Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates; Proposed Quality Reporting Requirements for Specific Providers; Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (Promoting Interoperability Programs) Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Medicare Cost Reporting Requirements; and Physician Certification and Recertification of Claims

 
CONTENT

Federal Register, Volume 83 Issue 88 (Monday, May 7, 2018)

Federal Register Volume 83, Number 88 (Monday, May 7, 2018)

Proposed Rules

Pages 20164-20643

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

FR Doc No: 2018-08705

Page 20163

Vol. 83

Monday,

No. 88

May 7, 2018

Part II

Book 2 of 2 Books

Pages 20163-20706

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 412, 413, 424, et al.

Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the LongdashTerm Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates; Proposed Quality Reporting Requirements for Specific Providers; Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (Promoting Interoperability Programs) Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Medicare Cost Reporting Requirements; and Physician Certification and Recertification of Claims; Proposed Rule

Page 20164

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 412, 413, 424, and 495

CMS-1694-P

RIN 0938-AT27

Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the LongdashTerm Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2019 Rates; Proposed Quality Reporting Requirements for Specific Providers; Proposed Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (Promoting Interoperability Programs) Requirements for Eligible Hospitals, Critical Access Hospitals, and Eligible Professionals; Medicare Cost Reporting Requirements; and Physician Certification and Recertification of Claims

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

ACTION: Proposed rule.

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SUMMARY: We are proposing to revise 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 2019. Some of these proposed changes implement certain statutory provisions contained in the 21st Century Cures Act and the Bipartisan Budget Act of 2018, and other legislation. We also are proposing to make changes relating to Medicare graduate medical education (GME) affiliation agreements for new urban teaching hospitals. In addition, we are proposing to provide the market basket update that would apply to the ratedashofdashincrease limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits for FY 2019. We are proposing to update 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 2019.

In addition, we are proposing to establish new requirements or revise existing requirements for quality reporting by specific Medicare providers (acute care hospitals, PPSdashexempt cancer hospitals, and LTCHs). We also are proposing to establish new requirements or revise existing requirements for eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) participating in the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs (now referred to as the Promoting Interoperability Programs). In addition, we are proposing changes to the requirements that apply to States operating Medicaid Promoting Interoperability Prrograms. We are proposing to update policies for the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program.

We also are proposing to make changes relating to the required supporting documentation for an acceptable Medicare cost report submission and the supporting information for physician certification and recertification of claims.

DATES: Comment Period: To be assured consideration, comments must be received at one of the addresses provided in the ADDRESSES section, no later than 5 p.m. on June 25, 2018.

ADDRESSES: In commenting, please refer to file code CMS-1694-P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the ``Submit a comment'' instructions.

2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1694-P, P.O. Box 8011, Baltimore, MD 21244-1850.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1694-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, we refer readers to the beginning of the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Donald Thompson, (410) 786-4487, and Michele Hudson, (410) 786-4487, 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, Sole Community Hospitals, Medicare Disproportionate Share Hospital (DSH) Payment Adjustment, MedicaredashDependent Small Rural Hospital (MDH) Program, and Low-Volume Hospital Payment Adjustment Issues.

Michele Hudson, (410) 786-4487, Mark Luxton, (410) 786-4530, and Emily Lipkin, (410) 786-3633, LongdashTerm Care Hospital Prospective Payment System and MS-LTC-DRG Relative Weights Issues.

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

Jeris Smith, (410) 786-0110, Frontier Community Health Integration Project Demonstration Issues.

Cindy Tourison, (410) 786-1093, Hospital Readmissions Reduction Program--Readmission Measures for Hospitals Issues.

James Poyer, (410) 786-2261, Hospital Readmissions Reduction Program--Administration Issues.

Elizabeth Bainger, (410) 786-0529, Hospital-Acquired Condition Reduction Program Issues.

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

Grace Snyder, (410) 786-0700 and James Poyer, (410) 786-2261, Hospital Inpatient Quality Reporting and Hospital Value-Based Purchasing--Program Administration, Validation, and Reconsideration Issues.

Reena Duseja, (410) 786-1999 and 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 Spalding 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.

Joel Andress, (410) 786-5237 and Caitlin Cromer, (410) 786-3106, PPS-Exempt Cancer Hospital Quality Reporting Issues.

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

Page 20165

Elizabeth Holland, (410) 786-1309, Promoting Interoperability Programs Clinical Quality Measure Related Issues.

Kathleen Johnson, (410) 786-3295 and Steven Johnson (410) 786-3332, Promoting Interoperability Programs Nonclinical Quality Measure Related Issues.

Kellie Shannon, (410) 786-0416, Acceptable Medicare Cost Report Submissions Issues.

Thomas Kessler, (410) 786-1991, Physician Certification and Recertification of Claims.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments.

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 Website

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, the majority 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 proposed rule are available through the Internet on the CMS website 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 2019 IPPS Proposed Rule Home Page'' or ``Acute Inpatient--Files for Download''. The LTCH PPS tables for this FY 2019 proposed rule are available through the Internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/LongTermCareHospitalPPS/index.html under the list item for Regulation Number CMS-1694-P. For further details on the contents of the tables referenced in this proposed rule, we refer readers to section VI. of the Addendum to this proposed rule.

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

Table of Contents

I. Executive Summary and Background

A. Executive Summary

B. Background Summary

C. Summary of Provisions of Recent Legislation Proposed To Be Implemented in This Proposed Rule

D. Summary of Provisions of This Proposed Rule

II. Proposed 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. Proposed FY 2019 MS-DRG Documentation and Coding Adjustment

E. Refinement of the MS-DRG Relative Weight Calculation

F. Proposed Changes to Specific MS-DRG Classifications

G. Recalibration of the Proposed FY 2019 MS-DRG Relative Weights

H. Proposed Add-On Payments for New Services and Technologies for FY 2019

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

A. Background

B. Worksheet S-3 Wage Data for the Proposed FY 2019 Wage Index

C. Verification of Worksheet S-3 Wage Data

D. Method for Computing the Proposed FY 2019 Unadjusted Wage Index

E. Proposed Occupational Mix Adjustment to the FY 2019 Wage Index

F. Analysis and Implementation of the Proposed Occupational Mix Adjustment and the Proposed FY 2019 Occupational Mix Adjusted Wage Index

G. Proposed Application of the Rural, Imputed, and Frontier Floors

H. Proposed FY 2019 Wage Index Tables

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

J. Proposed Out-Migration Adjustment Based on Commuting Patterns of Hospital Employees

K. Reclassification From Urban to Rural Under Section 1886(d)(8)(E) of the Act Implemented at 42 CFR 412.103 and Proposed Change to Lock-In Date

L. Process for Requests for Wage Index Data Corrections

M. Proposed Labor-Related Share for the Proposed FY 2019 Wage Index

N. Request for Public Comments on Wage Index Disparities

IV. Other Decisions and Proposed Changes to the IPPS for Operating System

A. Proposed Changes to MS-DRGs Subject to Postacute Care Transfer Policy and MS-DRG Special Payment Policies (Sec. 412.4)

B. Proposed Changes in the Inpatient Hospital Updates for FY 2019 (Sec. 412.64(d))

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

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

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

F. Proposed Payment Adjustment for Medicare Disproportionate Share Hospitals (DSHs) for FY 2019 (Sec. 412.106)

G. Sole Community Hospitals (SCHs) and Medicare-Dependent, Small Rural Hospitals (MDHs) (Sec. Sec. 412.90, 412.92, and 412.108)

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

I. Hospital Value-Based Purchasing (VBP) Program: Proposed Policy Changes

J. Hospital-Acquired Condition (HAC) Reduction Program

K. Payments for Indirect and Direct Graduate Medical Education Costs (Sec. Sec. 412.105 and 413.75 Through 413.83)

L. Rural Community Hospital Demonstration Program

M. Proposed Revision of Hospital Inpatient Admission Orders Documentation Requirements Under Medicare Part A

V. Proposed Changes to the IPPS for Capital-Related Costs

A. Overview

B. Additional Provisions

C. Proposed Annual Update for FY 2019

VI. Proposed Changes for Hospitals Excluded From the IPPS

A. Proposed Rate-of-Increase in Payments to Excluded Hospitals for FY 2019

B. Proposed Changes to Regulations Governing Satellite Facilities

C. Proposed Changes to Regulations Governing Excluded Units of Hospitals

D. Critical Access Hospitals (CAHs)

VII. Proposed Changes to the Long-Term Care Hospital Prospective Payment System (LTCH PPS) for FY 2019

A. Background of the LTCH PPS

B. Proposed Medicare Severity Long-Term Care Diagnosis-Related Group (MS-LTC-DRG) Classifications and Relative Weights for FY 2019

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

D. Proposed Changes to the LTCH PPS Payment Rates and Other Proposed Changes to the LTCH PPS for FY 2019

E. Proposed Elimination of the ``25-Percent Threshold Policy'' Adjustment (Sec. 412.538)

VIII. Quality Data Reporting Requirements for Specific Providers and Suppliers

A. Hospital Inpatient Quality Reporting (IQR) Program

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

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

D. Proposed Changes to the Medicare and Medicaid EHR Incentive Programs (Now Referred to as the Medicare and Medicaid Promoting Interoperability Programs)

Page 20166

IX. Proposed Revisions of the Supporting Documentation Required for Submission of an Acceptable Medicare Cost Report

X. Requirements for Hospitals To Make Public a List of Their Standard Charges via the Internet

XI. Proposed Revisions Regarding Physician Certification and Recertification of Claims

XII. Request for Information on Promoting Interoperability and Electronic Healthcare Information Exchange Through Possible Revisions to the CMS Patient Health and Safety Requirements for Hospitals and Other Medicare- and Medicaid-Participating Providers and Suppliers

XIII. MedPAC Recommendations

XIV. Other Required Information

A. Publicly Available Data

B. Collection of Information Requirements

C. Response to Public Comments

Regulation Text

Addendum--Proposed Schedule of Proposed Standardized Amounts, Update Factors, RatedashofdashIncrease Percentages Effective With Cost Reporting Periods Beginning on or After October 1, 2018, and Payment Rates for LTCHs Effective for Discharges Occurring on or After October 1, 2018

I. Summary and Background

II. Proposed Changes to the Prospective Payment Rates for Hospital Inpatient Operating Costs for Acute Care Hospitals for FY 2019

A. Calculation of the Adjusted Standardized Amount

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

C. Calculation of the Prospective Payment Rates

III. Proposed Changes to Payment Rates for Acute Care Hospital Inpatient CapitaldashRelated Costs for FY 2019

A. Determination of Federal Hospital Inpatient CapitaldashRelated Prospective Payment Rate Update for FY 2019

B. Calculation of the Inpatient CapitaldashRelated Prospective Payments for FY 2019

C. Capital Input Price Index

IV. Proposed Changes to Payment Rates for Excluded Hospitals: RatedashofdashIncrease Percentages for FY 2019

V. Proposed Changes to the Payment Rates for the LTCH PPS for FY 2019

A. Proposed LTCH PPS Standard Federal Payment Rate for FY 2019

B. Proposed Adjustment for Area Wage Levels Under the LTCH PPS for FY 2019

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

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

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

F. Computing the Proposed Adjusted LTCH PPS Federal Prospective Payments for FY 2019

VI. Tables Referenced in This Proposed Rule Generally Available Only Through the Internet on the CMS Website

Appendix A--Economic Analyses

I. Regulatory Impact Analysis

A. Statement of Need

B. Overall Impact

C. Objectives of the IPPS and the LTCH PPS

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 Proposed Policy Changes Under the IPPS for Operating Costs

H. Effects of Other Proposed Policy Changes

I. Effects of Proposed Changes in the Capital IPPS

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

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

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

M. Effects of Proposed Requirements for the Long-Term Care Hospital Quality Reporting Program (LTCH QRP)

N. Effects of Proposed Requirements Regarding the Promoting Interoperability Programs

O. Alternatives Considered

P. Reducing Regulation and Controlling Regulatory Costs

Q. Overall Conclusion

R. Regulatory Review Costs

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 13175

VII. 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 2019

A. Proposed FY 2019 Inpatient Hospital Update

B. Proposed Update for SCHs and MDHs for FY 2019

C. Proposed FY 2019 Puerto Rico Hospital Update

D. Proposed Update for Hospitals Excluded From the IPPS for FY 2019

E. Proposed Update for LTCHs for FY 2019

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 proposed rule would make payment and policy changes under the Medicare inpatient prospective payment systems (IPPS) for operating and capitaldashrelated costs of acute care hospitals as well as for certain hospitals and hospital units excluded from the IPPS. In addition, it would make payment and policy changes for inpatient hospital services provided by long-term care hospitals (LTCHs) under the longdashterm care hospital prospective payment system (LTCH PPS). This proposed rule also would make policy changes to programs associated with Medicare IPPS hospitals, IPPS-excluded hospitals, and LTCHs.

We are proposing to establish new requirements and revise existing requirements for quality reporting by specific providers (acute care hospitals, PPSdashexempt cancer hospitals, and LTCHs) that are participating in Medicare. We also are proposing to establish new requirements and revise existing requirements for eligible professionals (EPs), eligible hospitals, and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs. We are proposing to update policies for the Hospital ValuedashBased Purchasing (VBP) Program, the Hospital Readmissions Reduction Program, and the Hospital-Acquired Condition (HAC) Reduction Program.

We also are proposing to make changes relating to the supporting documentation required for an acceptable Medicare cost report submission and the supporting information for physician certification and recertification of claims.

Under various statutory authorities, we are proposing to make changes to the Medicare IPPS, to the LTCH PPS, and to other related payment methodologies and programs for FY 2019 and subsequent fiscal years. These statutory authorities include, but are not limited to, the following:

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; extended neoplastic disease care 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,

Page 20167

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. 106dash113) and section 307(b)(1) of the BIPA (Pub. L. 106dash554) (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 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 that would otherwise apply to the standardized amount applicable to a subsection (d) hospital for discharges occurring in 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 and section 15002 of the 21st Century Cures Act, which establishes the ``Hospital Readmissions Reduction Program.'' Under the program, payments for discharges from an ``applicable hospital'' under section 1886(d) of the Act will be reduced to account for certain excess readmissions. Section 15002 of the 21st Century Cures Act requires the Secretary to compare cohorts of hospitals to each other in determining the extent of 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 who are uninsured (minus 0.2 percentage point for FY 2018 through FY 2019); 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(c) of the Pathway for Sustainable Growth Rate (SGR) Reform Act of 2013 (Pub. L. 113-67) and amended by section 51005(a) of the Bipartisan Budget Act of 2018 (Pub. L. 115-123), which provided for the establishment of site neutral payment rate criteria under the LTCH PPS with implementation beginning in FY 2016, and provides for a 4-year transitional blended payment rate for discharges occurring in LTCH cost reporting periods beginning in FYs 2016 through 2019. Section 51005(b) of the Bipartisan Budget Act of 2018 amended section 1886(m)(6)(B)(ii) by adding new clause (iv), which specifies that the IPPS comparable amount defined in subclause (I) shall be reduced by 4.6 percent for FYs 2018 through 2026.

Section 1886(m)(6) of the Act, as amended by section 15009 of the 21st Century Cures Act (Pub. L. 114-255), which provides for a temporary exception to the application of the site neutral payment rate under the LTCH PPS for certain spinal cord specialty hospitals for discharges in cost reporting periods beginning during FYs 2018 and 2019.

Section 1886(m)(6) of the Act, as amended by section 15010 of the 21st Century Cures Act (Pub. L. 114-255), which provides for a temporary exception to the application of the site neutral payment rate under the LTCH PPS for certain LTCHs with certain discharges with severe wounds occurring in cost reporting periods beginning during FY 2018.

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 in the LTCH QRP for change in mobility among inpatients requiring ventilator support.

Section 1899B of the Act, as added by section 2(a) of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act, Pub. L. 113-185), which provides for the establishment of standardized data reporting for certain post-acute care providers, including LTCHs.

2. Improving Patient Outcomes and Reducing Burden Through Meaningful Measures

Regulatory reform and reducing regulatory burden are high priorities for CMS. To reduce the regulatory burden on the healthcare industry, lower health care costs, and enhance patient care, in October 2017, we launched the Meaningful Measures Initiative.\1\ This initiative is one component of our agency-wide Patients Over Paperwork Initiative,\2\ which is aimed at evaluating and streamlining regulations with a goal to reduce unnecessary cost and burden, increase efficiencies, and improve beneficiary experience. The Meaningful Measures Initiative is aimed at identifying the highest priority areas for quality measurement and quality improvement in order to assess the core quality of care issues that are most vital

Page 20168

to advancing our work to improve patient outcomes. The Meaningful Measures Initiative represents a new approach to quality measures that will foster operational efficiencies and will reduce costs, including collection and reporting burden while producing quality measurement that is more focused on meaningful outcomes.

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\1\ Meaningful Measures webpage: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/MMF/General-info-Sub-Page.html.

\2\ Remarks by Administrator Seema Verma at the Health Care Payment Learning and Action Network (LAN) Fall Summit, as prepared for delivery on October 30, 2017. Available at: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2017-Fact-Sheet-items/2017-10-30.html.

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The Meaningful Measures framework has the following objectives:

Address high-impact measure areas that safeguard public health;

Patient-centered and meaningful to patients;

Outcome-based where possible;

Fulfill each program's statutory requirements;

Minimize the level of burden for health care providers (for example, through a preference for EHR-based measures where possible, such as electronic clinical quality measures; \3\

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\3\ Refer to section VIII.A.9.c.of the preamble of this proposed rule where we are seeking public comment on the potential future development and adoption of eCQMs.

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Significant opportunity for improvement;

Address measure needs for population based payment through alternative payment models; and

Align across programs and/or with other payers.

In order to achieve these objectives, we have identified 19 Meaningful Measures areas and mapped them to six overarching quality priorities as shown in the following table:

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

Quality priority Meaningful measure area

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

Making Care Safer by Reducing Harm Healthcare-Associated

Caused in the Delivery of Care. Infections

Preventable Healthcare Harm

Strengthen Person and Family Engagement Care is Personalized and

as Partners in Their Care. Aligned with Patient's Goals

End of Life Care According to

Preferences

Patient's Experience of Care

Patient Reported Functional

Outcomes

Promote Effective Communication and Medication Management

Coordination of Care. Admissions and Readmissions to

Hospitals

Transfer of Health Information

and Interoperability

Promote Effective Prevention and Preventive Care

Treatment of Chronic Disease. Management of Chronic

Conditions

Prevention, Treatment, and

Management of Mental Health

Prevention and Treatment of

Opioid and Substance Use

Disorders

Risk Adjusted Mortality

Work with Communities to Promote Best Equity of Care

Practices of Healthy Living. Community Engagement

Make Care Affordable................... Appropriate Use of Healthcare

Patient-focused Episode of Care

Risk Adjusted Total Cost of

Care

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

By including Meaningful Measures in our programs, we believe that we can also address the following cross-cutting measure criteria:

Eliminating disparities;

Tracking measurable outcomes and impact;

Safeguarding public health;

Achieving cost savings;

Improving access for rural communities; and

Reducing burden.

We believe that the Meaningful Measures Initiative will improve outcomes for patients, their families, and health care providers while reducing burden and costs for clinicians and providers as well as promoting operational efficiencies.

3. Summary of the Major Provisions

Below we provide a summary of the major provisions in this proposed rule. In general, these major provisions are being proposed as part of the annual update to the payment policies and payment rates, consistent with the applicable statutory provisions. A general summary of the proposed changes included in this proposed rule is presented below in section I.D. of this preamble.

  1. MS-DRG Documentation and Coding Adjustment

    Section 631 of the American Taxpayer Relief Act of 2012 (ATRA, Pub. L. 112-240) amended section 7(b)(1)(B) of Public Law 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. The FY 2014 through FY 2017 adjustments represented 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 Public Law 110-

    90. Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) Therefore, for FY 2019, we are proposing to make an adjustment of +0.5 percent to the standardized amount.

  2. Expansion of the Postacute Care Transfer Policy

    Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, we are proposing to make conforming amendments to Sec. 412.4(c) of the regulation, effective for discharges on or after October 1, 2018, to specify that if a discharge is assigned to one of the MS-DRGs subject to the postacute care transfer policy and the individual is transferred to hospice care by a hospice program, the discharge would be subject to payment as a transfer case.

  3. DSH Payment Adjustment and Additional Payment for Uncompensated Care

    Section 3133 of the Affordable Care Act modified the Medicare

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    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 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 the amount that otherwise would have been paid as Medicare DSH payments, is 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 proposed rule, we are proposing to update our estimates of the three factors used to determine uncompensated care payments for FY 2019. We are continuing to use uninsured estimates produced by CMS' Office of the Actuary (OACT) as part of the development of the National Health Expenditure Accounts (NHEA) in the calculation of Factor 2. We also are continuing to incorporate data from Worksheet S-10 in the calculation of hospitals' share of the aggregate amount of uncompensated care by combining data on uncompensated care costs from Worksheet S-10 for FYs 2014 and 2015 with proxy data regarding a hospital's share of low-income insured days for FY 2013 to determine Factor 3 for FY 2019. In addition, we are proposing to use only data regarding low-income insured days for FY 2013 to determine the amount of uncompensated care payments for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers. For this proposed rule, we also are proposing the following policies: (1) For providers with multiple cost reports beginning in the same fiscal year, to use the longest cost report and annualize Medicaid data and uncompensated care data if a hospital's cost report does not equal 12 months of data; (2) in the rare case where a provider has multiple cost reports beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year such that the hospital has no cost report for that fiscal year, the cost report that spans both fiscal years would be used for the latter fiscal year; and (3) to apply statistical trim methodologies to potentially aberrant cost-to-charge ratios (CCRs) and potentially aberrant uncompensated care costs reported on the Worksheet S-10.

  4. Proposed Changes to the LTCH PPS

    In this 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 2019. In addition, we are proposing to eliminate the 25-percent threshold policy, and under this proposal we would apply a one-time permanent adjustment of approximately -0.9 percent to the LTCH PPS standard Federal payment rate to ensure this proposed elimination of the 25-percent threshold policy is budget neutral.

  5. Reduction of Hospital Payments for Excess Readmissions

    We are proposing to make 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 and further amended by section 15002 of the 21st Century Cures 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 2018 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 proposed rule, we are proposing to establish the applicable periods for FY 2019, FY 2020, and FY 2021. We are also proposing to codify the definitions of dual-eligible patients, the proportion of dual-eligibles, and the applicable period for dual-

    eligibility.

  6. 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. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients, clinicians, and providers in our quality programs and the Patients Over Paperwork Initiative to reduce costs and burden and program complexity as discussed in section I.A.2. of the preamble of this proposed rule, we are proposing to remove a total of 10 measures from the Hospital VBP Program, all of which would continue to be used in the Hospital IQR Program or the HAC Reduction Program, in order to reduce the costs and complexity of tracking these measures in multiple programs. We also are proposing to adopt measure removal factors for the Hospital VBP Program. Specifically, we are proposing to remove six measures beginning with the FY 2021 program year: (1) Elective Delivery (NQF #0469) (PC-01); (2) National Healthcare Safety Network (NHSN) Catheter-

    Associated Urinary Tract Infection (CAUTI) Outcome Measure (NQF #0138); (3) National Healthcare Safety Network (NHSN) Central Line-Associated Bloodstream Infection (CLABSI) Outcome Measure (NQF #0139); (4) American College of Surgeons-Centers for Disease Control and Prevention (ACS-CDC) Harmonized Procedure Specific Surgical Site Infection (SSI) Outcome Measure (NQF #0753); (5) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Methicillin-resistant Staphylococcus aureus Bacteremia (MRSA) Outcome Measure (NQF #1716); and (6) National Healthcare Safety Network (NHSN) Facility-wide Inpatient Hospital-onset Clostridium difficile Infection (CDI) Outcome Measure (NQF #1717). We are also proposing to remove four measures from the Hospital VBP Program effective with the effective date of the FY 2019 IPPS/LTCH PPS final rule: (1) Patient Safety and Adverse Events (Composite) (NQF #0531) (PSI 90); (2) Hospital-Level, Risk-Standardized Payment Associated With a 30-Day Episode-of-Care for Acute Myocardial Infarction (NQF #2431) (AMI Payment); (3) Hospital-Level, Risk-

    Standardized Payment Associated With a 30-Day Episode-of-Care for Heart Failure (NQF #2436) (HF Payment); and (4) Hospital-Level, Risk-

    Standardized Payment Associated With a 30-Day Episode-of-Care for Pneumonia (PN Payment) (NQF #2579). In addition, we are proposing to rename the Clinical Care domain as the Clinical Outcomes domain beginning with the FY 2020 program year; we are proposing to remove the Safety domain from the Hospital VBP Program, if our proposals to removal all of the measures in this domain are finalized, and to weight the three remaining domains as follows: Clinical Outcomes domain--50 percent; Person and Community Engagement domain--25 percent; and Efficiency and Cost Reduction domain--25 percent.

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  7. 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 in the worst-

    performing 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. As part of our agency-wide Patients over Paperwork and Meaningful Measures Initiatives, discussed in section I.A.2. of the preamble of this proposed rule, we are proposing that the measures currently included in the HAC Reduction Program should be retained because the measures address a performance gap in patient safety and reducing harm caused in the delivery of care. In this proposed rule, we are proposing to: (1) Establish administrative policies to collect, validate, and publicly report NHSN healthcare-associated infection (HAI) quality measure data that facilitate a seamless transition, independent of the Hospital IQR Program, beginning with January 1, 2019 infectious events; (2) change the scoring methodology by removing domains and assigning equal weighting to each measure for which a hospital has a measure; and (3) establish the applicable period for FY 2021. In addition, we are seeking stakeholder comment regarding the potential future inclusion of additional measures, including eCQMs.

  8. Hospital Inpatient Quality Reporting (IQR) Program

    Under section 1886(b)(3)(B)(viii) of the Act, subsection (d) hospitals are required to report data on measures selected by the Secretary for a fiscal year in order to receive the full annual percentage increase that would otherwise apply to the standardized amount applicable to discharges occurring in that fiscal year.

    In this proposed rule, we are proposing several changes. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients and clinicians in our quality programs and the Patients Over Paperwork initiative to reduce burden, cost, and program complexity as discussed in section I.A.2. of the preamble of this proposed rule, we are proposing to add a new measure removal factor and to remove a total of 39 measures from the Hospital IQR Program. For a full list of measures proposed for removal, we refer readers to section VIII.A.4.b. of the preamble of this proposed rule. Beginning with the CY 2018 reporting period/FY 2020 payment determination and subsequent years, we are proposing to remove 17 claims-based measures and two structural measures. Beginning with the CY 2019 reporting period/FY 2021 payment determination and subsequent years, we are proposing to remove eight chart-abstracted measures and two claims-based measures. Beginning with the CY 2020 reporting period/FY 2022 payment determination and subsequent years, we are proposing to remove one chart-abstracted measure, one claimsdashbased measure, and seven eCQMs from the Hospital IQR Program measure set. Beginning with the CY 2021 reporting period/FY 2023 payment determination, we are proposing to remove one claims-based measure.

    In addition, for the CY 2019 reporting period/FY 2021 payment determination, we are proposing to: (1) Require the same eCQM reporting requirements that were adopted for the CY 2018 reporting period/FY 2020 payment determination (82 FR 38355 through 38361), such that hospitals submit one, self-selected calendar quarter of 2019 discharge data for 4 eCQMs in the Hospital IQR Program measure set; and (2) require that hospitals use the 2015 Edition certification criteria for CEHRT. These proposals are in alignment with proposals or current established policies under the Medicare and Medicaid Promoting Interoperability Programs (previously known as the Medicare and Medicaid EHR Incentive Programs). In addition, we are seeking public comment on two measures for potential future inclusion in the Hospital IQR Program, as well as the potential future development and adoption of electronic clinical quality measures generally.

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

    The LTCH QRP is authorized by section 1886(m)(5) of the Act and applies to all hospitals certified by Medicare as long-term care hospitals (LTCHs). Under the LTCH QRP, the Secretary reduces by 2 percentage points the annual update to the LTCH PPS standard Federal rate for discharges for an LTCH during a fiscal year if the LTCH fails to submit data in accordance with the LTCH QRP requirements specified for that fiscal year. As part of agency-wide efforts under the Meaningful Measures Initiative to use a parsimonious set of the most meaningful measures for patients and clinicians in our quality programs and the Patients Over Paperwork Initiative to reduce cost and burden and program complexity as discussed in section I.A.2. of the preamble of this proposed rule, we are proposing to remove three measures from the LTCH QRP. We also are proposing to adopt a new measure removal factor and are proposing to codify the measure removal factors in our regulations. In addition, we are proposing to update our regulations to change methods by which an LTCH is notified of noncompliance with the requirements of the LTCH QRP for a program year; and how CMS will notify an LTCH of a reconsideration decision.

    4. Summary of Costs and Benefits

    Adjustment for MS-DRG Documentation and Coding Changes. Section 414 of the MACRA replaced the single positive adjustment we intended to make in FY 2018 once the recoupment required by section 631 of the ATRA was complete with a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. (The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.) For FY 2019, we are proposing to make an adjustment of +0.5 percent to the standardized amount consistent with the MACRA.

    Expansion of the Postacute Care Transfer Policy. Section 53109 of the Bipartisan Budget Act of 2018 amended section 1886(d)(5)(J)(ii) of the Act to also include discharges to hospice care by a hospice program as a qualified discharge, effective for discharges occurring on or after October 1, 2018. Accordingly, we are proposing to make conforming amendments to Sec. 412.4(c) of the regulation to specify that, effective for discharges on or after October 1, 2018, if a discharge is assigned to one of the MS-DRGs subject to the postacute care transfer policy and the individual is transferred to hospice care by a hospice program, the discharge would be subject to payment as a transfer case. We estimate that this statutory expansion to the postacute care transfer policy will reduce Medicare payments under the IPPS by approximately $240 million in FY 2019.

    Proposed 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

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    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 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 remainder, equal to an estimate of 75 percent of what otherwise would have been paid as Medicare DSH payments, is 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 2019, we are proposing to update our estimates of the three factors used to determine uncompensated care payments. We are continuing to use uninsured estimates produced by OACT as part of the development of the NHEA in the calculation of Factor 2. We also are continuing to incorporate data from Worksheet S-10 in the calculation of hospitals' share of the aggregate amount of uncompensated care by combining data on uncompensated care costs from Worksheet S-10 for FY 2014 and FY 2015 with proxy data regarding a hospital's share of low-

    income insured days for FY 2013 to determine Factor 3 for FY 2019. To determine the amount of uncompensated care for Puerto Rico hospitals, Indian Health Service and Tribal hospitals, and all-inclusive rate providers, we are proposing to use only the data regarding low-income insured days for FY 2013. In addition, in this proposed rule, we are proposing the following policies: (1) For providers with multiple cost reports beginning in the same fiscal year, to use the longest cost report and annualize Medicaid data and uncompensated care data if a hospital's cost report does not equal 12 months of data; (2) in the rare case where a provider has multiple cost reports beginning in the same fiscal year, but one report also spans the entirety of the following fiscal year such that the hospital has no cost report for that fiscal year, the cost report that spans both fiscal years would be used for the latter fiscal year; and (3) to apply statistical trim methodologies to potentially aberrant CCRs and potentially aberrant uncompensated care costs.

    We are projecting that proposed estimated Medicare DSH payments, and additional payments for uncompensated care made for FY 2019, would increase payments overall by approximately 1.3 percent as compared to the estimate of overall payments, including Medicare DSH payments and uncompensated care payments that will be distributed in FY 2018. 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.

    Proposed Update to the LTCH PPS Payment Rates and Other Payment Policies. Based on the best available data for the 409 LTCHs in our database, we estimate that the proposed changes to the payment rates and factors that we are presenting in the preamble and Addendum of this proposed rule, which reflects the continuation of the transition of the statutory application of the site neutral payment rate, the update to the LTCH PPS standard Federal payment rate for FY 2019, and the proposed one-time permanent adjustment of approximately-

    0.9 percent to the LTCH PPS standard Federal payment rate to ensure this proposed elimination of the 25dashpercent threshold policy is budget neutral would result in an estimated decrease in payments in FY 2019 of approximately $5 million.

    Proposed Changes to the Hospital Readmissions Reduction Program. For FY 2019 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 proposed rule, we estimate that 2,610 hospitals would have their base operating DRG payments reduced by their determined proposed proxy FY 2019 hospital-specific readmission adjustment. As a result, we estimate that the Hospital Readmissions Reduction Program would save approximately $566 million in FY 2019.

    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 2019 program year in the aggregate because, by law, the amount available for valuedashbased 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 2019 program year and, therefore, the estimated amount available for value-based incentive payments for FY 2019 discharges is approximately $1.9 billion.

    Proposed Changes to the HAC Reduction Program. A hospital's Total HAC score and its ranking in comparison to other hospitals in any given year depend on several different factors. Any significant impact due to the proposed HAC Reduction Program changes for FY 2019, including which hospitals would receive the adjustment, would depend on actual experience.

    The proposed removal of NHSN HAI measures from the Hospital IQR Program and the subsequent cessation of its validation processes for NHSN HAI measures and proposed creation of a validation process for the HAC Reduction program represent no net change in reporting burden across CMS hospital quality programs. However, if our proposal to remove HAI chart-abstracted measures from the Hospital IQR Program is finalized, we anticipate a total burden shift of 43,200 hours and approximately $1.6 million as a result of no longer needing to validate those HAI measures under the Hospital IQR Program and beginning the validation process under the HAC Reduction Program.

    Proposed Changes to the Hospital Inpatient Quality Reporting (IQR) Program. Across 3,300 IPPS hospitals, we estimate that our proposed requirements for the Hospital IQR Program would result in the following changes to costs and burdens related to information collection for this program compared to previously adopted requirements: (1) A total collection of information burden reduction of 1,046,071 hours and a total cost reduction of approximately $38.3 million for the CY 2019 reporting period/FY 2021 payment determination, due to the proposed removal of ED-1, IMM-2, and VTE-6 measures; and (2) a total collection of information burden reduction of 901,200 hours and a total cost reduction of $33 million for the CY 2020 reporting period/

    FY 2022 payment determination, due to: (a) The proposed removal of ED-

    2, and (b) validation of the NHSN HAI measures no longer being conducted under the Hospital IQR Program once the HAC Reduction Program begins validating these measures, as proposed in the preamble

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    of this proposed rule for the HAC Reduction Program.

    Further, we anticipate that the proposed removal of 39 measures would result in a reduction in costs unrelated to information collection. For example, it may be costly for health care providers to track the confidential feedback, preview reports, and publicly reported information on a measure where we use the measure in more than one program. Also, when measures are in multiple programs, maintaining the specifications for those measures, as well as the tools we need to collect, validate, analyze, and publicly report the measure data may result in costs to CMS. In addition, beneficiaries may find it confusing to see public reporting on the same measure in different programs. We anticipate that our proposals will reduce the above-

    described costs.

    Proposed Changes Related to the LTCH QRP. In this proposed rule, we are proposing to remove three measures from the LTCH QRP, two measures beginning with the FY 2020 LTCH QRP and one measure beginning with the FY 2021 LTCH QRP. We also are proposing a new quality measure removal factor for the LTCH QRP. We estimate that the impact of these proposed changes is a reduction in costs of approximately $1,148 per LTCH annually or approximately $482,469 for all LTCHs annually.

    B. Background 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 capitaldashrelated 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 diagnosisdashrelated 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 adddashon 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 hospitaldashspecific 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 2022. 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 hospitaldashspecific rate. For discharges occurring on or after October 1, 2007, but before October 1, 2022, 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 (or, as amended by the Bipartisan Budget Act of 2018, a hospital located in a State with no rural area that meets certain statutory criteria), 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.

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    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 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; extended neoplastic disease care 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 included along with the IPPS annual update in this 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 ratedashofdashincrease ceiling on inpatient operating costs. Similarly, extended neoplastic disease care hospitals are paid on a reasonable cost basis subject to a ratedashofdashincrease 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 through September 30, 2016, all LTCHs were 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 generally paid for 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) of the Act and existing regulations under 42 CFR part 413.

    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 Proposed To Be Implemented in This Proposed Rule

    1. 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 patientdashspecific criteria. In this proposed rule, we are continuing to update certain policies that implemented provisions under section 1206 of the Pathway for SGR Reform Act.

    2. 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 Hospital Quality Reporting Program (LTCH QRP). In this proposed rule, we are proposing to continue to implement portions of section 1899B of the Act, as added by section 2(a) 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.

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

    Section 414 of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, Pub. L. 114-10) specifies a 0.5 percent positive adjustment to the standardized amount of Medicare payments to acute care hospitals for FYs 2018 through 2023. These adjustments follow the recoupment adjustment to the standardized amounts under section 1886(d) of the Act based upon the Secretary's estimates for discharges occurring from FYs 2014 through 2017 to fully offset $11 billion, in accordance with section 631 of the ATRA. The FY 2018 adjustment was subsequently adjusted to 0.4588 percent by section 15005 of the 21st Century Cures Act.

    4. The 21st Century Cures Act (Pub. L. 114-255)

    The 21st Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016, contained the following provision affecting payments under the Hospital Readmissions Reduction Program,

    Page 20174

    which we are proposing to continue to implement in this proposed rule:

    Section 15002, which amended section 1886(q)(3) of the Act by adding subparagraphs (D) and (E), which requires the Secretary to develop a methodology for calculating the excess readmissions adjustment factor for the Hospital Readmissions Reduction Program based on cohorts defined by the percentage of dual-eligible patients (that is, patients who are eligible for both Medicare and full-benefit Medicaid coverage) cared for by a hospital. In this proposed rule, we are proposing to continue to implement changes to the payment adjustment factor to assess penalties based on a hospital's performance relative to other hospitals treating a similar proportion of dual-

    eligible patients.

    5. The Bipartisan Budget Act of 2018 (Pub. L. 115-123)

    The Bipartisan Budget Act of 2018 (Pub. L. 115-123), enacted on February 9, 2018, contains provisions affecting payments under the IPPS and the LTCH PPS, which we are proposing to implement or continue to implement in this proposed rule:

    Section 50204 amended section 1886(d)(12) of the Act to provide for certain temporary changes to the low-volume hospital payment adjustment policy for FYs 2018 through 2022. For FY 2018, this provision extends the qualifying criteria and payment adjustment formula that applied for FYs 2011 through 2017. For FYs 2019 through 2022, this provision modifies the discharge criterion and payment adjustment formula. In FY 2023 and subsequent fiscal years, the qualifying criteria and payment adjustment revert to the requirements that were in effect for FYs 2005 through 2010.

    Section 50205 extends the MDH program through FY 2022. It also provides for an eligible hospital that is located in a State with no rural area to qualify for MDH status under an expanded definition if the hospital satisfies any of the statutory criteria at section 1886(d)(8)(E)(ii)(I), (II) (as of January 1, 2018), or (III) of the Act to be reclassified as rural.

    Section 51005(a) modified section 1886(m)(6) of the Act by extending the blended payment rate for site neutral payment rate LTCH discharges for cost reporting periods beginning in FY 2016 by an additional 2 years (FYs 2018 and 2019). In addition, section 51005(b) reduces the LTCH IPPS comparable per diem amount used in the site neutral payment rate for FYs 2018 through 2026 by 4.6 percent. In this proposed rule, we are proposing to make conforming changes to the existing regulations.

    Section 53109 modified section 1886(d)(5)(J) of the Act to require that, beginning in FY 2019, discharges to hospice care will also qualify as a postacute care transfer and be subject to payment adjustments.

    D. Summary of the Provisions of This Proposed Rule

    In this proposed rule, we are setting forth proposed payment and policy changes to the Medicare IPPS for FY 2019 operating costs and for capital-related costs of acute care hospitals and certain hospitals and hospital units that are excluded from IPPS. In addition, we are setting 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 2019.

    Below is a general summary of the proposed changes included in this proposed rule.

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

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

    Proposed changes to MS-DRG classifications based on our yearly review for FY 2019.

    Proposed adjustment to the standardized amounts under section 1886(d) of the Act for FY 2019 in accordance with the amendments made to section 7(b)(1)(B) of Public Law 110-90 by section 414 of the MACRA.

    Proposed recalibration of the MS-DRG relative weights.

    A discussion of the proposed FY 2019 status of new technologies approved for add-on payments for FY 2018 and a presentation of our evaluation and analysis of the FY 2019 applicants for adddashon 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 this proposed rule, we are proposing to make revisions to the wage index for acute care hospitals and the annual update of the wage data. Specific issues addressed include, but are not limited to, the following:

    The proposed FY 2019 wage index update using wage data from cost reporting periods beginning in FY 2015.

    Proposal regarding other wage-related costs in the wage index.

    Calculation of the proposed occupational mix adjustment for FY 2019 based on the 2016 Occupational Mix Survey.

    Analysis and implementation of the proposed FY 2019 occupational mix adjustment to the wage index for acute care hospitals.

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

    Proposals to codify policies regarding multicampus hospitals.

    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.

    The proposed adjustment to the wage index for acute care hospitals for FY 2019 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 2019 wage index.

    Public comment solicitation on wage index disparities.

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

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

    Proposed changes to MS-DRGs subject to the postacute care transfer policy and special payment policy and implementation of the statutory changes to the postacute care transfer policy.

    Proposed changes to the inpatient hospital update for FY 2019.

    Proposed changes related to the statutory changes to the low-volume hospital payment adjustment policy.

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

    The statutorily required IME adjustment factor for FY 2019.

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

    Proposed changes to the effective date of SCH and MDH classification status determinations.

    Proposed changes related to the extension of the MDH program.

    Proposed changes to the rules for payment adjustments under the Hospital Readmissions Reduction Program based on hospital readmission

    Page 20175

    measures and the process for hospital review and correction of those rates for FY 2019.

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

    Proposed requirements for payment adjustments to hospitals under the HAC Reduction Program for FY 2019.

    Proposed changes to Medicare GME affiliation agreements for new urban teaching hospitals.

    Discussion of and proposals relating to the implementation of the Rural Community Hospital Demonstration Program in FY 2019.

    Proposed revisions of the hospital inpatient admission orders documentation requirements.

    4. Proposed FY 2019 Policy Governing the IPPS for Capital-Related Costs

    In section V. of the preamble to this proposed rule, we discuss the proposed payment policy requirements for capitaldashrelated costs and capital payments to hospitals for FY 2019.

    5. Proposed Changes to the Payment Rates for Certain Excluded Hospitals: RatedashofdashIncrease Percentages

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

    Proposed changes to payments to certain excluded hospitals for FY 2019.

    Proposed changes to the regulations governing satellite facilities.

    Proposed changes to the regulations governing excluded units of hospitals.

    Proposed continued 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 2019.

    Proposed changes to the blended payment rate for site neutral payment rate cases.

    Proposed elimination of the 25-percent threshold policy.

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

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

    Proposed requirements for the Hospital Inpatient Quality Reporting (IQR) Program.

    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 requirements pertaining to the clinical quality measurement for eligible hospitals and CAHs participating in the Medicare and Medicaid Promoting Interoperability Programs.

    8. Proposed Revision to the Supporting Documentation Requirements for an Acceptable Medicare Cost Report Submission

    In section IX. of the preamble of this proposed rule, we set forth proposed revisions to the supporting documentation required for an acceptable Medicare cost report submission.

    9. Requirements for Hospitals To Make Public List of Standard Charges

    In section X. of the preamble of this proposed rule, we discuss our efforts to further improve the public accessibility of hospital standard charge information, effective January 1, 2019, in accordance with section 2718(e) of the Public Health Service Act.

    10. Proposed Revisions Regarding Physician Certification and Recertification of Claims

    In section XI. of the preamble of this proposed rule, we set forth proposed revisions to the requirements for supporting information used for physician certification and recertification of claims.

    11. Request for Information

    In section XII. of the preamble of this proposed rule, we include a request for information on possible establishment of CMS patient health and safety requirements for hospitals and other Medicare- and Medicaid-

    participating providers and suppliers for interoperable electronic health records and systems for electronic health care information exchange.

    12. Determining Prospective Payment Operating and Capital Rates and RatedashofdashIncrease Limits for Acute Care Hospitals

    In section V. of the Addendum to this proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2019 prospective payment rates for operating costs and capital-related costs for acute care hospitals. We are proposing to establish the threshold amounts for outlier cases. In addition, we address the update factors for determining the ratedashofdashincrease limits for cost reporting periods beginning in FY 2019 for certain hospitals excluded from the IPPS.

    13. Determining Prospective Payment Rates for LTCHs

    In section V. of the Addendum to this proposed rule, we set forth proposed changes to the amounts and factors for determining the proposed FY 2019 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 2019. We are proposing to establish the adjustments for wage levels, the labordashrelated 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.

    14. Impact Analysis

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

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

    In Appendix B of this proposed rule, as required by sections 1886(e)(4) and (e)(5) of the Act, we provide our recommendations of the appropriate percentage changes for FY 2019 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 hospitaldashspecific 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.

    16. 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 2018 recommendations concerning hospital inpatient payment policies address the update factor for hospital inpatient operating costs and capital-related costs for hospitals under

    Page 20176

    the IPPS. We address these recommendations in Appendix B of this proposed rule. For further information relating specifically to the MedPAC March 2018 report or to obtain a copy of the report, contact MedPAC at (202) 220-3700 or visit MedPAC's website at: http://www.medpac.gov.

    II. Proposed 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.

    Section 1886(d)(4)(C) of the Act requires that the Secretary adjust the DRG classifications and relative weights at least annually to account for changes in resource consumption. 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 through 2018 IPPS/LTCH PPS final rules (75 FR 50053 through 50055; 76 FR 51485 through 51487; 77 FR 53273; 78 FR 50512; 79 FR 49871; 80 FR 49342; 81 FR 56787 through 56872; and 82 FR 38010 through 38085, 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. Proposed FY 2019 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 and the Recoupment or Repayment Adjustment Authorized by Section 631 of the American Taxpayer Relief Act of 2012 (ATRA)

    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. 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 percentage points to the national standardized amount. We provided for phasing in this -4.8 percentage point adjustment over 3 years. Specifically, we established prospective documentation and coding adjustments of -1.2 percentage points for FY 2008, -1.8 percentage points for FY 2009, and -1.8 percentage points 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 (Pub. L. 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 percentage point for FY 2008 and -0.9 percentage point for FY 2009.

    As discussed in prior year rulemakings, and most recently in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56780 through 56782), we implemented a series of adjustments required under sections 7(b)(1)(A) and 7(b)(1)(B) of Public Law 110-90, based on a retrospective review of FY 2008 and FY 2009 claims data. We completed these adjustments in FY 2013, but indicated in the FY 2013 IPPS/LTCH PPS final rule (77 FR 53274 through 53275) that delaying full implementation 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, and that these overpayments could not be recovered under Public Law 110-90.

    In addition, as discussed in prior rulemakings and most recently in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38008 through 38009), 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 represented 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.

    2. Adjustment Made for FY 2018 as Required Under Section 414 of Public Law 114-10 (MACRA) and Section 15005 of Public Law 114-255

    As stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56785), once the recoupment required under section 631 of the ATRA 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 (which was enacted on April 16, 2015) replaced the single positive adjustment we intended to make in FY 2018 with a 0.5 percentage point positive adjustment for each of FYs 2018 through 2023. In the FY 2017 rulemaking, we indicated that we would address the adjustments for FY 2018 and later fiscal years in future rulemaking. Section 15005 of the 21st Century Cures Act (Pub. L. 114-255), which was enacted on December 13, 2016, amended section 7(b)(1)(B) of the TMA, as amended by section 631 of the ATRA and section 414 of the MACRA, to reduce the adjustment for FY 2018 from a 0.5 percentage point to a 0.4588 percentage point. As we discussed in the FY 2018

    Page 20177

    rulemaking, we believe the directive under section 15005 of Public Law 114-255 is clear. Therefore, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38009) for FY 2018, we implemented the required +0.4588 percentage point adjustment to the standardized amount. This is a permanent adjustment to payment rates. While we did not address future adjustments required under section 414 of the MACRA and section 15005 of Public Law 114-255 at that time, we stated that we expected to propose positive 0.5 percentage point adjustments to the standardized amounts for FYs 2019 through 2023.

    3. Proposed Adjustment for FY 2019

    Consistent with the requirements of section 414 of the MACRA, we are proposing to implement a positive 0.5 percentage point adjustment to the standardized amount for FY 2019. This would be a permanent adjustment to payment rates. We plan to propose future adjustments required under section 414 of the MACRA for FYs 2020 through 2023 in future rulemaking.

    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 costdashbased 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. We also refer readers to the FY 2017 IPPS/

    LTCH PPS final rule (81 FR 56785 through 56787) for a detailed discussion of the history of changes to the number of cost centers used in calculating the DRG relative weights. Since FY 2014, we calculate the IPPS MS-DRG relative weights using 19 CCRs, which now include distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization.

    2. Discussion of Policy for FY 2019

    Consistent with our established policy, we are calculating the proposed MS-DRG relative weights for FY 2019 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 proposed 19 CCRs and the proposed MS-DRG relative weights for FY 2019 is included in section II.G. of the preamble to this FY 2019 IPPS/LTCH PPS proposed rule. As we did with the FY 2018 IPPS/LTCH PPS final rule, for this proposed rule, we are providing the version of the HCRIS from which we calculated these proposed 19 CCRs on the CMS website 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 2019 IPPS Proposed Rule Home Page'' or ``Acute Inpatient Files for Download.''

    F. Proposed Changes to Specific MS-DRG Classifications

    1. Discussion of Changes to Coding System and Basis for Proposed FY 2019 MS-DRG Updates

  10. 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 ICD-10-CM and ICD-10-PCS Official Guidelines for Coding and Reporting. For a detailed discussion of the conversion of the MS-DRGs to ICD-10, we refer readers to the FY 2017 IPPS/LTCH PPS final rule (81 FR 56787 through 56789).

  11. Basis for Proposed FY 2019 MS-DRG Updates

    CMS has previously encouraged input from our stakeholders concerning the annual IPPS updates when that input was made available to us by December 7 of the year prior to the next annual proposed rule update. As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38010), as we work with the public to examine the ICD-10 claims data used for updates to the ICD-10 MS DRGs, we would like to examine areas where the MS-DRGs can be improved, which will require additional time for us to review requests from the public to make specific updates, analyze claims data, and consider any proposed updates. Given the need for more time to carefully evaluate requests and propose updates, we changed the deadline to request updates to the MS-DRGs to November 1 of each year. This will provide an additional 5 weeks for the data analysis and review process. Interested parties had to submit any comments and suggestions for FY 2019 by November 1, 2017, and are encouraged to submit any comments and suggestions for FY 2020 by November 1, 2018 via the CMS MS-DRG Classification Change Request Mailbox located at: email protected. The comments that were submitted in a timely manner for FY 2019 are discussed in this section of the preamble of this proposed rule.

    Following are the changes that we are proposing to the MS-DRGs for FY 2019 in this FY 2019 IPPS/LTCH PPS proposed rule. We are inviting public comments on each of the MS-DRG classification proposed changes, as well as our proposals to maintain certain existing MS-DRG classifications discussed in this proposed rule. In some cases, we are proposing changes to the MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. In other cases, we are proposing to maintain the existing MS-DRG classifications based on our analysis of claims data and consultation with our clinical advisors. For this FY 2019 IPPS/LTCH PPS proposed rule, our MS-DRG analysis was based on ICD-10 claims data from the September 2017 update of the FY 2017 MedPAR file, which contains hospital bills received through September 30, 2017, for discharges occurring through September 30, 2017. In our discussion of the proposed MS-DRG reclassification changes, we refer to our analysis of claims data from the ``September 2017 update of the FY 2017 MedPAR file.''

    As explained in previous rulemaking (76 FR 51487), in deciding whether to propose to make further modifications 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 represented in the MS-DRG. We evaluate patient care costs using average costs and lengths of stay and rely on the judgment of our clinical advisors to determine whether patients are clinically distinct or similar to other patients represented in the MS-DRG. In evaluating resource costs, we consider both the absolute and percentage differences in average costs

    Page 20178

    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; and

    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.

    2. Pre-MDC

  12. Heart Transplant or Implant of Heart Assist System

    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we stated our intent to review the ICD-10 logic for Pre-MDC MS-DRGs 001 and 002 (Heart Transplant or Implant of Heart Assist System with and without MCC, respectively), as well as MS-DRG 215 (Other Heart Assist System Implant) and MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively) where procedures involving heart assist devices are currently assigned. We also encouraged the public to submit any comments on restructuring the MS-DRGs for heart assist system procedures to the CMS MS-DRG Classification Change Request Mailbox located at: email protected by November 1, 2017.

    The logic for Pre-MDC MS-DRGs 001 and 002 is comprised of two lists. The first list includes procedure codes identifying a heart transplant procedure, and the second list includes procedure codes identifying the implantation of a heart assist system. The list of procedure codes identifying the implantation of a heart assist system includes the following three codes.

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

    ICD-10-PCS code Code description

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

    02HA0QZ................... Insertion of implantable heart assist system

    into heart, open approach.

    02HA3QZ................... Insertion of implantable heart assist system

    into heart, percutaneous approach.

    02HA4QZ................... Insertion of implantable heart assist system

    into heart, percutaneous endoscopic

    approach.

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

    In addition to these three procedure codes, there are also 33 pairs of code combinations or procedure code ``clusters'' that, when reported together, satisfy the logic for assignment to MS-DRGs 001 and 002. The code combinations are represented by two procedure codes and include either one code for the insertion of the device with one code for removal of the device or one code for the revision of the device with one code for the removal of the device. The 33 pairs of code combinations are listed below.

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

    Code Code description Code Code description

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

    02HA0RS.................. Insertion of with 02PA0RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart, open

    assist system into approach.

    heart, open approach.

    02HA0RS.................. Insertion of with 02PA3RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous approach.

    heart, open approach.

    02HA0RS.................. Insertion of with 02PA4RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous endoscopic

    heart, open approach. approach.

    02HA0RZ.................. Insertion of short-term with 02PA0RZ................. Removal of short-term

    external heart assist external heart assist

    system into heart, open system from heart, open

    approach. approach.

    02HA0RZ.................. Insertion of short-term with 02PA3RZ................. Removal of short-term

    external heart assist external heart assist

    system into heart, open system from heart,

    approach. percutaneous approach.

    02HA0RZ.................. Insertion of short-term with 02PA4RZ................. Removal of short-term

    external heart assist external heart assist

    system into heart, open system from heart,

    approach. percutaneous endoscopic

    approach.

    02HA3RS.................. Insertion of with 02PA0RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart, open

    assist system into approach.

    heart, percutaneous

    approach.

    02HA3RS.................. Insertion of with 02PA3RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous approach.

    heart, percutaneous

    approach.

    02HA3RS.................. Insertion of with 02PA4RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous endoscopic

    heart, percutaneous approach.

    approach.

    02HA4RS.................. Insertion of with 02PA0RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart, open

    assist system into approach.

    heart, percutaneous

    endoscopic approach.

    Page 20179

    02HA4RS.................. Insertion of with 02PA3RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous approach.

    heart, percutaneous

    endoscopic approach.

    02HA4RS.................. Insertion of with 02PA4RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous endoscopic

    heart, percutaneous approach.

    endoscopic approach.

    02HA4RZ.................. Insertion of short-term with 02PA0RZ................. Removal of short-term

    external heart assist external heart assist

    system into heart, system from heart, open

    percutaneous endoscopic approach.

    approach.

    02HA4RZ.................. Insertion of short-term with 02PA3RZ................. Removal of short-term

    external heart assist external heart assist

    system into heart, system from heart,

    percutaneous endoscopic percutaneous approach.

    approach.

    02HA4RZ.................. Insertion of short-term with 02PA4RZ................. Removal of short-term

    external heart assist external heart assist

    system into heart, system from heart,

    percutaneous endoscopic percutaneous endoscopic

    approach. approach.

    02WA0QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, open approach. system from heart, open

    approach.

    02WA0QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, open approach. system from heart,

    percutaneous approach.

    02WA0QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, open approach. system from heart,

    percutaneous endoscopic

    approach.

    02WA0RZ.................. Revision of short-term with 02PA0RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, open system from heart, open

    approach. approach.

    02WA0RZ.................. Revision of short-term with 02PA3RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, open system from heart,

    approach. percutaneous approach.

    02WA0RZ.................. Revision of short-term with 02PA4RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, open system from heart,

    approach. percutaneous endoscopic

    approach.

    02WA3QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart, open

    approach. approach.

    02WA3QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart,

    approach. percutaneous approach.

    02WA3QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart,

    approach. percutaneous endoscopic

    approach.

    02WA3RZ.................. Revision of short-term with 02PA0RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, system from heart, open

    percutaneous approach. approach.

    02WA3RZ.................. Revision of short-term with 02PA3RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, system from heart,

    percutaneous approach. percutaneous approach.

    02WA3RZ.................. Revision of short-term with 02PA4RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, system from heart,

    percutaneous approach. percutaneous endoscopic

    approach.

    02WA4QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart, open

    endoscopic approach. approach.

    02WA4QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart,

    endoscopic approach. percutaneous approach.

    02WA4QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart,

    endoscopic approach. percutaneous endoscopic

    approach.

    02WA4RZ.................. Revision of short-term with 02PA0RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, system from heart, open

    percutaneous endoscopic approach.

    approach.

    02WA4RZ.................. Revision of short-term with 02PA3RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, system from heart,

    percutaneous endoscopic percutaneous approach.

    approach.

    02WA4RZ.................. Revision of short-term with 02PA4RZ................. Removal of short-term

    external heart assist external heart assist

    system in heart, system from heart,

    percutaneous endoscopic percutaneous endoscopic

    approach. approach.

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

    In response to our solicitation for public comments on restructuring the MS-DRGs for heart assist system procedures, commenters recommended that CMS maintain the current logic under the Pre-MDC MS-DRGs 001 and 002. Similar to the discussion in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38011 through 38012) involving MS-DRG 215 (Other Heart Assist System Implant), the commenters provided examples of common clinical scenarios involving a left ventricular assist device (LVAD) and included the procedure codes that were reported under the ICD-9 based MS-DRGs in comparison to the procedure codes reported under the ICD-10 MS-DRGs, which are reflected in the following table.

    Page 20180

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

    ICD-9-CM procedure

    Procedure code ICD-9 MS-DRG ICD-10-PCS codes ICD-10 MS-DRG

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

    New LVAD inserted................ 37.66 (Insertion of 001 or 002 02WA0QZ (Insertion of 001 or 002

    implantable heart implantable heart

    assist system). assist system into

    heart, open approach).

    02WA3QZ (Insertion of

    implantable heart

    assist system into

    heart, percutaneous

    approach).

    02WA4QZ (Insertion of

    implantable heart

    assist system into

    heart, percutaneous

    endoscopic approach).

    LVAD Exchange--existing LVAD is 37.63 (Repair of 215 02PA0QZ (Removal of 001 or 002

    removed and replaced with either heart assist implantable heart

    new LVAD system or new LVAD pump. system). assist system from

    heart, open approach).

    02PA3QZ (Removal of

    implantable heart

    assist system from

    heart, percutaneous

    approach).

    02PA4QZ (Removal of

    implantable heart

    assist system from

    heart, percutaneous

    endoscopic approach)

    and.

    02WA0QZ (Insertion of

    implantable heart

    assist system into

    heart, open approach).

    02WA3QZ (Insertion of

    implantable heart

    assist system into

    heart, percutaneous

    approach).

    02WA4QZ (Insertion of

    implantable heart

    assist system into

    heart, percutaneous

    endoscopic approach).

    LVAD revision and repair-- 37.63 (Repair of 215 02WA0QZ (Revision of 215

    existing LVAD is adjusted or heart assist implantable heart

    repaired without removing the system). assist system in heart,

    existing LVAD device. open approach).

    02WA3QZ (Revision of

    implantable heart

    assist system in heart,

    percutaneous approach).

    02WA4QZ (Revision of

    implantable heart

    assist system in heart,

    percutaneous endoscopic

    approach).

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

    The commenters noted that, for Pre-MDC MS-DRGs 001 and 002, the procedures involving the insertion of an implantable heart assist system, such as the insertion of a LVAD, and the procedures involving exchange of an LVAD (where an existing LVAD is removed and replaced with either a new LVAD or a new LVAD pump) demonstrate clinical similarities and utilize similar resources. Although the commenters recommended that CMS maintain the current logic under the Pre-MDC MS-

    DRGs 001 and 002, they also recommended that CMS continue to monitor the data in these MS-DRGs for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of patients undergoing procedures utilizing heart assist devices. The commenters also requested that coding guidance be issued for assignment of the correct ICD-10-PCS procedure codes describing LVAD exchanges to encourage accurate reporting of these procedures.

