would be possible with updates occurring only once a year on October 1.

    While section 1886(d)(5)(K)(vii) of the Act states that the addition of new diagnosis and procedure codes on April 1 of each year shall not require the Secretary to adjust the payment, or DRG classification, under section 1886(d) of the Act until the fiscal year that begins after such date, we have to update the DRG software and other systems in order to recognize and accept the new codes. We also publicize the code changes and the need for a mid-year systems update by providers to identify the new codes. Hospitals also have to obtain the new code books and encoder updates, and make other system changes in order to identify and report the new codes.

    The ICD-10 (previously the ICD-9-CM) Coordination and Maintenance Committee holds its meetings in the spring and fall in order to update the codes and the applicable payment and reporting systems by October 1 of each year. Items are placed on the agenda for the Committee meeting if the request is received at least 2 months prior to the meeting. This requirement allows time for staff to review and research the coding issues and prepare material for discussion at the meeting. It also allows time for the topic to be publicized in meeting announcements in the Federal Register as well as on the CMS Web site. Final decisions on code title revisions are currently made by March 1 so that these titles can be included in the IPPS proposed rule. A complete addendum describing details of all diagnosis and procedure coding changes, both tabular and index, is published on the CMS and NCHS Web sites in June of each year. Publishers of coding books and software use this information to modify their products that are used by health care providers. This 5-month time period has proved to be necessary for hospitals and other providers to update their systems.

    A discussion of this timeline and the need for changes are included in the

    Page 56856

    December 4-5, 2005 ICD-9-CM Coordination and Maintenance Committee Meeting minutes. The public agreed that there was a need to hold the fall meetings earlier, in September or October, in order to meet the new implementation dates. The public provided comment that additional time would be needed to update hospital systems and obtain new code books and coding software. There was considerable concern expressed about the impact this new April update would have on providers.

    In the FY 2005 IPPS final rule, we implemented section 1886(d)(5)(K)(vii) of the Act, as added by section 503(a) of Public Law 108-173, by developing a mechanism for approving, in time for the April update, diagnosis and procedure code revisions needed to describe new technologies and medical services for purposes of the new technology add-on payment process. We also established the following process for making these determinations. Topics considered during the Fall ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee meeting are considered for an April 1 update if a strong and convincing case is made by the requester at the Committee's public meeting. The request must identify the reason why a new code is needed in April for purposes of the new technology process. The participants at the meeting and those reviewing the Committee meeting summary report are provided the opportunity to comment on this expedited request. All other topics are considered for the October 1 update. Participants at the Committee meeting are encouraged to comment on all such requests. There were no requests approved for an expedited April l, 2016 implementation of a code at the September 22-23, 2015 Committee meeting. Therefore, there were no new codes implemented on April 1, 2016.

    ICD-9-CM addendum and code title information is published on the CMS Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/

    icd9ProviderDiagnosticCodes/01overview.asp#TopofPage. ICD-10-CM and ICD-10-PCS addendum and code title information is published on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/index.html. Information on ICD-10-CM diagnosis codes, along with the Official ICD-

    10-CM Coding Guidelines, can also be found on the CDC Web site at: http://www.cdc.gov/nchs/icd/icd10.htm. Information on new, revised, and deleted ICD-10-CM/ICD-10-PCS codes is also provided to the AHA for publication in the Coding Clinic for ICD-10. AHA also distributes information to publishers and software vendors.

    CMS also sends copies of all ICD-10-CM and ICD-10-PCS coding changes to its Medicare contractors for use in updating their systems and providing education to providers.

    The code titles are adopted as part of the ICD-10 (previously ICD-

    9-CM) Coordination and Maintenance Committee process. Therefore, although we publish the code titles in the IPPS proposed and final rules, they are not subject to comment in the proposed or final rules.

  235. Code Freeze

    In the January 16, 2009 ICD-10-CM and ICD-10-PCS final rule (74 FR 3340), there was a discussion of the need for a partial or total freeze in the annual updates to both ICD-9-CM and ICD-10-CM and ICD-10-PCS codes. The public comment addressed in that final rule stated that the annual code set updates should cease l year prior to the implementation of ICD-10. The commenters stated that this freeze of code updates would allow for instructional and/or coding software programs to be designed and purchased early, without concern that an upgrade would take place immediately before the compliance date, necessitating additional updates and purchases.

    HHS responded to comments in the ICD-10 final rule that the ICD-9-

    CM Coordination and Maintenance Committee has jurisdiction over any action impacting the ICD-9-CM and ICD-10 code sets. Therefore, HHS indicated that the issue of consideration of a moratorium on updates to the ICD-9-CM, ICD-10-CM, and ICD-10-PCS code sets in anticipation of the adoption of ICD-10-CM and ICD-10-PCS would be addressed through the Committee at a future public meeting.

    The code freeze was discussed at multiple meetings of the ICD-9-CM Coordination and Maintenance Committee and public comment was actively solicited. The Committee evaluated all comments from participants attending the Committee meetings as well as written comments that were received. The Committee also considered the delay in implementation of ICD-10 until October 1, 2014. There was an announcement at the September 19, 2012 ICD-9-CM Coordination and Maintenance Committee meeting that a partial freeze of both ICD-9-CM and ICD-10 codes would be implemented as follows:

    The last regular annual update to both ICD-9-CM and ICD-10 code sets was made on October 1, 2011.

    On October 1, 2012 and October 1, 2013, there were only limited code updates to both ICD-9-CM and ICD-10 code sets to capture new technology and new diseases.

    On October 1, 2014, there were to be only limited code updates to ICD-10 code sets to capture new technology and diagnoses as required by section 503(a) of Public Law 108-173. There were to be no updates to ICD-9-CM on October 1, 2014.

    On October 1, 2015, 1 year after the originally scheduled implementation of ICD-10, regular updates to ICD-10 were to begin.

    On May 15, 2014, CMS posted an updated Partial Code Freeze schedule on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/ICD-9-CM-Coordination-and-Maintenance-Committee-Meetings.html. This updated schedule provided information on the extension of the partial code freeze until 1 year after the implementation of ICD-10. As stated earlier, on April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. 113-93) was enacted, which specified that the Secretary may not adopt ICD-10 prior to October 1, 2015. On August 4, 2014, the Department published a final rule with a compliance date to require the use of ICD-10 beginning October 1, 2015. The final rule also required HIPAA-covered entities to continue to use ICD-9-CM through September 30, 2015. Accordingly, the updated schedule for the partial code freeze was as follows:

    The last regular annual updates to both ICD-9-CM and ICD-

    10 code sets were made on October 1, 2011.

    On October 1, 2012, October 1, 2013, and October 1, 2014, there were only limited code updates to both the ICD-9-CM and ICD-10 code sets to capture new technologies and diseases as required by section 1886(d)(5)(K) of the Act.

    On October 1, 2015, there were only limited code updates to ICD-10 code sets to capture new technologies and diagnoses as required by section 1886(d)(5)(K) of the Act. There were no updates to ICD-9-CM, as it will no longer be used for reporting.

    On October 1, 2016 (1 year after implementation of ICD-

    10), regular updates to ICD-10 will begin.

    The ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee announced that it would continue to meet twice a year during the freeze. At these meetings, the public was encouraged to comment on whether

    Page 56857

    or not requests for new diagnosis and procedure codes should be created based on the need to capture new technology and new diseases. Any code requests that do not meet the criteria will be evaluated for implementation within ICD-10 1 year after the implementation of ICD-10, once the partial freeze is ended.

    Complete information on the partial code freeze and discussions of the issues at the Committee meetings can be found on the ICD-10 Coordination and Maintenance Committee Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/meetings.html. A summary of the September 19, 2012 Committee meeting, along with both written and audio transcripts of this meeting, is posted on the Web site at: http://www.cms.hhs.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials-Items/2012-09-19-MeetingMaterials.html.

    This partial code freeze dramatically decreased the number of codes created each year as shown by the following information.

    Total Number of Codes and Changes in Total Number of Codes per Fiscal Year

    ----------------------------------------------------------------------------------------------------------------

    ICD-9-CM codes ICD-10-CM and ICD-10-PCS codes

    ----------------------------------------------------------------------------------------------------------------

    Fiscal year No. Change Fiscal year No. Change

    ----------------------------------------------------------------------------------------------------------------

    FY 2009 (October 1, 2008): .............. ............... FY 2009: .............. ..............

    Diagnoses................ 14,025 348 ICD-10-CM.... 68,069 +5

    Procedures............... 3,824 56 ICD-10-PCS... 72,589 -14,327

    FY 2010 (October 1, 2009): .............. ............... FY 2010: .............. ..............

    Diagnoses................ 14,315 290 ICD-10-CM.... 69,099 +1,030

    Procedures............... 3,838 14 ICD-10-PCS... 71,957 -632

    FY 2011 (October 1, 2010): .............. ............... ................ .............. ..............

    Diagnoses................ 14,432 117 ICD-10-CM.... 69,368 +269

    Procedures............... 3,859 21 ICD-10-PCS... 72,081 +124

    FY 2012 (October 1, 2011): .............. ............... FY 2012: .............. ..............

    Diagnoses................ 14,567 135 ICD-10-CM.... 69,833 +465

    Procedures............... 3,877 18 ICD-10-PCS... 71,918 -163

    FY 2013 (October 1, 2012) .............. ............... FY 2013: .............. ..............

    Diagnoses................ 14,567 0 ICD-10-CM.... 69,832 -1

    Procedures............... 3,878 1 ICD-10-PCS... 71,920 +2

    FY 2014 (October 1, 2013): .............. ............... FY 2014: .............. ..............

    Diagnoses................ 14,567 0 ICD-10-CM.... 69,823 -9

    Procedures............... 3,882 4 ICD-10-PCS... 71,924 +4

    FY 2015 (October 1, 2014): .............. ............... FY 2015: .............. ..............

    Diagnoses................ 14,567 0 ICD-10-CM.... 69,823 0

    Procedures............... 3,882 0 ICD-10-PCS... 71,924 0

    FY 2016 (October 1, 2015): .............. ............... FY 2016: .............. ..............

    Diagnoses................ 14,567 0 ICD-10-CM.... 69,823 0

    Procedures............... 3,882 0 ICD-10-PCS... 71,924 0

    FY 2017(October 1, 2016) .............. ............... FY 2017: .............. ..............

    Diagnoses................ 14,567 0 ICD-10-CM.... 71,486 0

    Procedures............... 3,882 0 ICD-10-PCS... 75,789 0

    ----------------------------------------------------------------------------------------------------------------

    As mentioned previously, the public is provided the opportunity to comment on any requests for new diagnosis or procedure codes discussed at the ICD-10 Coordination and Maintenance Committee meeting. The public has supported only a limited number of new codes during the partial code freeze, as can be seen by previously shown data. We have gone from creating several hundred new codes each year to creating only a limited number of new ICD-9-CM and ICD-10 codes.

    At the September 22-23, 2015 and March 9-10, 2016 Committee meetings, we discussed any requests we had received for new ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that were to be implemented on October 1, 2016. We did not discuss ICD-9-CM codes. Because the partial code freeze will end on October 1, 2016, the public no longer had to comment on whether or not new ICD-10-CM and ICD-10-PCS codes should be created based on the partial code freeze criteria. We invited public comments on any code requests discussed at the September 22-23, 2015 and March 9-10, 2016 Committee meetings for implementation as part of the October 1, 2016 update. The deadline for commenting on code proposals discussed at the September 22-23, 2015 Committee meeting was November 13, 2015. The deadline for commenting on code proposals discussed at the March 9-10, 2016 Committee meeting was April 8, 2016.

    18. Replaced Devices Offered Without Cost or With a Credit

  236. Background

    In the FY 2008 IPPS final rule with comment period (72 FR 47246 through 47251), we discussed the topic of Medicare payment for devices that are replaced without cost or where credit for a replaced device is furnished to the hospital. We implemented a policy to reduce a hospital's IPPS payment for certain MS-DRGs where the implantation of a device that has been recalled determined the base MS-DRG assignment. At that time, we specified that we will reduce a hospital's IPPS payment for those MS-DRGs where the hospital received a credit for a replaced device equal to 50 percent or more of the cost of the device.

    In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51556 through 51557), we clarified this policy to state that the policy applies if the hospital received a credit equal to 50 percent or more of the cost of the replacement device and issued instructions to hospitals accordingly.

  237. Changes for FY 2017

    In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25019), for FY 2017, we proposed not to add any MS-DRGs to the policy for replaced devices offered without cost or with a credit. We proposed to continue to include the

    Page 56858

    existing MS-DRGs currently subject to the policy as displayed in the table below.

    ----------------------------------------------------------------------------------------------------------------

    MDC MS-DRG MS-DRG Title

    ----------------------------------------------------------------------------------------------------------------

    Pre-MDC............................. 001 Heart Transplant or Implant of Heart Assist System with

    MCC

    Pre-MDC............................. 002 Heart Transplant or Implant of Heart Assist System without

    MCC.

    1................................... 023 Craniotomy with Major Device Implant/Acute Complex CNS

    Principal Diagnosis with MCC or Chemo Implant.

    1................................... 024 Craniotomy with Major Device Implant/Acute Complex CNS

    Principal Diagnosis without MCC.

    1................................... 025 Craniotomy & Endovascular Intracranial Procedures with

    MCC.

    1................................... 026 Craniotomy & Endovascular Intracranial Procedures with CC.

    1................................... 027 Craniotomy & Endovascular Intracranial Procedures without

    CC/MCC.

    1................................... 040 Peripheral/Cranial Nerve & Other Nervous System Procedure

    with MCC.

    1................................... 041 Peripheral/Cranial Nerve & Other Nervous System Procedure

    with CC or Peripheral Neurostimulator.

    1................................... 042 Peripheral/Cranial Nerve & Other Nervous System Procedure

    without CC/MCC.

    3................................... 129 Major Head & Neck Procedures with CC/MCC or Major Device.

    3................................... 130 Major Head & Neck Procedures without CC/MCC.

    5................................... 215 Other Heart Assist System Implant.

    5................................... 216 Cardiac Valve & Other Major Cardiothoracic Procedure with

    Cardiac Catheter with MCC.

    5................................... 217 Cardiac Valve & Other Major Cardiothoracic Procedure with

    Cardiac Catheter with CC.

    5................................... 218 Cardiac Valve & Other Major Cardiothoracic Procedure with

    Cardiac Catheter without CC/MCC.

    5................................... 219 Cardiac Valve & Other Major Cardiothoracic Procedure

    without Cardiac Catheter with MCC.

    5................................... 220 Cardiac Valve & Other Major Cardiothoracic Procedure

    without Cardiac Catheter with CC.

    5................................... 221 Cardiac Valve & Other Major Cardiothoracic Procedure

    without Cardiac Catheter without CC/MCC.

    5................................... 222 Cardiac Defibrillator Implant with Cardiac Catheter with

    AMI/Heart Failure/Shock with MCC.

    5................................... 223 Cardiac Defibrillator Implant with Cardiac Catheter with

    AMI/Heart Failure/Shock without MCC.

    5................................... 224 Cardiac Defibrillator Implant with Cardiac Catheter

    without AMI/Heart Failure/Shock with MCC.

    5................................... 225 Cardiac Defibrillator Implant with Cardiac Catheter

    without AMI/Heart Failure/Shock without MCC.

    5................................... 226 Cardiac Defibrillator Implant without Cardiac Catheter

    with MCC.

    5................................... 227 Cardiac Defibrillator Implant without Cardiac Catheter

    without MCC.

    5................................... 242 Permanent Cardiac Pacemaker Implant with MCC.

    5................................... 243 Permanent Cardiac Pacemaker Implant with CC.

    5................................... 244 Permanent Cardiac Pacemaker Implant without CC/MCC.

    5................................... 245 AICD Generator Procedures.

    5................................... 258 Cardiac Pacemaker Device Replacement with MCC.

    5................................... 259 Cardiac Pacemaker Device Replacement without MCC.

    5................................... 260 Cardiac Pacemaker Revision Except Device Replacement with

    MCC.

    5................................... 261 Cardiac Pacemaker Revision Except Device Replacement with

    CC.

    5................................... 262 Cardiac Pacemaker Revision Except Device Replacement

    without CC/MCC.

    5................................... 266 Endovascular Cardiac Valve Replacement with MCC.

    5................................... 267 Endovascular Cardiac Valve Replacement without MCC.

    5................................... 268 Aortic and Heart Assist Procedures Except Pulsation

    Balloon with MCC.

    5................................... 269 Aortic and Heart Assist Procedures Except Pulsation

    Balloon without MCC.

    5................................... 270 Other Major Cardiovascular Procedures with MCC.

    5................................... 271 Other Major Cardiovascular Procedures with CC.

    5................................... 272 Other Major Cardiovascular Procedures without CC/MCC.

    8................................... 461 Bilateral or Multiple Major Joint Procedures Of Lower

    Extremity with MCC.

    8................................... 462 Bilateral or Multiple Major Joint Procedures of Lower

    Extremity without MCC.

    8................................... 466 Revision of Hip or Knee Replacement with MCC.

    8................................... 467 Revision of Hip or Knee Replacement with CC.

    8................................... 468 Revision of Hip or Knee Replacement without CC/MCC.

    8................................... 469 Major Joint Replacement or Reattachment of Lower Extremity

    with MCC.

    8................................... 470 Major Joint Replacement or Reattachment of Lower Extremity

    without MCC.

    ----------------------------------------------------------------------------------------------------------------

    We solicited public comments on our proposal to continue to include the existing MS-DRGs currently subject to the policy and to not add any additional MS-DRGs to the policy. We indicated that the final list of MS-DRGs subject to the policy for FY 2017 would be listed in this FY 2017 IPPS/LTCH PPS final rule, as well as issued to providers in the form of a Change Request (CR).

    We did not receive any public comments opposing our proposal to continue to include the existing MS-DRGs currently subject to the policy and to not add any additional MS-DRGs. Therefore, we are finalizing the list of MS-DRGs in the table included in the proposed rule and above that will be subject to the replaced devices offered without cost or with a credit policy effective October 1, 2016.

    19. Other Policy Changes

  238. MS-DRG GROUPER Logic

    (1) Operations on Products of Conception

    In the ICD-9-CM MS-DRGs Version 32, intrauterine operations that may be performed in an attempt to correct a fetal abnormality are identified by ICD-9-CM procedure code 75.36 (Correction of fetal defect). This procedure code is designated as an O.R. procedure and is assigned to MDC 14 (Pregnancy, Childbirth and the Puerperium) in MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or Dilation and Curettage).

    A replication issue for 208 ICD-10-PCS comparable code translations that describe operations on the products of conception (fetus) to correct fetal defects was identified during an internal review. These 208 procedure codes were inadvertently omitted from the MDC 14 GROUPER logic for ICD-10 MS-DRG 768. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25020), we proposed to add the 208 ICD-10-PCS procedure codes shown in Table 6P.3a. associated with the proposed rule (which is available via the Internet on the CMS Web site at:

    Page 56859

    http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 14 in MS-DRG 768, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the 208 ICD-10-

    PCS procedure codes describing operations to correct fetal defects to MDC 14 in MS-DRG 768. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add the 208 ICD-10-PCS procedure codes shown in Table 6P.3a. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 14 in MS-DRG 768 in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    Separate from the replication issue described above, during our internal review, we also concluded that the proposed MS-DRG logic for these intrauterine procedures under ICD-10 may not accurately represent a subset of the 208 ICD-10-PCS procedure codes (listed in Table 6P.3a.). For example, the GROUPER logic for MS-DRG 768 requires that a vaginal delivery occur during the same episode of care in which an intrauterine procedure is performed. However, this scenario may not be clinically consistent with all pregnant patients who undergo fetal surgery. For example, a pregnant patient whose fetus is diagnosed with a congenital diaphragmatic hernia (CDH) may undergo a fetoscopic endoluminal tracheal occlusion (FETO) procedure in which the pregnant patient does not subsequently deliver during the same hospital stay. The goal of this specific fetal surgery is to allow the fetus to remain in utero until its lungs have developed to increase the chance of survival. Therefore, this scenario of a patient who has fetal surgery but does not have a delivery during the same hospital stay is not appropriately captured in the GROUPER logic. We believe that further analysis is warranted regarding a future proposal for a new MS-DRG to better recognize this subset of patients.

    In past rulemaking (72 FR 24700 and 24705), we have acknowledged that CMS does not have the expertise or data to maintain the DRGs in clinical areas that have very low volume in the Medicare population, including for conditions associated with and/or occurring in the maternal-fetal patient population. Additional information is needed to fully and accurately evaluate all the possible fetal conditions that may fall under similar scenarios to the one described above before making a specific proposal. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25020), we solicited public comments on two clinical concepts for consideration for a possible future proposal for the FY 2018 ICD-10 MS-DRGs Version 35: (1) The ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that describe fetal abnormalities for which fetal surgery may be performed in the absence of a delivery during the same hospital stay; and (2) the ICD-10-CM diagnosis codes and ICD-10-PCS procedure codes that describe fetal abnormalities for which fetal surgery may be performed with a subsequent delivery during the same hospital stay. This second concept is the structure of current MS-DRG 768. We indicated that commenters should submit their code recommendations for these concepts to the following email address MSDRGClassificationChange@cms.hhs.gov by December 7, 2016. We encouraged public comments as we consider these enhancements for the FY 2018 ICD-10 MS-DRGs Version 35.

    (2) Other Heart Revascularization

    In the ICD-9-CM MS-DRGs Version 32, revascularization procedures that are performed to restore blood flow to the heart are identified with procedure code 36.39 (Other heart revascularization). This procedure code is designated as an O.R. procedure and is assigned to MDC 5 (Diseases and Disorders of the Circulatory System) in MS-DRGs 228 through 230 (Other Cardiothoracic Procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for 16 ICD-10-PCS comparable code translations that describe revascularization procedures was identified after implementation of the ICD-10 MS-DRGs Version 33. These 16 procedure codes were inadvertently omitted from the MDC 5 GROUPER logic for ICD-

    10 MS-DRGs 228 through 230. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25021), we noted that, as discussed in section II.F.5.d. of the preamble of the proposed rule, we proposed to delete MS-DRG 230 and revise MS-DRG 229. Accordingly, to resolve this replication issue, we proposed to add the 16 ICD-10-PCS procedure codes listed in the table below to MDC 5 in MS-DRG 228 and proposed revised MS-DRG 229.

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    0210344.................. Bypass coronary artery, one site from

    coronary vein with drug-eluting intraluminal

    device, percutaneous approach.

    02103D4.................. Bypass coronary artery, one site from

    coronary vein with intraluminal device,

    percutaneous approach.

    0210444.................. Bypass coronary artery, one site from

    coronary vein with drug-eluting intraluminal

    device, percutaneous endoscopic approach.

    02104D4.................. Bypass coronary artery, one site from

    coronary vein with intraluminal device,

    percutaneous endoscopic approach.

    0211344.................. Bypass coronary artery, two sites from

    coronary vein with drug-eluting intraluminal

    device, percutaneous approach.

    02113D4.................. Bypass coronary artery, two sites from

    coronary vein with intraluminal device,

    percutaneous approach.

    0211444.................. Bypass coronary artery, two sites from

    coronary vein with drug-eluting intraluminal

    device, percutaneous endoscopic approach.

    02114D4.................. Bypass coronary artery, two sites from

    coronary vein with intraluminal device,

    percutaneous endoscopic approach.

    0212344.................. Bypass coronary artery, three sites from

    coronary vein with drug-eluting intraluminal

    device, percutaneous approach.

    02123D4.................. Bypass coronary artery, three sites from

    coronary vein with intraluminal device,

    percutaneous approach.

    0212444.................. Bypass coronary artery, three sites from

    coronary vein with drug-eluting intraluminal

    device, percutaneous endoscopic approach.

    02124D4.................. Bypass coronary artery, three sites from

    coronary vein with intraluminal device,

    percutaneous endoscopic approach.

    0213344.................. Bypass coronary artery, four or more sites

    from coronary vein with drug-eluting

    intraluminal device, percutaneous approach.

    02133D4.................. Bypass coronary artery, four or more sites

    from coronary vein with intraluminal device,

    percutaneous approach.

    0213444.................. Bypass coronary artery, four or more sites

    from coronary vein with drug-eluting

    intraluminal device, percutaneous endoscopic

    approach.

    02134D4.................. Bypass coronary artery, four or more sites

    from coronary vein with intraluminal device,

    percutaneous endoscopic approach.

    ------------------------------------------------------------------------

    Page 56860

    We invited public comments on our proposal to add the above listed ICD-10-PCS procedure codes to MDC 5 in MS-DRG 228 and proposed revised MS-DRG 229 (Other Cardiothoracic Procedures with and without MCC, respectively), effective October 1, 2016, in ICD-10 MS-DRGs Version 34.

    Comment: Commenters supported the proposal to add the 16 ICD-10-PCS procedure codes describing revascularization procedures to MDC 5 in MS-

    DRGs 228 and proposed revised MS-DRG 229. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs. We note that, as discussed in section II.F.15.b. of the proposed rule, we made a document consisting of procedure code updates publicly available. This document included the titles to the above list of codes that were revised in response to public comments received during the partial code freeze. The revised code titles reflect the term ``artery'' where the current term ``site'' is displayed and reflect the term ``arteries'' where the current term ``sites'' is displayed in the table above. A complete list of all the revised ICD-10-PCS procedure code titles is shown in Table 6F.--Revised Procedure Code Titles associated with this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index).

    After consideration of the public comments we received, we are finalizing our proposal to add the ICD-10-PCS procedure codes in the proposed rule and above in this final rule, with their revised code titles as shown in Table 6F.--Revised Procedure Code Titles, to MDC 5 in MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with and without MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016. We also note that, as discussed in section II.F.5.d. of this final rule, the proposal to collapse MS-DRGs 228, 229, and 230 from three severity levels into two severity levels was finalized.

    (3) Procedures on Vascular Bodies: Chemoreceptors

    In the ICD-9-CM MS-DRGs Version 32, procedures performed on the sensory receptors are identified with ICD-9-CM procedure code 39.89 (Other operations on carotid body, carotid sinus and other vascular bodies). This procedure code is designated as an O.R. procedure and is assigned to MDC 5 (Diseases and Disorders of the Circulatory System) in MS-DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for 234 ICD-10-PCS comparable code translations that describe these procedures was identified after implementation of the ICD-10 MS-DRGs Version 33. These 234 procedure codes were inadvertently omitted from the MDC 5 GROUPER logic for ICD-10 MS-DRGs 252 through 254. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25021), we proposed to add the 234 ICD-10-PCS procedure codes listed in Table 6P.3b. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 5 in MS-DRGs 252, 253, and 254, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the 234 ICD-10-

    PCS procedure codes describing procedures performed on the sensory receptors to MDC 5 in MS-DRGs 252, 253, and 254. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add the 234 ICD-10-PCS procedure codes listed in Table 6P.3b. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 5 in MS-DRGs 252, 253, and 254 (Other Vascular Procedures with MCC, with CC, and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (4) Repair of the Intestine

    In the ICD-9-CM MS-DRGs Version 32, the procedure for a repair to the intestine may be identified with procedure code 46.79 (Other repair of intestine). This procedure code is designated as an O.R. procedure and is assigned to MDC 6 (Diseases and Disorders of the Digestive System) in MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for four ICD-10-PCS comparable code translations was identified after implementation of the ICD-10 MS-DRGs Version 33. These four procedure codes are:

    0DQF0ZZ (Repair right large intestine, open approach);

    0DQG0ZZ (Repair left large intestine, open approach);

    0DQL0ZZ (Repair transverse colon, open approach); and

    0DQM0ZZ (Repair descending colon, open approach).

    These four ICD-10-PCS codes were inadvertently omitted from the MDC 6 GROUPER logic for ICD-10 MS-DRGs 329 through 331. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25021), we proposed to add the four ICD-10-PCS procedure codes to MDC 6 in MS-DRGs 329, 330, and 331, effective October 1, 2016, in ICD-10 MS-

    DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the four ICD-10-

    PCS procedure codes describing repair of the intestine to MDC 6 in MS-

    DRGs 329, 330, and 331. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS procedure codes 0DQF0ZZ, 0DQG0ZZ, 0DQL0ZZ, and 0DQM0ZZ listed in the proposed rule and above in this final rule to MDC 6 in MS-DRGs 329, 330, and 331 (Major Small and Large Bowel Procedures with MCC, with CC, and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (5) Insertion of Infusion Pump

    In the ICD-9-CM MS-DRGs Version 32, the procedure for insertion of an infusion pump is identified with procedure code 86.06 (Insertion of totally implantable infusion pump), which is designated as an O.R. procedure and assigned to a number of MDCs and MS-DRGs across various body systems. We refer readers to the ICD-9-CM MS-DRG Definitions Manual Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index, which is available on the CMS Web site at: https://www.cms.gov/

    Medicare/Medicare-Fee-for-Service-

    Page 56861

    Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/

    FY2016-IPPS-Rule-Data-Files.html, for the complete list of MDCs and MS-

    DRGs to which procedure code 86.06 is assigned.

    A replication issue for 16 ICD-10-PCS comparable code translations was identified after implementation of the ICD-10 MS-DRGs Version 33. These 16 procedure codes are listed in the table below:

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    0JHD0VZ.................. Insertion of infusion pump into right upper

    arm subcutaneous tissue and fascia, open

    approach.

    0JHD3VZ.................. Insertion of infusion pump into right upper

    arm subcutaneous tissue and fascia,

    percutaneous approach.

    0JHF0VZ.................. Insertion of infusion pump into left upper

    arm subcutaneous tissue and fascia, open

    approach.

    0JHF3VZ.................. Insertion of infusion pump into left upper

    arm subcutaneous tissue and fascia,

    percutaneous approach.

    0JHG0VZ.................. Insertion of infusion pump into right lower

    arm subcutaneous tissue and fascia, open

    approach.

    0JHG3VZ.................. Insertion of infusion pump into right lower

    arm subcutaneous tissue and fascia,

    percutaneous approach.

    0JHH0VZ.................. Insertion of infusion pump into left lower

    arm subcutaneous tissue and fascia, open

    approach.

    0JHH3VZ.................. Insertion of infusion pump into left lower

    arm subcutaneous tissue and fascia,

    percutaneous approach.

    0JHL0VZ.................. Insertion of infusion pump into right upper

    leg subcutaneous tissue and fascia, open

    approach.

    0JHL3VZ.................. Insertion of infusion pump into right upper

    leg subcutaneous tissue and fascia,

    percutaneous approach.

    0JHM0VZ.................. Insertion of infusion pump into left upper

    leg subcutaneous tissue and fascia, open

    approach.

    0JHM3VZ.................. Insertion of infusion pump into left upper

    leg subcutaneous tissue and fascia,

    percutaneous approach.

    0JHN0VZ.................. Insertion of infusion pump into right lower

    leg subcutaneous tissue and fascia, open

    approach.

    0JHN3VZ.................. Insertion of infusion pump into right lower

    leg subcutaneous tissue and fascia,

    percutaneous approach.

    0JHP0VZ.................. Insertion of infusion pump into left lower

    leg subcutaneous tissue and fascia, open

    approach.

    0JHP3VZ.................. Insertion of infusion pump into left lower

    leg subcutaneous tissue and fascia,

    percutaneous approach.

    ------------------------------------------------------------------------

    These codes were inadvertently omitted from the MDCs and MS-DRGs to which they should be assigned (consistent with the assignment of ICD-9-

    CM procedure code 86.06) to accurately replicate the ICD-9-CM MS-DRG logic. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25021 through 25022), we proposed to add the 16 ICD-10-PCS procedure codes listed in the table above to the corresponding MDCs and MS-DRGs, as set forth in the ICD-9-CM MS-DRG Definitions Manual--Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as described earlier, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the 16 ICD-10-PCS procedure codes describing insertion of an infusion pump listed in the proposed rule to the corresponding MDCs and MS-DRGs for ICD-9-CM code 86.06. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add the 16 ICD-10-PCS procedure codes describing insertion of an infusion pump listed in the proposed rule and above in this final rule to the corresponding MDCs and MS-DRGs for ICD-9-CM code 86.06, as set forth in the ICD-9-CM MS-DRG Definitions Manual--Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index which is available on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Rule-Data-Files.html in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (6) Procedures on the Bursa

    In the ICD-9-CM MS-DRGs Version 32, procedures that involve cutting into the bursa are identified with procedure code 83.03 (Bursotomy). This procedure code is designated as an O.R. procedure and is assigned to MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) in MS-DRGs 500, 501, and 502 (Soft Tissue Procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for six ICD-10-PCS comparable code translations was identified after implementation of the ICD-10 MS-DRGs Version 33. These six procedure codes are:

    0M850ZZ (Division of right wrist bursa and ligament, open approach);

    0M853ZZ (Division of right wrist bursa and ligament, percutaneous approach);

    0M854ZZ (Division of right wrist bursa and ligament, percutaneous endoscopic approach);

    0M860ZZ (Division of left wrist bursa and ligament, open approach);

    0M863ZZ (Division of left wrist bursa and ligament, percutaneous approach); and

    0M864ZZ (Division of left wrist bursa and ligament, percutaneous endoscopic approach).