    We agree with the commenters that we should continue to monitor the data in Pre-MDC MS-DRGs 001 and 002 for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of patients undergoing procedures utilizing heart assist devices. In response to the request that coding guidance be issued for assignment of the correct ICD-10-PCS procedure codes describing LVAD exchanges to encourage accurate reporting of these procedures, as we noted in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), coding advice is issued independently from payment policy. We also noted that, historically, we have not provided coding advice in rulemaking with respect to policy (82 FR 38045). We collaborate with the American Hospital Association (AHA) through the Coding Clinic for ICD-10-CM and ICD-10-PCS to promote proper coding. We recommend that the requestor and other interested parties submit any questions pertaining to correct coding for these technologies to the AHA.

    In response to the public comments we received on this topic, we are providing the results of our claims analysis from the September 2017 update of the FY 2017 MedPAR file for cases in Pre-MDC MS-DRGs 001 and 002. Our findings are shown in the following table.

    MS-DRGs for Heart Transplant or Implant of Heart Assist System

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 001--All cases........................................... 1,993 35.6 $185,660

    MS-DRG 002--All cases........................................... 179 18.3 99,635

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

    As shown in this table, for MS-DRG 001, there were a total of 1,993 cases with an average length of stay of 35.6 days and average costs of $185,660. For MS-DRG 002, there were a total of 179 cases with an average length of stay of 18.3 days and average costs of $99,635.

    We then examined claims data in Pre-MDC MS-DRGs 001 and 002 for cases that reported one of the three procedure codes identifying the implantation of a heart assist system such as the LVAD. Our findings are shown in the following table.

    Page 20181

    MS-DRGs for Heart Transplant or Implant of Heart Assist System

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 001--All cases........................................... 1,993 35.6 $185,660

    MS-DRG 001--Cases with procedure code 02HA0QZ (Insertion of 1,260 35.5 206,663

    implantable heart assist system into heart, open approach).....

    MS-DRG 001--Cases with procedure code 02HA3QZ (Insertion of 1 8 33,889

    implantable heart assist system into heart, percutaneous

    approach)......................................................

    MS-DRG 001--Cases with procedure code 02HA4QZ (Insertion of 0 0 0

    implantable heart assist system into heart, percutaneous

    endoscopic approach)...........................................

    MS-DRG 002--All cases........................................... 179 18.3 99,635

    MS-DRG 002--Cases with procedure code 02HA0QZ (Insertion of 82 19.9 131,957

    implantable heart assist system into heart, open approach).....

    MS-DRG 002--Cases with procedure code 02HA3QZ (Insertion of 0 0 0

    implantable heart assist system into heart, percutaneous

    approach)......................................................

    MS-DRG 002--Cases with procedure code 02HA4QZ (Insertion of 0 0 0

    implantable heart assist system into heart, percutaneous

    endoscopic approach)...........................................

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

    As shown in this table, for MS-DRG 001, there were a total of 1,260 cases reporting procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) with an average length of stay of 35.5 days and average costs of $206,663. There was one case that reported procedure code 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) with an average length of stay of 8 days and average costs of $33,889. There were no cases reporting procedure code 02HA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach). For MS-DRG 002, there were a total of 82 cases reporting procedure code 02HA0QZ (Insertion of implantable heart assist system into heart, open approach) with an average length of stay of 19.9 days and average costs of $131,957. There were no cases reporting procedure codes 02HA3QZ (Insertion of implantable heart assist system into heart, percutaneous approach) or 02HA4QZ (Insertion of implantable heart assist system into heart, percutaneous endoscopic approach).

    We also examined the cases in MS-DRGs 001 and 002 that reported one of the possible 33 pairs of code combinations or clusters. Our findings are shown in the following 8 tables. The first table provides the total number of cases reporting a procedure code combination (or cluster) compared to all of the cases in the respective MS-DRG, followed by additional detailed tables showing the number of cases, average length of stay, and average costs for each specific code combination that was reported in the claims data.

    Heart Transplant or Implant of Heart Assist System

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

    Number of Average length

    MS-DRG 001 and 002 cases of stay Average costs

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

    MS-DRG 001--All cases........................................... 1,993 35.6 $185,660

    MS-DRG 001--Cases with a procedure code combination (cluster)... 149 28.4 179,607

    MS-DRG 002--All cases........................................... 179 18.3 99,635

    MS-DRG 002--Cases with a procedure code combination (cluster)... 6 3.8 57,343

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

    Procedure Code Combinations for Implant of Heart Assist System

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

    Number of Average length

    MS-DRG 001 cases of stay Average costs

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

    Cases with a procedure code combination of 02HA0RS (Insertion of 3 20.3 $121,919

    biventricular short-term external heart assist system into

    heart, open approach) with 02PA0RZ (Removal of short-term

    external heart assist system from heart, open approach)........

    Cases with a procedure code combination of 02HA0RS (Insertion of 2 12 114,688

    biventricular short-term external heart assist system into

    heart, open approach) with 02PA3RZ (Removal of short-term

    external heart assist system from heart, percutaneous approach)

    All cases reporting one or more of the above procedure code 5 17 119,027

    combinations in MS-DRG 001.....................................

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

    Page 20182

    Procedure Code Combinations for Implant of Heart Assist System

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

    Number of Average length

    cases of stay Average costs

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

    MS-DRG 001

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

    Cases with a procedure code combination of 02HA0RZ (Insertion of 30 55.6 $351,995

    short-term external heart assist system into heart, open

    approach) with 02PA0RZ (Removal of short-term external heart

    assist system from heart, open approach).......................

    Cases with a procedure code combination of 02HA0RZ (Insertion of 19 29.8 191,163

    short-term external heart assist system into heart, open

    approach) with 02PA3RZ (Removal of short-term external heart

    assist system from heart, percutaneous approach)...............

    All cases reporting one or more of the above procedure code 49 45.6 289,632

    combinations in MS-DRG 001.....................................

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

    MS-DRG 002

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

    Cases with a procedure code combination of 02HA0RZ (Insertion of 1 4 48,212

    short-term external heart assist system into heart, open

    approach) with 02PA0RZ (Removal of short-term external heart

    assist system from heart, open approach).......................

    Cases with a procedure code combination of 02HA0RZ (Insertion of 2 4.5 66,386

    short-term external heart assist system into heart, open

    approach) with 02PA3RZ (Removal of short-term external heart

    assist system from heart, percutaneous approach)...............

    All cases reporting one or more of the above procedure code 3 4.3 60,328

    combinations in MS-DRG 002.....................................

    All cases reporting one or more of the above procedure code 52 43.3 276,403

    combinations across both MS-DRGs 001 and 002...................

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

    Procedure Code Combinations for Implant of Heart Assist System

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

    Number of Average length

    cases of stay Average costs

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

    MS-DRG 001

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

    Cases with a procedure code combination of 02HA3RS (Insertion of 3 43.3 $233,330

    biventricular short-term external heart assist system into

    heart, percutaneous approach) with 02PA0RZ (Removal of short-

    term external heart assist system from heart, open approach)...

    Cases with a procedure code combination of 02HA3RS (Insertion of 24 14.8 113,955

    biventricular short-term external heart assist system into

    heart, percutaneous approach) with 02PA3RZ (Removal of short-

    term external heart assist system from heart, percutaneous

    approach)......................................................

    Cases with a procedure code combination of 02HA3RS (Insertion of 1 44 153,284

    biventricular short-term external heart assist system into

    heart, percutaneous approach) with 02PA4RZ (Removal of short-

    term external heart assist system from heart, percutaneous

    endoscopic approach)...........................................

    All cases reporting one or more of the above procedure code 28 18.9 128,150

    combinations in MS-DRG 001.....................................

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

    MS-DRG 002

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

    Cases with a procedure code combination of 02HA3RS (Insertion of 2 4 $30,954

    biventricular short-term external heart assist system into

    heart, percutaneous approach) with 02PA3RZ (Removal of short-

    term external heart assist system from heart, percutaneous

    approach)......................................................

    All cases reporting one of the above procedure code combinations 2 4 30,954

    in MS-DRG 002..................................................

    All cases reporting one or more of the above procedure code 30 17.9 121,670

    combinations across both MSdashDRGs 001 and 002..............

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

    Procedure Code Combinations for Implant of Heart Assist System

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

    Number of Average length

    MS-DRG 001 cases of stay Average costs

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

    Cases with a procedure code combination of 02HA4RZ (Insertion of 4 17.3 $154,885

    short-term external heart assist system into heart,

    percutaneous endoscopic approach) with 02PA3RZ (Removal of

    short-term external heart assist system from heart,

    percutaneous approach).........................................

    Cases with a procedure code combination of 02HA4RZ (Insertion of 2 15.5 80,852

    short-term external heart assist system into heart, open

    approach) with 02PA4RZ (Removal of short-term external heart

    assist system from heart, percutaneous endoscopic approach)....

    All cases reporting one or more of the above procedure code 6 16.7 130,207

    combinations in MS-DRG 001.....................................

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

    Page 20183

    Procedure Code Combinations for Implant of Heart Assist System

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

    Number of Average length

    MS-DRG 001 cases of stay Average costs

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

    Cases with a procedure code combination of 02WA0QZ (Revision of 1 105 $516,557

    implantable heart assist system in heart, open approach) with

    02PA0RZ (Removal of short-term external heart assist system

    from heart, open approach).....................................

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

    Procedure Code Combinations for Implant of Heart Assist System

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

    Number of Average length

    MS-DRG 001 cases of stay Average costs

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

    Cases with a procedure code combination of 02WA0RZ (Revision of 2 40 $285,818

    short-term external heart assist system in heart, open

    approach) with 02PA0RZ (Removal of short-term external heart

    assist system from heart, open approach).......................

    Cases with a procedure code combination of 02WA0RZ (Revision of 1 43 372,673

    short-term external heart assist system in heart, open

    approach) with 02PA03Z (Removal of short-term external heart

    assist system from heart, percutaneous approach)...............

    All cases reporting one or more of the above procedure code 3 41 314,770

    combinations in MS-DRG 001.....................................

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

    Procedure Code Combinations for Implant of Heart Assist System

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

    Number of Average length

    cases of stay Average costs

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

    MS-DRG 001

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

    Cases with a procedure code combination of 02WA3RZ (Revision of 2 24 $123,084

    short-term external heart assist system in heart, percutaneous

    approach) with 02PA0RZ (Removal of short-term external heart

    assist system from heart, open approach).......................

    Cases with a procedure code combination of 02WA3RZ (Revision of 55 14.7 104,963

    short-term external heart assist system in heart, percutaneous

    approach) with 02PA3RZ (Removal of short-term external heart

    assist system from heart, percutaneous approach)...............

    All cases reporting one or more of the above procedure code 57 15 105,599

    combinations in MS-DRG 001.....................................

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

    MS-DRG 002

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

    Cases with a procedure code combination of 02WA3RZ (Revision of 1 2 101,168

    short-term external heart assist system in heart, percutaneous

    approach) with 02PA3RZ (Removal of short-term external heart

    assist system from heart, percutaneous approach)...............

    All cases reporting one or more of the above procedure code 58 14.8 105,522

    combinations across both MS-DRGs 001 and 002...................

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

    MS-DRG 001

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

    Cases with a procedure code combination of 02WA4RZ (Revision of 1 10 112,698

    short-term external heart assist system in heart, percutaneous

    endoscopic approach) with 02PA0RZ (Removal of short-term

    external heart assist system from heart, open approach)........

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

    We did not find any cases reporting the following procedure code combinations (clusters) in the claims data.

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

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

    02HA4RS.................. Insertion of with 02PA0RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart, open

    assist system into approach.

    heart, percutaneous

    endoscopic approach.

    02HA4RS.................. Insertion of with 02PA3RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous approach.

    heart, percutaneous

    endoscopic approach.

    02HA4RS.................. Insertion of with 02PA4RZ................. Removal of short-term

    biventricular short- external heart assist

    term external heart system from heart,

    assist system into percutaneous endoscopic

    heart, percutaneous approach.

    endoscopic approach.

    02WA3QZ.................. Revision of implantable with 02PA0RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart, open

    approach. approach.

    02WA3QZ.................. Revision of implantable with 02PA3RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart,

    approach. percutaneous approach.

    Page 20184

    02WA3QZ.................. Revision of implantable with 02PA4RZ................. Removal of short-term

    heart assist system in external heart assist

    heart, percutaneous system from heart,

    approach. percutaneous endoscopic

    approach.

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

    The data show that there are differences in the average length of stay and average costs for cases in Pre-MDC MS-DRGs 001 and 002 according to the type of procedure (insertion, revision, or removal), the type of device (biventricular short-term external heart assist system, short-term external heart assist system or implantable heart assist system), and the approaches that were utilized (open, percutaneous, or percutaneous endoscopic). We agree with the commenters' recommendation to maintain the structure of Pre-MDC MS-DRGs 001 and 002 for FY 2019 and will continue to analyze the claims data. We are inviting public comments on our decision to maintain the current structure of PredashMDC MS-DRGs 001 and 002 for FY 2019.

    Commenters also suggested that CMS maintain the current logic for MS-DRG 215 (Other Heart Assist System Implant), but they recommended that CMS continue to monitor the data in MS-DRG 215 for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of procedures utilizing heart assist devices. We also received a request to review claims data for procedures involving extracorporeal membrane oxygenation (ECMO) in combination with the insertion of a percutaneous short-term external heart assist device to determine if the current MS-

    DRG assignment is appropriate.

    The logic for MS-DRG 215 is comprised of the procedure codes shown in the following table, for which we examined claims data in the September 2017 update of the FY 2017 MedPAR file in response to the commenters' requests. Our findings are shown in the following table.

    MS-DRG 215

    Other heart assist system implant

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

    Number of Average length

    cases of stay Average costs

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

    All cases....................................................... 3,428 8.7 $68,965

    Cases with procedure code 02HA0RJ (Insertion of short-term 0 0 0

    external heart assist system into heart, intraoperative, open

    approach)......................................................

    Cases with procedure code 02HA0RS (Insertion of biventricular 9 10 118,361

    short-term external heart assist system into heart, open

    approach)......................................................

    Cases with procedure code 02HA0RZ (Insertion of short-term 66 11.5 99,107

    external heart assist system into heart, open approach)........

    Cases with procedure code 02HA3RJ (Insertion of short-term 0 0 0

    external heart assist system into heart, intraoperative,

    percutaneous approach).........................................

    Cases with procedure code 02HA3RS (Insertion of biventricular 117 7.2 64,302

    short-term external heart assist system into heart,

    percutaneous approach).........................................

    Cases with procedure code 02HA3RZ (Insertion of short-term 3,136 8.4 67,670

    external heart assist system into heart, percutaneous approach)

    Cases with procedure code 02HA4RJ (Insertion of short-term 0 0 0

    external heart assist system into heart, intraoperative,

    percutaneous endoscopic approach)..............................

    Cases with procedure code 02HA4RS (Insertion of biventricular 1 2 43,988

    short-term external heart assist system into heart,

    percutaneous endoscopic approach)..............................

    Cases with procedure code 02HA4RZ (Insertion of short-term 31 5.3 57,042

    external heart assist system into heart, percutaneous

    endoscopic approach)...........................................

    Cases with procedure code 02WA0JZ (Revision of synthetic 1 84 366,089

    substitute in heart, open approach)............................

    Cases with procedure code 02WA0QZ (Revision of implantable heart 56 25.1 123,410

    assist system in heart, open approach).........................

    Cases with procedure code 02WA0RS (Revision of biventricular 0 0 0

    short-term external heart assist system in heart, open

    approach)......................................................

    Cases with procedure code 02WA0RZ (Revision of short-term 8 13.5 99,378

    external heart assist system in heart, open approach)..........

    Cases with procedure code 02WA3QZ (Revision of implantable heart 0 0 0

    assist system in heart, percutaneous approach).................

    Cases with procedure code 02WA3RS (Revision of biventricular 0 0 0

    short-term external heart assist system in heart, percutaneous

    approach)......................................................

    Cases with procedure code 02WA3RZ (Revision of short-term 80 10 71,077

    external heart assist system in heart, percutaneous approach)..

    Cases with procedure code 02WA4QZ (Revision of implantable heart 0 0 0

    assist system in heart, percutaneous endoscopic approach)......

    Cases with procedure code 02WA4RS (Revision of biventricular 0 0 0

    short-term external heart assist system in heart, percutaneous

    endoscopic approach)...........................................

    Cases with procedure code 02WA4RZ (Revision of short-term 0 0 0

    external heart assist system in heart, percutaneous endoscopic

    approach)......................................................

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

    As shown in this table, for MS-DRG 215, we found a total of 3,428 cases with an average length of stay of 8.7 days and average costs of $68,965. For procedure codes describing the insertion of a biventricular short-term external heart

    Page 20185

    assist system with open, percutaneous or percutaneous endoscopic approaches, we found a total of 127 cases with an average length of stay ranging from 2 to 10 days and average costs ranging from $43,988 to $118,361. For procedure codes describing the insertion of a short-

    term external heart assist system with open, percutaneous or percutaneous endoscopic approaches, we found a total of 3,233 cases with an average length of stay ranging from 5.3 days to 11.5 days and average costs ranging from $57,042 to $99,107. For procedure codes describing the revision of a short-term external heart assist system with open or percutaneous approaches, we found a total of 88 cases with an average length of stay ranging from 10 to 13.5 days and average costs ranging from $71,077 to $99,378. We found 1 case reporting procedure code 02WA0JZ (Revision of synthetic substitute in heart, open approach), with an average length of stay of 84 days and average costs of $366,089. Lastly, we found 56 cases reporting procedure code 02WA0QZ (Revision of implantable heart assist system in heart, open approach) with an average length of stay of 25.1 days and average costs of $123,410.

    As the data show, there is a wide range in the average length of stay and the average costs for cases reporting procedures that involve a biventricular short-term external heart assist system versus a short-

    term external heart assist system. There is an even greater range in the average length of stay and the average costs when comparing the revision of a short-term external heart assist system to the revision of a synthetic substitute in the heart or to the revision an implantable heart assist system.

    We agree with the commenters that continued monitoring of the data and further analysis is necessary prior to proposing any modifications to MS-DRG 215. As stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38012), we are aware that the AHA published Coding Clinic advice that clarified coding and reporting for certain external heart assist devices due to the technology being approved for new indications. The current claims data do not yet reflect that updated guidance. We also note that there have been recent updates to the descriptions of the codes for heart assist devices in the past year. For example, the qualifier ``intraoperative'' was added effective October 1, 2017 (FY 2018) to the procedure codes describing the insertion of short-term external heart assist system procedures to distinguish between procedures where the device was only used intraoperatively and was removed at the conclusion of the procedure versus procedures where the device was not removed at the conclusion of the procedure and for which that qualifier would not be reported. The current claims data do not yet reflect these new procedure codes, which are displayed in the following table and are assigned to MS-DRG 215.

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

    ICD-10-PCS code Code description

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

    02HA0RJ................... Insertion of short-term external heart

    assist system into heart, intraoperative,

    open approach.

    02HA3RJ................... Insertion of short-term external heart

    assist system into heart, intraoperative,

    percutaneous approach.

    02HA4RJ................... Insertion of short-term external heart

    assist system into heart, intraoperative,

    percutaneous endoscopic approach.

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

    Our clinical advisors agree that additional claims data are needed for analysis prior to proposing any changes to MS-DRG 215. Therefore, we are proposing not to make any modifications to MS-DRG 215 for FY 2019. We are inviting public comments on our proposal.

    As stated earlier in this section, we also received a request to review cases reporting the use of ECMO in combination with the insertion of a percutaneous shortdashterm external heart assist device. Under ICD-10-PCS, ECMO is identified with procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) and the insertion of a percutaneous short-term external heart assist device is identified with procedure code 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach). According to the commenter, when ECMO procedures are performed percutaneously, they are less invasive and less expensive than traditional ECMO. The commenter also noted that, currently under ICD-

    10-PCS, there is not a specific procedure code to identify percutaneous ECMO, and providers are only able to report ICD-10-PCS procedure code 5A15223, which may be inappropriately resulting in a higher paying MS-

    DRG. Therefore, the commenter submitted a separate request to create a new ICD-10-PCS procedure code specifically for percutaneous ECMO which was discussed at the March 6-7, 2018 ICD-10 Coordination and Maintenance Committee Meeting. We refer readers to section II.F.18. of the preamble of this proposed rule for further information regarding this meeting and the discussion for a new procedure code.

    The requestor suggested that cases reporting a procedure code for ECMO in combination with the insertion of a percutaneous short-term external heart assist device could be reassigned from Pre-MDC MS-DRG 003 (ECMO or Tracheostomy with Mechanical Ventilation >96 Hours or Principal Diagnosis Except Face, Mouth and Neck with Major O.R. Procedure) to MS-DRG 215. Our analysis involved examining cases in Pre-

    MDC MS-DRG 003 in the September 2017 update of the FY 2017 MedPAR file for cases reporting ECMO with and without the insertion of a percutaneous short-term external heart assist device. Our findings are shown in the following table.

    ECMO and Percutaneous Short-Term External Heart Assist Device

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

    Number of Average length

    Pre-MDC MS-DRG cases of stay Average costs

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

    MS-DRG 003--All cases........................................... 14,383 29.5 $118,218

    MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal 1,786 19 119,340

    membrane oxygenation, continuous)..............................

    MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal 94 11.4 110,874

    membrane oxygenation, continuous) and 02HA3RZ (Insertion of

    short-term external heart assist system into heart,

    percutaneous approach).........................................

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    MS-DRG 003--Cases with procedure code 5A15223 (Extracorporeal 1 1 64,319

    membrane oxygenation, continuous) and 02HA4RZ (Insertion of

    short-term external heart assist system into heart,

    percutaneous endoscopic approach)..............................

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

    As shown in this table, we found a total of 14,383 cases with an average length of stay of 29.5 days and average costs of $118,218 in Pre-MDC MS-DRG 003. We found 1,786 cases reporting procedure code 5A15223 (Extracorporeal membrane oxygenation, continuous) with an average length of stay of 19 days and average costs of $119,340. We found 94 cases reporting procedure code 5A15223 and 02HA3RZ (Insertion of short-term external heart assist system into heart, percutaneous approach) with an average length of stay of 11.4 days and average costs of $110,874. Lastly, we found 1 case reporting procedure code 5A15223 and 02HA4RZ (Insertion of short-term external heart assist system into heart, percutaneous endoscopic approach) with an average length of stay of 1 day and average costs of $64,319.

    We also reviewed the cases in MS-DRG 215 for procedure codes 02HA3RZ and 02HA4RZ. Our findings are shown in the following table.

    Percutaneous Short-Term External Heart Assist Device

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 215--All cases........................................... 3,428 8.7 $68,965

    MS-DRG 215--Cases with procedure code 02HA3RZ (Insertion of 3,136 8.4 67,670

    short-term external heart assist system into heart,

    percutaneous approach).........................................

    MS-DRG 215--Cases with procedure code 02HA4RZ (Insertion of 31 5.3 57,042

    short-term external heart assist system into heart,

    percutaneous endoscopic approach)..............................

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

    As shown in this table, we found a total of 3,428 cases with an average length of stay of 8.7 days and average costs of $68,965. We found a total of 3,136 cases reporting procedure code 02HA3RZ with an average length of stay of 8.4 days and average costs of $67,670. We found a total of 31 cases reporting procedure code 02HA4RZ with an average length of stay of 5.3 days and average costs of $57,042.

    For Pre-MDC MS-DRG 003, while the average length of stay and average costs for cases where procedure code 5A15223 was reported with procedure code 02HA3RZ or procedure code 02HA4RZ are lower than the average length of stay and average costs for cases where procedure code 5A15223 was reported alone, we are unable to determine from the data if those ECMO procedures were performed percutaneously in the absence of a unique code. In addition, the one case reporting procedure code 5A15223 with 02HA4RZ only had a 1 day length of stay and it is unclear from the data what the circumstances of that case may have involved. For example, the patient may have been transferred or may have expired. Therefore, we are proposing to not reassign cases reporting procedure code 5A15223 when reported with procedure code 02HA3RZ or procedure code 02HA4RZ for FY 2019. Our clinical advisors agree that until there is a way to specifically identify percutaneous ECMO in the claims data to enable further analysis, a proposal at this time is not warranted. We are inviting public comments on our proposal.

    A commenter also suggested that CMS maintain the current logic for MS-DRGs 268 and 269 (Aortic and Heart Assist Procedures Except Pulsation Balloon with and without MCC, respectively), but recommended that CMS continue to monitor the data in these MS-DRGs for future consideration of distinctions (for example, different approaches and evolving technologies) that may impact the clinical and resource use of procedures involving heart assist devices.

    The logic for heart assist system devices in MS-DRGs 268 and 269 is comprised of the procedure codes shown in the following table, for which we examined claims data in the September 2017 update of the FY 2017 MedPAR file in response to the commenter's request. Our findings are shown in the following table.

    MS-DRGs for Aortic and Heart Assist Procedures Except Pulsation Balloon

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

    Number of Average length

    cases of stay Average costs

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

    MS-DRG 268--All cases........................................... 3,798 9.6 $49,122

    MS-DRG 268--Cases with procedure code 02PA0QZ (Removal of 16 23.4 79,850

    implantable heart assist system from heart, open approach).....

    MS-DRG 268--Cases with procedure code 02PA0RS (Removal of 0 0 0

    biventricular short-term external heart assist system from

    heart, open approach)..........................................

    MS-DRG 268--Cases with procedure code 02PA0RZ (Removal of short- 0 0 0

    term external heart assist system from heart, open approach)...

    MS-DRG 268--Cases with procedure code 02PA3QZ (Removal of 28 10.5 31,797

    implantable heart assist system from heart, percutaneous

    approach)......................................................

    Page 20187

    MS-DRG 268--Cases with procedure code 02PA3RS (Removal of 0 0 0

    biventricular short-term external heart assist system from

    heart, percutaneous approach)..................................

    MS-DRG 268--Cases with procedure code 02PA3RZ (Removal of short- 96 12.4 51,469

    term external heart assist system from heart, percutaneous

    approach)......................................................

    MS-DRG 268--Cases with procedure code 02PA4QZ (Removal of 5 7.8 37,592

    implantable heart assist system from heart, percutaneous

    endoscopic approach)...........................................

    MS-DRG 268--Cases with procedure code 02PA4RS (Removal of 0 0 0

    biventricular short-term external heart assist system from

    heart, percutaneous endoscopic approach).......................

    MS-DRG 268--Cases with procedure code 02PA4RZ (Removal of short- 0 0 0

    term external heart assist system from heart, percutaneous

    endoscopic approach)...........................................

    MS-DRG 269--All cases........................................... 16,900 2.4 30,793

    MS-DRG 269--Cases with procedure code 02PA0QZ (Removal of 10 8 23,741

    implantable heart assist system from heart, open approach).....

    MS-DRG 269--Cases with procedure code 02PA0RS (Removal of 0 0 0

    biventricular short-term external heart assist system from

    heart, open approach)..........................................

    MS-DRG 269--Cases with procedure code 02PA0RZ (Removal of short- 0 0 0

    term external heart assist system from heart, open approach)...

    MS-DRG 269--Cases with procedure code 02PA3QZ (Removal of 6 5 19,421

    implantable heart assist system from heart, percutaneous

    approach)......................................................

    MS-DRG 269--Cases with procedure code 02PA3RS (Removal of 0 0 0

    biventricular short-term external heart assist system from

    heart, percutaneous approach)..................................

    MS-DRG 269--Cases with procedure code 02PA3RZ (Removal of short- 11 4 25,719

    term external heart assist system from heart, percutaneous

    approach)......................................................

    MS-DRG 269--Cases with procedure code 02PA4QZ (Removal of 1 3 14,415

    implantable heart assist system from heart, percutaneous

    endoscopic approach)...........................................

    MS-DRG 269--Cases with procedure code 02PA4RS (Removal of 0 0 0

    biventricular short-term external heart assist system from

    heart, percutaneous endoscopic approach).......................

    MS-DRG 269--Cases with procedure code 02PA4RZ (Removal of short- 0 0 0

    term external heart assist system from heart, percutaneous

    endoscopic approach)...........................................

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

    As shown in this table, for MS-DRG 268, there were a total of 3,798 cases, with an average length of stay of 9.6 days and average costs of $49,122. There were 16 cases reporting procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach), with an average length of stay of 23.4 days and average costs of $79,850. There were no cases that reported procedure codes 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach), 02PA0RZ (Removal of short-term external heart assist system from heart, open approach), 02PA3RS (Removal of biventricular short-

    term external heart assist system from heart, percutaneous approach), 02PA4RS (Removal of biventricular short-term external heart assist system from heart, percutaneous endoscopic approach) or 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach). There were 28 cases reporting procedure code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach), with an average length of stay of 10.5 days and average costs of $31,797. There were 96 cases reporting procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach), with an average length of stay of 12.4 days and average costs of $51,469. There were 5 cases reporting procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach), with an average length of stay of 7.8 days and average costs of $37,592. For MS-DRG 269, there were a total of 16,900 cases, with an average length of stay of 2.4 days and average costs of $30,793. There were 10 cases reporting procedure code 02PA0QZ (Removal of implantable heart assist system from heart, open approach), with an average length of stay of 8 days and average costs of $23,741. There were no cases reporting procedure codes 02PA0RS (Removal of biventricular short-term external heart assist system from heart, open approach), 02PA0RZ (Removal of short-term external heart assist system from heart, open approach), 02PA3RS (Removal of biventricular short-term external heart assist system from heart, percutaneous approach), 02PA4RS (Removal of biventricular short-

    term external heart assist system from heart, percutaneous endoscopic approach) or 02PA4RZ (Removal of short-term external heart assist system from heart, percutaneous endoscopic approach). There were 6 cases reporting procedure code 02PA3QZ (Removal of implantable heart assist system from heart, percutaneous approach), with an average length of stay of 5 days and average costs of $19,421. There were 11 cases reporting procedure code 02PA3RZ (Removal of short-term external heart assist system from heart, percutaneous approach), with an average length of stay of 4 days and average costs of $25,719. There was 1 case reporting procedure code 02PA4QZ (Removal of implantable heart assist system from heart, percutaneous endoscopic approach), with an average length of stay of 3 days and average costs of $14,415.

    The data show that there are differences in the average length of stay and average costs for cases in MS-DRGs 268 and 269 according to the type of device (short-term external heart assist system or implantable heart assist system), and the approaches that were utilized (open, percutaneous, or percutaneous endoscopic). We agree with the recommendation to maintain the structure of MS-DRGs 268 and 269 for FY 2019 and will continue to analyze the claims data for possible future updates. As such, we are proposing to not make any changes to the structure of MS-DRGs 268 and 269

    Page 20188

    for FY 2019. We are inviting public comments on our proposal.

  13. Brachytherapy

    We received a request to create a new Pre-MDC MS-DRG for all procedures involving the CivaSheetreg technology, an implantable, planar brachytherapy source designed to enable delivery of radiation to the site of the cancer tumor excision or debulking, while protecting neighboring tissue. The requestor stated that physicians have used the CivaSheetreg technology for a number of indications, such as colorectal, gynecological, head and neck, soft tissue sarcomas and pancreatic cancer. The requestor noted that potential uses also include nonsmall-cell lung cancer, ocular melanoma, and atypical meningioma. Currently, procedures involving the CivaSheetreg technology are reported using ICD-10-PCS Section D--Radiation Therapy codes, with the root operation ``Brachytherapy.'' These codes are non-O.R. codes and group to the MS-DRG to which the principal diagnosis is assigned.

    In response to this request, we have analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases representing patients who received treatment that reported low dose rate (LDR) brachytherapy procedure codes across all MS-DRGs. We refer readers to Table 6P.--ICD-10-CM and ICD-10-PCS Codes for Proposed MS-DRG Changes associated with this proposed rule, which is available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. A detailed list of these procedure codes are shown in Table 6P.1. Our findings are reflected in the following table.

    Cases Reporting Low Dose Rate (LDR) Brachytherapy Procedure Codes Across All MS-DRGs

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

    Number of Average length

    ICD-10-PCS procedures cases of stay Average costs

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

    MS-DRG 129 (Major Head and Neck Procedures with CC/MCC or Major 1 7 $10,357

    Device)--Cases with procedure code D710BBZ (Low dose rate (LDR)

    brachytherapy of bone marrow using Palladiumdash103 (Pd-103))

    MS-DRG 724 (Malignancy, Male Reproductive System without CC/ 1 7 32,298

    MCC)--Cases with procedure code DV10BBZ (Low dose rate (LDR)

    brachytherapy of prostate using Palladiumdash103 (Pd-103))...

    MS-DRG 129--Cases with procedure code DW11BBZ (Low dose rate 1 3 42,565

    (LDR) brachytherapy of head and neck using Palladiumdash103

    (Pd-103))......................................................

    MS-DRG 330 (Major Small and Large Bowel Procedures with CC)-- 1 8 74,190

    Cases with procedure code DW16BBZ (Low dose rate (LDR)

    brachytherapy of pelvic region using Palladiumdash103 (Pd-

    103))..........................................................

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

    As shown in the immediately preceding table, we identified 4 cases reporting one of these LDR brachytherapy procedure codes across all MS-

    DRGs, with an average length of stay of 6.3 days and average costs of $39,853. We believe that creating a new Pre-MDC MS-DRG based on such a small number of cases could lead to distortion in the relative payment weights for the Pre-MDC MS-DRG. Having a larger number of clinically cohesive cases within the Pre-MDC MS-DRG provides greater stability for annual updates to the relative payment weights. Therefore, we are not proposing to create a new Pre-MDC MS-DRG for procedures involving the CivaSheetreg technology for FY 2019. We are inviting public comments on our proposal to maintain the current MSdashDRG structure for procedures involving the CivaSheetreg technology.

  14. Laryngectomy

    The logic for case assignment to Pre-MDC MS-DRGs 11, 12, and 13 (Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC, and without CC/MCC, respectively) as displayed in the ICD-10 MS-DRG Version 35 Definitions Manual, which is available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, is comprised of a list of procedure codes for laryngectomies, a list of procedure codes for tracheostomies, and a list of diagnosis codes for conditions involving the face, mouth, and neck. The procedure codes for laryngectomies are listed separately and are reported differently from the procedure codes listed for tracheostomies. The procedure codes listed for tracheostomies must be reported with a diagnosis code involving the face, mouth, or neck as a principal diagnosis to satisfy the logic for assignment to Pre-MDC MS-DRG 11, 12, or 13. Alternatively, any principal diagnosis code reported with a procedure code from the list of procedure codes for laryngectomies will satisfy the logic for assignment to PredashMDC MS-DRG 11, 12, or 13.

    To improve the manner in which the logic for assignment is displayed in the ICD-10 MS-DRG Definitions Manual and to clarify how it is applied for grouping purposes, we are proposing to reorder the lists of the diagnosis and procedure codes. The list of principal diagnosis codes for face, mouth, and neck would be sequenced first, followed by the list of the tracheostomy procedure codes and, lastly, the list of laryngectomy procedure codes.

    We also are proposing to revise the titles of Pre-MDC MS-DRGs 11, 12, and 13 from ``Tracheostomy for Face, Mouth and Neck Diagnoses with MCC, with CC and without CC/MCC, respectively'' to ``Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with MCC'', ``Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy with CC'', and ``Tracheostomy for Face, Mouth and Neck Diagnoses or Laryngectomy without CC/MCC'', respectively, to reflect that laryngectomy procedures may also be assigned to these MS-DRGs.

    We are inviting public comments on our proposals.

  15. Chimeric Antigen Receptor (CAR) T-Cell Therapy

    Chimeric Antigen Receptor (CAR) T-cell therapy is a cell-based gene therapy in which a patient's own T-cells are genetically engineered in a laboratory and used to assist in the patient's treatment to attack certain cancerous cells. Blood is drawn from the patient and the T-

    cells are separated. The laboratory then utilizes the CAR process to genetically engineer the Tdashcells,

    Page 20189

    resulting in the addition of a chimeric antigen receptor that will bind to a certain protein on the patient's cancerous cells. The CAR Tdashcells are then administered to the patient by infusion.

    Two CAR Tdashcell therapy drugs received FDA approval in 2017. KYMRIAHTM (manufactured by Novartis Pharmaceuticals Corporation) was approved for the use in the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse. YESCARTATM (manufactured by Kite Pharma, Inc.) was approved for use in the treatment of adult patients with relapsed or refractory large B-cell lymphoma and who have not responded to or who have relapsed after at least two other kinds of treatment.

    Procedures involving the CAR Tdashcell therapy drugs are currently identified with ICD-10-PCS procedure codes XW033C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 3) and XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3), which both became effective October 1, 2017. Procedures described by these two ICD-10-PCS procedure codes are designated as non-O.R. procedures that have no impact on MS-DRG assignment.

    We have received many inquiries from the public regarding payment of CAR Tdashcell therapy under the IPPS. Suggestions for the MS-DRG assignment for FY 2019 ranged from assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to an existing MS-DRG to the creation of a new MS-

    DRG for CAR Tdashcell therapy. In the context of the recommendation to create a new MS-DRG for FY 2019, we also received suggestions that payment should be established in a way that promotes comparability between the inpatient setting and outpatient setting.

    As part of our review of these suggestions, we examined the existing MS-DRGs to identify the MS-DRGs that represent cases most clinically similar to those cases in which the CAR Tdashcell therapy procedures would be reported. The CAR T-cell procedures involve a type of autologous immunotherapy in which the patient's cells are genetically transformed and then returned to that patient after the patient undergoes cell depleting chemotherapy. Our clinical advisors believe that patients receiving treatment utilizing CAR T-cell therapy procedures would have similar clinical characteristics and comorbidities to those seen in cases representing patients receiving treatment for other hematopoietic carcinomas who are treated with autologous bone marrow transplant therapy that are currently assigned to MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC). Therefore, after consideration of the inquiries received as to how the IPPS can appropriately group cases reporting the use of CAR T-cell therapy, we are proposing to assign ICD-10-PCS procedure codes XW033C3 and XW043C3 to PredashMDC MS-DRG 016 for FY 2019. In addition, we are proposing to revise the title of MS-DRG 016 from ``Autologous Bone Marrow Transplant with CC/MCC'' to ``Autologous Bone Marrow Transplant with CC/MCC or T-cell Immunotherapy.''

    However, we note that, as discussed in greater detail in section II.H.5.a. of the preamble of this proposed rule, the manufacturer of KYMRIAHTM and the manufacturer of YESCARTATM submitted applications for new technology add-on payments for FY 2019. We also recognize that many members of the public have noted that the combination of the new technology add-on payment applications, the extremely highdashcost of these CAR T-cell therapy drugs, and the potential for volume increases over time present unique challenges with respect to the MS-DRG assignment for procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients receiving treatment involving CAR T-cell therapy. We believe that, in the context of these pending new technology add-on payment applications, there may also be merit in the alternative suggestion we received to create a new MS-DRG for procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients receiving treatment involving CAR T-cell therapy to which we could assign ICD-10-PCS procedure codes XW033C3 and XW043C3, effective for discharges occurring in FY 2019. As noted in section II.H.5.a. of the preamble of this proposed rule, if a new MS-DRG were to be created then consistent with section 1886(d)(5)(K)(ix) of the Act there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act.

    We are inviting public comments on our proposed approach of assigning ICD-10-PCS procedure codes XW033C3 and XW043C3 to Pre-MDC MS-

    DRG 016 for FY 2019. We also are inviting public comments on alternative approaches, including in the context of the pending KYMRIAHTM and YESCARTATM new technology add-on payment applications, and the most appropriate way to establish payment for FY 2019 under any alternative approaches. Such payment alternatives may include using a CCR of 1.0 for charges associated with ICD-10-PCS procedure codes XW033C3 and XW043C3, given that many public inquirers believed that hospitals would be unlikely to set charges different from the costs for KYMRIAHTM and YESCARTATM CAR T-cell therapy drugs, as discussed further in section II.A.4.g.2. of the Addendum of this proposed rule. These payment alternatives, including payment under any potential new MS-DRG, also could take into account an appropriate portion of the average sales price (ASP) for these drugs, including in the context of the pending new technology add-on payment applications.

    We are inviting comments on how these payment alternatives would affect access to care, as well as how they affect incentives to encourage lower drug prices, which is a high priority for this Administration. In addition, we are considering approaches and authorities to encourage value-based care and lower drug prices. We solicit comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches.

    As stated in section II.F.1.b. of the preamble of this proposed rule, we described the criteria used to establish new MS-DRGs. In particular, 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 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 whether observed average differences are consistent across patients or attributable to cases that were 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. Based on the principles typically used to establish a new MS-DRG, we are soliciting comments on how the administration of the CAR T-cell

    Page 20190

    therapy drugs and associated services meet the criteria for the creation of a new MS-DRG. Also, section 1886(d)(4)(C)(iii) of the Act specifies that, beginning in FY 1991, the annual DRG reclassification and recalibration of the relative weights must be made in a manner that ensures that aggregate payments to hospitals are not affected. Given that a new MS-DRG must be established in a budget neutral manner, we are concerned with the redistributive effects away from core hospital services over time toward specialized hospitals and how that may affect payment for these core services. Therefore, we are soliciting public comments on our concerns with the payment alternatives that we are considering for CAR T-cell therapy drugs and therapies.

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

  16. Epilepsy With Neurostimulator

    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38015 through 38019), based on a request we received and our review of the claims data, the advice of our clinical advisors, and consideration of public comments, we finalized our proposal to reassign all cases reporting a principal diagnosis of epilepsy and one of the following ICD-10-PCS code combinations, which capture cases involving neurostimulator generators inserted into the skull (including cases involving the use of the RNS(copyright) neurostimulator), to retitled MS-DRG 023 (Craniotomy with Major Device Implant or Acute Complex Central Nervous System (CNS) Principal Diagnosis (PDX) with MCC or Chemotherapy Implant or Epilepsy with Neurostimulator), even if there is no MCC reported:

    0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H00MZ (Insertion of neurostimulator lead into brain, open approach);

    0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H03MZ (Insertion of neurostimulator lead into brain, percutaneous approach); and

    0NH00NZ (Insertion of neurostimulator generator into skull, open approach), in combination with 00H04MZ (Insertion of neurostimulator lead into brain, percutaneous endoscopic approach).

    The finalized listing of epilepsy diagnosis codes (82 FR 38018 through 38019) contained codes provided by the requestor (82 FR 38016), in addition to diagnosis codes organized in subcategories G40.A- and G40.B- as recommended by a commenter in response to the proposed rule (82 FR 38018) because the diagnosis codes organized in these subcategories also are representative of diagnoses of epilepsy.

    For FY 2019, we received a request to include two additional diagnosis codes organized in subcategory G40.1- in the listing of epilepsy diagnosis codes for cases assigned to MS-DRG 023 because these diagnosis codes also represent diagnoses of epilepsy. The two additional codes identified by the requestor are:

    G40.109 (Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, not intractable, without status epilepticus); and

    G40.111 (Localization-related (focal) (partial) symptomatic epilepsy and epileptic syndromes with simple partial seizures, intractable, with status epilepticus).

    We agree with the requestor that diagnosis codes G40.109 and G40.111 also are representative of epilepsy diagnoses and should be added to the listing of epilepsy diagnosis codes for cases assigned to MS-DRG 023 because they also capture a type of epilepsy. Our clinical advisors reviewed this issue and agree that adding the two additional epilepsy diagnosis codes is appropriate. Therefore, we are proposing to add ICD-10-CM diagnosis codes G40.109 and G40.111 to the listing of epilepsy diagnosis codes for cases assigned to MS-DRG 023, effective October 1, 2018.

    We are inviting public comments on our proposal.

  17. Neurological Conditions With Mechanical Ventilation

    We received two separate, but related requests to create new MS-

    DRGs for cases that identify patients who have been diagnosed with neurological conditions classified under MDC 1 (Diseases and Disorders of the Nervous System) and who require mechanical ventilation with and without a thrombolytic and in the absence of an O.R. procedure. The requestors suggested that CMS consider when mechanical ventilation is reported with a neurological condition for the ICD-10 MS-DRG GROUPER assignment logic, similar to the current logic for MS-DRGs 207 and 208 (Respiratory System Diagnosis with Ventilator Support >96 Hours and 96 Hours), which has a relative weight of 5.4845, and to MS-

    DRG 208 (Respiratory System Diagnoses with Ventilator Support Suggested new MS-DRG XXX (Intracranial Hemorrhage or Cerebral Infarction with Mechanical Ventilation >96 Hours); and

    Suggested new MS-DRG XXX (Intracranial Hemorrhage or Cerebral Infarction with Mechanical Ventilation Suggested New MS-DRG XXX (Neurological System Diagnosis with Mechanical Ventilation 96+ Hours); and

    Suggested New MS-DRG XXX (Neurological System Diagnosis with Mechanical Ventilation 96 hours................

    MS-DRG 061--Cases with principal diagnosis of cerebral 378 7.5 26,368

    infarction and mechanical ventilation =24-96 hours.............

    MS-DRG 061--Cases with principal diagnosis of cerebral 214 4.9 19,795

    infarction and mechanical ventilation 96 hours................

    MS-DRG 062--Cases with principal diagnosis of cerebral 10 5.3 19,817

    infarction and mechanical ventilation =24-96 hours.............

    MS-DRG 062--Cases with principal diagnosis of cerebral 23 3.8 14,026

    infarction and mechanical ventilation 96 hours................

    MS-DRG 063--Cases with principal diagnosis of cerebral 3 2.7 14,588

    infarction and mechanical ventilation =24-96 hours.............

    MS-DRG 063--Cases with principal diagnosis of cerebral 5 2.0 11,195

    infarction and mechanical ventilation 96 hours with a principal diagnosis of cerebral infarction where a thrombolytic agent was administered and the patient did not undergo an O.R. procedure against the total number of cases reporting mechanical ventilation 96 hours................

    MS-DRG 061--Cases with principal diagnosis of cerebral 594 6.5 23,780

    infarction and mechanical ventilation 96 hours................

    MS-DRG 062--Cases with principal diagnosis of cerebral 34 4.2 15,558

    infarction and mechanical ventilation 96 hours................

    MS-DRG 063--Cases with principal diagnosis of cerebral 8 2.3 12,467

    infarction and mechanical ventilation 96

    Page 20193

    hours, with an average length of stay of 12.8 days and average costs of $41,691. There were 594 cases that reported mechanical ventilation 96 hours was reported. However, there were 34 cases that reported mechanical ventilation 96 hours was reported. However, there were 8 cases that reported mechanical ventilation 96 hours..........................................

    MS-DRG 064--Cases with principal diagnosis of cerebral 4,843 6.6 18,119

    infarction or intracranial hemorrhage and mechanical

    ventilation =24-96 hours.......................................

    MS-DRG 064--Cases with principal diagnosis of cerebral 4,001 3.1 8,675

    infarction or intracranial hemorrhage and mechanical

    ventilation 96 hours..........................................

    MS-DRG 065--Cases with principal diagnosis of cerebral 127 4.2 12,688

    infarction or intracranial hemorrhage and mechanical

    ventilation =24-96 hours.......................................

    MS-DRG 065--Cases with principal diagnosis of cerebral 301 2.1 6,145

    infarction or intracranial hemorrhage and mechanical

    ventilation 96 hours..........................................

    MS-DRG 066--Cases with principal diagnosis of cerebral 31 3.7 10,364

    infarction or intracranial hemorrhage and mechanical

    ventilation =24-96 hours.......................................

    MS-DRG 066--Cases with principal diagnosis of cerebral 163 1.4 4,148

    infarction or intracranial hemorrhage and mechanical

    ventilation 96 hours with a principal diagnosis of cerebral infarction or intracranial hemorrhage where a thrombolytic agent was not administered and the patient did not undergo an O.R. procedure against the total number of cases reporting mechanical ventilation 96 hours..........................................

    MS-DRG 064--Cases with principal diagnosis of cerebral 8,794 4.9 13,704

    infarction or intracranial hemorrhage and mechanical

    ventilation 96 hours..........................................

    MS-DRG 065--Cases with principal diagnosis of cerebral 428 2.7 8,086

    infarction or intracranial hemorrhage and mechanical

    ventilation 96 hours..........................................

    MS-DRG 066--Cases with principal diagnosis of cerebral 194 1.8 5,141

    infarction or intracranial hemorrhage and mechanical

    ventilation 96 hours, with an average length of stay of 13.4 days and average costs of $38,262, and there were 8,794 cases that reported mechanical ventilation 96 hours, with an average length of stay of 10.2 days and average costs of $20,759, and there were 428 cases that reported mechanical ventilation96 hours, with an average length of stay of 4.0 days and average costs of $3,426, and there were 194 cases that reported mechanical ventilation 96 hours had a longer average length of stay (12.8 days versus 6.4 days) and higher average costs ($41,691 versus $20,097) compared to all the cases in MS-DRG 061. However, there were no cases that reported mechanical ventilation >96 hours for MS-DRG 062 or MS-DRG 063. For the 594 cases that reported mechanical ventilation 96 hours in MS-DRG 064 showed a longer average length of stay (13.4 days versus 6.0 days) and higher average costs ($38,262 versus $12,574) compared to all of the cases in MS-DRG 064. However, the 2,153 cases represent only 2.8 percent of all the cases in MS-DRG

    Page 20195

    064. For the 22 cases that reported mechanical ventilation >96 hours in MS-DRG 065, the data showed a longer average length of stay (10.2 days versus 3.7 days) and higher average costs ($20,759 versus $7,236) compared to all of the cases in MS-DRG 065. However, the 22 cases represent only 0.02 percent of all the cases in MS-DRG 065. For the one case that reported mechanical ventilation >96 hours in MS-DRG 066, the data showed a longer average length of stay (4.0 days versus 2.5 days) and lower average costs ($3,426 versus $5,321) compared to all of the cases in MS-DRG 066. For the 8,794 cases that reported mechanical ventilation 96 hours. Our findings are shown in the table below.

    Mechanical Ventilation >96 Hours Across All MDCs

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

    Number of Average length

    MDC cases of stay Average costs

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

    All cases with mechanical ventilation >96 hours................. 127,626 18.4 $61,056

    MDC 1 (Diseases and Disorders of the Nervous System)--Cases with 13,668 18.3 61,234

    mechanical ventilation >96 hours...............................

    MDC 2 (Disease and Disorders of the Eye)--Cases with mechanical 33 22.7 79,080

    ventilation >96 hours..........................................

    MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and 602 20.3 62,625

    Throat)--Cases with mechanical ventilation >96 hours...........

    MDC 4 (Diseases and Disorders of the Respiratory System)--Cases 27,793 16.6 48,869

    with mechanical ventilation >96 hours..........................

    MDC 5 (Diseases and Disorders of the Circulatory System)--Cases 16,923 20.7 84,565

    with mechanical ventilation >96 hours..........................

    MDC 6 (Diseases and Disorders of the Digestive System)--Cases 6,401 22.4 73,759

    with mechanical ventilation >96 hours..........................

    MDC 7 (Diseases and Disorders of the Hepatobiliary System and 1,803 24.5 80,477

    Pancreas)--Cases with mechanical ventilation >96 hours.........

    MDC 8 (Diseases and Disorders of the Musculoskeletal System and 2,780 22.3 83,271

    Connective Tissue)--Cases with mechanical ventilation >96 hours

    MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue 390 22.2 68,288

    and Breast)--Cases with mechanical ventilation >96 hours.......

    MDC 10 (Endocrine, Nutritional and Metabolic Diseases and 1,168 20.9 60,682

    Disorders)--Cases with mechanical ventilation >96 hours........

    MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract)-- 2,325 19.6 57,893

    Cases with mechanical ventilation >96 hours....................

    MDC 12 (Diseases and Disorders of the Male Reproductive System)-- 54 26.8 95,204

    Cases with mechanical ventilation >96 hours....................

    MDC 13 (Diseases and Disorders of the Female Reproductive 89 24.6 83,319

    System)--Cases with mechanical ventilation >96 hours...........

    MDC 14 (Pregnancy, Childbirth and the Puerperium)--Cases with 22 17.4 56,981

    mechanical ventilation >96 hours...............................

    MDC 16 (Diseases and Disorders of Blood, Blood Forming Organs, 468 20.1 68,658

    Immunologic Disorders)--Cases with mechanical ventilation >96

    hours..........................................................

    MDC 17 (Myeloproliferative Diseases and Disorders, Poorly 538 29.7 99,968

    Differentiated Neoplasms)--Cases with mechanical ventilation

    >96 hours......................................................

    MDC 18 (Infectious and Parasitic Diseases, Systemic or 48,176 17.3 55,022

    Unspecified Sites)--Cases with mechanical ventilation >96 hours

    MDC 19 (Mental Diseases and Disorders)--Cases with mechanical 54 29.3 52,749

    ventilation >96 hours..........................................

    MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental 312 20.5 47,637

    Disorders)--Cases with mechanical ventilation >96 hours........

    Page 20196

    MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs)--Cases 2,436 18.2 57,712

    with mechanical ventilation >96 hours..........................

    MDC 22 (Burns)--Cases with mechanical ventilation >96 hours..... 242 34.8 188,704

    MDC 23 (Factors Influencing Health Status and Other Contacts 64 17.7 50,821

    with Health Services)--Cases with mechanical ventilation >96

    hours..........................................................

    MDC 24 (Multiple Significant Trauma)--Cases with mechanical 922 17.6 72,358

    ventilation >96 hours..........................................

    MDC 25 (Human Immunodeficiency Virus Infections)--Cases with 363 19.1 56,688

    mechanical ventilation >96 hours...............................

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

    As shown in the table, the top 5 MDCs with the largest number of cases reporting mechanical ventilation >96 hours are MDC 18, with 48,176 cases; MDC 4, with 27,793 cases; MDC 5, with 16,923 cases; MDC 1, with 13,668 cases; and MDC 6, with 6,401 cases. We note that the claims data demonstrate that the average length of stay is consistent with what we would expect for cases reporting the use of mechanical ventilation >96 hours across each of the 25 MDCs. The top 5 MDCs with the highest average costs for cases reporting mechanical ventilation >96 hours were MDC 22, with average costs of $188,704; MDC 17, with average costs of $99,968; MDC 12, with average costs of $95,204; MDC 5, with average costs of $84,565; and MDC 13, with average costs of $83,319. We note that the data for MDC 8 demonstrated similar results compared to MDC 13 with average costs of $83,271 for cases reporting mechanical ventilation >96 hours. In summary, the claims data reflect a wide variance with regard to the frequency and average costs for cases reporting the use of mechanical ventilation >96 hours.

    We also examined claims data across each of the 25 MDCs for the number of cases reporting the use of mechanical ventilation 96 hours, the claims data for cases reporting the use of mechanical ventilation 17) and MS-DRG 576 (Septicemia without Mechanical Ventilation 96+ Hours Age >17)) were created several years ago, in FY 2007 (71 FR 47938 through 47939) in response to public comments suggesting alternatives for the need to recognize the treatment for that subset of patients with severe sepsis who exhibit a greater degree of severity and resource consumption as septicemia is a systemic condition, and also as a preliminary step in the transition from the CMS DRGs to MS-DRGs.

    We believe that additional analysis and efforts toward a broader approach to refining the MS-DRGs for cases of patients requiring mechanical ventilation across the MDCs involves carefully examining the potential for instability in the relative weights and disrupting the integrity of the MS-DRG system based on the creation of separate MSdashDRGs involving small numbers of cases for various indications in which mechanical ventilation may be required.

    The second request focused on patients diagnosed with any neurological condition classified under MDC 1 requiring mechanical ventilation in the absence of an O.R. procedure and without having received a thrombolytic agent. Because the first request specifically involved analysis for the acute neurological conditions of cerebral infarction and intracranial hemorrhage under MDC 1 and our findings do not support creating new MS-DRGs for those specific conditions, we did not perform separate claims analysis for other conditions classified under MDC 1.

    Therefore, we are not proposing to create new MS-DRGs for cases that identify patients diagnosed with neurological conditions classified under MDC 1 who require mechanical ventilation with or without a thrombolytic and in the absence of an O.R. procedure. We are inviting public comments on our proposal.

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

  18. Pacemaker Insertions

    In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56804 through 56809), we discussed a request to examine the ICD-10-PCS procedure code combinations that describe procedures involving pacemaker insertions to determine if some procedure code combinations were excluded from the Version 33 ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/

    MCC, respectively) under MDC 5. We finalized our proposal to modify the Version 34 ICD-10 MS-DRG GROUPER logic so the specified procedure code combinations were no longer required for assignment into those MS-DRGs. As a result, the logic for pacemaker insertion procedures was simplified by separating the procedure codes describing cardiac pacemaker device insertions into one list and separating the procedure codes describing cardiac pacemaker lead insertions into another list. Therefore, when any ICD-10-PCS procedure code describing the insertion of a pacemaker device is reported from that specific logic list with any ICD-10-PCS procedure code describing the insertion of a pacemaker lead from that specific logic list (81 FR 56804 through 56806), the case is assigned to MS-DRGs 242, 243, and 244 under MDC 5.

    We then discussed our examination of the Version 33 GROUPER logic for MSdashDRGs 258 and 259 (Cardiac Pacemaker Device Replacement with and without MCC, respectively) because assignment of cases to these MS-

    DRGs

    Page 20198

    also included qualifying ICD-10-PCS procedure code combinations involving pacemaker insertions (81 FR 56806 through 56808). Specifically, the logic for Version 33 ICD-10 MS-DRGs 258 and 259 included ICD-10-PCS procedure code combinations describing the removal of pacemaker devices and the insertion of new pacemaker devices. We finalized our proposal to modify the Version 34 ICD-10 MS-DRG GROUPER logic for MS-DRGs 258 and 259 to establish that a case reporting any procedure code from the 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 (81 FR 56806 through 56807) under MDC 5. In addition, we pointed out that a limited number of ICD-10-PCS procedure codes describing pacemaker insertion are classified as non-operating room (non-O.R.) codes within the MS-DRGs and that the Version 34 ICD-10 MS-DRG GROUPER logic would continue to classify these procedure codes as non-O.R. codes. We noted that a case reporting any one of these non-O.R. procedure codes describing a pacemaker device insertion without any other procedure code involving a pacemaker lead would be assigned to MS-DRGs 258 and 259. Therefore, the listed procedure codes describing a pacemaker device insertion under MS-DRGs 258 and 259 are designated as non-O.R. affecting the MS-DRG.

    Lastly, we discussed our examination of the Version 33 GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively), and noted that cases assigned to these MS-DRGs also included 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 cardiac devices, and revision of cardiac devices (81 FR 56808). We finalized our proposal to modify the ICD-10 MS-DRG GROUPER logic for MS-DRGs 260, 261, and 262 so that cases reporting any one of the listed ICD-10-PCS procedure codes describing procedures involving pacemakers and related procedures and associated devices are assigned to MS DRGs 260, 261, and 262 under MDC 5. Therefore, the GROUPER logic that required a combination of procedure codes be reported for assignment into MS-DRGs 260, 261 and 262 under Version 33 was no longer required effective with discharges occurring on or after October 1, 2016 (FY 2017) under Version 34 of the ICD-10 MS-DRGs.

    We note that while the discussion in the FY 2017 IPPS/LTCH PPS final rule focused on the MS-DRGs involving pacemaker procedures under MDC 5, similar GROUPER logic exists in Version 33 of the ICD-10 MS-DRGs under MDC 1 (Diseases and Disorders of the Nervous System) in 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) and MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs) in MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without MCC, respectively) where procedure code combinations involving cardiac pacemaker device insertions or removals and cardiac pacemaker lead insertions or removals are required to be reported together for assignment into those MS-DRGs. We also note that, with the exception of when a principal diagnosis is reported from MDC 1, MDC 5, or MDC 21, the procedure codes describing the insertion, removal, replacement, or revision of pacemaker devices are assigned to a medical MS-DRG in the absence of another O.R. procedure according to the GROUPER logic. We refer the reader to the ICD-10 MS-DRG Definitions Manual Version 33, 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 for complete documentation of the GROUPER logic that was in effect at that time for the Version 33 ICD-10 MS-DRGs discussed earlier.

    For FY 2019, we received a request to assign all procedures involving the insertion of pacemaker devices to surgical MS-DRGs, regardless of the principal diagnosis. The requestor recommended that procedures involving pacemaker insertion be grouped to surgical MS-DRGs within the MDC to which the principal diagnosis is assigned, or that they group to MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, respectively). Currently, in Version 35 of the ICD-10 MS-DRGs, procedures involving pacemakers are assigned 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) under MDC 1 (Diseases and Disorders of the Nervous System), to MS-DRGs 242, 243, and 244 (Permanent Cardiac Pacemaker Implant with MCC, with CC, and without CC/MCC, respectively), MS-DRGs 258 and 259 (Cardiac Pacemaker Device Replacement with MCC and without MCC, respectively), and MS-DRGs 260, 261 and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/

    MCC, respectively) under MDC 5 (Diseases and Disorders of the Circulatory System), and to MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively), under MDC 21 (Injuries, Poisoning and Toxic Effects of Drugs), with all other unrelated principal diagnoses resulting in a medical MS-DRG assignment. According to the requestor, the medical MS-

    DRGs do not provide adequate payment for the pacemaker device, specialized operating suites, time, skills, and other resources involved for pacemaker insertion procedures. Therefore, the requestor recommended that procedures involving pacemaker insertions be grouped to surgical MS-DRGs. We refer readers to the ICD-10 MS-DRG Definitions Manual Version 35, which is available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for complete documentation of the GROUPER logic for the MS-DRGs discussed earlier.

    The following procedure codes describe procedures involving the insertion of a cardiac rhythm related device which are classified as a type of pacemaker insertion under the ICD-10 MS-DRGs. These four codes are assigned to MS-DRGs 040, 041, and 042, as well as MS-DRGs 907, 908, and 909, and are designated as O.R. procedures.

    Page 20199

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

    ICD-10-PCS code Code description

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

    0JH60PZ................... Insertion of cardiac rhythm related device

    into chest subcutaneous tissue and fascia,

    open approach.

    0JH63PZ................... Insertion of cardiac rhythm related device

    into chest subcutaneous tissue and fascia,

    percutaneous approach.

    0JH80PZ................... Insertion of cardiac rhythm related device

    into abdomen subcutaneous tissue and

    fascia, open approach.

    0JH83PZ................... Insertion of cardiac rhythm related device

    into abdomen subcutaneous tissue and

    fascia, percutaneous approach.

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

    We examined cases from the September update of the FY 2017 MedPAR claims data for cases involving pacemaker insertion procedures reporting the above ICD-10-PCS codes in MS-DRGs 040, 041 and 042 under MDC 1. Our findings are shown in the following table.

    Cases Involving Pacemaker Insertion Procedures in MDC 1

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

    Number of Average length

    MS-DRG in MDC 1 cases of stay Average costs

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

    MS-DRG 040--All cases........................................... 4,462 10.4 $26,877

    MS-DRG 040--Cases with procedure code 0JH60PZ (Insertion of 13 14.2 55,624

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 040--Cases with procedure code 0JH63PZ (Insertion of 2 3.5 15,826

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 040--Cases with procedure code 0JH80PZ (Insertion of 0 0 0

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 040--Cases with procedure code 0JH83PZ (Insertion of 0 0 0

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 041--All cases........................................... 5,648 5.2 16,927

    MS-DRG 041--Cases with procedure code 0JH60PZ (Insertion of 12 6.4 22,498

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 041--Cases with procedure code 0JH63PZ (Insertion of 4 5 17,238

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 041--Cases with procedure code 0JH80PZ (Insertion of 0 0 0

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 041--Cases with procedure code 0JH83PZ (Insertion of 0 0 0

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 042--All cases........................................... 2,154 3.1 13,730

    MS-DRG 042--Cases with procedure code 0JH60PZ (Insertion of 5 8 18,183

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of 0 0 0

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 042--Cases with procedure code 0JH80PZ (Insertion of 0 0 0

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 042--Cases with procedure code 0JH83PZ (Insertion of 0 0 0

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, percutaneous approach).............................

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

    The following table is a summary of the findings shown above from our review of MS-DRGs 040, 041 and 042 and the total number of cases reporting a pacemaker insertion procedure.

    MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 1

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

    Number of Average length

    MS-DRG in MDC 1 cases of stay Average costs

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

    MS-DRGs 040, 041, and 042--All cases............................ 12,264 6.7 $19,986

    MS-DRGs 040, 041, and 042--Cases with a pacemaker insertion 36 9.1 32,906

    procedure......................................................

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

    We found a total of 12,264 cases in MS-DRGs 040, 041, and 042 with an average length of stay of 6.7 days and average costs of $19,986. We found a total of 36 cases in MS-DRGs 040, 041, and 042 reporting procedure codes describing the insertion of a pacemaker device with an average length of stay of 9.1 days and average costs of $32,906.

    We then examined cases involving pacemaker insertion procedures reporting those same four ICD-10-PCS procedure codes 0JH60PZ, 0JH63PZ, 0JH80PZ and 0JH83PZ in MS-DRGs 907, 908, and 909 under MDC 21. Our findings are shown in the following table.

    Page 20200

    MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 21

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

    Number of Average length

    MS-DRG in MDC 21 cases of stay Average costs

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

    MS-DRG 907--All cases........................................... 7,405 10.1 $28,997

    MS-DRG 907--Cases with procedure code 0JH60PZ (Insertion of 7 11.1 60,141

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 908--All cases........................................... 8,519 5.2 14,282

    MS-DRG 908--Cases with procedure code 0JH60PZ (Insertion of 4 3.8 35,678

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 909--All cases........................................... 3,224 3.1 9,688

    MS-DRG 909--Cases with procedure code 0JH60PZ (Insertion of 2 2 42,688

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

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

    We note that there were no cases found where procedure codes 0JH63PZ, 0JH80PZ or 0JH83PZ were reported in MS-DRGs 907, 908 and 909 under MDC 21 and, therefore, they are not displayed in the table.

    The following table is a summary of the findings shown above from our review of MS-DRGs 907, 908, and 909 and the total number of cases reporting a pacemaker insertion procedure.

    MS-DRGs for Cases Involving Pacemaker Insertion Procedures in MDC 21

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

    Number of Average length

    MS-DRG in MDC 21 cases of stay Average costs

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

    MS-DRGs 907, 908 and 909--All cases............................. 19,148 6.7 $19,199

    MS-DRGs 907, 908 and 909--Cases with a pacemaker insertion 13 7.5 49,929

    procedure......................................................

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

    We found a total of 19,148 cases in MS-DRGs 907, 908, and 909 with an average length of stay of 6.7 days and average costs of $19,199. We found a total of 13 cases in MS-DRGs 907, 908, and 909 reporting pacemaker insertion procedures with an average length of stay of 7.5 days and average costs of $49,929.

    We also examined cases involving pacemaker insertion procedures reporting the following procedure codes that are assigned to MS-DRGs 242, 243, and 244 under MDC 5.

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

    ICD-10-PCS code 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.

    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.

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

    Our data findings are shown in the following table. We note that procedure codes displayed with an asterisk (*) in the table are designated as non-O.R. procedures affecting the MS-DRG.

    Page 20201

    Cases Involving Pacemaker Insertion Procedures in MDC 5

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

    Number of Average length

    MS-DRG in MDC 5 cases of stay Average costs

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

    MS-DRG 242--All cases........................................... 18,205 6.9 $26,414

    MS-DRG 242--Cases with procedure code 0JH604Z* (Insertion of 2,518 7.7 25,004

    pacemaker, single chamber into chest subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 242--Cases with procedure code 0JH605Z* (Insertion of 306 7.7 24,454

    pacemaker, single chamber rate responsive into chest

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 242--Cases with procedure code 0JH606Z* (Insertion of 13,323 6.7 25,497

    pacemaker, dual chamber into chest subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 242--Cases with procedure code 0JH607Z (Insertion of 1,528 8.1 37,060

    cardiac resynchronization pacemaker pulse generator into chest

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 242--Cases with procedure code 0JH60PZ (Insertion of 5 16.6 59,334

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 242--Cases with procedure code 0JH634Z* (Insertion of 65 8.5 26,789

    pacemaker, single chamber into chest subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 242--Cases with procedure code 0JH635Z* (Insertion of 10 7 35,104

    pacemaker, single chamber rate responsive into chest

    subcutaneous tissue and fascia, percutaneous approach).........

    MS-DRG 242--Cases with procedure code 0JH636Z* (Insertion of 313 6.4 23,699

    pacemaker, dual chamber into chest subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 242--Cases with procedure code 0JH637Z (Insertion of 82 7.1 35,382

    cardiac resynchronization pacemaker pulse generator into chest

    Subcutaneous tissue and fascia, percutaneous approach).........

    MS-DRG 242--Cases with procedure code 0JH63PZ (Insertion of 2 12.5 32,405

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 242--Cases with procedure code 0JH804Z* (Insertion of 25 14.4 43,080

    pacemaker, single chamber into abdomen subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 242--Cases with procedure code 0JH805Z* (Insertion of 2 4 26,949

    pacemaker, single chamber rate responsive into abdomen

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 242--Cases with procedure code 0JH806Z* (Insertion of 50 6.8 25,306

    pacemaker, dual chamber into abdomen subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 242--Cases with procedure code 0JH807Z (Insertion of 5 21.2 67,908

    cardiac resynchronization pacemaker pulse generator into

    abdomen subcutaneous tissue and fascia, open approach).........

    MS-DRG 242--Cases with procedure code 0JH836Z (Insertion of 1 5 36,111

    pacemaker, dual chamber into abdomen subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 243--All cases........................................... 24,586 4 18,669

    MS-DRG 243--Cases with procedure code 0JH604Z* (Insertion of 2,537 4.7 17,118

    pacemaker, single chamber into chest subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 243--Cases with procedure code 0JH605Z* (Insertion of 271 4.4 17,268

    pacemaker, single chamber rate responsive into chest

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 243--Cases with procedure code 0JH606Z* (Insertion of 19,921 3.9 18,306

    pacemaker, dual chamber into chest subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 243--Cases with procedure code 0JH607Z (Insertion of 1,236 4.4 28,658

    cardiac resynchronization pacemaker pulse generator into chest

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 243--Cases with procedure code 0JH60PZ (Insertion of 6 4.2 20,994

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 243--Cases with procedure code 0JH634Z* (Insertion of 55 5.2 16,784

    pacemaker, single chamber into chest subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 243--Cases with procedure code 0JH635Z* (Insertion of 15 4.1 17,938

    pacemaker, single chamber rate responsive into chest

    subcutaneous tissue and fascia, percutaneous approach).........

    MS-DRG 243--Cases with procedure code 0JH636Z* (Insertion of 431 3.7 16,164

    pacemaker, dual chamber into chest subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 243--Cases with procedure code 0JH637Z (Insertion of 58 5 28,926

    cardiac resynchronization pacemaker pulse generator into chest

    subcutaneous tissue and fascia, percutaneous approach).........

    MS-DRG 243--Cases with procedure code 0JH63PZ (Insertion of 3 8.3 23,717

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 243--Cases with procedure code 0JH804Z* (Insertion of 10 8.2 20,871

    pacemaker, single chamber into abdomen subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 243--Cases with procedure code 0JH805Z* (Insertion of 1 4 15,739

    pacemaker, single chamber rate responsive into abdomen

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 243--Cases with procedure code 0JH806Z* (Insertion of 57 4.4 18,787

    pacemaker, dual chamber into abdomen subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 243--Cases with procedure code 0JH807Z (Insertion of 3 4 19,653

    cardiac resynchronization pacemaker pulse generator into

    abdomen subcutaneous tissue and fascia, open approach).........

    MS-DRG 243--Cases with procedure code 0JH80PZ (Insertion of 1 7 16,224

    cardiac rhythm related device into abdomen subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 243--Cases with procedure code 0JH836Z* (Insertion of 1 2 14,005

    pacemaker, dual chamber into abdomen subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 244--All cases........................................... 15,974 2.7 15,670

    MS-DRG 244--Cases with procedure code 0JH604Z* (Insertion of 1,045 3.2 14,541

    pacemaker, single chamber into chest subcutaneous tissue and

    fascia, open approach).........................................

    Page 20202

    MS-DRG 244--Cases with procedure code 0JH605Z* (Insertion of 127 3 13,208

    pacemaker, single chamber rate responsive into chest

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 244--Cases with procedure code 0JH606Z* (Insertion of 14,092 2.7 15,596

    pacemaker, dual chamber into chest subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 244--Cases with procedure code 0JH607Z (Insertion of 303 2.8 26,221

    cardiac resynchronization pacemaker pulse generator into chest

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 244--Cases with procedure code 0JH60PZ (Insertion of 2 4.5 9,248

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, open approach).....................................

    MS-DRG 244--Cases with procedure code 0JH634Z* (Insertion of 32 2.8 11,525

    pacemaker, single chamber into chest subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 244--Cases with procedure code 0JH635Z* (Insertion of 1 2 30,100

    pacemaker, single chamber rate responsive into chest

    subcutaneous tissue and fascia, percutaneous approach).........

    MS-DRG 244--Cases with procedure code 0JH636Z* (Insertion of 320 2.6 13,670

    pacemaker, dual chamber into chest subcutaneous tissue and

    fascia, percutaneous approach).................................

    MS-DRG 244--Cases with procedure code 0JH637Z (Insertion of 20 2.7 19,218

    cardiac resynchronization pacemaker pulse generator into chest

    subcutaneous tissue and fascia, percutaneous approach).........

    MS-DRG 244--Cases with procedure code 0JH63PZ (Insertion of 1 3 12,120

    cardiac rhythm related device into chest subcutaneous tissue

    and fascia, percutaneous approach).............................

    MS-DRG 244--Cases with procedure code 0JH805Z* (Insertion of 1 1 21,604

    pacemaker, single chamber rate responsive into abdomen

    subcutaneous tissue and fascia, open approach).................

    MS-DRG 244--Cases with procedure code 0JH806Z* (Insertion of 36 3.2 16,492

    pacemaker, dual chamber into abdomen subcutaneous tissue and

    fascia, open approach).........................................

    MS-DRG 244--Cases with procedure code 0JH836Z* (Insertion of 1 3 12,160

    pacemaker, dual chamber into abdomen subcutaneous tissue and

    fascia, percutaneous approach).................................

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

    The following table is a summary of the findings shown above from our review of MS-DRGs 242, 243, and 244 and the total number of cases reporting a pacemaker insertion procedure.

    Cases Involving Pacemaker Insertion Procedures in MDC 5

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

    Number of Average length

    MS-DRG in MDC 5 cases of stay Average costs

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

    MS-DRGs 242, 243 and 244--All cases............................. 58,765 4.6 $20,253

    MS-DRGs 242, 243, and 244--Cases with a pacemaker insertion * 58,822 4.6 20,270

    procedure......................................................

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

    * The figure is not adjusted for cases reporting more than one pacemaker insertion procedure code. The figure

    represents the frequency in which the number of pacemaker insertion procedures was reported.

    We found a total of 58,765 cases in MS-DRGs 242, 243, and 244 with an average length of stay of 4.6 days and average costs of $20,253. We found a total of 58,822 cases reporting pacemaker insertion procedures in MS-DRGs 242, 243, and 244 with an average length of stay of 4.6 days and average costs of $20,270. We note that the analysis performed is by procedure code, and because multiple pacemaker insertion procedures may be reported on a single claim, the total number of these pacemaker insertion procedure cases exceeds the total number of all cases found across MS-DRGs 242, 243, and 244 (58,822 procedures versus 58,765 cases).

    We then analyzed claims for cases reporting a procedure code describing (1) the insertion of a pacemaker device only, (2) the insertion of a pacemaker lead only, and (3) both the insertion of a pacemaker device and a pacemaker lead across all the MDCs except MDC 5 to determine the number of cases currently grouping to medical MS-DRGs and the potential impact of these cases moving into the surgical unrelated MS-DRGs 981, 982 and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC and without CC/MCC, respectively). Our findings are shown in the following table.

    Pacemaker Insertion Procedures in Medical MS-DRGs

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

    Number of Average length

    All MDCs except MDC 5 cases of stay Average costs

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

    Procedures for insertion of pacemaker device.................... 2,747 9.5 $29,389

    Procedures for insertion of pacemaker lead...................... 2,831 9.4 29,240

    Procedures for insertion of pacemaker device with insertion of 2,709 9.4 29,297

    pacemaker lead.................................................

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

    Page 20203

    We found a total of 2,747 cases reporting the insertion of a pacemaker device in 177 medical MS-DRGs with an average length of stay of 9.5 days and average costs of $29,389 across all the MDCs except MDC 5. We found a total of 2,831 cases reporting the insertion of a pacemaker lead in 175 medical MS-DRGs with an average length of stay of 9.4 days and average costs of $29,240 across all the MDCs except MDC 5. We found a total of 2,709 cases reporting both the insertion of a pacemaker device and the insertion of a pacemaker lead in 170 medical MS-DRGs with an average length of stay of 9.4 days and average costs of $29,297 across all the MDCs except MDC 5.

    We also analyzed claims for cases reporting a procedure code describing the insertion of a pacemaker device with a procedure code describing the insertion of a pacemaker lead in all the surgical MS-

    DRGs across all the MDCs except MDC 5. Our findings are shown in the following table.

    Pacemaker Insertion Procedures in Medical MS-DRGs

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

    Average length

    All MDCs except MDC 5 Number of cases of stay Average costs

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

    Procedures for insertion of pacemaker device with insertion 3,667 12.8 $48,856

    of pacemaker lead...........................................

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

    We found a total of 3,667 cases reporting the insertion of a pacemaker device and the insertion of a pacemaker lead in 194 surgical MS-DRGs with an average length of stay of 12.8 days and average costs of $48,856 across all the MDCs except MDC 5.

    For cases where the insertion of a pacemaker device, the insertion of a pacemaker lead or the insertion of both a pacemaker device and lead were reported on a claim grouping to a medical MS-DRG, the average length of stay and average costs were generally higher for these cases when compared to the average length of stay and average costs for all the cases in their assigned MS-DRGs. For example, we found 113 cases reporting both the insertion of a pacemaker device and lead in MS-DRG 378 (G.I. Hemorrhage with CC), with an average length of stay of 7.1 days and average costs of $23,711. The average length of stay for all cases in MS-DRG 378 was 3.6 days and the average cost for all cases in MS-DRG 378 was $7,190. The average length of stay for cases reporting both the insertion of a pacemaker device and lead were twice as long as the average length of stay for all the cases in MS-DRG 378 (7.1 days versus 3.6 days). In addition, the average costs for the cases reporting both the insertion of a pacemaker device and lead were approximately $16,500 higher than the average costs of all the cases in MS-DRG 378 ($23,711 versus $7,190). We refer readers to Table 6P.1c associated with this proposed rule (which is available via the internet on the CMS website) for the detailed report of our findings across the other medical MS-DRGs. We note that the average costs and average length of stay for cases reporting the insertion of a pacemaker device, the insertion of a pacemaker lead or the insertion of both a pacemaker device and lead are reflected in Columns D and E, while the average costs and average length of stay for all cases in the respective MS-DRG are reflected in Columns I and J.

    The claims data results from our analysis of this request showed that if we were to support restructuring the GROUPER logic so that pacemaker insertion procedures that include a combination of the insertion of the pacemaker device with the insertion of the pacemaker lead are designated as an O.R. procedure across all the MDCs, we would expect approximately 2,709 cases to move or ``shift'' from the medical MS-DRGs where they are currently grouping into the surgical unrelated MS-DRGs 981, 982, and 983.

    Our clinical advisors reviewed the data results and recommended that pacemaker insertion procedures involving a complete pacemaker system (insertion of pacemaker device combined with insertion of pacemaker lead) warrant classification into surgical MS-DRGs because the patients receiving these devices demonstrate greater treatment difficulty and utilization of resources when compared to procedures that involve the insertion of only the pacemaker device or the insertion of only the pacemaker lead. We note that the request we addressed in the FY 2017 IPPS/LTCH PPS proposed rule (81 FR 24981 through 24984) was to determine if some procedure code combinations were excluded from the ICD-10 MS-DRG assignments for MS-DRGs 242, 243, and 244. We proposed and, upon considering public comments received, finalized an alternate approach that we believed to be less complicated. We also stated in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56806) that we would continue to monitor the MS-DRGs for pacemaker insertion procedures as we receive ICD-10 claims data. Upon further review, we believe that recreating the procedure code combinations for pacemaker insertion procedures would allow for the grouping of these procedures to the surgical MS-DRGs, which we believe is warranted to better recognize the resources and complexity of performing these procedures. Therefore, we are proposing to recreate pairs of procedure code combinations involving both the insertion of a pacemaker device with the insertion of a pacemaker lead to act as procedure code combination pairs or ``clusters'' in the GROUPER logic that are designated as O.R. procedures outside of MDC 5 when reported together. We are inviting public comments on our proposal.

    We also are proposing to designate all the procedure codes describing the insertion of a pacemaker device or the insertion of a pacemaker lead as non-O.R. procedures when reported as a single, individual stand-alone code based on the recommendation of our clinical advisors as noted earlier in this section and consistent with how these procedures were classified under the Version 33 ICD-10 MS-DRG GROUPER logic. We are inviting public comments on our proposal.

    We refer readers to Table 6P.1d, Table 6P.1e, and Table 6P.1f associated with this proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) for (1) a complete list of the proposed procedure code combinations or ``pairs''; (2) a complete list of the procedure codes describing the insertion of a pacemaker device; and (3) a complete list of the procedure codes describing the insertion of a pacemaker lead. We are inviting public comments on our lists of procedure codes that we are proposing to include for restructuring the ICD-10 MS-DRG GROUPER logic for pacemaker insertion procedures.

    In addition, we are proposing to maintain the current GROUPER logic for MS-DRGs 258 and 259 (Cardiac

    Page 20204

    Pacemaker Device Replacement with MCC and without MCC, respectively) where the listed procedure codes as shown in the ICD-10 MS-DRG Definitions Manual Version 35, which is available via the internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, describing a pacemaker device insertion, continue to be designated as ``non-O.R. affecting the MS-DRG'' because they are reported when a pacemaker device requires replacement and have a corresponding diagnosis from MDC 5. Also, we are proposing to maintain the current GROUPER logic for MS-DRGs 260, 261, and 262 (Cardiac Pacemaker Revision Except Device Replacement with MCC, with CC, and without CC/MCC, respectively) so that cases reporting any one of the listed ICD-10-PCS procedure codes as shown in the ICD-10 MS-DRG Definitions Manual Version 35 describing procedures involving pacemakers and related procedures and associated devices will continue to be assigned to those MS-DRGs under MDC 5 because they are reported when a pacemaker device requires revision and they have a corresponding circulatory system diagnosis. We are inviting public comments on our proposal.

    We note that, while the requestor did not include the following procedure codes in its request, these codes are also currently designated as O.R. procedure codes and are assigned to MS-DRGs 260, 261, and 262 under MDC 5.

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

    ICD-10-PCS code Code description

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

    02PA0MZ................... Removal of cardiac lead from heart, open

    approach.

    02PA3MZ................... Removal of cardiac lead from heart,

    percutaneous approach.

    02PA4MZ................... 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.

    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.

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

    We are soliciting public comments on whether these procedure codes describing the removal or revision of a cardiac lead and removal or revision of a cardiac rhythm related (pacemaker) device should also be designated as non-O.R. procedure codes for FY 2019 when reported as a single, individual stand-alone code with a principal diagnosis outside of MDC 5 for consistency in the classification among these devices.

    We also note that, while the requestor did not include the following procedure codes in its request, the codes in the following table became effective October 1, 2016 (FY 2017) and also describe procedures involving the insertion of a pacemaker. Specifically, the following list includes procedure codes that describe an intracardiac or ``leadless'' pacemaker. These procedure codes are designated as O.R. procedure codes and are currently assigned to MS-DRGs 228 and 229 (Other Cardiothoracic Procedures with MCC and without MCC, respectively) under MDC 5.

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

    ICD-10-PCS code Code description

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

    02H40NZ................... Insertion of intracardiac pacemaker into

    coronary vein, open approach.

    02H43NZ................... Insertion of intracardiac pacemaker into

    coronary vein, percutaneous approach.

    02H44NZ................... Insertion of intracardiac pacemaker into

    coronary vein, percutaneous endoscopic

    approach.

    02H60NZ................... Insertion of intracardiac pacemaker into

    right atrium, open approach.

    02H63NZ................... Insertion of intracardiac pacemaker into

    right atrium, percutaneous approach.

    02H64NZ................... Insertion of intracardiac pacemaker into

    right atrium, percutaneous endoscopic

    approach.

    02H70NZ................... Insertion of intracardiac pacemaker into

    left atrium, open approach.

    02H73NZ................... Insertion of intracardiac pacemaker into

    left atrium, percutaneous approach.

    02H74NZ................... Insertion of intracardiac pacemaker into

    left atrium, percutaneous endoscopic

    approach.

    02HK0NZ................... Insertion of intracardiac pacemaker into

    right ventricle, open approach.

    02HK3NZ................... Insertion of intracardiac pacemaker into

    right ventricle, percutaneous approach.

    02HK4NZ................... Insertion of intracardiac pacemaker into

    right ventricle, percutaneous endoscopic

    approach.

    02HL0NZ................... Insertion of intracardiac pacemaker into

    left ventricle, open approach.

    02HL3NZ................... Insertion of intracardiac pacemaker into

    left ventricle, percutaneous Approach.

    02HL4NZ................... Insertion of intracardiac pacemaker into

    left ventricle, percutaneous endoscopic

    approach.

    02WA0NZ................... Revision of intracardiac pacemaker in heart,

    open approach.

    02WA3NZ................... Revision of intracardiac pacemaker in heart,

    percutaneous approach.

    02WA4NZ................... Revision of intracardiac pacemaker in heart,

    percutaneous endoscopic approach.

    02WAXNZ................... Revision of intracardiac pacemaker in heart,

    external approach.

    02H40NZ................... Insertion of intracardiac pacemaker into

    coronary vein, open approach.

    02H43NZ................... Insertion of intracardiac pacemaker into

    coronary vein, percutaneous approach.

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

    We examined claims data for procedures involving an intracardiac pacemaker reporting any of the above codes across all MS-DRGs. Our findings are shown in the following table.

    Page 20205

    Intracardiac Pacemaker Procedures

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

    Average length

    Across all MS-DRGs Number of cases of stay Average costs

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

    Procedures for intracardiac pacemaker........................ 1,190 8.6 $38,576

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

    We found 1,190 cases reporting a procedure involving an intracardiac pacemaker with an average length of stay of 8.6 days and average costs of $38,576. Of these 1,190 cases, we found 1,037 cases in MS-DRGs under MDC 5. We also found that the 153 cases that grouped to MS-DRGs outside of MDC 5 grouped to surgical MS-DRGs; therefore, another O.R. procedure was also reported on the claim. However, we are soliciting public comments on whether these procedure codes describing the insertion and revision of intracardiac pacemakers should also be considered for classification into all surgical unrelated MS-DRGs outside of MDC 5 for FY 2019.

  19. Drug-Coated Balloons in Endovascular Procedures

    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38111), we discontinued new technology adddashon payments for the LUTONIXreg and IN.PACTTM AdmiralTM drug-coated balloon (DCB) technologies, effective for FY 2018, because the technology no longer met the newness criterion for new technology add-on payments. For FY 2019, we received a request to reassign cases that utilize a drug-

    coated balloon in the performance of an endovascular procedure involving the treatment of superficial femoral arteries for peripheral arterial disease from the lower severity level MS-DRG 254 (Other Vascular Procedures without CC/MCC) and MS-DRG 253 (Other Vascular Procedures with CC) to the highest severity level MS-DRG 252 (Other Vascular Procedures with MCC). We also received a request to revise the title of MS-DRG 252 to ``Other Vascular Procedures with MCC or Drug-

    Coated Balloon Implant''.

    There are currently 36 ICD-10-PCS procedure codes that describe the performance of endovascular procedures involving treatment of the superficial femoral arteries that utilize a drug-coated balloon, which are listed 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.

    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.

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

    Page 20206

    The requestor performed its own analysis of claims data and expressed concern that it found that the average costs of cases using a drug-coated balloon in the performance of percutaneous endovascular procedures involving treatment of patients who have been diagnosed with peripheral arterial disease are significantly higher than the average costs of all of the cases in the MS-DRGs where these procedures are currently assigned. The requestor also expressed concern that payments may no longer be adequate because the new technology add-on payments have been discontinued and may affect patient access to these procedures.

    We first examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting any 1 of the 36 ICD-10-PCS procedure codes listed in the immediately preceding table that describe the use of a drug-coated balloon in the performance of endovascular procedures in MS-DRGs 252, 253, and 254. Our findings are shown in the following table.

    MS-DRGs for Other Vascular Procedures With DrugdashCoated Balloon

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 252--All cases........................................... 33,583 7.6 $23,906

    MS-DRG 252--Cases with drug-coated balloon...................... 870 8.8 30,912

    MS-DRG 253--All cases........................................... 25,714 5.4 18,986

    MS-DRG 253--Cases with drug-coated balloon...................... 1,532 5.4 23,051

    MS-DRG 254--All cases........................................... 12,344 2.8 13,287

    MS-DRG 254--Cases with drug-coated balloon...................... 488 2.4 17,445

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

    As shown in this table, there were a total of 33,583 cases in MS-

    DRG 252, with an average length of stay of 7.6 days and average costs of $23,906. There were 870 cases in MS-DRG 252 reporting the use of a drug-coated balloon in the performance of an endovascular procedure, with an average length of stay of 8.8 days and average costs of $30,912. The total number of cases in MS-DRG 253 was 25,714, with an average length of stay of 5.4 days and average costs of $18,986. There were 1,532 cases in MS-DRG 253 reporting the use of a DCB in the performance of an endovascular procedure, with an average length of stay of 5.4 days and average costs of $23,051. The total number of cases in MS-DRG 254 was 12,344, with an average length of stay of 2.8 days and average costs of $13,287. There were 488 cases in MS-DRG 254 reporting the use of a DCB in the performance of an endovascular procedure, with an average length of stay of 2.4 days and average costs of $17,445.

    The results of our data analysis show that there is not a very high volume of cases reporting the use of a drug-coated balloon in the performance of endovascular procedures compared to all of the cases in the assigned MS-DRGs. The data results also show that the average length of stay for cases reporting the use of a drugdashcoated balloon in the performance of endovascular procedures in MS-DRGs 253 and 254 is lower compared to the average length of stay for all of the cases in the assigned MS-DRGs, while the average length of stay for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures in MS-DRG 252 is slightly higher compared to all of the cases in MS-DRG 252 (8.8 days versus 7.6 days). Lastly, the data results showed that the average costs for cases reporting the use of a drug-coated balloon in the performance of percutaneous endovascular procedures were higher compared to all of the cases in the assigned MS-DRGs. Specifically, for MS-DRG 252, the average costs for cases reporting the use of a DCB in the performance of endovascular procedures were $30,912 versus the average costs of $23,906 for all cases in MS-DRG 252, a difference of $7,006. For MS-DRG 253, the average costs for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures were $23,051 versus the average costs of $18,986 for all cases in MS-DRG 253, a difference of $4,065. For MS-DRG 254, the average costs for cases reporting the use of a drug-coated balloon in the performance of endovascular procedures were $17,445 versus the average costs of $13,287 for all cases in MS-

    DRG 254, a difference of $4,158.

    The following table is a summary of the findings discussed above from our review of MS-DRGs 252, 253 and 254 and the total number of cases that used a drugdashcoated balloon in the performance of the procedure across MS-DRGs 252, 253, and 254.

    MS-DRGs for Other Vascular Procedures and Cases With Drug-Coated Balloon

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

    Number of Average Length

    MS-DRG cases of stay Average costs

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

    MS-DRGs 252, 253, and 254--All cases............................ 71,641 6.0 $20,310

    MS-DRGs 252, 253, and 254--Cases with drug-coated balloon....... 2,890 6.0 24,569

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

    As shown in this table, there were a total of 71,641 cases across MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days and average costs of $20,310. There were a total of 2,890 cases across MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $24,569. The data analysis showed that cases reporting the use of a drug-coated balloon in the performance of the procedure across MS-DRGs 252, 253 and 254 have similar lengths of stay (6.0 days) compared to the average length of stay for all of the cases in MS-DRGs 252, 253, and 254. The data results also showed that the cases reporting the use of a drug-coated balloon in the performance of the procedure across

    Page 20207

    these MS-DRGs have higher average costs ($24,569 versus $20,310) compared to the average costs for all of the cases across these MS-

    DRGs.

    The results of our claims data analysis and the advice from our clinical advisors do not support reassigning cases reporting the use of a drug-coated balloon in the performance of these procedures from the lower severity level MS-DRGs 253 and 254 to the highest severity level MS-DRG 252 at this time. If we were to reassign cases that utilize a drug-coated balloon in the performance of these types of procedures from MS-DRG 254 to MS-DRG 252, the cases would result in overpayment and also would have a shorter length of stay compared to all of the cases in MS-DRG 252. While the cases reporting the use of a drug-coated balloon in the performance of these procedures are higher compared to the average costs for all cases in their assigned MS-DRGs, it is not by a significant amount. We believe that as use of a drug-coated balloon becomes more common, the costs will be reflected in the data. Our clinical advisors also agreed that it would not be clinically appropriate to reassign cases for patients from the lowest severity level (without CC/MCC) MS-DRG to the highest severity level (with MCC) MS-DRG in the absence of additional data to better determine the resource utilization for this subset of patients. Therefore, for these reasons, we are proposing to not reassign cases reporting the use of a drug-coated balloon in the performance of endovascular procedures from MS-DRGs 253 and 254 to MS-DRG 252. We are inviting public comments on our proposal.

    We note that because 24 of the 36 ICD-10-PCS procedure codes describing the use of a drug-coated balloon in the performance of endovascular procedures also include the use of an intraluminal device, we conducted further analysis to determine the number of cases reporting an intraluminal device with the use of a drug-coated balloon in the performance of the procedure versus the number of cases reporting the use of a drugdashcoated balloon alone. We analyzed the number of cases across MS-DRGs 252, 253, and 254 reporting: (1) The use of an intraluminal device (stent) with use of a drug-coated balloon in the performance of the procedure; (2) the use of a drug-eluting intraluminal device (stent) with the use of a drug-coated balloon in the performance of the procedure; and (3) the use of a drug-coated balloon only in the performance of the procedure. Our findings are shown in the following table.

    MS-DRGs for Other Vascular Procedures and Cases With Drug-Coated Balloon

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRGs 252, 253 and 254--All cases............................. 71,641 6.0 $20,310

    MS-DRGs 252, 253 and 254--Cases with intraluminal device with 522 6.0 28,418

    drug-coated balloon............................................

    MS-DRGs 252, 253 and 254--Cases with drug-eluting intraluminal 447 6.0 26,098

    device with drug-coated balloon................................

    MS-DRGs 252, 253 and 254--Cases with drug-coated balloon only... 2,705 6.1 24,553

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

    As shown in this table, there were a total of 71,641 cases across MS-DRGs 252, 253, and 254, with an average length of stay of 6.0 days and average costs of $20,310. There were 522 cases across MS-DRGs 252, 253, and 254 reporting the use of an intraluminal device with use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $28,418. There were 447 cases across MS-DRGs 252, 253, and 254 reporting the use of a drugdasheluting intraluminal device with use of a drug-coated balloon in the performance of the procedure, with an average length of stay of 6.0 days and average costs of $26,098. Lastly, there were 2,705 cases across MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon alone in the performance of the procedure, with an average length of stay of 6.1 days and average costs of $24,553.

    The data showed that the 2,705 cases in MS-DRGs 252, 253, and 254 reporting the use of a drug-coated balloon alone in the performance of the procedure have lower average costs compared to the 969 cases in MS-

    DRGs 252, 253, and 254 reporting the use of an intraluminal device (522 cases) or a drug-eluting intraluminal device (447 cases) with a drug-

    coated balloon in the performance of the procedure ($24,553 versus $28,418 and $26,098, respectively). The data also showed that the cases reporting the use of a drug-coated balloon alone in the performance of the procedure have a comparable average length of stay compared to the cases reporting the use of an intraluminal device or a drug-eluting intraluminal device with a drug-coated balloon in the performance of the procedure (6.1 days versus 6.0 days).

    In summary, we believe that further analysis of endovascular procedures involving the treatment of superficial femoral arteries for peripheral arterial disease that utilize a drug-coated balloon in the performance of the procedure would be advantageous. As additional claims data become available, we will be able to more fully evaluate the differences in cases where a procedure utilizes a drug-coated balloon alone in the performance of the procedure versus cases where a procedure utilizes an intraluminal device or a drug-eluting intraluminal device in addition to a drug-coated balloon in the performance of the procedure.

    5. MDC 6 (Diseases and Disorders of the Digestive System)

  20. Benign Lipomatous Neoplasm of Kidney

    We received a request to reassign ICD-10-CM diagnosis code D17.71 (Benign lipomatous neoplasm of kidney) from MDC 06 (Diseases and Disorders of the Digestive System) to MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). The requestor stated that this diagnosis code is used to describe a kidney neoplasm and believed that because the ICD-10-CM code is specific to the kidney, a more appropriate assignment would be under MDC 11. In FY 2015, under the ICD-9-CM classification, there was not a specific diagnosis code for a benign lipomatous neoplasm of the kidney. The only diagnosis code available was ICD-9-CM diagnosis code 214.3 (Lipoma of intradashabdominal organs), which was assigned to MS-DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 6. Therefore, when we converted from the ICD-9 based MSdashDRGs to the ICDdash10 MSdashDRGs, there was not a specific code available that identified the kidney from which to

    Page 20208

    replicate. As a result, ICD-10-CM diagnosis code D17.71 was assigned to those same MS-DRGs (MS-DRGs 393, 394, and 395) under MDC 6.

    While reviewing the MS-DRG classification of ICD-10-CM diagnosis code D17.71, we also reviewed the MS-DRG classification of another diagnosis code organized in subcategory D17.7, ICD-10-CM diagnosis code D17.72 (Benign lipomatous neoplasm of other genitourinary organ). ICD-

    10-CM diagnosis code D17.72 is currently assigned under MDC 09 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast) to MS-DRGs 606 and 607 (Minor Skin Disorders with and without MCC, respectively). Similar to the replication issue with ICD-10-CM diagnosis code D17.71, with ICD-10-CM diagnosis code D17.72, under the ICD-9-CM classification, there was not a specific diagnosis code to identify a benign lipomatous neoplasm of genitourinary organ. The only diagnosis code available was ICD-9-CM diagnosis code 214.8 (Lipoma of other specified sites), which was assigned to MS-DRGs 606 and 607 under MDC 09. Therefore, when we converted from the ICD-9 based MSdashDRGs to the ICD-10 MSdashDRGs, there was not a specific code available that identified another genitourinary organ (other than the kidney) from which to replicate. As a result, ICD-10-CM diagnosis code D17.72 was assigned to those same MS-DRGs (MS-DRGs 606 and 607) under MDC 9.

    We are proposing to reassign ICD-10-CM diagnosis code D17.71 from MS-DRGs 393, 394, and 395 (Other Digestive System Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 06 to MS-DRGs 686, 687, and 688 (Kidney and Urinary Tract Neoplasms with MCC, with CC, and without CC/MCC, respectively) under MDC 11 because this diagnosis code is used to describe a kidney neoplasm. We also are proposing to reassign ICD-10-CM diagnosis code D17.72 from MS-DRGs 606 and 607 under MDC 09 to MS-DRGs 686, 687, and 688 under MDC 11 because this diagnosis code is used to describe other types of neoplasms classified to the genitourinary tract that do not have a specific code identifying the site. Our clinical advisors agree that the conditions described by the ICD-10-CM diagnosis codes provide specific anatomic detail involving the kidney and genitourinary tract and, therefore, if reclassified under this proposed MDC and reassigned to these MS-DRGs, would improve the clinical coherence of the patients assigned to these groups.

    We are inviting public comments on our proposals.

  21. Bowel Procedures

    We received a request to reassign the following 8 ICD-10-PCS procedure codes that describe repositioning of the colon and takedown of end colostomy from MS-DRGs 344, 345, and 346 (Minor Small and Large Bowel 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):

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

    ICD-10-PCS code Code description

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

    0DSK0ZZ................... Reposition ascending colon, open approach.

    0DKL4ZZ................... Reposition ascending colon, percutaneous

    endoscopic approach.

    0DSL0ZZ................... Reposition transverse colon, open approach.

    0DSL4ZZ................... Reposition transverse colon, percutaneous

    endoscopic approach.

    0DSM0ZZ................... Reposition descending colon, open approach.

    0DSM4ZZ................... Reposition descending colon, percutaneous

    endoscopic approach.

    0DSN0ZZ................... Reposition sigmoid colon, open approach.

    0DSN4ZZ................... Reposition sigmoid colon, percutaneous

    endoscopic approach.

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

    The requestor indicated that the resources required for procedures identifying repositioning of specified segments of the large bowel are more closely aligned with other procedures that group to MS-DRGs 329, 330, and 331, such as repositioning of the large intestine (unspecified segment).

    We analyzed the claims data from the September 2017 update of the FY 2017 Med PAR file for MS-DRGs 344, 345 and 346 for all cases reporting the 8 ICDdash10-PCS procedure codes listed in the table above. Our findings are shown in the following table:

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 344--All cases........................................... 1,452 9.5 $20,609

    MS-DRG 344--All cases with a specific large bowel reposition 52 9.6 23,409

    procedure......................................................

    MS-DRG 345--All cases........................................... 2,674 5.6 11,552

    MS-DRG 345--All cases with a specific large bowel reposition.... 246 6 14,915

    MS-DRG 346--All cases........................................... 990 3.8 8,977

    MS-DRG 346--All cases with a specific large bowel reposition 223 4.5 12,279

    procedure......................................................

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

    The data showed that the average length of stay and average costs for cases that reported a specific large bowel reposition procedure were generally consistent with the average length of stay and average costs for all of the cases in their assigned MS-DRG.

    We then examined the claims data in the September 2017 update of the FY 2017 MedPAR file for MS-DRGs 329, 330 and 331. Our findings are shown in the following table.

    Page 20209

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRGs 329, 330, and 331--All cases............................ 112,388 8.4 $21,382

    MS-DRG 329--All cases........................................... 33,640 13.3 34,015

    MS-DRG 330--All cases........................................... 52,644 7.3 17,896

    MS-DRG 331--All cases........................................... 26,104 4.1 12,132

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

    As shown in this table, across MS-DRGs 329, 330, and 331, we found a total of 112,388 cases, with an average length of stay of 8.4 days and average costs of $21,382. The results of our analysis indicate that the resources required for cases reporting the specific large bowel repositioning procedures are more aligned with those resources required for all cases assigned to MS-DRGs 344, 345, and 346, with the average costs being lower than the average costs for all cases assigned to MS-

    DRGs 329, 330, and 331. Our clinical advisors also indicated that the 8 specific bowel repositioning procedures are best aligned with those in MS-DRGs 344, 345, and 346. Therefore, we are proposing to maintain the current assignment of the 8 specific bowel repositioning procedures in MSdashDRGs 344, 345, and 346 for FY 2019. We are inviting public comments on this proposal.

    In conducting our analysis of MS-DRGs 329, 330, and 331, we also examined the subset of cases reporting one of the bowel procedures listed in the following table as the only O.R. procedure.

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

    ICD-10-PCS code Code description

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

    0DQK0ZZ................... Repair ascending colon, open approach.

    0DQK4ZZ................... Repair ascending colon, percutaneous

    endoscopic approach.

    0DQL0ZZ................... Repair transverse colon, open approach.

    0DQL4ZZ................... Repair transverse colon, percutaneous

    endoscopic approach.

    0DQM0ZZ................... Repair descending colon, open approach.

    0DQM4ZZ................... Repair descending colon, percutaneous

    endoscopic approach.

    0DQN0ZZ................... Repair sigmoid colon, open approach.

    0DQN4ZZ................... Repair sigmoid colon, percutaneous

    endoscopic approach.

    0DSB0ZZ................... Reposition ileum, open approach.

    0DSB4ZZ................... Reposition ileum, percutaneous endoscopic

    approach.

    0DSE0ZZ................... Reposition large intestine, open approach.

    0DSE4ZZ................... Reposition large intestine, percutaneous

    endoscopic approach.

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

    This approach can be useful in determining whether resource use is truly associated with a particular procedure or whether the procedure frequently occurs in cases with other procedures with higher than average resource use. As shown in the following table, we identified 398 cases reporting a bowel procedure as the only O.R. procedure, with an average length of stay of 6.3 days and average costs of $13,595 across MS-DRGs 329, 330, and 331, compared to the overall average length of stay of 8.4 days and average costs of $21,382 for all cases in MS-DRGs 329, 330, and 331.

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRGs 329, 330 and 331--All cases............................. 112,388 8.4 $21,382

    MS-DRGs 329, 330 and 331--All cases with a bowel procedure as 398 6.3 13,595

    only O.R. procedure............................................

    MS-DRG 329--All cases........................................... 33,640 13.3 34,015

    MS-DRG 329--Cases with a bowel procedure as only O.R. procedure. 86 8.3 19,309

    MS-DRG 330--All cases........................................... 52,644 7.3 17,896

    MS-DRG 330--Cases with a bowel procedure as only O.R. procedure. 183 6.9 13,617

    MS-DRG 331--All cases........................................... 26,104 4.1 12,132

    MS-DRG 331--Cases with a bowel procedure as only O.R. procedure. 129 4.3 9,754

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

    The resources required for these cases are more aligned with the resources required for cases assigned to MS-DRGs 344, 345, and 346 than with the resources required for cases assigned to MS-DRGs 329, 330, and 331. Our clinical advisors also agreed that these cases are more clinically aligned with cases in MS-DRGs 344, 345, and 346, as they are minor procedures relative to the major bowel procedures assigned to MS-

    DRGs 329, 330, and 331. Therefore, we are proposing to reassign the 12 ICD-10-PCS procedure codes listed above from MS-DRGs 329, 330, and 331 to MS-DRGs 344, 345, and 346. We are inviting public comments on this proposal.

    6. MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue): Spinal Fusion

    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38036), we announced our plans to review the ICD-10 logic for the MS-DRGs where procedures involving spinal fusion are currently assigned for FY 2019. After publication of the FY 2018 IPPS/LTCH PPS final rule, we

    Page 20210

    received a comment suggesting that CMS publish findings from this review and discuss possible future actions. The commenter agreed that it is important to be able to fully evaluate the MS-DRGs to which all spinal fusion procedures are currently assigned with additional claims data, particularly considering the 33 clinically invalid codes that were identified through the rulemaking process (82 FR 38034 through 38035) and the 87 codes identified from the upper and lower joint fusion tables in the ICD-10-PCS classification and discussed at the September 12, 2017 ICD-10 Coordination and Maintenance Committee that were proposed to be deleted effective October 1, 2018 (FY 2019). The agenda and handouts from that meeting can be obtained from the CMS website at: https://www.cms.gov/Medicare/Coding/ICD9ProviderDiagnosticCodes/ICD-9-CM-C-and-M-Meeting-Materials.html.

    According to the commenter, deleting the 33 procedure codes describing clinically invalid spinal fusion procedures for FY 2018 partially resolves the issue for data used in setting the FY 2020 payment rates. However, the commenter also noted that the problem will not be fully resolved until the FY 2019 claims are available for FY 2021 ratesetting (due to the 87 codes identified at the ICD-10 Coordination and Maintenance Committee meeting for deletion effective October 1, 2018 (FY 2019)).

    The commenter noted that it analyzed claims data from the FY 2016 MedPAR data set and was surprised to discover a significant number of discharges reporting 1 of the 87 clinically invalid codes that were identified and discussed by the ICD-10 Coordination and Maintenance Committee among the following spinal fusion MS-DRGs.

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

    MS-DRG Description

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

    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 Fusions with CC.

    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.

    460....................... Spinal Fusion Except Cervical without MCC.

    471....................... Cervical Spinal Fusion with MCC.

    472....................... Cervical Spinal Fusion with CC.

    473....................... Cervical Spinal Fusion without CC/MCC.

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

    In addition, the commenter noted that it also identified a number of discharges for the 33 clinically invalid codes we identified in the FY 2018 IPPS/LTCH PPS final rule in the same MS-DRGs listed above. According to the commenter, its findings of these invalid spinal fusion procedure codes in the FY 2016 claims data comprise approximately 30 percent of all discharges for spinal fusion procedures.

    The commenter expressed its appreciation that CMS is making efforts to address coding inaccuracies within the classification and suggested that CMS publish findings from its own review of spinal fusion coding issues in those MS-DRGs where cases reporting spinal fusion procedures are currently assigned and include a discussion of possible future actions in the FY 2019 IPPS/LTCH PPS proposed rule. The commenter believed that such an approach would allow time for stakeholder input on any possible proposals along with time for the invalid codes to be worked out of the datasets. The commenter also noted that publishing CMS' findings will put the agency, as well as the public, in a better position to address any potential payment issues for these services beginning in FY 2021.

    We thank the commenter for acknowledging the steps we have taken in our efforts to address coding inaccuracies within the classification as we continue to refine the ICD-10 MS-DRGs. We are not proposing any changes to the MS-DRGs involving spinal fusion procedures for FY 2019. However, in response to the commenter's suggestion and findings, we are providing the results from our analysis of the September 2017 update of the FY 2017 MedPAR claims data for the MS-DRGs involving spinal fusion procedures.

    We note that while the commenter stated that 87 codes were identified from the upper and lower joint fusion tables in the ICD-10-

    PCS classification and discussed at the September 12, 2017 ICD-10 Coordination and Maintenance Committee meeting to be deleted effective October 1, 2018 (FY 2019), there were 99 spinal fusion codes identified in the meeting materials, as shown in Table 6P.1g associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

    As shown in Table 6P.1g associated with this proposed rule, the 99 procedure codes describe spinal fusion procedures that have device value ``Z'' representing No Device for the 6th character in the code. Because a spinal fusion procedure always requires some type of device (for example, instrumentation with bone graft or bone graft alone) to facilitate the fusion of vertebral bones, these codes are considered clinically invalid and were proposed for deletion at the September 12, 2017 ICD-10 Coordination and Maintenance Committee meeting. We received public comments in support of the proposal to delete the 99 codes describing a spinal fusion without a device, in addition to receiving support for the deletion of other procedure codes describing fusion of body sites other than the spine. A total of 213 procedure codes describing fusion of a specific body part with device value ``Z'' No Device are being deleted effective October 1, 2018 (FY 2019) as shown in Table 6D.--Invalid Procedure Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html).

    We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting any of the clinically invalid spinal fusion procedures with device value ``Z'' No Device in MS-DRGs 028 (Spinal Procedures with MCC), 029 (Spinal Procedures with CC or Spinal Neurostimulators), and 030 (Spinal Procedures without CC/MCC) under

    Page 20211

    MDC 1 and MS-DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under MDC 8 (that are listed and shown earlier in this section). Our findings are shown in the following tables.

    Spinal Fusion Procedures

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 028--All cases........................................... 1,927 11.7 $37,524

    MS-DRG 028--Cases with invalid spinal fusion procedures......... 132 13 52,034

    MS-DRG 029--All cases........................................... 3,426 5.7 22,525

    MS-DRG 029--Cases with invalid spinal fusion procedures......... 171 7.4 33,668

    MS-DRG 030--All cases........................................... 1,578 3 15,984

    MS-DRG 030--Cases with invalid spinal fusion procedures......... 52 2.6 22,471

    MS-DRG 453--All cases........................................... 2,891 9.5 70,005

    MS-DRG 453--Cases with invalid spinal fusion procedures......... 823 10.1 84,829

    MS-DRG 454--All cases........................................... 12,288 4.7 47,334

    MS-DRG 454--Cases with invalid spinal fusion procedures......... 2,473 5.4 59,814

    MS-DRG 455--All cases........................................... 12,751 3 37,440

    MS-DRG 455--Cases with invalid spinal fusion procedures......... 2,332 3.2 45,888

    MS-DRG 456--All cases........................................... 1,439 11.5 66,447

    MS-DRG 456--Cases with invalid spinal fusion procedures......... 404 12.5 71,385

    MS-DRG 457--All cases........................................... 3,644 6 48,595

    MS-DRG 457--Cases with invalid spinal fusion procedures......... 960 6.7 53,298

    MS-DRG 458--All cases........................................... 1,368 3.6 37,804

    MS-DRG 458--Cases with invalid spinal fusion procedures......... 244 4.1 43,182

    MS-DRG 459--All cases........................................... 4,904 7.8 43,862

    MS-DRG 459--Cases with invalid spinal fusion procedures......... 726 9 49,387

    MS-DRG 460--All cases........................................... 59,459 3.4 29,870

    MS-DRG 460--Cases with invalid spinal fusion procedures......... 5,311 3.9 31,936

    MS-DRG 471--All cases........................................... 3,568 8.4 36,272

    MS-DRG 471--Cases with invalid spinal fusion procedures......... 389 9.9 43,014

    MS-DRG 472--All cases........................................... 15,414 3.2 21,836

    MS-DRG 472--Cases with invalid spinal fusion procedures......... 1,270 4 25,780

    MS-DRG 473--All cases........................................... 18,095 1.8 17,694

    MS-DRG 473--Cases with invalid spinal fusion procedures......... 1,185 2.3 19,503

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

    Summary Table for Spinal Fusion Procedures

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 142,752 3.9 $31,788

    471, 472, and 473--All cases...................................

    MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 16,472 5.1 42,929

    471, 472, and 473--Cases with invalid spinal fusion procedures.

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

    As shown in this summary table, we found a total of 142,752 cases in MS-DRGs 028, 029, 030, 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 with an average length of stay of 3.9 days and average costs of $31,788. We found a total of 16,472 cases reporting a procedure code for an invalid spinal fusion procedure with device value ``Z'' No Device across MS-DRGs 028, 029, and 030 under MDC 1 and MS-

    DRGs 453, 454, 455, 456, 457, 458, 459, 460, 471, 472, and 473 under MDC 8, with an average length of stay of 5.1 days and average costs of $42,929. The results of the data analysis demonstrate that these invalid spinal fusion procedures represent approximately 12 percent of all discharges across the spinal fusion MS-DRGs. Because these procedure codes describe clinically invalid procedures, we would not expect these codes to be reported on any claims data. It is unclear why providers assigned procedure codes for spinal fusion procedures with the device value ``Z'' No Device. Our analysis did not examine whether these claims were isolated to a specific provider or whether this inaccurate reporting was widespread among a number of providers.

    With regard to possible future action, we will continue to monitor the claims data for resolution of the coding issues previously identified. Because the procedure codes that we analyzed and presented findings for in this FY 2019 IPPS/LTCH PPS proposed rule are no longer in the classification effective October 1, 2018 (FY 2019), the claims data that we examine for FY 2020 may still contain claims with the invalid codes. As such, we will continue to collaborate with the AHA as one of the four Cooperating Parties through the AHA's Coding Clinic for ICD-10-CM/PCS and provide further education on spinal fusion procedures and the proper reporting of the ICD-10-PCS spinal fusion procedure codes. We agree with the commenter that until these coding inaccuracies are no longer reflected in the claims data, it would be premature to propose any MS-DRG modifications for spinal fusion procedures. Possible MS-DRG modifications may include taking into account the approach that was utilized in performing the spinal fusion procedure (for example, open versus percutaneous).

    For the reasons described, stated earlier in our discussion, we are proposing to not make any changes to the spinal fusion MS-DRGs for FY 2019.

    Page 20212

    We are inviting public comments on our proposal.

    7. MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast): Cellulitis With Methicillin Resistant Staphylococcus Aureus (MSRA) Infection

    We received a request to reassign ICD-10-CM diagnosis codes reported with a primary diagnosis of cellulitis and a secondary diagnosis code of B95.62 (Methicillin resistant Staphylococcus aureus infection as the cause of diseases classified elsewhere) or A49.02 (Methicillin resistant Staphylococcus aureus infection, unspecified site). Currently, these cases are assigned to MS-DRG 602 (Cellulitis with MCC) and MS-DRG 603 (Cellulitis without MCC) in MDC 9. The requestor believed that cases of cellulitis with MSRA infection should be reassigned to MS-DRG 867 (Other Infectious and Parasitic Diseases Diagnoses with MCC) because MS-DRGs 602 and 603 include cases that do not accurately reflect the severity of illness or risk of mortality for patients diagnosed with cellulitis and MRSA. The requestor acknowledged that the organism is not to be coded before the localized infection, but stated in its request that patients diagnosed with cellulitis and MRSA are entirely different from patients diagnosed only with cellulitis. The requestor stated that there is a genuine threat to life or limb in these cases. The requestor further stated that, with the opioid crisis and the frequency of MRSA infection among this population, cases of cellulitis with MRSA should be identified with a specific combination code and assigned to MS-DRG 867.

    We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for all cases assigned to MS-DRGs 602 and 603 and subsets of these cases reporting a primary ICD-10-CM diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02. Our findings are shown in the following table.

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 602--All cases........................................... 26,244 5.8 $10,034

    MS-DRG 603--All cases........................................... 104,491 3.9 6,128

    MS-DRGs 602 and 603--Cases reported with a primary diagnosis of 5,364 5.3 8,245

    cellulitis and a secondary diagnosis of B95.62.................

    MS-DRGs 602 and 603--Cases reported with a primary diagnosis of 309 5.4 8,832

    cellulitis and a secondary diagnosis of A49.02.................

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

    As shown in this table, we examined the subsets of cases in MS-DRGs 602 and 603 reported with a primary diagnosis of cellulitis and a secondary diagnosis code B95.62 or A49.02. Both of these subsets of cases had an average length of stay that was comparable to the average length of stay for all cases in MS-DRG 602 and greater than the average length of stay for all cases in MS-DRG 603, and average costs that were lower than the average costs of all cases in MS-DRG 602 and higher than the average costs of all cases in MS-DRG 603. As we have discussed in prior rulemaking (77 FR 53309), it is a fundamental principle of an averaged payment system that half of the procedures in a group will have above average costs. It is expected that there will be higher cost and lower cost subsets, especially when a subset has low numbers.

    To examine the request to reassign ICD-10-CM diagnosis codes reported with a primary diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRG 867 (which would typically involve also reassigning those cases to the two other severity level MS-DRGs 868 and 869 (Other Infectious and Parasitic Diseases Diagnoses with CC and Other Infectious and Parasitic Diseases Diagnoses without CC/MCC, respectively)), we then analyzed the data for all cases in MS-DRGs 867, 868 and 869. The results of our analysis are shown in the following table.

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 867-All cases............................................ 2,653 7.5 $14,762

    MS-DRG 868-All cases............................................ 2,096 4.4 7,532

    MS-DRG 869-All cases............................................ 499 3.3 5,624

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

    We compared the average length of stay and average costs for MS-

    DRGs 867, 868, and 869 to the average length of stay and average costs for the subsets of cases in MS-DRGs 602 and 603 reported with a primary diagnosis of cellulitis and a secondary diagnosis code of B95.62 or A49.02. We found that the average length of stay for these subsets of cases was shorter and the average costs were lower than those for all cases in MS-DRG 867, but that the average length of stay and average costs were higher than those for all cases in MS-DRG 868 and MS-DRG 869. Our findings from the analysis of claims data do not support reassigning cellulitis cases reported with ICD-10-CM diagnosis code B95.62 or A49.02 from MS-DRGs 602 and 603 to MS-DRGs 867, 868 and 869. Our clinical advisors noted that when a primary diagnosis of cellulitis is accompanied by a secondary diagnosis of B95.62 or A49.02 in MS-DRGs 602 or 603, the combination of these primary and secondary diagnoses is the reason for the hospitalization, and the level of acuity of these subsets of patients is similar to other patients in MS-DRGs 602 and 603. Therefore, these cases are more clinically aligned with all cases in MS-DRGs 602 and 603. For these reasons, we are not proposing to reassign cellulitis cases reported with ICD-10-CM diagnosis code of B95.62 or A49.02 to MS-DRG 867, 868, or 869 for FY 2019. We are inviting public comments on our proposal to maintain the current MS-DRG assignment for ICD-10-CM codes B95.62 and A49.02 when reported as secondary diagnoses with a primary diagnosis of cellulitis.

    8. MDC 10 (Endocrine, Nutritional and Metabolic Diseases and Disorders): Acute Intermittent Porphyria

    We received a request to revise the MS-DRG classification for cases of

    Page 20213

    patients diagnosed with porphyria and reported with ICD-10-CM diagnosis code E80.21 (Acute intermittent (hepatic) porphyria) to recognize the resource requirements in caring for these patients, to ensure appropriate payment for these cases, and to preserve patient access to necessary treatments. Porphyria is defined as a group of rare disorders (``porphyrias'') that interfere with the production of hemoglobin that is needed for red blood cells. While some of these disorders are genetic (inborn) and others are acquired, they all result in the abnormal accumulation of hemoglobin building blocks, called porphyrins, which can be deposited in the tissues where they particularly interfere with the functioning of the nervous system and the skin. Treatment for patients suffering from disorders of porphyrin metabolism consists of an intravenous injection of Panhematinreg (hemin for injection). ICD-

    10-CM diagnosis code E80.21 is currently assigned to MS-DRG 642 (Inborn and Other Disorders of Metabolism). (We note that this issue has been discussed previously in the FY 2013 IPPS/LTCH PPS proposed and final rules (77 FR 27904 through 27905 and 77 FR 53311 through 53313, respectively) and the FY 2015 IPPS/LTCH PPS proposed and final rules (79 FR 28016 and 79 FR 49901, respectively).)