    These codes were inadvertently omitted from the MDC 8 GROUPER logic for ICD-10 MS-DRGs 500, 501, and 502. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25022), we proposed to add the six ICD-10-PCS procedure codes listed above to MDC 8 in MS-DRGs 500, 501, and 502, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the 6 ICD-10-PCS procedure codes describing procedures that involve cutting into the bursa listed in the proposed rule to MDC 8 in MS-DRGs 500, 501, and 502. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add the six ICD-10-PCS procedure codes listed in the proposed rule and above in this final rule to MDC 8 in MS-DRGs 500, 501, and 502 (Soft Tissue Procedures with MCC, with CC, and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (7) Procedures on the Breast

    In the ICD-9-CM MS-DRGs Version 32, procedures performed for a simple repair to the skin of the breast may be identified with procedure code 86.59 (Closure of skin and subcutaneous tissue of other sites). This procedure

    Page 56862

    code is designated as a non-O.R. procedure. Therefore, this procedure code does not have an impact on MS-DRG assignment.

    A replication issue for two ICD-10-PCS comparable code translations was identified after implementation of the ICD-10 MS-DRGs Version 33. These two procedure codes are: 0HQVXZZ (Repair bilateral breast, external approach) and 0HQYXZZ (Repair supernumerary breast, external approach). These ICD-10-PCS procedures codes were inadvertently assigned to ICD-10 MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC, respectively) in the ICD-10 MS-DRG GROUPER logic. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25022), we proposed to remove these two ICD-10-PCS procedure codes from MS-DRGs 981, 982, and 983, to designate them as non-O.R. procedures, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to designate the two ICD-10-PCS codes (0HQVXZZ and 0HQYXZZ) as non-O.R. procedures. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    One commenter expressed concern with the proposal, noting that the proposed change may result in unintended consequences for other procedures because these ICD-10-PCS codes can also be considered comparable translations of ICD-9-CM procedure code 85.89 (Other mammoplasty), which is designated as an O.R. procedure.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs. We also acknowledge the concerns of the commenter who stated that our proposal could result in unintended consequences. We note that a large number of ICD-9-CM procedure codes that have a fourth digit of 9 (XX.X9) and include the term ``other'' as part of the code title are designated as O.R. procedures under the ICD-

    9-CM MS-DRGs Version 32. The intent of these codes is to capture procedures that are not able to be identified elsewhere in the classification system with another procedure code. These codes are often very vague and generally do not distinguish what approach is used for a specific anatomic site according to the body system in which it was assigned. Therefore, when these ``other'' ICD-9-CM procedure codes went through the process of the ICD-10 MS-DRG conversion, they understandably satisfied almost every available option (root operation, body part, approach, among others) within the structure of the specified ICD-10-PCS section, respective of the body system.

    As such, while we recognize that ICD-10-PCS procedure codes 0HQVXZZ (Repair bilateral breast, external approach) and 0HQYXZZ (Repair supernumerary breast, external approach) can be considered comparable translations of ICD-9-CM procedure code 85.89 (Other mammoplasty), which is designated as an O.R. procedure, we note that, under ICD-10-

    PCS, there also are more appropriate root operations that could logically be reported to identify that a mammoplasty was performed. For example, a mammoplasty may involve breast augmentation to enhance the appearance, size, or contour of the breast, in which case the ICD-10-

    PCS root operation ``Alteration'' could be reported. In the case where a mammoplasty was performed for breast reduction purposes, the ICD-10-

    PCS root operation ``Excision'' could be reported. For cases where mammoplasty is performed for breast reconstruction after mastectomy, the ICD-10-PCS root operations ``Supplement'' or ``Replacement'' could be reported. We believe that, from a clinical perspective, a mammoplasty would not necessarily be coded using the root of Repair with an external approach under ICD-10-PCS.

    In addition, we note that the ICD-10-PCS procedure codes describing unilateral repair of the breast with an external approach are currently designated as non-O.R. procedures under the ICD-10 MS-DRGs Version 33. Therefore, the proposal to make bilateral repair of the breast with an external approach non-O.R. would be consistent with those codes.

    After consideration of the public comments we received, we are finalizing our proposal to designate ICD-10-PCS procedure codes 0HQVXZZ (Repair bilateral breast, external approach) and 0HQYXZZ (Repair supernumerary breast, external approach) as non-O.R. codes in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (8) Excision of Subcutaneous Tissue and Fascia

    In the ICD-9-CM MS-DRGs Version 32, procedures involving excision of the skin and subcutaneous tissue are identified with procedure code 86.3 (Other local excision of lesion or tissue of skin and subcutaneous tissue). This procedure code is designated as a non-O.R. procedure that affects MS-DRG assignment for MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively) in MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast).

    A replication issue for 19 ICD-10-PCS comparable code translations was identified after implementation of the ICD-10 MS-DRGs Version 33. These 19 procedure codes are listed in the table below.

    ------------------------------------------------------------------------

    ICD-10-PCS code Description

    ------------------------------------------------------------------------

    0JB03ZZ.................. Excision of scalp subcutaneous tissue and

    fascia, percutaneous approach.

    0JB43ZZ.................. Excision of anterior neck subcutaneous tissue

    and fascia, percutaneous approach.

    0JB53ZZ.................. Excision of posterior neck subcutaneous

    tissue and fascia, percutaneous approach.

    0JB63ZZ.................. Excision of chest subcutaneous tissue and

    fascia, percutaneous approach.

    0JB73ZZ.................. Excision of back subcutaneous tissue and

    fascia, percutaneous approach.

    0JB83ZZ.................. Excision of abdomen subcutaneous tissue and

    fascia, percutaneous approach.

    0JB93ZZ.................. Excision of buttock subcutaneous tissue and

    fascia, percutaneous approach.

    0JBB3ZZ.................. Excision of perineum subcutaneous tissue and

    fascia, percutaneous approach.

    0JBC3ZZ.................. Excision of pelvic region subcutaneous tissue

    and fascia, percutaneous approach.

    0JBD3ZZ.................. Excision of right upper arm subcutaneous

    tissue and fascia, percutaneous approach.

    0JBF3ZZ.................. Excision of left upper arm subcutaneous

    tissue and fascia, percutaneous approach.

    0JBG3ZZ.................. Excision of right lower arm subcutaneous

    tissue and fascia, percutaneous approach.

    0JBH3ZZ.................. Excision of left lower arm subcutaneous

    tissue and fascia, percutaneous approach.

    0JBL3ZZ.................. Excision of right upper leg subcutaneous

    tissue and fascia, percutaneous approach.

    0JBM3ZZ.................. Excision of left upper leg subcutaneous

    tissue and fascia, percutaneous approach.

    Page 56863

    0JBN3ZZ.................. Excision of right lower leg subcutaneous

    tissue and fascia, percutaneous approach.

    0JBP3ZZ.................. Excision of left lower leg subcutaneous

    tissue and fascia, percutaneous approach.

    0JBQ3ZZ.................. Excision of right foot subcutaneous tissue

    and fascia, percutaneous approach.

    0JBR3ZZ.................. Excision of left foot subcutaneous tissue and

    fascia, percutaneous approach.

    ------------------------------------------------------------------------

    These codes were inadvertently omitted from the ICD-10 MS-DRG GROUPER logic for MDC 9 in MS-DRGs 579, 580, and 581. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25022 through 25023), we proposed to add the 19 ICD-10-PCS procedure codes listed in the table above to MDC 9 in MS-DRGs 579, 580, and 581, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the 19 ICD-10-PCS procedure codes describing procedures that involve cutting the subcutaneous tissue and fascia listed in the table in the proposed rule to MDC 9 in MS-DRGs 579, 580, and 581. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add the 19 ICD-10-PCS procedure codes listed in the table in the proposed rule and above in this final rule to MDC 9 in MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, with CC and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (9) Shoulder Replacement

    In the ICD-9-CM MS-DRGs Version 32, procedures that involve replacing a component of bone from the upper arm are identified with procedure code 78.42 (Other repair or plastic operations on bone, humerus). This procedure code is designated as an O.R. procedure and is assigned to MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) in MS-DRGs 492, 493, and 494 (Lower Extremity and Humerus Procedures Except Hip, Foot and Femur with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for two ICD-10-PCS comparable code translations was identified after implementation of the ICD-10 MS-DRGs Version 33. These two procedure codes are: 0PRC0JZ (Replacement of right humeral head with synthetic substitute, open approach) and 0PRD0JZ (Replacement of left humeral head with synthetic substitute, open approach). These two codes were inadvertently omitted from the ICD-10 MS-DRG GROUPER logic for MDC 8 in MS-DRGs 492, 493, and 494. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25023), we proposed to add these two ICD-10-PCS procedure codes to MDC 8 in MS-DRGs 492, 493, and 494, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the two ICD-10-

    PCS procedure codes describing procedures that involve shoulder replacement listed in the proposed rule to MDC 8 in MS-DRGs 492, 493, and 494. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS codes 0PRC0JZ (Replacement of right humeral head with synthetic substitute, open approach) and 0PRD0JZ (Replacement of left humeral head with synthetic substitute, open approach) to MDC 8 in MS-DRGs 492, 493, and 494 (Lower Extremity and Humerus Procedures Except Hip, Foot and Femur with MCC, with CC, and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (10) Reposition

    In the ICD-9-CM MS-DRGs Version 32, procedures that involve the percutaneous repositioning of an area in the vertebra are identified with procedure code 81.66 (Percutaneous vertebral augmentation). This procedure code is designated as an O.R. procedure and is assigned to MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) in MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue Procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for four ICD-10-PCS comparable code translations was identified after implementation of the ICD-10 MS-DRGs Version 33. These four procedure codes are:

    0PS33ZZ (Reposition cervical vertebra, percutaneous approach);

    0PS43ZZ (Reposition thoracic vertebra, percutaneous approach);

    0QS03ZZ (Reposition lumbar vertebra, percutaneous approach); and

    0QS13ZZ (Reposition sacrum, percutaneous approach).

    These four ICD-10 PCS procedure codes were inadvertently omitted from the ICD-10 MS-DRG GROUPER logic for MDC 8 and MS-DRGs 515, 516, and 517. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25023), we proposed to add these four ICD-10-

    PCS procedure codes to MDC 8 in MS-DRGs 515, 516, and 517, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the four ICD-10-

    PCS procedure codes describing repositioning of vertebra listed in the proposed rule to MDC 8 in MS-DRGs 515, 516, and 517. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-PCS codes 0PS33ZZ (Reposition cervical vertebra, percutaneous approach); 0PS43ZZ (Reposition thoracic vertebra, percutaneous approach), 0QS03ZZ (Reposition lumbar vertebra, percutaneous approach), and 0QS13ZZ (Reposition sacrum, percutaneous approach) to MDC 8 in MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue Procedures with MCC, with CC, and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    Page 56864

    (11) Insertion of Infusion Device

    In the ICD-9-CM MS-DRGs Version 32, the procedure for insertion of an infusion pump is identified with procedure code 86.06 (Insertion of totally implantable infusion pump) which is designated as an O.R. procedure and assigned to a number of MDCs and MS-DRGs, one of which is MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) in MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively).

    A replication issue for 49 ICD-10-PCS comparable code translations that describe insertion of an infusion device into a joint or disc was identified after implementation of the ICD-10 MS-DRGs Version 33. These 49 procedure codes appear to describe procedures that utilize a specific type of infusion device known as an infusion pump and were inadvertently omitted from the ICD-10 MS-DRG GROUPER logic for MDC 8. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25023), we proposed to add the 49 ICD-10-PCS procedure codes shown in Table 6P.3c. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) to MDC 8 in MS-DRGs 515, 516, and 517, effective October 1, 2016, in ICD-10 MS-DRGs Version 34. We invited public comments on our proposal.

    Comment: Several commenters supported the proposal to add the 49 ICD-10-PCS procedure codes describing open insertion of an infusion device into a joint or disc to MDC 8 in MS-DRGs 515, 516, and 517. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    One commenter reported that standard surgical practice does not support procedures involving infusion devices (as well as removal of tracheostomy and occlusion of esophageal vein which are discussed in sections II.F.19.c.1.c. and section II.F.19.c.1.j. of the preamble of this final rule) being performed outside of an operating room setting. This commenter asserted that because these types of procedures are complex, necessitate a sterile environment and general anesthesia support, physicians would rarely perform them in a setting other than the operating room.

    However, other commenters did not agree that procedures describing the insertion of an infusion device into a joint or disc should be classified the same as ICD-9-CM code 86.06 (Insertion of totally implantable infusion pump). One commenter noted that the 49 ICD-10-PCS procedure codes describe an infusion device which the ICD-10-PCS classification categorizes as an infusion catheter, and there are separate ICD-10-PCS device values that specifically describe an infusion device, pump. This commenter disagreed with the proposal to assign the 49 ICD-10-PCS procedure codes into MS-DRGs 515, 516, and 517, stating that an infusion pump cannot be inserted into a joint, while a catheter can. The commenter noted that, similar to our discussion in section II.F.19.c.1.k. of the preamble of the proposed rule, these ICD-10-PCS procedures codes reasonably correlate to the insertion of a common infusion catheter versus the insertion of a totally implantable infusion pump.

    Another commenter expressed concern with the potential coding and payment impacts as a result of the proposal and noted that while an infusion catheter and an infusion pump may be inserted together, they are separate devices with different levels of resource utilization. The commenter stated that implantable infusion pumps are resource-intensive for hospitals and designated appropriately as O.R. procedures in contrast to infusion catheters.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs. It is not clear if the commenter who stated that standard surgical practice does not support procedures involving infusion devices being performed outside of an operating room was referring to procedures involving an infusion pump versus procedures involving an infusion device as classified under ICD-10-PCS. We note that, as stated above, under ICD-9-CM, procedure code 86.06 describes the insertion of a totally implantable infusion pump. Under ICD-10-PCS, the term ``implantable'' is not utilized with the infusion device, pump, or infusion codes.

    In response to the commenters who disagreed with our proposal, we acknowledge that the ICD-10-PCS classification categorizes the device values for an infusion device (catheter) separately from the device values that describe an infusion device, pump. In addition, our clinical advisors support the commenters' observation that an infusion device, pump is not inserted into a joint space, but rather the infusion device, catheter would be inserted into the joint space.

    It is understandable that the term ``infusion device'' can be interpreted in different ways because the type of infusion device used is sometimes dependent on whether the prescribed treatment will be administered intermittently (for example, for chemotherapy) or continuously (for example, insulin therapy) and the mechanism used to pump in the drug may vary (for example, battery, electricity, or pressure). Taking these characteristics into account, an ``infusion device'' could be literally implanted in the body or parts of the device could be found outside of the body. For example, a subcutaneously implanted reservoir may function as an infusion device when it is accessed via a needle attached to another catheter that transports the intended drug to the reservoir. Transport of the drug is via an external mechanical pump. In comparison to the aforementioned example of a subcutaneous reservoir with catheter as an ``infusion device'' are the elastomeric pumps which rely on the pressure generated by the elastic constriction created when the pump is filled with the drug to be administered. Elastomeric pumps do not rely upon any electronics or additional sources of energy to maintain the flow rate. Elastomeric pumps are typically single-use and disposable. In view of the different types of pumps used for short-term and long-term treatment purposes and the different interpretations of the infusion device codes, we will continue to analyze if further revisions to these codes are needed in ICD-10-PCS to ensure accurate assignment under the ICD-10 MS-DRGs. We also will continue to work with the AHA through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote proper coding.

    After consideration of the public comments we received, we are not finalizing our proposal to assign the 49 ICD-10-PCS procedure codes describing insertion of an infusion device to MDC 8 in MS-DRGs 515, 516, and 517 (Other Musculoskeletal System and Connective Tissue O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) for FY 2017. Consistent with the discussion in section II.F.19.c.(1)(k) of the preamble of the proposed rule and the same section of this final rule, the 49 ICD-10-PCS procedure codes shown in Table 6P.3c. associated with the proposed rule and updated for this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/

    Page 56865

    Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) will take the attributes of ICD-9-CM procedure code 99.99 (Other miscellaneous procedures), a non-O.R. procedure in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (12) Bladder Neck Repair

    In the ICD-9-CM MS-DRGs Version 32, a procedure involving a bladder repair is identified with procedure code 57.89 (Other repair of bladder) which is designated as an O.R. procedure and assigned to MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract) in MS-DRGs 653, 654, and 655 (Major Bladder Procedures with MCC, with CC, and without CC/MCC, respectively) and MDC 13 (Diseases and Disorders of the Female Reproductive System) in MS-DRGs 749 and 750 (Other Female Reproductive System O.R. Procedures with CC/MCC and without CC/MCC, respectively).

    A replication issue for five ICD-10-PCS comparable code translations that describe a bladder neck repair was identified after implementation of the ICD-10 MS-DRGs Version 33. These five procedure codes are:

    0TQC0ZZ (Repair Bladder Neck, Open Approach);

    0TQC3ZZ (Repair Bladder Neck, Percutaneous Approach);

    0TQC4ZZ (Repair Bladder Neck, Percutaneous Endoscopic Approach);

    0TQC7ZZ (Repair Bladder Neck, Via Natural or Artificial Opening); and

    0TQC8ZZ (Repair Bladder Neck, Via Natural or Artificial Opening Endoscopic).

    These five ICD-10-PCS procedure codes were inadvertently omitted from the ICD-10 MS-DRG GROUPER logic for MDC 11 in MS-DRGs 653, 654, and 655 and MDC 13 in MS-DRGs 749 and 750. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25023 through 25024), we proposed to add these five ICD-10-PCS procedure codes to MDC 11 in MS-DRGs 653, 654, and 655 (Major Bladder Procedures with MCC, with CC, and without CC/MCC, respectively) and MDC 13 in MS-DRGs 749 and 750 (Other Female Reproductive System O.R. Procedures with CC/MCC and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to add the five ICD-10-

    PCS procedure codes describing bladder neck repair listed in the proposed rule to MDC 11 in MS-DRGs 653, 654 and 655 and to MDC 13 in MS-DRGs 749 and 750. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add the ICD-10-PCS procedure codes 0TQC0ZZ (Repair Bladder Neck, Open Approach), 0TQC3ZZ (Repair Bladder Neck, Percutaneous Approach), 0TQC4ZZ (Repair Bladder Neck, Percutaneous Endoscopic Approach), 0TQC7ZZ (Repair Bladder Neck, Via Natural or Artificial Opening), and 0TQC8ZZ (Repair Bladder Neck, Via Natural or Artificial Opening Endoscopic) to MDC 11 in MS-DRGs 653, 654, and 655 (Major Bladder Procedures with MCC, with CC, and without CC/MCC, respectively) and MDC 13 in MS-DRGs 749 and 750 (Other Female Reproductive System O.R. Procedures with CC/MCC and without CC/MCC, respectively) in ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (13) Future Consideration

    We note that commenters have suggested that there are a number of procedure codes that may not appear to be clinically feasible due to a specific approach or device value in relation to a unique body part in a given body system. These commenters have not identified a comprehensive list of codes to be deleted. However, they have suggested that CMS examine these codes further. Due to the multiaxial structure of ICD-10-PCS, the current system allows for multiple possibilities for a given procedure, some of which may not currently be used. As our focus to refine the ICD-10 MS-DRGs continues, for FY 2018, we will begin to conduct an analysis of where such ICD-10-PCS codes may exist. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25024), we welcomed suggestions from the public of code refinements that could address the issue of current ICD-10-PCS codes that capture procedures that would not reasonably be performed. We indicated that commenters should submit their recommendations for these code refinements to the following email address: MSDRGClassificationChanges@cms.hhs.gov by December 7, 2016.

    We also noted in the proposed rule that any suggestions that are received by December 7, 2016 to update ICD-10-PCS, including creating new codes or deleting existing codes, will be addressed by the ICD-10 Coordination and Maintenance Committee. Proposals to address the modification of any ICD-10-PCS codes are discussed at the ICD-10 Coordination and Maintenance Committee meetings held in March and September of each year. We refer the reader to section II.F.17. of the preamble of the proposed rule and this final rule for information related to this process to request updates to ICD-10-PCS.

  239. Issues Relating to MS-DRG 999 (Ungroupable)

    Under the ICD-9-CM MS-DRGs Version 32, a diagnosis of complications of an obstetric surgical wound after delivery is identified with diagnosis code 674.32 (Other complications of obstetrical surgical wounds, delivered, with mention of postpartum complication) and is assigned to MDC 14 (Pregnancy, Childbirth and the Puerperium) under MS-

    DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. Procedure) or MS-DRG 776 (Postpartum and Post Abortion Diagnoses without O.R. Procedure). A replication issue under the ICD-10 MS-DRGs Version 33 for this condition was identified after implementation on October 1, 2015. Under ICD-10-CM, diagnosis code O90.2 (Hematoma of obstetric wound) is the comparable translation for ICD-9-CM diagnosis code 674.32. We discovered that cases where a patient has been readmitted to the hospital after a delivery and ICD-10-CM diagnosis code O90.2 is reported as the principal diagnosis are resulting in assignment to MS-

    DRG 999 (Ungroupable).

    In the ICD-9-CM diagnosis code description, the concept of ``delivery'' is included in the code title. This concept is not present in the ICD-10-CM classification and has led to a replication issue for patients who delivered during a previous stay and are subsequently readmitted for the complication. To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25024), we proposed to add ICD-10-CM diagnosis code O90.2 to MDC 14 under MS-DRGs 769 and 776. This refinement would be consistent with the ICD-9-CM diagnosis code assignment and result in a more accurate replication of the ICD-9-CM MS-DRGs Version 32.

    We invited public comments on our proposal to add ICD-10-CM diagnosis code O90.2 to MS-DRG 769 and MS-DRG 776 in MDC 14, effective October 1, 2016, in the ICD-10 MS-DRGs Version 34.

    Comment: Commenters supported the proposal to add ICD-10-CM diagnosis code O90.2 (Hematoma of obstetric wound) to MDC 14 in MS-DRGs 769 and 776. The commenters also

    Page 56866

    expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to add ICD-10-CM diagnosis code O90.2 (Hematoma of obstetric wound) to MDC 14 in MS-DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. Procedure) or MS-DRG 776 (Postpartum and Post Abortion Diagnoses without O.R. Procedure) in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

  240. Other Operating Room (O.R.) and Non-O.R. Issues

    (1) O.R. Procedures to Non-O.R. Procedures

    For the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25024 through 25026), we continued our efforts to address the MS-DRG replication issues between ICD-9-CM logic and ICD-10 that were brought to our attention. As a result of analyzing those specific requests, we identified areas in the ICD-10-PCS classification where additional refinements could further support our replication efforts. We discuss these below.

    We evaluated specific groups of ICD-10-PCS procedure codes with respect to their current operating room (O.R.) designation that were determined to be inconsistent with the ICD-9-CM procedure codes from which the designation was initially derived. Our review demonstrated that these ICD-10-PCS procedure codes should instead have the attributes of a more logical ICD-9-CM procedure code translation for MS-DRG replication purposes. As specified below, we proposed to change the status of ICD-10-PCS procedure codes from being designated as O.R. to non-O.R. for the ICD-10 MS-DRGs Version 34. For each group summarized below, the detailed code lists are shown in Tables 6P.4a. through 6P.4k. (ICD-10-CM and ICD-10-PCS Codes for Proposed MCE and MS-

    DRG Changes--FY 2017) associated with the proposed rule, which are available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

    (a) Endoscopic/Transorifice Insertion

    We found 72 ICD-10-PCS procedure codes describing an endoscopic/

    transorifice (via natural or artificial opening) insertion of infusion and monitoring devices into various tubular body parts that, when coded under ICD-9-CM, would reasonably correlate to other noninvasive catheterization and monitoring types of procedure codes versus an ``incision of body part'' or ``other operation on a body part'' procedure code. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25024 through 25025), we proposed that the 72 ICD-10-PCS procedure codes in Table 6P.4a. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C would replace the ICD-9-CM procedure codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of 72 ICD-10-PCS procedure codes describing an endoscopic/

    transorifice (via natural or artificial opening) insertion of infusion and monitoring devices into various tubular body parts. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    Comment: One commenter who agreed with our proposal also recommended that CMS remove the following two ICD-10-PCS procedure codes from the O.R. procedure list: 0DH67UZ (Insertion of Feeding Device into Stomach, Via Natural or Artificial Opening); and 0DH68UZ (Insertion of Feeding Device into Stomach, Via Natural or Artificial Opening Endoscopic). According to the commenter, these two ICD-10-PCS procedure codes are comparable translations of ICD-9-CM procedure code 96.6 (Enteral infusion of concentrated nutritional substances), which is designated as a non-O.R. procedure.

    Response: We thank the commenter for their support of our proposal. With respect to the commenter's recommendation that we change the designation of the two ICD-10-PCS procedure codes (0DH67UZ and 0DH68UZ), we note that these procedure codes are currently designated as non-O.R. procedures in the ICD-10 MS-DRGs Version 33 Definitions Manual. Therefore, no change is needed. These procedure codes will remain non-O.R. procedures in ICD-10 Version 34.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 72 ICD-10-PCS procedure codes in Table 6P.4a. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 72 ICD-10-PCS procedure codes will be assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (b) Endoscopic/Transorifice Removal

    We found 155 ICD-10-PCS procedure codes describing an endoscopic/

    transorifice (via natural or artificial opening) removal of common devices such as a drainage device, infusion device, intraluminal device, or monitoring device from various tubular body parts that, when coded under ICD-9-CM, would reasonably correlate to other nonoperative removal of a wide range of devices/appliances procedure codes versus an ``incision of body part'' or ``other operation on a body part'' procedure code. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25025), we proposed that the 155 ICD-10-PCS procedure codes in Table 6P.4b. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C would replace the ICD-9-CM procedure codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of 155 ICD-10-PCS procedure codes describing the endoscopic/transorifice (via natural or artificial opening) removal of common devices such as a drainage device, infusion device, intraluminal device, or monitoring device from various tubular body parts. The commenters also expressed

    Page 56867

    appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 155 ICD-10-PCS procedure codes in Table 6P.4b. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 155 ICD-10-PCS procedure codes will be assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (c) Tracheostomy Device Removal

    We found five ICD-10-PCS procedure codes describing removal of a tracheostomy device with various approaches such that, when coded under ICD-9-CM, would reasonably correlate to the nonoperative removal of a tracheostomy device procedure code versus an ``incision of body part'' or ``other operation on a body part'' procedure code. We acknowledge that, under ICD-10-PCS, an ``open'' approach is defined as ``cutting through.'' However, this procedure was designated as non-O.R. under ICD-9-CM. For replication purposes, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25025), we proposed that the five ICD-10-PCS procedure codes in Table 6P.4c. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-

    CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C would replace the ICD-9-CM procedure codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Several commenters supported the proposal to change the designation of five ICD-10-PCS procedure codes describing the removal of a tracheostomy device with various approaches. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    Comment: One commenter stated that standard surgical practice does not support procedures involving removal of tracheostomy being performed outside of an operating room setting. This commenter also stated that these procedure codes were considered valid O.R. procedures under ICD-9-CM.

    Response: We disagree with the commenter's statements. We note that removal of a tracheostomy frequently occurs at the bedside and is performed by nonoperative, manual removal of the tracheostomy tube. As discussed in the FY 2017 IPPS/LTCH PPS proposed rule and above in this final rule, under ICD-9-CM, removal of tracheostomy was designated as a non-O.R. procedure.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the five ICD-10-

    PCS procedure codes in Table 6P.4c. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These five ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (d) Endoscopic/Percutaneous Insertion

    We found 117 ICD-10-PCS procedure codes describing the endoscopic/

    percutaneous insertion of infusion and monitoring devices into vascular and musculoskeletal body parts that, when coded under ICD-9-CM, would reasonably correlate to other noninvasive catheterization and monitoring types of procedure codes versus an ``incision of body part'' or ``other operation on a body part'' procedure code. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25025), we proposed that the 117 ICD-10-PCS procedure codes in Table 6P.4d. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-

    CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C would replace the ICD-9-CM procedure codes and descriptions reflected in column D, which are less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of 117 ICD-10-PCS procedure codes describing the endoscopic/percutaneous insertion of infusion and monitoring devices into vascular and musculoskeletal body parts. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 117 ICD-10-PCS procedure codes in Table 6P.4d. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 117 ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (e) Percutaneous Removal

    We found 124 ICD-10-PCS procedure codes describing the percutaneous removal of drainage, infusion and monitoring devices from vascular and musculoskeletal body parts that, when coded under ICD-9-CM, would reasonably correlate to the nonoperative removal of a wide range of devices/appliances procedure codes versus an ``incision of body part'' or ``other operation on a body part'' procedure code. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25025), we proposed that the 124 ICD-10-PCS procedure codes in Table 6P.4e. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-

    CM procedure code specified in column C. The ICD-9-CM procedure codes and

    Page 56868

    descriptions in column C would replace the ICD-9-CM procedure codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of 124 ICD-10-PCS procedure codes describing the percutaneous removal of drainage, infusion and monitoring devices from vascular and musculoskeletal body parts. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 124 ICD-10-PCS procedure codes in Table 6P.4e. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 124 ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (f) Percutaneous Drainage

    We found 518 ICD-10-PCS procedure codes describing the percutaneous therapeutic drainage of all body sites that do not have specific percutaneous drainage codes. The list includes procedure codes for drainage with or without placement of a drainage device. Exceptions to this are cranial, intracranial and the eye where small incisions are the norm and appropriately classified as O.R. These 518 ICD-10-PCS procedures codes, when coded under ICD-9-CM, would reasonably correlate to the nonoperative puncture or drainage of various body sites and other miscellaneous procedures versus an ``incision of body part'' procedure code. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25025), we proposed that the 518 ICD-10-PCS procedure codes in Table 6P.4f. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C would replace the ICD-9-CM procedure codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Several commenters supported the proposal to change the designation of 518 ICD-10-PCS procedure codes describing the percutaneous therapeutic drainage of various body sites with or without placement of a drainage device. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    Comment: Other commenters who agreed with our proposal also recommended that CMS change the designation of ICD-10-PCS procedure code 0W9G3ZX (Drainage of Peritoneal Cavity, Percutaneous Approach, Diagnostic) from O.R. to non-O.R. The commenters noted that the nondiagnostic version of the same code (7th character Z) is designated non-O.R. and suggested that ICD-9-CM procedure code 54.91(Percutaneous abdominal drainage) is a more accurate translation for the diagnostic version of the ICD-10-PCS procedure code.

    Response: We thank the commenters for their support of our proposal. With respect to the commenters' recommendation that we change the designation of ICD-10-PCS procedure code 0W9G3ZX from O.R. to non-

    O.R., we note that the comparable translation under ICD-9-CM for replication purposes was procedure code 54.29 (Other diagnostic procedures on abdominal region), which is designated as an O.R. code. However, we agree with the commenters that diagnostic drainage of the peritoneal cavity is more accurately replicated with ICD-9-CM procedure code 54.91 (Percutaneous abdominal drainage) for reporting diagnostic paracentesis procedures and it is designated as a non-O.R. procedure. Therefore, we agree that the designation of ICD-10-PCS procedure code 0W9G3ZX (Drainage of peritoneal cavity, percutaneous approach, diagnostic) should also be changed from O.R. to non-O.R.

    Comment: Another commenter who agreed with the proposal also recommended that CMS change the designation of all the diagnostic versions of the ICD-10-PCS procedures codes in Table 6P.4f. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

    Response: We acknowledge the commenter's support of our proposal. We note that, due to the volume of 518 ICD-10-PCS procedure codes listed in Table 6P.4f. and the timeframe that we have available to evaluate and assess the impact of additional recommendations submitted in response to proposals, we were not able to analyze all diagnostic versions for the full list of codes for FY 2017. We will review the list as part of our annual update process for FY 2018.