    We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases assigned to MS-DRG 642. Our findings are shown in the following table.

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 642--All cases........................................... 1,801 4.3 $9,157

    MS-DRG 642--Cases reporting diagnosis code E80.21 as principal 183 5.6 19,244

    diagnosis......................................................

    MS-DRG 642--Cases not reporting diagnosis code E80.21 as 1,618 4.1 8,016

    principal diagnosis............................................

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

    As shown in this table, cases reporting diagnosis code E80.21 as the principal diagnosis in MS-DRG 642 had higher average costs and longer average lengths of stay compared to the average costs and lengths of stay for all other cases in MS-DRG 642.

    To examine the request to reassign cases with ICD-10-CM diagnosis code E80.21 as the principal diagnosis, we analyzed claims data for all cases in MS-DRGs for endocrine disorders, including MS-DRG 643 (Endocrine Disorders with MCC), MSdashDRG 644 (Endocrine Disorders with CC), and MS-DRG 645 (Endocrine Disorders without CC/MCC). The results of our analysis are shown in the following table.

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 643--All cases........................................... 9,337 6.3 $11,268

    MS-DRG 644--All cases........................................... 11,306 4.2 7,154

    MS-DRG 645--All cases........................................... 4,297 3.2 5,406

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

    The data results showed that the average length of stay for the subset of cases reporting ICD-10-CM diagnosis code E80.21 as the principal diagnosis in MS-DRG 642 is lower than the average length of stay for all cases in MS-DRG 643, but higher than the average length of stay for all cases in MS-DRGs 644 and 645. The average costs for the subset of cases reporting ICD-10-CM diagnosis code E80.21 as the principal diagnosis in MS-DRG 642 are much higher than the average costs for all cases in MS-DRGs 643, 644, and 645. However, after considering these findings in the context of the current MS-DRG structure, we were unable to identify an MS-DRG that would more closely parallel these cases with respect to average costs and length of stay that would also be clinically aligned. Our clinical advisors believe that, in the current MS-DRG structure, the clinical characteristics of patients in these cases are most closely aligned with the clinical characteristics of patients in all cases in MS-DRG 642. Moreover, given the small number of porphyria cases, we do not believe there is justification for creating a new MS-DRG. Basing a new MS-DRG on such a small number of cases could lead to distortions in the relative payment weights for the MS-DRG because several expensive cases could impact the overall relative payment weight. Having larger clinical cohesive groups within an MS-DRG provides greater stability for annual updates to the relative payment weights. In summary, we are not proposing to revise the MS-DRG classification for porphyria cases. We are inviting public comments on our proposal to maintain porphyria cases in MS-DRG 642.

    9. MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract): Admit for Renal Dialysis

    We received a request to review the codes assigned to MS-DRG 685 (Admit for Renal Dialysis) to determine if the MS-DRG should be deleted, or if it should remain as a valid MS-DRG. Currently, the ICD-

    10-CM diagnosis codes shown in the table below are assigned to MS-DRG 685:

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

    ICD-10-CM code ICD-CM code title

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

    Z49.01.................... Encounter for fitting and adjustment of

    extracorporeal dialysis catheter.

    Z49.02.................... Encounter for fitting and adjustment of

    peritoneal dialysis catheter.

    Z49.31.................... Encounter for adequacy testing for

    hemodialysis.

    Z49.32.................... Encounter for adequacy testing for

    peritoneal dialysis.

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

    Page 20214

    The requestor stated that, under ICD-9-CM, diagnosis code V56.0 (Encounter for extracorporeal dialysis) was reported as the principal diagnosis to identify patients who were admitted for an encounter for dialysis. However, under ICD-10-CM, there is no comparable code in which to replicate such a diagnosis. The requestor noted that, while patients continue to be admitted under inpatient status (under certain circumstances) for dialysis services, there is no existing ICD-10-CM diagnosis code within the classification that specifically identifies a patient being admitted for an encounter for dialysis services.

    The requestor also noted that three of the four ICD-10-CM diagnosis codes currently assigned to MS-DRG 685 are on the ``Unacceptable Principal Diagnosis'' edit code list in the Medicare Code Editor (MCE). Therefore, these codes are not allowed to be reported as a principal diagnosis for an inpatient admission.

    We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting ICD-10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32. Our findings are shown in the following table.

    Admit for Renal Dialysis Encounter

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 685--All cases........................................... 78 4 $8,871

    MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.01..... 78 4 8,871

    MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.02..... 0 0 0

    MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.31..... 0 0 0

    MS-DRG 685--Cases reporting ICD-10-CM diagnosis code Z49.32..... 0 0 0

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

    As shown in the table above, for MS-DRG 685, there were a total of 78 cases reporting ICD-10-CM diagnosis code Z49.01, with an average length of stay of 4 days and average costs of $8,871. There were no cases reporting ICD-10-CM diagnosis code Z49.02, Z49.31, or Z49.32.

    Our clinical advisors reviewed the clinical issues, as well as the claims data for MS-DRG 685. Based on their review of the data analysis, our clinical advisors recommended that MS-DRG 685 be deleted and ICD-

    10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 be reassigned. Historically, patients were admitted as inpatients to receive hemodialysis services. However, over time, that practice has shifted to outpatient and ambulatory settings. Because of this change in medical practice, we do not believe that it is appropriate to maintain a vestigial MS-DRG, particularly due to the fact that the transition to ICD-10 has resulted in three out of four codes that map to the MS-DRG being precluded from being used as principal diagnosis codes on the claim. In addition, our clinical advisors believe that reassigning the ICD-10-CM diagnosis codes from MS-DRG 685 to MS-DRGs 698, 699, and 700 (Other Kidney and Urinary Tract Diagnoses with MCC, with CC, and without CC\MCC, respectively) is clinically appropriate because the reassignment will result in an accurate MS-DRG assignment of a specific case or inpatient service and encounter based on acceptable principal diagnosis codes under these MS-DRGs.

    Therefore, for FY 2019, because there is no existing ICD-10-CM diagnosis code within the classification system that specifically identifies a patient being admitted for an encounter for dialysis services and three of the four ICD-10-CM diagnosis codes, Z49.02, Z49.31, and Z49.32, currently assigned to MS-DRG 685 are on the Unacceptable Principal Diagnosis edit code list in the Medicare Code Editor (MCE), we are proposing to delete MS-DRG 685 and reassign ICD-

    10-CM diagnosis codes Z49.01, Z49.02, Z49.31, and Z49.32 from MS-DRG 685 to MS-DRGs 698, 699, and 700.

    We are inviting public comments on our proposals.

    10. MDC 14 (Pregnancy, Childbirth and the Puerperium)

    In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19834) and final rule (82 FR 38036 through 38037), we noted that the MS-DRG logic involving a vaginal delivery under MDC 14 is technically complex as a result of the requirements that must be met to satisfy assignment to the affected MS-DRGs. As a result, we solicited public comments on further refinement to the following four MS-DRGs related to vaginal delivery: MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C); MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C); MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis); and MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis). In addition, we sought public comments on further refinements to the conditions defined as a complicating diagnosis in MS-DRG 774 and MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications). We indicated that we would review public comments received in response to the solicitation as we continued to evaluate these MS-DRGs under MDC 14 and, if warranted, we would propose refinements for FY 2019. Commenters were instructed to direct comments for consideration to the CMS MS-DRG Classification Change Request Mailbox located at email protected by November 1, 2017.

    In response to our solicitation for public comments on the MS-DRGs related to vaginal delivery, one commenter recommended that CMS convene a workgroup that would include hospital staff and physicians to systematically review the MDC 14 MS-DRGs and to identify which conditions should appropriately be considered complicating diagnoses. As an interim step, this commenter recommended that CMS consider the following suggestions as a result of its own evaluation of MS-DRGs 767, 774 and 775.

    For MS-DRG 767, the commenter recommended that the following ICD-

    10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code.

    Page 20215

    Suggestions for MS-DRG 767

    Vaginal delivery with sterilization and/or D&C

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

    Rationale for removing

    ICD-10-CM code Code description code from MS-DRG 767

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

    O66.41.................. Failed attempted This code indicates

    vaginal birth after that the attempt at

    previous cesarean vaginal delivery has

    delivery. failed.

    O71.00.................. Rupture of uterus This code indicates

    before onset of that the uterus has

    labor, unspecified ruptured before onset

    trimester. of labor and

    therefore, a vaginal

    delivery would not be

    possible.

    O82..................... Encounter for cesarean This code indicates

    delivery without the encounter is for

    indication. a cesarean delivery.

    O75.82.................. Onset (spontaneous) of This code indicates

    labor after 37 weeks this is a cesarean

    of gestation but delivery.

    before 39 completed

    weeks, with delivery

    by (planned) C-

    section.

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

    Suggestions for MS-DRG 767

    Vaginal delivery with sterilization and/or D&C

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

    Rationale for removing

    ICD-10-PCS code Code description code from MS-DRG 767

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

    10A07Z6................. Abortion of products This code indicates

    of conception, the procedure to be

    vacuum, via natural an abortion rather

    or artificial opening. than a vaginal

    delivery.

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

    For MS-DRG 774, the commenter recommended that the following ICD-

    10-CM diagnosis codes be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code.

    Suggestions for MS-DRG 774

    Vaginal delivery with Complicating Diagnoses

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

    Rationale for removing

    ICD-10-CM code Code description code from MS-DRG 774

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

    O66.41.................. Failed attempted This code indicates

    vaginal birth after that the attempt at

    previous cesarean vaginal delivery has

    delivery. failed.

    O71.00.................. Rupture of uterus This code indicates

    before onset of that the uterus has

    labor, unspecified ruptured before onset

    trimester. of labor and

    therefore, a vaginal

    delivery would not be

    possible.

    O75.82.................. Onset (spontaneous) of This code indicates

    labor after 37 weeks this is a planned

    of gestation but cesarean delivery.

    before 39 completed

    weeks, with delivery

    by (planned) C-

    section.

    O82..................... Encounter for cesarean This code indicates

    delivery without the encounter is for

    indication. a cesarean delivery.

    O80..................... Encounter for full- According to the

    term uncomplicated Official Guidelines

    delivery. for Coding and

    Reporting, ``Code O80

    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.''

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

    For MS-DRG 775, the commenter recommended that the following ICD-

    10-CM diagnosis codes and ICD-10-PCS procedure code be removed from the GROUPER logic and provided the rationale for why the commenter suggested removing each code.

    Suggestions for MS-DRG 775

    Vaginal delivery without complicating diagnoses

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

    Rationale for removing

    ICD-10-CM code Code description code from MS-DRG 775

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

    O66.41.................. Failed attempted This code indicates

    vaginal birth after that the attempt at

    previous cesarean vaginal delivery has

    delivery. failed.

    O69.4XX0................ Labor and delivery According to the

    complicated by vasa physicians consulted,

    previa, not vasa previa always

    applicable or results in C-section.

    unspecified. Research indicates

    that when vasa previa

    is diagnosed, C-

    section before labor

    begins can save the

    baby's life.

    Page 20216

    O69.4XX2................ Labor and delivery According to the

    complicated by vasa physicians consulted,

    previa, fetus 2. vasa previa always

    results in C-section.

    Research indicates

    that when vasa previa

    is diagnosed, C-

    section before labor

    begins can save the

    baby's life.

    O69.4XX3................ Labor and delivery According to the

    complicated by vasa physicians consulted,

    previa, fetus 3. vasa previa always

    results in C-section.

    Research indicates

    that when vasa previa

    is diagnosed, C-

    section before labor

    begins can save the

    baby's life.

    O69.4XX4................ Labor and delivery According to the

    complicated by vasa physicians consulted,

    previa, fetus 4. vasa previa always

    results in C-section.

    Research indicates

    that when vasa previa

    is diagnosed, C-

    section before labor

    begins can save the

    baby's life.

    O69.4XX5................ Labor and delivery According to the

    complicated by vasa physicians consulted,

    previa, fetus 5. vasa previa always

    results in C-section.

    Research indicates

    that when vasa previa

    is diagnosed, C-

    section before labor

    begins can save the

    baby's life.

    O69.4XX9................ Labor and delivery According to the

    complicated by vasa physicians consulted,

    previa, other fetus. vasa previa always

    results in C-section.

    Research indicates

    that when vasa previa

    is diagnosed, C-

    section before labor

    begins can save the

    baby's life.

    O71.00.................. Rupture of uterus This code indicates

    before onset of that the uterus has

    labor, unspecified ruptured before onset

    trimester. of labor and

    therefore, a vaginal

    delivery would not be

    possible.

    O82..................... Encounter for cesarean This code indicates

    delivery without the encounter is for

    indication. a cesarean delivery.

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

    Suggestions for MS-DRG 775

    Vaginal delivery without Complicating Diagnosis

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

    Rationale for removing

    ICD-10-CM code Code description code from MS-DRG 775

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

    10A07Z6................. Abortion of Products This code indicates

    of Conception, the procedure to be

    Vacuum, Via Natural an abortion rather

    or Artificial Opening. than a vaginal

    delivery.

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

    Another commenter agreed that the MS-DRG logic for a vaginal delivery under MDC 14 is technically complex and provided examples to illustrate these facts. For instance, the commenter noted that the GROUPER logic code lists appear redundant with several of the same codes listed for different MS-DRGs and that the GROUPER logic code list for a vaginal delivery in MS-DRG 774 is comprised of diagnosis codes while the GROUPER logic code list for a vaginal delivery in MS-DRG 775 is comprised of procedure codes. The commenter also noted that several of the ICD-10-CM diagnosis codes shown in the table below that became effective with discharges on and after October 1, 2016 (FY 2017) or October 1, 2017 (FY 2018) appear to be missing from the GROUPER logic code lists for MS-DRGs 781 and 774.

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

    ICD-10-CM code Code description

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

    O11.4..................... Pre-existing hypertension with pre-

    eclampsia, complicating childbirth.

    O11.5..................... Pre-existing hypertension with pre-

    eclampsia, complicating the puerperium.

    012.04.................... Gestational edema, complicating childbirth.

    012.05.................... Gestational edema, complicating the

    puerperium.

    012.14.................... Gestational proteinuria, complicating

    childbirth.

    012.15.................... Gestational proteinuria, complicating the

    puerperium.

    012.24.................... Gestational edema with proteinuria,

    complicating childbirth.

    012.25.................... Gestational edema with proteinuria,

    complicating the puerperium.

    O13.4..................... Gestational pregnancy-induced hypertension

    without significant proteinuria,

    complicating childbirth.

    O13.5..................... Gestational pregnancy-induced hypertension

    without significant proteinuria,

    complicating the puerperium.

    O14.04.................... Mild to moderate pre-eclampsia, complicating

    childbirth.

    O14.05.................... Mild to moderate pre-eclampsia, complicating

    the puerperium.

    O14.14.................... Severe pre-eclampsia, complicating

    childbirth.

    O14.15.................... Severe pre-eclampsia, complicating the

    puerperium.

    O14.24.................... HELLP syndrome, complicating childbirth.

    O14.25.................... HELLP syndrome, complicating the puerperium.

    O14.94.................... Unspecified pre-eclampsia, complicating

    childbirth.

    O14.95.................... Unspecified pre-eclampsia, complicating the

    puerperium.

    O15.00.................... Eclampsia complicating pregnancy,

    unspecified trimester.

    Page 20217

    O15.02.................... Eclampsia complicating pregnancy, second

    trimester.

    O15.03.................... Eclampsia complicating pregnancy, third

    trimester.

    O15.1..................... Eclampsia complicating labor.

    O15.2..................... Eclampsia complicating puerperium, second

    trimester.

    O16.4..................... Unspecified maternal hypertension,

    complicating childbirth.

    O16.5..................... Unspecified maternal hypertension,

    complicating the puerperium.

    O24.415................... Gestational diabetes mellitus in pregnancy,

    controlled by oral hypoglycemic drugs.

    O24.425................... Gestational diabetes mellitus in childbirth,

    controlled by oral hypoglycemic drugs.

    O24.435................... Gestational diabetes mellitus in puerperium,

    controlled by oral hypoglycemic drugs.

    O44.20.................... Partial placenta previa NOS or without

    hemorrhage, unspecified trimester.

    O44.21.................... Partial placenta previa NOS or without

    hemorrhage, first trimester.

    O44.22.................... Partial placenta previa NOS or without

    hemorrhage, second trimester.

    O44.23.................... Partial placenta previa NOS or without

    hemorrhage, third trimester.

    O44.30.................... Partial placenta previa with hemorrhage,

    unspecified trimester.

    O44.31.................... Partial placenta previa with hemorrhage,

    first trimester.

    O44.32.................... Partial placenta previa with hemorrhage,

    second trimester.

    O44.33.................... Partial placenta previa with hemorrhage,

    third trimester.

    O44.40.................... Low lying placenta NOS or without

    hemorrhage, unspecified trimester.

    O44.41.................... Low lying placenta NOS or without

    hemorrhage, first trimester.

    O44.42.................... Low lying placenta NOS or without

    hemorrhage, second trimester.

    O44.43.................... Low lying placenta NOS or without

    hemorrhage, third trimester.

    O44.50.................... Low lying placenta with hemorrhage,

    unspecified trimester.

    O44.51.................... Low lying placenta with hemorrhage, first

    trimester.

    O44.52.................... Low lying placenta with hemorrhage, second

    trimester.

    O44.53.................... Low lying placenta with hemorrhage, third

    trimester.

    O70.20.................... Third degree perineal laceration during

    delivery, unspecified.

    O70.21.................... Third degree perineal laceration during

    delivery, IIIa.

    O70.22.................... Third degree perineal laceration during

    delivery, IIIb.

    O70.23.................... Third degree perineal laceration during

    delivery, IIIc.

    O86.11.................... Cervicitis following delivery.

    O86.12.................... Endometritis following delivery.

    O86.13.................... Vaginitis following delivery.

    O86.19.................... Other infection of genital tract following

    delivery.

    O86.20.................... Urinary tract infection following delivery,

    unspecified.

    O86.21.................... Infection of kidney following delivery.

    O86.22.................... Infection of bladder following delivery.

    O86.29.................... Other urinary tract infection following

    delivery.

    O86.81.................... Puerperal septic thrombophlebitis.

    O86.89.................... Other specified puerperal infections.

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

    Lastly, the commenter stated that the list of ICD-10-PCS procedure codes appears comprehensive, but indicated that inpatient coding is not their expertise. We note that it was not clear which list of procedure codes the commenter was specifically referencing. The commenter did not provide a list of any procedure codes for CMS to review or reference a specific MS-DRG in its comment.

    Another commenter expressed concern that ICD-10-PCS procedure codes 10D17Z9 (Manual extraction of products of conception, retained, via natural or artificial opening) and 10D18Z9 (Manual extraction of products of conception, retained, via natural or artificial opening endoscopic) are not assigned to the appropriate MS-DRG. ICD-10-PCS procedure codes 10D17Z9 and 10D18Z9 describe the manual removal of a retained placenta and are currently assigned to MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C). According to the commenter, a patient that has a vaginal delivery with manual removal of a retained placenta is not having a sterilization or D&C procedure. The commenter noted that, under ICD-9-CM, a vaginal delivery with manual removal of retained placenta grouped to MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis) or MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis). The commenter suggested CMS review these procedure codes for appropriate MS-DRG assignment under the ICD-10 MS-

    DRGs.

    We thank the commenters and appreciate the recommendations and suggestions provided in response to our solicitation for comments on the GROUPER logic for the MS-DRGs involving a vaginal delivery or complicating diagnosis under MDC 14. With regard to the commenter who recommended that we convene a workgroup that would include hospital staff and physicians to systematically review the MDC 14 MS-DRGs and to identify which conditions should appropriately be considered complicating diagnoses, we note that we formed an internal workgroup comprised of clinical advisors that included physicians, coding specialists, and other IPPS policy staff that assisted in our review of the GROUPER logic for a vaginal delivery and complicating diagnoses. We also received clinical input from 3M/Health Information Systems (HIS) staff, which, under contract with CMS, is responsible for updating and maintaining the GROUPER program. We note that our analysis involved other MS-DRGs under MDC 14, in addition to those for which we specifically solicited public comments. As one of the other commenters correctly pointed out, there is redundancy, with several of the same codes listed for different MS-DRGs. Below we provide a summary of our internal analysis with responses to the commenters' recommendations and suggestions incorporated into the applicable sections. We refer readers to the ICD-10 MS-DRG Version 35 Definitions Manual located via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-

    Fee-

    Page 20218

    for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-

    Items/FY2018-IPPS-Final-Rule-Data-

    Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending for documentation of the GROUPER logic associated with the MDC 14 MS-DRGs to assist in the review of our discussion that follows.

    We started our evaluation of the GROUPER logic for the MS-DRGs under MDC 14 by first reviewing the current concepts that exist. For example, there are ``groups'' for cesarean section procedures, vaginal delivery procedures, and abortions. There also are groups where no delivery occurs, and lastly, there are groups for after the delivery occurs, or the ``postpartum'' period. These groups are then further subdivided based on the presence or absence of complicating conditions or the presence of another procedure. We examined how we could simplify some of the older, complex GROUPER logic and remain consistent with the structure of other ICD-10 MS-DRGs. We identified the following MS-DRGs for closer review, in addition to MS-DRG 767, MS-DRG 768, MS-DRG 774, MS-DRG 775 and MS-DRG 781.

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

    MS-DRG Description

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

    MS-DRG 765................ Cesarean Section with CC/MCC.

    MS-DRG 766................ Cesarean Section without CC/MCC.

    MS-DRG 769................ Postpartum and Post Abortion Diagnoses with

    O.R. Procedure.

    MS-DRG 770................ Abortion with D&C, Aspiration Curettage or

    Hysterotomy.

    MS-DRG 776................ Postpartum and Post Abortion Diagnoses

    without O.R. Procedure.

    MS-DRG 777................ Ectopic Pregnancy.

    MS-DRG 778................ Threatened Abortion.

    MS-DRG 779................ Abortion without D&C.

    MS-DRG 780................ False Labor.

    MS-DRG 782................ Other Antepartum Diagnoses without Medical

    Complications.

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

    The first issue we reviewed was the GROUPER logic for complicating conditions (MS-DRGs 774 and 781). Because one of the main objectives in our transition to the MS-DRGs was to better recognize the severity of illness of a patient, we believed we could structure the vaginal delivery and other MDC 14 MS-DRGs in a similar way. Therefore, we began working with the concept of vaginal delivery ``with MCC, with CC and without CC/MCC'' to replace the older, ``complicating conditions'' logic.

    Next, we compared the additional GROUPER logic that exists between the vaginal delivery and the cesarean section MS-DRGs (MS-DRGs 765, 766, 767, 774, and 775). Currently, the vaginal delivery MS-DRGs take into account a sterilization procedure; however, the cesarean section MS-DRGs do not. Because a patient can have a sterilization procedure performed along with a cesarean section procedure, we adopted a working concept of ``cesarean section with and without sterilization with MCC, with CC and without CC/MCC'', as well as ``vaginal delivery with and without sterilization with MCC, with CC and without CC/MCC''.

    We then reviewed the GROUPER logic for the MS-DRGs involving abortion and where no delivery occurs (MS-DRGs 770, 777, 778, 779, 780, and 782). We believed that we could consolidate the groups in which no delivery occurs.

    Finally, we considered the GROUPER logic for the MS-DRGs related to the postpartum period (MS-DRGs 769 and 776) and determined that the structure of these MS-DRGs did not appear to require modification.

    After we established those initial working concepts for the MS-DRGs discussed above, we examined the list of the ICD-10-PCS procedure codes that comprise the sterilization procedure GROUPER logic for the vaginal delivery MS-DRG 767. We identified the two manual extraction of placenta codes that the commenter had brought to our attention (ICD-10-

    PCS codes 10D17Z9 and 10D18Z9). We also identified two additional procedure codes, ICD-10-PCS codes 10D17ZZ (Extraction of products of conception, retained, via natural or artificial opening) and 10D18ZZ (Extraction of products of conception, retained, via natural or artificial opening endoscopic) in the list that are not sterilization procedures. Two of the four procedure codes describe manual extraction (removal) of retained placenta and the other two procedure codes describe dilation and curettage procedures. We then identified four more procedure codes in the list that do not describe sterilization procedures. ICD-10-PCS procedure codes 0UDB7ZX (Extraction of endometrium, via natural or artificial opening, diagnostic), 0UDB7ZZ (Extraction of endometrium, via natural or artificial opening), 0UDB8ZX (Extraction of endometrium, via natural or artificial opening endoscopic, diagnostic), and 0UDB8ZZ (Extraction of endometrium, via natural or artificial opening endoscopic) describe dilation and curettage procedures that can be performed for diagnostic or therapeutic purposes. We believe that these ICD-10-PCS procedure codes would be more appropriately assigned to MDC 13 (Diseases and Disorders of the Female Reproductive System) in MS-DRGs 744 and 745 (D&C, Conization, Laparascopy and Tubal Interruption with and without CC/MCC, respectively) and, therefore, removed them from our working list of sterilization and/or D&C procedures. Because the GROUPER logic for MS-

    DRG 767 includes both sterilization and/or D&C, we agreed that all the other procedure codes currently included under that logic list of sterilization procedures should remain, with the exception of the two identified by the commenter. Therefore, we agree with the commenter that the manual extraction of retained placenta procedure codes should be reassigned to a more clinically appropriate vaginal delivery MS-DRG because they are not describing sterilization procedures.

    Our attention then turned to other MDC 14 GROUPER logic code lists starting with the ``CC for C-section'' list under MS-DRGs 765 and 766 (Cesarean Section with and without CC/MCC, respectively). As noted earlier in this section, in conducting our review, we considered how we could utilize the severity level concept (with MCC, with CC, and without CC/MCC) where applicable. Consistent with this approach, we removed the ``CC for C-section'' logic from these MS-DRGs as part of our working concept and efforts to refine MDC 14. We determined it would be less complicated to simply allow the existing ICD-10 MSdashDRG CC and MCC code list logic to apply for these MS-DRGs. Next, we reviewed the logic code lists for ``Malpresentation'' and ``Twins'' and concluded that this logic was not necessary for the cesarean section MS-DRGs because these are

    Page 20219

    describing antepartum conditions and it is the procedure of the cesarean section that determines whether or not a patient would be classified to these MS-DRGs. Therefore, those code lists were also removed for purposes of our working concept. With regard to the ``Operating Room Procedure'' code list, we agreed there should be no changes. However, we note that the title to ICD-10-PCS procedure code 10D00Z0 (Extraction of products of conception, classical, open approach) is being revised effective October 1, 2018, to replace the term ``classical'' with ``high'' and ICD-10-PCS procedure code 10D00Z1 (Extraction of products of conception, low cervical, open approach) is being revised to replace the term ``low cervical'' to ``low''. These revisions are also shown in Table 6F--Revised Procedure Code Titles available via the Internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

    Next, we reviewed the ``Delivery Procedure'' and ``Delivery Outcome'' GROUPER logic code lists for the vaginal delivery MS-DRGs 767, 768, 774, and 775. We identified ICD-10-PCS procedure code 10A0726 (Abortion of products of conception, vacuum, via natural or artificial opening) and ICD-10-PCS procedure code 10S07ZZ (Reposition products of conception, via natural or artificial opening) under the ``Delivery Procedure'' code list as procedure codes that should not be included because ICD-10-PCS procedure code 10A07Z6 describes an abortion procedure and ICD-10-PCS procedure code 10S07ZZ describes repositioning of the fetus and does not indicate a delivery took place. We also note that, as described earlier in this discussion, a commenter recommended that ICD-10-PCS procedure code 10A07Z6 be removed from the GROUPER logic specifically for MS-DRGs 767 and 775. Therefore, we removed these two procedure codes from the logic code list for ``Delivery Procedure'' in MS-DRGs 767, 768, 774, and 775. We agreed with the commenter that ICD-10-PCS procedure code 10A07Z6 would be more appropriately assigned to one of the Abortion MS-DRGs. For the remaining procedures currently included in the ``Delivery Procedure'' code list we considered which procedures would be expected to be performed during the course of a standard, uncomplicated delivery episode versus those that would reasonably be expected to require additional resources outside of the delivery room. The list of procedure codes we reviewed is shown in the following table.

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

    ICD-10-PCS code Code description

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

    0DQP7ZZ................... Repair rectum, via natural or artificial

    opening.

    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.

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

    While we acknowledge that these procedures may be performed to treat obstetrical lacerations as discussed in prior rulemaking (81 FR 56853), we also believe that these procedures would reasonably be expected to require a separate operative episode and would not be performed immediately at the time of the delivery. Therefore, we removed those procedure codes describing repair of the rectum, anus, and anal sphincter shown in the table above from our working concept list of procedures to consider for a vaginal delivery. Our review of the list of diagnosis codes for the ``Delivery Outcome'' as a secondary diagnosis did not prompt any changes. We agreed that the current list of diagnosis codes continues to appear appropriate for describing the outcome of a delivery.

    As the purpose of our analysis and this review was to clarify what constitutes a vaginal delivery to satisfy the ICD-10 MS-DRG logic for the vaginal delivery MS-DRGs, we believed it was appropriate to expect that a procedure code describing the vaginal delivery or extraction of ``products of conception'' procedure and a diagnosis code describing the delivery outcome should be reported on every claim in which a vaginal delivery occurs. This is also consistent with Section I.C.15.b.5 of the ICD-10-CM Official Guidelines for Coding and Reporting, which states ``A code from category Z37, Outcome of delivery, should be included on every maternal record when a delivery has occurred. These codes are not to be used on subsequent records or on the newborn record.'' Therefore, we adopted the working concept that, regardless of the principal diagnosis, if there is a procedure code describing the vaginal delivery or extraction of ``products of conception'' procedure and a diagnosis code describing the delivery outcome, this logic would result in assignment to a vaginal delivery MS-DRG. We note that, as a result of this working concept, there would no longer be a need to maintain the ``third condition'' list under MS-

    DRG 774. In addition, as noted earlier in this discussion, because we were working with the concept of vaginal delivery ``with MCC, with CC, and without CC/MCC'' to replace the older, ``complicating conditions'' logic, there would no longer be a need to maintain the ``second condition'' list of complicating diagnosis under MS-DRG 774.

    We then reviewed the GROUPER logic code list of ``Or Other O.R. procedures'' (MS-DRG 768) to determine if any changes to these lists were warranted. Similar to our analysis of the procedures listed under the ``Delivery Procedure'' logic code list, our examination of the procedures currently described in the ``Or Other O.R. procedures'' procedure code list also considered which procedures would be expected to be performed during the course of a standard, uncomplicated delivery episode versus those that would reasonably be expected to require additional resources outside of the delivery room. Our analysis of all the procedures resulted in the working concept to allow all O.R. procedures to be applicable for assignment to MS-DRG 768, with the exception of the procedure codes for sterilization and/or D&C and ICD-

    10-PCS procedure codes 0KQM0ZZ (Repair perineum muscle, open approach) and 0UJM0ZZ (Inspection of vulva, open approach),

    Page 20220

    which we determined would be reasonably expected to be performed during a standard delivery episode and, therefore, assigned to MS-DRG 774 or MS-DRG 775. We also note that, this working concept for MS-DRG 768 would eliminate vaginal delivery cases with an O.R. procedure grouping to the unrelated MSdashDRGs because all O.R. procedures would be included in the GROUPER logic procedure code list for ``Or Other O.R. Procedures''.

    The next set of MS-DRGs we examined more closely included MS-DRGs 777, 778, 780, 781, and 782. We believed that, because the conditions in these MS-DRGs are all describing antepartum related conditions, we could group the conditions together clinically. Diagnoses described as occurring during pregnancy and diagnoses specifying a trimester or maternal care in the absence of a delivery procedure reported were considered antepartum conditions. We also believed we could better classify these groups of patients based on the presence or absence of a procedure. Therefore, we worked with the concept of ``antepartum diagnoses with and without O.R. procedure''.

    As noted earlier in the discussion, we adopted a working concept of ``cesarean section with and without sterilization with MCC, with CC, and without CC/MCC.'' This concept is illustrated in the following table and includes our suggested modifications.

    Suggested Modifications to MS-DRGs for MDC 14

    Pregnancy, childbirth and the puerperium

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

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

    DELETE 2 MS-DRGs:

    MS-DRG 765 (Cesarean Section with CC/MCC).

    MS-DRG 766 (Cesarean Section without CC/MCC).

    CREATE 6 MS-DRGs:

    MS-DRG XXX (Cesarean Section with Sterilization with MCC).

    MS-DRG XXX (Cesarean Section with Sterilization with CC).

    MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC).

    MS-DRG XXX (Cesarean Section without Sterilization with MCC).

    MS-DRG XXX (Cesarean Section without Sterilization with CC).

    MS-DRG XXX (Cesarean Section without Sterilization without CC/MCC).

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

    As shown in the table, we suggest deleting MS-DRGs 765 and 766. We also suggest creating 6 new MS-DRGs that are subdivided by a 3-way severity level split that includes ``with Sterilization'' and ``without Sterilization''.

    We also adopted a working concept of ``vaginal delivery with and without sterilization with MCC, with CC, and without CC/MCC''. This concept is illustrated in the following table and includes our suggested modifications.

    Suggested Modifications to MS-DRGs for MDC 14

    Pregnancy, childbirth and the puerperium

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

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

    DELETE 3 MS-DRGs:

    MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C).

    MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis).

    MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis).

    CREATE 6 MS-DRGs:

    MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with MCC).

    MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with CC).

    MS-DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/MCC).

    MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC).

    MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with CC).

    MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without CC/

    MCC).

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

    As shown in the table, we suggest deleting MS-DRGs 767, 774, and 775. We also suggest creating 6 new MS-DRGs that are subdivided by a 3-

    way severity level split that includes ``with Sterilization/D&C'' and ``without Sterilization/D&C''.

    In addition, as indicated above, we believed that we could consolidate the groups in which no delivery occurs. We believe that consolidating MS-DRGs where clinically coherent conditions exist is consistent with our approach to MS-DRG reclassification and our continued refinement efforts. This concept is illustrated in the following table and includes our suggested modifications.

    Suggested Modifications to MS-DRGs for MDC 14

    Pregnancy, childbirth and the puerperium

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

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

    DELETE 5 MS-DRGs:

    MS-DRG 777 (Ectopic Pregnancy).

    MS-DRG 778 (Threatened Abortion).

    MS-DRG 780 (False Labor).

    MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications).

    MS-DRG 782 (Other Antepartum Diagnoses without Medical Complications).

    CREATE 6 MS-DRGs:

    MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with MCC).

    MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with CC).

    MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure without CC/

    MCC).

    MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with

    MCC).

    MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure with

    CC).

    MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure without

    CC/MCC).

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

    As shown in the table, we suggest deleting MS-DRGs 777, 778, 780, 781, and 782. We also suggest creating 6 new MS-DRGs that are subdivided by a 3-way severity level split that includes ``with O.R. Procedure'' and ``without O.R. Procedure''.

    Once we established each of these fundamental concepts from a clinical perspective, we were able to analyze the data to determine if our initial suggested modifications were supported.

    To analyze our suggested modifications for the cesarean section and vaginal delivery MS-DRGs, we examined the claims data from the September 2017 update of the FY 2017 MedPAR file for MS-DRGs 765, 766, 767, 768, 774, and 775.

    MS-DRGs for MDC 14 Pregnancy, Childbirth and the Puerperium

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 765 (Cesarean Section with CC/MCC)--All cases............ 3,494 4.6 $8,929

    MS-DRG 766 (Cesarean Section without CC/MCC)--All cases......... 1,974 3.1 6,488

    MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C)--All 351 3.2 7,886

    cases..........................................................

    MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except 17 6.2 26,164

    Sterilization and/or D&C)--All cases...........................

    MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis)--All 1,650 3.3 6,046

    cases..........................................................

    MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis)-- 4,676 2.4 4,769

    All cases......................................................

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

    Page 20221

    As shown in the table, there were a total of 3,494 cases in MS-DRG 765, with an average length of stay of 4.6 days and average costs of $8,929. For MS-DRG 766, there were a total of 1,974 cases, with an average length of stay of 3.1 days and average costs of $6,488. For MS-

    DRG 767, there were a total of 351 cases, with an average length of stay of 3.2 days and average costs of $ 7,886. For MS-DRG 768, there were a total of 17 cases, with an average length of stay of 6.2 days and average costs of $26,164. For MS-DRG 774, there were a total of 1,650 cases, with an average length of stay of 3.3 days and average costs of $6,046. Lastly, for MS-DRG 775, there were a total of 4,676 cases, with an average length of stay of 2.4 days and average costs of $4,769.

    To compare and analyze the impact of our suggested modifications, we ran a simulation using the Version 35 ICD-10 MS-DRG GROUPER. The following table reflects our findings for the suggested Cesarean Section MS-DRGs with a 3-way severity level split.

    Suggested MS-DRGs for Cesarean Section

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

    Number of Average Length

    MS-DRG cases of stay Average costs

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

    MS-DRG 783 (Cesarean Section with Sterilization with MCC)....... 178 6.4 $12,977

    MS-DRG 784 (Cesarean Section with Sterilization with CC)........ 511 4.1 8,042

    MS-DRG 785 (Cesarean Section with Sterilization without CC/MCC). 475 3.0 6,259

    MS-DRG 786 (Cesarean Section without Sterilization with MCC).... 707 5.9 11,515

    MS-DRG 787 (Cesarean Section without Sterilization with CC)..... 1,887 4.2 7,990

    MS-DRG 788 (Cesarean Section without Sterilization without CC/ 1,710 3.3 6,663

    MCC)...........................................................

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

    As shown in the table, there were a total of 178 cases for the cesarean section with sterilization with MCC group, with an average length of stay of 6.4 days and average costs of $12,977. There were a total of 511 cases for the cesarean section with sterilization with CC group, with an average length of stay of 4.1 days and average costs of $8,042. There were a total of 475 cases for the cesarean section with sterilization without CC/MCC group, with an average length of stay of 3.0 days and average costs of $6,259. For the cesarean section without sterilization with MCC group there were a total of 707 cases, with an average length of stay of 5.9 days and average costs of $11,515. There were a total of 1,887 cases for the cesarean section without sterilization with CC group, with an average length of stay of 4.2 days and average costs of $7,990. Lastly, there were a total of 1,710 cases for the cesarean section without sterilization without CC/MCC group, with an average length of stay of 3.3 days and average costs of $6,663.

    The following table reflects our findings for the suggested Vaginal Delivery MS-DRGs with a 3-way severity level split.

    Suggested MS-DRGs for Vaginal Delivery

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 796 (Vaginal Delivery with Sterilization/D&C with MCC)... 25 6.7 $11,421

    MS-DRG 797 (Vaginal Delivery with Sterilization/D&C with CC).... 63 2.4 6,065

    MS-DRG 798 (Vaginal Delivery with Sterilization/D&C without CC/ 126 2.3 6,697

    MCC)...........................................................

    MS-DRG 805 (Vaginal Delivery without Sterilization/D&C with MCC) 406 5.0 9,605

    MS-DRG 806 (Vaginal Delivery without Sterilization/D&C with CC). 1,952 2.9 5,506

    MS-DRG 807 (Vaginal Delivery without Sterilization/D&C without 4,105 2.3 4,601

    CC/MCC)........................................................

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

    As shown in the table, there were a total of 25 cases for the vaginal delivery with sterilization/D&C with MCC group, with an average length of stay of 6.7 days and average costs of $11,421. There were a total of 63 cases for the vaginal delivery with sterilization/D&C with CC group, with an average length of stay of 2.4 days and average costs of $6,065. There were a total of 126 cases for vaginal delivery with sterilization/D&C without CC/MCC group, with an average length of stay of 2.3 days and average costs of $6,697. There were a total of 406 cases for the vaginal delivery without sterilization/D&C with MCC group, with an average length of stay of 5.0 days and average costs of $9,605. There were a total of 1,952 cases for the vaginal delivery without sterilization/D&C with CC group, with an average length of stay of 2.9 days and average costs of $5,506. There were a total of 4,105 cases for the vaginal delivery without sterilization/D&C without CC/MCC group, with an average length of stay of 2.3 days and average costs of $4,601.

    We then reviewed the claims data from the September 2017 update of the FY 2017 MedPAR file for MS-DRGs 777, 778, 780, 781, and 782. Our findings are shown in the following table.

    MS-DRGs for MDC 14 Pregnancy, Childbirth and the Puerperium

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 777 (Ectopic Pregnancy)--All cases....................... 72 1.9 $7,149

    MS-DRG 778 (Threatened Abortion)--All cases..................... 205 2.7 4,001

    Page 20222

    MS-DRG 780 (False Labor)--All cases............................. 41 2.1 3,045

    MS-DRG 781 (Other Antepartum Diagnoses with Medical 2,333 3.7 5,817

    Complications)--All cases......................................

    MS-DRG 782 (Other Antepartum Diagnoses without Medical 70 2.1 3,381

    Complications)--All cases......................................

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

    As shown in the table, there were a total of 72 cases in MS-DRG 777, with an average length of stay of 1.9 days and average costs of $7,149. For MS-DRG 778, there were a total of 205 cases, with an average length of stay of 2.7 days and average costs of $4,001. For MS-

    DRG 780, there were a total of 41 cases, with an average length of stay of 2.1 days and average costs of $3,045. For MS-DRG 781, there were a total of 2,333 cases, with an average length of stay of 3.7 days and average costs of $5,817. Lastly, for MS-DRG 782, there were a total of 70 cases, with an average length of stay of 2.1 days and average costs of $3,381.

    To compare and analyze the impact of deleting those 5 MS-DRGs and creating 6 new MS-DRGs, we ran a simulation using the Version 35 ICD-10 MS-DRG GROUPER. Our findings below represent what we found and would expect under the suggested modifications. The following table reflects the MS-DRGs for the suggested Other Antepartum Diagnoses MS-DRGs with a 3-way severity level split.

    Suggested MS-DRGs for Other Antepartum Diagnoses

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 817 (Other Antepartum Diagnoses with O.R. Procedure with 60 5.1 $13,117

    MCC)...........................................................

    MS-DRG 818 (Other Antepartum Diagnoses with O.R. Procedure with 66 4.2 10,483

    CC)............................................................

    MS-DRG 819 (Other Antepartum Diagnoses with O.R. Procedure 44 1.7 5,904

    without CC/MCC)................................................

    MS-DRG 831 (Other Antepartum Diagnoses without O.R. Procedure 786 4.3 7,248

    with MCC)......................................................

    MS-DRG 832 (Other Antepartum Diagnoses without O.R. Procedure 910 3.5 4,994

    with CC).......................................................

    MS-DRG 833 (Other Antepartum Diagnoses without O.R. Procedure 855 2.7 3,843

    without CC/MCC)................................................

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

    Our analysis of claims data from the September 2017 update of the FY 2017 MedPAR file recognized that when the criteria to create subgroups were applied for the 3-way severity level splits for the suggested MS-DRGs, those criteria were not met in all instances. For example, the criteria that there are at least 500 cases in the MCC or CC group was not met for the suggested Vaginal Delivery with Sterilization/D&C 3dashway severity level split or the suggested Other Antepartum Diagnoses with O.R. Procedure 3dashway severity level split.

    However, as we have noted in prior rulemaking (72 FR 47152), we cannot adopt the same approach to refine the maternity and newborn MS-

    DRGs because of the extremely low volume of Medicare patients there are in these DRGs. While there is not a high volume of these cases represented in the Medicare data, and while we generally advise that other payers should develop MS-DRGs to address the needs of their patients, we believe that our suggested 3dashway severity level splits would address the complexity of the current MDC 14 GROUPER logic for a vaginal delivery and takes into account the new and different clinical concepts that exist under ICD-10 for this subset of patients while also maintaining the existing MS-DRG structure for identifying severity of illness, utilization of resources and complexity of service.

    However, as an alternative option, we also performed analysis for a 2-way severity level split for the suggested MS-DRGs. Our findings are shown in the following tables.

    Suggested MS-DRGs for Cesarean Section

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG XXX (Cesarean Section with Sterilization with CC/MCC).... 689 4.7 $9,317

    MS-DRG XXX (Cesarean Section with Sterilization without CC/MCC). 475 3.0 6,259

    MS-DRG XXX (Cesarean Section without Sterilization with MCC).... 2,594 4.7 8,951

    MS-DRG XXX (Cesarean Section without Sterilization without CC/ 1,710 3.3 6,663

    MCC)...........................................................

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

    Suggested MS-DRGs for Vaginal Delivery

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG XXX (Vaginal Delivery with Sterilization/D&C with CC/MCC) 88 3.6 $7,586

    MS-DRG XXX (Vaginal Delivery with Sterilization/D&C without CC/ 126 2.3 6,697

    MCC)...........................................................

    MS-DRG XXX (Vaginal Delivery without Sterilization/D&C with MCC) 2,358 3.2 6,212

    Page 20223

    MS-DRG XXX (Vaginal Delivery without Sterilization/D&C without 4,105 2.3 4,601

    CC/MCC)........................................................

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

    Suggested MS-DRGs for Other Antepartum Diagnoses

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure with 126 4.7 $11,737

    MCC)...........................................................

    MS-DRG XXX (Other Antepartum Diagnoses with O.R. Procedure 44 1.7 5,904

    without CC/MCC)................................................

    MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure 1,696 3.9 6,039

    with MCC)......................................................

    MS-DRG XXX (Other Antepartum Diagnoses without O.R. Procedure 855 2.7 3,843

    without CC/MCC)................................................

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

    Similar to the analysis performed for the 3-way severity level split, we acknowledge that when the criteria to create subgroups was applied for the alternative 2dashway severity level splits for the suggested MS-DRGs, those criteria were not met in all instances. For example, the suggested Vaginal Delivery with Sterilization/D&C and the Other Antepartum Diagnoses with O.R. Procedure alternative option 2-way severity level splits did not meet the criteria for 500 or more cases in the MCC or CC group.

    Based on our review, which included support from our clinical advisors, and the analysis of claims data described above, we are proposing the deletion of 10 MS-DRGs and the creation of 18 new MS-DRGs (as shown below). This proposal is based on the approach described above, which involves consolidating specific conditions and concepts into the structure of existing logic and making additional modifications, such as adding severity levels, as part of our refinement efforts for the ICD-10 MS-DRGs. Our proposals are intended to address the vaginal delivery ``complicating diagnosis'' logic and antepartum diagnoses with ``medical complications'' logic with the proposed addition of the existing and familiar severity level concept (with MCC, with CC, and without CC/MCC) to the MDC 14 MS-DRGs to provide the ability to distinguish the varying resource requirements for this subset of patients and allow the opportunity to make more meaningful comparisons with regard to severity across the MS-DRGs. Our proposals, as set forth below, would also simplify the vaginal delivery procedure logic that we identified and commenters acknowledged as technically complex by eliminatng the extensive diagnosis and procedure code lists for several conditions that must be met for assignment to the vaginal delivery MS-DRGs. Our proposals are also intended to respond to issues identified and brought to our attention through public comments for consideration in updating the GROUPER logic code lists in MDC 14.

    Specifically, we are proposing to delete the following 10 MS-DRGs under MDC 14:

    MS-DRG 765 (Cesarean Section with CC/MCC);

    MS-DRG 766 (Cesarean Section without CC/MCC);

    MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C);

    MS-DRG 774 (Vaginal Delivery with Complicating Diagnosis);

    MS-DRG 775 (Vaginal Delivery without Complicating Diagnosis);

    MS-DRG 777 (Ectopic Pregnancy);

    MS-DRG 778 (Threatened Abortion);

    MS-DRG 780 (False Labor);

    MS-DRG 781 (Other Antepartum Diagnoses with Medical Complications); and

    MS-DRG 782 (Other Antepartum Diagnoses without Medical Complications).

    We are proposing to create the following new 18 MS-DRGs under MDC 14:

    Proposed new MS-DRG 783 (Cesarean Section with Sterilization with MCC);

    Proposed new MS-DRG 784 (Cesarean Section with Sterilization with CC);

    Proposed new MS-DRG 785 (Cesarean Section with Sterilization without CC/MCC);

    Proposed new MS-DRG 786 (Cesarean Section without Sterilization with MCC);

    Proposed new MS-DRG 787 (Cesarean Section without Sterilization with CC);

    Proposed new MS-DRG 788 Cesarean Section without Sterilization without CC/MCC);

    Proposed new MS-DRG 796 (Vaginal Delivery with Sterilization/D&C with MCC);

    Proposed new MS-DRG 797 (Vaginal Delivery with Sterilization/D&C with CC);

    Proposed new MS-DRG 798 (Vaginal Delivery with Sterilization/D&C without CC/MCC);

    Proposed new MS-DRG 805 (Vaginal Delivery without Sterilization/D&C with MCC);

    Proposed new MS-DRG 806 (Vaginal Delivery without Sterilization/D&C with CC);

    Proposed new MS-DRG 807 (Vaginal Delivery without Sterilization/D&C without CC/MCC);

    Proposed new MS-DRG 817 (Other Antepartum Diagnoses with O.R. Procedure with MCC);

    Proposed new MS-DRG 818 (Other Antepartum Diagnoses with O.R. Procedure with CC);

    Proposed new MS-DRG 819 (Other Antepartum Diagnoses with O.R. Procedure without CC/MCC);

    Proposed new MS-DRG 831 (Other Antepartum Diagnoses without O.R. Procedure with MCC);

    Proposed new MS-DRG 832 (Other Antepartum Diagnoses without O.R. Procedure with CC); and

    Proposed new MS-DRG 833 (Other Antepartum Diagnoses without O.R. Procedure without CC/MCC).

    The diagrams below illustrate how the proposed MS-DRG logic for MDC 14 would function. The first diagram (Diagram 1.) begins by asking if there is a principal diagnosis from MDC 14. If no, the GROUPER logic directs the case to the appropriate MDC based on the principal diagnosis reported. Next, the logic asks if there is a cesarean section procedure reported on the claim. If yes, the logic asks if there was a sterilization procedure reported on the claim. If yes, the logic assigns the case to one of the proposed new MS-DRGs 783, 784, or

    Page 20224

    785. If no, the logic assigns the case to one of the proposed new MS-

    DRGs 786, 787, or 788. If there was not a cesarean section procedure reported on the claim, the logic asks if there was a vaginal delivery procedure reported on the claim. If yes, the logic asks if there was another O.R. procedure other than sterilization, D&C, delivery procedure or a delivery inclusive O.R. procedure. If yes, the logic assigns the case to existing MS-DRG 768. If no, the logic asks if there was a sterilization and/or D&C reported on the claim. If yes, the logic assigns the case to one of the proposed new MS-DRGs 796, 797, or 798. If no, the logic assigns the case to one of the proposed new MS-DRGs 805, 806, or 807. If there was not a vaginal delivery procedure reported on the claim, the GROUPER logic directs you to the other non-

    delivery MS-DRGs as shown in Diagram 2.

    BILLING CODE 4120-01-P

    GRAPHIC TIFF OMITTED TP07MY18.000

    The logic for Diagram 2. begins by asking if there is a principal diagnosis of abortion reported on the claim. If yes, the logic then asks if there was a D&C, aspiration curettage or hysterotomy procedure reported on the claim. If yes, the logic assigns the case to existing MS-DRG 770. If no, the logic assigns the case to existing MS-DRG 779. If there was not a principal diagnosis of abortion reported on the claim, the logic asks if there was a principal diagnosis of an antepartum condition reported on the claim. If yes, the logic then asks if there was an O.R. procedure reported on the claim. If yes, the logic assigns the case to one of the proposed new MS-DRGs 817, 818, or 819. If no, the logic assigns the case to one of the proposed new MS-DRGs 831, 832, or 833. If there was not a principal diagnosis of an

    Page 20225

    antepartum condition reported on the claim, the logic asks if there was a principal diagnosis of a postpartum condition reported on the claim. If yes, the logic then asks if there was an O.R. procedure reported on the claim. If yes, the logic assigns the case to existing MS-DRG 769. If no, the logic assigns the case to existing MS-DRG 776. If there was not a principal diagnosis of a postpartum condition reported on the claim, the logic identifies that there was a principal diagnosis describing childbirth, delivery or an intrapartum condition reported on the claim without any other procedures, and assigns the case to existing MS-DRG 998 (Principal Diagnosis Invalid as Discharge Diagnosis).

    To assist in detecting coding and MS-DRG assignment errors for MS-

    DRG 998 that could result when a provider does not report the procedure code for either a cesarean section or a vaginal delivery along with an outcome of delivery diagnosis code, as discussed in section II.F.13.d., we are proposing to add a new Questionable Obstetric Admission edit under the MCE. We are inviting public comments on this proposed MCE edit and we also are inviting public comments on the need for any additional MCE considerations with regard to the proposed changes for the MDC 14 MS-DRGs.

    GRAPHIC TIFF OMITTED TP07MY18.001

    BILLING CODE 4120-01-C

    We refer readers to Tables 6P.1h through 6P.1k for the lists of the diagnosis and procedure codes that we are proposing to assign to the GROUPER logic for the proposed new MS-DRGs and the existing MS-DRGs under MDC

    Page 20226

    14. We are inviting public comments on our proposed list of diagnosis codes, which also addresses the list of diagnosis codes that a commenter identified as missing from the GROUPER logic. We note that, as a result of our proposed GROUPER logic changes to the vaginal delivery MS-DRGs, which would only take into account the procedure codes for a vaginal delivery and the outcome of delivery secondary diagnosis codes, there is no longer a need to maintain a specific principal diagnosis logic list for those MS-DRGs. Therefore, while we appreciate the detailed suggestions and rationale submitted by the commenter for why specific diagnosis codes should be removed from the vaginal delivery principal diagnosis logic as displayed earlier in this discussion, we are proposing to remove that logic. We are inviting public comments on our proposal.

    We also are inviting public comments on our proposal to reassign ICD-10-PCS procedure codes 0UDB7ZX, 0UDB7ZZ, 0UDB8ZX, and 0UDB8ZZ that describe dilation and curettage procedures from MS-DRG 767 under MDC 14 to MS-DRGs 744 and 745 under MDC 13.

    In addition, we are inviting public comments on our proposed list of procedure codes for the proposed revised MDC 14 MS-DRG logic, which would require a procedure code for case assignment. Finally, we are inviting public comments on the proposed deletion of the 10 MS-DRGs and the proposed creation of 18 new MS-DRGs with a 3-way severity level split listed above in this section, as well as on the potential alternative new MS-DRGs using a 2-way severity level split as also presented above.

    11. MDC 18 (Infectious and Parasitic Diseases (Systematic or Unspecified Sites): Systemic Inflammatory Response Syndrome (SIRS) of Non-Infectious Origin

    ICD-10-CM diagnosis codes R65.10 (Systemic Inflammatory Response Syndrome (SIRS) of non-infectious origin without acute organ dysfunction) and R65.11 (Systemic Inflammatory Response Syndrome (SIRS) of non-infectious origin with acute organ dysfunction) are currently assigned to MS-DRGs 870 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours), 871 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours with MCC), and 872 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours without MCC) under MDC 18 (Infectious and Parasitic Diseases, Systemic or Unspecified Sites). Our clinical advisors noted that these diagnosis codes are specifically describing conditions of a non-infectious origin, and recommended that they be reassigned to a more clinically appropriate MS-DRG.

    We examined claims data from the September 2017 update of the FY 2017 MedPAR file for cases in MS-DRGs 870, 871, and 872. Our findings are shown in the following table.

    Septicemia or Severe Sepsis With and Without Mechanical Ventilation >96 Hours With and Without MCC

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 870--All cases........................................... 31,658 14.3 $42,981

    MS-DRG 871--All cases........................................... 566,531 6.3 13,002

    MS-DRG 872--All cases........................................... 150,437 4.3 7,532

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

    As shown in this table, we found a total of 31,658 cases in MS-DRG 870, with an average length of stay of 14.3 days and average costs of $42,981. We found a total of 566,531 cases in MS-DRG 871, with an average length of stay of 6.3 days and average costs of $13,002. Lastly, we found a total of 150,437 cases in MS-DRG 872, with an average length of stay of 4.3 days and average costs of $7,532.

    We then examined claims data in MS-DRGs 870, 871, or 872 for cases reporting an ICD-10-CM diagnosis code of R65.10 or R65.11. Our findings are shown in the following table.

    SIRS of Non-Infectious Origin With and Without Acute Organ Dysfunction

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

    Number of Average length

    MS-DRGs 870, 871 and 872 cases of stay Average costs

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

    MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis 1,254 3.8 $6,615

    code of R65.10.................................................

    MS-DRGs 870, 871, and 872--Cases reporting a principal diagnosis 138 4.8 9,655

    code of R65.11.................................................

    MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis 1,232 5.5 10,670

    code of R65.10.................................................

    MS-DRGs 870, 871, and 872--Cases reporting a secondary diagnosis 117 6.2 12,525

    code of R65.11.................................................

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

    As shown in this table, we found a total of 1,254 cases reporting a principal diagnosis code of R65.10 in MS-DRGs 870, 871, and 872, with an average length of stay of 3.8 days and average costs of $6,615. We found a total of 138 cases reporting a principal diagnosis code of R65.11 in MS-DRGs 870, 871, and 872, with an average length of stay of 4.8 days and average costs of $9,655. We found a total of 1,232 cases reporting a secondary diagnosis code of R65.10 in MS-DRGs 870, 871, and 872, with an average length of stay of 5.5 days and average costs of $10,670. Lastly, we found a total of 117 cases reporting a secondary diagnosis code of R65.11 in MS-DRGs 870, 871, and 872, with an average length of stay of 6.2 days and average costs of $12,525.

    The claims data included a total of 1,392 cases in MS-DRGs 870, 871, and 872 that reported a principal diagnosis code of R65.10 or R65.11. We note that these 1,392 cases appear to have been coded inaccurately according to the ICD-10-CM Official Guidelines for Coding and Reporting at Section I.C.18.g., which specifically state: ``The systemic inflammatory response syndrome (SIRS) can develop as a result of certain nondashinfectious disease processes, such as trauma, malignant neoplasm, or pancreatitis. When SIRS is documented with a non-infectious condition, and no subsequent infection

    Page 20227

    is documented, the code for the underlying condition, such as an injury, should be assigned, followed by code R65.10, Systemic inflammatory response syndrome (SIRS) of non-infectious origin without acute organ dysfunction or code R65.11, Systemic inflammatory response syndrome (SIRS) of non-infectious origin with acute organ dysfunction.'' Therefore, according to the Coding Guidelines, ICD-10-CM diagnosis codes R65.10 and R65.11 should not be reported as the principal diagnosis on an inpatient claim.

    We have acknowledged in past rulemaking the challenges with coding for SIRS (and sepsis) (71 FR 24037). In addition, we note that there has been confusion with regard to how these codes are displayed in the ICD-10 MS-DRG Definitions Manual under MS-DRGs 870, 871, and 872, which may also impact the reporting of these conditions. For example, in Version 35 of the ICD-10 MS-DRG Definitions Manual (which is available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Data-Files.html?DLPage=1&DLEntries=10&DLSort=0&DLSortDir=ascending, the logic for case assignment to MS-DRGs 870, 871, and 872 is comprised of a list of several diagnosis codes, of which ICD-10-CM diagnosis codes R65.10 and R65.11 are included. Because these codes are listed under the heading of ``Principal Diagnosis'', it may appear that these codes are to be reported as a principal diagnosis for assignment to MS-DRGs 870, 871, or 872. However, the Definitions Manual display of the GROUPER logic assignment for each diagnosis code is for grouping purposes only. The GROUPER (and, therefore, documentation in the MS-DRG Definitions Manual) was not designed to account for coding guidelines or coverage policies. Since the inception of the IPPS, the data editing function has been a separate and independent step in the process of determining a DRG assignment. Except for extreme data integrity issues that prevent a DRG from being assigned, such as an invalid principal diagnosis, the DRG assignment GROUPER does not edit for data integrity. Prior to assigning the MS-DRG to a claim, the MACs apply a series of data integrity edits using programs such as the Medicare Code Editor (MCE). The MCE is designed to identify cases that require further review before classification into an MS-DRG. These data integrity edits address issues such as data validity, coding rules, and coverage policies. The separation of the MS-DRG grouping and data editing functions allows the MS-DRG GROUPER to remain stable during a fiscal year even though coding rules and coverage policies may change during the fiscal year. As such, in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38050 through 38051), we finalized our proposal to add ICD-10-CM diagnosis codes R65.10 and R65.11 to the Unacceptable Principal Diagnosis edit in the MCE as a result of the Official Guidelines for Coding and Reporting related to SIRS, in efforts to improve coding accuracy for these types of cases.