    After consideration of the public comments we received, we are finalizing the recommendation to change the designation of ICD-10-PCS procedure code 0W9G3ZX (Drainage of Peritoneal Cavity, Percutaneous Approach, Diagnostic) from O.R. to non-O.R. We also are finalizing our proposal to change the designation of the 518 ICD-10-PCS procedure codes in Table 6P.4f. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 518 ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (g) Percutaneous Inspection

    We found 131 ICD-10-PCS procedure codes describing the percutaneous inspection of body part sites, with the exception of the cranial cavity and brain, whose designation is not consistent with other percutaneous inspection codes. When coded under ICD-9-CM, these procedure codes would reasonably correlate to the ``other nonoperative examinations'' and ``other diagnostic procedures on body part'' codes where the approach is not specified and the codes are designated as non-O.R. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25025), we proposed that the 131 ICD-10-PCS procedure codes in Table 6P.4g. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be

    Page 56869

    assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C would replace the ICD-9-CM procedure codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of 131 ICD-10-PCS procedure codes describing the percutaneous inspection of various body sites. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 131 ICD-10-PCS procedure codes in Table 6P.4g. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 131 ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (h) Inspection Without Incision

    We found 40 ICD-10-PCS procedure codes describing the inspection of various body sites with endoscopic/transorifice and external approaches. Under ICD-9-CM, these codes would reasonably correlate to ``other diagnostic procedures on body part'' codes where the approach is not specified and the codes are designated as non-O.R. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25026), we proposed that the 40 ICD-10-PCS codes in Table 6P.4h. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-

    CM code specified in column C. The ICD-9-CM codes and descriptions in column C would replace the ICD-9-CM codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of 40 ICD-10-PCS procedure codes describing the inspection of various body sites with endoscopic/transorifice and external approaches. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 40 ICD-10-PCS procedure codes in Table 6P.4h. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 40 ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (i) Dilation of Stomach

    We found six ICD-10-PCS procedure codes describing the dilation of stomach and pylorus body sites with various approaches whose designation is not consistent with all other gastrointestinal body parts dilation codes. Under ICD-9-CM, where a unique dilation code exists, the approach is not specified and these codes are designated as non-O.R. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25026), we proposed that the six ICD-10-PCS procedure codes in Table 6P.4i. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-CM code specified in column C. The ICD-9-CM codes and descriptions in column C would replace the ICD-9-CM codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of six ICD-10-PCS procedure codes describing the dilation of stomach and pylorus body sites with various approaches. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the six ICD-10-PCS procedure codes in Table 6P.4i. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These six ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (j) Endoscopic/Percutaneous Occlusion

    We found six ICD-10-PCS codes describing percutaneous occlusion of esophageal vein with and without a device that, when coded under ICD-9-

    CM would reasonably correlate to the endoscopic excision or destruction of the vessel versus an open surgical procedure. In the FY 2017 IPPS/

    LTCH PPS proposed rule (81 FR 25026), we proposed that the six ICD-10-

    PCS procedure codes in Table 6P.4j. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) be assigned the attributes of the ICD-9-

    CM code specified in column C. The ICD-9-CM codes and descriptions in column C would replace the ICD-9-CM codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Several commenters supported the proposal to change the designation of six ICD-10-PCS procedure codes describing the percutaneous occlusion of esophageal vein with and without a device. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential

    Page 56870

    replication issues between the ICD-9 and ICD-10 based MS-DRGs.

    Comment: One commenter stated that standard surgical practice does not support procedures involving occlusion of the esophageal vein being performed outside of an operating room setting. This commenter also stated that these procedure codes were considered valid O.R. procedures under ICD-9-CM.

    Response: We disagree with the commenter's statements. We note that percutaneous occlusion of the esophageal vein does not utilize the resources to be designated as an O.R. procedure. In addition, under ICD-9-CM, the endoscopic excision or destruction of lesion or tissue of esophagus for occlusion of esophageal vein was designated as a non-O.R. procedure.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the six ICD-10-PCS procedure codes in Table 6P.4j. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These six ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (k) Infusion Device

    We found 82 ICD-10-PCS codes describing the insertion of an infusion device to various body parts that, when coded under ICD-9-CM, would reasonably correlate to the insertion of a common infusion catheter versus the insertion of a totally implantable infusion pump. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25026), we proposed that the 82 ICD-10-PCS procedure codes in Table 6P.4k. associated with the proposed rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index) be assigned the attributes of the ICD-9-CM code specified in column C. The ICD-9-CM codes and descriptions in column C would replace the ICD-9-CM codes and descriptions reflected in column D, which are considered less accurate correlations. We invited public comments on this proposal.

    Comment: Commenters supported the proposal to change the designation of 82 ICD-10-PCS procedure codes describing the insertion of an infusion device to various parts. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 82 ICD-10-PCS procedure codes in Table 6P.4k. associated with the proposed rule and this final rule (which is available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html). These 82 ICD-10-PCS procedure codes are assigned the attributes of the ICD-9-CM procedure code specified in column C. The ICD-9-CM procedure codes and descriptions in column C replace the ICD-9-CM procedure codes and descriptions reflected in column D in the ICD-10 MS-DRGs Version 34, effective October 1, 2016.

    (2) Non-O.R. Procedures to O.R. Procedures

    (a) Drainage of Pleural Cavity

    In the ICD-9-CM MS-DRGs Version 32 Definitions Manual under Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index, procedure code 34.06 (Thoracoscopic drainage of pleural cavity) is designated as an O.R. procedure code and is assigned to MS-DRGs 166 through 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 4 (Diseases and Disorders of the Respiratory System).

    A replication issue regarding the procedure code designation and MS-DRG assignment for the comparable code translations under the ICD-10 MS-DRGs Version 33 was brought to our attention after implementation on October 1, 2015. The replication issue involves the following four ICD-

    10-PCS procedure codes:

    0W9940Z (Drainage of right pleural cavity with drainage device, percutaneous endoscopic approach);

    0W994ZZ (Drainage of right pleural cavity, percutaneous endoscopic approach);

    0W9B40Z (Drainage of left pleural cavity with drainage device, percutaneous endoscopic approach); and

    0W9B4ZZ (Drainage of left pleural cavity, percutaneous endoscopic approach).

    In the ICD-10 MS-DRGs Version 33, these four ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. We agree that this was a replication error and the designation and MS-DRG assignment should be consistent with the designation and MS-DRG assignment of ICD-9-CM procedure code 34.06.

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25026), we proposed to add ICD-10-PCS procedure codes 0W9940Z, 0W994ZZ, 0W9B40Z, and 0W9B4ZZ to the FY 2017 ICD-10 MS-

    DRGs Version 34 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 166 through 168 in MDC 4. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to change the designation of four ICD-10-PCS procedure codes describing percutaneous endoscopic drainage of the pleural cavity with or without a drainage device. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the four ICD-10-

    PCS procedure codes describing percutaneous endoscopic drainage of the pleural cavity with or without a drainage device (0W9940Z, 0W994ZZ, 0W9B40Z, and 0W9B4ZZ) from non-O.R. to O.R. These procedure codes are added to the ICD-10 MS-DRGs Version 34 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index and assigned to MS-DRGs 166, 167, and 168 (Other Respiratory System O.R. Procedures with MCC, with CC, and without CC/MCC, respectively), effective October 1, 2016.

    (b) Drainage of Cerebral Ventricle

    In the ICD-9-CM MS-DRGs Version 32 Definitions Manual under Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index, procedure code 02.22 (Intracranial ventricular shunt or anastomosis) is designated as an O.R. procedure code and is assigned to MS-DRGs 023 through 027, collectively referred to as

    Page 56871

    the ``Craniotomy'' MS-DRGs, in MDC 1 (Diseases and Disorders of the Nervous System).

    A replication issue regarding the procedure code designation and MS-DRG assignment for the comparable code translations under the ICD-10 MS-DRGs Version 33 was brought to our attention after implementation on October 1, 2015. The replication issue involves the following ICD-10-

    PCS procedure codes:

    ------------------------------------------------------------------------

    ICD-10-PCS procedure

    code Description

    ------------------------------------------------------------------------

    009130Z.................. Drainage of cerebral meninges with drainage

    device, percutaneous approach.

    00913ZZ.................. Drainage of cerebral meninges, percutaneous

    approach.

    009140Z.................. Drainage of cerebral meninges with drainage

    device, percutaneous endoscopic approach.

    00914ZZ.................. Drainage of cerebral meninges with drainage

    device, percutaneous endoscopic approach.

    009230Z.................. Drainage of dura mater with drainage device,

    percutaneous approach.

    00923ZZ.................. Drainage of dura mater, percutaneous

    approach.

    009240Z.................. Drainage of dura mater with drainage device,

    percutaneous endoscopic approach.

    00924ZZ.................. Drainage of dura mater, percutaneous

    endoscopic approach.

    009430Z.................. Drainage of subdural space with drainage

    device, percutaneous approach.

    00943ZZ.................. Drainage of subdural space, percutaneous

    approach.

    009440Z.................. Drainage of subdural space with drainage

    device, percutaneous endoscopic approach.

    00944ZZ.................. Drainage of subdural space, percutaneous

    endoscopic approach.

    009530Z.................. Drainage of subarachnoid space with drainage

    device, percutaneous approach.

    00953ZZ.................. Drainage of subarachnoid space, percutaneous

    approach.

    009540Z.................. Drainage of subarachnoid space with drainage

    device, percutaneous endoscopic approach.

    00954ZZ.................. Drainage of subarachnoid space, percutaneous

    endoscopic approach.

    00963ZZ.................. Drainage of cerebral ventricle, percutaneous

    approach.

    00964ZZ.................. Drainage of cerebral ventricle, percutaneous

    endoscopic approach.

    ------------------------------------------------------------------------

    In the ICD-10 MS-DRGs Version 33, these ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. We agree that this was a replication error and their translation should be consistent with the designation and MS-DRG assignment of ICD-9-CM procedure 02.22.

    To resolve this replication issue, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25026 through 25027), we proposed to add the ICD-

    10-PCS procedure codes listed above to the FY 2017 ICD-10 MS-DRGs Version 34 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 023 through 027 in MDC 1. We invited public comments on our proposal.

    Comment: Commenters supported the proposal to change the designation of 18 ICD-10-PCS procedure codes describing endoscopic/

    percutaneous drainage of intracranial sites with or without a drainage device. The commenters also expressed appreciation for CMS' continued efforts towards addressing replication issues.

    Response: We appreciate the commenters' support of our proposal and of our efforts to analyze potential replication issues between the ICD-

    9 and ICD-10 based MS-DRGs.

    After consideration of the public comments we received, we are finalizing our proposal to change the designation of the 18 ICD-10-PCS procedure codes listed above describing endoscopic/percutaneous drainage of intracranial sites with or without a drainage device from non-O.R. to O.R. These procedure codes are added to the ICD-10 MS-DRGs Version 34 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index and assigned to MS-DRGs 023 and 024 (Craniotomy with Major Device Implant or Acute Complex Central Nervous System Principal Diagnosis with MCC or Chemotherapy Implant and without MCC, respectively) and to MS-DRGs 025, 026 and 027 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/

    MCC, respectively), effective October 1, 2016.

    (3) FY 2018 Refinements

    As discussed earlier in this section, for FY 2017, we continued our efforts to address the MS-DRG replication issues between the ICD-9-CM logic and ICD-10 that were brought to our attention. As a result of analyzing specific requests, additional areas in the ICD-10 classification were identified where we proposed modifications to more accurately replicate the logic of ICD-9-CM and to reassign ICD-10 codes based on the different clinical concepts and definitions of the codes under the ICD-10 classification.

    In response to some of the proposals set forth in the FY 2017 IPPS/

    LTCH PPS proposed rule pertaining to changing the designation of an ICD-10-PCS procedure code from O.R. to non-O.R., we received detailed comments and recommendations for consideration that we were not able to fully evaluate for FY 2017. We appreciate the extensive and thorough analysis that the commenters performed and their suggestions for further refinements. As the commenters' recommendations included analysis of over 800 procedure codes for redesignation, we plan to conduct a comprehensive review and analyze these codes for our FY 2018 refinement efforts.

    20. Out of Scope Public Comments Received

    We received public comments regarding five MS-DRG issues that were outside of the scope of the proposals included in the FY 2017 IPPS/LTCH PPS proposed rule. These comments were as follows:

    Several commenters requested the inclusion of ICD-10-PCS code 02L73ZK (Occlusion of left atrial appendage, percutaneous approach) that describes what is known as the LARIAT procedure in the FY 2017 MS-DRG proposal for the transcatheter mitral valve repair procedure.

    Commenters provided comments on ICD-10-CM diagnosis codes that were not approved at the time of issuance of the proposed rule.

    One commenter requested the creation of new MS-DRGs for the treatment of orphan diseases.

    Comments were submitted regarding the complexity, time commitment, and payment for transesophageal echocardiography services performed for a MitraClip procedure.

    Page 56872

    We consider these public comments to be outside of the scope of the proposed rule and, therefore, we are not addressing them in this final rule. As stated in section II.F.1.b. of the preamble of this final rule, we encourage individuals with comments about MS-DRG classification to submit these comments no later than December 7 of each year so that they can be considered for possible inclusion in the annual proposed rule and, if included, may be subjected to public review and comment. We will consider these public comments for possible proposals in future rulemaking as part of our annual review process.

    G. Recalibration of the FY 2017 MS-DRG Relative Weights

    1. Data Sources for Developing the Relative Weights

    As we discussed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25027), in developing the FY 2017 system of weights, we used two data sources: claims data and cost report data. As in previous years, the claims data source is the MedPAR file. This file is based on fully coded diagnostic and procedure data for all Medicare inpatient hospital bills. The FY 2015 MedPAR data used in this final rule include discharges occurring on October 1, 2014, through September 30, 2015, based on bills received by CMS through March 31, 2016, from all hospitals subject to the IPPS and short-term, acute care hospitals in Maryland (which at that time were under a waiver from the IPPS). The FY 2015 MedPAR file used in calculating the relative weights includes data for approximately 9,770,558 Medicare discharges from IPPS providers. Discharges for Medicare beneficiaries enrolled in a Medicare Advantage managed care plan are excluded from this analysis. These discharges are excluded when the MedPAR ``GHO Paid'' indicator field on the claim record is equal to ``1'' or when the MedPAR DRG payment field, which represents the total payment for the claim, is equal to the MedPAR ``Indirect Medical Education (IME)'' payment field, indicating that the claim was an ``IME only'' claim submitted by a teaching hospital on behalf of a beneficiary enrolled in a Medicare Advantage managed care plan. In addition, the March 31, 2016 update of the FY 2015 MedPAR file complies with version 5010 of the X12 HIPAA Transaction and Code Set Standards, and includes a variable called ``claim type.'' Claim type ``60'' indicates that the claim was an inpatient claim paid as fee-for-

    service. Claim types ``61,'' ``62,'' ``63,'' and ``64'' relate to encounter claims, Medicare Advantage IME claims, and HMO no-pay claims. Therefore, the calculation of the relative weights for FY 2017 also excludes claims with claim type values not equal to ``60.'' The data exclude CAHs, including hospitals that subsequently became CAHs after the period from which the data were taken. We note that the FY 2017 relative weights are based on the ICD-9-CM diagnoses and procedures codes from the FY 2015 MedPAR claims data, grouped through the ICD-9-CM version of the FY 2017 GROUPER (Version 34).

    The second data source used in the cost-based relative weighting methodology is the Medicare cost report data files from the HCRIS. Normally, we use the HCRIS dataset that is 3 years prior to the IPPS fiscal year. Specifically, we used cost report data from the March 31, 2016 update of the FY 2014 HCRIS for calculating the FY 2017 cost-based relative weights.

    2. Methodology for Calculation of the Final Relative Weights

    As we explain in section II.E.2. of the preamble of this final rule, we calculated the FY 2017 relative weights based on 19 CCRs, as we did for FY 2016. The methodology we used to calculate the FY 2017 MS-DRG cost-based relative weights based on claims data in the FY 2015 MedPAR file and data from the FY 2014 Medicare cost reports is as follows:

    To the extent possible, all the claims were regrouped using the FY 2017 MS-DRG classifications discussed in sections II.B. and II.F. of the preamble of this final rule.

    The transplant cases that were used to establish the relative weights for heart and heart-lung, liver and/or intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively) were limited to those Medicare-approved transplant centers that have cases in the FY 2015 MedPAR file. (Medicare coverage for heart, heart-

    lung, liver and/or intestinal, and lung transplants is limited to those facilities that have received approval from CMS as transplant centers.)

    Organ acquisition costs for kidney, heart, heart-lung, liver, lung, pancreas, and intestinal (or multivisceral organs) transplants continue to be paid on a reasonable cost basis. Because these acquisition costs are paid separately from the prospective payment rate, it is necessary to subtract the acquisition charges from the total charges on each transplant bill that showed acquisition charges before computing the average cost for each MS-DRG and before eliminating statistical outliers.

    Claims with total charges or total lengths of stay less than or equal to zero were deleted. Claims that had an amount in the total charge field that differed by more than $10.00 from the sum of the routine day charges, intensive care charges, pharmacy charges, special equipment charges, therapy services charges, operating room charges, cardiology charges, laboratory charges, radiology charges, other service charges, labor and delivery charges, inhalation therapy charges, emergency room charges, blood charges, and anesthesia charges were also deleted.

    At least 92.1 percent of the providers in the MedPAR file had charges for 14 of the 19 cost centers. All claims of providers that did not have charges greater than zero for at least 14 of the 19 cost centers were deleted. In other words, a provider must have no more than five blank cost centers. If a provider did not have charges greater than zero in more than five cost centers, the claims for the provider were deleted.

    Statistical outliers were eliminated by removing all cases that were beyond 3.0 standard deviations from the geometric mean of the log distribution of both the total charges per case and the total charges per day for each MS-DRG.

    Effective October 1, 2008, because hospital inpatient claims include a POA indicator field for each diagnosis present on the claim, only for purposes of relative weight-setting, the POA indicator field was reset to ``Y'' for ``Yes'' for all claims that otherwise have an ``N'' (No) or a ``U'' (documentation insufficient to determine if the condition was present at the time of inpatient admission) in the POA field.

    Under current payment policy, the presence of specific HAC codes, as indicated by the POA field values, can generate a lower payment for the claim. Specifically, if the particular condition is present on admission (that is, a ``Y'' indicator is associated with the diagnosis on the claim), it is not a HAC, and the hospital is paid for the higher severity (and, therefore, the higher weighted MS-DRG). If the particular condition is not present on admission (that is, an ``N'' indicator is associated with the diagnosis on the claim) and there are no other complicating conditions, the DRG GROUPER assigns the claim to a lower severity (and, therefore, the lower weighted MS-DRG) as a penalty for allowing a Medicare inpatient to contract a HAC. While the POA reporting meets policy goals of encouraging quality care and generates

    Page 56873

    program savings, it presents an issue for the relative weight-setting process. Because cases identified as HACs are likely to be more complex than similar cases that are not identified as HACs, the charges associated with HAC cases are likely to be higher as well. Therefore, if the higher charges of these HAC claims are grouped into lower severity MS-DRGs prior to the relative weight-setting process, the relative weights of these particular MS-DRGs would become artificially inflated, potentially skewing the relative weights. In addition, we want to protect the integrity of the budget neutrality process by ensuring that, in estimating payments, no increase to the standardized amount occurs as a result of lower overall payments in a previous year that stem from using weights and case-mix that are based on lower severity MS-DRG assignments. If this would occur, the anticipated cost savings from the HAC policy would be lost.

    To avoid these problems, we reset the POA indicator field to ``Y'' only for relative weight-setting purposes for all claims that otherwise have an ``N'' or a ``U'' in the POA field. This resetting ``forced'' the more costly HAC claims into the higher severity MS-DRGs as appropriate, and the relative weights calculated for each MS-DRG more closely reflect the true costs of those cases.

    In addition, in the FY 2013 IPPS/LTCH PPS final rule, for FY 2013 and subsequent fiscal years, we finalized a policy to treat hospitals that participate in the Bundled Payments for Care Improvement (BPCI) initiative the same as prior fiscal years for the IPPS payment modeling and ratesetting process without regard to hospitals' participation within these bundled payment models (that is, as if hospitals were not participating in those models under the BPCI initiative). The BPCI initiative, developed under the authority of section 3021 of the Affordable Care Act (codified at section 1115A of the Act), is comprised of four broadly defined models of care, which link payments for multiple services beneficiaries receive during an episode of care. Under the BPCI initiative, organizations enter into payment arrangements that include financial and performance accountability for episodes of care. For FY 2017, as we proposed, we are continuing to include all applicable data from subsection (d) hospitals participating in BPCI Models 1, 2, and 4 in our IPPS payment modeling and ratesetting calculations. We refer readers to the FY 2013 IPPS/LTCH PPS final rule for a complete discussion on our final policy for the treatment of hospitals participating in the BPCI initiative in our ratesetting process. For additional information on the BPCI initiative, we refer readers to the CMS' Center for Medicare and Medicaid Innovation's Web site at: http://innovation.cms.gov/initiatives/Bundled-Payments/index.html and to section IV.H.4. of the preamble of the FY 2013 IPPS/

    LTCH PPS final rule (77 FR 53341 through 53343).

    Once the MedPAR data were trimmed and the statistical outliers were removed, the charges for each of the 19 cost groups for each claim were standardized to remove the effects of differences in area wage levels, IME and DSH payments, and for hospitals located in Alaska and Hawaii, the applicable cost-of-living adjustment. Because hospital charges include charges for both operating and capital costs, we standardized total charges to remove the effects of differences in geographic adjustment factors, cost-of-living adjustments, and DSH payments under the capital IPPS as well. Charges were then summed by MS-DRG for each of the 19 cost groups so that each MS-DRG had 19 standardized charge totals. These charges were then adjusted to cost by applying the national average CCRs developed from the FY 2014 cost report data.

    The 19 cost centers that we used in the relative weight calculation are shown in the following table. The table shows the lines on the cost report and the corresponding revenue codes that we used to create the proposed 19 national cost center CCRs. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25028), we stated that if stakeholders have comments about the groupings in this table, we may consider those comments as we finalize our policy. However, we did not receive any comments on the groupings in this table, and therefore, we are finalizing the groupings as proposed.

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    Cost from HCRIS Charges from HCRIS Medicare Charges from

    Revenue codes (Worksheet C, Part (Worksheet C, Part HCRIS (Worksheet D-

    Cost center group name (19 MedPAR charge contained in Cost report line 1, Column 5 and 1, Column 6 & 7 and 3, Column & line

    total) field MedPAR charge description line number) Form line number) Form number) Form CMS-

    field CMS-2552-10 CMS-2552-10 2552-10

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    Routine Days.................. Private Room 011X and 014X.... Adults & C_1_C5_30 C_1_C6_30 D3_HOS_C2_30

    Charges. Pediatrics

    (General Routine

    Care).

    Semi-Private Room 012X, 013X and

    Charges. 016X-019X.

    Ward Charges..... 015X.............

    Intensive Days................ Intensive Care 020X............. Intensive Care C_1_C5_31 C_1_C6_31 D3_HOS_C2_31

    Charges. Unit.

    Coronary Care 021X............. Coronary Care C_1_C5_32 C_1_C6_32 D3_HOS_C2_32

    Charges. Unit.

    Burn Intensive C_1_C5_33 C_1_C6_33 D3_HOS_C2_33

    Care Unit.

    Surgical C_1_C5_34 C_1_C6_34 D3_HOS_C2_34

    Intensive Care

    Unit.

    Other Special C_1_C5_35 C_1_C6_35 D3_HOS_C2_35

    Care Unit.

    Drugs......................... Pharmacy Charges. 025X, 026X and Intravenous C_1_C5_64 C_1_C6_64 D3_HOS_C2_64

    063X. Therapy.

    C_1_C7_64

    Drugs Charged To C_1_C5_73 C_1_C6_73 D3_HOS_C2_73

    Patient.

    Page 56874

    C_1_C7_73

    Supplies and Equipment........ Medical/Surgical 0270, 0271, 0272, Medical Supplies C_1_C5_71 C_1_C6_71 D3_HOS_C2_71

    Supply Charges. 0273, 0274, Charged to

    0277, 0279, and Patients.

    0621, 0622, 0623.

    C_1_C7_71

    Durable Medical 0290, 0291, 0292 DME-Rented....... C_1_C5_96 C_1_C6_96 D3_HOS_C2_96

    Equipment and 0294-0299.

    Charges.

    C_1_C7_96

    Used Durable 0293............. DME-Sold......... C_1_C5_97 C_1_C6_97 D3_HOS_C2_97

    Medical Charges.

    C_1_C7_97

    Implantable Devices........... 0275, 0276, 0278, Implantable C_1_C5_72 C_1_C6_72 D3_HOS_C2_72

    0624. Devices Charged

    to Patients.

    C_1_C7_72

    Therapy Services.............. Physical Therapy 042X............. Physical Therapy. C_1_C5_66 C_1_C6_66 D3_HOS_C2_66

    Charges.

    C_1_C7_66

    Occupational 043X............. Occupational C_1_C5_67 C_1_C6_67 D3_HOS_C2_67

    Therapy Charges. Therapy.

    C_1_C7_67

    Speech Pathology 044X and 047X.... Speech Pathology. C_1_C5_68 C_1_C6_68 D3_HOS_C2_68

    Charges.

    C_1_C7_68

    Inhalation Therapy............ Inhalation 041X and 046X.... Respiratory C_1_C5_65 C_1_C6_65 D3_HOS_C2_65

    Therapy Charges. Therapy.

    C_1_C7_65

    Operating Room................ Operating Room 036X............. Operating Room... C_1_C5_50 C_1_C6_50 D3_HOS_C2_50

    Charges.

    C_1_C7_50

    071X............. Recovery Room.... C_1_C5_51 C_1_C6_51 D3_HOS_C2_51

    C_1_C7_51

    Labor & Delivery.............. Operating Room 072X............. Delivery Room and C_1_C5_52 C_1_C6_52 D3_HOS_C2_52

    Charges. Labor Room.

    C_1_C7_52

    Anesthesia.................... Anesthesia 037X............. Anesthesiology... C_1_C5_53 C_1_C6_53 D3_HOS_C2_53

    Charges.

    C_1_C7_53

    Cardiology.................... Cardiology 048X and 073X.... Electro car C_1_C5_69 C_1_C6_69 D3_HOS_C2_69

    Charges. diology.

    C_1_C7_69

    Cardiac Cath eteri zation..... 0481............. Cardiac C_1_C5_59 C_1_C6_59 D3_HOS_C2_59

    Catheterization.

    C_1_C7_59

    Laboratory.................... Laboratory 030X, 031X, and Laboratory....... C_1_C5_60 C_1_C6_60 D3_HOS_C2_60

    Charges. 075X.

    C_1_C7_60

    PBP Clinic C_1_C5_61 C_1_C6_61 D3_HOS_C2_61

    Laboratory

    Services.

    C_1_C7_61

    074X, 086X....... Electro-Enceph C_1_C5_70 C_1_C6_70 D3_HOS_C2_70

    alography.

    C_1_C7_70

    Radiology..................... Radiology Charges 032X, 040X....... Radiology-Diagnos C_1_C5_54 C_1_C6_54 D3_HOS_C2_54

    tic.

    C_1_C7_54

    028x, 0331, 0332, Radiology-Therape C_1_C5_55 C_1_C6_55 D3_HOS_C2_55

    0333, 0335, utic.

    0339, 0342.

    0343 and 344..... Radioisotope..... C_1_C5_56 C_1_C6_56 D3_HOS_C2_56

    C_1_C7_56

    Computed Tomography (CT) Scan. CT Scan Charges.. 035X............. Computed C_1_C5_57 C_1_C6_57 D3_HOS_C2_57

    Tomography (CT)

    Scan.

    C_1_C7_57

    Magnetic Resonance Imaging MRI Charges...... 061X............. Magnetic C_1_C5_58 C_1_C6_58 D3_HOS_C2_58

    (MRI). Resonance

    Imaging (MRI).

    C_1_C7_58

    Page 56875

    Emergency Room................ Emergency Room 045x............. Emergency........ C_1_C5_91 C_1_C6_91 D3_HOS_C2_91

    Charges.

    C_1_C7_91

    Blood and Blood Products...... Blood Charges.... 038x............. Whole Blood & C_1_C5_62 C_1_C6_62 D3_HOS_C2_62

    Packed Red Blood

    Cells.

    C_1_C7_62

    Blood Storage/ 039x............. Blood Storing, C_1_C5_63 C_1_C6_63 D3_HOS_C2_63

    Processing. Processing, &

    Transfusing.

    C_1_C7_63

    Other Services................ Other Service 0002-0099, 022X,

    Charge. 023X, 024X,

    052X, 053X.

    055X-060X, 064X-

    070X, 076X-078X,

    090X-095X and

    099X.

    Renal Dialysis... 0800X............ Renal Dialysis... C_1_C5_74 C_1_C6_74 D3_HOS_C2_74

    ESRD Revenue 080X and 082X- C_1_C7_74

    Setting Charges. 088X.

    Home Program C_1_C5_94 C_1_C6_94 D3_HOS_C2_94

    Dialysis.

    C_1_C7_94

    Outpatient 049X............. ASC (Non Distinct C_1_C5_75 C_1_C6_75 D3_HOS_C2_75

    Service Charges. Part).

    Lithotripsy 079X............. C_1_C7_75

    Charge.

    Other Ancillary.. C_1_C5_76 C_1_C6_76 D3_HOS_C2_76

    C_1_C7_76

    Clinic Visit 051X............. Clinic........... C_1_C5_90 C_1_C6_90 D3_HOS_C2_90

    Charges.

    C_1_C7_90

    Observation beds. C_1_C5_92.01 C_1_C6_92.01 D3_HOS_C2_92.01

    C_1_C7_92.01

    Professional Fees 096X, 097X, and Other Outpatient C_1_C5_93 C_1_C6_93 D3_HOS_C2_93

    Charges. 098X. Services.

    C_1_C7_93

    Ambulance Charges 054X............. Ambulance........ C_1_C5_95 C_1_C6_95 D3_HOS_C2_95

    C_1_C7_95

    Rural Health C_1_C5_88 C_1_C6_88 D3_HOS_C2_88

    Clinic.

    C_1_C7_88

    FQHC............. C_1_C5_89 C_1_C6_89 D3_HOS_C2_89

    C_1_C7_89

    --------------------------------------------------------------------------------------------------------------------------------------------------------

    3. Development of National Average CCRs

    We developed the national average CCRs as follows:

    Using the FY 2014 cost report data, we removed CAHs, Indian Health Service hospitals, all-inclusive rate hospitals, and cost reports that represented time periods of less than 1 year (365 days). We included hospitals located in Maryland because we include their charges in our claims database. We then created CCRs for each provider for each cost center (see prior table for line items used in the calculations) and removed any CCRs that were greater than 10 or less than 0.01. We normalized the departmental CCRs by dividing the CCR for each department by the total CCR for the hospital for the purpose of trimming the data. We then took the logs of the normalized cost center CCRs and removed any cost center CCRs where the log of the cost center CCR was greater or less than the mean log plus/minus 3 times the standard deviation for the log of that cost center CCR. Once the cost report data were trimmed, we calculated a Medicare-specific CCR. The Medicare-specific CCR was determined by taking the Medicare charges for each line item from Worksheet D-3 and deriving the Medicare-specific costs by applying the hospital-specific departmental CCRs to the Medicare-specific charges for each line item from Worksheet D-3. Once each hospital's Medicare-specific costs were established, we summed the total Medicare-specific costs and divided by the sum of the total Medicare-specific charges to produce national average, charge-weighted CCRs.

    After we multiplied the total charges for each MS-DRG in each of the 19 cost centers by the corresponding national average CCR, we summed the 19 ``costs'' across each MS-DRG to produce a total standardized cost for the MS-DRG. The average standardized cost for each MS-DRG was then computed as the total standardized cost for the MS-DRG divided by the transfer-adjusted case count for the MS-DRG. The average cost for each MS-DRG was then divided by the national average standardized cost

    Page 56876

    per case to determine the relative weight.

    The FY 2017 cost-based relative weights were then normalized by an adjustment factor of 1.691521 so that the average case weight after recalibration was equal to the average case weight before recalibration. The normalization adjustment is intended to ensure that recalibration by itself neither increases nor decreases total payments under the IPPS, as required by section 1886(d)(4)(C)(iii) of the Act.

    The 19 national average CCRs for FY 2017 are as follows:

    ------------------------------------------------------------------------

    Group CCR

    ------------------------------------------------------------------------

    Routine Days............................................ 0.457

    Intensive Days.......................................... 0.375

    Drugs................................................... 0.194

    Supplies & Equipment.................................... 0.297

    Implantable Devices..................................... 0.331

    Therapy Services........................................ 0.321

    Laboratory.............................................. 0.120

    Operating Room.......................................... 0.191

    Cardiology.............................................. 0.112

    Cardiac Catheterization................................. 0.118

    Radiology............................................... 0.153

    MRIs.................................................... 0.079

    CT Scans................................................ 0.038

    Emergency Room.......................................... 0.171

    Blood and Blood Products................................ 0.323

    Other Services.......................................... 0.365

    Labor & Delivery........................................ 0.410

    Inhalation Therapy...................................... 0.170

    Anesthesia.............................................. 0.089

    ------------------------------------------------------------------------

    Since FY 2009, the relative weights have been based on 100 percent cost weights based on our MS-DRG grouping system.