    To address the issue of determining a more appropriate MS-DRG assignment for ICD-10-CM diagnosis codes R65.10 and R65.11, we reviewed alternative options under MDC 18. Our clinical advisors determined the most appropriate option is MS-DRG 864 (Fever) because the conditions that are assigned here describe conditions of a non-infectious origin.

    Therefore, we are proposing to reassign ICD-10-CM diagnosis codes R65.10 and R65.11 to MS-DRG 864 and to revise the title of MS-DRG 864 to ``Fever and Inflammatory Conditions'' to better reflect the diagnoses assigned there.

    Proposed Revised MS-DRG 864 (Fever and Inflammatory Conditions)

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

    Average length

    MS-DRG Number of cases of stay Average costs

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

    MS-DRG 864--All cases........................................ 12,144 3.4 $6,232

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

    We are inviting public comments on our proposals.

    12. MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs): Corrosive Burns

    ICD-10-CM Coding Guidelines include ``Code first'' sequencing instructions for cases reporting a primary diagnosis of toxic effect (ICD-10-CM codes T51 through T65) and a secondary diagnosis of corrosive burn (ICD-10-CM codes T21.40 through T21.79). We received a request to reassign these cases from MS-DRGs 901 (Wound Debridements for Injuries with MCC), 902 (Wound Debridements for Injuries with CC), 903 (Wound Debridements for Injuries without CC/MCC), 904 (Skin Grafts for Injuries with CC/MCC), 905 (Skin Grafts for Injuries without CC/

    MCC), 917 (Poisoning and Toxic Effects of Drugs with MCC), and 918 (Poisoning and Toxic Effects of Drugs without MCC) to MS-DRGs 927 (Extensive Burns or Full Thickness Burns with Mechanical Ventilation >96 Hours with Skin Graft), 928 (Full Thickness Burn with Skin Graft or Inhalation Injury with CC/MCC), 929 (Full Thickness Burn with Skin Graft or Inhalation Injury without CC/MCC), 933 (Extensive Burns or Full Thickness Burns with Mechanical Ventilation >96 Hours without Skin Graft), 934 (Full Thickness Burn without Skin Graft or Inhalation Injury), and 935 (Nonextensive Burns).

    The requestor noted that, for corrosion burns codes T21.40 through T21.79, ICDdash10-CM Coding Guidelines instruct to ``Code first (T51 through T65) to identify chemical and intent.'' Because code first notes provide sequencing directive, when patients are admitted with corrosive burns (which can be full thickness and extensive), toxic effect codes T51 through T65 must be sequenced first followed by codes for the corrosive burns. This causes full-thickness and extensive burns to group to MS-DRGs 901 through 905 when excisional debridement and split thickness skin grafts are performed, and to MS-DRGs 917 and 918 when procedures are not performed. This is in contrast to cases reporting a primary diagnosis of corrosive burn, which group to MSdashDRGs 927 through 935.

    The requestor stated that 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) are grouped based on the procedure performed in combination with the principal diagnosis or secondary

    Page 20228

    diagnosis (secondary scoliosis). The requestor stated that when codes for corrosive burns are reported as secondary diagnoses in conjunction with principal diagnoses codes T5l through T65, particularly when skin grafts are performed, they would be more appropriately assigned to MS-

    DRGs 927 through 935.

    We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for all cases assigned to MS-DRGs 901, 902, 903, 904, 905, 917, and 918, and subsets of these cases with primary diagnosis of toxic effect with secondary diagnosis of corrosive burn. We note that we found no cases from this subset in MSdashDRGs 903, 907, 908, and 909 and, therefore, did not include the results for these MSdashDRGs in the table below. We also analyzed all cases assigned to MS-DRGs 927, 928, 929, 933, 934, and 935 and those cases that reported a primary diagnosis of corrosive burn. Our findings are shown in the following two tables.

    MDC 21 Injuries, Poisonings and Toxic Effects of Drugs

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    All Cases with primary diagnosis of toxic effect and secondary 55 5.5 $18,077

    diagnosis of corrosive burn--Across all MS-DRGs................

    MS-DRG 901--All cases........................................... 968 13 31,479

    MS-DRG 901--Cases with primary diagnosis of toxic effect and 1 8 12,388

    secondary diagnosis of corrosive burn..........................

    MS-DRG 902--All cases........................................... 1,775 6.6 14,206

    MS-DRG 902--Cases with primary diagnosis of toxic effect and 8 10.3 20,940

    secondary diagnosis of corrosive burn..........................

    MS-DRG 904--All cases........................................... 905 9.8 23,565

    MS-DRG 904--Cases with primary diagnosis of toxic effect and 8 6.4 22,624

    secondary diagnosis of corrosive burn..........................

    MS-DRG 905--All cases........................................... 263 4.9 13,291

    MS-DRG 905--Cases with primary diagnosis of toxic effect and 2 2.5 7,682

    secondary diagnosis of corrosive burn..........................

    MS-DRG 906--All cases........................................... 458 4.8 13,555

    MS-DRG 906--Cases with primary diagnosis of toxic effect and 1 5 7,409

    secondary diagnosis of corrosive burn..........................

    MS-DRG 917--All cases........................................... 31,730 4.8 10,280

    MS-DRG 917--Cases with primary diagnosis of toxic effect and 6 4.8 7,336

    secondary diagnosis of corrosive burn..........................

    MS-DRG 918--All cases........................................... 19,819 3 5,529

    MS-DRG 918--Cases with primary diagnosis of toxic effect and 28 3.5 5,643

    secondary diagnosis of corrosive burn..........................

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

    As shown in this table, there were a total of 55 cases with a primary diagnosis of toxic effect and a secondary diagnosis of corrosive burn across MS-DRGs 901, 902, 903, 904, 905, 917, and 918. When comparing this subset of codes relative to those of each MS-DRG as a whole, we noted that, in most of these MS-DRGs, the average costs and average length of stay for this subset of cases were roughly equivalent to or lower than the average costs and average length of stay for cases in the MS-DRG as a whole, while in one case, they were higher. As we have noted in prior rulemaking (77 FR 53309) and elsewhere in this rule, it is a fundamental principle of an averaged payment system that half of the procedures in a group will have above average costs. It is expected that there will be higher cost and lower cost subsets, especially when a subset has low numbers. The results of this analysis indicate that these cases are appropriately placed within their current MDC.

    Our clinical advisors reviewed this request and indicated that patients with a primary diagnosis of toxic effect and a secondary diagnosis of corrosive burn have been exposed to an irritant or corrosive substance and, therefore, are clinically similar to those patients in MDC 21. Furthermore, our clinical advisors do not believe that the size of this subset of cases justifies the significant changes to the GROUPER logic that would be required to address the commenter's request, which would involve rerouting cases when the primary and secondary diagnoses are in different MDCs.

    MDC 22 Burns

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    All cases with primary diagnosis of corrosive burn--Across all 60 8.5 $19,456

    MS-DRGs........................................................

    MS-DRG 927--All cases........................................... 159 28.1 128,960

    MS-DRG 927--Cases with primary diagnosis of corrosive burn...... 1 41 75,985

    MS-DRG 928--All cases........................................... 1,021 15.1 42,868

    MS-DRG 928--Cases with primary diagnosis of corrosive burn...... 13 13.2 31,118

    MS-DRG 929--All cases........................................... 295 7.9 21,600

    MS-DRG 929--Cases with primary diagnosis of corrosive burn...... 4 12.5 18,527

    MS-DRG 933--All cases........................................... 121 4.6 21,291

    MS-DRG 933--Cases with primary diagnosis of corrosive burn...... 1 7 91,779

    MS-DRG 934--All cases........................................... 503 6.1 13,286

    Page 20229

    MS-DRG 934--Cases with primary diagnosis of corrosive burn...... 11 5.8 13,280

    MS-DRG 935--All cases........................................... 1,705 5.2 13,065

    MS-DRG 935--Cases with primary diagnosis of corrosive burn...... 29 5 9,822

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

    To address the request of reassigning cases with a primary diagnosis of toxic effect and secondary diagnosis of corrosive burn, we reviewed the data for all cases in MS-DRGs 927, 928, 929, 933, 934, and 935 and those cases reporting a primary diagnosis of corrosive burn. We found a total of 60 cases reporting a primary diagnosis of corrosive burn, with an average length of stay of 8.5 days and average costs of $19,456. Our clinical advisors believe that these cases reporting a primary diagnosis of corrosive burn are appropriately placed in MDC 22 as they are clinically aligned with other patients in this MDC. In summary, the results of our claims data analysis and the advice from our clinical advisors do not support reassigning cases in MS-DRGs 901, 902, 903, 904, 905, 917, and 918 reporting a primary diagnosis of toxic effect and a secondary diagnosis of corrosive burn to MS-DRGs 927, 928, 929, 933, 934 and 935. Therefore, we are not proposing to reassign these cases. We are inviting public comments on our proposal to maintain the current MSdashDRG structure for these cases.

    13. Proposed Changes to the Medicare Code Editor (MCE)

    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.

    As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38045), we made available the FY 2018 ICD-10 MCE Version 35 manual file. The link to this MCE manual file, along with the link to the mainframe and computer software for the MCE Version 35 (and ICD-10 MS-DRGs) are posted on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html through the FY 2018 IPPS Final Rule Home Page.

    For this FY 2019 IPPS/LTCH PPS proposed rule, below we address the MCE requests we received by the November 1, 2017 deadline. We also discuss the proposals we are making based on our internal review and analysis.

  22. 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:

    Perinatal/Newborn--Age of 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 (for example, tetanus neonatorum, health examination for newborn under 8 days old).

    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) Perinatal/Newborn Diagnoses Category

    Under the ICD-10 MCE, the Perinatal/Newborn Diagnoses category under the Age Conflict edit considers the age of 0 years only; a subset of diagnoses which will only occur during the perinatal or newborn period of age 0 to be inclusive. This includes conditions that have their origin in the fetal or perinatal period (before birth through the first 28 days after birth) even if morbidity occurs later. 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.

    In the ICD-10-CM classification, there are 14 diagnosis codes that describe specific suspected conditions that have been evaluated and ruled out during the newborn period and are currently not on the Perinatal/Newborn Diagnoses Category edit code list. We consulted with staff at 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. The NCHS' staff confirmed that the following diagnosis codes are appropriate to add to the edit code list for the Perinatal/Newborn Diagnoses Category.

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

    ICD-10-CM code Code description

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

    Z05.0..................... Observation and evaluation of newborn for

    suspected cardiac condition ruled out.

    Z05.1..................... Observation and evaluation of newborn for

    suspected infectious condition ruled out.

    Z05.2..................... Observation and evaluation of newborn for

    suspected neurological condition ruled out.

    Z05.3..................... Observation and evaluation of newborn for

    suspected respiratory condition ruled out.

    Z05.41.................... Observation and evaluation of newborn for

    suspected genetic condition ruled out.

    Z05.42.................... Observation and evaluation of newborn for

    suspected metabolic condition ruled out.

    Z05.43.................... Observation and evaluation of newborn for

    suspected immunologic condition ruled out.

    Z05.5..................... Observation and evaluation of newborn for

    suspected gastrointestinal condition ruled

    out.

    Z05.6..................... Observation and evaluation of newborn for

    suspected genitourinary condition ruled

    out.

    Z05.71.................... Observation and evaluation of newborn for

    suspected skin and subcutaneous tissue

    condition ruled out.

    Page 20230

    Z05.72.................... Observation and evaluation of newborn for

    suspected musculoskeletal condition ruled

    out.

    Z05.73.................... Observation and evaluation of newborn for

    suspected connective tissue condition ruled

    out.

    Z05.8..................... Observation and evaluation of newborn for

    other specified suspected condition ruled

    out.

    Z05.9..................... Observation and evaluation of newborn for

    unspecified suspected condition ruled out.

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

    Therefore, we are proposing to add the ICD-10-CM diagnosis codes listed in the table above to the Age Conflict edit under the Perinatal/

    Newborn Diagnoses Category edit code list. We also are proposing to continue to include the existing diagnosis codes currently listed under the Perinatal/Newborn Diagnoses Category edit code list. We are inviting public comments on our proposals.

    (2) Pediatric Diagnoses Category

    Under the ICD-10 MCE, the Pediatric Diagnoses 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.

    As discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnoses that are no longer effective as of October 1, 2018. Included in this table is an ICD-10-CM diagnosis code currently listed on the Pediatric Diagnoses Category edit code list, ICD-10-CM diagnosis code Z13.4 (Encounter for screening for certain developmental disorders in childhood). We are proposing to remove this code from the Pediatric Diagnoses Category edit code list. We also are proposing to continue to include the other existing diagnosis codes currently listed under the Pediatric Diagnoses Category edit code list. We are inviting public comments on our proposals.

    (3) Maternity Diagnoses

    Under the ICD-10 MCE, the Maternity Diagnoses Category for the Age Conflict edit considers the age range of 12 to 55 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.

    As discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.--New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnoses codes that have been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new ICD-10-CM diagnosis codes included in Table 6A associated with pregnancy and maternal care that we believe are appropriate to add to the Maternity Diagnoses Category edit code list under the Age Conflict edit. Therefore, we are proposing to add these codes to the Maternity Diagnoses Category edit code list under the Age Conflict edit.

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

    ICD-10-CM code Code description

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

    F53.0..................... Postpartum depression.

    F53.1..................... Puerperal psychosis.

    O30.131................... Triplet pregnancy, trichorionic/triamniotic,

    first trimester.

    O30.132................... Triplet pregnancy, trichorionic/triamniotic,

    second trimester.

    O30.133................... Triplet pregnancy, trichorionic/triamniotic,

    third trimester.

    O30.139................... Triplet pregnancy, trichorionic/triamniotic,

    unspecified trimester.

    O30.231................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, first trimester.

    O30.232................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, second trimester.

    O30.233................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, third trimester.

    O30.239................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, unspecified trimester.

    O30.831................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, first trimester.

    O30.832................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, second trimester.

    O30.833................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, third trimester.

    O30.839................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, unspecified

    trimester.

    O86.00.................... Infection of obstetric surgical wound,

    unspecified.

    O86.01.................... Infection of obstetric surgical wound,

    superficial incisional site.

    O86.02.................... Infection of obstetric surgical wound, deep

    incisional site.

    O86.03.................... Infection of obstetric surgical wound, organ

    and space site.

    O86.04.................... Sepsis following an obstetrical procedure.

    O86.09.................... Infection of obstetric surgical wound, other

    surgical site.

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

    In addition, as discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnosis codes that are no longer effective as of October 1, 2018. Included in this table are two ICD-10-CM diagnosis codes currently listed on the Maternity Diagnoses Category edit code list: ICD-10-CM diagnosis codes F53 (Puerperal psychosis) and O86.0 (Infection of obstetric surgical wound). We are proposing to remove these codes from the Maternity Diagnoses Category Edit code list. We also are proposing to continue to include the other existing diagnosis codes currently listed under the Maternity Diagnoses Category edit

    Page 20231

    code list. We are inviting public comments on our proposals.

  23. 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.

    (1) Diagnoses for Females Only Edit

    We received a request to consider the addition of the following ICD-10-CM diagnosis codes to the list for the Diagnoses for Females Only edit.

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

    ICD-10-CM code Code description

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

    Z30.015................... Encounter for initial prescription of

    vaginal ring hormonal contraceptive.

    Z31.7..................... Encounter for procreative management and

    counseling for gestational carrier.

    Z98.891................... History of uterine scar from previous

    surgery.

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

    The requestor noted that, currently, ICD-10-CM diagnosis code Z30.44 (Encounter for surveillance of vaginal ring hormonal contraceptive device) is on the Diagnoses for Females Only edit code list and suggested that ICD-10-CM diagnosis code Z30.015, which also describes an encounter involving a vaginal ring hormonal contraceptive, be added to the Diagnoses for Females Only edit code list as well. In addition, the requestor suggested that ICD-10-CM diagnosis codes Z31.7 and Z98.891 be added to the Diagnoses for Females Only edit code list.

    We reviewed ICD-10-CM diagnosis codes Z30.015, Z31.7, and Z98.891, and we agree with the requestor that it is clinically appropriate to add these three ICD-10-CM diagnosis codes to the Diagnoses for Females Only edit code list because the conditions described by these codes are specific to and consistent with the female sex.

    In addition, as discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.--New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new diagnosis codes that are associated with conditions consistent with the female sex. We are proposing to add these ICD-10-CM diagnosis codes to the Diagnoses for Females Only edit code list under the Sex Conflict edit.

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

    ICD-10-CM code Code description

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

    F53.0..................... Postpartum depression.

    F53.1..................... Puerperal psychosis.

    N35.82.................... Other urethral stricture, female.

    N35.92.................... Unspecified urethral stricture, female.

    O30.131................... Triplet pregnancy, trichorionic/triamniotic,

    first trimester.

    O30.132................... Triplet pregnancy, trichorionic/triamniotic,

    second trimester.

    O30.133................... Triplet pregnancy, trichorionic/triamniotic,

    third trimester.

    O30.139................... Triplet pregnancy, trichorionic/triamniotic,

    unspecified trimester.

    O30.231................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, first trimester.

    O30.232................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, second trimester.

    O30.233................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, third trimester.

    O30.239................... Quadruplet pregnancy, quadrachorionic/quadra-

    amniotic, unspecified trimester.

    O30.831................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, first trimester.

    O30.832................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, second trimester.

    O30.833................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, third trimester.

    O30.839................... Other specified multiple gestation, number

    of chorions and amnions are both equal to

    the number of fetuses, unspecified

    trimester.

    O86.00.................... Infection of obstetric surgical wound,

    unspecified.

    O86.01.................... Infection of obstetric surgical wound,

    superficial incisional site.

    O86.02.................... Infection of obstetric surgical wound, deep

    incisional site.

    O86.03.................... Infection of obstetric surgical wound, organ

    and space site.

    O86.04.................... Sepsis following an obstetrical procedure.

    O86.09.................... Infection of obstetric surgical wound, other

    surgical site.

    Q51.20.................... Other doubling of uterus, unspecified.

    Q51.21.................... Other complete doubling of uterus.

    Q51.22.................... Other partial doubling of uterus.

    Q51.28.................... Other doubling of uterus, other specified.

    Z13.32.................... Encounter for screening for maternal

    depression.

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

    We are inviting public comments on our proposals.

    In addition, as discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed rule (which is available via the internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnosis codes that are no longer effective as of October 1, 2018. Included

    Page 20232

    in this table are the following three ICD-10-CM diagnosis codes currently listed on the Diagnoses for Females Only edit code list.

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

    ICD-10-CM code Code description

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

    F53....................... Puerperal psychosis.

    O86.00.................... Infection of obstetric surgical wound.

    Q51.20.................... Other doubling of uterus, unspecified.

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

    Because these three ICD-10-CM diagnosis codes will no longer be effective as of October 1, 2018, we are proposing to remove them from the Diagnoses for Females Only edit code list under the Sex Conflict edit. We are inviting public comments on our proposal.

    (2) Procedures for Females Only Edit

    As discussed in section II.F.15. of the preamble of this proposed rule, Table 6B.--New Procedure Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the procedure codes that have been approved to date, which will be effective with discharges occurring on and after October 1, 2018. We are proposing to add the three ICD-10-PCS procedure codes in the following table describing procedures associated with the female sex to the Procedures for Females Only edit code list.

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

    ICD-10-CM code Code description

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

    0UY90Z0................... Transplantation of uterus, allogeneic, open

    approach.

    0UY90Z1................... Transplantation of uterus, syngeneic, open

    approach.

    0UY90Z2................... Transplantation of uterus, zooplastic, open

    approach.

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

    We also are proposing to continue to include the existing procedure codes currently listed under the Procedures for Females Only edit code list. We are inviting public comments on our proposals.

    (3) Diagnoses for Males Only Edit

    As discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.--New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have been approved to date, which will be effective with discharges occurring on and after October 1, 2018. The following table lists the new diagnosis codes that are associated with conditions consistent with the male sex. We are proposing to add these ICD-10-CM diagnosis codes to the Diagnoses for Males Only edit code list under the Sex Conflict edit.

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

    ICD-10-CM code Code description

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

    N35.016................... Post-traumatic urethral stricture, male,

    overlapping sites.

    N35.116................... Postinfective urethral stricture, not

    elsewhere classified, male, overlapping

    sites.

    N35.811................... Other urethral stricture, male, meatal.

    N35.812................... Other urethral bulbous stricture, male.

    N35.813................... Other membranous urethral stricture, male.

    N35.814................... Other anterior urethral stricture, male,

    anterior.

    N35.816................... Other urethral stricture, male, overlapping

    sites.

    N35.819................... Other urethral stricture, male, unspecified

    site.

    N35.911................... Unspecified urethral stricture, male,

    meatal.

    N35.912................... Unspecified bulbous urethral stricture,

    male.

    N35.913................... Unspecified membranous urethral stricture,

    male.

    N35.914................... Unspecified anterior urethral stricture,

    male.

    N35.916................... Unspecified urethral stricture, male,

    overlapping sites.

    N35.919................... Unspecified urethral stricture, male,

    unspecified site.

    N99.116................... Postprocedural urethral stricture, male,

    overlapping sites.

    R93.811................... Abnormal radiologic findings on diagnostic

    imaging of right testicle.

    R93.812................... Abnormal radiologic findings on diagnostic

    imaging of left testicle.

    R93.813................... Abnormal radiologic findings on diagnostic

    imaging of testicles, bilateral.

    R93.819................... Abnormal radiologic findings on diagnostic

    imaging of unspecified testicle.

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

    We also are proposing to continue to include the existing diagnosis codes currently listed under the Diagnoses for Males Only edit code list. We are inviting public comments on our proposals.

  24. Manifestation Code as Principal Diagnosis Edit

    In the ICD-10-CM classification system, manifestation codes describe the manifestation of an underlying disease, not the disease itself and, therefore, should not be used as a principal diagnosis.

    As discussed in section II.F.15. of the preamble of this proposed rule, Table 6A.--New Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS

    Page 20233

    website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the new diagnosis codes that have been approved to date which will be effective with discharges occurring on and after October 1, 2018. Included in this table are ICD-

    10-CM diagnosis codes K82.A1 (Gangrene of gallbladder in cholecystitis) and K82.A2 (Perforation of gallbladder in cholecystitis). We are proposing to add these two ICD-10-CM diagnosis codes to the Manifestation Code as Principal Diagnosis edit code list because the type of cholecystitis would be required to be reported first. We also are proposing to continue to include the existing diagnosis codes currently listed under the Manifestation Code as Principal Diagnosis edit code list. We are inviting public comments on our proposals.

  25. 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.

    As discussed in section II.F.10. of the preamble of this proposed rule, we are proposing several modifications to the MS-DRGs under MDC 14 (Pregnancy, Childbirth and the Puerperium). One aspect of these proposed modifications involves the GROUPER logic for the cesarean section and vaginal delivery MS-DRGs. We refer readers to section II.F.10. of the preamble of this proposed rule for a detailed discussion of the proposals regarding these MS-DRG modifications under MDC 14 and the relation to the MCE.

    If a patient presents to the hospital and either a cesarean section or a vaginal delivery occurs, it is expected that, in addition to the specific type of delivery code, an outcome of delivery code is also assigned and reported on the claim. The outcome of delivery codes are ICD-10-CM diagnosis codes that are to be reported as secondary diagnoses as instructed in Section I.C.15.b.5 of the ICD-10-CM Official Guidelines for Coding and Reporting which states: ``A code from category Z37, Outcome of delivery, should be included on every maternal record when a delivery has occurred. These codes are not to be used on subsequent records or on the newborn record.'' Therefore, to encourage accurate coding and appropriate MS-DRG assignment in alignment with the proposed modifications to the delivery MS-DRGs, we are proposing to create a new ``Questionable Obstetric Admission Edit'' under the Questionable Admission edit to read as follows:

    ``b. Questionable obstetric admission

    ICD-10-PCS procedure codes describing a cesarean section or vaginal delivery are considered to be a questionable admission except when reported with a corresponding secondary diagnosis code describing the outcome of delivery.

    Procedure code list for cesarean section

    10D00Z0 Extraction of Products of Conception, High, Open Approach

    10D00Z1 Extraction of Products of Conception, Low, Open Approach

    10D00Z2 Extraction of Products of Conception, Extraperitoneal, Open Approach

    Procedure code list for vaginal delivery

    10D07Z3 Extraction of Products of Conception, Low Forceps, Via Natural or Artificial Opening

    10D07Z4 Extraction of Products of Conception, Mid Forceps, Via Natural or Artificial Opening

    10D07Z5 Extraction of Products of Conception, High Forceps, Via Natural or Artificial Opening

    10D07Z6 Extraction of Products of Conception, Vacuum, Via Natural or Artificial Opening

    10D07Z7 Extraction of Products of Conception, Internal Version, Via Natural or Artificial Opening

    10D07Z8 Extraction of Products of Conception, Other, Via Natural or Artificial Opening

    10D17Z9 Manual Extraction of Products of Conception, Retained, Via Natural or Artificial Opening

    10D18Z9 Manual Extraction of Products of Conception, Retained, Via Natural or Artificial Opening Endoscopic

    10E0XZZ Delivery of Products of Conception, External Approach

    Secondary diagnosis code list for outcome of delivery

    Z37.0 Single live birth

    Z37.1 Single stillbirth

    Z37.2 Twins, both liveborn

    Z37.3 Twins, one liveborn and one stillborn

    Z37.4 Twins, both stillborn

    Z37.50 Multiple births, unspecified, all liveborn

    Z37.51 Triplets, all liveborn

    Z37.52 Quadruplets, all liveborn

    Z37.53 Quintuplets, all liveborn

    Z37.54 Sextuplets, all liveborn

    Z37.59 Other multiple births, all liveborn

    Z37.60 Multiple births, unspecified, some liveborn

    Z37.61 Triplets, some liveborn

    Z37.62 Quadruplets, some liveborn

    Z37.63 Quintuplets, some liveborn

    Z37.64 Sextuplets, some liveborn

    Z37.69 Other multiple births, some liveborn

    Z37.7 Other multiple births, all stillborn

    Z37.9 Outcome of delivery, unspecified''

    We are proposing that the three ICD-10-PCS procedure codes listed in the following table would be used to establish the list of codes for the proposed Questionable Obstetric Admission edit logic for cesarean section.

    ICD-10-PCS Procedure Codes for Cesarean Section Under the Proposed

    Questionable Obstetric Admission Edit Code List in the MCE

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

    ICD-10-CM code Code description

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

    10D00Z0................... Extraction of products of conception, high,

    open approach.

    10D00Z1................... Extraction of products of conception, low,

    open approach.

    10D00Z2................... Extraction of products of conception,

    extraperitoneal, open approach.

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

    We are proposing that the nine ICD-10-PCS procedure codes listed in the following table would be used to establish the list of codes for the proposed new Questionable Obstetric Admission edit logic for vaginal delivery.

    Page 20234

    ICD-10-PCS Procedure Codes for Vaginal Delivery Under the Proposed

    Questionable Obstetric Admission Edit Code List in the MCE

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

    ICD-10-CM code Code description

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

    10D07Z3................... Extraction of products of conception, low

    forceps, via natural or artificial opening.

    10D07Z4................... Extraction of products of conception, mid

    forceps, via natural or artificial opening.

    10D07Z5................... Extraction of products of conception, high

    forceps, via natural or artificial opening.

    10D07Z6................... Extraction of products of conception,

    vacuum, via natural or artificial opening.

    10D07Z7................... Extraction of products of conception,

    internal version, via natural or artificial

    opening.

    10D07Z8................... Extraction of products of conception, other,

    via natural or artificial opening.

    10D17Z9................... Manual extraction of products of conception,

    retained, via natural or artificial

    opening.

    10D18Z9................... Manual extraction of products of conception,

    retained, via natural or artificial

    opening.

    10E0XZZ................... Delivery of products of conception, external

    approach.

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

    We are proposing that the 19 ICD-10-CM diagnosis codes listed in the following table would be used to establish the list of secondary diagnosis codes for the proposed new Questionable Obstetric Admission edit logic for outcome of delivery.

    ICD-10-CM Secondary Diagnosis Codes for Outcome of Delivery Under the

    Proposed Questionable Obstetric Admission Edit Code List in the MCE

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

    ICD-10-CM code Code description

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

    Z37.0..................... Single live birth.

    Z37.1..................... Single stillbirth.

    Z37.2..................... Twins, both liveborn.

    Z37.3..................... Twins, one liveborn and one stillborn.

    Z37.4..................... Twins, both stillborn.

    Z37.50.................... Multiple births, unspecified, all liveborn.

    Z37.51.................... Triplets, all liveborn.

    Z37.52.................... Quadruplets, all liveborn.

    Z37.53.................... Quintuplets, all liveborn.

    Z37.54.................... Sextuplets, all liveborn.

    Z37.59.................... Other multiple births, all liveborn.

    Z37.60.................... Multiple births, unspecified, some liveborn.

    Z37.61.................... Triplets, some liveborn.

    Z37.62.................... Quadruplets, some liveborn.

    Z37.63.................... Quintuplets, some liveborn.

    Z37.64.................... Sextuplets, some liveborn.

    Z37.69.................... Other multiple births, some liveborn.

    Z37.7..................... Other multiple births, all liveborn.

    Z37.9..................... Outcome of delivery, unspecified.

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

    We are inviting public comments on our proposal to create this new Questionable Obstetric Admission edit. We also are inviting public comments on the lists of diagnosis and procedure codes that we are proposing to include for this edit.

  26. 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.

    As discussed in section II.F.9. of the preamble of this proposed rule, ICD-10-CM diagnosis codes Z49.02 (Encounter for fitting and adjustment of peritoneal dialysis catheter), Z49.31 (Encounter for adequacy testing for hemodialysis), and Z49.32 (Encounter for adequacy testing for peritoneal dialysis) are currently on the Unacceptable Principal Diagnosis edit code list. We are proposing to add diagnosis code Z49.01 (Encounter for fitting and adjustment of extracorporeal dialysis catheter) to the Unacceptable Principal Diagnosis edit code list because this is an encounter code that would more likely be performed in an outpatient setting.

    As discussed in section II.F.15. of the preamble of this proposed rule, Table 6C.--Invalid Diagnosis Codes associated with this proposed rule (which is available via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) lists the diagnosis codes that are no longer effective as of October 1, 2018. As previously noted, included in this table is an ICD-10-CM diagnosis code Z13.4 (Encounter for screening for certain developmental disorders in childhood) which is currently listed on the Unacceptable Principal diagnoses Category edit code list. We are proposing to remove this code from the Unacceptable Principal Diagnoses Category edit code list.

    We also are proposing to continue to include the other existing diagnosis codes currently listed under the Unacceptable Principal Diagnosis edit code list. We are inviting public comments on our proposals.

    Page 20235

  27. Future Enhancement

    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38053 through 38054), we noted the importance of ensuring accuracy of the coded data from the reporting, collection, processing, coverage, payment, and analysis aspects. We have engaged a contractor to assist in the review of the limited coverage and noncovered procedure edits in the MCE that may also be present in other claims processing systems that are utilized by our MACs. The MACs must adhere to criteria specified within the National Coverage Determinations (NCDs) and may implement their own edits in addition to what are already incorporated into the MCE, resulting in duplicate edits. The objective of this review is to identify where duplicate edits may exist and to determine what the impact might be if these edits were to be removed from the MCE.

    We have noted that the purpose of the MCE is to ensure that errors and inconsistencies in the coded data are recognized during Medicare claims processing. We are considering whether the inclusion of coverage edits in the MCE necessarily aligns with that specific goal because the focus of coverage edits is on whether or not a particular service is covered for payment purposes and not whether it was coded correctly.

    As we continue to evaluate the purpose and function of the MCE with respect to ICD-10, we encourage public input for future discussion. As we discussed in the FY 2018 IPPS/LTCH PPS final rule, we recognize a need to further examine the current list of edits and the definitions of those edits. We continue to 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. Comments should be directed to the MS-DRG Classification Change Mailbox located at: email protected by November 1, 2018 for FY 2020.

    14. Proposed 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 resourcedashintensive to least resourcedashintensive, performs that function. Application of this hierarchy ensures that cases involving multiple surgical procedures are assigned to the MS-DRG associated with the most resourcedashintensive surgical class.

    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 proposed rule.

    This methodology may occasionally result in assignment of a case involving multiple procedures to the lowerdashweighted MS-DRG (in the highest, most resourcedashintensive 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 resourcedashintensive 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 higherdashordered surgical class has lower average costs than the class ordered below it.

    Based on the changes that we are proposing to make in this FY 2019 IPPS/LTCH PPS proposed rule, as discussed in section II.F.10. of the preamble of this proposed rule, we are proposing to revise the surgical hierarchy for MDC 14 (Pregnancy, Childbirth & the Puerperium) as follows: In MDC 14, we are proposing to delete MS-DRGs 765 and 766 (Cesarean Section with and without CC/MCC, respectively) and MS-DRG 767 (Vaginal Delivery with Sterilization and/or D&C) from the surgical hierarchy. We are proposing to sequence proposed new MS-DRGs 783, 784, and 785 (Cesarean Section with Sterilization with MCC, with CC and without CC/MCC, respectively) above proposed new MS-DRGs 786, 787, and 788 (Cesarean Section without Sterilization with MCC, with CC and without CC/MCC, respectively). We are proposing to sequence proposed new MS-DRGs 786, 787, and 788 (Cesarean Section without Sterilization with MCC, with CC and without CC/MCC, respectively) above MS-DRG 768 (Vaginal Delivery with O.R. Procedure Except Sterilization and/or D&C). We also are proposing to sequence proposed new MS-DRGs 796, 797, and 798 (Vaginal Delivery with Sterilization/D&C with MCC, with CC and without CC/MCC, respectively) below MS-DRG 768 and above MS-DRG 770 (Abortion with D&C, Aspiration Curettage or Hysterotomy). Finally, we are proposing to sequence proposed new MS-DRGs 817, 818, and 819 (Other Antepartum Diagnoses with O.R. procedure with

    Page 20236

    MCC, with CC and without CC/MCC, respectively) below MS-DRG 770 and above MS-DRG 769 (Postpartum and Post Abortion Diagnoses with O.R. Procedure). Our proposals for Appendix D MS-DRG Surgical Hierarchy by MDC and MS-DRG of the ICD-10 MS-DRG Definitions Manual Version 36 are illustrated in the following table.

    Proposed Surgical Hierarchy: MDC 14

    Pregnancy, childbirth and the puerperium

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

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

    Proposed New MS-DRGs 783-785........... Cesarean Section with

    Sterilization.

    Proposed New MS-DRGs 786-788........... Cesarean Section without

    Sterilization.

    MS-DRG 768............................. Vaginal Delivery with O.R.

    Procedures.

    Proposed New MS-DRGs 796-798........... Vaginal Delivery with

    Sterilization/D&C.

    MS-DRG 770............................. Abortion with D&C, Aspiration

    Curettage or Hysterotomy.

    Proposed New MS-DRGs 817-819........... Other Antepartum Diagnoses with

    O.R. Procedure.

    MS-DRG 769............................. Postpartum and Post Abortion

    Diagnoses with O.R. Procedure.

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

    We are inviting public comments on our proposals.

    As with other MS-DRG related issues, we encourage commenters to submit requests to examine ICD-10 claims pertaining to the surgical hierarchy via the CMS MSdashDRG Classification Change Request Mailbox located at: email protected by November 1, 2018 for FY 2020 consideration.

    15. Proposed Changes to the MS-DRG Diagnosis Codes for FY 2019

  28. 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 MSdashDRGs we adopted for FY 2008 (72 FR 47152 through 47171).

  29. Proposed Additions and Deletions to the Diagnosis Code Severity Levels for FY 2019

    The following 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 2019 are available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

    Table 6I.1--Proposed Additions to the MCC List--FY 2019;

    Table 6I.2--Proposed Deletions to the MCC List--FY 2019;

    Table 6J.1--Proposed Additions to the CC List--FY 2019; and

    Table 6J.2--Proposed Deletions to the CC List--FY 2019.

    We are inviting public comments on our proposed severity level designations for the diagnosis codes listed in Table 6I.1. and Table 6J.1. We note that, for Table 6I.2. and Table 6J.2., the proposed deletions are a result of code expansions, with the exception of diagnosis codes B20 and J80, which are the result of proposed severity level designation changes. Therefore, the diagnosis codes on these lists will no longer be valid codes, effective FY 2019.

    We refer readers to the Tables 6I.1, 6I.2, 6J.1, and 6J.2 associated with this proposed rule, which are available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

  30. Principal Diagnosis Is Its Own CC or MCC

    In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38060), we provided the public with notice of our plans to conduct a comprehensive review of the CC and MCC lists for FY 2019. In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38056 through 38057), we also finalized our proposal to maintain the existing lists of principal diagnosis codes in Table 6L.--

    Principal Diagnosis Is Its Own MCC List and Table 6M.--Principal Diagnosis Is Its Own CC List for FY 2018, without any changes to the existing lists, noting our plans to conduct a comprehensive review of the CC and MCC lists for FY 2019 (82 FR 38060). We stated that having multiple lists for CC and MCC diagnoses when reported as a principal and/or secondary diagnosis may not provide an accurate representation of resource utilization for the MS-DRGs.

    We also stated that the purpose of the Principal Diagnosis Is Its Own CC or MCC Lists was to ensure consistent MS-DRG assignment between the ICD-9-CM and ICD-10 MS-DRGs. The Principal Diagnosis Is Its Own CC or MCC Lists were developed for the FY 2016 implementation of the ICD-

    10 version of the MS-DRGs to facilitate replication of the ICD-9-CM MS-

    DRGs. As part of our efforts to replicate the ICD-9-CM MS-DRGs, we implemented logic that may have increased the complexity of the MS-DRG assignment hierarchy and altered the format of the ICD-10 MS-DRG Definitions Manual. Two examples of workarounds used to facilitate replication are the proliferation of procedure clusters in the surgical MS-DRGs and the creation of the Principal Diagnosis Is Its Own CC or MCC Lists special logic.

    The following paragraph was added to the Version 33 ICD-10 MS-DRG Definitions Manual to explain the use of the Principal Diagnosis Is Its Own CC or MCC Lists: ``A few ICD-10-CM diagnosis codes express conditions that are normally coded in ICD-9-CM using two or more ICD-9-

    CM diagnosis codes. In the interest of ensuring that the ICD-10 MS-DRGs Version 33 places a patient in the same DRG regardless whether the patient record were to be coded in ICD-9-CM or ICD-10-CM/PCS, 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 record is considered. If one of the ICD-9-CM codes in the cluster is a CC

    Page 20237

    or MCC, then the single ICD-10-CM combination code used as a principal diagnosis must also imply the CC or MCC that the ICD-9-CM cluster would have presented. The ICD-10-CM diagnoses for which this implication must be made are listed here.'' Versions 34 and 35 of the ICD-10 MS-DRG Definitions Manual also include this special logic for the MS-DRGs.

    The Principal Diagnosis Is Its Own CC or MCC Lists were developed in the absence of ICD-10 coded data by mapping the ICD-9-CM diagnosis codes to the new ICD-10-CM combination codes. CMS has historically used clinical judgment combined with data analysis to assign a principal diagnosis describing a complex or severe condition to the appropriate DRG or MS-DRG. The initial ICD-10 version of the MSdashDRGs replicated from the ICD-9 version can now be evaluated using clinical judgment combined with ICD-10 coded data because it is no longer necessary to replicate MS-DRG assignment across the ICD-9 and ICD-10 versions of the MS-DRGs for purposes of calculating relative weights. Now that ICD-10 coded data are available, in addition to using the data for calculating relative weights, ICD-10 data can be used to evaluate the effectiveness of the special logic for assigning a severity level to a principal diagnosis, as an indicator of resource utilization. To evaluate the effectiveness of the special logic, we have conducted analysis of the ICD-10 coded data combined with clinical review to determine whether to propose to keep the special logic for assigning a severity level to a principal diagnosis, or to propose to remove the special logic and use other available means of assigning a complex principal diagnosis to the appropriate MSdashDRG.

    Using claims data from the September 2017 update of the FY 2017 MedPAR file, we employed the following method to determine the impact of removing the special logic used in the current Version 35 GROUPER to process claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists. Edits and cost estimations used for relative weight calculations were applied, resulting in 9,070,073 IPPS claims analyzed for this special logic impact evaluation. We refer readers to section II.G. of the preamble of this proposed rule for further information regarding the methodology for calculation of the proposed relative weights.

    First, we identified the number of cases potentially impacted by the special logic. We identified 310,184 cases reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC lists. Of the 310,184 total cases that reported a principal diagnosis code on the Principal Diagnosis Is Its Own CC or MCC Lists, 204,749 cases also reported a secondary diagnosis code at the same severity level or higher severity level, and therefore the special logic had no impact on MS-DRG assignment. However, of the 310,184 total cases, there were 105,435 cases that did not report a secondary diagnosis code at the same severity level or higher severity level, and therefore the special logic could potentially impact MS-DRG assignment, depending on the specific severity leveling structure of the base DRG.

    Next, we removed the special logic in the GROUPER that is used for processing claims reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC Lists, thereby creating a Modified Version 35 GROUPER. Using this Modified Version 35 GROUPER, we reprocessed the 105,435 claims for which the principal diagnosis code was the sole source of a MCC or CC on the case, to obtain data for comparison showing the effect of removing the special logic.

    After removing the special logic in the Version 35 GROUPER for processing claims containing diagnosis codes on the Principal Diagnosis Is Its Own CC or MCC Lists, and reprocessing the claims using the Modified Version 35 GROUPER software, we found that 18,596 (6 percent) of the 310,184 cases reporting a principal diagnosis on the Principal Diagnosis Is Its Own CC or MCC Lists resulted in a different MS-DRG assignment. Overall, the number of claims impacted by removal of the special logic (18,596) represents 0.2 percent of the 9,070,073 IPPS claims analyzed.

    Below we provide a summary of the steps that we followed for the analysis performed.

    Step 1. We analyzed 9,070,073 claims to determine the number of cases impacted by the special logic.

    With Special Logic--9,070,073 Claims Analyzed

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

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

    Number of cases reporting a principal diagnosis from the 310,184

    Principal Diagnosis Is Its Own CC/MCC lists (special

    logic).................................................

    Number of cases reporting an additional CC/MCC secondary 204,749

    diagnosis code at or above the level of the designated

    severity level of the principal diagnosis..............

    Number of cases not reporting an additional CC/MCC 105,435

    secondary diagnosis code...............................

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

    Step 2. We removed special logic from GROUPER and created a modified GROUPER.

    Step 3. We reprocessed 105,435 claims with modified GROUPER.

    Without Special Logic--105,435 Claims Analyzed

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

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

    Number of cases reporting a principal diagnosis from the 310,184

    Principal Diagnosis Is Its Own CC/MCC lists............

    Number of cases resulting in different MS-DRG assignment 18,596

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

    To estimate the overall financial impact of removing the special logic from the GROUPER, we calculated the aggregate change in estimated payment for the MS-DRGs by comparing average costs for each MS-DRG affected by the change, before and after removing the special logic. Before removing the special logic in the Version 35 GROUPER, the cases impacted by the special logic had an estimated average payment of $58 million above the average costs for all the MS-DRGs to which the claim was originally assigned. After removing the special logic in the Version 35 GROUPER, the 18,596 cases impacted by the special logic had an estimated average payment of $39 million below the average costs for the newly assigned MS-DRGs.

    We performed regression analysis to compare the proportion of variance in the MS-DRGs with and without the special logic. The results of the

    Page 20238

    regression analysis showed a slight decrease in variance when the logic was removed. While the decrease itself was not statistically significant (an R-squared of 36.2603 percent after the special logic was removed, compared with an R-squared of 36.2501 percent in the current version 35 GROUPER), we note that the proportion of variance across the MS-DRGs essentially stayed the same, and certainly did not increase, when the special logic was removed.

    We further examined the 18,596 claims that were impacted by the special logic in the GROUPER for processing claims containing a code on the Principal Diagnosis Is Its Own CC or MCC Lists. The 18,596 claims were analyzed by the principal diagnosis code and the MS-DRG assigned, resulting in 588 principal diagnosis and MS-DRG combinations or subsets. Of the 588 subsets of cases that utilized the special logic, 556 of the 588 subsets (95 percent) had fewer than 100 cases, 529 of the 588 subsets (90 percent) had fewer than 50 cases, and 489 of the 588 subsets (83 percent) had fewer than 25 cases.

    We examined the 32 subsets of cases (5 percent of the 588 subsets) that utilized the special logic and had 100 or more cases. Of the 32 subsets of cases, 18 (56 percent) are similar in terms of average costs and length of stay to the MS-DRG assignment that results when the special logic is removed, and 14 of the 32 subsets of cases (44 percent) are similar in terms of average costs and length of stay to the MS-DRG assignment that results when the special logic is utilized.

    The table below contains examples of four subsets of cases that utilize the special logic, comparing average length of stay and average costs between two MS-DRGs within a base DRG, corresponding to the MS-

    DRG assigned when the special logic is removed and the MS-DRG assigned when the special logic is utilized. All four subsets of cases involve the principal diagnosis code E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy with gangrene). There are four subsets of cases in this example because the records involving the principal diagnosis code E11.52 are assigned to four different base DRGs, one medical MS-DRG and three surgical MSdashDRGs, depending on the procedure code(s) reported on the claim. All subsets of cases contain more than 100 claims. In three of the four subsets, the cases are similar in terms of average length of stay and average costs to the MS-

    DRG assignment that results when the special logic is removed, and in one of the four subsets, the cases are similar in terms of average length of stay and average costs to the MS-DRG assignment that results when the special logic is utilized.

    As shown in the following table, using ICD-10-CM diagnosis code E11.52 (Type 2 diabetes mellitus with diabetic peripheral angiopathy with gangrene) as our example, the data findings show four different MS-DRG pairs for which code E11.52 was the principal diagnosis on the claim and where the special logic impacted MS-DRG assignment. For the first MS-DRG pair, we examined MS-DRGs 240 and 241 (Amputation for Circulatory System Disorders Except Upper Limb and Toe with CC and without CC/MCC, respectively). We found 436 cases reporting diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 5.5 days and average costs of $11,769. These 436 cases are assigned to MS-DRG 240 with the special logic utilized, and assigned to MS-DRG 241 with the special logic removed. The total number of cases reported in MS-DRG 240 was 7,675, with an average length of stay of 8.3 days and average costs of $17,876. The total number of cases reported in MS-DRG 241 was 778, with an average length of stay of 5.0 days and average costs of $10,882. The 436 cases are more similar to MS-DRG 241 in terms of length of stay and average cost and less similar to MS-DRG 240.

    For the second MS-DRG pair, we examined MS-DRGs 256 and 257 (Upper Limb and Toe Amputation for Circulatory System Disorders with CC and without CC/MCC, respectively). We found 193 cases reporting ICD-10-CM diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 4.2 days and average costs of $8,478. These 193 cases are assigned to MS-DRG 256 with the special logic utilized, and assigned to MS-DRG 257 with the special logic removed. The total number of cases reported in MS-DRG 256 was 2,251, with an average length of stay of 6.1 days and average costs of $11,987. The total number of cases reported in MS-DRG 257 was 115, with an average length of stay of 4.6 days and average costs of $7,794. These 193 cases are more similar to MS-DRG 257 in terms of average length of stay and average costs and less similar to MS-DRG 256.

    For the third MS-DRG pair, we examined MS-DRGs 300 and 301 (Peripheral Vascular Disorders with CC and without CC/MCC, respectively). We found 185 cases reporting ICD-10-CM diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 3.6 days and average costs of $5,981. These 185 cases are assigned to MS-DRG 300 with the special logic utilized, and assigned to MS-DRG 301 with the special logic removed. The total number of cases reported in MS-DRG 300 was 29,327, with an average length of stay of 4.1 days and average costs of $7,272. The total number of cases reported in MS-DRG 301 was 9,611, with an average length of stay of 2.8 days and average costs of $5,263. These 185 cases are more similar to MS-DRG 301 in terms of average length of stay and average costs and less similar to MS-DRG 300.

    For the fourth MS-DRG pair, we examined MS-DRGs 253 and 254 (Other Vascular Procedures with CC and without CC/MCC, respectively). We found 225 cases reporting diagnosis code E11.52 as the principal diagnosis, with an average length of stay of 5.2 days and average costs of $17,901. These 225 cases are assigned to MS-DRG 253 with the special logic utilized, and assigned to MS-DRG 254 with the special logic removed. The total number of cases reported in MS-DRG 253 was 25,714, with an average length of stay of 5.4 days and average costs of $18,986. The total number of cases reported in MS-DRG 254 was 12,344, with an average length of stay of 2.8 days and average costs of $13,287. Unlike the previous three MS-DRG pairs, these 225 cases are more similar to MS-DRG 253 in terms of average length of stay and average costs and less similar to MS-DRG 254.

    MS-DRG Pairs for Principal Diagnosis ICD-10-CM Code E11.52 With and Without Special MS-DRG Logic

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRGs 240 and 241--Special logic impacted cases with ICD-10-CM 436 5.5 $11,769

    code E11.52 as principal diagnosis.............................

    MS-DRG 240--All cases........................................... 7,675 8.3 17,876

    MS-DRG 241--All cases........................................... 778 5.0 10,882

    Page 20239

    MS-DRGs 253 and 254--Special logic impacted cases with ICD-10-CM 225 5.2 17,901

    E11.52 as principal diagnosis..................................

    MS-DRG 253--All cases........................................... 25,714 5.4 18,986

    MS-DRG 254--All cases........................................... 12,344 2.8 13,287

    MS-DRGs 256 and 257--Special logic impacted cases with ICD-10-CM 193 4.2 8,478

    E11.52 as principal diagnosis..................................

    MS-DRG 256--All cases........................................... 2,251 6.1 11,987

    MS-DRG 257--All cases........................................... 115 4.6 7,794

    MS-DRGs 300 and 301--Special logic impacted cases with ICD-10-CM 185 3.6 5,981

    E11.52 as principal diagnosis..................................

    MS-DRG 300--All cases........................................... 29,327 4.1 7,272

    MS-DRG 301--All cases........................................... 9,611 2.8 5,263

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

    Based on our analysis of the data, we believe that there may be more effective indicators of resource utilization than the Principal Diagnosis Is Its Own CC or MCC Lists and the special logic used to assign clinical severity to a principal diagnosis. As stated earlier in this discussion, it is no longer necessary to replicate MS-DRG assignment across the ICD-9 and ICD-10 versions of the MS-DRGs. The available ICD-10 data can now be used to evaluate other indicators of resource utilization.

    Therefore, as an initial recommendation from the first phase in our comprehensive review of the CC and MCC lists, we are proposing to remove the special logic in the GROUPER for processing claims containing a diagnosis code from the Principal Diagnosis Is Its Own CC or MCC Lists, and we are proposing to delete the tables containing the lists of principal diagnosis codes, Table 6L.--Principal Diagnosis Is Its Own MCC List and Table 6M.--Principal Diagnosis Is Its Own CC List, from the ICD-10 MS-DRG Definitions Manual for FY 2019. We are inviting public comments on our proposals.

  31. Proposed CC Exclusions List for FY 2019

    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.

    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 through 50544) for detailed information regarding revisions that were made to the CC and CC Exclusion Lists under the ICD-9-CM MS-DRGs.

    In this proposed rule, for FY 2019, we are proposing changes to the ICD-10 MS-DRGs Version 36 CC Exclusion List. Therefore, we developed Table 6G.1.--Proposed Secondary Diagnosis Order Additions to the CC Exclusions List--FY 2019; Table 6G.2.--Proposed Principal Diagnosis Order Additions to the CC Exclusions List--FY 2019; Table 6H.1.--

    Proposed Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2019; and Table 6H.2.--Proposed Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2019. For Table 6G.1, each secondary diagnosis code proposed for addition to the CC Exclusion List is shown with an asterisk and the principal diagnoses proposed to exclude the secondary diagnosis code are provided in the indented column immediately following it. For Table 6G.2, each of the principal diagnosis codes for which there is a CC exclusion is shown with an asterisk and the conditions proposed for addition to the CC Exclusion List that will not count as a CC are provided in an indented column immediately following the affected principal diagnosis. For Table 6H.1, each secondary diagnosis code proposed for deletion from the CC Exclusion List is shown with an asterisk followed by the principal diagnosis codes that currently exclude it. For Table 6H.2, each of the principal diagnosis codes is shown with an asterisk and the proposed deletions to the CC Exclusions List are provided in an indented column immediately following the affected principal diagnosis. Tables 6G.1., 6G.2., 6H.1., and 6H.2. associated with this proposed rule are available via the Internet on the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html.

    To identify new, revised and deleted diagnosis and procedure codes, for FY 2019, we developed Table 6A.--New Diagnosis Codes, Table 6B.--

    New Procedure Codes, Table 6C.--Invalid Diagnosis Codes, Table 6D.--

    Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and Table 6F.--Revised Procedure Code Titles for this proposed rule.

    These tables are not published in the Addendum to the proposed rule but are available via the Internet on the CMS

    Page 20240

    website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html as described in section VI. of the Addendum to this proposed rule. As discussed in section II.F.18. of the preamble of this proposed rule, 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.

    In this FY 2019 IPPS/LTCH PPS proposed rule, we are inviting public comments on the MDC and MS-DRG assignments for the new diagnosis and procedure codes as set forth in Table 6A.--New Diagnosis Codes and Table 6B.--New Procedure Codes. In addition, we are inviting public comments on the proposed severity level designations for the new diagnosis codes as set forth in Table 6A. and the proposed O.R. status for the new procedure codes as set forth in Table 6B.

    We are making available on the CMS website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html the following tables associated with this proposed rule:

    Table 6A.--New Diagnosis Codes--FY 2019;

    Table 6B.--New Procedure Codes--FY 2019;

    Table 6C.--Invalid Diagnosis Codes--FY 2019;

    Table 6D.--Invalid Procedure Codes--FY 2019;

    Table 6E.--Revised Diagnosis Code Titles--FY 2019;

    Table 6F.--Revised Procedure Code Titles--FY 2019;

    Table 6G.1.--Proposed Secondary Diagnosis Order Additions to the CC Exclusions List--FY 2019;

    Table 6G.2.--Proposed Principal Diagnosis Order Additions to the CC Exclusions List--FY 2019;

    Table 6H.1.--Proposed Secondary Diagnosis Order Deletions to the CC Exclusions List--FY 2019;

    Table 6H.2.--Proposed Principal Diagnosis Order Deletions to the CC Exclusions List--FY 2019;

    Table 6I.1.--Proposed Additions to the MCC List--FY 2019;

    Table 6I.2.--Proposed Deletions to the MCC List--FY 2019;

    Table 6J.1.--Proposed Additions to the CC List--FY 2019; and

    Table 6J.2.--Proposed Deletions to the CC List--FY 2019.

    We note that, as discussed in section II.F.15.c. of the preamble of this proposed rule, we are proposing to delete Table 6L. and Table 6M. from the ICD-10 MS-DRG Definitions Manual for FY 2019.

    16. Comprehensive Review of CC List for FY 2019

  32. Overview of Comprehensive CC/MCC Analysis

    In the FY 2008 IPPS/LTCH PPS final rule (72 FR 47159), we described our process for establishing three different levels of CC severity into which we would subdivide the diagnosis codes. The categorization of diagnoses as an MCC, CC, or nondashCC was accomplished using an iterative approach in which each diagnosis was evaluated to determine the extent to which its presence as a secondary diagnosis resulted in increased hospital resource use. We refer readers to the FY 2008 IPPS/

    LTCH PPS final rule (72 FR 47159) for a complete discussion of our approach. Since this comprehensive analysis was completed for FY 2008, we have evaluated diagnosis codes individually when receiving requests to change the severity level of specific diagnosis codes. However, given the transition to ICD-10-CM and the significant changes that have occurred to diagnosis codes since this review, we believe it is necessary to conduct a comprehensive analysis once again. We have begun this analysis and will discuss our findings in future rulemaking. We are currently using the same methodology utilized in FY 2008 and described below to conduct this analysis.

    For each secondary diagnosis, we measured the impact in resource use for the following three subsets of patients:

    (1) Patients with no other secondary diagnosis or with all other secondary diagnoses that are non-CCs.

    (2) Patients with at least one other secondary diagnosis that is a CC but none that is an MCC.

    (3) Patients with at least one other secondary diagnosis that is an MCC.

    Numerical resource impact values were assigned for each diagnosis as follows:

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

    Value Meaning

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

    0................................ Significantly below expected value

    for the non-CC subgroup.

    1................................ Approximately equal to expected value

    for the non-CC subgroup.

    2................................ Approximately equal to expected value

    for the CC subgroup.

    3................................ Approximately equal to expected value

    for the MCC subgroup.

    4................................ Significantly above the expected

    value for the MCC subgroup.

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

    Each diagnosis for which Medicare data were available was evaluated to determine its impact on resource use and to determine the most appropriate CC subclass (nondashCC, CC, or MCC) assignment. In order to make this determination, the average cost for each subset of cases was compared to the expected cost for cases in that subset. The following format was used to evaluate each diagnosis:

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

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

    Code Diagnosis Cnt1 C1 Cnt2 C2 Cnt3 C3

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

    Count (Cnt) is the number of patients in each subset and C1, C2, and C3 are a measure of the impact on resource use of patients in each of the subsets. The C1, C2, and C3 values are a measure of the ratio of average costs for patients with these conditions to the expected average cost across all cases. The C1 value reflects a patient with no other secondary diagnosis or with all other secondary diagnoses that are non-CCs. The C2 value reflects a patient with at least one other secondary diagnosis that is a CC but none that is a major CC. The C3 value reflects a patient with at least one other secondary diagnosis that is a major CC. A value close to 1.0 in the C1 field would suggest that the code produces the same expected value as a non-CC diagnosis. That is, average costs for the case are similar to the expected average costs for that subset and the diagnosis is not expected to increase resource usage. A higher value in the C1 (or C2 and C3) field suggests more resource usage is associated with the diagnosis and an increased likelihood that it is more like a CC or major CC than a non-CC. Thus, a value close to 2.0 suggests the condition is more like a CC than a non-

    CC but not as significant in resource usage as an MCC. A value close to 3.0 suggests the condition is expected to consume resources more similar to an MCC than a CC or non-CC. For example, a C1 value of 1.8 for a secondary diagnosis means that for the subset of patients who have the secondary diagnosis and have either no other secondary diagnosis present, or all the other secondary diagnoses present are nondashCCs, the impact on resource use of the secondary diagnoses is greater than the expected value for a nondashCC by an amount equal to 80

    Page 20241

    percent of the difference between the expected value of a CC and a non-

    CC (that is, the impact on resource use of the secondary diagnosis is closer to a CC than a nondashCC).

    These mathematical constructs are used as guides in conjunction with the judgment of our clinical advisors to classify each secondary diagnosis reviewed as an MCC, CC or non-CC. Our clinical panel reviews the resource use impact reports and suggests modifications to the initial CC subclass assignments when clinically appropriate.

  33. Requested Changes to Severity Levels

    (1) Human Immunodeficiency Virus HIV Disease

    We received a request that we consider changing the severity level of ICD-10-CM diagnosis code B20 (Human immunodeficiency virus HIV disease) from an MCC to a CC. We used the approach outlined above to evaluate this request. The table below contains the data that were evaluated for this request.

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

    Proposed

    ICD-10-CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC CC

    subclass subclass

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

    B20 (Human immunodeficiency virus HIV disease)........ 2,918 0.9946 8,938 2.1237 11,479 3.0960 MCC CC

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

    While the data did not strongly suggest that the categorization of HIV as an MCC was inaccurate, our clinical advisors indicated that, for many patients with HIV disease, symptoms are well controlled by medications. Our clinical advisors stated that if these patients have an HIV-related complicating disease, that complicating disease would serve as a CC or an MCC. Therefore, they advised us that ICD-10-CM diagnosis code B20 is more similar to a CC than an MCC. Based on the data results and the advice of our clinical advisors, we are proposing to change the severity level of ICD-10-CM diagnosis code B20 from an MCC to a CC. We are inviting public comments on our proposal.

    (2) Acute Respiratory Distress Syndrome

    We also received a request to change the severity level for ICD-10-

    CM diagnosis code J80 (Acute respiratory distress syndrome) from a CC to a MCC. We used the approach outlined above to evaluate this request. The following table contains the data that were evaluated for this request.

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

    Proposed

    ICD-10-CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC CC

    subclass subclass

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

    J80 (Acute respiratory distress syndrome)............... 1,840 1.7704 6,818 2.5596 18,376 3.3428 CC MCC

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

    The data suggest that the resources involved in caring for a patient with this condition are 77 percent greater than expected when the patient has either no other secondary diagnosis present, or all the other secondary diagnoses present are nondashCCs. The resources are 56 percent greater than expected when reported in conjunction with another secondary diagnosis that is a CC, and 34 percent greater than expected when reported in conjunction with another secondary diagnosis code that is an MCC. Our clinical advisors agree that the resources required to care for a patient with this secondary diagnosis are consistent with those of an MCC. Therefore, we are proposing to change the severity level of ICD-10-CM diagnosis code J80 from a CC to an MCC. We are inviting public comments on our proposal.

    (3) Encephalopathy

    We also received a request to change the severity level for ICD-10-

    CM diagnosis code G93.40 (Encephalopathy, unspecified) from an MCC to a non-CC. The requestor pointed out that the nature of the encephalopathy or its underlying cause should be coded. The requestor also noted that unspecified heart failure is a non-CC. We used the approach outlined earlier to evaluate this request. The following table contains the data that were evaluated for this request.

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

    Proposed

    ICD-10-CM diagnosis code Cnt1 C1 Cnt2 C2 Cnt3 C3 Current CC CC

    subclass subclass

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

    G93.40 (Encephalopathy, unspecified).................... 1.840 16,306 1.8471 80,222 2.4901 139,066 MCC MCC

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

    The data suggest that the resources involved in caring for a patient with this condition are 84 percent greater than expected when the patient has either no other secondary diagnosis present, or all the other secondary diagnoses present are nondashCCs. The resources are 15 percent lower than expected when reported in conjunction with another secondary diagnosis that is a CC, and 49 percent greater than expected when reported in conjunction with another secondary diagnosis code that is an MCC. We note that the pattern observed in resource use for the condition of unspecified heart failure (ICD-10-CM diagnosis code I50.9) differs from that of unspecified encephalopathy. Our clinical advisors reviewed this request and agree that the resources involved in caring for a patient with this condition are aligned with those of an MCC. Therefore, we are not proposing a change to the severity level for ICD-10-CM diagnosis code G93.40. We are inviting public comments on our proposal.

    17. Review of Procedure Codes in MS DRGs 981 Through 983 and 987 Through 989

    Each year, we review cases assigned to MS-DRGs 981, 982, and 983

    Page 20242

    (Extensive 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 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.

  34. 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. Based on the results of our review of the claims data from the September 2017 update of the FY 2017 MedPAR file, we are not proposing to move 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 are inviting public comments on our proposal to maintain the current structure of these MS-DRGs.

  35. Reassignment of Procedures Among MS-DRGs 981 Through 983 and 987 Through 989

    We also review 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, or 987 through 989, to ascertain whether any of those procedures should be reassigned from one of those two groups of MS-DRGs to the other group 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.

    Based on the results of our review of the September 2017 update of the FY 2017 MedPAR file, we are proposing to maintain the current structure of MS-DRGs 981 through 983 and MS-DRGs 987 through 989.

    We are inviting public comments on our proposal.

  36. Adding Diagnosis or Procedure Codes to MDCs

    We received a request recommending that CMS reassign cases for congenital pectus excavatum (congenital depression of the sternum or concave chest) when reported with a procedure describing repositioning of the sternum (the Nuss procedure) from MS-DRGs 981, 982, and 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) 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). ICD-10-CM diagnosis code Q67.6 (Pectus excavatum) is reported for this congenital condition and is currently assigned to MDC 4 (Diseases and Disorders of the Respiratory System). ICD-10-PCS procedure code 0PS044Z (Reposition sternum with internal fixation device, percutaneous endoscopic approach) may be reported to identify the Nuss procedure and is currently assigned to MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue) in MS-DRGs 515, 516, and 517. The requester noted that acquired pectus excavatum (ICD-10-CM diagnosis code M95.4) groups to MS-DRGs 515, 516, and 517 when reported with a ICD-10-PCS procedure code describing repositioning of the sternum and requested that cases involving diagnoses describing congenital pectus excavatum also group to those MS-DRGs when reported with a ICD-10-PCS procedure code describing repositioning of the sternum.

    Our analysis of this grouping issue confirmed that, when pectus excavatum (ICD-10-CM diagnosis code Q67.6) is reported as a principal diagnosis with a procedure such as the Nuss procedure (ICD-10-PCS procedure code 0PS044Z), these cases group to MS-DRGs 981, 982, and 983. The reason for this grouping is because whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS-DRG assignment to a surgical class referred to as ``unrelated operating room procedures.'' In the example provided, because the ICD-10-CM diagnosis code Q67.6 describing pectus excavatum is classified to MDC 4 and the ICD-10-PCS procedure code 0PS044Z is classified to MDC 8, the GROUPER logic assigns this case to the ``unrelated operating room procedures'' set of MS-DRGs.

    During our review of ICD-10-CM diagnosis code Q67.6, we also reviewed additional ICD-10-CM diagnosis codes in the Q65 through Q79 code range to determine if there might be other conditions classified to MDC 4 that describe congenital malformations and deformities of the musculoskeletal system. We identified the following six ICD-10-CM diagnosis codes:

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

    ICD-10-CM code Code description

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

    Q67.7..................... Pectus carinatum.

    Q76.6..................... Other congenital malformations of ribs.

    Q76.7..................... Congenital malformation of sternum.

    Q76.8..................... Other congenital malformations of bony

    thorax.

    Q76.9..................... Congenital malformation of bony thorax,

    unspecified.

    Q77.2..................... Short rib syndrome.

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

    Page 20243

    We are proposing to reassign ICD-10-CM diagnosis code Q67.6, as well as the additional six ICD-10-CM diagnosis codes above describing congenital musculoskeletal conditions, from MDC 4 to MDC 8 where other related congenital conditions that correspond to the musculoskeletal system are classified, as discussed further below.

    We identified other related ICD-10-CM diagnosis codes that are currently assigned to MDC 8 in categories Q67 (Congenital musculoskeletal deformities of head, face, spine and chest), Q76 (Congenital malformations of spine and bony thorax), and Q77 (Osteochondrodysplasia with defects of growth of tubular bones and spine) that are listed in the following table.

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

    ICD-10-CM code Code description

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

    Q67.0..................... Congenital facial asymmetry.

    Q67.1..................... Congenital compression facies.

    Q67.2..................... Dolichocephaly.

    Q67.3..................... Plagiocephaly.

    Q67.4..................... Other congenital deformities of skull, face

    and jaw.

    Q67.5..................... Congenital deformity of spine.

    Q67.8..................... Other congenital deformities of chest.

    Q76.1..................... Klippel-Feil syndrome.

    Q76.2..................... Congenital spondylolisthesis.

    Q76.3..................... Congenital scoliosis due to congenital bony

    malformation.

    Q76.411................... Congenital kyphosis, occipito-atlanto-axial

    region.

    Q76.412................... Congenital kyphosis, cervical region.

    Q76.413................... Congenital kyphosis, cervicothoracic region.

    Q76.414................... Congenital kyphosis, thoracic region.

    Q76.415................... Congenital kyphosis, thoracolumbar region.

    Q76.419................... Congenital kyphosis, unspecified region.

    Q76.425................... Congenital lordosis, thoracolumbar region.

    Q76.426................... Congenital lordosis, lumbar region.

    Q76.427................... Congenital lordosis, lumbosacral region.

    Q76.428................... Congenital lordosis, sacral and

    sacrococcygeal region.

    Q76.429................... Congenital lordosis, unspecified region.

    Q76.49.................... Other congenital malformations of spine, not

    associated with scoliosis.

    Q76.5..................... Cervical rib.

    Q77.0..................... Achondrogenesis.

    Q77.1..................... Thanatophoric short stature.

    Q77.3..................... Chondrodysplasia punctate.

    Q77.4..................... Achondroplasia.

    Q77.5..................... Diastrophic dysplasia.

    Q77.6..................... Chondroectodermal dysplasia.

    Q77.7..................... Spondyloepiphyseal dysplasia.

    Q77.8..................... Other osteochondrodysplasia with defects of

    growth of tubular bones and spine.

    Q77.9..................... Osteochondrodysplasia with defects of growth

    of tubular bones and spine, unspecified.

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

    Next, we analyzed the MS-DRG assignments for the related codes listed above and found that cases with the following conditions are assigned to MS-DRGs 551 and 552 (Medical Back Problems with and without MCC, respectively) under MDC 8.

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

    ICD-10-CM code Code description

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

    Q76.2..................... Congenital spondylolisthesis.

    Q76.411................... Congenital kyphosis, occipito-atlanto-axial

    region.

    Q76.412................... Congenital kyphosis, cervical region.

    Q76.413................... Congenital kyphosis, cervicothoracic region.

    Q76.414................... Congenital kyphosis, thoracic region.

    Q76.415................... Congenital kyphosis, thoracolumbar region.

    Q76.419................... Congenital kyphosis, unspecified region.

    Q76.49.................... Other congenital malformations of spine, not

    associated with scoliosis.

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

    The remaining conditions shown below are assigned to MS-DRGs 564, 565, and 566 (Other Musculoskeletal System and Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC, respectively) under MDC 8.

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

    ICD-10-CM code Code description

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

    Q67.0..................... Congenital facial asymmetry.

    Q67.1..................... Congenital compression facies.

    Q67.2..................... Dolichocephaly.

    Q67.3..................... Plagiocephaly.

    Page 20244

    Q67.4..................... Other congenital deformities of skull, face

    and jaw.

    Q67.5..................... Congenital deformity of spine.

    Q67.8..................... Other congenital deformities of chest.

    Q76.1..................... Klippel-Feil syndrome.

    Q76.3..................... Congenital scoliosis due to congenital bony

    malformation.

    Q76.425................... Congenital lordosis, thoracolumbar region.

    Q76.426................... Congenital lordosis, lumbar region.

    Q76.427................... Congenital lordosis, lumbosacral region.

    Q76.428................... Congenital lordosis, sacral and

    sacrococcygeal region.

    Q76.429................... Congenital lordosis, unspecified region.

    Q76.5..................... Cervical rib.

    Q77.0..................... Achondrogenesis.

    Q77.1..................... Thanatophoric short stature.

    Q77.3..................... Chondrodysplasia punctate.

    Q77.4..................... Achondroplasia.

    Q77.5..................... Diastrophic dysplasia.

    Q77.6..................... Chondroectodermal dysplasia.

    Q77.7..................... Spondyloepiphyseal dysplasia.

    Q77.8..................... Other osteochondrodysplasia with defects of

    growth of tubular bones and spine.

    Q77.9..................... Osteochondrodysplasia with defects of growth

    of tubular bones and spine, unspecified.

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

    As a result of our review, we are proposing to reassign ICD-10-CM diagnosis code Q67.6, as well as the additional six ICD-10-CM diagnosis codes above describing congenital musculoskeletal conditions, from MDC 4 to MDC 8 in MS-DRGs 564, 565, and 566. Our clinical advisors agree with this proposed reassignment because it is clinically appropriate and consistent with the other related ICD-10-CM diagnosis codes grouped in the Q65 through Q79 range that describe congenital malformations and deformities of the musculoskeletal system that are classified under MDC 8 in MS-DRGs 564, 565, and 566. By reassigning ICD-10-CM diagnosis code Q67.6 and the additional six ICD-10-CM diagnosis codes listed in the table above from MDC 4 to MDC 8, cases reporting these ICD-10-CM diagnosis codes in combination with the respective ICD-10-PCS procedure code will reflect a more appropriate grouping from a clinical perspective because they will now be classified under a surgical musculoskeletal system related MS-DRG and will no longer result in an MS-DRG assignment to the ``unrelated operating room procedures'' surgical class.

    In summary, we are proposing to reassign ICD-10-CM diagnosis codes Q67.6, Q67.7, Q76.6, Q76.7, Q76.8, Q76.9, and Q77.2 from MDC 4 to MDC 8 in MS-DRGs 564, 565, and 566 (Other Musculoskeletal System and Connective Tissue Diagnoses with MCC, with CC, and without CC/MCC, respectively). We are inviting public comments on our proposals.

    We also received a request recommending that CMS reassign cases for sternal fracture repair procedures from MS-DRGs 981, 982, and 983 and from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures with MCC, with CC and without CC/MCC, respectively) under MDC 4 to MS-

    DRGs 515, 516, and 517 under MDC 8. The requester noted that clavicle fracture repair procedures with an internal fixation device group to MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis code describing a fractured clavicle. However, sternal fracture repair procedures with an internal fixation device group to MS-DRGs 981, 982, and 983 or MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM diagnosis code describing a fracture of the sternum. According to the requestor, because the clavicle and sternum are in the same anatomical region of the body, it would appear that assignment to MS-DRGs 515, 516, and 517 would be more appropriate for sternal fracture repair procedures.

    The requestor provided the following list of ICD-10-PCS procedure codes in its request for consideration to reassign to MS-DRGs 515, 516 and 517 when reported with an ICD-10-CM diagnosis code for sternal fracture.

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

    ICD-10-PCS code Code description

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

    0PS000Z................... Reposition sternum with rigid plate internal

    fixation device, open approach.

    0PS004Z................... Reposition sternum with internal fixation

    device, open approach.

    0PS00ZZ................... Reposition sternum, open approach.

    0PS030Z................... Reposition sternum with rigid plate internal

    fixation device, percutaneous approach.

    0PS034Z................... Reposition sternum with internal fixation

    device, percutaneous approach.

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

    We note that the above five ICD-10-PCS procedure codes that may be reported to describe a sternal fracture repair are already assigned to MS-DRGs 515, 516, and 517 under MDC 8. In addition, ICD-10-PCS procedure codes 0PS000Z and 0PS030Z are assigned to MS-DRGs 166, 167 and 168 under MDC 4.

    As noted in the previous discussion, whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS-DRG assignment to a surgical class referred to as ``unrelated operating room procedures.'' In the examples provided by the requestor, when the ICD-10-CM diagnosis code describing a sternal fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a sternal fracture repair procedure is classified under MDC 8, the GROUPER logic assigns these cases to the ``unrelated operating room procedures'' group of MS-DRGs (981,

    Page 20245

    982, and 983) and when the ICD-10-CM diagnosis code describing a sternal fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a sternal repair procedure is also classified under MDC 4, the GROUPER logic assigns these cases to MS-DRG 166, 167, or 168.

    For our review of this grouping issue and the request to have procedures for sternal fracture repairs assigned to MDC 8, we analyzed the ICD-10-CM diagnosis codes describing a sternal fracture currently classified under MDC 4. We identified 10 ICD-10-CM diagnosis codes describing a sternal fracture with an ``initial encounter'' classified under MDC 4 that are listed in the following table.

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

    ICD-10-CM code Code description

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

    S22.20XA.................. Unspecified fracture of sternum, initial

    encounter for closed fracture.

    S22.20XB.................. Unspecified fracture of sternum, initial

    encounter for open fracture.

    S22.21XA.................. Fracture of manubrium, initial encounter for

    closed fracture.

    S22.21XB.................. Fracture of manubrium, initial encounter for

    open fracture.

    S22.22XA.................. Fracture of body of sternum, initial

    encounter for closed fracture.

    S22.22XB.................. Fracture of body of sternum, initial

    encounter for open fracture.

    S22.23XA.................. Sternal manubrial dissociation, initial

    encounter for closed fracture.

    S22.23XB.................. Sternal manubrial dissociation, initial

    encounter for open fracture.

    S22.24XA.................. Fracture of xiphoid process, initial

    encounter for closed fracture.

    S22.24XB.................. Fracture of xiphoid process, initial

    encounter for open fracture.

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

    Our analysis of this grouping issue confirmed that when 1 of the 10 ICD-10-CM diagnosis codes describing a sternal fracture listed in the table above from MDC 4 is reported as a principal diagnosis with an ICD-10-PCS procedure code for a sternal repair procedure from MDC 8, these cases group to MS-DRG 981, 982, or 983. We also confirmed that when 1 of the 10 ICD-10-CM diagnosis codes describing a sternal fracture listed in the table above from MDC 4 is reported as a principal diagnosis with an ICD-10-PCS procedure code for a sternal repair procedure from MDC 4, these cases group to MS-DRG 166, 167 or 168.

    Our clinical advisors agree with the requested reclassification of ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB describing a sternal fracture with an initial encounter from MDC 4 to MDC 8. They advised that this requested reclassification is clinically appropriate because it is consistent with the other related ICD-10-CM diagnosis codes that describe fractures of the sternum and which are classified under MDC 8. The ICD-10-CM diagnosis codes describing a sternal fracture currently classified under MDC 8 to MS-DRGs 564, 565, and 566 are listed in the following table.

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

    ICD-10-CM code Code description

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

    S22.20XD.................. Unspecified fracture of sternum, subsequent

    encounter for fracture with routine

    healing.

    S22.20XG.................. Unspecified fracture of sternum, subsequent

    encounter for fracture with delayed

    healing.

    S22.20XK.................. Unspecified fracture of sternum, subsequent

    encounter for fracture with nonunion.

    S22.20XS.................. Unspecified fracture of sternum, sequela.

    S22.21XD.................. Fracture of manubrium, subsequent encounter

    for fracture with routine healing.

    S22.21XG.................. Fracture of manubrium, subsequent encounter

    for fracture with delayed healing.

    S22.21XK.................. Fracture of manubrium, subsequent encounter

    for fracture with nonunion.

    S22.21XS.................. Fracture of manubrium, sequela.

    S22.22XD.................. Fracture of body of sternum, subsequent

    encounter for fracture with routine

    healing.

    S22.22XG.................. Fracture of body of sternum, subsequent

    encounter for fracture with delayed

    healing.

    S22.22XK.................. Fracture of body of sternum, subsequent

    encounter for fracture with nonunion.

    S22.22XS.................. Fracture of body of sternum, sequela.

    S22.23XD.................. Sternal manubrial dissociation, subsequent

    encounter for fracture with routine

    healing.

    S22.23XG.................. Sternal manubrial dissociation, subsequent

    encounter for fracture with delayed

    healing.

    S22.23XK.................. Sternal manubrial dissociation, subsequent

    encounter for fracture with nonunion.

    S22.23XS.................. Sternal manubrial dissociation, sequela.

    S22.24XD.................. Fracture of xiphoid process, subsequent

    encounter for fracture with routine

    healing.

    S22.24XG.................. Fracture of xiphoid process, subsequent

    encounter for fracture with delayed

    healing.

    S22.24XK.................. Fracture of xiphoid process, subsequent

    encounter for fracture with nonunion.

    S22.24XS.................. Fracture of xiphoid process, sequela.

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

    By reclassifying the 10 ICD-10-CM diagnosis codes listed in the table earlier in this section describing sternal fracture codes with an ``initial encounter'' from MDC 4 to MDC 8, the cases reporting these ICD-10-CM diagnosis codes in combination with the respective ICD-10-PCS procedure codes will reflect a more appropriate grouping from a clinical perspective and will no longer result in an MS-DRG assignment to the ``unrelated operating room procedures'' surgical class when reported with a surgical procedure classified under MDC 8.

    Therefore, we are proposing to reassign ICD-10-CM diagnosis codes S22.20XA, S22.20XB, S22.21XA, S22.21XB, S22.22XA, S22.22XB, S22.23XA, S22.23XB, S22.24XA, and S22.24XB from under MDC 4 to MDC 8 to MS-DRGs 564, 565, and 566. We are inviting public comments on our proposals.

    In addition, we received a request recommending that CMS reassign cases for rib fracture repair procedures from MS-DRGs 981, 982, and 983, and from MS-DRGs 166, 167 and 168 (Other Respiratory System O.R. Procedures

    Page 20246

    with MCC, with CC, and without CC/MCC, respectively) under MDC 4 to MS-

    DRGs 515, 516, and 517 under MDC 8. The requestor noted that clavicle fracture repair procedures with an internal fixation device group to MS-DRGs 515, 516, and 517 when reported with an ICD-10-CM diagnosis code describing a fractured clavicle. However, rib fracture repair procedures with an internal fixation device group to MS-DRGs 981, 982, and 983 or to MS-DRGs 166, 167 and 168 when reported with an ICD-10-CM diagnosis code describing a rib fracture. According to the requestor, because the clavicle and ribs are in the same anatomical region of the body, it would appear that assignment to MS-DRGs 515, 516, and 517 would be more appropriate for rib fracture repair procedures.

    The requestor provided the following list of 10 ICD-10-PCS procedure codes in its request for consideration for reassignment to MS-DRGs 515, 516 and 517 when reported with an ICD-10-CM diagnosis code for rib fracture.

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

    ICD-10-PCS code Code description

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

    0PH104Z................... Insertion of internal fixation device into 1

    to 2 ribs, open approach.

    0PH134Z................... Insertion of internal fixation device into 1

    to 2 ribs, percutaneous approach.

    0PH144Z................... Insertion of internal fixation device into 1

    to 2 ribs, percutaneous endoscopic

    approach.

    0PH204Z................... Insertion of internal fixation device into 3

    or more ribs, open approach.

    0PH234Z................... Insertion of internal fixation device into 3

    or more ribs, percutaneous approach.

    0PH244Z................... Insertion of internal fixation device into 3

    or more ribs, percutaneous endoscopic

    approach.

    0PS104Z................... Reposition 1 to 2 ribs with internal

    fixation device, open approach.

    0PS134Z................... Reposition 1 to 2 ribs with internal

    fixation device, percutaneous approach.

    0PS204Z................... Reposition 3 or more ribs with internal

    fixation, device, open approach.

    0PS234Z................... Reposition 3 or more ribs with internal

    fixation device, percutaneous approach.

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

    We note that the above 10 ICD-10-PCS procedure codes that may be reported to describe a rib fracture repair are already assigned to MS-

    DRGs 515, 516, and 517 under MDC 8. In addition, 6 of the 10 ICD 10-PCS procedure codes listed above (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z and 0PH244Z) are also assigned to MS-DRGs 166, 167, and 168 under MDC 4.

    As noted in the previous discussions above, whenever there is a surgical procedure reported on a claim, which is unrelated to the MDC to which the case was assigned based on the principal diagnosis, it results in an MS-DRG assignment to a surgical class referred to as ``unrelated operating room procedures.'' In the examples provided by the requestor, when the ICD-10-CM diagnosis code describing a rib fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a rib fracture repair procedure is classified under MDC 8, the GROUPER logic assigns these cases to the ``unrelated operating room procedures'' group of MS-DRGs (981, 982, and 983) and when the ICD-10-

    CM diagnosis code describing a rib fracture is classified under MDC 4 and the ICD-10-PCS procedure code describing a rib repair procedure is also classified under MDC 4, the GROUPER logic assigns these cases to MS-DRG 166, 167, or 168.

    For our review of this grouping issue and the request to have procedures for rib fracture repairs assigned to MDC 8, we analyzed the ICD-10-CM diagnosis codes describing a rib fracture and found that, while some rib fracture ICD-10-CM diagnosis codes are classified under MDC 8 (which would result in those cases grouping appropriately to MS-

    DRGs 515, 516, and 517), there are other ICD-10-CM diagnosis codes that are currently classified under MDC 4. We identified the following ICD-

    10-CM diagnosis codes describing a rib fracture with an initial encounter classified under MDC 4, as listed in the following table.

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

    ICD-10-PCS code Code description

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

    S2231XA................... Fracture of one rib, right side, initial

    encounter for closed fracture.

    S2231XB................... Fracture of one rib, right side, initial

    encounter for open fracture.

    S2232XA................... Fracture of one rib, left side, initial

    encounter for closed fracture.

    S2232XB................... Fracture of one rib, left side, initial

    encounter for open fracture.

    S2239XA................... Fracture of one rib, unspecified side,

    initial encounter for closed fracture.

    S2239XB................... Fracture of one rib, unspecified side,

    initial encounter for open fracture.

    S2241XA................... Multiple fractures of ribs, right side,

    initial encounter for closed fracture.

    S2241XB................... Multiple fractures of ribs, right side,

    initial encounter for open fracture.

    S2242XA................... Multiple fractures of ribs, left side,

    initial encounter for closed fracture.

    S2242XB................... Multiple fractures of ribs, left side,

    initial encounter for open fracture.

    S2243XA................... Multiple fractures of ribs, bilateral,

    initial encounter for closed fracture.

    S2243XB................... Multiple fractures of ribs, bilateral,

    initial encounter for open fracture.

    S2249XA................... Multiple fractures of ribs, unspecified

    side, initial encounter for closed

    fracture.

    S2249XB................... Multiple fractures of ribs, unspecified

    side, initial encounter for open fracture.

    S225XXA................... Flail chest, initial encounter for closed

    fracture.

    S225XXB................... Flail chest, initial encounter for open

    fracture.

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

    Our analysis of this grouping issue confirmed that, when one of the following four ICD-10-PCS procedure codes identified by the requestor (and listed in the table earlier in this section) from MDC 8 (0PS104Z, 0PS134Z, 0PS204Z, or 0PS234Z) is reported to describe a rib fracture repair procedure with a principal diagnosis code for a rib fracture with an initial encounter listed in the table above from MDC 4, these cases group to MS-DRG 981, 982, or 983.

    During our review of those four repositioning of the rib procedure codes, we also identified the following four ICD-10-PCS procedure codes classified

    Page 20247

    to MDC 8 that describe repositioning of the ribs.

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

    ICD-10-PCS code Code description

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

    0PS10ZZ................... Reposition 1 to 2 ribs, open approach.

    0PS144Z................... Reposition 1 to 2 ribs with internal

    fixation device, percutaneous endoscopic

    approach.

    0PS20ZZ................... Reposition 3 or more ribs, open approach.

    0PS244Z................... Reposition 3 or more ribs with internal

    fixation device, percutaneous endoscopic

    approach.

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

    We confirmed that when one of the above four procedure codes is reported with a principal diagnosis code for a rib fracture listed in the table above from MDC 4, these cases also group to MS-DRG 981, 982, or 983.

    Lastly, we confirmed that when one of the six ICD-10-PCS procedure codes describing a rib fracture repair listed in the previous table above from MDC 4 is reported with a principal diagnosis code for a rib fracture with an initial encounter from MDC 4, these cases group to MS-

    DRG 166, 167, or 168.

    In response to the request to reassign the procedure codes that describe a rib fracture repair procedure from MS-DRGs 981, 982, and 983 and from MS-DRGs 166, 167, and 168 under MDC 4 to MS-DRGs 515, 516, and 517 under MDC 8, as discussed above, the 10 ICD-10-PCS procedure codes submitted by the requestor that may be reported to describe a rib fracture repair are already assigned to MS-DRGs 515, 516, and 517 under MDC 8 and 6 of those 10 procedure codes (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) are also assigned to MS-DRGs 166, 167, and 168 under MDC 4.

    We analyzed claims data from the September 2017 update of the FY 2017 MedPAR file for cases reporting a principal diagnosis of a rib fracture (initial encounter) from the list of diagnosis codes shown in the table above with one of the six ICD-10-PCS procedure codes describing the insertion of an internal fixation device into the rib (0PH104Z, 0PH134Z, 0PH144Z, 0PH204Z, 0PH234Z, and 0PH244Z) in MS-DRGs 166, 167, and 168 under MDC 4. Our findings are shown in the table below.

    MS-DRGs for Other Respiratory System O.R. Procedures

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

    Number of Average length

    MS-DRG cases of stay Average costs

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

    MS-DRG 166--All cases........................................... 22,938 10.2 $24,299

    MS-DRG 166--Cases with principal diagnosis of rib fracture(s) 40 11.4 43,094

    and insertion of internal fixation device for the rib(s).......

    MS-DRG 167--All cases........................................... 10,815 5.7 13,252

    MS-DRG 167--Cases with principal diagnosis of rib fracture(s) 10 6.7 30,617

    and insertion of internal fixation device for the rib(s).......

    MS-DRG 168--All cases........................................... 3,242 3.1 9,708

    MS-DRG 168--Cases with principal diagnosis of rib fracture(s) 4 2 21,501

    and insertion of internal fixation device for the rib(s).......

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

    As shown in this table, there were a total of 22,938 cases in MS-

    DRG 166, with an average length of stay of 10.2 days and average costs of $24,299. In MS-DRG 166, we found 40 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 11.4 days and average costs of $43,094. There were a total of 10,815 cases in MS-DRG 167, with an average length of stay of 5.7 days and average costs of $13,252. In MS-DRG 167, we found 10 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 6.7 days and average costs of $30,617. There were a total of 3,242 cases in MS-DRG 168, with an average length of stay of 3.1 days and average costs of $9,708. In MS-DRG 168, we found 4 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), with an average length of stay of 2 days and average costs of $21,501. Overall, for MS-DRGs 166, 167, and 168, there were a total of 54 cases reporting a principal diagnosis of a rib fracture(s) with insertion of an internal fixation device for the rib(s), demonstrating that while rib fractures may require treatment, they are not typically corrected surgically. Our clinical advisors agree with the current assignment of procedure codes to MS-DRGs 166, 167, and 168 that may be reported to describe repair of a rib fracture under MDC 4, as well as the current assignment of procedure codes to MS-DRGs 515, 516, and 517 that may be reported to describe repair of a rib fracture under MDC 8. Our clinical advisors noted that initial, acute rib fractures can cause numerous respiratory related issues requiring various treatments and problems with the healing of a rib fracture are considered musculoskeletal issues.

    We also note that the procedure codes submitted by the requestor may be reported for other indications and they are not restricted to reporting for repair of a rib fracture. Therefore, assignment of these codes to the MDC 4 MS-DRGs and the MDC 8 MS-DRGs is clinically appropriate.

    To address the cases reporting procedure codes describing the repositioning of a rib(s) that are grouping to MS-DRGs 981, 982, and 983 when reported with a principal diagnosis of a rib fracture (initial encounter), we are proposing to add the following eight ICD-10-PCS procedure codes currently assigned to MDC 8 into MDC 4, in MS-DRGs 166, 167 and 168.

    Page 20248

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

    ICD-10-PCS code Code description

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

    0PS104Z................... Reposition 1 to 2 ribs with internal

    fixation device, open approach.

    0PS10ZZ................... Reposition 1 to 2 ribs, open approach.

    0PS134Z................... Reposition 1 to 2 ribs with internal

    fixation device, percutaneous approach.

    0PS144Z................... Reposition 1 to 2 ribs with internal

    fixation device, percutaneous endoscopic

    approach.

    0PS204Z................... Reposition 3 or more ribs with internal

    fixation device, open approach.

    0PS20ZZ................... Reposition 3 or more ribs, open approach.

    0PS234Z................... Reposition 3 or more ribs with internal

    fixation device, percutaneous approach.

    0PS244Z................... Reposition 3 or more ribs with internal

    fixation device, percutaneous endoscopic

    approach.

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

    Our clinical advisors agree with this proposed addition to the classification structure because it is clinically appropriate and consistent with the other related ICD-10-PCS procedure codes that may be reported to describe rib fracture repair procedures with the insertion of an internal fixation device and are classified under MDC 4.

    By adding the eight ICD-10-PCS procedure codes describing repositioning of the rib(s) that may be reported to describe a rib fracture repair procedure under the classification structure for MDC 4, these cases will no longer result in an MS-DRG assignment to the ``unrelated operating room procedures'' surgical class when reported with a diagnosis code under MDC 4.

    We are inviting public comments on our proposals.

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

    In September 1985, the ICDdash9dashCM 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 (CDC), and CMS, charged with maintaining and updating the ICDdash9dashCM system. The final update to ICD-9-CM codes was 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 nondashFederal educational programs and other 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 website 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 website 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 2019 at a public meeting held on September 12-13, 2017, and finalized the coding changes after consideration of comments received at the meetings and in writing by November 13, 2017.

    The Committee held its 2018 meeting on March 6-7, 2018. The deadline for submitting comments on these code proposals is scheduled for April 6, 2018. 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 2018 would be included in the October 1, 2018 update to ICD-10-CM/ICD-10-

    PCS. As discussed in earlier sections of the preamble of the proposed rule, there are new, revised, 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, Table 6C.--Invalid Diagnosis Codes, Table 6D.--Invalid Procedure Codes, Table 6E.--Revised Diagnosis Code Titles, and Table 6F.--Revised Procedure Code Titles for this proposed rule, which are available via the Internet on the CMS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. The code titles are adopted as part of the ICD-10 (previously ICD-9-CM) Coordination and Maintenance Committee process. Therefore, although we make the code titles available for the IPPS proposed rule, they are not subject to comment in the proposed rule. We are inviting public comments on the MDC and MS-DRG assignments for the new diagnosis and procedure codes as set forth in Table 6A--New Diagnosis Codes and Table 6B.--New Procedure Codes. In addition, we are inviting public comments on the proposed severity level designations for the new diagnosis codes as set forth in Table 6A. and the proposed O.R. status for the new procedure codes as set forth in Table 6B. Because of the length of these tables, they are not published in the Addendum to this proposed rule. Rather, they are available via the Internet as discussed in section VI. of the Addendum to this proposed rule.

    Live Webcast recordings of the discussions of procedure codes at the Committee's September 12-13, 2017 meeting and March 6-7, 2018 meeting can be obtained from the CMS website at: http://cms.hhs.gov/

    Medicare/Coding/ICD9ProviderDiagnosticCodes/index.html?redirect=/

    icd9ProviderDiagnosticCodes/

    Page 20249

    03_meetings.asp. The minutes of the discussions of diagnosis codes at the September 12-13, 2017 meeting and March 6-7, 2018 meeting can be found at: http://www.cdc.gov/nchs/icd/icd10cm_maintenance.html. These websites 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, CodashChairperson, ICD-

    10 Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo Road, Hyattsville, MD 20782. Comments may be sent by Edashmail to: email protected.

    Questions and comments concerning the procedure codes should be submitted via Edashmail to: email protected.

    In the September 7, 2001 final rule implementing the IPPS new technology adddashon 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 108dash173 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 diagnosisdashrelated group classification) until the fiscal year that begins after such date. This requirement improves the recognition of new technologies under the IPPS 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 middashyear 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 website. 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 websites 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 5dashmonth 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 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 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 adddashon 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 not any requests approved for an expedited April l, 2018 implementation of a code at the September 12-13, 2017 Committee meeting. Therefore, there are not any new codes for implementation on April 1, 2018.

    ICD-9-CM addendum and code title information is published on the CMS website 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 website at: http://www.cms.gov/Medicare/Coding/ICD10/index.html. 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.

    Information on ICD-10-CM diagnosis codes, along with the Official ICD-10-CM Coding Guidelines, can also be found on the CDC website at: http://www.cdc.gov/nchs/icd/icd10.htm. Additionally, information on new, revised, and deleted ICD-10-CM/ICD-10-PCS codes is provided to the AHA for publication in the Coding Clinic for ICD-10. AHA also distributes coding update information to publishers and software vendors.

    The following chart shows the number of ICD-10-CM and ICD-10-PCS codes and code changes since FY 2016 when ICD-10 was implemented.

    Total Number of Codes and Changes in Total Number of Codes per Fiscal

    Year ICD-10-CM and ICD-10-PCS Codes

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

    Fiscal year Number Change

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

    FY 2016:

    ICD-10-CM......................................... 69,823 ........

    ICD-10-PCS........................................ 71,974 ........

    FY 2017:

    ICD-10-CM......................................... 71,486 +1,663

    ICD-10-PCS........................................ 75,789 +3,815

    Page 20250

    FY 2018:

    ICD-10-CM......................................... 71,704 +218

    ICD-10-PCS........................................ 78,705 +2,916

    Proposed FY 2019:

    ICD-10-CM......................................... 71,902 +198

    ICD-10-PCS........................................ 78,533 -172

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

    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.

    At the September 12-13, 2017 and March 6-7, 2018 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, 2018. We invited public comments on any code requests discussed at the September 12-13, 2017 and March 6-7, 2018 Committee meetings for implementation as part of the October 1, 2018 update. The deadline for commenting on code proposals discussed at the September 12-13, 2017 Committee meeting was November 13, 2017. The deadline for commenting on code proposals discussed at the March 6-7, 2018 Committee meeting was April 6, 2018.

    19. Proposed Replaced Devices Offered Without Cost or With a Credit

  37. 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 subsequently failed or was 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.

  38. Proposed Changes for FY 2019

    In this FY 2019 IPPS/LTCH PPS proposed rule, for FY 2019, we are not proposing to add any MS-DRGs to the policy for replaced devices offered without cost or with a credit. We are proposing to continue to include the existing MS-DRGs currently subject to the policy as displayed in the table below.

    We are soliciting public comments on our proposal to continue to include the existing MS-DRGs currently subject to the policy for replaced devices offered without cost or with credit and to not add any additional MS-DRGs to the policy.

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

    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 or Acute

    Complex CNS Principal

    Diagnosis with MCC or

    Chemotherapy Implant or

    Epilepsy with

    Neurostimulator.

    1.......................... 024 Craniotomy with Major

    Device Implant or 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

    Procedures with MCC.

    1.......................... 041 Peripheral, Cranial Nerve &

    Other Nervous System

    Procedures with CC or

    Peripheral

    Neurostimulator.

    1.......................... 042 Peripheral, Cranial Nerve &

    Other Nervous System

    Procedures 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

    Catheterization with MCC.

    5.......................... 217 Cardiac Valve & Other Major

    Cardiothoracic Procedure

    with Cardiac

    Catheterization with CC.

    5.......................... 218 Cardiac Valve & Other Major

    Cardiothoracic Procedure

    with Cardiac

    Catheterization without CC/

    MCC.

    5.......................... 219 Cardiac Valve & Other Major

    Cardiothoracic Procedure

    without Cardiac

    Catheterization with MCC.

    5.......................... 220 Cardiac Valve & Other Major

    Cardiothoracic Procedure

    without Cardiac

    Catheterization with CC.

    5.......................... 221 Cardiac Valve & Other Major

    Cardiothoracic Procedure

    without Cardiac

    Catheterization without CC/

    MCC.

    5.......................... 222 Cardiac Defibrillator

    Implant with Cardiac

    Catheterization with AMI/

    Heart Failure/Shock with

    MCC.

    5.......................... 223 Cardiac Defibrillator

    Implant with Cardiac

    Catheterization with AMI/

    Heart Failure/Shock

    without MCC.

    5.......................... 224 Cardiac Defibrillator

    Implant with Cardiac

    Catheterization without

    AMI/Heart Failure/Shock

    with MCC.

    5.......................... 225 Cardiac Defibrillator

    Implant with Cardiac

    Catheterization without

    AMI/Heart Failure/Shock

    without MCC.

    5.......................... 226 Cardiac Defibrillator

    Implant without Cardiac

    Catheterization with MCC.

    5.......................... 227 Cardiac Defibrillator

    Implant without Cardiac

    Catheterization 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.......................... 265 AICD Lead Procedures.

    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.

    Page 20251

    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 Hip and Knee Joint

    Replacement or

    Reattachment of Lower

    Extremity with MCC or

    Total Ankle Replacement.

    8.......................... 470 Major Hip and Knee Joint

    Replacement or

    Reattachment of Lower

    Extremity without MCC.

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

    20. Other Policy Changes: Other Operating Room (O.R.) and Non-O.R. Issues

    In this proposed rule, we are addressing requests that we received regarding changing the designation of specific ICD-10-PCS procedure codes from non-O.R. to O.R. procedures, or changing the designation from O.R. procedure to non-O.R. procedure. In cases where we are proposing to change the designation of procedure codes from non-O.R. to O.R. procedures, we also are proposing one or more MS-DRGs with which these procedures are clinically aligned and to which the procedure code would be assigned. We generally examine the MS-DRG assignment for similar procedures, such as the other approaches for that procedure, to determine the most appropriate MS-DRG assignment for procedures newly designated as O.R. procedures. We are inviting public comments on these proposed MS-DRG assignments.

    We also note that many MS-DRGs require the presence of any O.R. procedure. As a result, cases with a principal diagnosis associated with a particular MS-DRG would, by default, be grouped to that MS-DRG. Therefore, we do not list these MS-DRGs in our discussion below. Instead, we only discuss MS-DRGs that require explicitly adding the relevant procedures codes to the GROUPER logic in order for those procedure codes to affect the MS-DRG assignment as intended. In addition, cases that contain O.R. procedures will map to MS-DRGs 981, 982, or 983 (Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 987, 988, or 989 (Non-Extensive O.R. Procedure Unrelated to Principal Diagnosis with MCC, with CC, and without CC/MCC, respectively) when they do not contain a principal diagnosis that corresponds to one of the MDCs to which that procedure is assigned. These procedures need not be assigned to MS-DRGs 981 through 989 in order for this to occur. Therefore, if requestors included some or all of MS-DRGs 981 through 989 in their request or included MS-DRGs that require the presence of any O.R. procedure, we did not specifically address that aspect in summarizing their request or our response to the request in the section below.

  39. Percutaneous and Percutaneous Endoscopic Excision of Brain and Cerebral Ventricle

    One requestor identified 22 ICD-10-PCS procedure codes that describe procedures involving transcranial brain and cerebral ventricle excision that the requestor stated would generally require the resources of an operating room. The 22 procedure codes are listed in the following table.

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

    ICD-10-PCS procedure code Code description

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

    00B03ZX................... Excision of brain, percutaneous approach,

    diagnostic.

    00B13ZX................... Excision of cerebral meninges, percutaneous

    approach, diagnostic.

    00B23ZX................... Excision of dura mater, percutaneous

    approach, diagnostic.

    00B63ZX................... Excision of cerebral ventricle, percutaneous

    approach, diagnostic.

    00B73ZX................... Excision of cerebral hemisphere,

    percutaneous approach, diagnostic.

    00B83ZX................... Excision of basal ganglia, percutaneous

    approach, diagnostic.

    00B93ZX................... Excision of thalamus, percutaneous approach,

    diagnostic.

    00BA3ZX................... Excision of hypothalamus, percutaneous

    approach, diagnostic.

    00BB3ZX................... Excision of pons, percutaneous approach,

    diagnostic.

    00BC3ZX................... Excision of cerebellum, percutaneous

    approach, diagnostic.

    00BD3ZX................... Excision of medulla oblongata, percutaneous

    approach, diagnostic.

    00B04ZX................... Excision of brain, percutaneous endoscopic

    approach, diagnostic.

    00B14ZX................... Excision of cerebral meninges, percutaneous

    endoscopic approach, diagnostic.

    00B24ZX................... Excision of dura mater, percutaneous

    endoscopic approach, diagnostic.

    00B64ZX................... Excision of cerebral ventricle, percutaneous

    endoscopic approach, diagnostic.

    00B74ZX................... Excision of cerebral hemisphere,

    percutaneous endoscopic approach,

    diagnostic.

    00B84ZX................... Excision of basal ganglia, percutaneous

    endoscopic approach, diagnostic.

    00B94ZX................... Excision of thalamus, percutaneous

    endoscopic approach, diagnostic.

    00BA4ZX................... Excision of hypothalamus, percutaneous

    endoscopic approach, diagnostic.

    00BB4ZX................... Excision of pons, percutaneous endoscopic

    approach, diagnostic.

    00BC4ZX................... Excision of cerebellum, percutaneous

    endoscopic approach, diagnostic.

    00BD4ZX................... Excision of medulla oblongata, percutaneous

    endoscopic approach, diagnostic.

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

    The requestor stated that, although percutaneous burr hole biopsies are performed through smaller openings in the skull than open burr hole biopsies, these procedures require drilling or cutting through the skull using sterile technique with anesthesia for pain control. The requestor also noted that similar procedures involving percutaneous drainage of the subdural space are currently classified as O.R. procedures in Version 35 of the ICD-10

    Page 20252

    MS-DRGs. However, these 22 ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that the 22 ICD-10-PCS codes be designated as O.R. procedures and assigned to MS-DRGs 25, 26, and 27 (Craniotomy and Endovascular Intracranial Procedures with MCC, with CC, and without CC/

    MCC, respectively).

    We agree with the requestor that these procedures typically require the resources of an operating room. Therefore, we are proposing to add these 22 ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 25, 26, and 27 in MDC 1 (Diseases and Disorders of the Nervous System). We are inviting public comments on our proposal.

  40. Open Extirpation of Subcutaneous Tissue and Fascia

    One requestor identified 22 ICD-10-PCS procedure codes that describe procedures involving open extirpation of subcutaneous tissue and fascia that the requestor stated would generally require the resources of an operating room. The 22 procedure codes are listed in the following table.

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

    ICD-10-PCS procedure code Code description

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

    0JC00ZZ................... Extirpation of matter from scalp

    subcutaneous tissue and fascia, open

    approach.

    0JC10ZZ................... Extirpation of matter from face subcutaneous

    tissue and fascia, open approach.

    0JC40ZZ................... Extirpation of matter from right neck

    subcutaneous tissue and fascia, open

    approach.

    0JC50ZZ................... Extirpation of matter from left neck

    subcutaneous tissue and fascia, open

    approach.

    0JC60ZZ................... Extirpation of matter from chest

    subcutaneous tissue and fascia, open

    approach.

    0JC70ZZ................... Extirpation of matter from back subcutaneous

    tissue and fascia, open approach.

    0JC80ZZ................... Extirpation of matter from abdomen

    subcutaneous tissue and fascia, open

    approach.

    0JC90ZZ................... Extirpation of matter from buttock

    subcutaneous tissue and fascia, open

    approach.

    0JCB0ZZ................... Extirpation of matter from perineum

    subcutaneous tissue and fascia, open

    approach.

    0JCC0ZZ................... Extirpation of matter from pelvic region

    subcutaneous tissue and fascia, open

    approach.

    0JCD0ZZ................... Extirpation of matter from right upper arm

    subcutaneous tissue and fascia, open

    approach.

    0JCF0ZZ................... Extirpation of matter from left upper arm

    subcutaneous tissue and fascia, open

    approach.

    0JCG0ZZ................... Extirpation of matter from right lower arm

    subcutaneous tissue and fascia, open

    approach.

    0JCH0ZZ................... Extirpation of matter from left lower arm

    subcutaneous tissue and fascia, open

    approach.

    0JCJ0ZZ................... Extirpation of matter from right hand

    subcutaneous tissue and fascia, open

    approach.

    0JCK0ZZ................... Extirpation of matter from left hand

    subcutaneous tissue and fascia, open

    approach.

    0JCL0ZZ................... Extirpation of matter from right upper leg

    subcutaneous tissue and fascia, open

    approach.

    0JCM0ZZ................... Extirpation of matter from left upper leg

    subcutaneous tissue and fascia, open

    approach.

    0JCN0ZZ................... Extirpation of matter from right lower leg

    subcutaneous tissue and fascia, open

    approach.

    0JCP0ZZ................... Extirpation of matter from left lower leg

    subcutaneous tissue and fascia, open

    approach.

    0JCQ0ZZ................... Extirpation of matter from right foot

    subcutaneous tissue and fascia, open

    approach.

    0JCR0ZZ................... Extirpation of matter from left foot

    subcutaneous tissue and fascia, open

    approach.

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

    The requestor stated that these procedures involve making an open incision deeper than the skin under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity are often required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, and open nonexcisional debridement/extraction of subcutaneous tissue and fascia are designated as O.R. procedures, and that these 22 procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-

    DRGs Version 35, these 22 ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that the 22 ICD-10-PCS procedure codes listed in the table be assigned to MS-DRGs 579, 580, and 581 (Other Skin, Subcutaneous Tissue and Breast Procedures with MCC, CC, and without CC/MCC, respectively).

    We disagree with the requestor that these procedures typically require the resources of an operating room. Our clinical advisors indicated that these open extirpation procedures are minor procedures that can be performed outside of an operating room, such as in a radiology suite with CT or MRI guidance. We disagree that these procedures are similar to open drainage procedures. Therefore, we are proposing to maintain the status of these 22 ICD-10-PCS procedure codes as non-O.R. procedures. We are inviting public comments on our proposal.

  41. Open Scrotum and Breast Procedures

    One requestor identified 13 ICD-10-PCS procedure codes that describe procedures involving open drainage, open extirpation, and open debridement/excision of the scrotum and breast. The requestor stated that the 13 procedures listed in the following table involve making an open incision deeper than the skin under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity are often required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, open nondashexcisional debridement/extraction of subcutaneous tissue and fascia, and open excision of breast are designated as O.R. procedures, and that these 13 procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 35, these 13 ICD-10-

    PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment.

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

    ICD-10-PCS procedure code Code description

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

    0V950ZZ................... Drainage of scrotum, open approach.

    0VB50ZZ................... Excision of scrotum, open approach.

    0VC50ZZ................... Extirpation of matter from scrotum, open

    approach.

    Page 20253

    0H9U0ZZ................... Drainage of left breast, open approach.

    0H9T0ZZ................... Drainage of right breast, open approach.

    0H9V0ZZ................... Drainage of bilateral breast, open approach.

    0H9W0ZZ................... Drainage of right nipple, open approach.

    0H9X0ZZ................... Drainage of left nipple, open approach.

    0HCT0ZZ................... Extirpation of matter from right breast,

    open approach.

    0HCU0ZZ................... Extirpation of matter from left breast, open

    approach.

    0HCV0ZZ................... Extirpation of matter from bilateral breast,

    open approach.

    0HCW0ZZ................... Extirpation of matter from right nipple,

    open approach.

    0HCX0ZZ................... Extirpation of matter from left nipple, open

    approach.

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

    The requestor recommended that the 3 ICD-10-PCS scrotal procedure codes be assigned to MS-DRGs 717 and 718 (Other Male Reproductive System O.R. Procedures Except Malignancy with CC/MCC and without CC/

    MCC, respectively) and the 10 breast procedure codes be assigned to MS-

    DRGs 584 and 585 (Breast Biopsy, Local Excision and Other Breast Procedures with CC/MCC and without CC/MCC, respectively).

    We agree with the requestor that these procedures typically require the resources of an operating room due to the nature of breast and scrotal tissue, as well as with the MS-DRG assignments recommended by the requestor. In addition, we believe that the scrotal codes should also be assigned to MS-DRGs 715 and 716 (Other Male Reproductive System O.R. Procedures for Malignancy with CC/MCC and without CC/MCC, respectively). Therefore, we are proposing to add these 13 ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-

    DRG Index as O.R. procedures, assigned to MS-DRGs 715, 716, 717, and 718 in MDC 12 (Diseases and Disorders of the Male Reproductive System) for the scrotal procedure codes and assigned to MS-DRGs 584 and 585 in MDC 9 (Diseases and Disorders of the Skin, Subcutaneous Tissue & Breast) for the breast procedure codes. We are inviting public comments on our proposal.

  42. Open Parotid Gland and Submaxillary Gland Procedures

    One requestor identified eight ICD-10-PCS procedure codes that describe procedures involving open drainage and open extirpation of the parotid or submaxillary glands, shown in the following table.

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

    ICD-10-PCS procedure code Code description

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

    0C980ZZ................... Drainage of right parotid gland, open

    approach.

    0C990ZZ................... Drainage of left parotid gland, open

    approach.

    0C9G0ZZ................... Drainage of right submaxillary gland, open

    approach.

    0C9H0ZZ................... Drainage of left submaxillary gland, open

    approach.

    0CC80ZZ................... Extirpation of matter from right parotid

    gland, open approach.

    0CC90ZZ................... Extirpation of matter from left parotid

    gland, open approach.

    0CCG0ZZ................... Extirpation of matter from right

    submaxillary gland, open approach.

    0CCH0ZZ................... Extirpation of matter from left submaxillary

    gland, open approach.

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

    The requestor stated that these procedures involve making an open incision through subcutaneous tissue, fascia, and potentially muscle, to reach and incise the parotid or submaxillary gland under general anesthesia, and that irrigation and/or excision of devitalized tissue or cavity may be required and are considered inherent to the procedure. The requestor also stated that open drainage of subcutaneous tissue and fascia, open excisional debridement of subcutaneous tissue and fascia, and open nondashexcisional debridement/extraction of subcutaneous tissue and fascia are designated as O.R. procedures, and that these eight procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 35, these eight ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor requested that these procedures be assigned to MS-DRG 139 (Salivary Gland Procedures).

    We agree with the requestor that these eight procedures typically require the resources of an operating room. Therefore, we are proposing to add these ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRG 139 in MDC 3 (Diseases and Disorders of the Ear, Nose, Mouth and Throat). We are inviting public comments on our proposal.

  43. Removal and Reinsertion of Spacer; Knee Joint and Hip Joint

    One requestor identified four sets of ICD-10-PCS procedure code combinations (eight ICD-10-PCS codes) that describe procedures involving open removal and insertion of spacers into the knee or hip joints, shown in the following table. The requestor stated that these are invasive procedures involving removal and reinsertion of devices into major joints and are performed in the operating room under general anesthesia. In the ICD-10 MS-DRGs Version 35, these four ICD-10-PCS procedure code combinations are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that CMS determine the most appropriate surgical DRGs for these procedures.

    Page 20254

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

    ICD-10-PCS procedure code Code description

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

    0SPC08Z................... Removal of spacer from right knee joint,

    open approach.

    0SHC08Z................... Insertion of spacer into right knee joint,

    open approach.

    0SPD08Z................... Removal of spacer from left knee joint, open

    approach.

    0SHD08Z................... Insertion of spacer into left knee joint,

    open approach.

    0SP908Z................... Removal of spacer from right hip joint, open

    approach.

    0SH908Z................... Insertion of spacer into right hip joint,

    open approach.

    0SPB08Z................... Removal of spacer from left hip joint, open

    approach.

    0SHB08Z................... Insertion of spacer into left hip joint,

    open approach.

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

    We agree with the requestor that these procedures typically require the resources of an operating room. However, our clinical advisors indicated that these codes should be designated as O.R. procedures even when reported as stand-alone procedures. Therefore, for the knee procedures, we are proposing to add these four ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 485, 486, and 487 (Knee Procedures with Principal Diagnosis of Infection with MCC, with CC, and without CC/MCC, respectively) or MS-DRGs 488 and 489 (Knee Procedures without Principal diagnosis of Infection with CC/MCC and without CC/

    MCC, respectively), both in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). For the hip procedures, we are proposing to add these four ICD-10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--

    Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 480, 481, and 482 (Hip and Femur Procedures Except Major Joint with MCC, with CC, and without CC/MCC, respectively) in MDC 8 (Diseases and Disorders of the Musculoskeletal System and Connective Tissue). We are inviting public comments on our proposal.

  44. Endoscopic Dilation of Ureter(s) With Intraluminal Device

    One requestor identified the following three ICD-10-PCS procedure codes that describe procedures involving endoscopic dilation of ureter(s) with intraluminal device.

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

    ICD-10-PCS procedure code Code description

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

    0T778DZ................... Dilation of left ureter with intraluminal

    device, via natural or artificial opening

    endoscopic.

    0T768DZ................... Dilation of right ureter with intraluminal

    device, via natural or artificial opening

    endoscopic.

    0T788DZ................... Dilation of bilateral ureters with

    intraluminal device, via natural or

    artificial opening endoscopic.

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

    The requestor stated that these procedures involve the use of cystoureteroscopy to view the bladder and ureter and dilation under visualization, which are often followed by placement of a ureteral stent. The requestor also stated that endoscopic extirpation of matter from ureter, endoscopic biopsy of bladder, endoscopic dilation of bladder, endoscopic dilation of renal pelvis, and endoscopic dilation of the ureter without insertion of intraluminal device are all assigned to surgical DRGs, and that these three procedures should be designated as O.R. procedures for the same reason. In the ICD-10 MS-DRGs Version 35, these three ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment. The requestor recommended that these procedures be assigned to MS-DRGs 656, 657, and 658 (Kidney and Ureter Procedures for Neoplasm with MCC, with CC, and without CC/

    MCC, respectively) and MS-DRGs 659, 660, and 661 (Kidney and Ureter Procedures for Non-Neoplasm with MCC, with CC, and without CC/MCC, respectively).

    We agree with the requestor that these procedures typically require the resources of an operating room. In addition to the MS-DRGs recommended by the requestor, we believe that these procedure codes should also be assigned to other MS-DRGs, consistent with the assignment of other dilation of ureter procedures: MS-DRG 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). Therefore, we are proposing to add the three ICD-10-PCS procedure codes identified by the requestor to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--

    Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to MS-DRGs 656, 657, and 658 in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract), MS-DRGs 659, 660, and 661 in MDC 11, MS-DRGs 907, 908, and 909 in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs), and MS-DRGs 957, 958, and 959 in MDC 24 (Multiple Significant Trauma). We are inviting public comments on our proposal.

  45. Thoracoscopic Procedures of Pericardium and Pleura

    One requestor identified seven ICD-10-PCS procedure codes that describe procedures involving thoracoscopic drainage of the pericardial cavity or pleural cavity, or extirpation of matter from the pleura, as shown in the following table.

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

    ICD-10-PCS procedure code Code description

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

    0W9D4ZZ................... Drainage of pericardial cavity, percutaneous

    endoscopic approach.

    0W9D40Z................... Drainage of pericardial cavity with drainage

    device, percutaneous endoscopic approach.

    0W9D4ZX................... Drainage of pericardial cavity, percutaneous

    endoscopic approach, diagnostic.

    Page 20255

    0W994ZX................... Drainage of right pleural cavity,

    percutaneous endoscopic approach,

    diagnostic.

    0W9B4ZX................... Drainage of left pleural cavity,

    percutaneous endoscopic approach,

    diagnostic.

    0BCP4ZZ................... Extirpation of matter from left pleura,

    percutaneous endoscopic approach.

    0BCN4ZZ................... Extirpation of matter from right pleura,

    percutaneous endoscopic approach.

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

    The requestor stated that these procedures involve making an incision through the chest wall and inserting a thoracoscope for visualization of thoracic structures during the procedure. The requestor also stated that some thoracoscopic procedures are assigned to surgical MS-DRGs, while other procedures are assigned to medical MS-

    DRGs. In the ICD-10 MS-DRGs Version 35, these seven ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment.

    We agree with the requestor that these procedures typically require the resources of an operating room, as well as significant time and skill. During our review, we noted that the following two related procedures using the open approach also were not currently recognized as O.R. procedures:

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

    ICD-10-PCS procedure code Code description

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

    0BCP0ZZ................... Extirpation of matter from left pleura, open

    approach.

    0BCN0ZZ................... Extirpation of matter from right pleura,

    open approach.

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

    Therefore, to be consistent with the MS-DRGs to which other approaches for procedures involving drainage or extirpation of matter from the pleura are assigned, we are proposing to add these nine ICD-

    10-PCS procedure codes to the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures assigned to one of the following MS-DRGs: MS-DRGs 163, 164, and 165 (Major Chest Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 4 (Diseases and Disorders of the Respiratory System); MS-DRGs 270, 271, and 272 (Other Major Cardiovascular Procedures with MCC, with CC, and without CC/MCC, respectively) in MDC 5 (Diseases and Disorders of the Circulatory System); MS-DRGs 820, 821, and 822 (Lymphoma and Leukemia with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17 (Myeloproliferative Diseases and Disorders, Poorly Differentiated Neoplasms); MS-DRGs 826, 827, and 828 (Myeloproliferative Disorders or Poorly Differentiated Neoplasms with Major O.R. Procedure with MCC, with CC, and without CC/MCC, respectively) in MDC 17; MS-DRGs 907, 908, and 909 (Other O.R. Procedures for Injuries with MCC, with CC, and without CC/MCC, respectively) in MDC 21 (Injuries, Poisonings and Toxic Effects of Drugs); and MS-DRGs 957, 958, and 959 (Other O.R. Procedures for Multiple Significant Trauma with MCC, with CC, and without CC/MCC, respectively) in MDC 24 (Multiple Significant Trauma). We are inviting public comments on our proposal.

  46. Open Insertion of Totally Implantable and Tunneled Vascular Access Devices

    One requestor identified 20 ICD-10-PCS procedure codes that describe procedures involving open insertion of totally implantable and tunneled vascular access devices. The codes are identified in the following table.

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

    ICD-10-PCS procedure code Code description

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

    0JH60WZ................... Insertion of totally implantable vascular

    access device into chest subcutaneous

    tissue and fascia, open approach.

    0JH60XZ................... Insertion of tunneled vascular access device

    into chest subcutaneous tissue and fascia,

    open approach.

    0JH80WZ................... Insertion of totally implantable vascular

    access device into abdomen subcutaneous

    tissue and fascia, open approach.