    When we recalibrated the DRG weights for previous years, we set a threshold of 10 cases as the minimum number of cases required to compute a reasonable weight. As we proposed, we use that same case threshold in recalibrating the MS-DRG relative weights for FY 2017. Using data from the FY 2015 MedPAR file, there were 8 MS-DRGs that contain fewer than 10 cases. Under the MS-DRGs, we have fewer low-

    volume DRGs than under the CMS DRGs because we no longer have separate DRGs for patients aged 0 to 17 years. With the exception of newborns, we previously separated some DRGs based on whether the patient was age 0 to 17 years or age 17 years and older. Other than the age split, cases grouping to these DRGs are identical. The DRGs for patients aged 0 to 17 years generally have very low volumes because children are typically ineligible for Medicare. In the past, we have found that the low volume of cases for the pediatric DRGs could lead to significant year-to-year instability in their relative weights. Although we have always encouraged non-Medicare payers to develop weights applicable to their own patient populations, we have received frequent complaints from providers about the use of the Medicare relative weights in the pediatric population. We believe that eliminating this age split in the MS-DRGs will provide more stable payment for pediatric cases by determining their payment using adult cases that are much higher in total volume. Newborns are unique and require separate MS-DRGs that are not mirrored in the adult population. Therefore, it remains necessary to retain separate MS-DRGs for newborns. All of the low-volume MS-DRGs listed are for newborns. For FY 2017, because we do not have sufficient MedPAR data to set accurate and stable cost relative weights for these low-volume MS-DRGs, as we proposed, we compute relative weights for the low-volume MS-DRGs by adjusting their final FY 2016 relative weights by the percentage change in the average weight of the cases in other MS-

    DRGs. The crosswalk table is shown:

    ----------------------------------------------------------------------------------------------------------------

    Low-volume MS-DRG MS-DRG Title Crosswalk to MS-DRG

    ----------------------------------------------------------------------------------------------------------------

    768......................... Vaginal Delivery with O.R. Final FY 2016 relative weight (adjusted by percent

    Procedure Except change in average weight of the cases in other MS-

    Sterilization and/or D&C. DRGs).

    789......................... Neonates, Died or Transferred Final FY 2016 relative weight (adjusted by percent

    to Another Acute Care change in average weight of the cases in other MS-

    Facility. DRGs).

    790......................... Extreme Immaturity or Final FY 2016 relative weight (adjusted by percent

    Respiratory Distress change in average weight of the cases in other MS-

    Syndrome, Neonate. DRGs).

    791......................... Prematurity with Major Final FY 2016 relative weight (adjusted by percent

    Problems. change in average weight of the cases in other MS-

    DRGs).

    792......................... Prematurity without Major Final FY 2016 relative weight (adjusted by percent

    Problems. change in average weight of the cases in other MS-

    DRGs).

    793......................... Full-Term Neonate with Major Final FY 2016 relative weight (adjusted by percent

    Problems. change in average weight of the cases in other MS-

    DRGs).

    794......................... Neonate with Other Significant Final FY 2016 relative weight (adjusted by percent

    Problems. change in average weight of the cases in other MS

    DRGs).

    795......................... Normal Newborn................ Final FY 2016 relative weight (adjusted by percent

    change in average weight of the cases in other MS-

    DRGs).

    ----------------------------------------------------------------------------------------------------------------

    We did not receive any public comments on our proposals for establishing the relative weights for FY 2017 and are finalizing them as proposed.

    H. Add-On Payments for New Services and Technologies for FY 2017

    1. Background

    Sections 1886(d)(5)(K) and (L) of the Act establish a process of identifying and ensuring adequate payment for new medical services and technologies (sometimes collectively referred to in this section as ``new technologies'') under the IPPS. Section 1886(d)(5)(K)(vi) of the Act specifies that a medical service or technology will be considered new if it meets criteria established by the Secretary after notice and opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act specifies that a new medical service or technology may be considered for new technology add-on payment if, based on the estimated costs incurred with respect to discharges involving such service or technology, the DRG prospective payment rate otherwise applicable to such discharges under this subsection is inadequate. We note that, beginning with discharges occurring in FY 2008, CMS transitioned from CMS-DRGs to MS-DRGs.

    The regulations at 42 CFR 412.87 implement these provisions and specify three criteria for a new medical service or technology to receive the additional payment: (1) The medical service or technology must be new; (2) the medical service or technology must be costly such that the DRG rate otherwise applicable to discharges involving the medical service or technology is determined to be inadequate; and (3) the

    Page 56877

    service or technology must demonstrate a substantial clinical improvement over existing services or technologies. Below we highlight some of the major statutory and regulatory provisions relevant to the new technology add-on payment criteria, as well as other information. For a complete discussion on the new technology add-on payment criteria, we refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51572 through 51574).

    Under the first criterion, as reflected in Sec. 412.87(b)(2), a specific medical service or technology will be considered ``new'' for purposes of new medical service or technology add-on payments until such time as Medicare data are available to fully reflect the cost of the technology in the MS-DRG weights through recalibration. We note that we do not consider a service or technology to be new if it is substantially similar to one or more existing technologies. That is, even if a technology receives a new FDA approval or clearance, it may not necessarily be considered ``new'' for purposes of new technology add-on payments if it is ``substantially similar'' to a technology that was approved or cleared by FDA and has been on the market for more than 2 to 3 years. In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 through 43814), we established criteria for evaluating whether a new technology is substantially similar to an existing technology, specifically: (1) Whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome; (2) whether a product is assigned to the same or a different MS-DRG; and (3) whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population. If a technology meets all three of these criteria, it would be considered substantially similar to an existing technology and would not be considered ``new'' for purposes of new technology add-on payments. For a detailed discussion of the criteria for substantial similarity, we refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 43814).

    Under the second criterion, Sec. 412.87(b)(3) further provides that, to be eligible for the add-on payment for new medical services or technologies, the MS-DRG prospective payment rate otherwise applicable to the discharge involving the new medical services or technologies must be assessed for adequacy. Under the cost criterion, consistent with the formula specified in section 1886(d)(5)(K)(ii)(I) of the Act, to assess the adequacy of payment for a new technology paid under the applicable MS-DRG prospective payment rate, we evaluate whether the charges for cases involving the new technology exceed certain threshold amounts. Table 10 that was released with the FY 2016 IPPS/LTCH PPS final rule contains the final thresholds that we used to evaluate applications for new medical service and new technology add-on payments for FY 2017. We refer readers to the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2016-IPPS-Final-Rule-Home-Page-Items/FY2016-IPPS-Final-Rule-Tables.html to download and view Table 10.

    In the September 7, 2001 final rule that established the new technology add-on payment regulations (66 FR 46917), we discussed the issue of whether the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule at 45 CFR parts 160 and 164 applies to claims information that providers submit with applications for new medical service and new technology add-on payments. We refer readers to the FY 2012 IPPS/LTCH PPS final rule (76 FR 51573) for complete information on this issue.

    Under the third criterion, Sec. 412.87(b)(1) of our existing regulations provides that a new technology is an appropriate candidate for an additional payment when it represents an advance that substantially improves, relative to technologies previously available, the diagnosis or treatment of Medicare beneficiaries. For example, a new technology represents a substantial clinical improvement when it reduces mortality, decreases the number of hospitalizations or physician visits, or reduces recovery time compared to the technologies previously available. (We refer readers to the September 7, 2001 final rule for a more detailed discussion of this criterion (66 FR 46902).)

    The new medical service or technology add-on payment policy under the IPPS provides additional payments for cases with relatively high costs involving eligible new medical services or technologies while preserving some of the incentives inherent under an average-based prospective payment system. The payment mechanism is based on the cost to hospitals for the new medical service or technology. Under Sec. 412.88, if the costs of the discharge (determined by applying cost-to-

    charge ratios (CCRs) as described in Sec. 412.84(h)) exceed the full DRG payment (including payments for IME and DSH, but excluding outlier payments), Medicare will make an add-on payment equal to the lesser of: (1) 50 percent of the estimated costs of the new technology or medical service (if the estimated costs for the case including the new technology or medical service exceed Medicare's payment); or (2) 50 percent of the difference between the full DRG payment and the hospital's estimated cost for the case. Unless the discharge qualifies for an outlier payment, the additional Medicare payment is limited to the full MS-DRG payment plus 50 percent of the estimated costs of the new technology or new medical service.

    Section 503(d)(2) of Public Law 108-173 provides that there shall be no reduction or adjustment in aggregate payments under the IPPS due to add-on payments for new medical services and technologies. Therefore, in accordance with section 503(d)(2) of Public Law 108-173, add-on payments for new medical services or technologies for FY 2005 and later years have not been subjected to budget neutrality.

    In the FY 2009 IPPS final rule (73 FR 48561 through 48563), we modified our regulations at Sec. 412.87 to codify our longstanding practice of how CMS evaluates the eligibility criteria for new medical service or technology add-on payment applications. That is, we first determine whether a medical service or technology meets the newness criterion, and only if so, do we then make a determination as to whether the technology meets the cost threshold and represents a substantial clinical improvement over existing medical services or technologies. We amended Sec. 412.87(c) to specify that all applicants for new technology add-on payments must have FDA approval or clearance for their new medical service or technology by July 1 of each year prior to the beginning of the fiscal year that the application is being considered.

    The Council on Technology and Innovation (CTI) at CMS oversees the agency's cross-cutting priority on coordinating coverage, coding and payment processes for Medicare with respect to new technologies and procedures, including new drug therapies, as well as promoting the exchange of information on new technologies and medical services between CMS and other entities. The CTI, composed of senior CMS staff and clinicians, was established under section 942(a) of Public Law 108-

    173. The Council is co-chaired by the Director of the Center for Clinical Standards and Quality (CCSQ) and the Director of the Center for Medicare (CM), who is also designated as the CTI's Executive Coordinator.

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    The specific processes for coverage, coding, and payment are implemented by CM, CCSQ, and the local claims-payment contractors (in the case of local coverage and payment decisions). The CTI supplements, rather than replaces, these processes by working to assure that all of these activities reflect the agency-wide priority to promote high-

    quality, innovative care. At the same time, the CTI also works to streamline, accelerate, and improve coordination of these processes to ensure that they remain up to date as new issues arise. To achieve its goals, the CTI works to streamline and create a more transparent coding and payment process, improve the quality of medical decisions, and speed patient access to effective new treatments. It is also dedicated to supporting better decisions by patients and doctors in using Medicare-covered services through the promotion of better evidence development, which is critical for improving the quality of care for Medicare beneficiaries.

    To improve the understanding of CMS' processes for coverage, coding, and payment and how to access them, the CTI has developed an ``Innovator's Guide'' to these processes. The intent is to consolidate this information, much of which is already available in a variety of CMS documents and in various places on the CMS Web site, in a user-

    friendly format. This guide was published in 2010 and is available on the CMS Web site at: http://www.cms.gov/CouncilonTechInnov/Downloads/InnovatorsGuide5_10_10.pdf.

    As we indicated in the FY 2009 IPPS final rule (73 FR 48554), we invite any product developers or manufacturers of new medical services or technologies to contact the agency early in the process of product development if they have questions or concerns about the evidence that would be needed later in the development process for the agency's coverage decisions for Medicare.

    The CTI aims to provide useful information on its activities and initiatives to stakeholders, including Medicare beneficiaries, advocates, medical product manufacturers, providers, and health policy experts. Stakeholders with further questions about Medicare's coverage, coding, and payment processes, or who want further guidance about how they can navigate these processes, can contact the CTI at CTI@cms.hhs.gov.

    We note that applicants for add-on payments for new medical services or technologies for FY 2018 must submit a formal request, including a full description of the clinical applications of the medical service or technology and the results of any clinical evaluations demonstrating that the new medical service or technology represents a substantial clinical improvement, along with a significant sample of data to demonstrate that the medical service or technology meets the high-cost threshold. Complete application information, along with final deadlines for submitting a full application, will be posted as it becomes available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/newtech.html. To allow interested parties to identify the new medical services or technologies under review before the publication of the proposed rule for FY 2018, the CMS Web site also will post the tracking forms completed by each applicant.

    2. Public Input Before Publication of a Notice of Proposed Rulemaking on Add-On Payments

    Section 1886(d)(5)(K)(viii) of the Act, as amended by section 503(b)(2) of Public Law 108-173, provides for a mechanism for public input before publication of a notice of proposed rulemaking regarding whether a medical service or technology represents a substantial clinical improvement or advancement. The process for evaluating new medical service and technology applications requires the Secretary to--

    Provide, before publication of a proposed rule, for public input regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of Medicare beneficiaries;

    Make public and periodically update a list of the services and technologies for which applications for add-on payments are pending;

    Accept comments, recommendations, and data from the public regarding whether a service or technology represents a substantial clinical improvement; and

    Provide, before publication of a proposed rule, for a meeting at which organizations representing hospitals, physicians, manufacturers, and any other interested party may present comments, recommendations, and data regarding whether a new medical service or technology represents a substantial clinical improvement to the clinical staff of CMS.

    In order to provide an opportunity for public input regarding add-

    on payments for new medical services and technologies for FY 2017 prior to publication of the FY 2017 IPPS/LTCH PPS proposed rule, we published a notice in the Federal Register on November 30, 2015 (80 FR 74774), and held a town hall meeting at the CMS Headquarters Office in Baltimore, MD, on February 16, 2016. In the announcement notice for the meeting, we stated that the opinions and presentations provided during the meeting would assist us in our evaluations of applications by allowing public discussion of the substantial clinical improvement criterion for each of the FY 2017 new medical service and technology add-on payment applications before the publication of the FY 2017 IPPS/

    LTCH PPS proposed rule.

    Approximately 76 individuals registered to attend the town hall meeting in person, while additional individuals listened over an open telephone line. We also live-streamed the town hall meeting and posted the town hall on the CMS YouTube Web page at: https://www.youtube.com/watch?v=dn-R5KGQu-M. We considered each applicant's presentation made at the town hall meeting, as well as written comments submitted on the applications that were received by the due date of February 26, 2016, in our evaluation of the new technology add-on payment applications for FY 2017 presented in the FY 2017IPPS/LTCH PPS proposed rule.

    As indicated earlier in this section, CMS is required to provide, before publication of a proposed rule, for a meeting at which organizations representing hospitals, physicians, manufacturers, and any other interested party may present comments, recommendations, and data regarding whether a new medical service or technology represents a substantial clinical improvement to the clinical staff of CMS. In recent years, CMS has live-streamed the town hall meeting through the CMS YouTube Web page and later posted the recorded version of the town hall meeting, in addition to maintaining an open telephone line. In the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25033), we proposed to conduct future town hall meetings entirely via teleconference and Webcast using the same technologies. Under that proposal, we would continue to publish a notice informing the public of the date of the meeting, as well as requirements for the submission of presentations. We also would continue to maintain an open telephone line, with an option for participation in the Webcast. The recording of the town hall meeting would continue to be available on the CMS You Tube Web page or other CMS

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    Web site following the meeting. This recording would include closed captioning of all presentations and comments. In addition to submitting materials for discussion at the town hall meeting, individuals would continue to be able to submit other written comments after the town hall meeting on whether the service or technology represents a substantial clinical improvement. We invited public comments on this proposal in the proposed rule.

    Comment: One commenter expressed appreciation for CMS' efforts to organize and host the new technology town hall meetings entirely via teleconference and Webcast, while continuing to maintain an open telephone line with an option for participation through the Webcast and making the recording of the town hall meeting available on the CMS You Tube Web page or other CMS Web site following the meeting. However, the commenter requested that the option for an open face-to-face meeting be maintained in addition to the teleconference and Webcast participation options. The commenter noted that the opportunity to be able to present in an actual face-to-face forum allows attendees and presenters to gauge reaction and foster added awareness of the use of new technologies.

    Several commenters disagreed with the proposal to conduct the new technology town hall meetings via phone and video conference only, and to discontinue in-person meetings. The commenters stated that there is considerable value in face-to-face meetings and presentations on new technologies.

    Response: We appreciate the commenter's support and have taken into consideration the commenters' concerns. Therefore, in the interim, we will continue to host the new technology town hall meetings in person. However, we encourage the public to utilize the teleconference and Webcast participation options in order to become familiar with the advancing technological options. We will continue to gauge the public's interest in CMS hosting the new technology town hall meetings entirely via teleconference and Webcast in subsequent fiscal years.

    In response to the published notice and the February 16, 2016 New Technology Town Hall meeting, we received written comments regarding the applications for FY 2017 new technology add-on payments. We summarized in the proposed rule a general comment that did not relate to a specific application for FY 2017 new technology add-on payments. We also summarized comments regarding individual applications, or, if applicable, indicated that there were no comments received in section II.H.5. of the preamble of the proposed rule at the end of each applicable discussion of the individual applications. We note that we did receive public comments unrelated to the substantial clinical improvement criterion. As stated earlier, the purpose of the new technology town hall meeting is specifically to discuss the substantial clinical improvement criterion in regard to pending new technology add-

    on payment applications for FY 2017. Therefore, we did not summarize these additional comments in the proposed rule. However, we did invite the commenter to resubmit its comments in response to proposals presented in the proposed rule.

    Comment: Commenters provided additional comments during the 60-day comment period for the proposed rule with regard to the newness, cost, and substantial clinical improvement criteria. Some commenters reiterated comments presented at the town hall meeting, including a recommendation that CMS broaden the criteria applied in making substantial clinical improvement determinations to require, in addition to existing criteria, consideration of whether the new technology or medical service meets one or more of the following additional suggested criteria: (1) Results in a reduction of the length of a hospital stay; (2) improves patient quality of life; (3) creates long-term clinical efficiencies in treatment; (4) addresses patient-centered objectives as defined by the Secretary; or (5) meets such other criteria as the Secretary may specify; and a suggestion that an entity submitting an application for new technology add-on payments be entitled to administrative review of an adverse determination made by the Secretary.

    Response: We did not propose any policy changes to the criteria applied to new technology applications in the FY 2016 IPPS/LTCH PPS proposed rule. Therefore, we are not addressing these additional comments in this final rule. Similar to our response in the proposed rule, we will take the commenters' recommendation and suggestion into consideration in future rulemaking.

    3. ICD-10-PCS Section ``X'' Codes for Certain New Medical Services and Technologies

    As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49434), the ICD-10-PCS includes a new section containing the new Section ``X'' codes, which began being used with discharges occurring on or after October 1, 2015. Decisions regarding changes to ICD-10-PCS Section ``X'' codes will be handled in the same manner as the decisions for all of the other ICD-10-PCS code changes. That is, proposals to create, delete, or revise Section ``X'' codes under the ICD-10-PCS structure will be referred to the ICD-10 Coordination and Maintenance Committee. In addition, several of the new medical services and technologies that have been, or may be, approved for new technology add-on payments may now, and in the future, be assigned a Section ``X'' code within the structure of the ICD-10-PCS. We posted ICD-10-PCS Guidelines on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS ``X'' codes. We encourage providers to view the material provided on ICD-10-PCS Section ``X'' codes.

    Comment: One commenter supported the implementation of Section ``X'' codes, but recommended that CMS, in order to avoid confusion, make it mandatory that requestors of these new Section ``X'' codes also request the creation of new procedure codes in the body of ICD-10-PCS to accommodate the new medical service or technology. Other commenters also supported the creation and implementation of the Section ``X'' codes, but noted the need to gain better understanding of how the new section ``X'' codes will be used and applied. These commenters encouraged CMS to continue to remain transparent in how the agency develops and applies these new codes.

    Response: We appreciate the commenters' support of the new ICD-10-

    PCS codes. These Section ``X'' codes are included in Table 6B associated with this final rule (which is available via the Internet on the CMS Web site). Section ``X'' codes are standalone codes. They are not supplemental codes. Section ``X'' codes fully represent the specific procedure described in the code title and do not require any additional codes from other sections of ICD-10-PCS. When a section ``X'' code contains a code title that describes a specific new technology procedure, only that section ``X'' code is reported for the procedure. There is no need to report a broader, nonspecific code in another section of ICD-10-PCS. Section X of the ICD-10-PCS structure does not introduce any new coding concepts or unusual guidelines for correct coding. We encourage individuals interested in the creation of ICD-10-PCS codes (including Section ``X'' codes) and any recommendations as to whether or not there should be a mandatory requirement that new code requests

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    include both codes in Section X as well as in other sections of ICD-10-

    PCS to make this suggestion at future meetings of the ICD-10 Coordination and Maintenance Committee. We encourage participation at these future meetings as well as the presentation of comments during the comment period regarding proposals and approvals for creating and implementing new codes. We refer commenters to the CMS Web site at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/meetings.html for complete details.

    4. FY 2017 Status of Technologies Approved for FY 2016 Add-On Payments

  241. KcentraTM

    CSL Behring submitted an application for new technology add-on payments for KcentraTM for FY 2014. KcentraTM is a replacement therapy for fresh frozen plasma (FFP) for patients with an acquired coagulation factor deficiency due to warfarin and who are experiencing a severe bleed. KcentraTM contains the Vitamin K dependent coagulation factors II, VII, IX and X, together known as the prothrombin complex, and antithrombotic proteins C and S. Factor IX is the lead factor for the potency of the preparation. The product is a heat-treated, non-activated, virus filtered and lyophilized plasma protein concentrate made from pooled human plasma. KcentraTM is available as a lyophilized powder that needs to be reconstituted with sterile water prior to administration via intravenous infusion. The product is dosed based on Factor IX units. Concurrent Vitamin K treatment is recommended to maintain blood clotting factor levels once the effects of KcentraTM have diminished.

    KcentraTM was approved by the FDA on April 29, 2013. Under the ICD-10 coding system, KcentraTM is uniquely identified by ICD-10-CM procedure code 30283B1 (Transfusion of nonautologous 4-factor prothrombin complex concentrate into vein, percutaneous approach).

    After evaluation of the newness, cost, and substantial clinical improvement criteria for new technology add-on payments for KcentraTM and consideration of the public comments we received in response to the FY 2014 IPPS/LTCH PPS proposed rule, we approved KcentraTM for new technology add-on payments for FY 2014 (78 FR 50575 through 50580). In the application, the applicant estimated that the average Medicare beneficiary would require an average dosage of 2500 International Units (IU). Vials contain 500 IU at a cost of $635 per vial. Therefore, cases of KcentraTM would incur an average cost per case of $3,175 ($635 x 5). Under Sec. 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum add-on payment for a case of KcentraTM was $1,587.50 for FY 2014. We refer the reader to the FY 2014 IPPS/LTCH PPS final rule (78 FR 50579) for complete details on the new technology add-on payments for KcentraTM.

    As stated above, the new technology add-on payment regulations provide that a medical service or technology may be considered new within 2 or 3 years after the point at which data begin to become available reflecting the ICD-9-CM code assigned to the new service or technology (Sec. 412.87(b)(2)). Our practice has been to begin and end new technology add-on payments on the basis of a fiscal year, and we have generally followed a guideline that uses a 6-month window before and after the start of the fiscal year to determine whether to extend the new technology add-on payment for an additional fiscal year. In general, we extend add-on payments for an additional year only if the 3-year anniversary date of the product's entry on the market occurs in the latter half of the fiscal year (70 FR 47362).

    With regard to the newness criterion for KcentraTM, we considered the beginning of the newness period to commence when KcentraTM was approved by the FDA on April 29, 2013. Because the 3-year anniversary date for KcentraTM would occur in the latter half of FY 2016 (April 29, 2016), in the FY 2016 IPPS/LTCH PPS final rule, we continued new technology add-on payments for this technology for FY 2016 (80 FR 49437). However, for FY 2017, the 3-year anniversary date of the entry of KcentraTM on the U.S. market (April 29, 2016) occurred prior to the beginning of FY 2017. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25034), we proposed to discontinue new technology add-on payments for this technology for FY 2017. We invited public comments on this proposal in the proposed rule.

    We did not receive any public comments on our proposal. Therefore, as we proposed, we are discontinuing new technology add-on payments for KcentraTM for FY 2017. The 3-year anniversary date of the product's entry onto the U.S. market occurred prior to the beginning of FY 2017. Therefore, the technology is not eligible for new technology add-on payments for FY 2017 because the technology will no longer meet the ``newness'' criterion.

  242. Argussupreg II Retinal Prosthesis System

    Second Sight Medical Products, Inc. submitted an application for new technology add-on payments for the Argussupreg II Retinal Prosthesis System (Argussupreg II System) for FY 2014. The Argussupreg II System is an active implantable medical device that is intended to provide electrical stimulation of the retina to induce visual perception in patients who are profoundly blind due to retinitis pigmentosa (RP). These patients have bare or no light perception in both eyes. The system employs electrical signals to bypass dead photo-

    receptor cells and stimulate the overlying neurons according to a real-

    time video signal that is wirelessly transmitted from an externally worn video camera. The Argussupreg II implant is intended to be implanted in a single eye, typically the worse-seeing eye. Currently, bilateral implants are not intended for this technology. According to the applicant, the surgical implant procedure takes approximately 4 hours and is performed under general anesthesia.

    With regard to the newness criterion, the applicant received a Humanitarian Device Exemption (HDE) approval from the FDA on February 13, 2013. However, in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49924 through 49925), we discussed comments we had received informing CMS that the Argussupreg II System was not available on the U.S. market until December 20, 2013. The applicant explained that, as part of the lengthy approval process, it was required to submit a request to the Federal Communications Commission (FCC) for a waiver of section 15.209(a) of the FCC rules that would allow the applicant to apply for FCC authorization to utilize this specific RF band. The FCC approved the applicant's waiver request on November 30, 2011. After receiving the FCC waiver of the section 15.209(a) rules, the applicant requested and obtained a required Grant of Equipment Authorization to utilize the specific RF band, which the FCC issued on December 20, 2013. Therefore, the applicant stated that the date the Argussupreg II System first became available for commercial sale in the United States was December 20, 2013. We agreed with the applicant that, due to the delay, the date of newness for the Argussupreg II System was December 20, 2013, instead of February 13, 2013.

    After evaluation of the new technology add-on payment application and consideration of public comments received, we concluded that the Argussupreg

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    II System met all of the new technology add-on payment policy criteria. Therefore, we approved the Argussupreg II System for new technology add-on payments in FY 2014 (78 FR 50580 through 50583). Cases involving the Argussupreg II System that are eligible for new technology add-on payments currently are identified when one of the following ICD-10-PCS procedure codes is reported: 08H005Z (Insertion of epiretinal visual prosthesis into right eye, open approach); or 08H105Z (Insertion of epiretinal visual prosthesis into left eye, open approach). In the application, the applicant provided a breakdown of the costs of the Argussupreg II System. The total operating cost of the Argussupreg II System is $144,057.50. Under Sec. 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the device or 50 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum add-on payment for a case involving the Argussupreg II System for FY 2014 was $72,028.75.

    With regard to the newness criterion for the Argussupreg II System, we considered the beginning of the newness period to commence when the Argussupreg II System became available on the U.S. market on December 20, 2013. Because the 3-year anniversary date for the Argussupreg II System will occur after FY 2016 (December 20, 2016), in the FY 2016 IPPS/LTCH PPS final rule, we continued new technology add-on payments for this technology for FY 2016 (80 FR 49439). However, for FY 2017, the 3-year anniversary date of the entry of the Argussupreg II System on the U.S. market (December 20, 2016) will occur in the first half of FY 2017. As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry on to the U.S. market occurs in the latter half of the fiscal year. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25034 and 25035), we proposed to discontinue new technology add-on payments for this technology for FY 2017. We invited public comments on this proposal in the proposed rule.

    We did not receive any public comments on our proposal. Therefore, as we proposed, we are discontinuing new technology add-on payments for the Argussupreg II System for FY 2017. The 3-year anniversary date of the product's entry onto the U.S. market occurs in the first half of FY 2017. Therefore, the technology is not eligible for new technology add-

    on payments for FY 2017 because the technology will no longer meet the ``newness'' criterion.

  243. CardioMEMSTM HF (Heart Failure) Monitoring System

    CardioMEMS, Inc. submitted an application for new technology add-on payment for FY 2015 for the CardioMEMSTM HF (Heart Failure) Monitoring System, which is an implantable hemodynamic monitoring system comprised of an implantable sensor/monitor placed in the distal pulmonary artery. Pulmonary artery hemodynamic monitoring is used in the management of heart failure. The CardioMEMSTM HF Monitoring System measures multiple pulmonary artery pressure parameters for an ambulatory patient to measure and transmit data via a wireless sensor to a secure Web site.

    The CardioMEMSTM HF Monitoring System utilizes radiofrequency (RF) energy to power the sensor and to measure pulmonary artery (PA) pressure and consists of three components: An Implantable Sensor with Delivery Catheter, an External Electronics Unit, and a Pulmonary Artery Pressure Database. The system provides the physician with the patient's PA pressure waveform (including systolic, diastolic, and mean pressures) as well as heart rate. The sensor is permanently implanted in the distal pulmonary artery using transcatheter techniques in the catheterization laboratory where it is calibrated using a Swan-

    Ganz catheter. PA pressures are transmitted by the patient at home in a supine position on a padded antenna, pushing one button which records an 18-second continuous waveform. The data also can be recorded from the hospital, physician's office or clinic.

    The hemodynamic data, including a detailed waveform, are transmitted to a secure Web site that serves as the Pulmonary Artery Pressure Database, so that information regarding PA pressure is available to the physician or nurse at any time via the Internet. Interpretation of trend data allows the clinician to make adjustments to therapy and can be used along with heart failure signs and symptoms to adjust medications.

    The applicant received FDA approval on May 28, 2014. After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology payments for the CardioMEMSTM HF Monitoring System and consideration of the public comments we received in response to the FY 2015 IPPS/LTCH PPS proposed rule, we approved the CardioMEMSTM HF Monitoring System for new technology add-on payments for FY 2015 (79 FR 49940). Cases involving the CardioMEMSTM HF Monitoring System that are eligible for new technology add-on payments are identified by either ICD-10-PCS procedure code 02HQ30Z (Insertion of pressure sensor monitoring device into right pulmonary artery, percutaneous approach) or ICD-10-PCS procedure code 02HR30Z (Insertion of pressure sensor monitoring device into left pulmonary artery, percutaneous approach). With the new technology add-on payment application, the applicant stated that the total operating cost of the CardioMEMSTM HF Monitoring System is $17,750. Under Sec. 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the device or 50 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the CardioMEMSTM HF Monitoring System is $8,875.

    With regard to the newness criterion for the CardioMEMSTM HF Monitoring System, we considered the beginning of the newness period to commence when the CardioMEMSTM HF Monitoring System was approved by the FDA on May 28, 2014. Because the 3-year anniversary date of the entry of the CardioMEMSTM HF Monitoring System on the U.S. market will occur in the latter half of FY 2017 (May 28, 2017), in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25035 and 25036), we proposed to continue new technology add-on payments for this technology for FY 2017. We proposed that the maximum payment for a case involving the CardioMEMSTM HF Monitoring System would remain at $8,875 for FY 2017. We invited public comments on our proposal in the proposed rule.

    Comment: One commenter, the manufacturer, supported the continuation of new technology add-on payments for the CardioMEMSTM HF Monitoring System in FY 2017. The commenter requested that CMS provide further and more detailed guidance to the various stakeholders, including hospitals, physicians, MACs, and other manufacturers, on the purpose for the additional payment and how the new technology add-on payment is calculated thereafter. The commenter added that when new technology add-on payments are approved, it is ultimately the responsibility of the applicable provider to charge and bill appropriately. The commenter further explained that it is most often the manufacturer that developed the new technology that researches and provides guidance and expertise to the adopting facilities regarding the technology's use. However, the commenter believed that, given the few new medical services or technologies approved for new

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    technology add-on payments, hospitals often lack the resources or experience to research and understand the payment calculations. The commenter recommended that CMS provide examples or sample calculations of the new technology add-on payment in a similar fashion that CMS has published examples of other payment methodologies, for example, DSH payments.

    Response: We appreciate the commenter's support. We note that after the development and publication of each final rule, CMS issues instructions to the MACs informing them of important changes for the upcoming fiscal year. In addition, CMS issues a Medicare Learning Matters (MLN) article for the public in order to provide information regarding changes for the upcoming fiscal year. The instructions for the MACs and the MLN article for the public always include which new technologies are eligible for new technology add-on payments for in the upcoming fiscal year. We refer readers to the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/2015-Transmittals-Items/R3431CP.html to view the MAC instructions and MLN article issued in conjunction with the FY 2016 IPPS/LTCH final rule. For information regarding how to receive MLN articles, we refer readers to the CMS Web site at: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/What_Is_MLNMatters.pdf. Also, the regulations at 42 CFR 412.88 explain how the new technology add-on payment is made. Further, on December 13, 2002, we issued Change Request 2301, which provides examples of how the new technology add-on payment is made. Change Request 2301 is available for download via the Internet from the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/downloads/A02124.pdf. We also educate the public through our conference calls via open door forums. For information on CMS' open door forums, we refer readers to the CMS Web site at: https://www.cms.gov/Outreach-and-Education/Outreach/OpenDoorForums/index.html.

    After consideration of the public comments we received, we are finalizing our proposal to continue new technology add-on payments for the CardioMEMSTM HF Monitoring System for FY 2017. The maximum new technology add-on payment for a case involving the CardioMEMSTM HF Monitoring System will remain at $8,875 for FY 2017.

  244. MitraClipsupreg System

    Abbott Vascular submitted an application for new technology add-on payments for the MitraClipsupreg System for FY 2015. The MitraClipsupreg System is a transcatheter mitral valve repair system that includes a MitraClipsupreg device implant, a Steerable Guide Catheter, and a Clip Delivery System. It is designed to perform reconstruction of the insufficient mitral valve for high-risk patients who are not candidates for conventional open mitral valve repair surgery.