    0JH80XZ................... Insertion of tunneled vascular access device

    into abdomen subcutaneous tissue and

    fascia, open approach.

    0JHD0WZ................... Insertion of totally implantable vascular

    access device into right upper arm

    subcutaneous tissue and fascia, open

    approach.

    0JHD0XZ................... Insertion of tunneled vascular access device

    into right upper arm subcutaneous tissue

    and fascia, open approach.

    0JHF0WZ................... Insertion of totally implantable vascular

    access device into left upper arm

    subcutaneous tissue and fascia, open

    approach.

    0JHF0XZ................... Insertion of tunneled vascular access device

    into left upper arm subcutaneous tissue and

    fascia, open approach.

    0JHG0WZ................... Insertion of totally implantable vascular

    access device into right lower arm

    subcutaneous tissue and fascia, open

    approach.

    0JHG0XZ................... Insertion of tunneled vascular access device

    into right lower arm subcutaneous tissue

    and fascia, open approach.

    0JHH0WZ................... Insertion of totally implantable vascular

    access device into left lower arm

    subcutaneous tissue and fascia, open

    approach.

    0JHH0XZ................... Insertion of tunneled vascular access device

    into left lower arm subcutaneous tissue and

    fascia, open approach.

    0JHL0WZ................... Insertion of totally implantable vascular

    access device into right upper leg

    subcutaneous tissue and fascia, open

    approach.

    0JHL0XZ................... Insertion of tunneled vascular access device

    into right upper leg subcutaneous tissue

    and fascia, open approach.

    0JHM0WZ................... Insertion of totally implantable vascular

    access device into left upper leg

    subcutaneous tissue and fascia, open

    approach.

    0JHM0XZ................... Insertion of tunneled vascular access device

    into left upper leg subcutaneous tissue and

    fascia, open approach.

    0JHN0WZ................... Insertion of totally implantable vascular

    access device into right lower leg

    subcutaneous tissue and fascia, open

    approach.

    0JHN0XZ................... Insertion of tunneled vascular access device

    into right lower leg subcutaneous tissue

    and fascia, open approach.

    0JHP0WZ................... Insertion of totally implantable vascular

    access device into left lower leg

    subcutaneous tissue and fascia, open

    approach.

    0JHP0XZ................... Insertion of tunneled vascular access device

    into left lower leg subcutaneous tissue and

    fascia, open approach.

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

    The requestor stated that open procedures to insert totally implantable vascular access devices (VAD) involve implantation of a port by open approach, cutting through subcutaneous tissue/fascia, placing the device, and

    Page 20256

    then closing tissues so that none of the device is exposed. The requestor explained that open procedures to insert tunneled VADs involve insertion of the catheter into central vasculature, and then open incision of subcutaneous tissue and fascia through which the device is tunneled. The requestor also indicated that these procedures require two ICD-10-PCS codes: One for the insertion of the VAD or port within the subcutaneous tissue; and one for percutaneous insertion of the central venous catheter that is connected to the device. The requestor further noted that, in MDC 11, cases with these procedure codes are assigned to surgical MS-DRGs and that insertion of infusion pumps by open approach groups to surgical MS-DRGs. The requestor recommended that these procedures be assigned to surgical MS-DRGs in MDC 09 as well. We examined the O.R. designations for this group of procedures and determined that they currently are designated as non-

    O.R. procedures for MDC 09 and MDC 11.

    We agree with the requestor that procedures involving open insertion of totally implantable VAD procedures typically require the resources of an operating room. However, we disagree that the tunneled VAD procedures typically require the resources of an operating room. Therefore, we are proposing to update the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index to designate the 10 ICD-10-PCS procedure codes describing the totally implantable VAD procedures as O.R. procedures, which will continue to be assigned to 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) and MS-DRGs 673, 674, and 675 (Other Kidney and Urinary Tract Procedures, with CC, with MCC, and without CC/MCC, respectively) in MDC 11 (Diseases and Disorders of the Kidney and Urinary Tract). We note that these procedures already affect MS-DRG assignment to these MS-DRGs. However, if the procedure is unrelated to the principal diagnosis, it will be assigned to MS-DRGs 981, 982, and 983 instead of a medical MSdashDRG. We are inviting public comments on our proposal.

  47. Percutaneous Joint Reposition With Internal Fixation Device

    One requestor identified 20 ICD-10-PCS procedure codes that describe procedures involving percutaneous joint reposition with internal fixation device, shown in the following table.

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

    ICD-10-PCS procedure code Code description

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

    0SS034Z................... Reposition lumbar vertebral joint with

    internal fixation device, percutaneous

    approach.

    0SS334Z................... Reposition lumbosacral joint with internal

    fixation device, percutaneous approach.

    0SS534Z................... Reposition sacrococcygeal joint with

    internal fixation device, percutaneous

    approach.

    0SS634Z................... Reposition coccygeal joint with internal

    fixation device, percutaneous approach.

    0SS734Z................... Reposition right sacroiliac joint with

    internal fixation device, percutaneous

    approach.

    0SS834Z................... Reposition left sacroiliac joint with

    internal fixation device, percutaneous

    approach.

    0SS934Z................... Reposition right hip joint with internal

    fixation device, percutaneous approach.

    0SSB34Z................... Reposition left hip joint with internal

    fixation device, percutaneous approach.

    0SSC34Z................... Reposition right knee joint with internal

    fixation device, percutaneous approach.

    0SSD34Z................... Reposition left knee joint with internal

    fixation device, percutaneous approach.

    0SSF34Z................... Reposition right ankle joint with internal

    fixation device, percutaneous approach.

    0SSG34Z................... Reposition left ankle joint with internal

    fixation device, percutaneous approach.

    0SSH34Z................... Reposition right tarsal joint with internal

    fixation device, percutaneous approach.

    0SSJ34Z................... Reposition left tarsal joint with internal

    fixation device, percutaneous approach.

    0SSK34Z................... Reposition right tarsometatarsal joint with

    internal fixation device, percutaneous

    approach.

    0SSL34Z................... Reposition left tarsometatarsal joint with

    internal fixation device, percutaneous

    approach.

    0SSM34Z................... Reposition right metatarsal-phalangeal joint

    with internal fixation device, percutaneous

    approach.

    0SSN34Z................... Reposition left metatarsal-phalangeal joint

    with internal fixation device, percutaneous

    approach.

    0SSP34Z................... Reposition right toe phalangeal joint with

    internal fixation device, percutaneous

    approach.

    0SSQ34Z................... Reposition left toe phalangeal joint with

    internal fixation device, percutaneous

    approach.

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

    The requestor stated that reposition of the sacrum, femur, tibia, fibula, and other fractures of bone with internal fixation device by percutaneous approach are assigned to surgical DRGs, and that reposition of sacroiliac, hip, knee, and other joint locations with internal fixation should therefore also be assigned to surgical DRGs. In the ICD-10 MS-DRGs Version 35, these 20 ICD-10-PCS procedure codes are not recognized as O.R. procedures for purposes of MS-DRG assignment.

    We disagree with the requestor that these procedures typically require the resources of an operating room, as these procedures are not as invasive as the bone reposition procedures referenced by the requestor. Our clinical advisors advised that these procedures are typically performed in a radiology suite. Therefore, we are proposing to maintain the status of these 20 ICD-10-PCS procedure codes as non-

    O.R. procedures. We are inviting public comments on our proposal.

  48. Endoscopic Destruction of Intestine

    One requestor identified four ICD-10-PCS procedure codes that describe procedures involving endoscopic destruction of the intestine, as shown in the following table.

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

    ICD-10-PCS procedure code Code description

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

    0D5A8ZZ................... Destruction of jejunum, via natural or

    artificial opening endoscopic.

    0D5B8ZZ................... Destruction of ileum, via natural or

    artificial opening endoscopic.

    0D5C8ZZ................... Destruction of ileocecal valve, via natural

    or artificial opening endoscopic.

    0D588ZZ................... Destruction of small intestine, via natural

    or artificial opening endoscopic.

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

    Page 20257

    The requestor stated that these procedures are rarely performed in the operating room. In the ICD-10 MS-DRGs Version 35, these 20 ICD-10-

    PCS procedure codes are currently recognized as O.R. procedures for purposes of MS-DRG assignment.

    We agree with the requestor that these procedures do not typically require the resources of an operating room. Therefore, we are proposing to remove these four procedure codes from the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures. We are inviting public comments on our proposal.

  49. Drainage of Lower Lung Via Natural or Artificial Opening Endoscopic, Diagnostic

    One requestor identified the following ICD-10-PCS procedure codes that describe procedures involving endoscopic drainage of the lung via natural or artificial opening for diagnostic purposes.

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

    ICD-10-PCS procedure code Code description

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

    0B9J8ZX................... Drainage of left lower lung lobe, via

    natural or artificial opening endoscopic,

    diagnostic.

    0B9F8ZX................... Drainage of right lower lung lobe, via

    natural or artificial opening endoscopic,

    diagnostic.

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

    The requestor stated that these procedures are rarely performed in the operating room.

    We agree with the requestor that these procedures do not require the resources of an operating room. In addition, while we were reviewing this comment, we identified three additional related codes:

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

    ICD-10-PCS procedure code Code description

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

    0B9D8ZX................... Drainage of right middle lung lobe, via

    natural or artificial opening endoscopic,

    diagnostic.

    0B9C8ZX................... Drainage of right upper lung lobe, via

    natural or artificial opening endoscopic,

    diagnostic.

    0B9G8ZX................... Drainage of left upper lung lobe, via

    natural or artificial opening endoscopic,

    diagnostic.

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

    In the ICD-10 MS-DRGs Version 35, these ICD-10-PCS procedure codes are currently recognized as O.R. procedures for purposes of MS-DRG assignment.

    We are proposing to remove ICD-10-PCS procedure codes 0B9J8ZX, 0B9F8ZX, 0B9D8ZX, 0B9C8ZX, and 0B9G8ZX from the FY 2019 ICD-10 MS-DRGs Version 36 Definitions Manual in Appendix E--Operating Room Procedures and Procedure Code/MS-DRG Index as O.R. procedures. We are inviting public comments on our proposal.

    G. Recalibration of the Proposed FY 2019 MS-DRG Relative Weights

    1. Data Sources for Developing the Proposed Relative Weights

    In developing the proposed FY 2019 system of weights, we are proposing to use 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 2017 MedPAR data used in this proposed rule include discharges occurring on October 1, 2016, through September 30, 2017, based on bills received by CMS through December 31, 2017, from all hospitals subject to the IPPS and shortdashterm, acute care hospitals in Maryland (which at that time were under a waiver from the IPPS). The FY 2017 MedPAR file used in calculating the proposed relative weights includes data for approximately 9,652,400 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 December 31, 2017 update of the FY 2017 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 proposed relative weights for FY 2019 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 proposed FY 2019 relative weights are based on the ICDdash10dashCM diagnoses and ICD-10-PCS procedure codes from the FY 2017 MedPAR claims data, grouped through the ICDdash10 version of the proposed FY 2019 GROUPER (Version 36).

    The second data source used in the costdashbased 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 December 31, 2017 update of the FY 2016 HCRIS for calculating the proposed FY 2019 costdashbased relative weights.

    2. Methodology for Calculation of the Proposed Relative Weights

    As we explain in section II.E.2. of the preamble of this proposed rule, we calculated the proposed FY 2019 relative weights based on 19 CCRs, as we did for FY 2018. The methodology we are proposing to use to calculate the FY 2019 MS-DRG costdashbased relative weights based on claims data in the FY 2017 MedPAR file and data from the FY 2016 Medicare cost reports is as follows:

    To the extent possible, all the claims were regrouped using the proposed FY 2019 MSdashDRG classifications discussed in sections II.B. and II.F. of the preamble of this proposed rule.

    The transplant cases that were used to establish the proposed relative weights for heart and heartdashlung, liver and/or intestinal, and lung transplants (MS-DRGs 001, 002, 005, 006, and 007, respectively) were limited to those Medicaredashapproved transplant centers that have cases in the FY 2017 MedPAR

    Page 20258

    file. (Medicare coverage for heart, heartdashlung, 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, heartdashlung, 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 $30.00 from the sum of the routine day charges, intensive care charges, pharmacy charges, implantable devices charges, supplies and 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 and blood products charges, anesthesia charges, cardiac catheterization charges, CT scan charges, and MRI charges were also deleted.

    At least 92.5 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 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 MSdashDRGs 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 (77 FR 53341 through 53343). Specifically, because acute care hospitals participating in the BPCI initiative still receive IPPS payments under section 1886(d) of the Act, we include all applicable data from these subsection (d) hospitals in our IPPS payment modeling and ratesetting calculations as if they were not participating in those models under the BPCI initiative. 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.

    The participation of hospitals in the BPCI initiative is set to conclude on September 30, 2018. The participation of hospitals in the Bundled Payments for Care Improvement (BPCI) Advanced model is set to start on October 1, 2018. The BPCI Advanced model, tested under the authority of section 3021 of the Affordable Care Act (codified at section 1115A of the Act), is comprised of a single payment and risk track, which bundles payments for multiple services beneficiaries receive during a Clinical Episode. Acute care hospitals may participate in BPCI Advanced in one of two capacities: As a model Participant or as a downstream Episode Initiator. Regardless of the capacity in which they participate in the BPCI Advanced model, participating acute care hospitals will continue to receive IPPS payments under section 1886(d) of the Act. Acute care hospitals that are Participants also assume financial and quality performance accountability for Clinical Episodes in the form of a reconciliation payment. For additional information on the BPCI Advanced model, we refer readers to the BPCI Advanced webpage on the CMS Center for Medicare and Medicaid Innovation's website at: https://innovation.cms.gov/initiatives/bpci-advanced/. For FY 2019, consistent with how we have treated hospitals that participated in the BPCI Initiative, we believe it is appropriate to include all applicable data from the subsection (d) hospitals participating in the BPCI Advanced model in our IPPS payment modeling and ratesetting calculations because, as noted above, these hospitals are still receiving IPPS payments under section 1886(d) of the Act.

    The charges for each of the proposed 19 cost groups for each claim were standardized to remove the effects of differences in proposed area wage levels, IME and DSH payments, and for hospitals located in Alaska and Hawaii, the applicable proposed costdashofdashliving adjustment. Because hospital charges include charges for both operating and capital costs, we standardized total charges to remove the effects of differences in proposed geographic

    Page 20259

    adjustment factors, costdashofdashliving adjustments, and DSH payments under the capital IPPS as well. Charges were then summed by MS-DRG for each of the proposed 19 cost groups so that each MS-DRG had 19 standardized charge totals. Statistical outliers were then removed. These charges were then adjusted to cost by applying the proposed national average CCRs developed from the FY 2016 cost report data.

    The 19 cost centers that we used in the proposed 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. If stakeholders have comments about the groupings in this table, we may consider those comments as we finalize our policy.

    We are inviting public comments on our proposals related to recalibration of the proposed FY 2019 relative weights and the changes in relative weights from FY 2018.

    BILLING CODE 4120-01-P

    Page 20260

    GRAPHIC TIFF OMITTED TP07MY18.002

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    GRAPHIC TIFF OMITTED TP07MY18.003

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    GRAPHIC TIFF OMITTED TP07MY18.004

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    GRAPHIC TIFF OMITTED TP07MY18.007

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    GRAPHIC TIFF OMITTED TP07MY18.009

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    BILLING CODE 4120-01-C

    Page 20275

    3. Development of Proposed National Average CCRs

    We developed the proposed national average CCRs as follows:

    Using the FY 2016 cost report data, we removed CAHs, Indian Health Service hospitals, alldashinclusive 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 Medicaredashspecific CCR. The Medicaredashspecific CCR was determined by taking the Medicare charges for each line item from Worksheet D-3 and deriving the Medicaredashspecific costs by applying the hospitaldashspecific departmental CCRs to the Medicaredashspecific charges for each line item from Worksheet D-3. Once each hospital's Medicaredashspecific costs were established, we summed the total Medicaredashspecific costs and divided by the sum of the total Medicaredashspecific charges to produce national average, chargedashweighted CCRs.

    After we multiplied the total charges for each MS-DRG in each of the proposed 19 cost centers by the corresponding national average CCR, we summed the 19 ``costs'' across each proposed MS-DRG to produce a total standardized cost for the proposed MS-DRG. The average standardized cost for each proposed MS-DRG was then computed as the total standardized cost for the proposed MS-DRG divided by the transferdashadjusted case count for the proposed MS-DRG. We calculated the transfer-adjusted discharges for use in the calculation of the Version 36 MS-DRG relative weights using the statutory expansion of the postacute care transfer policy to include discharges to hospice care by a hospice program discussed in section IV.A.2.b. of the preamble of this proposed rule. For the purposes of calculating the normalization factor, we used the transfer-adjusted discharges with the expanded postacute care transfer policy for Version 35 as well. (When we calculate the normalization factor, we calculate the transfer-

    adjusted case count for the prior GROUPER version (in this case Version 35) and multiply by the weights of that GROUPER. We then compare that pool to the transfer-adjusted case count using the new GROUPER version.) The average cost for each proposed MS-DRG was then divided by the national average standardized cost per case to determine the proposed relative weight.

    The proposed FY 2019 cost-based relative weights were then normalized by a proposed adjustment factor of 1.760698 so that the average case weight after recalibration was equal to the average case weight before recalibration. The proposed 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 proposed 19 national average CCRs for FY 2019 are as follows:

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

    Group CCR

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

    Routine Days................................................... 0.451

    Intensive Days................................................. 0.373

    Drugs.......................................................... 0.196

    Supplies & Equipment........................................... 0.299

    Implantable Devices............................................ 0.321

    Therapy Services............................................... 0.312

    Laboratory..................................................... 0.116

    Operating Room................................................. 0.185

    Cardiology..................................................... 0.107

    Cardiac Catheterization........................................ 0.115

    Radiology...................................................... 0.149

    MRIs........................................................... 0.076

    CT Scans....................................................... 0.037

    Emergency Room................................................. 0.165

    Blood and Blood Products....................................... 0.306

    Other Services................................................. 0.355

    Labor & Delivery............................................... 0.363

    Inhalation Therapy............................................. 0.163

    Anesthesia..................................................... 0.081

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

    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. We are proposing to use that same case threshold in recalibrating the proposed MS-DRG relative weights for FY 2019. Using data from the FY 2017 MedPAR file, there were 7 MS-DRGs that contain fewer than 10 cases. For FY 2019, because we do not have sufficient MedPAR data to set accurate and stable cost relative weights for these lowdashvolume MS-DRGs, we are proposing to compute relative weights for the proposed low-volume MS-DRGs by adjusting their final FY 2018 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

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

    789...................... Neonates, Died or Final FY 2018 relative

    Transferred to weight (adjusted by

    Another Acute Care percent change in

    Facility. average weight of the

    cases in other MS-

    DRGs).

    790...................... Extreme Immaturity Final FY 2018 relative

    or Respiratory weight (adjusted by

    Distress Syndrome, percent change in

    Neonate. average weight of the

    cases in other MS-

    DRGs).

    791...................... Prematurity with Final FY 2018 relative

    Major Problems. weight (adjusted by

    percent change in

    average weight of the

    cases in other MS-

    DRGs).

    792...................... Prematurity without Final FY 2018 relative

    Major Problems. weight (adjusted by

    percent change in

    average weight of the

    cases in other MS-

    DRGs).

    793...................... Full-Term Neonate Final FY 2018 relative

    with Major weight (adjusted by

    Problems. percent change in

    average weight of the

    cases in other MS-

    DRGs).

    794...................... Neonate with Other Final FY 2018 relative

    Significant weight (adjusted by

    Problems. percent change in

    average weight of the

    cases in other MS-

    DRGs).

    795...................... Normal Newborn..... Final FY 2018 relative

    weight (adjusted by

    percent change in

    average weight of the

    cases in other MS-

    DRGs).

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

    Page 20276

    We are inviting public comments on our proposals.

    H. Proposed Add-On Payments for New Services and Technologies for FY 2019

    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 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 discharges involving the new medical service or technology 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 2018 IPPS/LTCH PPS final rule contains the final thresholds that we used to evaluate applications for new medical service or technology add-on payments for FY 2019. We refer readers to the CMS website at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY2018-IPPS-Final-Rule-Home-Page-Items/FY2018-IPPS-Final-Rule-Tables.html to download and view Table 10.

    As previously stated, Table 10 that is released with each proposed and final rule contains the thresholds that we use to evaluate applications for new medical service and technology add-on payments for the fiscal year that follows the fiscal year that is otherwise the subject of the rulemaking. For example, the thresholds in Table 10 released with the FY 2018 IPPS/LTCH PPS final rule are applicable to FY 2019 new technology applications. Beginning with the thresholds for FY 2020 and future years, we are proposing to provide the thresholds that we previously included in Table 10 as one of our data files posted via the Internet on the CMS website at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html, which is the same URL where the impact data files associated with the rulemaking for the applicable fiscal year are posted. We believe that this proposed change in the presentation of this information, specifically in the data files rather than in a Table 10, will clarify for the public that the listed thresholds will be used for new technology add-

    on payment applications for the next fiscal year (in this case, for FY 2020) rather than for the fiscal year that is otherwise the subject of the rulemaking (in this case, for FY 2019), while continuing to furnish the same information on the new technology adddashon payment thresholds for applications for the next fiscal year as has been provided in previous fiscal years. Accordingly, we would no longer include Table 10 as one of our IPPS tables, but would instead include the thresholds applicable to the next fiscal year (beginning with FY 2020) in the data files associated with the prior fiscal year (in this case, FY 2019).

    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 or 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

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    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 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 the 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.

    The specific processes for coverage, coding, and payment are implemented by CM, CCSQ, and the local Medicare Administrative Contractors (MACs) (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 Medicaredashcovered 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 website, in a user friendly format. This guide was published in 2010 and is available on the CMS website at: https://www.cms.gov/Medicare/Coverage/CouncilonTechInnov/Downloads/Innovators-Guide-Master-7-23-15.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 email protected.

    We note that applicants for add-on payments for new medical services or technologies for FY 2020 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 website at: https://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 2020, the CMS website also will post the tracking forms completed by each applicant. We note that the burden associated with this information collection requirement is the time and effort required to collect and submit the data in the formal request for add-

    on payments for new medical services and technologies to CMS. The aforementioned burden is subject to the PRA; it is currently approved under OMB control number 0938-1347, which expires on December 31, 2020.

    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--

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    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 2019 prior to publication of this FY 2019 IPPS/LTCH PPS proposed rule, we published a notice in the Federal Register on December 4, 2017 (82 FR 57275), and held a town hall meeting at the CMS Headquarters Office in Baltimore, MD, on February 13, 2018. 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 2019 new medical service and technology adddashon payment applications before the publication of this FY 2019 IPPS/LTCH PPS proposed rule.

    Approximately 150 individuals registered to attend the town hall meeting in person, while additional individuals listened over an open telephone line. We also livedashstreamed the town hall meeting and posted the town hall on the CMS YouTube web page at: https://www.youtube.com/watch?v=9niqfxXe4oA&t=217s. 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 23, 2018, in our evaluation of the new technology adddashon payment applications for FY 2019 in this FY 2019 IPPS/LTCH PPS proposed rule.

    In response to the published notice and the February 13, 2018 New Technology Town Hall meeting, we received written comments regarding the applications for FY 2019 new technology adddashon payments. We note that we do not summarize comments that are unrelated to the ``substantial clinical improvement'' criterion. As explained earlier and in the Federal Register notice announcing the New Technology Town Hall meeting (82 FR 57275 through 57277), the purpose of the meeting was specifically to discuss the substantial clinical improvement criterion in regard to pending new technology add-on payment applications for FY 2019. Therefore, we are not summarizing those written comments in this proposed rule. In section II.H.5. of the preamble of this proposed rule, we are summarizing comments regarding individual applications, or, if applicable, indicating that there were no comments received in response to the New Technology Town Hall meeting notice, at the end of each discussion of the individual applications.

    Comment: One commenter recommended that the specific criteria that CMS uses in making substantial clinical improvement determinations be codified in the regulations to more explicitly clarify that the new medical service or technology will meet the substantial clinical improvement criterion if it: (a) Results in a reduction of the length of a hospital stay; (b) improves patient quality of life; (c) creates long-term clinical efficiencies in treatment; (d) addresses patient-

    centered objectives as defined by the Secretary; or (e) meets such other criteria as the Secretary may specify. The commenter stated that criteria similar to these were defined in the September 2001 New Technology Final Rule (66 FR 46913 through 46914). The commenter also recommended that final decisions on new technology add-on payment applications should explicitly discuss how a technology or treatment meets or fails to meet these specific criteria.

    Response: We appreciate the commenter's recommendation. However, in the September 2001 New Technology Final Rule (66 FR 46913 through 46914), we explained how we evaluate if a new medical service or technology would meet the substantial clinical improvement criterion. Specifically, we stated that we evaluate a request for new technology payments against the following criteria to determine if the new medical service or technology would represent a substantial clinical improvement over existing technologies:

    The device offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments.

    The device offers the ability to diagnose a medical condition in a patient population where that medical condition is currently undetectable or offers the ability to diagnose a medical condition earlier in a patient population than allowed by currently available methods. There must also be evidence that use of the device to make a diagnosis affects the management of the patient.

    Use of the device significantly improves clinical outcomes for a patient population as compared to currently available treatments.

    We typically require the applicant to submit evidence that the technology meets one or more of these standards. Regarding whether the use of the device significantly improves clinical outcomes for a patient population as compared to currently available treatments, we provided examples of improved clinical outcomes.

    In response to the commenter's recommendation that final decisions on new technology add-on applications explicitly discuss how a technology or treatment meets or fails to meet these specific standards, we believe that we provide this explanation when approving or denying an application for new technology add-on payments in the final rule.

    Comment: One commenter stated that the United States Food and Drug Administration Modernization Act (FDAMA) of 1997 established a category of medical devices and diagnostics that are eligible for priority FDA review. The commenter explained that, to qualify, products must be designated by the FDA as offering the potential for significant improvements in the diagnosis or treatment of the most serious illnesses, including those that are life-threatening or irreversibly debilitating. The commenter indicated that the processes by which products meeting the statutory standard for priority treatment are considered by the FDA are spelled out in greater detail in FDA's Expedited Access Program (EAP), and in the 21st Century Cures Act. The commenter believed that the criteria for priority FDA review are very similar to the substantial clinical improvement criteria and, therefore, devices used in the inpatient setting determined to be eligible for expedited review and approved by the FDA should automatically be considered as meeting the substantial clinical improvement criterion, without further consideration by CMS.

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    Another commenter stated that CMS historically has noted 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.'' The commenter believed that this standard was created for medical devices because they dominated new technology of the time. The commenter recommended that this standard not be applied to regenerative medicine therapies because it believed these criteria are likely outside Congressional intent and inconsistent with some of the congressionallydashcreated FDA approval rules related to expedited approval programs. The commenter explained that the FDA defines congressionally-created ``breakthrough therapy'' and designates a therapy as such if it ``may demonstrate substantial improvement over existing therapies.'' In addition, the commenter stated that the Regenerative Medicine Advanced Therapy (RMAT) designation is granted to products that are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition, and if clinical evidence shows that it has the potential to meet an unmet medical need.

    Response: The FDA provides a number of different types of approvals and designations for devices, drugs, and other medical products. As required by section 1886(d)(5)(K)(viii) of the Act, CMS provides a mechanism for public input, before the publication of the proposed rule, regarding whether a new service or technology represents an advance in medical technology that substantially improves the diagnosis or treatment of individuals entitled to benefits under Medicare Part A. We believe that the criteria explained in the September 2001 New Technology Final Rule (66 FR 46914) are consistent with the statutory requirements for evaluating new medical services and technologies and continue to be relevant to determining whether a new medical service or technology represents a substantial clinical improvement over existing technologies. If the technology has a status designated by the FDA that is similar to the standards and conditions required to demonstrate substantial clinical improvement under the new technology add-on payment criterion, or is designated as a breakthrough therapy, the technology should be able to demonstrate with evidence that it meets the new technology add-on payment substantial clinical improvement criterion. Finally, we do take FDA approvals into consideration in our evaluation and determination of approvals and denials of new technology add-on payment applications.

    Comment: One commenter stated that, for technologies without a special FDA designation, the substantial clinical improvement standard is an inappropriate clinical standard for the family of regenerative therapies because it creates a threshold that is too high and unrealistic to meet. The commenter believed that requiring a vague standard such as ``substantial clinical improvement'' ignores that innovation is achieved incrementally. The commenter asserted that by only approving new technologies that can achieve this standard for new technology add-on payments, CMS' policy is at cross-purposes with promoting innovation because many worthy technologies will not be approved by CMS, which denies the general population the opportunity of having the chance to learn and otherwise benefit from those technologies.

    The commenter also stated that CMS has questioned how substantial clinical improvement can be measured and achieved via small clinical trials with FDA approval. The commenter stated that it is concerned that this view sets a dangerous precedent by significantly undervaluing new transformative therapies. The commenter added that the FDA often only requires single-arm trials with small numbers of patients for these products because it is often not feasible for product developers to provide data on a large number of patients, especially those working in rare diseases as many regenerative and advanced therapeutic developers are. The commenter stated that, given the transformative nature of the products, this should not be a reason for CMS to deny a new medical service or technology add-on payment.

    Response: We believe that the September 2001 New Technology Final Rule (66 FR 46914) clearly defines the criteria that CMS uses to evaluate and determine if a new medical service or technology represents a substantial clinical improvement. In addition, we accept different types of data (for example, peer-reviewed articles, study results, or letters from major associations, among others) that demonstrate and support the substantial clinical improvement associated with the new medical service or technology's use. In addition to clinical data, we will consider any evidence that would support the conclusion of a substantial clinical improvement associated with a new medical service or technology. Therefore, we believe that we consider an appropriate range of evidence.

    Comment: One commenter stated that CMS should consider FDA approval and the associated evidence base leading to such an approval as a standard for meeting the substantial clinical improvement criterion. The commenter believed that additional factors such as improvements in patient quality of life, creation of long-term clinical efficiencies in care, reductions in the use of other healthcare services, or other such criteria should be incorporated into the CMS determination process for whether a new medical service or technology demonstrates or represents a substantial clinical improvement over existing technologies. The commenter believed that, by including these additional factors, CMS would align payment rates such that patients would have access to the highest standard of treatment for all transformative therapies representing a substantial clinical improvement for the patient populations they serve, and it would be recognized as such by the receipt of new technology add-on payments.

    Response: As stated earlier, one of the standards we use to determine whether a new medical service or technology represents a substantial clinical improvement over existing technologies is to evaluate whether the use of the device, drug, service, or technology significantly improves clinical outcomes for a patient population as compared to currently available treatments, and we provided examples of improved clinical outcomes in the September 2001 New Technology Final Rule (66 FR 46913 through 46914).

    Comment: One commenter encouraged CMS to ensure appropriate implementation of the substantial clinical improvement criterion under the applicable Medicare statutory provisions and regulations, as applied to radio pharma ceuticals and other nuclear medicine technologies that can lead to significant benefits and advances in the diagnosis and treatment of many diseases. The commenter recommended that CMS apply an appropriately flexible standard for purposes of assessing whether a technology represents a substantial clinical improvement over other existing, available therapies. The commenter asserted that a flexible standard for this purpose must include new products and new formulations of products that increase the safety or efficacy, or both, relative to current treatments. The commenter believed that failing to recognize a technology that enhances the safety and/or efficacy of existing options as both ``new'' and a

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    ``substantial clinical improvement'' over existing options would be a disservice to Medicare beneficiaries and to the mission of the Medicare program.

    The commenter encouraged CMS to give consideration to the importance of technologies that make radiotherapies safer, as well as those that lead to increased efficacy. The commenter explained that minimizing a patient's exposure to radiation, while also maximizing the effectiveness of the radiotherapy dose results in highly significant clinical improvements for patients, including in specific areas that CMS has expressly identified as relevant to the substantial clinical improvement criterion.

    Response: As stated earlier, we believe that the criteria explained in the September 2001 New Technology Final Rule (66 FR 46914) are consistent with the statutory requirements for evaluating new medical services and technologies and continue to be relevant to determining whether a new medical service or technology represents a substantial clinical improvement over existing technologies.

    We believe that it is important to maintain an open dialogue regarding the IPPS new technology add-on payment process, and we appreciate all of the commenters' input and recommendations.

    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 website at: http://www.cms.gov/Medicare/Coding/ICD10/2016-ICD-10-PCS-and-GEMs.html, including guidelines for ICD-10-PCS Section ``X'' codes. We encourage providers to view the material provided on ICD-10-PCS Section ``X'' codes.

    4. Proposed FY 2019 Status of Technologies Approved for FY 2018 Add-On Payments

  50. Defitelioreg (Defibrotide)

    Jazz Pharmaceuticals submitted an application for new technology add-on payments for FY 2017 for defibrotide (Defitelioreg), a treatment for patients diagnosed with hepatic veno-occlusive disease (VOD) with evidence of multiorgan 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 asserted that Defitelioreg improves the survival rate of patients diagnosed with VOD with multi-organ failure by 23 percent.

    Defitelioreg received 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 2006. The applicant's New Drug Application (NDA) for Defitelioreg received FDA approval on March 30, 2016. The applicant confirmed that Defitelioreg was not available on the U.S. market as of the FDA NDA approval date of March 30, 2016. According to the applicant, commercial packaging could not be completed until the label for Defitelioreg was finalized with FDA approval, and that commercial shipments of Defitelioreg to hospitals and treatment centers began on April 4, 2016. Therefore, we agreed that, based on this information, the newness period for Defitelioreg begins on April 4, 2016, the date of its first commercial availability.

    The applicant received approval to use unique ICD-10-PCS procedure codes to describe the use of Defitelioreg, with an effective date of October 1, 2016. The approved ICD-10PCS procedure codes are: XW03392 (Introduction of defibrotide sodium anticoagulant into peripheral vein, percutaneous approach); and XW04392 (Introduction of defibrotide sodium anticoagulant into central vein, percutaneous approach).

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for Defitelioreg and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved Defitelioreg for new technology add-on payments for FY 2017 (81 FR 56906). With the new technology add-on payment application, the applicant estimated that the average Medicare beneficiary would require a dosage of 25 mg/kg/day for a minimum of 21 days of treatment. The recommended dose is 6.25 mg/kg given as a 2-hour intravenous infusion every 6 hours. Dosing should be based on a patient's baseline body weight, which is assumed to be 70 kg for an average adult patient. All vials contain 200 mg at a cost of $825 per vial. Therefore, we determined that cases involving the use of the Defitelioreg technology would incur an average cost per case of $151,800 (70 kg adult x 25 mg/kg/day x 21 days = 36,750 mg per patient/200 mg vial = 184 vials per patient x $825 per vial = $151,800). 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 new technology add-on payment amount for a case involving the use of Defitelioreg is $75,900.

    Our policy is that a medical service or technology may continue to be considered ``new'' for purposes of new technology add-on payments within 2 or 3 years after the point at which data begin to become available reflecting the inpatient hospital code assigned to the new service or technology. 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 new technology add-on payments for an additional year only if the 3-year anniversary date of the product's entry onto the U.S. market occurs in the latter half of the fiscal year (70 FR 47362).

    With regard to the newness criterion for Defitelioreg, we considered the beginning of the newness period to commence on the first day Defitelioreg was commercially available (April 4, 2016). Because the 3-year anniversary date of the entry of the Defitelioreg onto the U.S. market (April 4, 2019) will occur in the latter half of FY 2019, we are proposing to continue new technology add-on payments for this technology for FY 2019. We are

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    proposing that the maximum payment for a case involving Defitelioreg would remain at $75,900 for FY 2019. We are inviting public comments on our proposal to continue new technology add-on payments for Defitelioreg for FY 2019.

  51. EDWARDS INTUITY EliteTM Valve System (INTUITY) and LivaNova Perceval Valve (Perceval)

    Two manufacturers, Edwards Lifesciences and LivaNova, submitted applications for new technology add-on payments for FY 2018 for the INTUITY EliteTM Valve System (INTUITY) and the Perceval Valve (Perceval), respectively. Both of these technologies are prosthetic aortic valves inserted using surgical aortic valve replacement (AVR). Aortic valvular disease is relatively common, primarily manifested by aortic stenosis. Most aortic stenosis is due to calcification of the valve, either on a normal tri-leaflet valve or on a congenitally bicuspid valve. The resistance to outflow of blood is progressive over time, and as the size of the aortic orifice narrows, the heart must generate increasingly elevated pressures to maintain blood flow. Symptoms such as angina, heart failure, and syncope eventually develop, and portend a very serious prognosis. There is no effective medical therapy for aortic stenosis, so the diseased valve must be replaced or, less commonly, repaired.

    According to both applicants, the INTUITY valve and the Perceval valve are the first sutureless, rapid deployment aortic valves that can be used for the treatment of patients who are candidates for surgical AVR. Because potential cases representing patients who are eligible for treatment using the INTUITY and the Perceval aortic valve devices would group to the same MS-DRGs, and we believe that these devices 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 determined these two devices are substantially similar to each other and that it was appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS.

    With respect to the newness criterion, the INTUITY valve received FDA approval on August 12, 2016, and was commercially available on the U.S. market on August 19, 2016. The Perceval valve received FDA approval on January 8, 2016, and was commercially available on the U.S. market on February 29, 2016. In accordance with our policy, we stated in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38120) 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 is February 29, 2016, when the Perceval valve became commercially available. The ICD-10-PCS code approved to identify procedures involving the use of both devices when surgically implanted is ICD-10-PCS code X2RF032 (Replacement of aortic valve using zooplastic tissue, rapid deployment technique, open approach, new technology group 2).

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for the INTUITY and Perceval valves and consideration of the public comments we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved the INTUITY and Perceval valves for new technology add-on payments for FY 2018 (82 FR 38125). We stated that we believed that the use of a weighted-average of the cost of the standard valves based on the projected number of cases involving each technology to determine the maximum new technology add-on payment was most appropriate. To compute the weighted-cost average, we summed the total number of projected cases for each of the applicants, which equaled 2,429 cases (1,750 plus 679). 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: 72 percent for the INTUITY and 28 percent for the Perceval valve. We then multiplied the cost per case for the manufacturer specific valve by the case-weighted percentage (0.72 * $12,500 = $9,005.76 for INTUITY and 0.28 * $11,500 = $3,214.70 for the Perceval valve). This resulted in a case-weighted average cost of $12,220.46 for the valves. 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 INTUITY or Perceval valves is $6,110.23 for FY 2018.

    With regard to the newness criterion for the INTUITY and Perceval valves, we considered the newness period for the INTUITY and Perceval valves to begin February 29, 2016. 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 onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the technology onto the U.S. market (February 29, 2019) will occur in the first half of FY 2019, we are proposing to discontinue new technology add-on payments for the INTUITY and Perceval valves for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for the INTUITY and Perceval valves.

  52. GOREreg EXCLUDERreg Iliac Branch Endoprosthesis (Gore IBE Device)

    W. L. Gore and Associates, Inc. submitted an application for new technology add-on payments for the GOREreg EXCLUDERreg Iliac Branch Endoprosthesis (GORE IBE device) for FY 2017. The device consists of two components: The Iliac Branch Component (IBC) and the Internal Iliac Component (IIC). The applicant indicated that each endoprosthesis is pre-mounted on a customized delivery and deployment system allowing for controlled endovascular delivery via bilateral femoral access. According to the applicant, the device is designed to be used in conjunction with the GOREreg EXCLUDERreg AAA Endoprosthesis for the treatment of patients requiring repair of common iliac or aortoiliac aneurysms. When deployed, the GORE IBE device excludes the common iliac aneurysm from systemic blood flow, while preserving blood flow in the external and internal iliac arteries.

    With regard to the newness criterion, the applicant received pre-

    market FDA approval of the GORE IBE device on February 29, 2016. The following procedure codes describe the use of this technology: 04VC0EZ (Restriction of right common iliac artery with branched or fenestrated intraluminal device, one or two arteries, open approach); 04VC3EZ (Restriction of right common iliac artery with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach); 04VC4EZ (Restriction of right common iliac artery with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach); 04VD0EZ (Restriction of left common iliac artery with branched or fenestrated intraluminal device, one or two arteries, open approach); 04VD3EZ (Restriction of left common iliac artery with branched or fenestrated intraluminal device, one or two arteries, percutaneous approach); 04VD4EZ (Restriction of left common iliac artery with branched or fenestrated

    Page 20282

    intraluminal device, one or two arteries, percutaneous endoscopic approach).

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for the GORE IBE device and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved the GORE IBE device for new technology add-on payments for FY 2017 (81 FR 56909). With the new technology add-on payment application, the applicant indicated that the total operating cost of the GORE IBE device is $10,500. 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 GORE IBE device is $5,250.

    With regard to the newness criterion for the GORE IBE device, we considered the beginning of the newness period to commence when the GORE IBE device received FDA approval on February 29, 2016. 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 onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the GORE IBE device onto the U.S. market (February 28, 2019) will occur in the first half of FY 2019, we are proposing to discontinue new technology add-on payments for this technology for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for the GORE IBE device.

  53. 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 PRADAXAR (Dabigatran), which is also manufactured by Boehringer Ingelheim Pharmaceuticals, Inc.

    Dabigatran is an oral direct thrombin inhibitor currently indicated: (1) To reduce the risk of stroke and systemic embolism in patients who have been diagnosed with nonvalvular atrial fibrillation (NVAF); (2) for the treatment of deep venous thrombosis (DVT) and pulmonary embolism (PE) in patients who have been administered a parenteral anticoagulant for 5 to 10 days; (3) to reduce the risk of recurrence of DVT and PE in patients who have been previously treated; and (4) for the prophylaxis of DVT and PE in patients who have undergone hip replacement surgery. 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. Idarucizumab is indicated for the use in the treatment of patients who have been administered Pradaxa when reversal of the anticoagulant effects of dabigatran is needed for emergency surgery or urgent medical procedures or in life-threatening or uncontrolled bleeding.

    The applicant was granted approval to use unique ICD-10-PCS procedure codes that became effective October 1, 2016, to describe the use of this technology. The approved ICD-10-PCS procedure codes are: XW03331 (Introduction of Idarucizumab, Dabigatran reversal agent into peripheral vein, percutaneous approach, new technology group 1); and XW04331 (Introduction of Idarucizumab, Dabigatran reversal agent into central vein, percutaneous approach, new technology group 1).

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for Idarucizumab and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved Idarucizumab for new technology add-on payments for FY 2017 (81 FR 56897). With the new technology add-on payment application, the applicant indicated that the total operating cost of Idarucizumab is $3,500. 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 new technology add-on payment for a case involving Idarucizumab is $1,750.

    With regard to the newness criterion for Idarucizumab, we considered the beginning of the newness period to commence when Idarucizumab was approved by the FDA on October 16, 2015. 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 onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of Idarucizumab onto the U.S. market will occur in the first half of FY 2019 (October 15, 2018), we are proposing to discontinue new technology add-on payments for this technology for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for Idarucizumab.

  54. Ustekinumab (Stelarareg)

    Janssen Biotech submitted an application for new technology add-on payments for the Stelarareg induction therapy for FY 2018. Stelarareg received FDA approval as an intravenous (IV) infusion treatment of Crohn's disease (CD) on September 23, 2016, which added a new indication for the use of Stelarareg and route of administration for this monoclonal antibody. IV infusion of Stelarareg is indicated for the treatment of adult patients (18 years and older) diagnosed with moderately to severely active CD who have: (1) Failed or were intolerant to treatment using immunomodulators or corticosteroids, but never failed a tumor necrosis factor (TNF) blocker; or (2) failed or were intolerant to treatment using one or more TNF blockers. Stelarareg for IV infusion has only one purpose, induction therapy. Stelarareg must be administered intravenously by a health care professional in either an inpatient hospital setting or an outpatient hospital setting.

    Stelarareg for IV infusion is packaged in single 130 mg vials. Induction therapy consists of a single IV infusion dose using the following weight-based dosing regimen: Patients weighing less than ()55 kg, but less than ()85 kg are administered 520 mg of Stelarareg (4 vials). An average dose of Stelarareg administered through IV infusion is 390 mg (3 vials). Maintenance doses of Stelarareg are administered at 90 mg, subcutaneously, at 8-week intervals and may occur in the outpatient hospital setting.

    CD is an inflammatory bowel disease of unknown etiology, characterized by transmural inflammation of the gastrointestinal (GI) tract. Symptoms of CD may include fatigue, prolonged diarrhea with or without bleeding, abdominal pain, weight loss and fever. CD can affect any part of the GI tract

    Page 20283

    including the mouth, esophagus, stomach, small intestine, and large intestine. Conventional pharmacologic treatments of CD include antibiotics, mesalamines, corticosteroids, immunomodulators, tumor necrosis alpha (TNFalpha) inhibitors, and anti-integrin agents. Surgery may be necessary for some patients diagnosed with CD in which conventional therapies have failed.

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for Stelarareg and consideration of the public comments we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved Stelarareg for new technology add-on payments for FY 2018 (82 FR 38129). Cases involving Stelarareg that are eligible for new technology add-on payments are identified by ICD-10-PCS procedure code XW033F3 (Introduction of other New Technology therapeutic substance into peripheral vein, percutaneous approach, new technology group 3). With the new technology add-on payment application, the applicant estimated that the average Medicare beneficiary would require a dosage of 390 mg (3 vials) at a hospital acquisition cost of $1,600 per vial (for a total of $4,800). 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 new technology add-

    on payment amount for a case involving the use of Stelarareg is $2,400.

    With regard to the newness criterion for Stelarareg, we considered the beginning of the newness period to commence when Stelarareg received FDA approval as an IV infusion treatment of Crohn's disease (CD) on September 23, 2016. Because the 3-year anniversary date of the entry of Stelarareg onto the U.S. market (September 23, 2019) will occur after FY 2019, we are proposing to continue new technology add-on payments for this technology for FY 2019. We are proposing that the maximum payment for a case involving Stelarareg would remain at $2,400 for FY 2019. We are inviting public comments on our proposal to continue new technology add-on payments for Stelarareg for FY 2019.

  55. Vistogard\TM\ (Uridine Triacetate)

    BTG International Inc. submitted an application for new technology add-on payments for the VistogardTM for FY 2017. VistogardTM was developed as an emergency treatment for Fluorouracil toxicity.

    Chemotherapeutic agent 5-fluorouracil (5-FU) is used to treat specific solid tumors. It acts upon deoxyribonucleic acid (DNA) and ribonucleic acid (RNA) in the body, as uracil is a naturally occurring building block for genetic material. Fluorouracil is a fluorinated pyrimidine. As a chemotherapy agent, Fluorouracil is absorbed by cells and causes the cell to metabolize into byproducts that are toxic and used to destroy cancerous cells. According to the applicant, the byproducts fluorodoxyuridine monophosphate (F-dUMP) and floxuridine triphosphate (FUTP) are believed to do the following: (1) Reduce DNA synthesis; (2) lead to DNA fragmentation; and (3) disrupt RNA synthesis. Fluorouracil is used to treat a variety of solid tumors such as colorectal, head and neck, breast, and ovarian cancer. With different tumor treatments, different dosages, and different dosing schedules, there is a risk for toxicity in these patients. Patients may suffer from fluorouracil toxicity/death if 5-FU is delivered in slight excess or at faster infusion rates than prescribed. The cause of overdose can happen for a variety of reasons including: Pump malfunction, incorrect pump programming or miscalculated doses, and accidental or intentional ingestion.

    VistogardTM is an antidote to Fluorouracil toxicity and is a prodrug of uridine. Once the drug is metabolized into uridine, it competes with the toxic byproduct FUTP in binding to RNA, thereby reducing the impact FUTP has on cell death.

    With regard to the newness criterion, VistogardTM received FDA approval on December 11, 2015. However, as discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 56910), due to the delay in VistogardTM's commercial availability, we considered the newness period to begin March 2, 2016, instead of December 11, 2015. The applicant noted that the VistogardTM is the first FDAdashapproved antidote used to reverse fluorouracil toxicity. The applicant submitted a request for a unique ICD-10-PCS procedure code and was granted approval for the following procedure code: XW0DX82 (Introduction of Uridine Triacetate into Mouth and Pharynx, External Approach, new technology group 2). The new code became effective on October 1, 2016.

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for VistogardTM and consideration of the public comments we received in response to the FY 2017 IPPS/LTCH PPS proposed rule, we approved VistogardTM for new technology add-on payments for FY 2017 (81 FR 56912). With the new technology add-on payment application, the applicant stated that the total operating cost of VistogardTM is $75,000. 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 new technology add-on payment for a case involving VistogardTM is $37,500.

    With regard to the newness criterion for the VistogardTM, we considered the beginning of the newness period to commence upon the entry of VistogardTM onto the U.S. market on March 2, 2016. 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 onto the U.S. market occurs in the latter half of the upcoming fiscal year. Because the 3-year anniversary date of the entry of the VistogardTM onto the U.S. market (March 2, 2019) will occur in the first half of FY 2019, we are proposing to discontinue new technology add-on payments for this technology for FY 2019. We are inviting public comments on our proposal to discontinue new technology add-on payments for the VistogardTM.

  56. Bezlotoxumab (ZINPLAVA\TM\)

    Merck & Co., Inc. submitted an application for new technology add-

    on payments for ZINPLAVATM for FY 2018. ZINPLAVATM is indicated to reduce recurrence of Clostridium difficile infection (CDI) in adult patients who are receiving antibacterial drug treatment for a diagnosis of CDI who are at high risk for CDI recurrence. ZINPLAVATM is not indicated for the treatment of the presenting episode of CDI and is not an antibacterial drug.

    Clostridium difficile (C-diff) is a disease-causing anaerobic, spore forming bacteria that can affect the gastrointestinal (GI) tract. Some people carry the C-diff bacterium in their intestines, but never develop symptoms of an infection. The difference between asymptomatic colonization and pathogenicity is caused primarily by the production of an enterotoxin (Toxin A) and/or a cytotoxin (Toxin B). The presence of either or both toxins can lead to symptomatic CDI, which is defined as the acute onset of diarrhea with a documented infection with toxigenic C-diff, or the presence of either toxin A or B. The GI tract contains millions of bacteria, commonly referred to as ``normal flora'' or ``good

    Page 20284

    bacteria,'' which play a role in protecting the body from infection. Antibiotics can kill these good bacteria and allow the C-diff bacteria to multiply and release toxins that damage the cells lining the intestinal wall, resulting in a CDI. CDI is a leading cause of hospital-associated gastrointestinal illnesses. Persons at increased risk for CDI include people who are treated with current or recent antibiotic use, people who have encountered current or recent hospitalization, people who are older than 65 years, immunocompromised patients, and people who have recently had a diagnosis of CDI. CDI symptoms include, but are not limited to, diarrhea, abdominal pain, and fever. CDI symptoms range in severity from mild (abdominal discomfort, loose stools) to severe (profuse, watery diarrhea, severe pain, and high fevers). Severe CDI can be lifedashthreatening and, in rare cases, can cause bowel rupture, sepsis and organ failure. CDI is responsible for 14,000 deaths per year in the United States.

    C-diff produces two virulent, pro-inflammatory toxins, Toxin A and Toxin B, which target host colonocytes (that is, large intestine endothelial cells) by binding to endothelial cell surface receptors via combined repetitive oligopeptide (CROP) domains. These toxins cause the release of inflammatory cytokines leading to intestinal fluid secretion and intestinal inflammation. The applicant asserted that ZINPLAVATM targets Toxin B sites within the CROP domain rather than the C-diff organism itself. According to the applicant, by targeting C-diff Toxin B, ZINPLAVATM neutralizes Toxin B, prevents large intestine endothelial cell inflammation, symptoms associated with CDI, and reduces the recurrence of CDI.

    ZINPLAVATM received FDA approval on October 21, 2016, for reduction of recurrence of CDI in patients receiving antibacterial drug treatment for CDI and who are at high risk of CDI recurrence. ZINPLAVATM became commercially available on February 10, 2017. Therefore, the newness period for ZINPLAVATM began on February 10, 2017. The applicant submitted a request for a unique ICD-

    10-PCS procedure code and was granted approval for the following procedure codes: XW033A3 (Introduction of bezlotoxumab monoclonal antibody, into peripheral vein, percutaneous approach, new technology group 3) and XW043A3 (Introduction of bezlotoxumab monoclonal antibody, into central vein, percutaneous approach, new technology group 3).

    After evaluation of the newness, costs, and substantial clinical improvement criteria for new technology add-on payments for ZINPLAVATM and consideration of the public comments we received in response to the FY 2018 IPPS/LTCH PPS proposed rule, we approved ZINPLAVATM for new technology add-on payments for FY 2018 (82 FR 38119). With the new technology add-on payment application, the applicant estimated that the average Medicare beneficiary would require a dosage of 10 mg/kg of ZINPLAVATM administered as an IV infusion over 60 minutes as a single dose. According to the applicant, the WAC for one dose is $3,800. 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 new technology add-on payment amount for a case involving the use of ZINPLAVATM is $1,900.

    With regard to the newness criterion for ZINPLAVATM, we considered the beginning of the newness period to commence on February 10, 2017. Because the 3-year anniversary date of the entry of ZINPLAVATM onto the U.S. market (February 10, 2020) will occur after FY 2019, we are proposing to continue new technology add-on payments for this technology for FY 2019. We are proposing that the maximum payment for a case involving ZINPLAVATM would remain at $1,900 for FY 2019. We are inviting public comments on our proposal to continue new technology add-on payments for ZINPLAVATM for FY 2019.

    5. FY 2019 Applications for New Technology Add-On Payments

    We received 15 applications for new technology add-on payments for FY 2019. In accordance with the regulations under Sec. 412.87(c), applicants for new technology adddashon payments must have FDA approval or clearance by July 1 of the year prior to the beginning of the fiscal year that the application is being considered. A discussion of the 15 applications is presented below.

  57. KYMRIAH\TM\ (Tisagenlecleucel) and YESCARTA\TM\ (Axicabtagene Ciloleucel)

    Two manufacturers, Novartis Pharmaceuticals Corporation and Kite Pharma, Inc. submitted separate applications for new technology add-on payments for FY 2019 for KYMRIAHTM (tisagenlecleucel) and YESCARTATM (axicabtagene ciloleucel), respectively. Both of these technologies are CD-19-directed Tdashcell immunotherapies used for the purposes of treating patients with aggressive variants of nondashHodgkin lymphoma (NHL). We note that KYMRIAHTM was approved by the FDA on August 30, 2017, for use in the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse, which is a different indication and patient population than the new indication and targeted patient population for which the applicant submitted a request for approval of new technology add-on payments for FY 2019. Specifically, and as summarized in the following table, the new indication for which Novartis Pharmaceuticals Corporation is requesting approval for new technology add-on payments for KYMRIAHTM is as an autologous T-cell immune therapy indicated for use in the treatment of patients with relapsed/refractory (R/R) Diffuse Large BdashCell Lymphoma (DLBCL) not eligible for autologous stem cell transplant (ASCT). As of the time of the development of this proposed rule, Novartis Pharmaceuticals Corporation has been granted a Breakthrough Therapy designation by the FDA, and is awaiting FDA approval for the use of KYMRIAHTM under this new indication. We also note that Kite Pharma, Inc. previously submitted an application for approval for new technology add-on payments for FY 2018 for KTE-C19 for use as an autologous Tdashcell immune therapy in the treatment of adult patients with R/R aggressive B-cell NHL who are ineligible for ASCT. However, Kite Pharma, Inc. withdrew its application for KTE-C19 prior to publication of the FY 2018 IPPS/LTCH PPS final rule. Kite Pharma, Inc. has resubmitted an application for approval for new technology add-on payments for FY 2019 for KTE-C19 under a new name, YESCARTATM, for the same indication. Kite Pharma, Inc. received FDA approval for this original indication and treatment use of YESCARTATM on October 18, 2017. (We refer readers to the following table for a comparison of the indications and FDA approvals for KYMRIAHTM and YESCARTATM.)

    Page 20285

    Comparison of Indication and FDA Approval for KYMRIAHTM and YESCARTATM

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

    Description of indication for which new

    FY 2019 applicant technology name technology add-on payments are being FDA approval status

    requested

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

    KYMRIAHTM (Novartis Pharmaceuticals KYMRIAHTM: Autologous T-cell immune Breakthrough Therapy

    Corporation). therapy indicated for use in the designation granted by

    treatment of patients with relapsed/ FDA; FDA approval

    refractory (R/R) Diffuse Large B Cell pending.

    Lymphoma (DLBCL) not eligible for

    autologous stem cell transplant (ASCT).

    YESCARTATM (Kite Pharma, Inc.).......... YESCARTATM: Autologous T-cell immune FDA approval received 10/

    therapy indicated for use in the 18/2017.

    treatment of adult patients with R/R

    large B-cell lymphoma after two or more

    lines of systemic therapy, including

    DLBCL not otherwise specified, primary

    mediastinal large B-cell, high grade B-

    cell lymphoma, and DLBCL arising from

    follicular lymphoma.

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

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

    Technology approved for other FDA approval of other

    indications Description of other indication indication

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

    KYMRIAHTM (Novartis Pharmaceuticals KYMRIAHTM: CD-19dashdirected T-cell FDA approval received 8/30/

    Corporation). immunotherapy indicated for the use in 2017.

    the treatment of patients up to 25 years

    of age with B-cell precursor ALL that is

    refractory or in second or later relapse.

    YESCARTATM (Kite Pharma, Inc.).......... None...................................... N/A.

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

    We note that procedures involving the KYMRIAHTM and YESCARTATM therapies are both reported using the following ICD-10-PCS procedure codes: XW033C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into peripheral vein, percutaneous approach, new technology group 3); and XW043C3 (Introduction of engineered autologous chimeric antigen receptor t-cell immunotherapy into central vein, percutaneous approach, new technology group 3). We further note that, in section II.F.2.d. of the preamble of this proposed rule, we are proposing to assign cases reporting these ICD-10-PCS procedure codes to Pre-MDC MS-DRG 016 (Autologous Bone Marrow Transplant with CC/MCC) for FY 2019. We refer readers to section II.F.2.d. of this proposed rule for a complete discussion of the proposed assignment of cases reporting these procedure codes to Pre-MDC MS-DRG 016, which also includes a proposal to revise the title of MS-DRG 016 to reflect the proposed assignments.

    According to the applicants, patients with NHL represent a heterogeneous group of B-cell malignancies with varying patterns of behavior and response to treatment. B-cell NHL can be classified as either an aggressive, or indolent disease, with aggressive variants including DLBCL; primary mediastinal large Bdashcell lymphoma (PMBCL); and transformed follicular lymphoma (TFL). Within diagnoses of NHL, DLBCL is the most common subtype of NHL, accounting for approximately 30 percent of patients who have been diagnosed with NHL, and survival without treatment is measured in months.\4\ Despite improved therapies, only 50 to 70 percent of newly diagnosed patients are cured by standard first-line therapy alone. Furthermore, R/R disease continues to carry a poor prognosis because only 50 percent of patients are eligible for autologous stem cell transplantation (ASCT) due to advanced age, poor functional status, comorbidities, inadequate social support for recovery after ASCT, and provider or patient choice.5 6 7 8 Of the roughly 50 percent of patients that are eligible for ASCT, nearly 50 percent fail to respond to prerequisite salvage chemotherapy and cannot undergo ASCT.9 10 11 12 Second-line chemotherapy regimens studied to date include rituximab, ifosfamide, carboplatin and etoposide (R-ICE), and rituximab, dexamethasone, cytarabine, and cisplatin (R-DHAP), followed by consolidative high-dose therapy (HDT)/ASCT. Both regimens offer similar overall response rates (ORR) of 51 percent with 1 in 4 patients achieving long-term complete response (CR) at the expense of increased toxicity.\13\ Second-line treatment with dexamethasone, high-

    dose cytarabine, and cisplatin (DHAP) is considered a standard chemotherapy regimen, but is associated with substantial treatment-

    related toxicity.\14\ For patients who experience disease progression during or after primary treatment, the combination of HDT/ASCT remains the only curative option.\15\ According to the applicants,

    Page 20286

    given the modest response to seconddashline therapy and/or HDT/ASCT, the population of patients with the highest unmet need is those with chemorefractory disease, which include DLBCL, PMBCL, and TFL. These patients are defined as either progressive disease (PD) as best response to chemotherapy, stable disease as best response following greater than or equal to 4 cycles of first-line or 2 cycles of later-

    line therapy, or relapse within less than or equal to 12 months of ASCT.\16\ Based on these definitions and available data from a multidashcenter retrospective study (SCHOLAR-1), chemorefractory disease treated with current and historical standards of care has consistently poor outcomes with an ORR of 26 percent and median overall survival (OS) of 6.3 months.\17\

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

    \4\ Chaganti, S., et al., ``Guidelines for the management of diffuse large B-cell lymphoma,'' BJH Guideline, 2016. Available at: www.bit.do/bsh-guidelines.