    With regard to the newness criterion, the MitraClipsupreg System received a premarket approval from the FDA on October 24, 2013. The MitraClipsupreg System is indicated ``for the percutaneous reduction of significant symptomatic mitral regurgitation (MR >= 3+) due to primary abnormality of the mitral apparatus (degenerative MR) in patients who have been determined to be at prohibitive risk for mitral valve surgery by a heart team, which includes a cardiac surgeon experienced in mitral valve surgery and a cardiologist experienced in mitral valve disease, and in whom existing comorbidities would not preclude the expected benefit from reduction of the mitral regurgitation.'' The MitraClipsupreg System became immediately available on the U.S. market following FDA approval. The MitraClipsupreg System is a Class III device, and has an investigational device exemption (IDE) for the EVEREST study (Endovascular Valve Edge-to-Edge Repair Study)--IDE G030061, and for the COAPT study (Cardiovascular Outcomes Assessment of the MitraClip Percutaneous Therapy for Health Failure Patients with Functional Mitral Regurgitation)--IDE G120024. Cases involving the MitraClipsupreg System are identified using ICD-10-PCS procedure code 02UG3JZ (Supplement mitral valve with synthetic substitute, percutaneous approach).

    On August 7, 2014, CMS issued a National Coverage Decision (NCD) concerning Transcatheter Mitral Valve Repair procedures. We refer readers to the CMS Web site at: http://www.cms.gov/medicare-coverage-database/details/nca-tracking-sheet.aspx?NCAId=273 for information related to this NCD.

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology payments for the MitraClipsupreg System and consideration of the public comments we received in response to the FY 2015 IPPS/LTCH PPS proposed rule, we approved the MitraClipsupreg System for new technology add-on payments for FY 2015 (79 FR 49946). As discussed in the FY 2015 IPPS/

    LTCH PPS final rule, this approval is on the basis of using the MitraClipsupreg consistent with the NCD. The average cost of the MitraClipsupreg System is reported as $30,000. Under section 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the device or 50 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the MitraClipsupreg System is $15,000 for FY 2015.

    With regard to the newness criterion for the MitraClipsupreg System, we considered the beginning of the newness period to commence when the MitraClipsupreg System was approved by the FDA on October 24, 2013. Because the 3-year anniversary date of the entry of the MitraClipsupreg System on the U.S. market (October 24, 2016) will occur after FY 2016, in the FY 2016 IPPS/LTCH PPS final rule, we continued new technology add-on payments for this technology for FY 2016 (80 FR 49442). However, for FY 2017, the 3-year anniversary date of the entry of MitraClipsupreg System on the U.S. market (October 24, 2016) will occur in the first half of FY 2017. As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry on to the U.S. market occurs in the latter half of the fiscal year. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25036), we proposed to discontinue new technology add-on payments for this technology for FY 2017. We invited public comments on this proposal in the proposed rule.

    We did not receive any public comments on our proposal. Therefore, as we proposed, we are discontinuing new technology add-on payments for the MitraClipsupreg System for FY 2017. The 3-year anniversary of the product's entry onto the U.S. market occurs in the first half of FY 2017. Therefore, the technology is not eligible for new technology add-

    on payments for FY 2017 because the technology will no longer meet the ``newness'' criterion.

  245. Responsive Neurostimulator (RNSsupreg) System

    NeuroPace, Inc. submitted an application for new technology add-on payments for FY 2015 for the use of the RNSsupreg System. (We note that the applicant submitted an application for new technology add-on payments for FY 2014, but failed to receive FDA approval prior to the July 1 deadline.) Seizures

    Page 56883

    occur when brain function is disrupted by abnormal electrical activity. Epilepsy is a brain disorder characterized by recurrent, unprovoked seizures. According to the applicant, the RNSsupreg System is the first implantable medical device (developed by NeuroPace, Inc.) for treating persons diagnosed with epilepsy whose partial onset seizures have not been adequately controlled with antiepileptic medications. The applicant further stated that, the RNSsupreg System is the first closed-loop, responsive system to treat partial onset seizures. Responsive electrical stimulation is delivered directly to the seizure focus in the brain when abnormal brain activity is detected. A cranially implanted programmable neurostimulator senses and records brain activity through one or two electrode-containing leads that are placed at the patient's seizure focus/foci. The neurostimulator detects electrographic patterns previously identified by the physician as abnormal, and then provides brief pulses of electrical stimulation through the leads to interrupt those patterns. Stimulation is delivered only when abnormal electrocorticographic activity is detected. The typical patient is treated with a total of 5 minutes of stimulation a day. The RNSsupreg System incorporates remote monitoring, which allows patients to share information with their physicians remotely.

    With regard to the newness criterion, the applicant stated that some patients diagnosed with partial onset seizures that cannot be controlled with antiepileptic medications may be candidates for the vagus nerve stimulator (VNS) or for surgical removal of the seizure focus. According to the applicant, these treatments are not appropriate for, or helpful to, all patients. Therefore, the applicant believed that there is an unmet clinical need for additional therapies for partial onset seizures. The applicant further stated that the RNSsupreg System addresses this unmet clinical need by providing a novel treatment option for treating persons diagnosed with medically intractable partial onset seizures. The applicant received FDA premarket approval on November 14, 2013.

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology payments for the RNSsupreg System and consideration of the public comments we received in response to the FY 2015 IPPS/LTCH PPS proposed rule, we approved the RNSsupreg System for new technology add-on payments for FY 2015 (79 FR 49950). Cases involving the RNSsupreg System that are eligible for new technology add-on payments are identified using the following ICD-10-

    PCS procedure code combination: 0NH00NZ (Insertion of neurostimulator generator into skull, open approach) in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach). According to the applicant, cases using the RNSsupreg System would incur an anticipated cost per case of $36,950. Under Sec. 412.88(a)(2) of the regulations, we limit new technology add-on payments to the lesser of 50 percent of the average costs of the device or 50 percent of the costs in excess of the MS-DRG payment rate for the case. As a result, the maximum new technology add-on payment for cases involving the RNSsupreg System is $18,475.

    With regard to the newness criterion for the RNSsupreg System, we considered the beginning of the newness period to commence when the RNSsupreg System was approved by the FDA on November 14, 2013. Because the 3-year anniversary date of the entry of the RNSsupreg System on the U.S. market (November 14, 2016) will occur after FY 2016, in the FY 2016 IPPS/LTCH PPS final rule, we continued new technology add-on payments for this technology for FY 2016 (80 FR 49443). However, for FY 2017, the 3-year anniversary date of the entry of RNSsupreg System on the U.S. market (November 14, 2016) will occur in the first half of FY 2017. As discussed previously in this section, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry on to the U.S. market occurs in the latter half of the fiscal year. Therefore, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25036 and 25037), we proposed to discontinue new technology add-on payments for this technology for FY 2017. We invited public comments on this proposal in the proposed rule.

    Comment: One commenter, the manufacturer, submitted a comment and requested that CMS continue to make new technology add-on payments for the RNSsupreg System in FY 2017. The commenter stated that it recognized that the 3-year anniversary date of the RNSsupreg System's entry onto the U.S. market technically occurs in the first half of FY 2017. However, the commenter believed that CMS should continue to consider the device ``new'' in FY 2017 for purposes of new technology add-on payments because numerous obstacles were encountered before the product began to be sold, resulting in a significant delay in the product's availability on the U.S. market. As a result of these obstacles, the commenter believed that the data used to analyze and compare cost for the limited number of cases reported in the first half of FY 2014 were also hindering and skewed the comparisons. The commenter provided the following reasons why it believed CMS should continue new technology add-on payments for the RNSsupreg System for FY 2017:

    Because of delays encountered during the FDA approval process for the RNSsupreg System, FDA approval for the use of the new technology was not received by July 1, 2013, which disqualified the approval of the FY 2014 new technology add-on payment application for the RNSsupreg System in FY 2014. Although the RNSsupreg System received FDA approval on November 14, 2013, a 30-day notice to replace a component supplier was required to be submitted to FDA following the approval. According to the manufacturer, the delays significantly impacted the product's availability on the U.S. market; prohibiting the ability to market or make the product available on the U.S. market until December 18, 2013.

    As a condition of approval by the FDA, the RNSsupreg System can only be sold to Comprehensive Epilepsy Centers (CECs) that meet specific requirements related to physician expertise and center experience. The FDA does not grant approval for the CECs to purchase and implant the RNSsupreg System. Rather, the manufacturer (NeuroPace) has to verify that the CEC meets certain requirements before it allows the CEC to procure the device. After that verification is completed, the CEC then has to comply with its own internal approval processes, which are quite extensive, before the actual acquisition or purchase of the device and commencing use of the device. The approval process typically involves several different groups within the CEC and occurs in a series of sequential steps. According to the manufacturer, as a result, many CECs were unwilling to adopt the use of the technology initially because they would incur a significant financial loss for each Medicare patient treated in FY 2014 because new technology add-on payments for the RNSsupreg System were not available. In addition, the manufacturer stated that further complications and delays were presented and encountered because a number of CECs were unwilling to proceed with acquisition and use of the new technology until CMS announced approval of new technology add-

    on payments for the RNSsupreg System in the FY 2015 IPPS/LTCH PPS final rule.

    According to the manufacturer, because the RNSsupreg System can only be sold to CECs, by March 30, 2014 (that

    Page 56884

    is, during the first half of FY 2014), only six RNSsupreg System commercial implant procedures were performed (which occurred at previous clinical trial sites that allowed the internal approval process to proceed more quickly). Of these cases, only two represented the treatment of Medicare beneficiaries. As a result, the market activity was extremely limited in the first half of that fiscal year. In addition, the manufacturer stated that hospitals incorrectly reported cases involving ICD-9-CM procedure codes 01.20 and 02.93 for non-RNSsupreg System procedures. The manufacturer asserted that, as a result, CMS may have reviewed MedPAR data and may have believed that there were many more RNSsupreg System cases than what actually occurred (including during the first 6 months of FY 2014), which may have negatively impacted how CMS views and applies the criteria regarding continuing new technology add-on payments for the RNSsupreg System for a third year because the MedPAR data does not accurately reflect cases involving treatment using the RNSsupreg System.

    Without the approval for new technology add-on payments in FY 2017, CECs currently offering treatment involving the RNSsupreg System would face the difficult challenge of continuing to provide treatment using the device to Medicare beneficiaries in the face of substantial losses because of an inadequate applicable MS-DRG payment rate.

    Response: With regard to the technology's newness, the timeframe that a new technology can be eligible to receive new technology add-on payments ends when data documenting the use and cost of the procedures become available. Section 412.87(b)(2) states that, a medical service or technology may be considered new within 2 or 3 years after the point at which data begin to become available reflecting the ICD-9-CM code assigned to the new service or technology (depending on when a new code is assigned and data on the new service or technology become available for DRG recalibration). Section 412.87(b)(2) also states, after CMS has recalibrated the DRGs, based on available data, to reflect the costs of an otherwise new medical service or technology, the medical service or technology will no longer be considered ``new'' under the applicable criteria. Therefore, as discussed in the FY 2005 IPPS final rule (69 FR 49003), if the costs of the technology are included in the charge data, and the MS-DRGs have been recalibrated using that data, the technology can no longer be considered ``new'' for the purposes of this provision. We further stated in the FY 2005 IPPS final rule that the period of newness does not necessarily start with the FDA approval date for the medical service or technology or the issuance of a distinct procedure code. Instead, the newness period begins with the date of availability of the product on the U.S. market, which is when data become available. We have consistently applied this standard, and believe that it is most consistent with the purpose of new technology add-on payments.

    With regard to the RNSsupreg System, while there may have been issues with some CECs meeting specific requirements and delays prohibiting the use of the device, as the commenter noted, the RNSsupreg System was available for acquisition on the U.S. market on or after December 18, 2013. We agree that the newness period for the RNSsupreg System should begin on December 18, 2013. However, because the 3-year anniversary date of the entry of the RNSsupreg System on the U.S. market (December 18, 2016) will still occur in the first half of FY 2017, the RNSsupreg System continues to be ineligible for new technology add-on payments in FY 2017. As noted previously, in general, we extend new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry on to the U.S. market occurs in the latter half of the fiscal year.

    In addition, similar to our discussion in the FY 2006 IPPS final rule (70 FR 47349), we do not believe that case volume is a relevant consideration for making the determination as to whether a product is ``new.'' Consistent with the statute and our implementing regulations, a technology no longer qualifies as ``new'' once it is more than 2 to 3 years old, irrespective of how frequently it has been used in the Medicare population. Therefore, if a product is more than 2 to 3 years old, we consider its costs to be included in the MS-DRG relative weights, whether its use in the Medicare population has been frequent or infrequent.

    Therefore, based on all of the reasons stated above, the RNSsupreg System is no longer considered ``new'' for purposes of new technology add-on payments for FY 2017. We are finalizing our proposal to discontinue making new technology add-on payments for the RNSsupreg System for FY 2017.

    Comment: Several commenters that had experienced the effects of the correlating illnesses explained the clinical effectiveness of the device and requested the continuation of new technology add-on payments for the RNSsupreg System for FY 2017.

    Response: We thank the commenters for their input. However, as stated above, the RNSsupreg System is no longer considered ``new'' for FY 2017 and, therefore, is no longer eligible for new technology add-on payments.

  246. Blinatumomab (BLINCYTOsupregTrade Brand)

    Amgen, Inc. submitted an application for new technology add-on payments for FY 2016 for Blinatumomab (BLINCYTOsupreg), a bi-specific T-cell engager (BiTE) used for the treatment of Philadelphia chromosome-negative (Ph-) relapsed or refractory (R/R) B-cell precursor acute-lymphoblastic leukemia (ALL), which is a rare aggressive cancer of the blood and bone marrow. Approximately 6,050 individuals are diagnosed with Ph- R/R B-cell precursor ALL in the United States each year, and approximately 2,400 individuals, representing 30 percent of all new cases, are adults. Ph- R/R B-cell precursor ALL occurs when there are malignant transformations of B-cell or T-cell progenitor cells, causing an accumulation of lymphoblasts in the blood, bone marrow, and occasionally throughout the body. As a bi-specific T-cell engager, the BLINCYTOsupreg technology attaches to a molecule on the surface of the tumorous cell, as well as to a molecule on the surface of normal T-cells, bringing the two into closer proximity and allowing the normal T-cell to destroy the tumorous cell. Specifically, the BLINCYTOsupreg technology attaches to a cell identified as CD19, which is present on all of the cells of the malignant transformations that cause Ph- R/R B-cell precursor ALL and helps attract the cell into close proximity of the T-cell CD3 with the intent of getting close enough to allow the T-cell to inject toxins that destroy the cancerous cell. According to the applicant, the BLINCYTOsupreg technology is the first, and the only, bi-specific CD19-directed CD3 T-cell engager single-agent immunotherapy approved by the FDA.

    BLINCYTOsupreg is administered as a continuous IV infusion delivered at a constant flow rate using an infusion pump. A single cycle of treatment consists of 28 days of continuous infusion, and each treatment cycle is followed by 2 weeks without treatment prior to administering any further treatments. A course of treatment would consist of two phases. Phase 1 consists of initial inductions or treatments intended to achieve remission followed by additional inductions and treatments to maintain consolidation; or treatments

    Page 56885

    given after remission has been achieved to prolong the duration. During phase 1 of a single treatment course, up to two cycles of BLINCYTOsupreg are administered, and up to three additional cycles are administered during consolidation. The recommended dosage of BLINCYTOsupreg administered during the first cycle of treatment is 9 mcg per day for the first 7 days of treatment. The dosage is then increased to 28 mcg per day for 3 weeks until completion. During phase 2 of the treatment course, all subsequent doses are administered as 28 mcg per day throughout the entire duration of the 28-day treatment period.

    With regard to the newness criterion, the BLINCYTOsupreg technology received FDA approval on December 3, 2014, for the treatment of patients diagnosed with Ph- R/R B-cell precursor ALL, and the product gained entry onto the U.S. market on December 17, 2014.

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology payments for BLINCYTOsupreg and consideration of the public comments we received in response to the FY 2016 IPPS/LTCH PPS proposed rule, we approved BLINCYTOsupreg for new technology add-on payments for FY 2016 (80 FR 49449). Cases involving BLINCYTOsupreg that are eligible for new technology add-on payments are identified using one of the following ICD-10-PCS procedure codes: XW03351 (Introduction of Blinatumomab antineoplastic immunotherapy into peripheral vein, percutaneous approach, new technology group 1) or XW04351 (Introduction of Blinatumomab antineoplastic immunotherapy into central vein, percutaneous approach, new technology group 1).

    As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49449), the applicant recommended that CMS consider and use the cost of the full 28-day inpatient treatment cycle as the expected length of treatment when determining the maximum new technology add-on payment for cases involving the BLINCYTOsupreg rather than the average cost of lesser number of days used as other variables. For the reasons discussed, we disagreed with the applicant and established the maximum new technology add-on payment amount for a case involving the BLINCYTOsupreg technology for FY 2016 using the weighted average of the cycle 1 and cycle 2 observed treatment length. Specifically, in the Phase II trial, the most recent data available, 92 patients received cycle 1 for an average length of 21.2 days, and 52 patients received cycle 2 for an average length of 10.2 days. The weighted average of cycle 1 and 2 treatment length is 17 days. We noted that a small number of patients also received 3 to 5 treatment cycles. However, based on the data provided, these cases do not appear to be typical at this point and we excluded them from this calculation. We noted that, if we included all treatment cycles in this calculation, the weighted average number of days of treatment is much lower, 10 days. Using the clinical data provided by the applicant, we stated that we believe that setting the maximum new technology add-on payment amount for a case involving the BLINCYTOsupreg technology for FY 2016 based on a 17-day length of treatment cycle is representative of historical and current practice. We also stated that, for FY 2017, if new data on length of treatment are available, we would consider any such data in evaluating the maximum new technology add-on payment amount. However, we did not receive any new data from the applicant to evaluate for FY 2017.

    In the application, the applicant estimated that the average Medicare beneficiary would require a dosage of 9mcg/day for the first 7 days under the first treatment cycle, followed by a dosage of 28mcg/day for the duration of the treatment cycle, as well as all days included in subsequent cycles. All vials contain 35mcg at a cost of $3,178.57 per vial. The applicant noted that all vials are single-use. Therefore, we determined that cases involving the use of the BLINCYTOsupreg technology would incur an average cost per case of $54,035.69 (1 vial/

    day x 17 days x $3,178.57/vial). Under 42 CFR 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment amount for a case involving the use of the BLINCYTOsupreg is $27,017.85 for FY 2016.

    With regard to the newness criterion for BLINCYTOsupreg, we considered the beginning of the newness period to commence when the product gained entry onto the U.S. market on December 17, 2014. Because the 3-year anniversary date of the entry of the BLINCYTOsupreg on the U.S. market will occur after FY 2017 (December 17, 2017), in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25038), we proposed to continue new technology add-on payments for this technology for FY 2017. We proposed that the maximum payment for a case involving BLINCYTOsupreg would remain at $27,017.85 for FY 2017. We invited public comments on this proposal in the proposed rule.

    Comment: Commenters supported CMS' proposal to continue new technology add-on payments for BLINCYTOsupreg for FY 2017. The manufacturer submitted a comment with regard to the substantial clinical improvement of the BLINCYTOsupreg and stated that recently released results from a randomized, open-label, Phase 3 confirmatory study (the TOWER study) show significant improvements in overall survival (primary endpoint), complete remission, and event-free survival with BLINCYTOsupreg compared to standard of care chemotherapy in adult patients diagnosed with Ph- R/R B-cell precursor ALL. According to the manufacturer, in this study, 405 patients were randomized in a 2:1 ratio to receive BLINCYTOsupreg or one of four standard of care chemotherapeutic regimens chosen by the investigator. The manufacturer noted that the study was ended early based on a prespecified interim analysis from an independent data monitoring committee (DMC), which found a significant overall survival improvement in the BLINCYTOsupreg arm over standard of care chemotherapy. According to the manufacturer, results from the DMC analysis demonstrated a median overall survival (OS) of 7.8 months.

    Response: We appreciate the commenters' support for our proposal.

    After consideration of the public comments we received, we are finalizing our proposal to continue new technology add-on payments for BLINCYTOsupreg for FY 2017. The maximum new technology add-on payment for a case involving BLINCYTOsupreg will remain at $27,017.85 for FY 2017.

  247. Lutonixsupreg Drug Coated Balloon PTA Catheter and In.PACTTM AdmiralTM Paclitaxel Coated Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter

    Two manufacturers, CR Bard Inc. and Medtronic, submitted applications for new technology add-on payments for FY 2016 for LUTONIXsupreg Drug-Coated Balloon (DCB) Percutaneous Transluminal Angioplasty (PTA) Catheter (LUTONIXsupreg) and IN.PACTTM AdmiralTM Paclitaxel Coated Percutaneous Transluminal Angioplasty (PTA) Balloon Catheter (IN.PACTTM AdmiralTM), respectively. Both of these technologies are drug-coated balloon angioplasty treatments for patients diagnosed with peripheral artery disease (PAD). Typical treatments for patients with PAD include angioplasty, stenting, atherectomy and vascular bypass surgery. PAD most commonly occurs in the femoropopliteal segment of the

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    peripheral arteries, is associated with significant levels of morbidity and impairment in quality of life, and requires treatment to reduce symptoms and prevent or treat ischemic events.\2\ Treatment options for symptomatic PAD include noninvasive treatment such as medication and life-style modification (for example, exercise programs, diet, and smoking cessation) and invasive options which include endovascular treatment and surgical bypass. The 2013 American College of Cardiology and American Heart Association (ACC/AHA) guidelines for the management of PAD recommend endovascular therapy as the first-line treatment for femoropopliteal artery lesions in patients suffering from claudication (Class I, Level A recommendation).\3\

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    \2\ Tepe G, Zeller T, Albrecht T, Heller S, Schwarzwalder U, Beregi JP, Claussen CD, Oldenburg A, Scheller B, Speck U.: Local delivery of paclitaxel to inhibit restenosis during angioplasty of the leg. N Engl J Med 2008; 358: 689-99.

    \3\ Anderson JL, Halperin JL, Albert NM, Bozkurt B, Brindis RG, Curtis LH, DeMets D, Guyton RA, Hochman JS, Kovacs RJ, Ohman EM, Pressler SJ, Sellke FW, Shen WK.: Management of patients with peripheral artery disease (compilation of 2005 and 2011 ACCF/AHA guideline recommendations): a report of the American College of Cardiology Foundation/American Heart Association Task Force on Practice Guidelines. J Am Coll Cardiol 2013; 61:1555-70. Available at: http://dx.doi.org/10.1016/j.jacc.2013.01.004.

    ---------------------------------------------------------------------------

    According to both applicants, LUTONIXsupreg and IN.PACTTM AdmiralTM are the first drug coated balloons that can be used for treatment of patients who are diagnosed with PAD. In the FY 2016 IPPS/LTCH final rule, we stated that because cases eligible for the two devices would group to the same MS-DRGs and we believe that these devices are substantially similar to each other (that is, they are intended to treat the same or similar disease in the same or similar patient population and are purposed to achieve the same therapeutic outcome using the same or similar mechanism of action), we evaluated both technologies as one application for new technology add-

    on payment under the IPPS. The applicants submitted separate cost and clinical data, and we reviewed and discussed each set of data separately. However, we made one determination regarding new technology add-on payments that applied to both devices. We believe that this is consistent with our policy statements in the past regarding substantial similarity. Specifically, we have noted that approval of new technology add-on payments would extend to all technologies that are substantially similar (66 FR 46915), and that we believe that continuing our current practice of extending a new technology add-on payment without a further application from the manufacturer of the competing product or a specific finding on cost and clinical improvement if we make a finding of substantial similarity among two products is the better policy because we avoid--

    Creating manufacturer-specific codes for substantially similar products;

    Requiring different manufacturers of substantially similar products from having to submit separate new technology applications;

    Having to compare the merits of competing technologies on the basis of substantial clinical improvement; and

    Bestowing an advantage to the first applicant representing a particular new technology to receive approval (70 FR 47351).

    CR Bard, Inc. received FDA approval for LUTONIXsupreg on October 9, 2014. Commercial sales in the U.S. market began on October 10, 2014. Medtronic received FDA approval for IN.PACTTM AdmiralTM on December 30, 2014. Commercial sales in the U.S. market began on January 29, 2015.

    In accordance with our policy, we stated in the FY 2016 IPPS\LTCH final rule (80 FR 49463) that we believe it is appropriate to use the earliest market availability date submitted as the beginning of the newness period. Accordingly, for both devices, we stated that the beginning of the newness period will be October 10, 2014.

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology payments for the LUTONIXsupreg and IN.PACTTM AdmiralTM technologies and consideration of the public comments we received in response to the FY 2016 IPPS/LTCH PPS proposed rule, we approved the LUTONIXsupreg and IN.PACTTM AdmiralTM technologies for new technology add-on payments for FY 2016 (80 FR 49469). Cases involving the LUTONIXsupreg and IN.PACTTM AdmiralTM technologies that are eligible for new technology add-on payments are identified using one of the ICD-10-PCS procedure codes in the following table:

    ------------------------------------------------------------------------

    ICD-10-PCS code Code description

    ------------------------------------------------------------------------

    047K041.................. Dilation of right femoral artery with drug-

    eluting intraluminal device using drug-

    coated balloon, open approach.

    047K0D1.................. Dilation of right femoral artery with

    intraluminal device using drug-coated

    balloon, open approach.

    047K0Z1.................. Dilation of right femoral artery using drug-

    coated balloon, open approach.

    047K341.................. Dilation of right femoral artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous approach.

    047K3D1.................. Dilation of right femoral artery with

    intraluminal device using drug-coated

    balloon, percutaneous approach.

    047K3Z1.................. Dilation of right femoral artery using drug-

    coated balloon, percutaneous approach.

    047K441.................. Dilation of right femoral artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous endoscopic

    approach.

    047K4D1.................. Dilation of right femoral artery with

    intraluminal device using drug-coated

    balloon, percutaneous endoscopic approach.

    047K4Z1.................. Dilation of right femoral artery using drug-

    coated balloon, percutaneous endoscopic

    approach.

    047L041.................. Dilation of left femoral artery with drug-

    eluting intraluminal device using drug-

    coated balloon, open approach.

    047L0D1.................. Dilation of left femoral artery with

    intraluminal device using drug-coated

    balloon, open approach.

    047L0Z1.................. Dilation of left femoral artery using drug-

    coated balloon, open approach.

    047L341.................. Dilation of left femoral artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous approach.

    047L3D1.................. Dilation of left femoral artery with

    intraluminal device using drug-coated

    balloon, percutaneous approach.

    047L3Z1.................. Dilation of left femoral artery using drug-

    coated balloon, percutaneous approach.

    047L441.................. Dilation of left femoral artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous endoscopic

    approach.

    047L4D1.................. Dilation of left femoral artery with

    intraluminal device using drug-coated

    balloon, percutaneous endoscopic approach.

    047L4Z1.................. Dilation of left femoral artery using drug-

    coated balloon, percutaneous endoscopic

    approach.

    047M041.................. Dilation of right popliteal artery with drug-

    eluting intraluminal device using drug-

    coated balloon, open approach.

    047M0D1.................. Dilation of right popliteal artery with

    intraluminal device using drug-coated

    balloon, open approach.

    047M0Z1.................. Dilation of right popliteal artery using drug-

    coated balloon, open approach.

    047M341.................. Dilation of right popliteal artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous approach.

    047M3D1.................. Dilation of right popliteal artery with

    intraluminal device using drug-coated

    balloon, percutaneous approach.

    Page 56887

    047M3Z1.................. Dilation of right popliteal artery using drug-

    coated balloon, percutaneous approach.

    047M441.................. Dilation of right popliteal artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous endoscopic

    approach.

    047M4D1.................. Dilation of right popliteal artery with

    intraluminal device using drug-coated

    balloon, percutaneous endoscopic approach.

    047M4Z1.................. Dilation of right popliteal artery using drug-

    coated balloon, percutaneous endoscopic

    approach.

    047N041.................. Dilation of left popliteal artery with drug-

    eluting intraluminal device using drug-

    coated balloon, open approach.

    047N0D1.................. Dilation of left popliteal artery with

    intraluminal device using drug-coated

    balloon, open approach.

    047N0Z1.................. Dilation of left popliteal artery using drug-

    coated balloon, open approach.

    047N341.................. Dilation of left popliteal artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous approach.

    047N3D1.................. Dilation of left popliteal artery with

    intraluminal device using drug-coated

    balloon, percutaneous approach.

    047N3Z1.................. Dilation of left popliteal artery using drug-

    coated balloon, percutaneous approach.

    047N441.................. Dilation of left popliteal artery with drug-

    eluting intraluminal device using drug-

    coated balloon, percutaneous endoscopic

    approach.

    047N4D1.................. Dilation of left popliteal artery with

    intraluminal device using drug-coated

    balloon, percutaneous endoscopic approach.

    047N4Z1.................. Dilation of left popliteal artery using drug-

    coated balloon, percutaneous endoscopic

    approach.

    ------------------------------------------------------------------------

    As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49469), each of the applicants submitted operating costs for its DCB. The manufacturer of the LUTONIXsupreg stated that a mean of 1.37 drug-

    coated balloons was used during the LEVANT 2 clinical trial. The acquisition price for the hospital will be $1,900 per drug-coated balloon, or $2,603 per case (1.37 x $1,900). The applicant projected that approximately 8,875 cases will involve use of the LUTONIXsupreg for FY 2016. The manufacturer for the IN.PACTTM AdmiralTM stated that a mean of 1.4 drug-coated balloons was used during the IN.PACTTM AdmiralTM DCB arm. The acquisition price for the hospital will be $1,350 per drug-coated balloon, or $1,890 per case (1.4 x $1,350). The applicant projected that approximately 26,000 cases will involve use of the IN.PACTTM AdmiralTM for FY 2016.

    For FY 2016, we based the new technology add-on payment for cases involving these technologies on the weighted average cost of the two DCBs described by the ICD-10-PCS procedure codes listed above (which are not manufacturer specific). Because ICD-10 codes are not manufacturer specific, we cannot set one new technology add-on payment amount for IN.PACTTM AdmiralTM and a different new technology add-on payment amount for LUTONIXsupreg; both technologies will be captured by using the same ICD-10-PCS procedure code. As such, we stated that we believe that the use of a weighted average of the cost of the standard DCBs based on the projected number of cases involving each technology to determine the maximum new technology add-on payment would be most appropriate. To compute the weighted cost average, we summed the total number of projected cases for each of the applicants, which equaled 34,875 cases (26,000 plus 8,875). We then divided the number of projected cases for each of the applicants by the total number of cases, which resulted in the following case-weighted percentages: 25 percent for the LUTONIXsupreg and 75 percent for the IN.PACTTM AdmiralTM. We then multiplied the cost per case for the manufacturer specific DCB by the case-weighted percentage (0.25 * $2,603 = $662.41 for LUTONIXsupreg and 0.75 * $1,890 = $1,409.03 for the IN.PACTTM AdmiralTM). This resulted in a case-

    weighted average cost of $2,071.45 for DCBs. Under Sec. 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the device or 50 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum payment for a case involving the LUTONIXsupreg or IN.PACTTM AdmiralTM DCBs is $1,035.72.

    With regard to the newness criterion for LUTONIXsupreg and IN.PACTTM AdmiralTM technologies, we considered the beginning of the newness period to commence when LUTONIXsupreg gained entry onto the U.S. market on October 10, 2014. Because the 3-

    year anniversary date of the entry of LUTONIXsupreg on the U.S. market will occur after FY 2017 (October 10, 2017), in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25039 and 25040), we proposed to continue new technology add-on payments for both the LUTONIXsupreg and IN.PACTTM AdmiralTM technologies for FY 2017. We proposed that the maximum add-on payment for a case involving LUTONIXsupreg and IN.PACTTM AdmiralTM would remain at $1,035.72 for FY 2017. We invited public comments on this proposal in the proposed rule.

    Comment: Commenters supported CMS' proposal to continue new technology add-on payments for the LUTONIXsupreg and IN PACTTM AdmiralTM for FY 2017.

    Response: We appreciate the commenters' support for our proposal.

    After consideration of the public comments we received, we are finalizing our proposal and continuing new technology add-on payments for both the LUTONIXsupreg and IN PACTTM AdmiralTM for FY 2017. The maximum add-on payment for a case involving LUTONIXsupreg and IN.PACTTM AdmiralTM remains at $1,035.72 for FY 2017.

    5. FY 2017 Applications for New Technology Add-On Payments

    We received nine applications for new technology add-on payments for FY 2017. One applicant withdrew its application prior to the issuance of the FY 2017 IPPS/LTCH PPS proposed rule. Another applicant, Andexanet Alfa, withdrew its application prior to the issuance of the FY 2017 IPPS/LTCH PPS final rule.

    In addition, in accordance with the regulations under Sec. 412.87(c), applicants for new technology add-on payments must have FDA approval or clearance by July 1 of each year prior to the beginning of the fiscal year that the application is being considered. One applicant, the EDWARDS INTUITY EliteTM Valve System, did not receive FDA approval for their technology by July 1, 2016, and, therefore, it is ineligible for consideration for new technology add-on payments for FY 2017. We are not including the descriptions and discussions of these two applications that were included in the FY 2017 proposed rule in this final rule. We note that we did receive public comments on these two applications. However, because Andexanet Alfa withdrew its application and the EDWARDS INTUITY EliteTM Value System is ineligible for new technology add-on payments for FY 2017 because it did not receive FDA approval by July 1, 2016, we are not summarizing or responding to public comments on these applications in this final rule. A

    Page 56888

    discussion of the seven remaining applications is presented below.

  248. MAGECsupreg Spinal Bracing and Distraction System (MAGECsupreg Spine)

    Ellipse Technologies, Inc. submitted an application for new technology add-on payments for FY 2017 for the MAGECsupreg Spine. According to the applicant, the MAGECsupreg Spine has been developed for use in the treatment of children diagnosed with severe spinal deformities, such as scoliosis. The system can be used in the treatment of skeletally immature patients less than 10 years of age who have been diagnosed with severe progressive spinal deformities associated with or at risk of Thoracic Insufficiency Syndrome (TIS). The MAGECsupreg Spine consists of a (spinal growth) rod that can be lengthened through the use of magnets that are controlled by an external remote controller (ERC). The rod(s) can be implanted into children as young as 2 years of age. According to the applicant, use of the MAGECsupreg Spine has proven to be successfully used in the treatment of patients diagnosed with scoliosis who have not been responsive to other treatments.

    The MAGECsupreg Spine initially received FDA clearance for use of the predicate device, which used a Harrington Rod on February 27, 2014. The applicant verified that, due to manufacturing delays, the MAGECsupreg Spine was not available for implant until April 1, 2014. Specifically, the complete MAGECsupreg Spine system was produced and available for shipment for the first implant on April 1, 2014. Therefore, the newness period for the MAGECsupreg Spine begins on April 1, 2014. Subsequent FDA clearance was granted for use of the modified device, which uses a shorter 70 mm rod on September 18, 2014. After minor modification of the product, the MAGECsupreg Spine received FDA clearances on March 24, 2015, and May 29, 2015, respectively.

    The applicant submitted a request for a unique ICD-10-PCS procedure code and was granted approval for the following procedure codes under New Technology Group 2: XNS0032 (Reposition of lumbar vertebra using magnetically controlled growth rod(s), open approach); XNS0432 (Reposition of lumbar vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach); XNS3032 (Reposition of cervical vertebra using magnetically controlled growth rod(s), open approach); XNS3432 (Reposition of cervical vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach); XNS4032 (Reposition of thoracic vertebra using magnetically controlled growth rod(s), open approach); and XNS4432 (Reposition of thoracic vertebra using magnetically controlled growth rod(s), percutaneous endoscopic approach). These new ICD-10-PCS procedure codes are effective on October 1, 2016.

    In the FY 2010 IPPS/RY 2010 LTCH PPS final rule (74 FR 43813 through 43814), we established criteria for evaluating whether a new technology is substantially similar to an existing technology, specifically: (1) Whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome; (2) whether a product is assigned to the same or a different MS-DRG; and (3) whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population. If a technology meets all three of these criteria, it would be considered substantially similar to an existing technology and would not be considered ``new'' for purposes of new technology add-on payments. For a detailed discussion of the criteria for substantial similarity, we refer readers to the FY 2006 IPPS final rule (70 FR 47351 through 47352), and the FY 2010 IPPS/LTCH PPS final rule (74 FR 43813 through 43814).

    With regard to the first criterion, the applicant stated that the MAGECsupreg Spine's mechanism of action is dependent upon growing rods used for the treatment of patients diagnosed with early onset scoliosis (EOS), and is unique because the technique uses magnetic distraction (lengthening), which does not require the patients to be subjected to the potential and adverse effects of additional surgeries.

    The applicant explained that treatment of patients diagnosed with EOS involves the implantation of traditional growth rods (TGRs) followed by surgery every 6 months to distract the rods to accommodate the growing spine until the patient reaches a level of spinal maturity when the spine can then be fused. The average number of distraction surgeries per patient is 12 over the course of 6 years. Once spinal alignment and maturity is reached, the TGRs are surgically and permanently removed. The applicant stated that, while the most recent modification to the MAGECsupreg Spine's rods accomplish the same goal as the predicate device, Harrington rods, MAGECsupreg Spine rods achieve the predetermined goal with minimally invasive techniques after implantation, which prevents the patients from being subjected to the potential and adverse effects of numerous lengthening surgeries. The applicant further noted that after the MAGECsupreg Spine's rod has been implanted, the ERC is placed externally over the patient's spine at the location of the magnet in the MAGECsupreg Spine's rod. Periodic, noninvasive distraction of the rod is performed to lengthen the spine and to provide adequate bracing during growth. Routine X-ray or ultrasound procedures are used to confirm the position and amount of distraction. The frequency of distraction sessions is customized to the needs of the individual patient by the treating surgeon.

    With regard to the first criterion, in the proposed rule (81 FR 25040), we stated that we were concerned that the MAGECsupreg Spine uses the same mechanism of action, spinal rod distraction, to achieve the same therapeutic outcome of spinal alignment as other currently available technologies and treatment options for Medicare beneficiaries. Specifically, TGRs are implanted and affixed to the immature spine in order to correct spinal deformities. As a child grows, the TGRs must be distracted to accommodate spinal growth. The common denominator between TGRs and the MAGECsupreg Spine is that they both are devices (rods) that use the same mechanism of action to perform and achieve spinal distraction, the implantation of rods that are later lengthened. While we acknowledged that the applicant noted that the MAGECsupreg Spine does not require the patient to endure the potential and adverse effects of additional surgeries, we stated that this assertion seems to be a component of substantial clinical improvement rather than a basis to distinguish the mechanism of action.

    In consideration of the applicant's statements that the mechanism of action of the MAGECsupreg Spine, which uses growing rods in the treatment of patients diagnosed with EOS, is unique because the technique of using magnetic distraction (lengthening) does not require patients to endure the potential and adverse effects of additional surgeries, in the proposed rule, we stated that there are other technologies and products currently available that achieve spinal growth without the need to subject patients to potential and adverse effects of additional surgeries. For example, the Shilla growth guidance system, which received FDA clearance in 2014, uses a non-

    locking set screw at the proximal and distal portions of the construct's rods. This specific feature is designed to allow the rod to slide through the screw heads as a child's spine grows, while still providing correction of the spinal deformity. The Shilla technique also eliminates the

    Page 56889

    need for scheduled distraction surgeries, as the applicant pointed out are needed with the use of TGRs. Therefore, in the proposed rule, we stated that we believe that the MAGECsupreg Spine's mechanism of action may be similar to the mechanism of action employed by the Shilla growth guidance system because both technologies achieve the same therapeutic outcome and do not require the patient to endure the potential and adverse effects of additional surgeries.

    With regard to the second criterion, cases that may be eligible for treatment involving the MAGECsupreg Spine map to the following MS-

    DRGs: 456 (Spinal Fusion Except Cervical With Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC); 457 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with CC); and 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions without CC/MCC). All cases involving procedures describing spinal distraction devices, including those that use TGRs and the Shilla growth guidance system, currently map to the same MS-DRGs.

    With regard to the third criterion, we believe that the MAGECsupreg Spine technology involves the treatment of the same or similar type of disease and the same or similar patient population. Although the applicant stated that the MAGECsupreg Spine was developed for the use in the treatment of children diagnosed with severe spinal deformities, the MAGECsupreg Spine treats the same patient population as other currently available spinal distraction devices and technologies, including those that use TGRs and the Shilla growth guidance system. Because it appears that the MAGECsupreg Spine is substantially similar to these other currently available devices used to treat the same or similar types of diseases and the same or similar patient populations, in the proposed rule we stated that we were concerned that the technology may not be considered ``new'' for the purposes of new technology add-on payments (81 FR 25041). We also invited public comments on whether the MAGECsupreg Spine meets the newness criterion.

    Comment: The applicant submitted public comments that responded to CMS' concerns presented in the proposed rule with regard to newness. The applicant provided a working definition of ``mechanism of action'' of spinal distraction systems as: The combined device-technique interaction with tissues that produces a therapeutic effect. The combined device-technique interaction includes the following elements: Initial fusion; device mechanism; spinal growth control; and spinal curvature control.

    The applicant distinguished MAGECsupreg Spine's mechanism of action as distinct from the Shilla system's tissue interaction because the Shilla system provides passive growth guidance and the MAGECsupreg Spine provides active distraction by noninvasive magnetically controlled lengthening. Furthermore, MAGECsupreg Spine enables a surgeon to customize or adjust a patient's therapy with more frequent, noninvasive, magnetic external remote controlled sessions. The applicant described the MAGECsupreg Spine's device mechanism as distinct from the Shilla system in that the MAGECsupreg Spine system's initial fusion is the cephalad and caudad ends of the spine whereas the Shilla system's initial fusion is at the apex of the spinal curve. The MAGECsupreg Spine system drives growth with active noninvasive rod distractions whereas the Shilla system provides passive growth guidance with sliding anchors and limited stability.

    The applicant further described the MAGECsupreg Spine's device mechanism as distinct from TGRs in that the MAGECsupreg Spine system consists of magnetically controlled growing rods and actuators and an external remote, whereas, TGRs device mechanism consists of growing rods and tandem connectors which must be surgically removed and replaced with longer rods to achieve the desired lengthening. The applicant further compared the MAGECsupreg Spine system's tissue interaction as frequent noninvasive lengthening in an awake patient to control and adapt spine growth to a child's development, with low complication rates and few repeated surgeries. TGRs tissue interactions include manual surgical lengthening under general anesthesia at 6-month intervals.

    Response: We appreciate the details and input provided by the applicant in response to our concerns. As the commenter has described above, we agree that the MAGECsupreg Spine's mechanism of action is distinct from the TGR and the Shilla system. Specifically, the MAGECsupreg Spine's noninvasive method of distraction is distinct from TGRs surgical distraction and the MAGECsupreg Spine's active distraction is distinct from the Shilla system's passive distraction. After considering the additional information submitted by the applicant in response to our concerns, which supported the technology's uniqueness in achieving spinal rod distraction, we agree with the applicant that the MAGECsupreg Spine meets the newness criterion, and we consider the technology to be ``new'' as of April 1, 2014.

    With regard to the cost criterion, the applicant maintained that there is an insufficient number of cases in the Medicare claims data to evaluate because of the small number of potential cases and cases reflecting patients who were actually diagnosed with or who experience early onset scoliosis (EOS) requiring the implantation of growing rods. Specifically, the applicant stated that the majority of the Medicare population is 65 years of age and older, while individuals who may be eligible for the MAGECsupreg Spine are typically less than 10 years of age. Therefore, the applicant estimated the number of EOS cases using internal estimates for de novo cases ( The applicant did not specify how many cases were the basis for the average standardized case-weighted charges per case. Therefore, we cannot determine if the charges per case represent a statistical sample relative to the projected cases eligible for the MAGECsupreg Spine for the upcoming fiscal year.

    The applicant did not specify how many cases included in the analysis were Medicare and non-Medicare cases. We typically rely on Medicare data and understand the limitations of this patient population in the Medicare data (as the applicant explained above). However, CMS would still like the details regarding the numerical representation of Medicare and non-Medicare cases the applicant used in its analysis.

    The applicant did not explain the methodology it used to remove the charges for the predicate technology, as well as the type of technology that the charges replaced. Therefore, in the proposed rule, we stated that we were unable to validate the accuracy of the applicant's methodology.

    The applicant did not explain the basis of using a 10-

    percent inflation factor. Specifically, the applicant used cases from CY 2016 and inflated the costs to FY 2017 using a 10-percent inflation factor. However, the 1-year inflation factor in the FY 2016 IPPS/LTCH final rule (80 FR 49784) is 3.7 percent. Therefore, we do not believe that a 10-percent inflation factor is appropriate.

    The applicant used the average overall CCR of the six hospitals to convert the costs of the MAGECsupreg Spine to charges. However, rather than using an average CCR, to increase the precision of determining the charges of the MAGECsupreg Spine, the applicant could have instead used each hospital's individual CCR or the implantable device CCR of 0.337 as reported in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49429).

    We invited public comments on whether the MAGECsupreg Spine meets the cost criterion, particularly with regard to the concerns we raised in the proposed rule.

    Comment: In response to our concerns, the applicant reported that it had conducted a new cost analysis using the FY 2015 MedPAR data set. Specifically, the applicant searched for cases with patients less than 25 years of age that had the following ICD-9-CM diagnosis codes (737.30, 737.32, 737.34, 737.39, 737.43 or 754.2) that map to MS-DRGs 456, 457, and 458. This resulted in fewer than 11 cases in each of the applicable MS-DRGs (456, 457 and 458); therefore, the applicant suppressed the exact number of cases to protect patient privacy. The applicant stated that the total number of cases across all three MS-

    DRGs was between 11 and 20. This resulted in average case weighted charge per case of $329,370. The applicant then removed charges for the prior technology (traditional growth rods) and standardized the charges which resulted in a case-weighted standardized charge per case of $228,627. Using the FY 2016 IPPS Table 10 thresholds, the average case-

    weighted threshold amount was $170,061 (all calculations above were performed using unrounded numbers). Without inflating the charges and adding charges for the device to the standardized case-weighted charge per case, the applicant determined that the standardized case-weighted charge per case exceeds the average case-weighted threshold amount.

    Because the MedPAR analysis identified only a few cases, the applicant provided additional charge data to demonstrate it would meet the cost criterion. The applicant explained that patients who receive the MAGECsupreg Spine technology have an average length of stay of 5 days in the hospital. To compute the average implantation procedure costs for the MAGECsupreg Spine, the applicant used FY 2015 MedPAR data and determined average implantation procedure costs for MS-DRGs 456, 457, and 458 of $40.932. The applicant noted that 20 percent of cases use a single rod while 80 percent of cases use a dual rod. The applicant then computed an average weighted cost of $43,049 for single and dual rod construct of the device (which includes costs for pedicle and rod screws and hooks as well as some connectors). This resulted in a subtotal of total costs of $83,981 ($40.932 + $43,049). The applicant then deducted $13,845 for total costs related to the previous technology (costs for TGR). This resulted in total costs of $70,136 related to the MAGECsupreg Spine ($83,981 - $13,845). To convert the total costs to charges, the applicant applied divided the total costs of $70,136 by the national average implantable device CCR of 0.337 from the FY 2016 IPPS/LTCH PPS final rule (80 FR 49429) which resulted in total charges of $208,119. Because the total charges for the MAGECsupreg Spine technology of $208,119 exceed the average case-

    weighted threshold amount of $170,061, the applicant maintained that the MAGECsupreg Spine technology meets the cost criterion.

    Response: We thank the applicant for providing these further analyses. We agree that the applicant has demonstrated that the MAGECsupreg Spine technology meets the cost criterion.

    With regard to substantial clinical improvement, the applicant stated that use of the MAGECsupreg Spinal Bracing and Distraction System significantly improves clinical outcomes for the pediatric patient population with spinal deformities when compared to technologies and treatment options that employ TGRs by decreasing the number of subsequent surgeries and potential adverse effects following implantation. The applicant provided results from a study,\4\ which demonstrated that patients receiving treatment using the magnetically controlled growth rods (MCGR) system had 57 fewer surgeries as a whole than those patients receiving treatment options using TGRs. According to the applicant, the results further projected decreased rates of infection and attendant costs because the need for additional distraction (lengthening) surgeries is eliminated. In addition, the applicant stated that 1,500 patients located around the world have been successfully treated with the use of this technology. The applicant indicated that the results from another study \5\ cited the following qualitative outcomes: minimal surgical scarring, decreased psychological distress and improved quality of life, improved pulmonary function tests (PFTs), and capabilities to continuously monitor neurological behaviors because the patient is not exposed to anesthesia during follow-up distractions.

    ---------------------------------------------------------------------------

    \4\ Akbarnia BA, Cheung K, Noordeen H et al. Traditional rods versus magnetically controlled growing rods in early onset scoliosis: a case-matched two year study. 2013.

    \5\ Cheng, KMC, Cheung JPY, Damartzis, D, Mak, KC, Wong, WYC, Akbaria, BA, Luk KDK. Magnetically controlled growing rods for sever spinal curvature in young children. A prospective study. Lancet 379 (830) 26 May-1 June 2012, pp. 1967-1974.

    ---------------------------------------------------------------------------

    We stated in the proposed rule (81 FR 25042) that we were concerned that the applicant's assertions that the MAGECsupreg Spine technology leads to significantly better clinical outcomes; specifically, decreased rates of infection, when compared to treatment options that use TGRs has not been shown by the results of the studies provided. The results of the studies provided did not compare rates of infection for patients receiving treatment using the MAGECsupreg Spine versus patients receiving treatment using TGRs or other spinal growth rods. Also, as previously mentioned, there are

    Page 56891

    other currently available technologies and devices such as the Shilla growth guidance system that also achieve the same therapeutic outcome and do not require the patient to be subjected to the potential and adverse effects of additional surgery. Therefore, we stated that we were concerned that the MAGECsupreg Spine may not represent a substantial clinical improvement over existing technologies. We also invited public comments on whether the MAGECsupreg Spine meets the substantial clinical improvement criterion.

    Comment: The applicant submitted public comments that responded to our concerns presented in the proposed rule with regard to substantial clinical improvement. The applicant provided studies which showed frequency of spinal lengthening improves thoracic-sacral spinal growth. The applicant also provided studies which showed improved spinal curve correction, increased spinal height, and decreased complications with the MAGECsupreg Spine when compared to traditional growth rods.

    The applicant maintained that treatment goals for Early Onset Scoliosis (EOS) are not limited to controlling curvature and increasing height, but also include the avoidance of surgical and nonsurgical complications. Specifically, these additional goals include minimizing complications, procedures, hospitalizations, and family burden. The applicant asserted that the use of the MAGECsupreg Spine system achieves curve correction, increases patient height, results in fewer surgeries/hospitalizations (as compared to TGRs) which leads to fewer complications and better outcomes in a fragile and vulnerable patient population through reduced exposure to anesthesia,\6\ reduced exposure to radiation, reduced negative psychosocial outcomes,\7\ reduced infections risk due to fewer surgeries,\8\ and improved lung development and weight gain.

    ---------------------------------------------------------------------------

    \6\ Matsumoto, W.E., Abnormal psychological scores are observed in patients with EOS. The at-risk patients are younger at the time of their initial scoliosis surgery and the number of repetitive surgeries. Journal of Pediatric Orthopedics, 2014, pp. 172-182.

    \7\ Flynn, E., Psychological Dysfunction in Children Who Require Repetitive Surgery for Early Onset Scoliosis. Journal of Pediatric Orthopedics, 2014, pp. 594-599.

    \8\ Kabirian, et al., Deep Surgical Site Infection Following 2344 Growing-Rod Procedures for Early-Onset Scoliosis: Rick Factors and Clinical Consequences, Journal of Bone and Joint Surgery, 2014, pp. 2739-2744.

    ---------------------------------------------------------------------------

    Several commenters indicated improvements in clinical outcomes and decreased morbidity in this patient population. Other commenters who were parents with children who have converted to the MAGECsupreg rods from traditional growth rods and body casts considered the MAGECsupreg rods the best option to eliminate pain and hospitalization. Several other commenters supported approval of new technology add-on payment for the MAGECsupreg Spine System.

    Response: We appreciate the commenters' support and comments addressing our concerns. We agree that the MAGECsupreg Spine represents a substantial clinical improvement over existing technologies because it avoids surgical complications. Specifically, the MAGECsupreg Spine rods can be nonsurgically lengthened, eliminating the need for subsequent surgical intervention for revision.

    After consideration of the public comments we received, we have determined that the MAGECsupreg Spinal Bracing Distraction system meets all of the criteria for approval of new technology add-on payments for FY 2017. Cases involving the MAGECsupreg Spinal Bracing Distraction system that are eligible for new technology add-on payments will be identified by the ICD-10-PCS procedure codes XNS0032, XNS0432, XNS3032, XNS3432, XNS4032, and XNS4432. With the new technology add-on payment application, the applicant stated that the total operating cost of the MAGECsupreg Spine is $17,500 for a single rod and $35,000 for a dual rod. It is historical practice for CMS to make the new technology add-on payment based on the average cost of the technology and not the maximum. For example, in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53358), we approved new technology add-on payments for DIFICIDTM based on the average dosage of 6.2 days rather than the maximum 10 day dosage. As noted above, 20 percent of cases use a single rod while 80 percent of cases use a dual rod. As a result, the weighted average cost for a single and dual MAGECsupreg Spine is $31,500 (((0.2 * $17,500) + (0.8 * $35,000))). We note that the costs for pedicle and rod screws and hooks as well as some connectors are not unique to the MAGECsupreg Spine as these components are generic to TGR. Therefore, they are not considered new and are not included in the costs above. Under Sec. 412.88(a)(2), new technology add-on payments are limited to the lesser of 50 percent of the average cost of the device or 50 percent of the costs in excess of the MS-DRG payment for the case. As a result, the maximum new technology add-on payment for a case involving the use of the MAGECsupreg Spinal Bracing Distraction system is $15,750 for FY 2017.

  249. MIRODERM Biologic Wound Matrix (MIRODERM)

    Miromatrix Medical, Inc. submitted an application for new technology add-on payments for FY 2017 for MIRODERM. MIRODERM is a non-

    crosslinked acellular wound matrix that is derived from the porcine liver and is processed and stored in a phosphate buffered aqueous solution. MIRODERM is clinically indicated for the management of wounds, including: Partial and full-thickness wounds, pressure ulcers, venous ulcers, chronic vascular ulcers, diabetic ulcers, trauma wounds, drainage wounds, and surgical wounds. Typical decellularization where tissues are immersed in a decellularization solution is a diffusion-

    based process, and thereby limits the ability to fully decellularize thick, complex tissues such as the liver. MIRODERM uses a perfusion decellularization process that rapidly removes cellular material while maintaining the native architecture, vasculature and tissue structure. Following decellularization, MIRODERM is isolated from partial thickness liver sections following slight compression of the liver. This allows for the retention of the native liver structure, including the vasculature, within MIRODERM. The applicant noted that the MIRODERM is the only acellular skin substitute product that is derived from the liver.

    According to the applicant, MIRODERM is positioned to completely contact the entire surface of the wound bed and extend slightly beyond all wound margins. As required, it is securely anchored to the wound site with a physician's preferred fixation method. An appropriate, primary non-adherent wound dressing is then applied over the MIRODERM matrix. A secondary dressing (multi-layer compression bandage system), total contact cast, or other appropriate dressing that will manage the wound exudate should be applied in order to keep the MIRODERM matrix moist and keep all layers securely in place. Additional applications of MIRODERM are applied as needed until the wound closes.

    MIRODERM received FDA clearance for its use on January 27, 2015. The applicant submitted a request for an unique ICD-10-PCS procedure code and was granted approval for the following code: XLRPXL2 (Replacement of Skin using Porcine Liver Derived Skin Substitute, External Approach, New Technology Group 2). The new

    Page 56892

    code is effective on October 1, 2016 (FY 2017).

    Comment: One commenter asserted that an unique ICD-10-PCS procedure code for procedures involving the use of the MIRODERM is not necessary because the use of this product should coincide with the same coding used for all cellular and/or tissue-based products (CTPs).

    Response: As noted above, an unique ICD-10-PCS procedure code was created for procedures involving the use of the MIRODERM in Section ``X'' of the ICD-10-PCS codes. As discussed in the FY 2016 IPPS/LTCH final rule (80 FR 49434), Section ``X'' of the ICD-10-PCS was created to identify and describe new technologies and medical services for purposes of new technology, or that capture other new technologies that are not currently classified within the ICD-10-PCS. The Section ``X'' codes identify new medical services and technologies that are not usually captured by coders, or that do not usually have the desired specificity within the current ICD-10-PCS structure required to capture the use of these new services and technologies. We believe that the issuance of a unique ICD-10-PCS procedure code in Section ``X'' of the ICD-10-PCS for procedures involving the use of the MIRODERM is an example of why we created Section ``X.''

    As discussed earlier, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ``new'' for purposes of new technology add-on payments.

    With regard to the first substantial similarity criterion, whether the product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant stated in its application that current wound healing therapies are provided in several different modalities, which include hyperbaric oxygen treatment, negative wound pressure therapy, and treatment with other bioengineered skin substitute products. The applicant noted that other products that have been commonly used for similar procedures are Oasis Wound Matrix, Primatrix Dermal Repair, and Theraskin. The applicant asserted that MIRODERM is different from these other products because it is the only product sourced from porcine liver and undergoes a unique, patented process of perfusion decellularization that rapidly removes cellular material, while maintaining the native architecture, vasculature and tissue structure. The applicant explained that MIRODERM is isolated from partial thickness liver sections following slight compression of the liver, which allows for the retention of the native liver structure, including the vasculature, within MIRODERM. The applicant stated that partial thickness allows for one surface of MIRODERM to retain the native liver capsule (an epithelial basement membrane) and the other opposite surface to be comprised of open liver matrix. The applicant further stated that case studies of the MIRODERM demonstrated accelerated healing, which is likely the result of the unique perfusion decellularization technology that retains a 3-dimensional extracellular matrix that includes the vasculature.

    With regard to the first criterion, similar to other current wound matrix treatments, the MIRODERM uses a collagen matrix for tissue repair and regeneration. Therefore, we stated in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25042) that we were concerned that MIRODERM employs the same mechanism of action as other wound matrix treatments. Although the applicant had described how the MIRODERM differs from other wound matrix treatments due to the perfusion decellularization process, and is the first product that is derived from the porcine liver, we stated that we believe that the mechanism of action of MIRODERM may be substantially similar or the same as those employed by other wound treatment matrixes. With regard to the second criterion, whether a product is assigned to the same or a different MS-DRG, cases that may be eligible for treatment using MIRODERM map to the same MS-

    DRGs as other currently approved or cleared wound treatment matrixes. With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, MIRODERM is used to treat the same patient population as other currently approved or cleared wound treatment matrixes. Because it appeared that the MIRODERM may be substantially similar to currently approved or cleared wound treatment matrixes, we stated that we were concerned the technology may not be considered ``new'' for the purposes of new technology add-on payments. We also invited public comments on whether MIRODERM meets the newness criterion in the proposed rule.

    Comment: The applicant commented that, by definition, the native tissue reaction to liver tissue compressed into a biologic mesh will be different than other highly processed tissue sources. According to the applicant, the ``gentleness'' of the unique and patent-protected perfusion decellularization process results in a fully intact decellularized liver matrix, complete with a mix of proteins not contained in matrices decellularized by other means. The applicant further stated that the remaining large vascular structures in the perfusion decellularized liver matrix provide an entirely new and enhanced conduit for revascularization and remodeling.

    The applicant noted that MIRODERM is the only wound matrix derived from the porcine liver utilizing perfusion decellularization technology, which has been highly published by numerous leading academic institutions for its ability to decellularize the whole liver while retaining the native architecture and vasculature. The applicant stated that preclinical studies have demonstrated the importance of the preexisting vasculature in cellular migration into the matrix and subsequent revascularization. The vascular density within liver tissue far exceeds that of other tissues that are used to derive acellular skin substitutes including dermis, urinary bladder, pericardial sac and small intestine submucosa. For these reasons, the applicant believed that MIRODERM is unique compared to other currently approved wound treatment matrixes.

    One commenter stated that MIRODERM is substantially similar to existing wound matrix treatments because it supplies the wound bed an extracellular matrix (ECM). According to the commenter, treatments using an acellular matrix closely resemble native ECM. The commenter explained the following with regard to wound matrix treatments: While the ECM may act as a scaffold for matrix metalloproteinase (MMPs) to bind to and break down collagen in the product, epithelial cells, fibroblasts and vascular endothelial cells will migrate into the wound and proliferate; having reduced levels of MMPs to be released back into the wound as the collagen matrix breaks down, the ECM rebalances the protease and growth factor levels in the wound, thus allowing wound to heal.

    The commenter stated that the source of skin wound matrix treatments is collagen and the only difference between MIRODERM and other wound matrix treatments is the source of the ECM. The commenter noted that recent skin wound matrix products such as Kerecis, an intact fish skin that is rich in naturally occurring Omega3 polyunsaturatedfatty acids and is used to regenerate damaged human tissue, have been approved for use in the treatment of chronic wounds. According to the commenter, when grafted onto

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    damaged human tissue, such as a diabetic ulcer, the acellular material recruits the body's cells from the wound perimeter and these cells are then incorporated into the fish skin, which is ultimately converted into functional, living tissue. The commenter explained that fish skin structure resembles the native structure of human skin and studies have shown that cells and stem cells proliferate faster in this structure than in other materials such amnion-membrane and other mammalian-

    sourced materials.

    Response: After consideration of the public comments we received, we believe that MIRODERM's mechanism of action is similar to other acellular skin substitutes currently available for wound healing. We note that MIRODERM provides a scaffold of collagen with a mix of matrix proteins, both of which are similar to other acellular skin substitutes. Therefore, although the applicant asserted that MIRODERM's matrix proteins are different from the proteins found in other acellular skin substitutes, the mechanism of wound healing carried out by the body in the presence of the acellular substitutes is the same. We note that the applicant also indicated that the remaining large vascular structures in the perfusion decellularized liver matrix provide an entirely new and enhanced conduit for revascularization and remodeling. However, the applicant did not provide any data illustrating that MIRODERM's acellular porcine liver skin substitute is a conduit for revascularization and remodeling. Therefore, we are unable to verify the applicant's assertion.

    We believe that the MIRODERM is substantially similar to currently approved or cleared wound treatment matrixes because it meets all three of the criteria identified above and, therefore, does not meet the newness criterion. Therefore, because the MIRODERM is not considered ``new,'' it is not eligible for new technology add-on payments for FY 2017.

    With regard to the cost criterion, the applicant conducted the following analysis. The applicant began by researching the 2014 Medicare Inpatient Hospital Standard Analytical File (SAF) file for cases primarily associated with dermal regenerative grafts that may be eligible for treatment using MIRODERM. The applicant searched for claims that reported ICD-9-CM procedure code 86.67 (Dermal regenerative graft) that mapped to one of the following MS-DRGs: 463, 464, and 465 (Wound Debridement and Skin Graft Except Hand for Musculoskeletal System and Connective Tissue Disorders with MCC, with CC, or without CC/MCC, respectively); 573, 574, and 575 (Skin Graft for Skin Ulcer or Cellulitis with MCC, with CC, or without CC/MCC, respectively); 576, 577, and 578 (Skin Graft Except for Skin Ulcer or Cellulitis with MCC, with CC, or without CC/MCC, respectively); 622, 623, and 624 (Skin Grafts and Wound Debridement for Endocrine, Nutritional and Metabolic Diseases with MCC, with CC or without CC/MCC, respectively); and 904 and 905 (Skin Grafts for Injuries with CC/MCC or without CC/MCC, respectively). As a result, the applicant identified 1,130 cases across the MS-DRGs listed, which resulted in an average case-weighted charge per case of $83,059.

    Included in the average case-weighted charge per case were charges for other previously used dermal regenerative grafts. According to the applicant, the MIRODERM would replace the need for other dermal regenerative grafts and, therefore, the applicant removed charges related to the use of other currently used dermal regenerative grafts from the average case-weighted charge per case. Specifically, using the January 2016 CMS Part B Drug Pricing File, the applicant first computed an average cost per square centimeter for currently used dermal regenerative grafts (Apligraf $31.207/cm\2\, Oasis $10.676/cm\2\, Integra DRT $21.585/cm\2\, Dermagraft $32.858/cm\2\, Integra skin substitute $35.627/cm\2\, Primatrix $37.590/cm\2\, and Theraskin $38.474/cm\2\), which equaled $29.72/cm\2\. To determine the average amount of square centimeters of the other dermal regenerative grafts used for each case within the MS-DRG, given the vast complexity and variation in wounds, the applicant used clinical judgment based on experience, observation and typical sizes and depths of wounds that would present on different parts of the body. For an example, wounds on the hand would typically be smaller than those located on the lower extremities. The applicant also assumed that other dermal regenerative grafts would require three applications to close a wound as opposed to treatment using MIRODERM, which requires only two applications. Based on this assumption, the applicant noted that it assumed that the first application required 100 percent of the amount of skin substitute required to treat the original wound area, the second application required 70 percent, and the third application required 40 percent, totaling 210 percent. To compute the total amount of square centimeters used for each case within the MS-DRG, the applicant multiplied this percentage (210 percent) by the amount of square centimeters used for the first application for each case within the MS-DRG. The applicant then multiplied the average cost of the other previously used dermal regenerative grafts ($29.72/cm\2\) by the average amount of centimeters used for each case within the MS-DRG to determine the average cost of the other previously used dermal regenerative grafts for each case within the MS-DRG. To convert the costs to charges, the applicant computed an average CCR for each MS-DRG using CCRs from the FY 2014 Standardizing File of the hospitals indicated on each of the claims for each case within the MS-DRG. The applicant then divided the average cost of the other previously used dermal regenerative grafts for each MS-DRG by the average CCR for each MS-DRG to determine the average charges of the other previously used dermal regenerative grafts for each MS-DRG. The applicant also reduced the charges for the number of days of hospitalization by 30 percent because the applicant believed that MIRODERM heals patients faster than the other currently used dermal regenerative grafts, resulting in a reduction in the average lengths of stay. The applicant then deducted the charges related to the other previously used dermal regenerative grafts and the charges for the reduction in the average lengths of stay from the average case-

    weighted charge per case and then standardized the charges, which resulted in an average standardized case-weighted charge per case of $34,279. The applicant then inflated the average standardized case-

    weighted charge per case by 7.7 percent, the same inflation factor used by CMS to update the FY 2016 outlier threshold (80 FR 49784).

    After inflating the charges, it was necessary to add the associated charges for the use of MIRODERM. The applicant conducted a similar calculation to compute the charges for MIRODERM. Specifically, the applicant used clinical judgment based on experience, observation, and typical sizes and depths of wounds that would be present on different parts of the body. The applicant stated that because MIRODERM has shown greater efficacy in wound closure based on their case series, the applicant modeled for only two applications with 50 percent closure of the wound after the first application and full closure of the wound after the second application. Based on this assumption, the applicant noted that it assumed that the first application required 100 percent of the

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    amount of skin substitute required to treat the original wound area and the second application required 50 percent, totaling 150 percent. To compute the total amount of square centimeters used for each MS-DRG, the applicant multiplied this percentage (150 percent) by the amount of square centimeters used for the first application for each MS-DRG. The applicant then multiplied the cost per square centimeter for MIRODERM by the average amount of centimeters used for each case within the MS-

    DRG to determine the average cost of MIRODERM grafts used for each MS-

    DRG. Similar to above, to convert the costs to charges, the applicant used the same average CCRs for each MS-DRG and divided the average cost of MIRODERM for each MS-DRG by the average CCR for each MS-DRG to determine the average charges of MIRODERM for each MS-DRG. The applicant then added charges related to the use of MIRODERM to the inflated average standardized charges and determined a final inflated average standardized case-weighted charge per case of $94,009. Using the FY 2016 IPPS Table 10 thresholds, the average case-weighted threshold amount was $67,559 (all calculations above were performed using unrounded numbers). Because the final inflated average standardized case-weighted charge per case exceeds the average case-

    weighted threshold amount, the applicant maintained that the technology meets the cost criterion.

    We invited public comments on whether the MIRODERM technology meets the cost criterion in the proposed rule.

    Comment: One commenter stated that the evaluation of the cost criterion using the average standardized case-weighted threshold amount to determine cost savings is not unique to the MIRODERM.

    Response: We are not certain what the commenter is referring to with regard to the evaluation of the cost criterion for this technology because the criterion measures and determines whether a new technology is inadequately paid, but does not measure or determine cost savings. Based on the applicant's analysis, it appears that the MIRODERM meets the cost criterion. However, because we believe that the MIRODERM is substantially similar to other wound treatment matrixes for the reasons discussed earlier and, therefore, does not meet the newness criterion, it is not eligible for new technology add-on payments.

    With regard to substantial clinical improvement, the applicant believed that the technology represents a substantial clinical improvement over existing technologies because patients treated with the MIRODERM for complicated wounds heal quicker and avoid additional surgeries. To demonstrate that the technology meets the substantial clinical improvement criterion, the applicant submitted the results of two actual case studies of a complicated wound from necrotizing fasciitis that was treated with the MIRODERM. According to the applicant, one case study involved a complicated wound that would typically be treated with a diverting colostomy. The applicant noted that that the patient was discharged with intact anoplasty and good sphincter control after 35 days and four applications for MIRODERM. The applicant further stated that the use of MIRODERM demonstrated rapid healing and likely avoided at least two major debilitating surgeries, as well as the emotional and physical impact of a colostomy for 3 to 6 months. In the second case study, according to the applicant, the attending physician estimated the wound would likely take greater than 90 days to close using traditional wound care matrixes. The applicant stated that after 12 days and two applications of MIRODERM the patient was discharged and after 21 days the wound was sutured closed.

    The applicant noted that additional patients have been treated with MIRODERM. According to the applicant, given the recent product launch, the case studies have not been completed, but similar results have been communicated to the applicant.

    We stated in the proposed rule (81 FR 25044) that we were concerned that the clinical data the applicant submitted is from a very small sample with no comparisons to other currently approved wound treatment matrixes. Specifically, the applicant submitted data from only two case studies. Also, the applicant compared the use of MIRODERM to the use of other treatments, such as diverting colostomy. While MIRODERM may represent an improvement in treatment options compared to the other treatment options such as diverting colostomy, we stated that we were unable to determine if use of MIRODERM represents a substantial clinical improvement when compared to other wound treatment matrixes of other currently approved treatments. We invited public comments on whether MIRODERM meets the substantial clinical improvement criterion in the proposed rule.

    Comment: The applicant submitted additional clinical data, including a case series of seven additional cases that were selected to receive MIRODERM as a treatment for diabetic foot ulcers (DFU). The commenter noted the following: the duration of the preexisting chronic wound prior to MIRODERM treatment ranged from 5 to 48 months and 3 of the 6 patients in the evaluation healed after treatment with MIRODERM within the 12-week study duration. The applicant stated that the results obtained by case series demonstrated a 50-percent closure rate of hard to heal DFUs that had previously failed advanced biologic wound care treatment.

    The commenter also submitted one additional case study that had been submitted for presentation at a national wound conference. The patient was a 54-year old male that sustained a myocardial infarction in November 2015. This necessitated a coronary artery bypass graft surgical procedure. A major postoperative complication of the CABG procedure was bilateral pulmonary embolism with respiratory failure. The patient also developed bilateral lower extremity deep venous thrombosis and initiated Heparin therapy. This triggered a Heparin induced thrombocytopenia resulting in bilateral forefoot gangrene and bilateral lower extremity compartment syndrome.

    The commenter noted the following: The patient underwent an open transmetatarsal (TMA) of the left forefoot and extensive skin and deep tissue of the plantar foot extending to the distal heel; the wound remained open due to a lack of appropriate plantar soft tissue coverage with exposed muscle and bone; local wound care consisted of negative pressure wound therapy (NPWT) initially which was discontinued due to severe pain; enzymatic debridement with local wound care continued until the initial application of a perfusion decellularized porcine hepatic wound matrix. The patient was healed to a functional outcome.

    The commenter further stated that, with regard to perfusion decellularization technology, the MIRODERM encompasses a method to decellularize and recellularize whole or partial organs and tissues. The commenter explained that the technology is based on a proprietary method for removing all cells, while maintaining a non-cellular (called extracellular) matrix or scaffold with its original architecture, mechanical properties, and a vascular network capable of maintaining physiological pressures. The commenter noted that the most widely recognized method of removing cells in use today is ``immersion decellularization,'' in which an organ is soaked in a vat of

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    harsh detergent, which migrates from the outer surface inward and then back out once the cells are dissolved. The commenter stated that this method damages the organ capsule through mechanical or enzymatic methods, and the cells within the organ begin to break down before being exposed to the detergent, releasing various enzymes that also degrade the surrounding scaffold with the end result a partially degraded scaffold with a compromised vascular network and an outer organ capsule that will not maintain physiological pressures when tested. The commenter further stated that cells will no longer recognize this degraded scaffold as the appropriate environment in which to become functional.

    The commenter added that perfusion decellularization technology is in contrast to immersion decellularization and overcomes the hurdles of immersion by facilitating rapid access to the whole organ through the native vasculature by cannulating the vasculature and perfusing (running) a mild detergent solution through the native blood vessels, as opposed to immersing the organ. The commenter stated that scaffolds created with this technology are capable of receiving and incorporating a variety of cell types, depending on the organ scaffold utilized. Moreover, the commenter believed that as cell type discovery continues to grow, the fact that scaffolds created with this technology are of a natural biological design make them an ideal template to support the growth and differentiation of stem cells into functional tissues, organs and bioidentical test beds.

    One commenter stated that there are other CTPs with substantiated evidence of a randomized clinical trial that also demonstrate healing in one or two applications (GraftJacket and DermACELL). Additionally, the commenter stated there has been no published randomized clinical trial regarding the use of the MIRODERM in the treatment of chronic wound applications. The commenter concluded that citing two case studies, one involving a diverting colostomy, is not sufficient evidence.

    Response: We appreciate the commenters' input. However, because we believe that the MIRODERM is substantially similar to other wound treatment matrixes for the reasons discussed earlier and, therefore, does not meet the newness criterion, it is not eligible for new technology add-on payments.

  250. Idarucizumab

    Boehringer Ingelheim Pharmaceuticals, Inc. submitted an application for new technology add-on payments for FY 2017 for Idarucizumab; a product developed as an antidote to reverse the effects of PRADAXAsupreg (Dabigatran), which is also manufactured by Boehringer Ingelheim Pharmaceuticals, Inc. (We note that the applicant submitted an application for new technology add-on payments for FY 2016, but failed to obtain FDA approval prior to the July 1 deadline.) Dabigatran is an oral direct thrombin inhibitor currently indicated to: (1) Reduce the risk of stroke and systemic embolism in patients who have been diagnosed with nonvalvular atrial fibrillation (NVAF); (2) treat deep venous thrombosis (DVT) and pulmonary embolism (PE) in patients who have been administered a parenteral anticoagulant for 5 to 10 days; and (3) reduce the risk of recurrence of DVT and PE in patients who have been previously diagnosed with NVAF. Currently, unlike the anticoagulant Warfarin, there is no specific way to reverse the anticoagulant effect of Dabigatran in the event of a major bleeding episode.

    Idarucizumab is a humanized fragment antigen binding (Fab) molecule, which specifically binds to Dabigatran to deactivate the anticoagulant effect, thereby allowing thrombin to act in blood clot formation. The applicant stated that Idarucizumab represents a new pharmacologic approach to neutralizing the specific anticoagulant effect of Dabigatran in emergency situations. Idarucizumab was approved by the FDA on October 16, 2015. The applicant noted that Idarucizumab is the only FDA-approved therapy available to neutralize the anticoagulant effect of Dabigatran. Before the FDA approval of Idarucizumab, the approach for the management of the anticoagulant effect of Dabigatran prior to an invasive procedure was to withhold administration of Dabigatran, when possible, for a certain duration of time prior to the procedure to allow sufficient time for the patient's kidneys to flush out the medication. The duration of time needed to flush out the medication prior to the surgical procedure is based on the patient's kidney function. According to the applicant, if surgery cannot be delayed to allow the kidneys the necessary time to flush out the traces of Dabigatran, there is an increased risk of bleeding.

    Based on the FDA indication for Idarucizumab, the product can be used in the treatment of patients who have been diagnosed with NVAF and administered Dabigatran to reverse life-threatening bleeding events, or who require emergency surgery or medical procedures and rapid reversal of the anticoagulant effects of Dabigatran is necessary and desired. The applicant received a unique ICD-10-PCS procedure code that became effective October 1, 2015. The approved procedure code is XW03331 (Introduction of Idarucizumab, Dabigatran reversal agent into central vein, percutaneous approach, New Technology Group 1). We invited public comments on whether Idarucizumab meets the newness criterion in the proposed rule.

    Comment: Several commenters stated that there is currently no other reversal agent on the U.S. market for patients who are being treated with Dabigatran and experience severe bleeding.

    The applicant submitted public comments reiterating its assertion that Idarucizumab satisfies the newness criterion. The applicant emphasized that Idarucizumab was developed as a specific reversal agent to Dabigatran, an anticoagulant that works by directly inhibiting thrombin, thereby blocking the final step of the coagulation cascade. The applicant further defined the potential adverse effects of anticoagulant therapy and the increased risk of bleeding that may be life-threatening or fatal which may require emergent medical and surgical procedures and the need for rapid reversal of an anticoagulation to perform the procedure in a timely manner. The applicant reiterated that Idarucizumab was developed as a specific reversal agent to Dabigatran, and that Idarucizumab was granted FDA approval on October 16, 2015.

    Response: We appreciate the details and input provided by the commenters and the applicant on whether Idarucizumab meets the newness criterion. After review of the information provided by the applicant and consideration of the public comments we received, we believe that Idarucizumab meets the newness criterion and we consider the technology to be ``new'' as of October 16, 2015, when the technology received FDA approval.

    With regard to the cost criterion, in the proposed rule, we noted that the applicant conducted two analyses. The applicant began by researching claims data in the FY 2014 MedPAR file for cases that may be eligible for Idarucizumab using a combination of ICD-9-CM diagnosis and procedure codes. Specifically, the applicant searched the database for cases

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    reporting anticoagulant therapy diagnosis code E934.2 (Agents primarily affecting blood constituents, anticoagulants) or V58.61 (Long-term (current) use of anticoagulants) in combination with either current standard of care procedure code 99.03 (Other transfusion of whole blood), 99.04 (Transfusion of packed cells), 99.05 (Transfusion of platelets), 99.06 (Transfusion of coagulation factors), 99.07 (Transfusion of other serum), or 39.95 (Hemodialysis), and Dabigatran indication diagnosis code 427.31 (Atrial fibrillation), 453.40 (Acute venous embolism and thrombosis of unspecified deep vessels of lower extremity), 453.41 (Acute venous embolism and thrombosis of deep vessels of proximal lower extremity), 453.42 (Acute venous embolism and thrombosis of deep vessels of distal lower extremity), 453.50 (Chronic venous embolism and thrombosis of unspecified deep vessels of lower extremity), 453.51 (Chronic venous embolism and thrombosis of deep vessels of proximal lower extremity), 453.52 (Chronic venous embolism and thrombosis of deep vessels of distal lower extremity), 415.11 (Iatrogenic pulmonary embolism and infarction), 415.12 (Septic pulmonary embolism), 415.13 (Saddle embolus of pulmonary artery), 415.19 (Other pulmonary embolism and infarction), 416.2 (Chronic pulmonary embolism), V12.51 (Personal history of venous thrombosis and embolism), or V12.55 (Personal history of pulmonary embolism).

    To further target potential cases that may be eligible for Idarucizumab, the applicant also excluded specific cases based on Dabigatran contraindications, including all cases representing patients who have been diagnosed with chronic kidney disease (CKD) stage V (diagnosis code 585.5), end-stage renal disease (diagnosis code 585.6), prosthetic heart valves (diagnosis code V43.3), and cases representing patients who have been diagnosed with both CKD stage IV (diagnosis code 585.4) and either DVT or PE (using the same ICD-9-CM diagnosis codes listed above). As a result, the applicant identified 84,224 cases that mapped to 684 MS-DRGs. The applicant standardized the charges and computed an average standardized case-weighted charge per case of $60,089.

    The applicant then identified hospital charges potentially associated with the current treatments to reverse anticoagulation, specifically charges associated with pharmacy services, dialysis services, and laboratory services for blood work. Due to limitations associated with the claims data, the applicant was unable to determine the specific drugs used to reverse anticoagulation and if these cases represented patients who required laboratory services for blood work or dialysis services unrelated to the reversal of anticoagulation. Therefore, the applicant subtracted 40 percent of the charges related to these three categories from the standardized charge per case, based on the estimation that the full amount of charges associated with these services would not be incurred by hospitals when Idarucizumab is administered for use in the treatment of patients who have been diagnosed with NVAF and Dabigatran is administered during treatment. The applicant then inflated the standardized charge per case by 7.665 percent, the same inflation factor used by CMS to update the FY 2016 outlier threshold (80 FR 49784) and added charges for Idarucizumab. This resulted in an inflated average standardized case-weighted charge per case of $67,617. Using the FY 2016 IPPS Table 10 thresholds, the average case-weighted threshold amount across all 684 MS-DRGs is $55,586 (all calculations above were performed using unrounded numbers). Because the inflated average standardized case-weighted charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion under this analysis.

    Further, the applicant conducted an additional analysis using the same data from the FY 2014 MedPAR file and variables used in the previous analysis. However, instead of using potentially eligible cases that mapped to 100 percent of the 684 MS-DRGs identified, the applicant used potentially eligible cases that mapped to the top 75 percent of the 684 MS-DRGs identified. By applying this limitation, the applicant identified 63,033 cases that mapped to 87 MS-DRGs. The applicant computed an inflated average standardized case-weighted charge per case of $55,872. Using the FY 2016 IPPS Table 10 thresholds, the average case-weighted threshold amount across all 87 MS-DRGs is $63,323 (all calculations above were performed using unrounded numbers). Because the inflated average standardized case-weighted charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology also meets the cost criterion under this analysis. We invited public comments regarding the applicant's analyses with regard to the cost criterion in the proposed rule.

    Comment: The applicant submitted public comments reiterating its costs analysis results. According to the applicant, the standardized case-weighted charge per case exceeds the average case-weighted threshold for Idarucizumab. The applicant stated that CMS' summary in the proposed rule did not accurately reflect the analysis submitted by the applicant with its application. Specifically, the applicant stated that, with regard to the analysis cases that mapped to the top 75 percent of the 684 MS-DRGs identified, CMS listed the inflated average standardized case-weighted charge per case as $55,872 and the average case-weighted threshold amount across all 87 MS-DRGs as $63,323. The commenter stated that the inflated average standardized case-weighted charge per case should have been $63,323 and the average case-weighted threshold amount across all 87 MS-DRGs should have been $52,753.

    Response: We agree with the applicant that we inadvertently listed the wrong amounts in the proposed rule. The amounts listed above by the applicant are indeed the correct amounts. Under both analyses provided by the applicant, the inflated average standardized case-weighted charge per case exceeds the average case-weighted threshold amount. Therefore, we agree that Idarucizumab meets the cost criterion.

    With regard to substantial clinical improvement, according to the applicant, aside from Idarucizumab, there are no other FDA-approved antidotes to reverse the anticoagulant effects of Dabigatran. Management of the treatment of patients who have been diagnosed with NVAF and administered Dabigatran and experience bleeding may often include supportive care such as Hemodialysis and the use of fresh frozen plasma, blood factor products such as prothrombin complex concentrates (PCC), activated prothrombin complex concentrates, and recombinant factor VIIa or delayed intervention. Protamine sulfate and Vitamin K are typically used to reverse the effects of Heparin and Warfarin, respectively. However, due to the mechanism of action in Dabigatran, the applicant maintained that the use of protamine sulfate and Vitamin K may not be effective to reverse the anticoagulant effect of Dabigatran.

    The applicant provided information regarding the management of major bleeding events experienced by patients who were administered Dabigatran and Warfarin during the RE-LY trial.\9\

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    During this study, most major bleeding events were only managed by supportive care. Patients who were administered 150 mg of Dabigatran were transfused with pack red blood cells more often when compared to patients who were administered Warfarin (61.4 percent versus 49.9 percent, respectively). However, patients who were administered Warfarin were transfused with plasma more often when compared to patients who were administered 150 mg of Dabigatran (30.2 percent versus 21.6 percent, respectively). In addition, the use of Vitamin K in the treatment of patients who were administered Warfarin was more frequent when compared to the frequency of use in the treatment of patients who were administered 150 mg of Dabigatran (27.3 percent versus 10.3 percent, respectively). The use of PCCs, recombinant factor VIIa and other coagulation factor replacements in the treatment of patients who were administered both Warfarin and 150 mg of Dabigatran was minimal, and did not significantly differ in frequency when compared among patients assigned to either group. Hemodialysis was used in a single case.

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    \9\ Healy, et al.: Periprocedural bleeding and thromboembolic events with dabigatran compared with Warfarin: results from the randomized evaluation of long-term anticoagulation therapy (RE-LY) randomized trial, Circulation, 2012; 126:343-348.

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    The applicant reported that, currently, it is recommended that the administration of Dabigatran be discontinued 1 to 2 days (CrCl >= 50 ml/min) or 3 to 5 days (CrCl 11 12 in patients who may have life-threatening bleeding, or require emergency procedures. The applicant noted that published results of the interim data based on 90 patients suggested the following: Reversal of the Dabigatran anticoagulant effect, which was evident immediately after administration; reversal was 100 percent in the first 4 hours and greater than 89 percent of patients achieved complete reversal; hemostasis in 35 patients in Group A was restored at a median of 11.4 hours. Also, the 5 gram dose of Idarucizumab was calculated to reverse the total body load of Dabigatran that was associated with the 99th percentile of the Dabigatran levels measured in the RE-LY trial.

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    \11\ Pollack C, et al. Design and rationale for RE-VERSE AD: A phase 3 study of idarucizumab, a specific reversal agent for dabigatran. Thromb Haemost. 2015 Jul; 114(1):198-205.

    \12\ Pollack C, et al. Idarucizumab for Dabigatran Reversal. N Engl J Med. 2015 Aug 6; 373(6):511-20.

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    The applicant provided safety data from three Phase I studies and interim data from the Phase III study. In the Phase I study, 110 healthy male patients enrolled in the study were administered dosages of Idarucizumab that ranged from 20 mg to 8 grams. In this study, 135 patients received placebo. The applicant reported that adverse events were generally mild in intensity and nonspecific. Healthy human volunteers enrolled in the Phase I study were administered Idarucizumab in dosages of 2 and 4 grams, which resulted in immediate and complete reversal of the anticoagulant effect of Dabigatran that was sustained for several hours. In the Phase III study, five thrombotic events occurred. One occurred 2 days after treatment and the remainder occurred 7, 9, 13, and 26 days after treatment. These patients were not receiving antithrombotic therapy when the events occurred, and complications or adverse effects can be attributed to patients' underlying medical conditions. Twenty-one patients (13 in Group A and 8 in Group B) had a serious adverse event. The most frequently reported adverse reactions in greater than or equal to 5 percent of the patients treated with Idarucizumab were hypokalemia, delirium, constipation, pyrexia, and pneumonia. The applicant concluded that the data from these studies demonstrated that Idarucizumab effectively, safely, and potently reverses the anticoagulant effect of Dabigatran. We invited public comments on whether Idarucizumab meets the substantial clinical improvement criterion in the proposed rule.

    Comment: Several commenters supported the substantial clinical improvement criterion for Idarucizumab. Several commenters stated that, aside from Idarucizumab, the only alternative for anticoagulation reversal in patients being treated with Dabigatran is withholding the drug and observing the patient for bleeding. The commenters noted that this approach is not ideal in the case of severe bleeding when rapid reversal is needed for emergent surgical procedures. The applicant also reiterated its assertion that Idarucizumab satisfies the clinical improvement criterion, citing that prior to the approval of Idarucizumab, patients treated with Dabigatran who experienced severe bleeding were often managed by supportive care alone, such as fluid administration and blood transfusions. The applicant stated that Idarucizumab has been shown to reverse the anticoagulant effect of Dabigatran immediately in patients needing rapid reversal of anticoagulation in emergency situations.

    Response: We appreciate the comments supporting the substantial clinical improvement criterion for Idarucizumab. We agree that Idarucizumab meets the substantial clinical improvement criterion.

    After consideration of the public comments we received, we have determined that Idarucizumab meets all of the criteria for approval of new technology add-on payments. Therefore, we are approving new technology add-on payments for Idarucizumab for FY 2017. Cases involving Idarucizumab that are eligible for new technology add-on payments will be identified by ICD-10-PCS procedure code XW03331.

    In its application, the applicant estimated that the average Medicare beneficiary would require a dosage of 5 grams for Idarucizumab. According to the applicant, the wholesale acquisition cost for one dose is $3,500. Under 42 CFR 412.88(a)(2), we limit new technology add-on payments to the lesser of 50 percent of the average cost of the technology or 50 percent of the costs in excess of the MS-

    DRG payment for the case. As a result, the maximum new technology add-

    on payment amount for a case involving the use of Idarucizumab is $1,750 for FY 2017.

  251. Titan Spine (Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device)

    Titan Spine submitted an application for new technology add-on payments for the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device (the Titan Spine nanoLOCKTM) for FY 2017. The Titan Spine nanoLOCKTM is a

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    nanotechnology-based interbody medical device with a dual acid-etched titanium interbody system used to treat patients diagnosed with degenerative disc disease (DDD). One of the key distinguishing features of the device is the surface manufacturing technique and materials, which produce macro, micro, and nano surface textures. According to the applicant, the combination of surface topographies enables initial implant fixation, mimics an osteoclastic pit for bone growth, and produces the nano-scale features that interface with the integrins on the outside of the cellular membrane. Further, the applicant noted that these features generate better osteogenic and angiogenic responses that enhance bone growth, fusion, and stability. The applicant asserted that the Titan Spine nanoLOCKTM's clinical features also reduce pain, improve recovery time, and produce lower rates of device complications such as debris and inflammation.

    On October 27, 2014, the Titan Spine nanoLOCKTM received FDA clearance for the use of five lumbar interbody devices and one cervical interbody device: The nanoLOCK\TM\ TA-Sterile Packaged Lumbar ALIF Interbody Fusion Device with nanoLOCKTM surface, available in multiple sizes to accommodate anatomy; the nanoLOCK\TM\ TAS-Sterile Packaged Lumbar ALIF Stand Alone Interbody Fusion Device with nanoLOCKTM surface, available in multiple sizes to accommodate anatomy; the nanoLOCK\TM\ TL-Sterile Packaged Lumbar Lateral Approach Interbody Fusion Device with nanoLOCKTM surface, available in multiple sizes to accommodate anatomy; the nanoLOCK\TM\ TO-Sterile Packaged Lumbar Oblique/PLIF Approach Interbody Fusion Device with nanoLOCKTM surface, available in multiple sizes to accommodate anatomy; the nanoLOCK\TM\ TT-Sterile Packaged Lumbar TLIF Interbody Fusion Device with nanoLOCKTM surface, available in multiple sizes to accommodate anatomy and the nanoLOCK\TM\ TC-Sterile Packaged Cervical Interbody Fusion Device with nanoLOCKTM surface, available in multiple sizes to accommodate anatomy. The applicant received FDA clearance on December 14, 2015, for the nanoLOCKTM TCS-Sterile Package Cervical Stand Alone Interbody Fusion Device with nanoLOCKTM surface, available in multiple sizes to accommodate anatomy. The applicant indicated that, due to manufacturing delays, all of the devices above were not available on the market until July 8, 2016. Therefore, the applicant believes that all of the devices above are new as of July 8, 2016.

    The applicant submitted a request for a unique ICD-10-PCS procedure code and was granted approval for the following procedure codes under New Technology Group 2: XRG0092 (Fusion of occipital-cervical joint using nanotextured surface interbody fusion device, open approach); XRG1092 (Fusion of cervical vertebral joint using nanotextured surface interbody fusion device, open approach); XRG2092 (Fusion of 2 or more cervical vertebral joints using nanotextured surface interbody fusion device, open approach); XRG4092 (Fusion of cervicothoracic vertebral joint using nanotextured surface interbody fusion device, open approach); XRG6092 (Fusion of thoracic vertebral joint using nanotextured surface interbody fusion device, open approach); XRG7092 (Fusion of 2 to 7 thoracic vertebral joints using nanotextured surface interbody fusion device, open approach); XRG8092 (Fusion of 8 or more thoracic vertebral joints using nanotextured surface interbody fusion device, open approach); XRGA092 (Fusion of thoracolumbar vertebral joint using nanotextured surface interbody fusion device, open approach); XRGB092 (Fusion of lumbar vertebral joint using nanotextured surface interbody fusion device, open approach); XRGC092 (Fusion of 2 or more lumbar vertebral joints using nanotextured surface interbody fusion device, open approach); and XRGD092 (Fusion of lumbosacral joint using nanotextured surface interbody fusion device, open approach). These new ICD-10-PCS procedure codes are effective on October 1, 2016.

    We note that cases reporting procedures involving lumbar and cervical interbody devices map to different MS-DRGs. As discussed in the Inpatient New Technology Add-On Payment Final Rule (66 FR 46915), two separate reviews and evaluations of the technologies are necessary in this instance because cases representing patients receiving treatment for diagnoses associated with lumbar procedures that may be eligible for use of the technology under the first indication are not expected to be assigned to the same MS-DRGs as patients receiving treatment for diagnoses associated with cervical procedures using the technology under the second indication. Specifically, cases representing patients who have been diagnosed with lumbar DDD and received treatment that involved implanting a lumbar device map to MS-

    DRGs 028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC or Spinal Neurostimulators), 030 (Spinal Procedures without CC/MCC), 453 (Combined Anterior/Posterior Spinal Fusion with MCC), 454 (Combined Anterior/Posterior Spinal Fusion with CC), 455 (Combined Anterior/

    Posterior Spinal Fusion without CC/MCC), 456 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC), 457 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusion without MCC), 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions without CC/MCC), 459 (Spinal Fusion Except Cervical with MCC), and 460 (Spinal Fusion Except Cervical without MCC), while cases representing patients who have been diagnosed with cervical DDD and received treatment that involved implanting a cervical interbody device map to MS-DRGs 471 (Cervical Spinal Fusion with MCC), 472 (Cervical Spinal Fusion with CC), and 473 (Cervical Spinal Fusion without CC/MCC). Procedures involving the lumbar and cervical interbody devices are assigned to separate MS-DRGs. Therefore, the devices categorized as lumbar devices and the devices categorized as cervical devices must distinctively (each category) meet the cost criterion and the substantial clinical improvement criterion in order to be eligible for new technology add-on payments beginning in FY 2017. We discuss application of these criteria following discussion of the newness criterion.

    As discussed previously in this section, if a technology meets all three of the substantial similarity criteria, it would be considered substantially similar to an existing technology and would not be considered ``new'' for the purposes of new technology add-on payments. We note that the substantial similarity discussion is applicable to both the lumbar and the cervical devices because all of the devices use the Titan Spine nanoLOCKTM technology.

    With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant stated that, for both interbody devices (the lumbar and the cervical interbody device), the Titan Spine nanoLOCKTM's surface stimulates osteogenic cellular response to assist in bone formation during fusion. During the manufacturing process, the surface produces macro, micro, and nano-surface textures. The applicant believed that this unique

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    combination and use of these surface topographies represents a new approach to stimulating osteogenic cellular response. The applicant asserted that the macro-scale textured features are important for initial implant fixation. The micro-scale textured features mimic an osteoclastic pit for supporting bone growth. The nano-scale textured features interface with the integrins on the outside of the cellular membrane, which generates the osteogenic and angiogenic (mRNA) responses necessary to promote healthy bone growth and fusion. The applicant provided the results from in vitro studies, using human mesenchymal cells (MSCs), which showed positive effects on bone growth related to cellular signaling achieved by using the device's surface, and osteoblasts exhibited a more differentiated phenotype and increased bone morphogenetic protein (BMP) production using titanium alloy substrates as opposed to poly-ether-ether-ketone (PEEK) substrates. The applicant stated that Titan Spine's proprietary and unique surface technology, the Titan Spine nanoLOCKTM interbody devices, contain optimized nano-surface characteristics, which generate the distinct cellular responses necessary for improved bone growth, fusion, and stability. The applicant further stated that the Titan Spine nanoLOCKTM's surface engages with the strongest portion of the endplate, which enables better resistance to subsidence because a unique dual acid-etched titanium surface promotes earlier bone in-

    growth. The Titan Spine nanoLOCKTM's surface is created by using a reductive process of the titanium itself. The applicant asserted that use of the Titan Spine nanoLOCKTM significantly reduces the potential for debris generated during impaction when compared to treatments using PEEK-based implants coated with titanium. According to the results of an in vitro study \13\ provided by the applicant, which compared angiogenic factor production using PEEK-based versus titanium alloy surfaces, osteogenic production levels were greater with the use of rough titanium alloy surfaces than the levels produced using smooth titanium alloy surfaces. The results of an additional study \14\ provided by the applicant examined whether inflammatory microenvironment generated by cells as a result of use of titanium aluminum-vanadium (Ti-alloy, TiAlV) surfaces is effected by surface microtexture, and whether it differs from the effects generated by PEEK-based substrates. The applicant noted that the use of microtextured surfaces has demonstrated greater promotion of osteoblast differentiation when compared to use of PEEK-based surfaces.

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    \13\ Olivares-Navarrete R, Hyzy S, Gittens R. Titanium Alloys Regulate Osteoblast Production of Angiogenic Factors. The Spine Journal, 2013, ep.13. 1563-1570.

    \14\ Olivares-Navrrete R, Hyzy s, Slosar P, et al. Implant Materials Generate Different Peri-implant Inflammatory Factors. SPINE. 2015: 40:6:339-404.

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    With regard to the second criterion, whether a product is assigned to the same or a different MS-DRG, cases that may be eligible for treatment involving the Titan Spine nanoLOCKTM map to the same MS-DRGs as other (lumbar and cervical) interbody devices currently available to Medicare beneficiaries and also are used for the treatment of patients who have been diagnosed with DDD (lumbar or cervical).

    With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant stated that the Titan Spine nanoLOCKTM can be used in the treatment of patients diagnosed with similar types of diseases, such as DDD, and for a similar patient population receiving treatment involving both lumbar and cervical interbody devices.

    In summary, the applicant maintained that the Titan Spine nanoLOCKTM technology has a different mechanism of action when compared to other spinal fusion devices. Therefore, the applicant did not believe that the Titan Spine nanoLOCKTM technology is substantially similar to existing technologies.

    After reviewing the applicant's statements regarding nonsubstantial similarity of its technology with other existing technologies, in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 25047), we stated that we were still concerned that there are other titanium surfaced devices currently available on the U.S. market. While these devices do not use the Titan Spine nanoLOCKTM technology, their surfaces also are made of titanium. Therefore, we stated that we believe that the Titan Spine nanoLOCKTM interbody devices may be substantially similar to currently available titanium interbody devices.

    We invited public comments on whether the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Devices are substantially similar to existing technologies and whether these devices meet the newness criterion in the proposed rule.

    Comment: One commenter stated the Titan Spine nanoLOCK's rough topography is not unique to Titan Spine's nanoLOCKTM interbody devices. The commenter listed other titanium devices with micro and macro surfaces which also stimulate bone growth. According to the commenter, the studies provided by the Titan Spine applicant show that any roughened surface topography is associated with an increase in the apha2-beta1 integrin mRNA expression, which is favorable to osteogenesis.

    Response: We appreciate the commenter's comments regarding the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Devices. In the proposed rule, we stated concerns that Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Devices may be substantially similar to currently available titanium interbody devices. Although Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Devices employ nanotechnology in their surface manufacturing technique to produce macro, micro, and nano surfaces, there are other titanium devices that also produce porous surfaces which promote an osteogenic response.

    After consideration of the public comments we received, we remain concerned that the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Devices are substantially similar to other titanium spinal implants and, therefore, as to whether the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Devices meet the newness criterion.

    (1) Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device for Lumbar DDD

    As previously mentioned, the Titan Spine nanoLOCKTM received FDA clearance for the use of five lumbar interbody devices on October 27, 2014. To demonstrate that the Titan Spine nanoLOCKTM for Lumbar DDD technology meets the cost criterion, the applicant researched claims data in the FY 2014 MedPAR file for cases assigned to MS-DRGs 028, 029, 030, 453, 454, and 455 reporting any of the ICD-9-CM procedure codes within the code series 81.xx (Repair and plastic operations on joint structures) or code series 084.6x (Replacement of spinal disk), excluding cases reporting the following ICD-9-CM procedure codes describing cervical fusion: 81.01 (Atlas-axis spinal fusion), 81.02 (Other cervical fusion, anterior technique), 81.03 (Other cervical fusion, posterior technique), 81.31 (Refusion of atlas-axis spine), 81.32 (Refusion of other cervical spine, anterior technique), or 81.33 (Refusion of other cervical spine, posterior technique). As a result, the applicant found that all cases potentially eligible for treatment using

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    the technology mapped to MS-DRGs 456, 457, 458, 459, and 460. However, the applicant focused its analyses on MS-DRGs 028 through 030, 453 through 455, and 456 through 460 because these are the MS-DRGs to which cases treated with interbody fusion devices for degenerative disc disease would most likely be assigned. The applicant applied CMS' relative weight filtering process as described in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49424) to ensure the correct claim types were used and the charge details across the cost centers were appropriate.

    According to the applicant, 78.03 percent of the 96,281 cases found in the FY 2014 MedPAR file mapped to MS-DRG 460, while the remaining 21.97 percent of cases mapped to MS-DRGs 028 through 030, 453 through 455, and 456 through 459. This resulted in an average case-weighted charge per case of $127,082. The applicant then removed $15,766 for associated charges for other previously used spinal devices. The applicant determined the associated charges to be removed for other previously used devices based on current Titan Spine sales data for the Titan Spine nanolockTM for Lumbar DDD various sizes. The applicant computed the associated charges by multiplying the weighted sales mix by the average sales price for each product in the Titan Spine nanoLOCKTM for Lumbar DDD product line. After the charges for other previously used technologies were removed, the applicant standardized the charges for all cases using the FY 2014 standardizing file posted on the CMS Web site. The applicant excluded all cases without standardized charges, resulting in a total of 96,281 cases. The applicant then inflated the average standardized case-

    weighted charges from 2014 to 2016 by applying a 2-year rate of inflation factor of 7.7 percent, which is the same inflation factor used by CMS to update the FY 2016 outlier threshold (80 FR 49784).

    To calculate the appropriate charges for the Titan Spine nanoLOCKTM for Lumbar DDD, the applicant used a case-

    weighted charge because the devices implanted are produced and made available in different sizes. To calculate the case-weighted charge for different lumbar device sizes, the applicant determined the average cost to the hospital per device and divided that amount by the national average CCR for implantable devices (0.337) published in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49429). Based on sales data, the applicant then applied a factor of 1.5 per patient to the case-weighted charge by dividing the total number of products sold in the United States by the total invoices generated; with one invoice being the equivalent to one patient and a single surgery. The applicant then added the device-related charges to the inflated average standardized charge per case, which resulted in an inflated average standardized case-weighted charge per case of $167,197. Using the FY 2016 IPPS Table 10 thresholds, the average case-weighted threshold amount was $112,825 (all calculations above were performed using unrounded numbers). Because the final inflated average standardized case-weighted charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion.

    We invited public comments on whether the Titan Spine nanoLOCKTM for Lumbar DDD meets the cost criterion, particularly with regard to the assumptions and methodology used in the applicant's analyses in the proposed rule. We did not receive any public comments concerning costs for Titan Spine nanoLOCKTM for Lumbar DDD. We believe Titan Spine nanoLOCKTM for Lumbar DDD meets the cost criterion.

    (2) Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device for Cervical DDD

    As previously mentioned, Titan Spine received FDA clearance for the use of the nanoLOCKTM TC-Sterile Packaged Cervical Interbody Fusion Device with nanoLOCKTM surface on October 27, 2014, and the nanoLOCKTM TCS-Sterile Package Cervical Interbody Fusion Device with nanoLOCKTM surface on December 14, 2015. To demonstrate that the Titan Spine nanoLOCKTM for Cervical DDD meets the cost criterion, the applicant researched claims data in the FY 2014 MedPAR file for cases assigned to MS-DRGs 028, 029, 030, 453, 454, and 455 reporting any of the following ICD-9-CM cervical fusion procedure codes: 81.01, 81.02, 81.03, 81.32, 81.33. The applicant found that all of the cases mapped to MS-DRGs 471, 472, and 473. However, the applicant focused its analysis on MS-DRGs 028 through 030, 453 through 455, and 471 through 473 because these are the MS-DRGs to which cases treated with the implantation of cervical spinal devices for degenerative disc disease would most likely be assigned. Similar to the sensitivity analysis submitted for the Titan Spine nanoLOCKTM for Lumbar DDD, the applicant applied CMS' relative weight filtering process as described in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49424) to ensure the correct claim types were used and the charge details across the cost centers were appropriate.

    According to the applicant, 59.47 percent of the 48,187 cases mapped to MS-DRG 473 and 25.65 percent of the cases mapped to MS-DRG 472, while the remaining 14.88 percent of the cases mapped to MS-DRGs 028 through 030, 453 through 455, and 471. This resulted in an average case-weighted charge per case of $83,841. Using the same methodology described above, the applicant removed $4,423 for associated charges for other previously used technologies from the average case-weighted charge per case using current Titan Spine sales data for cervical device sizes and then standardized the charges. The applicant then inflated the average standardized case-weighted charges from 2014 to 2016 by applying the same 2-year rate of inflation factor used above (7.7 percent). Similar to the methodology described above, the applicant calculated $36,023 for associated device related charges for the Titan Spine nanoLOCKTM for Cervical DDD and added this amount to the inflated average standardized case-weighted charge per case, which resulted in a final inflated average standardized case-

    weighted charge per case of $114,472. Using the FY 2016 IPPS Table 10 thresholds, the average case-weighted threshold amount was $79,827 (all calculations above were performed using unrounded numbers). Because the final inflated average standardized case-weighted charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion.

    We invited public comments on whether the Titan Spine nanoLOCKTM for Cervical DDD meets the cost criterion in the proposed rule. We did not receive any public comments concerning costs for Titan Spine nanoLOCKTM for Cervical DDD. We believe Titan Spine nanoLOCKTM for Cervical DDD meets the cost criterion.

    With regard to the substantial clinical improvement criterion for the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device for Lumbar and Cervical DDD, the applicant asserted that the Titan Spine nanoLOCKTM substantially improves the treatment of Medicare beneficiaries who have been diagnosed with and receive treatment for serious spinal pathologies, such as DDD, compared to the currently available technologies and treatment options, especially in terms of improved fusion, decreased pain, greater stability, faster recovery times, and lower rates of interbody device related complications, such as debris and inflammation.

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    The applicant noted that the cellular process that occurs after implantation of the Titan Spine nanoLOCKTM induces the body to produce and regulate its own bone morphogenetic proteins (BMP), which help stimulate bone growth naturally in the human body. According to the applicant, this result supports new bone growth without requiring use of exogenous BMP. The applicant explained that exogenous rhBMPs trigger a significant cytokine related anti-inflammatory reaction that has resulted in adverse side effects. The applicant stated that the Titan Spine nanoLOCKTM's proprietary surface and use promotes endogenous production of osteogenic growth factors, such as BMP-2, BMP-4, BMP-7, and TGF-beta1.2, which produce only the physiologic amounts necessary for bone production without the concomitant cytokine related to anti-inflammatory reaction.

    The applicant also stated that the unique surface of the TitanSpine nanoLOCKTM differentiates the technology from existing interbody devices, which use materials such as PEEK-based or ceramic surfaces. The applicant explained that these materials cause stem cells to flatten on the surface of the implant and primarily differentiate into fibroblasts (fiber-producing cells). This result is avoided by using the Titan Spine nanoLOCKTM because the nano-textured surface promotes differentiation of osteoblasts (bone-forming cells), which increases bone production around the implant site and increases the potential for a faster and more robust fusion. The applicant further stated that use of titanium and titanium alloy surfaces with rough microtopography demonstrate greater bone apposition, but use of macrotextured titanium and titanium alloy surfaces, such as the Titan Spine nanoLOCKTM, promotes osteoblast differentiation and productions of factors that favor bone formation, whereas PEEK-based surfaces do not.

    As previously noted, the applicant provided results from in vitro studies, using human MSCs, which showed positive effects on bone growth related to cellular signaling achieved from use of the device's surface, and osteoblasts exhibited a more differentiated phenotype and increased bone morphogenetic protein BMP production using titanium alloy substrates as opposed to PEEK-based substrates. The applicant believed that the Titan Spine nanoLOCKTM substantially improves the treatment of Medicare beneficiaries diagnosed with and receiving treatment for serious spinal pathologies, such as DDD, compared to currently available technologies and treatment options for Medicare beneficiaries, especially in terms of improved fusion, decreased pain, greater stability, faster recovery times, and lower rates of interbody device related complications, such as debris and inflammation.

    We stated in the proposed rule (81 FR 25049) that we were concerned that the results of the in vitro studies may not necessarily correlate with the clinical results specified by the applicant. Specifically, because the applicant has only conducted in vitro studies without obtaining any clinical data from live subjects during a specific clinical trial, we further stated that we were unable to substantiate the clinical results that the applicant believed the technology achieved from a clinical standpoint based on the results of the studies provided. As a result, we stated that we were concerned that the results of the studies provided by the applicant do not demonstrate that the Titan Spine nanoLOCKTM technologies meet the substantial clinical improvement criterion. We invited public comments on whether the Titan Spine nanoLOCKTM technologies meet the substantial clinical improvement criterion in the proposed rule.

    Comment: Several commenters supported that Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Devices for Lumbar DDD and Cervical DDD represent a substantial clinical improvement over existing technologies. The commenters cited enhanced clinical outcomes with Titan Spine's predicate devices. Commenters cited the success of bench studies which show improved bone growth with nano-textured titanium surfaces. Several commenters have used Titan Spine's predicate devices and stated satisfaction with these predicate devices.

    Response: We appreciate the commenters' statements concerning Titan Spine's predicate devices. However, none of the commenters cited actual clinical data that used the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device for Lumbar DDD and Cervical DDD. As mentioned above, the commenters cited data with regard to Titan Spine's predicate devices. Therefore, our concerns stated in the proposed rule are still the same. Due to the lack of actual clinical data using the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device for Lumbar DDD and Cervical DDD, we are unable to determine if Titan Spine Endoskeletonsupreg meets the substantial clinical improvement criterion. Therefore, we are not approving new technology add-on payments for the Titan Spine Endoskeletonsupreg nanoLOCKTM Interbody Device for Lumbar DDD and Cervical DDD for FY 2017. The applicant can reapply in FY 2018 and provide additional clinical data supporting substantial clinical improvement.

  252. Defiteliosupreg (Defibrotide)

    Jazz Pharmaceuticals submitted an application for new technology add-on payments for FY 2017 for defibrotide (Defiteliosupreg), a treatment for patients diagnosed with hepatic veno-occlusive disease (VOD) with evidence of multi-organ dysfunction. VOD, also known as sinusoidal obstruction syndrome (SOS), is a potentially life-

    threatening complication of hematopoietic stem cell transplantation (HSCT), with an incidence rate of 8 percent to 15 percent. Diagnoses of VOD range in severity from what has been classically defined as a disease limited to the liver (mild) and reversible, to a severe syndrome associated with multi-organ dysfunction or failure and death. Patients treated with HSCT who develop VOD with multi-organ failure face an immediate risk of death, with a mortality rate of more than 80 percent when only supportive care is used. The applicant asserts that Defiteliosupreg improves the survival rate of patients with VOD with multi-organ failure by 23 percent.

    VOD is believed to be the result of endothelial cell damage and hepatocellular injury from high-dose conditioning regimens administered prior to receiving treatment with HSCT. Preclinical data suggest that Defiteliosupreg stabilizes endothelial cells by reducing endothelial cell activation and by protecting endothelial cells from further damage. Defiteliosupreg is administered as a 2-hour intravenous infusion every 6 hours for a minimum of 21 days. The recommended dosage is 6.25 mg/kg body weight (25mg/kg/day). If after 21 days the signs and symptoms associated with hepatic VOD are not resolved, the administration of Defiteliosupreg should be continued until clinical resolution.

    In the proposed rule, we noted that the applicant had applied for a unique ICD-10-PCS procedure code to identify the use of Defiteliosupreg. In this final rule, we note that the new ICD-10-PCS procedure codes XW03392 (Introduction of defibrotide sodium anticoagulant into peripheral vein, percutaneous approach) and XW04392 (Introduction of defibrotide sodium anticoagulant into central vein, percutaneous approach) were established in New Technology Group 2 as shown in Table 6B (New Procedure Codes) and will uniquely identify procedures involving the Defiteliosupreg technology. More information on this

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    request and the approval can be found on the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-MeetingMaterials.html and the FY 2016 New ICD-10-PCS Codes can be found at the CMS Web site at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html.

    As stated in the proposed rule, with regard to the newness criterion, according to the manufacturer, Defiteliosupreg received FDA approval on March 30, 2016. We subsequently learned that Defiteliosupreg was granted Orphan Drug Designation for the treatment of VOD in 2003 and for the prevention of VOD in 2007. It has been available to patients as an investigational drug through an expanded access program since 2007. The applicant's New Drug Application (NDA) for Defiteliosupreg received FDA approval on March 30, 2016.

    After the proposed rule was issued and after further analysis, we recognized that Defiteliosupreg may no longer be considered ``new'' due to the drug's prior Orphan Drug Designation and availability through an expanded access program. The regulations at Sec. 412.87(b)(2) state that a medical service or technology may be considered new within 2 or 3 years after the point at which data begin to become available reflecting the ICD-9-CM code assigned to the new service or technology (depending on when a new code is assigned and data on the new service or technology become available for DRG recalibration). After CMS has recalibrated the DRGs, based on available data, to reflect the costs of an otherwise new medical service or technology, the medical service or technology will no longer be considered ``new'' under the criterion of this section. As we have indicated in the past, we generally believe that the newness period begins on the date that FDA approval is granted. The FDA approval date is typically the date when new technologies are available on the market and as a result begin to be reflected within the MS-DRGs cost data. As noted above, Defiteliosupreg was first granted Orphan Drug Designation by the FDA in 2003.

    The applicant verified that it did not recover the costs of making Defiteliosupreg available under its 2003 Orphan Drug Designation or through its 2007 FDA grant of expanded access. Therefore, the applicant asserted that because cost recovery did not occur until after the NDA approval on March 30, 2016, the drug was not included in the data used to calculate the DRG relative weights, and it is inappropriate to consider prior availability of the drug as constituting an FDA approval in the context of the newness criterion. As we discuss in section II.H.4. and in our discussion of Voraxaze included in the FY 2013 IPPS/

    LTCH PPS final rule (77 FR 53348), the period of newness does not necessarily start with the FDA approval date for the medical service or technology or the issuance of a distinct procedure code. Instead, the newness period begins with the date of availability of the product on the U.S. market, which is when data become available. The applicant confirmed that Defiteliosupreg was not available on the U.S. market as of the FDA NDA approval date of March 30, 2016, which we believed to be the start of the newness period in the proposed rule. According to the applicant, commercial packaging could not be completed until the label for Defiteliosupreg was finalized with FDA approval, and that commercial shipments of Defiteliosupreg to hospitals and treatment centers began on April 4, 2016. We agree that, based on this information, the newness period for Defiteliosupreg begins on April 4, 2016, the date of its first commercial availability.

    As discussed earlier, if a technology meets all three of the criteria for substantial similarity, it would be considered substantially similar to an existing technology and would not be considered ``new'' for purposes of new technology add-on payments.

    With regard to the first criterion, whether the product uses the same or similar mechanism of action to achieve a therapeutic outcome, in the proposed rule, we stated that the applicant maintained that Defiteliosupreg has a unique mechanism of action that is not shared by any other drug on the market used to treat patients diagnosed with VOD with multi-organ failure. According to the applicant, there are no FDA-approved treatments for VOD other than supportive care. Anticoagulants such as heparin, antithrombin, and tissue plasminogen factor have been used to treat patients diagnosed with VOD, but there is a lack of conclusive evidence that these treatments are effective and they also present a high risk of bleeding. The applicant maintained that Defiteliosupreg addresses the underlying pathology of VOD with evidence of multi-organ failure and its use is effective as a treatment for this form of the disease. According to the applicant, it is speculated that the mechanism of action of the Defiteliosupreg revolves around the stabilization of endothelial cells because endothelial cell damage is believed to be a major contributing factor to the development of VOD. However, we stated in the proposed rule that we were concerned that this mechanism of action is not well understood by the manufacturer and we are unable to determine whether Defiteliosupreg is substantially similar to the other drugs on the market without full understanding of its distinct mechanism of action.

    With regard to the second criterion, whether a product is assigned to the same or a different MS-DRG, in the proposed rule, we stated that the applicant maintained that cases potentially eligible for treatment using Defiteliosupreg and representing the target patient population mainly group to two MS-DRGs: MS-DRG 014 (Allogeneic Bone Marrow Transplant) and MS-DRG 016 (Autologous Bone Marrow Transplant with CC/

    MCC). We believe that these are the same MS-DRGs that identify cases of patients treated with supportive care for VOD with multi-organ failure.

    With regard to the third criterion, whether the new use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, in the proposed rule, we stated that the applicant asserted that there are no FDA-

    approved treatments for VOD other than supportive care, such as dialysis or ventilation. In addition, the applicant stated that poor outcomes have been reported for patients treated with non-approved pharmacological treatments for VOD. These treatments have largely been discontinued because of the high incidence of hemorrhagic complications, particularly among patients diagnosed with multi-organ failure. According to the applicant, Defiteliosupreg would be the first and only FDA-approved treatment for VOD with evidence of multi-

    organ failure. However, we stated our concern that the applicant did not include in its application data comparing the outcomes of patients treated with Defiteliosupreg to outcomes of patients treated only for supportive care. We also stated in the proposed rule that we were concerned that Defiteliosupreg may not produce outcomes that are significantly different than the outcomes of patients treated with supportive care.

    We invited public comments on whether Defiteliosupreg is substantially similar to existing technologies and whether it meets the newness criterion.

    Comment: With regard to our concern that we cannot determine whether Defiteliosupreg is substantially similar to other technologies without a full understanding of its mechanism of action, the applicant provided additional information about the

    Page 56903

    pathophysiology of VOD and how it is addressed by Defiteliosupreg's dual mechanism of action consisting of: (1) Endothelial cell protection and stabilization, and (2) enhancement of plasmin enzymatic activity to restore thrombo-fibrinolytic balance. According to the applicant, this two-pronged mechanism of action sets Defiteliosupreg apart from supportive care agents available to treat VOD with multi-organ failure.

    The applicant described the damage, detachment, and death of endothelial cells as triggered first by conditioning chemotherapy and/

    or radiotherapy, a necessary part of the HSCT conditioning regimen, and then by complications related to the HSCT procedure itself. The applicant asserted that progressive deterioration of endothelial cells results in tissue damage characteristic of VOD with multi-organ failure. In particular, clots form at the site of endothelial cell damage and obstruct small veins in the liver. The hepatocellular necrosis and vascular occlusion resulting from endothelial cell damage ultimately leads to liver, pulmonary, and renal failure which can culminate in death.

    The applicant provided additional information from numerous clinical studies that demonstrate Defitelosupreg's robust and reproducible ability to protect endothelial cells from cell damage, particularly from chemotherapy-induced cell death, as well as its ability to restore the thrombo-fibrinolytic balance, improving blood circulation. The applicant reiterated that Defiteliosupreg is the only FDA-approved treatment for VOD with multi-organ failure and that, prior to this approval, patients only received supportive care. While supportive care agents with anti-coagulant activity are available, they do not have the unique dual mechanism of action that Defiteliosupreg possesses, nor have they been proven to be effective in the treatment of VOD with multi-organ failure.

    With regard to our concern that cases eligible for Defiteliosupreg would be assigned to the same MS-DRGs that identify cases of patients treated with supportive care for VOD with multi-organ failure, the applicant noted that, prior to NDA approval of Defiteliosupreg, patients with VOD with multi-organ failure would have received supportive care alone because there were no FDA-approved treatments for VOD. As a result, there are no charges for VOD treatment in MS-DRG 014, MS-DRG 016, or any other MS-DRG to which cases eligible for Defiteliosupreg would map.

    With regard to our concern that the applicant did not include in its application data comparing the outcomes of patients treated with Defiteliosupreg to outcomes of patients treated only with supportive care and that Defiteliosupreg may not produce outcomes that are significantly different than the outcomes of patients treated with supportive care, the applicant clarified that it did include such studies, including the Phase 3 Study #2005-01, which enabled a comparison of Defiteliosupreg versus supportive care alone and demonstrated the statistically and clinically significant benefit of Defiteliosupreg over supportive care. The results of Study #2005-01 are described below in our discussion of whether Defiteliosupreg meets the substantial clinical improvement criterion.

    Response: We appreciate the applicant's input and the detailed explanation of Defiteliosupreg's mechanism of action and the pathophysiology of VOD with multi-organ failure. We acknowledge that, as the only FDA-approved treatment for VOD with multi-organ failure, the applicant believed there are no charges for VOD treatment in the MS-DRGs claims data. We also acknowledge that the applicant submitted data from the Phase 3 Study #2005-01 to demonstrate that the improved outcomes among patients treated with Defiteliosupreg compared to patients treated only with supportive care are statistically significant and valid. After considering the additional information submitted by the applicant, we have determined that Defiteliosupreg is not substantially similar to any other technologies currently on the U.S. market for the treatment of VOD with multi-organ failure, and we agree that Defiteliosupreg meets the newness criterion.

    With regard to the cost criterion, in the proposed rule, we stated that the applicant conducted sensitivity analyses using claims data from 2012 through 2014 and determined the results in aggregate and by year. The applicant researched 100 percent of the 2012 through 2014 Inpatient Standard Analytic Files (SAFs) for cases eligible for Defiteliosupreg. Because an ICD-9-CM code specific to treatment for VOD does not exist, the applicant used an algorithm to identify cases to use in its sensitivity analyses. The most appropriate ICD-9-CM diagnosis codes were identified based on clinical criteria used to diagnose VOD and were used to identify cohorts of patients diagnosed with VOD and VOD with multi-organ dysfunction. The applicant first identified claims with an ICD-9-CM procedure code indicating an HSCT (Group A) within a 30-day window; VOD most commonly occurs after receipt of HSCT. The applicant then looked for cases with ICD-9-CM diagnosis codes related to liver injury (Group B) or clinical evidence of suspected VOD symptoms based on at least two relevant ICD-9 diagnosis codes (Group C). Lastly, the applicant filtered out cases that did not show clinical evidence of multi-organ dysfunction based on at least one relevant ICD-9-CM code (Group D).

    The applicant submitted the following table indicating the ICD-9-CM codes used for each category of the algorithm.

    Table Submitted by Applicant: ICD-9 Codes Used for the Premier VOD Algorithm

    ----------------------------------------------------------------------------------------------------------------

    Group Title ICD-9-CM code Description

    ----------------------------------------------------------------------------------------------------------------

    A..................... Hematopoietic Stem Cell 41.00......................... Bone marrow transplant, not

    Transplant (HSCT) (at 41.01......................... otherwise specified.

    least one code). 41.02......................... Autologous bone marrow

    41.03......................... transplant without purging.

    41.04......................... Allogeneic bone marrow

    transplant with purging.

    Allogeneic bone marrow

    transplant without purging.

    Autologous hematopoietic stem

    cell transplant without

    purging.

    41.05......................... Allogeneic hematopoietic stem

    cell transplant without

    purging.

    41.06......................... Cord blood stem cell

    transplant.

    41.07......................... Autologous hematopoietic stem

    cell transplant with

    purging.

    41.08......................... Allogeneic hematopoietic stem

    cell transplant.

    41.09......................... Autologous bone marrow

    transplant with purging.

    Page 56904

    B..................... Liver Injury (at least 453.xx........................ Other venous embolism and

    one code). 570.xx........................ thrombosis.

    573.8......................... Acute and subacute necrosis

    573.9......................... of liver.

    459.89........................ Other specified disorders of

    277.4......................... liver.

    Unspecified disorder of

    liver.

    Other specified disorders of

    the circulatory system.

    Disorders of bilirubin

    excretion.

    C..................... VOD Symptoms (at least 782.4......................... Hyperbilirubinemia.

    two codes). 789.1......................... Hepatomegaly.

    783.1......................... Abnormal weight gain.

    789.5......................... Ascites.

    D..................... Multi-Organ Dysfunction 518.8x........................ Acute/Chronic Respiratory

    (at least one code). 786.09........................ Failure.

    Other respiratory

    abnormalities (respiratory

    distress, except that

    associated with trauma/

    surgery in adults, or with

    RDS in newborns).

    799.02........................ Hypoxemia.

    518.81........................ Acute respiratory failure.

    V46.2......................... Other dependence on machines,

    supplemental oxygen.

    96.7x......................... Other continuous invasive

    mechanical ventilation.

    93.90, 93.91, 93.93, 93.99.... Non-invasive mechanical

    ventilation.

    584.X......................... Acute renal failure.

    586.X......................... Renal failure unspecified.

    593.9......................... Renal Failure.

    39.27, 39.42, 39.95, 54.98.... Dialysis, including

    hemodialysis, peritoneal

    dialysis, hemofiltration.

    ----------------------------------------------------------------------------------------------------------------

    Using the above algorithm, the applicant identified a total of 267 patient cases of VOD with multi-organ dysfunction in the 2012-2014 Inpatient SAFs, with 78 patient cases in 2012, 102 patient cases in 2013, and 87 patient cases in 2014, or an average annual patient case volume of 89. The applicant determined that these cases grouped mainly into two MS-DRGs: 014 and 016. The applicant noted that there were no cases in the data from MS-DRG 017 (Autologous Bone Marrow Transplant without CC/MCC). The applicant further noted that there were no cases from MS-DRG 017 because the ICD-9-CM codes identifying VOD with multi-

    organ dysfunction include serious medical conditions that are listed on the MCC and CC lists. In total, 38 MS-DRGs were represented in the patient cohort, with 27 percent of cases mapping to MS-DRG 014 and 42 percent of cases mapping to MS-DRG 016. The remaining cases mapped to 1 of the 36 remaining MS-DRGs with fewer than 11 cases.

    For results in the aggregate, the applicant calculated an average case-weighted charge per case of $427,440 across 267 cases representing diagnoses of VOD with multi-organ dysfunction from 2012 through 2014. The applicant assumed there would be a reduction in the use of selected drugs as a result of using Defiteliosupreg and removed 50 percent of the estimated charges for heparin, furosemide, and spironolactone. The charges for these drugs were estimated based on pricing taken from the Medispan PriceRx database, whose costs were marked up according to the inverse of CCRs from cost center 07300 (Drugs Charged to Patients) obtained from providers' 2012, 2013, and 2014 cost reports. The applicant matched these CCRs with the provider numbers on each claim. The applicant removed an average of $2,631 in charges for these drugs from the overall unstandardized charges for Defiteliosupreg.

    The applicant then standardized the charges and calculated an average standardized case-weighted charge per case of $310,651. To update the charge data to the current fiscal year, the applicant inflated the charges based on the charge inflation factor of 1.048116 in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49779). The 1-year inflation factor was applied four times to FY 2012 claims, three times to FY 2013 claims, and twice to FY 2014 claims to inflate all charges to 2016. The applicant computed an inflated average standardized case-

    weighted charge per case of $356,015. Using the FY 2016 IPPS Table 10 thresholds, the average case-weighted threshold amount was $157,951 (all calculations above were performed using unrounded numbers). Because the inflated average standardized case-weighted charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion. The applicant noted that it did not include charges for Defiteliosupreg in the inflated average standardized case-weighted charge per case because the inflated average standardized case-weighted charge per case exceeded the average case-weighted threshold amount without charges for Defiteliosupreg.

    The applicant provided a similar analysis for each individual year of the SAF data rather than combining all the data from all 3 years into one analysis. Under the other three analyses, the applicant noted that the average standardized case-weighted charge per case exceeded the average case-weighted threshold amount (as shown in the table below) without inflating the charges and without adding any charges for Defiteliosupreg.

    ------------------------------------------------------------------------

    Average

    Average case- standardized case-

    SAF Year weighted weighted charge

    threshold amount per case

    ------------------------------------------------------------------------

    2012............................ $161,469 $347,910

    2013............................ 150,585 326,445

    Page 56905

    2014............................ 163,434 404,883

    ------------------------------------------------------------------------

    We invited public comments on whether Defiteliosupreg meets the cost criterion in the proposed rule.

    Comment: The applicant submitted a technical correction to update its cost criterion analysis. According to the applicant, the 1-year inflation factor from the FY 2016 IPPS/LTCH PPS proposed rule (80 FR 24632) was used in the sensitivity analysis included in its application instead of the 1-year inflation factor from the FY 2016 IPPS/LTCH PPS final rule (80 FR 49784). The applicant maintained that, in the revised sensitivity analysis with the updated inflation factor, the average standardized case-weighted charge per case for the applicable MS-DRGs exceeded the average case-weighted threshold amount without adding any charges for Defiteliosupreg. In the applicant's initial analysis using the 1-year inflation factor of 1.048116 from the proposed rule, the average standardized case-weighted charges exceeded the average case-weighted MS-DRG thresholds by an average of $200,323. After applying the updated inflation factor of 1.037616, the average standardized case-weighted charges exceeded the average case-weighted MS-DRG thresholds by an average of $187,776 before adding charges for Defiteliosupreg. The 1-year inflation factor was applied four times for 2012 claims, three times for 2013 claims, and two times for 2014 claims in order to compare 2012 through 2014 claims data to the FY 2016 IPPS/LTCH PPS final rule thresholds.

    Response: We appreciate the applicant submitting the additional information. After reviewing the sensitivity analysis included in the original application and subsequent analysis included in the applicant's public comment, we have determined that the Defiteliosupreg meets the cost criterion.

    With regard to the substantial clinical improvement criterion, in the proposed rule, we stated that the applicant maintained that Defiteliosupreg is an effective treatment for VOD as an early onset cause of mortality following HSCT. According to the applicant, patients treated with Defiteliosupreg have improved survival and efficacy rates compared to patients who were not treated with Defiteliosupreg. In increasing the chances of post-HSCT survival, Defiteliosupreg affords the transplant patient the opportunity for engraftment, which could be a potential cure for the underlying disease that required HSCT.

    The applicant supported these assertions with clinical evidence from pivotal trial 2005-01, a Phase III historical control study in which patients with VOD with multi-organ failure were given Defiteliosupreg in doses of 25/mg/kg/day for the recommended minimum treatment duration of 21 d