    \5\ Matasar, M., et al., ``Ofatumumab in combination with ICE or DHAP chemotherapy in relapsed or refractory intermediate grade B-

    cell lymphoma,'' Blood, 25 July 2013, vol. 122, No 4.

    \6\ Hitz, F., et al., ``Outcome of patients with chemotherapy refractory and early progressive diffuse large B cell lymphoma after R-CHOP treatment,'' Blood (American Society of Hematology (ASH) annual meeting abstracts, poster session), 2010, pp. 116 (abstract #1751).

    \7\ Telio, D., et al., ``Salvage chemotherapy and autologous stem cell transplant in primary refractory diffuse large B-cell lymphoma: outcomes and prognostic factors,'' Leukemia & Lymphoma, 2012, vol. 53(5), pp. 836-41.

    \8\ Moskowitz, C.H., et al., ``Ifosfamide, carboplatin, and etoposide: a highly effective cytoreduction and peripheral-blood progenitor-cell mobilization regimen for transplant-eligible patients with non-Hodgkin's lymphoma,'' Journal of Clinical Oncology, 1999, vol. 17(12), pp. 3776-85.

    \9\ Crump, M., et al., ``Outcomes in patients with refractory aggressive diffuse large B-cell lymphoma (DLBCL): results from the international scholar-1 study,'' Abstract and poster presented at Pan Pacific Lymphoma Conference (PPLC), July 2016.

    \10\ Gisselbrecht, C., et al., ``Results from SCHOLAR-1: outcomes in patients with refractory aggressive diffuse large B-cell lymphoma (DLBCL),'' Oral presentation at European Hematology Association conference, July 2016.

    \11\ Iams, W., Reddy, N., ``Consolidative autologous hematopoietic stem-cell transplantation in first remission for non-

    Hodgkin lymphoma: current indications and future perspective,'' Ther Adv Hematol, 2014, vol. 5(5), pp. 153-67.

    \12\ Kantoff, P.W., et al., ``Sipuleucel-T immunotherapy for castration-resistant prostate cancer,'' N Engl J Med, 2010, vol. 363, pp. 411-422.

    \13\ Rovira, J., Valera, A., Colomo, L., et al., ``Prognosis of patients with diffuse large B cell lymphoma not reaching complete response or relapsing after frontline chemotherapy or immunochemotherapy,'' Ann Hematol, 2015, vol. 94(5), pp. 803-812.

    \14\ Swerdlow, S.H., Campo, E., Pileri, S.A., et al., ``The 2016 revision of the World Health Organization classification of lymphoid neoplasms,'' Blood, 2016, vol. 127(20), pp. 2375-2390.

    \15\ Koristka, S., Cartellieri, M., Arndt, C., et al., ``Tregs activated by bispecific antibodies: killers or suppressors?,'' OncoImmunology, 2015, vol. (3):e994441, DOI: 10.4161/

    2162402X.2014.994441.

    \16\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR-1 study,'' Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03-69620.

    \17\ Ibid.

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

    According to Novartis Pharmaceuticals Corporation, upon FDA approval of the additional indication, KYMRIAHTM will also be used for the treatment of patients with R/R DLBCL who are not eligible for ASCT. Novartis Pharmaceuticals Corporation describes KYMRIAHTM as a CDdash19dashdirected genetically modified autologous Tdashcell immunotherapy which utilizes peripheral blood Tdashcells, which have been reprogrammed with a transgene encoding, a chimeric antigen receptor (CAR), to identify and eliminate CD-19-

    expressing malignant and normal cells. Upon binding to CD-19-expressing cells, the CAR transmits a signal to promote T-cell expansion, activation, target cell elimination, and persistence of KYMRIAHTM cells. The transduced Tdashcells expand in vivo to engage and eliminate CD-19-expressing cells and may exhibit immunological endurance to help support long-lasting remission. 18 19 20 21 According to the applicant, no other agent currently used in the treatment of patients with R/R DLBCL employs gene modified autologous cells to target and eliminate malignant cells.

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

    \18\ KYMRIAHTM prescribing information, East Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.

    \19\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``Tdashcells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,'' Sci Transl Med, 2011, vol. 3(95), pp, 95ra73.

    \20\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.

    \21\ Wang, X., Riviere, I., ``Clinical manufacturing of CART cells: foundation of a promising therapy,'' Mol Ther Oncolytics, 2016, vol. 3, pp. 16015.

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

    According to Kite Pharma, Inc., YESCARTATM is indicated for the use in the treatment of adult patients with R/R large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma. YESCARTA is not indicated for the treatment of patients with primary central nervous system lymphoma. The applicant for YESCARTATM described the technology as a CD-

    19-directed genetically modified autologous Tdashcell immunotherapy that binds to CD-19-expressing cancer cells and normal Bdashcells. These normal Bdashcells are considered to be non-essential tissue, as they are not required for patient survival. According to the applicant, studies demonstrated that following anti-CD-19 CAR Tdashcell engagement with CD-19-expressing target cells, the CD-28 and CD-3-zeta co-stimulatory domains activate downstream signaling cascades that lead to T-cell activation, proliferation, acquisition of effector functions and secretion of inflammatory cytokines and chemokines. This sequence of events leads to the elimination of CD-19-expressing tumor cells.

    Both applicants expressed that their technology is the first treatment of its kind for the targeted adult population. In addition, both applicants asserted that their technology is new and does not use a substantially similar mechanism of action or involve the same treatment indication as any other currently FDA-approved technology. We note that, at the time each applicant submitted its new technology add-

    on payment application, neither technology had received FDA approval for the indication for which the applicant requested approval for the new technology add-on payment; KYMRIAHTM has been granted Breakthrough Therapy designation for the use in the treatment of patients for the additional indication that is the subject of its new technology add-on application and, as of the time of the development of this proposed rule, is awaiting FDA approval. However, as stated earlier, YESCARTATM received FDA approval for use in the treatment of patients and the indication stated in its application on October 18, 2017, after each applicant submitted its new technology add-on payment application.

    As noted, according to both applicants, KYMRIAHTM and YESCARTATM are the first CAR T immunotherapies of their kind. Because potential cases representing patients who may be eligible for treatment using KYMRIAHTM and YESCARTATM would group to the same MS-DRGs (because the same ICD-10-CM diagnosis codes and ICD-10-PCS procedures codes are used to report treatment using either KYMRIAHTM or YESCARTATM), and we believe that these technologies 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 disagree with the applicants and believe these two technologies are substantially similar to each other and that it is appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS. For these reasons, and as discussed further below, we would intend to make one determination regarding approval for new technology add-on payments that would apply to both applications, and in accordance with our policy, would use the earliest market availability date submitted as the beginning of the newness period for both KYMRIAHTM and YESCARTATM. We are inviting public comments on whether KYMRIAHTM and YESCARTATM are substantially similar.

    With respect to the newness criterion, as previously stated, YESCARTATM received FDA approval on October 18, 2017. According to the applicant, prior to FDA approval, YESCARTATM had been available in the U.S. only on an investigational basis under an investigational new drug (IND) application. For the same IND patient population, and until commercial availability, YESCARTATM was available under an Expanded Access Program (EAP) which started on May 17, 2017. The applicant stated that it did not recover any costs associated with the EAP. According to the applicant, the first commercial shipment of YESCARTATM was received by a certified treatment center on November 22, 2017. As previously indicated, KYMRIAHTM is not currently approved by the FDA for use in the treatment of patients with R/R DLBCL that are not eligible for ASCT; the technology has been granted Breakthrough Therapy designation by the FDA. The applicant anticipates receipt of FDA approval to occur in the second quarter of 2018. We believe that, in accordance with our policy, if these technologies are substantially similar to each other, it is appropriate to use the earliest market availability date submitted as the beginning of the newness period for both technologies. Therefore, based on

    Page 20287

    our policy, with regard to both technologies, if the technologies are approved for new technology add-on payments, we believe that the beginning of the newness period would be November 22, 2017.

    We previously stated that, because we believe these two technologies are substantially similar to each other, we believe it is appropriate to evaluate both technologies as one application for new technology add-on payments under the IPPS. The applicants submitted separate cost and clinical data, and we reviewed and discuss each set of data separately. However, we would intend to make one determination regarding new technology add-on payments that would apply to both applications. 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 we believe that continuing our current practice of extending new technology add-on payments 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 to submit separate new technology add-on payment 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).

    If substantially similar technologies are submitted for review in different (and subsequent) years, rather than the same year, we would evaluate and make a determination on the first application and apply that same determination to the second application. However, because the technologies have been submitted for review in the same year, and because we believe they are substantially similar to each other, we believe that it is appropriate to consider both sets of cost data and clinical data in making a determination, and we do not believe that it is possible to choose one set of data over another set of data in an objective manner. We are inviting public comments on our proposal to evaluate KYMRIAHTM and YESCARTATM as one application for new technology add-on payments under the IPPS.

    As stated earlier, we believe that KYMRIAHTM and YESCARTATM are substantially similar to each other for purposes of analyzing these two applications as one application. We also need to determine whether KYMRIAHTM and YESCARTATM are substantially similar to existing technologies prior to their approval by the FDA and their release onto the U.S. market. 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 respect to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant for KYMRIAHTM asserted that its unique design, which utilizes features that were not previously included in traditional cytotoxic chemotherapeutic or immunotherapeutic agents, constitutes a new mechanism of action. The deployment mechanism allows for identification and elimination of CD-19-expressing malignant and non-malignant cells, as well as possible immunological endurance to help support long-lasting remission.22 23 24 25 The applicant provided context regarding how KYMRIAHTM's unique design contributes to a new mechanism of action by explaining that peripheral blood T-cells, which have been reprogrammed with a transgene encoding, a CAR, identify and eliminate CDdash19-expressing malignant and nonmalignant cells. As explained by the applicant, upon binding to CD-19-expressing cells, the CAR transmits a signal to promote T-cell expansion, activation, target cell elimination, and persistence of KYMRIAHTM cells.26 27 28 According to the applicant, transduced Tdashcells expand in vivo to engage and eliminate CD-19-expressing cells and may exhibit immunological endurance to help support long-lasting remission.29 30 31

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

    \22\ KYMRIAH prescribing information. East Hanover, NJ: Novartis Pharmaceuticals Corp; 2017.

    \23\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,'' Sci Transl Med, 2011, vol. 3(95), pp. 95ra73.

    \24\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.

    \25\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric antigen receptor T cells for sustained remissions in leukemia,'' N Engl J Med, 2014, vol. 371(16), pp. 1507-1517.

    \26\ KYMRIAHTM prescribing information, East Hanover, NJ: Novartis Pharmaceuticals Corp, 2017.

    \27\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``Tdashcells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,'' Sci Transl Med, 2011, 3(95), pp, 95ra73.

    \28\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.

    \29\ Kalos, M., Levine, B.L., Porter, D.L., et al., ``T cells with chimeric antigen receptors have potent antitumor effects and can establish memory in patients with advanced leukemia,'' Sci Transl Med, 2011, vol. 3(95), pp. 95rs73.

    \30\ FDA Briefing Document. Available at: https://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/OncologicDrugsAdvisoryCommittee/UCM566168.pdf.

    \31\ Maude, S.L., Frey, N., Shaw, P.A., et al., ``Chimeric antigen receptor Tdashcells for sustained remissions in leukemia,'' N Engl J Med, 2014, vol. 371(16), pp. 1507-1517.

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

    The applicant for YESCARTATM stated that YESCARTATM is the first engineered autologous cellular immunotherapy comprised of CAR Tdashcells that recognizes CD-19 express cancer cells and normal B-cells with efficacy in patients with R/R large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma as demonstrated in a multi-centered clinical trial. Therefore, the applicant believed that YESCARTATM's mechanism of action is distinct and unique from any other cancer drug or biologic that is currently approved for use in the treatment of patients who have been diagnosed with aggressive B-

    cell NHL, namely single-agent or combination chemotherapy regimens. The applicant also pointed out that YESCARTATM is the only available therapy that has been granted FDA approval for the treatment of adult patients with R/R large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL not otherwise specified, PMBCL, high grade B-cell lymphoma, and DLBCL arising from follicular lymphoma.

    With respect to the second and third criteria, whether a product is assigned to the same or a different MS-DRG and 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 for KYMRIAHTM indicated that the technology is used in the treatment of the same patient population, and potential cases representing patients that may be eligible for treatment using KYMRIAHTM would be assigned to the same MS-DRGs as cases involving

    Page 20288

    patients with a DLBCL diagnosis. Potential cases representing patients that may be eligible for treatment using KYMRIAHTM map to 437 separate MS-DRGs, with the top 20 MS-DRGs covering approximately 68 percent of all patients who have been diagnosed with DLBCL. For patients with DLBCL and who have received chemotherapy during their hospital stay, the target population mapped to 8 separate MS-DRGs, with the top 2 MS-DRGs covering over 95 percent of this population: MS-DRGs 847 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with CC), and 846 (Chemotherapy without Acute Leukemia as Secondary Diagnosis with MCC). The applicant for YESCARTATM submitted findings that potential cases representing patients that may be eligible for treatment using YESCARTATM span 15 unique MS-

    DRGs, 8 of which contain more than 10 cases. The most common MS-DRGs were: MS-DRGs 840 (Lymphoma and Non-Acute Leukemia with MCC), 841 (Lymphoma and Non-Acute Leukemia with CC), and 823 (Lymphoma and Non-

    Acute Leukemia with other O.R. Procedures with MCC). These 3 MS-DRGs accounted for 628 (76 percent) of the 827 cases. While the applicants for KYMRIAHTM and YESCARTATM submitted different findings regarding the most common MS-DRGs to which potential cases representing patients who may be eligible for treatment involving their technology would map, we believe that, under the current MS-DRGs (FY 2018), potential cases representing patients who may be eligible for treatment involving either KYMRIAHTM or YESCARTATM would map to the same MS-DRGs because the same ICD-10-CM diagnosis codes and ICD-10-PCS procedures codes would be used to report cases for patients who may be eligible for treatment involving KYMRIAHTM and YESCARTATM. Furthermore, as noted above, we are proposing that cases reporting these ICD-10-PCS procedure codes would be assigned to MS-DRG 016 for FY 2019. Therefore, under this proposal, for FY 2019, cases involving the utilization of KYMRIAHTM and YESCARTATM would continue to map to the same MS-DRGs.

    The applicant for YESCARTATM also addressed the concern expressed by CMS in the FY 2018 IPPS/LTCH PPS proposed rule regarding Kite Pharma Inc.'s FY 2018 new technology add-on payment application for the KTE-C19 technology (82 FR 19888). At the time, CMS expressed concern that KTE-C19 may use the same or similar mechanism of action as the Bi-Specific T-Cell engagers (BiTE) technology. The applicant for YESCARTATM explained that YESCARTATM has a unique and distinct mechanism of action that is substantially different from BiTE's or any other drug or biologic currently assigned to any MS-DRG in the FY 2016 MedPAR Hospital Limited Data Set. In providing more detail regarding how YESCARTATM is different from the BiTE technology, the applicant explained that the BiTE technology is not an engineered autologous Tdashcell immunotherapy derived from a patient's own Tdashcells. Instead, it is a bi-specific Tdashcell engager that recognizes CD-19 and CD-3 cancer cells. Unlike engineered Tdashcell therapy, BiTE does not have the ability to enhance the proliferative and cytolytic capacity of T-cells through ex-vivo engineering. Further, BiTE is approved for the treatment of patients who have been diagnosed with Philadelphia chromosomedashnegative relapsed or refractory B-cell precursor acute lymphoblastic leukemia (ALL) and is not approved for patients with relapsed or refractory large B-cell lymphoma, whereas YESCARTATM is indicated for use in the treatment of adult patients with R/R aggressive B-cell NHL who are ineligible for ASCT.

    The applicant for YESCARTATM also indicated that its mechanism of action is not the same or similar to the mechanism of action used by KYMRIAHTM's currently available FDAdashapproved CD-19-directed genetically modified autologous Tdashcell immunotherapy indicated for use in the treatment of patients up to 25 years of age with B-cell precursor acute lymphoblastic leukemia (ALL) that is refractory or in second or later relapse.\32\ The applicant for YESCARTATM stated that the mechanism of action is different from KYMRIAHTM's FDAdashapproved therapy because the spacer, transmembrane and co-

    stimulatory domains of YESCARTATM are different from those of KYMRIAHTM. The applicant explained that YESCARTATM is comprised of a CD-28 codashstimulatory domain and KYMRIAHTM has 4-1BB co-stimulatory domain. Further, the applicant stated the manufacturing processes of the two immunotherapies are also different, which may result in cell composition differences leading to possible efficacy and safety differences.

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

    \32\ Food and Drug Administration. Available at: www.accessdata.fda.gov/scripts/opdlisting/oopd/.

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

    While the applicant for YESCARTATM stated how its technology is different from KYMRIAHTM, because both technologies are CD-19-directed Tdashcell immunotherapies used for the purpose of treating patients with aggressive variants of NHL, we believe that YESCARTATM and KYMRIAHTM are substantially similar treatment options. Furthermore, we also are concerned that there may be an age overlap (18 to 25) between the two different patient populations for the currently approved KYMRIAHTM technology and YESCARTATM technology. The currently approved KYMRIAHTM technology is indicated for use in the treatment of patients who are up to 25 years of age and YESCARTATM technology is indicated for use in the treatment of adult patients.

    As noted earlier, the applicant has asserted that YESCARTATM is not substantially similar to KYMRIAHTM. Under this scenario, if both YESCARTATM and KYMRIAHTM meet all of the new technology add-on payment criteria and are approved for new technology add-on payments for FY 2019, for purposes of making the new technology adddashon payment, because procedures utilizing either YESCARTATM or KYMRIAHTM CAR T-cell therapy drugs are reported using the same ICD-10-PCS procedure codes, in order to accurately pay the new technology adddashon payment to hospitals that perform procedures utilizing either technology, it may be necessary to use alternative coding mechanisms to make the new technology adddashon payments. CMS is inviting comments on alternative coding mechanisms to make the new technology add-on payments, if necessary.

    We are inviting public comments on whether KYMRIAHTM and YESCARTATM are substantially similar to existing technologies and whether the technologies meet the newness criterion.

    As we stated above, each applicant submitted separate analysis regarding the cost criterion for each of their products, and both applicants maintained that their product meets the cost criterion. We summarize each analysis below.

    With regard to the cost criterion, the applicant for KYMRIAHTM searched the FY 2016 MedPAR claims data file to identify potential cases representing patients who may be eligible for treatment using KYMRIAHTM. The applicant identified claims that reported an ICD-10-CM diagnosis code of: C83.30 (DLBCL, unspecified site); C83.31 (DLBCL, lymph nodes of head, face and neck); C83.32 (DLBCL, intrathoracic lymph nodes); C83.33 (DLBCL, intra-

    abdominal lymph nodes); C83.34 (DLBCL, lymph nodes of axilla and upper limb); C83.35 (DLBCL, lymph nodes of inquinal region and lower

    Page 20289

    limb); C83.36 (DLBCL, intrapelvic lymph nodes); C83.37 (DLBCL, spleen); C83.38 (DLBCL, lymph nodes of multiple sites); or C83.39 (DLBCL, extranodal and solid organ sites). The applicant also identified potential cases where patients received chemotherapy using two encounter codes, Z51.11 (Antineoplastic chemotherapy) and Z51.12 (Antineoplastic immunotherapy), in conjunction with DLBCL diagnosis codes.

    Applying the parameters above, the applicant for KYMRIAHTM identified a total of 22,589 DLBCL potential cases that mapped to 437 MS-DRGs. The applicant chose the top 20 MS-DRGs which made up a total of 15,451 potential cases at 68 percent of total cases. Of the 22,589 total DLBCL potential cases, the applicant also provided a breakdown of DLBCL potential cases where chemotherapy was used, and DLBCL potential cases where chemotherapy was not used. Of the 6,501 DLBCL potential cases where chemotherapy was used, MS-DRGs 846 and 847 accounted for 6,181 (95 percent) of the 6,501 cases. Of the 16,088 DLBCL potential cases where chemotherapy was not used, the applicant chose the top 20 MS-DRGs which made up a total of 9,333 potential cases at 58 percent of total cases. The applicant believed the distribution of patients that may be eligible for treatment using KYMRIAHTM will include a wide variety of MS-DRGs. As such, the applicant conducted an analysis of three scenarios: Potential DLBCL cases, potential DLBCL cases with chemotherapy, and potential DLBCL cases without chemotherapy.

    The applicant removed reported historic charges that would be avoided through the use of KYMRIAHTM. Next, the applicant removed 50 percent of the chemotherapy pharmacy charges that would not be required for patients that may be eligible to receive treatment using KYMRIAHTM. The applicant standardized the charges and then applied an inflation factor of 1.09357, which is the 2dashyear inflation factor in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527), to update the charges from FY 2016 to FY 2018. The applicant did not add charges for KYMRIAHTM to its analysis. However, the applicant provided a cost analysis related to the three categories of claims data it previously researched (that is, potential DLBCL cases, potential DLBCL cases with chemotherapy, and potential DLBCL cases without chemotherapy). The applicant's analysis showed the inflated average casedashweighted standardized charge per case for potential DLBCL cases, potential DLBCL cases with chemotherapy, and potential DLBCL cases without chemotherapy was $63,271, $39,723, and $72,781, respectively. The average case-weighted threshold amount for potential DLBCL cases, potential DLBCL cases with chemotherapy, and potential DLBCL cases without chemotherapy was $58,278, $48,190, and $62,355 respectively. While the inflated average case-weighted standardized charge per case ($39,723) is lower than the average case-weighted threshold amount ($48,190) for potential DLBCL cases with chemotherapy, the applicant expects the cost of KYMRIAHTM to be higher than the new technology add-on payment threshold amount for all three cohorts. Therefore, the applicant maintained that it meets the cost criterion.

    We note that, as discussed earlier, in section II.F.2.d. of the preamble of this proposed rule, we are proposing to assign the ICD-10-

    PCS procedure codes that describe procedures involving the utilization of these CAR T-cell therapy drugs and cases representing patients receiving treatment involving CAR T-cell therapy procedures to Pre-MDC MS-DRG 016 for FY 2019. Therefore, in addition to the analysis above, we compared the inflated average casedashweighted standardized charge per case from all three cohorts above to the average case-weighted threshold amount for MS-DRG 016. The average case-weighted threshold amount for MS-DRG 016 from Table 10 in the FY 2018 IPPS/LTCH PPS final rule is $161,058. Although the inflated average case-weighted standardized charge per case for all three cohorts ($63,271, $39,723, and $72,781) is lower than the average case-weighted threshold amount for MS-DRG 016, similar to above, the applicant expects the cost of KYMRIAHTM to be higher than the new technology add-on payment threshold amount for MS-DRG 016. Therefore, it appears that KYMRIAHTM would meet the cost criterion under this scenario as well.

    We appreciate the applicant's analysis. However, we note that the applicant did not provide information regarding which specific historic charges were removed in conducting its cost analysis. Nonetheless, we believe that even if historic charges were identified and removed, the applicant would meet the cost criterion because, as indicated, the applicant expects the cost of KYMRIAHTM to be higher than the new technology add-on payment threshold amounts listed earlier.

    We are inviting public comments on whether KYMRIAHTM meets the cost criterion.

    With regard to the cost criterion in reference to YESCARTATM, the applicant conducted the following analysis. The applicant examined FY 2016 MedPAR claims data restricted to patients discharged in FY 2016. The applicant included potential cases reporting an ICD-10 diagnosis code of C83.38. Noting that only MS-DRGs 820 (Lymphoma and Leukemia with Major O.R. Procedure with MCC), 821 (Lymphoma and Leukemia with Major O.R. Procedure with CC), 823 and 824 (Lymphoma and NondashAcute Leukemia with Other O.R. Procedure with MCC, with CC, respectively), 825 (Lymphoma and Non Acute Leukemia with Other O.R Procedure without CC/MCC), and 840, 841 and 842 (Lymphoma and Non-Acute Leukemia with MCC, with CC and without CC/MCC, respectively) consisted of 10 or more cases, the applicant limited its analysis to these 8 MS-DRGs. The applicant identified 827 potential cases across these MS-DRGs. The average case-weighted unstandardized charge per case was $126,978. The applicant standardized charges using FY 2016 standardization factors and applied an inflation factor of 1.09357 from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527). The applicant for YESCARTATM did not include the cost of its technology in its analysis.

    Included in the average case-weighted standardized charge per case were charges for the current treatment components. Therefore, the applicant for YESCARTATM removed 20 percent of radiology charges to account for chemotherapy, and calculated the adjusted average case-weighted standardized charge per case by subtracting these charges from the standardized charge per case. Based on the distribution of potential cases within the eight MS-DRGs, the applicant case-weighted the final inflated average case-weighted standardized charge per case. This resulted in an inflated average case-weighted standardized charge per case of $118,575. Using the FY 2018 IPPS Table 10 thresholds, the average case-weighted threshold amount was $72,858. Even without considering the cost of its technology, the applicant maintained that because the inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the technology meets the cost criterion.

    We note that, as discussed earlier, in section II.F.2.d. of the preamble of this proposed rule, we are proposing to assign the ICD-10-

    PCS procedure codes that describe procedures involving the utilization of these CAR T-cell therapy

    Page 20290

    drugs and cases representing patients receiving treatment involving CAR T-cell therapy procedures to Pre-MDC MS-DRG 016 for FY 2019. Therefore, in addition to the analysis above, we compared the inflated average case-weighted standardized charge per case ($118,575) to the average case-weighted threshold amount for MS-DRG 016. The average case-

    weighted threshold amount for MS-DRG 016 from Table 10 in the FY 2018 IPPS/LTCH PPS final rule is $161,058. Although the inflated average case-weighted standardized charge per case is lower than the average case-weighted threshold amount for MS-DRG 016, the applicant expects the cost of YESCARTATM to be higher than the new technology add-on payment threshold amount for MS-DRG 016. Therefore, it appears that YESCARTATM would meet the cost criterion under this scenario as well.

    We are inviting public comments on whether YESCARTATM technology meets the cost criterion.

    With regard to substantial clinical improvement for KYMRIAHTM, the applicant asserted that several aspects of the treatment represent a substantial clinical improvement over existing technologies. The applicant believed that KYMRIAHTM allows access for a treatment option for those patients who are unable to receive standard of care treatment. The applicant stated in its application that there are no currently FDA-approved treatment options for patients with R/R DLBCL who are ineligible for or who have failed ASCT. Additionally, the applicant maintained that KYMRIAHTM significantly improves clinical outcomes, including ORR, CR, OS, and durability of response, and allows for a manageable safety profile. The applicant asserted that, when compared to the historical control data (SCHOLAR-1) and the currently available treatment options, it is clear that KYMRIAHTM significantly improves clinical outcomes for patients with R/R DLBCL who are not eligible for ASCT. The applicant conveyed that, given that the patient population has no other available treatment options and an expected very short lifespan without therapy, there are no randomized controlled trials of the use of KYMRIAHTM in patients with R/R DLBCL and, therefore, efficacy assessments must be made in comparison to historical control data. The SCHOLAR-1 study is the most comprehensive evaluation of the outcome of patients with refractory DLBCL. SCHOLAR-1 includes patients from two large randomized controlled trials (Lymphoma Academic Research Organization-CORAL and Canadian Cancer Trials Group LY.12) and two clinical databases (MD Anderson Cancer Center and University of Iowa/

    Mayo Clinic Lymphoma Specialized Program of Research Excellence).\33\

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    \33\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR-1 study,'' Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03-769620.

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

    The applicant for KYMRIAHTM conveyed that the PARMA study established high-dose chemotherapy and ASCT as the standard treatment for patients with R/R DLBCL.\34\ However, according to the applicant, many patients with R/R DLBCL are ineligible for ASCT because of medical frailty. Patients who are ineligible for ASCT because of medical frailty would also be adversely affected by high-dose chemotherapy regimens.\35\ Lowering the toxicity of chemotherapy regimens becomes the only treatment option, leaving patients with little potential for therapeutic outcomes. According to the applicant, the lack of efficacy of these aforementioned salvage regimens was demonstrated in nine studies evaluating combined chemotherapeutic regimens in patients who were either refractory to firstdashline or first salvage. Chemotherapy response rates ranged from 0 percent to 23 percent with OS less than 10 months in all studies.\36\ For patients who do not respond to combined therapy regimens, the National Comprehensive Cancer Network (NCCN) offers only clinical trials or palliative care as therapeutic options.\37\

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    \34\ Philip, T., Guglielmi, C., Hagenbeek, A., et al., ``Autologous bone marrow transplantation as compared with salvage chemotherapy in relapses of chemotherapy-sensitive non-Hodgkin's lymphoma,'' N Engl J Med, 1995, vol. 333(23), pp. 1540-1545.

    \35\ Friedberg, J.W., ``Relapsed/refractory diffuse large B-cell lymphoma,'' Hematology AM Soc Hematol Educ Program, 2011, vol. (1), pp. 498-505.

    \36\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR-1 study,'' Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03-769620.

    \37\ National Comprehensive Cancer Network, NCCN Clinical Practice Guidelines in Oncology (NCCN GuidelinesR), ``B-cell lymphomas: Diffuse large b-cell lymphoma and follicular lymphoma (Version 3.2017),'' May 25, 2017. Available at: https://www.nccn.org/professionals/physician_gls/pdf/b-cell_blocks.pdf.

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    According to the applicant for KYMRIAHTM, the immunomodulatory agent Lenalidomide was only able to show an ORR of 30 percent, a CR rate of 8 percent, and a 4.6-month median duration of response.\38\ Mdashtor inhibitors such as Everolimus and Temserolimus have been studied as single agents, or in combination with Rituximab, as have newer monoclonal antibodies Dacetuzumab, Ofatumomab and Obinutuzumab. However, none induced a CR rate higher than 20 percent or showed a median duration of response longer than 1 year.\39\

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

    \38\ Klyuchnikov, E., Bacher, U., Kroll, T., et al., ``Allogeneic hematopoietic cell transplantation for diffuse large B cell lymphoma: who, when and how?,'' Bone Marrow Transplant, 2014, vol. 49(1), pp. 1-7.

    \39\ Ibid.

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

    According to the applicant, although controversial, allogeneic stem cell transplantation (allo-SCT) has been proposed for patients who have been diagnosed with R/R disease. It is hypothesized that the malignant cell will be less able to escape the immune targeting of allogenic T-

    cells--known as the graft-vs-lymphoma effect.\40\ \41\ The use of allo-

    SCT is limited in patients who are not eligible for ASCT because of the high rate of morbidity and mortality. This medically frail population is generally excluded from participation. The population most impacted by this is the elderly, who are often excluded based on age alone. In seven studies evaluating allo-SCT in patients with R/R DLBCL, the median age at transplant was 43 years old to 52 years old, considerably lower than the median age of patients with DLBCL of 64 years old. Only two studies included any patients over 66 years old. In these studies, allo-SCT provided OS rates ranging from 18 percent to 52 percent at 3 to 5 years, but was accompanied by treatment-related mortality rates ranging from 23 percent to 56 percent.\42\ According to the applicant, this toxicity and efficacy profile of allo-SCT substantially limits its use, especially in patients 65 years old and older. Given the high unmet medical need, the applicant maintained that KYMRIAHTM represents a substantial clinical improvement by offering a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments.

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

    \40\ Ibid.

    \41\ Maude, S.L., Teachey, D.T., Porter, D.L., Grupp, S.A., ``CD19-targeted chimeric antigen receptor T-cell therapy for acute lymphoblastic leukemia,'' Blood, 2015, vol. 125(26), pp. 4017-4023.

    \42\ Klyuchnikov, E., Bacher, U., Kroll, T., et al., ``Allogeneic hematopoietic cell transplantation for diffuse large B cell lymphoma: who, when and how?,'' Bone Marrow Transplant, 2014, vol. 49(1), pp. 1-7.

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

    To express how KYMRIAHTM has improved clinical outcomes, including ORR, CR rate, OS, and durability of response, the applicant referenced clinical trials in which KYMRIAHTM was tested. Study 1 was a singledasharm, opendashlabel, multidashsite, global Phase II study to determine the safety and efficacy of tisagenlecleucel in patients

    Page 20291

    with R/R DLBCL (CCTL019C2201/CT02445248/`JULIET' study).\43\ \44\ \45\ Key inclusion criteria included patients who were 18 years old and older, patients with refractory to at least two lines of chemotherapy and either relapsed post ASCT or who were ineligible for ASCT, measurable disease at the time of infusion, and adequate organ and bone marrow function. The study was conducted in three phases. In the screening phase patient eligibility was assessed and patient cells collected for product manufacture. Patients were also able to receive bridging, cytotoxic chemotherapy during this time. In the pre-treatment phase patients underwent a restaging of disease followed by lymphodepleting chemotherapy with fludarabine 25mg/m2 x3 and cyclophosphamide 250mg/m2/d x3 or bendamustine 90mg/m2/d x2 days. The treatment and followdashup phase began 2 to 14 days after lymphodepleting chemotherapy, when the patient received a single infusion of tisagenlecleucel with a target dose of 5x10\8\ CTL019 transduced viable cells. The primary objective was to assess the efficacy of tisagenlecleucel, as measured by the best overall response (BOR), which was defined as CR or partial response (PR). It was assessed on the Chesson 2007 response criteria amended by Novartis Pharmaceutical Corporation as confirmed by an Independent Review Committee (IRC). One hundred forty-seven patients were enrolled, and 99 of them were infused with tisagenlecleucel. Forty-three patients discontinued prior to infusion (9 due to inability to manufacture and 34 due to patientdashrelated issues).\46\ The median age of treated patients was 56 years old with a range of 24 to 75; 20 percent were older than 65 years old. Patients had received 2 to 7 prior lines of therapy, with 60 percent receiving 3 or more therapies, and 51 percent having previously undergone ASCT. A primary analysis was performed on 81 patients infused and followed for more than or at least 3 months. In this primary analysis, the BOR was 53 percent; the study met its primary objective based on statistical analysis (that is, testing whether BOR was greater than 20 percent, a clinically relevant threshold chosen based on the response to chemotherapy in a patient with R/R DLBCL). Forty-three percent (43 percent) of evaluated patients reached a CR, and 14 percent reached a PR. ORR evaluated at 3 months was 38 percent with a distribution of 32 percent CR and 6 percent PR. All patients in CR at 3 months continued to be in CR. ORR was similar across subgroups including 64.7 percent response in patients who were older than 65 years old, 61.1 percent response in patients with Grade III/IV disease at the time of enrollment, 58.3 percent response in patients with Activated Bdashcell, 52.4 percent response in patients with Germinal Center Bdashcell subtype, and 60 percent response in patients with double and triple hit lymphoma. Durability of response was assessed based on relapse free survival (RFS), which was estimated at 74 percent at 6 months.

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

    \43\ Data on file, Oncology clinical trial protocol CCTL019C2201: ``A Phase II, singledasharm, multidashcenter trial to determine the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large Bcell lymphoma (DLBCL),'' Novartis Pharmaceutical Corp, 2015.

    \44\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,'' Presented at: 22nd Congress of the European Hematology Association, June 22-25, 2017, Madrid, Spain.

    \45\ ClinicalTrials.gov, ``Study of efficacy and safety of CTL019 in adult DLBCL patients (JULIET).'' Available at: https://clinicaltrials.gov/ct2/show/NCT02445248.

    \46\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,'' Presented at: 22nd Congress of the European Hematology Association, June 22-25, 2017, Madrid, Spain.

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

    The applicant for KYMRIAHTM reported that Study 2 was a supportive Phase IIa single institution study of adults who were diagnosed with advanced CD19+ NHL conducted at the University of Pennsylvania.\47\ \48\ Tisagenlecleucel cells were produced at the University of Pennsylvania using the same genetic construct and a similar manufacturing technique as employed in Study 1. Key inclusion criteria included patients who were at least 18 years old, patients with CD19+ lymphoma with no available curative options, and measurable disease at the time of enrollment. Tisagenlecleucel was delivered in a single infusion 1 to 4 days after restaging and lymphodepleting chemotherapy. The median tisagenlecleucel cell dose was 5.0 x 108 transduced cells. The study enrolled 38 patients; of these, 21 were diagnosed with DLBCL and 13 received treatment involving KYMRIAHTM. Patients ranged in age from 25 to 77 years old, and had a median of 4 prior therapies. Thirty-seven percent had undergone ASCT and 63 percent were diagnosed with Grade III/IV disease. ORR at 3 months was 54 percent. Progression free survival was 43 percent at a median followdashup of 11.7 months. Safety and efficacy results are similar to those of the multi-center study.

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

    \47\ ClinicalTrials.gov, ``Phase IIa study of redirected autologous Tdashcells engineered to contain anti-CD19 attached to TCRz and 4-signaling domains in patients with chemotherapy relapsed or refractory CD19+ lymphomas,'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.

    \48\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al., ``Sustained remissions following chimeric antigen receptor modified T-cells directed against CD-19 (CTL019) in patients with relapsed or refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of the American Society of Hematology, December 6, 2015, Orlando, FL.

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

    The applicant for KYMRIAHTM reported that Study 3 was a supportive, patientdashlevel meta-analysis of historical outcomes in patients who were diagnosed with refractory DLBCL (SCHOLAR-1).\49\ This study included a pooled data analysis of two Phase III clinical trials (Lymphoma Academic Research Organization-CORAL and Canadian Cancer Trials Group LY.12) and two observational cohorts (MD Anderson Cancer Center and University of Iowa/Mayo Clinic Lymphoma Specialized Program of Research Excellence). Refractory disease was defined as progressive disease or stable disease as best response to chemotherapy (received more than or at least 4 cycles of first-line therapy or 2 cycles of laterdashline therapy, respectively) or relapse in less than or at 12 months post-ASCT. Of 861 abstracted records, 636 were included based on these criteria. All patients from each data source who met criteria for diagnosis of refractory DLBCL, including TFL and PMBCL, who went on to receive subsequent therapy were considered for analysis. Patients who were diagnosed with TFL and PMBCL were included because they are histologically similar and clinically treated as large cell lymphoma. Response rates were similar across the 4 datasets, ranging from 20 percent to 31 percent, with a pooled response rate of 26 percent. CR rates ranged from 2 percent to 15 percent, with a pooled CR rate of 7 percent. Subgroup analyses including patients with primary refractory, refractory to second or laterdashline therapy, and relapse in less than 12 months post-ASCT revealed response rates similar to the pooled analysis, with worst outcomes in the primary refractory group (20 percent). OS from the commencement of therapy was 6.3 months and was similar across subgroup analyses. Achieving a CR after last salvage chemotherapy predicted a longer OS of 14.9 months compared to 4.6 months in nonresponders. Patients who had not undergone ASCT had an OS of 5.1

    Page 20292

    months with a 2 year OS rate of 11 percent.

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

    \49\ Crump, M., Neelapu, S.S., Farooq, U., et al., ``Outcomes in refractory diffuse large B-cell lymphoma: results from the international SCHOLAR-1 study,'' Blood, Published online: August 3, 2017, doi: 10.1182/blood-2017-03-769620.

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

    The applicant asserted that KYMRIAHTM provides a manageable safety profile when treatment is performed by trained medical personnel and, as opposed to ASCT, KYMRIAHTM mitigates the need for high-dose chemotherapy to induce response prior to infusion. Adverse events were most common in the 8 weeks following infusion and were manageable by a trained staff. Cytokine Relapse Syndrome (CRS) occurred in 58 percent of patients with 23 percent having Grade III or IV events as graded on the University of Pennsylvania grading system.\50\ \51\ Median time to onset of CRS was 3 days and median duration was 7 days with a range of 2 to 30 days. Twentydashfour percent of the patients required ICU admission. CRS was managed with supportive care in most patients. However, 16 percent required anti-cytokine therapy including tocilizumab (15 percent) and corticosteroids (11 percent). Other adverse events of special interest include infection in 34 percent (20 percent Grade III or IV) of patients, cytopenias not resolved by day 28 in 36 percent (27 percent Grade III or IV) of patients, neurologic events in 21 percent (12 percent Grade III or IV) of patients, febrile neutropenia in 13 percent (13 percent Grade III or IV) of patients, and tumor lysis syndrome 1 percent (1 percent Grade III). No deaths were attributed to tisagenlecleucel including no fatal cases of CRS or neurologic events. No cerebral edema was observed.\52\ Study 2 safety results were consistent to those of Study 1.\53\

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

    \50\ ClinicalTrials.gov, ``Phase IIa study of redirected autologous T-cells engineered to contain anti-CD19 attached to TCRz and 4-signaling domains in patients with chemotherapy relapsed or refractory CD19+ lymphomas.'' Available at: https://clinicaltrials.gov/ct2/show/NCT02030834.

    \51\ Schuster, S.J., Svoboda, J., Nasta, S.D., et al., ``Sustained remissions following chimeric antigen receptor modified T-cells directed against CD-19 (CTL019) in patients with relapsed or refractory CD19+ lymphomas,'' Presented at: 57th Annual Meeting of the American Society of Hematology, December 6, 2015, Orlando, FL.

    \52\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,'' Presented at: 22nd Congress of the European Hematology Association, June 22-25, 2017, Madrid, Spain.

    \53\ Ibid.

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

    After reviewing the studies provided by the applicant, we are concerned that the applicant included patients who were diagnosed with TFL and PMBCL in the SCHOLAR-1 data results for their comparison analysis, possibly skewing results. Furthermore, the discontinue rate of the JULIET trial was high. Of 147 patients enrolled for infusion involving KYMRIAHTM, 43 discontinued prior to infusion (9 discontinued due to inability to manufacture, and 34 discontinued due to patientdashrelated issues). Finally, the rate of patients who experienced a diagnosis of CRS was high, 58 percent.\54\

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

    \54\ Schuster, S.J., Bishop, M.R., Tam, C., et al., ``Global trial of the efficacy and safety of CTL019 in adult patients with relapsed or refractory diffuse large B-cell lymphoma: an interim analysis,'' Presented at: 22nd Congress of the European Hematology Association, June 22-25, 2017, Madrid, Spain.

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

    The applicant for YESCARTATM stated that YESCARTATM represents a substantial clinical improvement over existing technologies when used in the treatment of patients with aggressive B-cell NHL. The applicant asserted that YESCARTATM can benefit the patient population with the highest unmet need, patients with R/R disease after failure of first-

    line or second-line therapy, and patients who have failed or who are ineligible for ASCT. These patients, otherwise, have adverse outcomes as demonstrated by historical control data.

    Regarding clinical data for YESCARTATM, the applicant stated that historical control data was the only ethical and feasible comparison information for these patients with chemorefractory, aggressive NHL who have no other available treatment options and who are expected to have a very short lifespan without therapy. According to the applicant, based on meta-analysis of outcomes in patients with chemorefractory DLBCL, there are no curative options for patients with aggressive B-cell NHL, regardless of refractory subgroup, line of therapy, and disease stage with their median OS being 6.6 months.\55\

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

    \55\ Seshardi, T., et al., ``Salvage therapy for relapsed/

    refractory diffuse large B-cell lymphoma,'' Biol Blood Marrow Transplant, 2008 Mar, vol. 14(3), pp. 259-67.

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

    In the applicant's FY 2018 new technology add-on payment application for the KTE-C19 technology, which was discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19889), the applicant cited ongoing clinical trials. The applicant provided updated data related to these ongoing clinical trials as part of its FY 2019 application for YESCARTATM.\56\ \57\ \58\ The updated analysis of the pivotal Study 1 (ZUMA-1, KTE-C19-101), Phase I and II occurred when patients had been followed for 12 months after infusion of YESCARTATM. Study 1 is a Phase I-II multidashcenter, opendashlabel study evaluating the safety and efficacy of the use of YESCARTATM in patients with aggressive refractory NHL. The trial consists of two distinct phases designed as Phase I (n=7) and Phase II (n=101). Phase II is a multi-cohort opendashlabel study evaluating the efficacy of YESCARTATM.\59\ The applicant noted that, as of the analysis cutoff date for the interim analysis, the results of Study 1 demonstrated rapid and substantial improvement in objective, or ORR. After 6 and 12 months, the ORR was 82 and 83 percent, respectively. Consistent response rates were observed in both Study 1, Cohort 1 (DLBCL; n=77) and Cohort 2 (PMBCL or TFL; n=24) and across covariates including disease stage, age, IPI scores, CD-19 status, and refractory disease subset. In the updated analysis, results were consistent across age groups. In this analysis, 39 percent of patients younger than 65 years old were in ongoing response, and 50 percent of patients at least 65 years old or older were in ongoing response. Similarly, the survival rate at 12 months was 57 percent among patients younger than 65 years old and 71 percent among patients at least 65 years old or older versus historical control of 26 percent. The applicant further stated that evidence of substantial clinical improvement regarding the efficacy of YESCARTATM for the treatment of patients with chemorefractory, aggressive B-cell NHL is supported by the CR of YESCARTATM in Study 1, Phase II (54 percent) versus the historical control (7 percent).\60\ \61\ \62\ \63\

    Page 20293

    The applicant noted that CR rates were observed in both Study 1, Cohort 1. The applicant reported that, in the updated analysis, results were in ongoing response (46 percent of patients at least 65 years old or older were in ongoing response). Similarly, the survival rate at 12 months was 57 percent among patients younger than 65 years old and 71 percent among patients at least 65 years old or older.\64\ \65\ \66\ \67\ The applicant also provided the following tables to depict data to support substantial clinical improvement (we refer readers to the two tables below).

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

    \56\ Locke, F.L., et al., ``Ongoing complete remissions in Phase 1 of ZUMA-1: A phase I-II multicenter study evaluating the safety and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016.

    \57\ Locke, F.L., et al., ``Primary results from ZUMA-1: A pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' Oral presentation, American Association of Cancer Research (AACR).

    \58\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 2017.

    \59\ Neelapu, S.S., Locke, F.L., et al., 2016, ``KTE-C19 (anti-

    CD19 CAR T cells) induces complete remissions in patients with refractory diffuse large B-cell lymphoma (DLBCL): Results from the pivotal Phase II ZUMA-1,'' Abstract presented at American Society of Hematology (ASH) 58th Annual Meeting, December 2016.

    \60\ Locke, F.L., et al., ``Ongoing complete remissions in Phase I of ZUMA-1: a phase I-II multicenter study evaluating the safety and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016.

    \61\ Locke, F.L., et al., ``Primary results from ZUMA-1: a pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' Oral presentation, American Association of Cancer Research (AACR).

    \62\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 2017.

    \63\ Crump, et al., 2017, ``Outcomes in refractory diffuse large B-cell lymphoma: Results from the international SCHOLAR-1 study,'' Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.

    \64\ Locke, F.L., et al., ``Ongoing complete remissions in Phase I of ZUMA-1: A phase I-II multicenter study evaluating the safety and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016.

    \65\ Locke, F.L., et al., ``Primary results from ZUMA-1: A pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' Oral presentation, American Association of Cancer Research (AACR).

    \66\ Locke, F.L., et al., ``Phase I results of ZUMA-1: A multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 2017.

    \67\ Crump, et al., ``Outcomes in refractory diffuse large B-

    cell lymphoma: Results from the international SCHOLAR-1 study,'' Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.

    Overall Response Rates Across All YESCARTA\TM\ Studies vs. SCHOLAR-1

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

    Study 1, Phase Scholar-1

    % I n=7 Study 1, Phase II n=101 n=529

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

    Overall Response Rate (%)............. 71 83...................................... 26

    Month 6 (%)........................... 43 41...................................... ..............

    Ongoing with >15 Months of follow-up 43 42...................................... ..............

    (%).

    Ongoing with >18 Months of follow-up 43 Follow-up ongoing....................... ..............

    (%).

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

    Results for YESCARTA\TM\ Study 1, Phase II: Complete Response

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

    Study 1, Phase II n=101

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

    Complete Response (%) (95 Percent 54 (44,64).

    Confidence Interval).

    Duration of Response, median (range in not reached.

    months).

    Ongoing Responses, CR (%); Median 8.7 39.

    months follow-up; median overall survival

    has not been reached.

    Ongoing Responses, CR (%); Median 15.3 40.

    months follow-up; median overall survival

    has not been reached.

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

    According to the applicant, the 6-month and 12-month survival rates (95 percent CI) for patients enrolled in the SCHOLAR-1 study were 53 percent (49 percent, 57 percent) and 28 percent (25 percent, 32 percent).\68\ In contrast, the 6-month and 12-month survival rates (95 percent CI) in the Study 1 updated analysis were 79 percent (70 percent, 86 percent) and 60 percent (50 percent, 69 percent).\69\ \70\ \71\

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

    \68\ Crump, et al., ``Outcomes in refractory diffuse large B-

    cell lymphoma: results from the international SCHOLAR-1 study,'' Blood, vol. 0, 2017, pp. blood-2017-03-769620v1.

    \69\ Locke, F.L., et al., ``Ongoing complete remissions in Phase I of ZUMA-1: a phase I-II multicenter study evaluating the safety and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016.

    \70\ Locke, F.L., et al., ``Primary results from ZUMA-1: a pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' Oral presentation, American Association of Cancer Research (AACR).

    \71\ Locke, F.L., et al., ``Phase I results of ZUMA-1: a multicenter study of KTE-C19 anti-CD19 CAR T cell therapy in refractory aggressive lymphoma,'' Mol Ther, vol. 25, No 1, January 2017.

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

    The applicant also cited safety results from the pivotal Study 1, Phase II. According to the applicant, the clinical trial protocol stipulated that patients were infused with YESCARTATM in the hospital inpatient setting and were monitored in the inpatient setting for at least 7 days for early identification and treatment involving YESCARTATM-related toxicities, which primarily included CRS diagnoses and neurotoxicities. The applicant noted that the interim analysis showed the length of stay following infusion of YESCARTATM was a median of 15 days. Ninety-three percent of patients experienced CRS diagnoses, 13 percent of whom experienced Grade III or higher (severe, life threatening or fatal) CRS diagnoses. The median time to onset of CRS diagnosis was 2 days (range 1 to 12 days) and the median time to resolution was 8 days. Ninety-eight percent of patients recovered from CRS diagnosis. Neurologic events occurred in 64 percent of patients, 28 percent of whom experienced Grade III or higher (severe or life threatening) events. The median time to onset of neurologic events was 5 days (range 1 to 17 days). The median time to resolution was 17 days. Nearly all patients recovered from neurologic events. The medications most often used to treat these complications included growth factors, blood products, anti-infectives, steroids, tocilizumab, and vasopressors. Two patients died from YESCARTATM-related adverse events (hemophagocytic lymphohistiocytosis and cardiac arrest in the hospital setting as a result of CRS diagnoses). According to the applicant, there were no clinically important differences in adverse event rates across age groups (younger than 65 years old; 65 years old or older), including CRS diagnoses and neurotoxicity.\72\ \73\

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

    \72\ Locke, F.L., et al., ``Ongoing complete remissions in Phase I of ZUMA-1: a phase I-II multicenter study evaluating the safety and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016.

    \73\ Locke, F.L., et al., ``Primary results from ZUMA-1: a pivotal trial of axicabtagene ciloretroleucel (axi-cel; KTE-C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' Oral presentation, American Association of Cancer Research (AACR).

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

    The applicant for YESCARTATM provided information regarding a safety expansion cohort, Study 1 Phase II Safety Expansion Cohort 3 that was created and carried out in 2017.

    Page 20294

    According to the applicant, this Safety Expansion Cohort investigated measures to mitigate the incidence and/or severity of anti-CD-19 CAR T therapy and evaluated an adverse event mitigation strategy by prophylactically using levetiracetam (Keppra), an anticonvulsant, and tocilizumab, an IL-6 receptor inhibitor. Of the 30 patients treated, 2 patients experienced Grade III CRS diagnoses; 1 of the 2 patients recovered. In late April 2017, the other patient also experienced multi-organ failure and a neurologic event that subsequently progressed to a fatal Grade V cerebral edema that was deemed related to YESCARTATM treatment. This case of cerebral edema was observed in a 21 year-old male with refractory, rapidly progressive, symptomatic, stage IVB PMBCL. Analysis of the baseline serum and cerebrospinal fluid (CSF) obtained prior to any study treatment demonstrated high cytokine and chemokine levels. According to the applicant, this suggests a significant preexisting underlying inflammatory process, both systemically and within the central nervous system. Rapidly progressing disease, recent mediastinal XRT (external beam radiation therapy) and/or CMV (cytomegalovirus) reactivation may have contributed to the pre-existing state. There were no prior cases of cerebral edema in the 200 patients who have been treated with YESCARTATM in the ZUMA clinical development program. The single patient event from the Study 1 Phase II Safety Expansion Cohort 3 was the first Grade V cerebral edema event.\74\ \75\

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

    \74\ Locke, F.L., et al., ``Ongoing complete remissions in Phase I of ZUMA-1: a phase I-II multicenter study evaluating the safety and efficacy of KTE-C19 (anti-CD19 CAR T cells) in patients with refractory aggressive B-cell non-Hodgkin lymphoma (NHL),'' Oral presentation (abstract 10480) presented at European Society for Medical Oncology (ESMO), October 2016.

    \75\ Locke, F.L., et al., ``Primary results from ZUMA-1: a pivotal trial of axicabtagene ciloretroleucel (aci-cel; KTE-C19) in patients with refractory aggressive non-Hodgkins lymphoma (NHL),'' Oral presentation, American Association of Cancer Research (AACR).

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

    After reviewing the information submitted by the applicant as part of its FY 2019 new technology add-on payment application for YESCARTATM, we are concerned that it does not appear to include patient mortality data that was included as part of the applicant's FY2018 new technology add-on payment application for the KTE-C19 technology. In that application, as discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19890), the applicant provided that by an earlier cutoff date for the interim analysis of Study 1, among all KTE-C19 treated patients, 12 patients in Study 1, Phase II, including 10 from Cohort 1, and 2 from Cohort 2, died. Eight of these deaths were due to disease progression. One patient had disease progression after receiving KTE-C19 treatment and subsequently had ASCT. After ASCT, the patient died due to sepsis. Two patients (3 percent) died due to KTE-C19dashrelated adverse events (Grade V hemophagocytic lymphohistiocytosis event and Grade V anoxic brain injury), and one died due to an adverse event deemed unrelated to treatment involving KTE-C19 (Grade V pulmonary embolism), without disease progression. We believe it would be relevant to include this information because it is related to the same treatment that is the subject of the applicant's FY 2019 new technology add-on payment application.

    We also are concerned that there are few published results showing any survival benefits from the use of this treatment. In addition, we are concerned with the limited number of patients (n=108) that were studied after infusion involving YESCARTATM T-cell immunotherapy. Finally, we are concerned about the data related to the percentage of patients who experience complications or toxicities related to YESCARTATM treatment. According to the applicant, of the patients who participated in YESCARTATM clinical trials, 93 percent developed CRS diagnoses and 64 percent experienced neurological adverse events.

    We are inviting public comments on whether KYMRIAHTM and YESCARTATM meet the substantial clinical improvement criterion.

    Finally, we believe that in the context of these pending new technology add-on payment applications, there may also be merit in the suggestions from the public to create a new MS-DRG for the assignment of procedures involving the utilization of CAR T-cell therapy drugs and cases representing patients who receive treatment involving CAR Tdashcell therapy as an alternative to our proposed MS-DRG assignment to MS-DRG 016 for FY 2019, or the suggestions to allow hospitals to utilize a CCR specific to procedures involving the utilization of KYMRIAHTM and YESCARTATM CAR T-cell therapy drugs for FY 2019 as part of the determination of the cost of a case for purposes of calculating outlier payments for individual FY 2019 cases, new technology add-on payments, if approved, for individual FY 2019 cases, and payments to IPPS-excluded cancer hospitals beginning in FY 2019. If as discussed in section II.F.2.d. of the preamble of this proposed rule a new MS-DRG were to be created, then consistent with section 1886(d)(5)(K)(ix) of the Act there may no longer be a need for a new technology add-on payment under section 1886(d)(5)(K)(ii)(III) of the Act. With respect to an alternative considered for the use of a CCR specific to procedures involving the utilization of KYMRIAHTM and YESCARTATM CAR Tdashcell therapy drugs for FY 2019 as part of the determination of the cost of a case for purposes of calculating outlier payments for individual FY 2019 cases, new technology add-on payments, if approved, for individual FY 2019 cases, and payments to IPPS-excluded cancer hospitals beginning in FY 2019, we refer readers to the discussion in section II.A.4.g.2. of the Addendum to this proposed rule.

    We are inviting public comments regarding the most appropriate mechanism to provide payment to hospitals for new technologies such as CAR Tdashcell therapy drugs, including through the use of new technology adddashon payments.

    We also are inviting public comments on how these payment alternatives would affect access to care, as well as how they affect incentives to encourage lower drug prices, which is a high priority for this Administration. In addition, we are considering alternative approaches and authorities to encourage value-based care and lower drug prices. We solicit comments on how the payment methodology alternatives may intersect and affect future participation in any such alternative approaches.

    We did not receive any written public comments in response to the New Technology Town Hall meeting notice published in the Federal Register regarding the application of KYMRIAHTM for new technology add-on payments for FY 2019.

    Below we summarize and respond to a written public comment we received during the open comment period regarding YESCARTATM in response to the New Technology Town Hall meeting notice published in the Federal Register.

    Comment: The applicant commented that the use of YESCARTATM as a treatment option has resulted in unprecedented and consistent treatment for patients with refractory large Bdashcell lymphoma who previously did not have a curative option. In addition, the applicant summarized the substantial clinical improvement differences between YESCARTATM and the results of KYMRIAHTM's SCHOLAR-1 study. The applicant noted that, for the patients enrolled in the SCHOLAR-1 study, the median overall survival was 6 months and complete remission was

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    7 percent. Conversely, the applicant conveyed that, for the patients enrolled in YESCARTATM's Study 1, at median 15.4 months follow-up, responses were ongoing in 42 percent of the patients and 40 percent of the patients were in complete remission.

    Response: We appreciate the applicant's input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for YESCARTATM for FY 2019.

    We note that the applicant also provided comments that were 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 2019. Therefore, we are not summarizing these additional comments in this proposed rule. However, the applicant may resubmit its comments in response to proposals presented in this proposed rule.

  58. VYXEOSTM (Cytarabine and Daunorubicin Liposome for Injection)

    Jazz Pharmaceuticals, Inc. submitted an application for new technology add-on payments for the VYXEOSTM technology for FY 2019. (We note that Celator Pharmaceuticals, Inc. submitted an application for new technology adddashon payments for VYXEOSTM for FY 2018. However, Celator Pharmaceuticals did not receive FDA approval by the July 1, 2017 deadline for applications for FY 2018.) VYXEOSTM was approved by FDA on August 3, 2017, for the treatment of adults with newly diagnosed therapy-related acute myeloid leukemia (tdashAML) or AML with myelodysplasia-related changes (AML-MRC).

    AML is a type of cancer in which the bone marrow makes abnormal myeloblasts (immature bone marrow white blood cells), red blood cells, and platelets. If left untreated, AML progresses rapidly. Normally, the bone marrow makes blood stem cells that develop into mature blood cells over time. Stem cells have the potential to develop into many different cell types in the body. Stem cells can act as an internal repair system, dividing, essentially without limit, to replenish other cells. When a stem cell divides, each new cell has the potential to either remain a stem cell or become a specialized cell, such as a muscle cell, a red blood cell, or a brain cell, among others. A blood stem cell may become a myeloid stem cell or a lymphoid stem cell. Lymphoid stem cells become white blood cells. A myeloid stem cell becomes one of three types of mature blood cells: (1) Red blood cells that carry oxygen and other substances to body tissues; (2) white blood cells that fight infection; or (3) platelets that form blood clots and help to control bleeding. In patients diagnosed with AML, the myeloid stem cells usually become a type of myeloblast. The myeloblasts in patients diagnosed with AML are abnormal and do not become healthy white blood cells. Sometimes in patients diagnosed with AML, too many stem cells become abnormal red blood cells or platelets. These abnormal cells are called leukemia cells or blasts.

    AML is defined by the World Health Organization (WHO) as greater than 20 percent blasts in the bone marrow or blood. AML can also be diagnosed if the blasts are found to have a chromosome change that occurs only in a specific type of AML diagnosis, even if the blast percentage does not reach 20 percent. Leukemia cells can build up in the bone marrow and blood, resulting in less room for healthy white blood cells, red blood cells, and platelets. When this occurs, infection, anemia, or increased risk for bleeding may result. Leukemia cells can spread outside the blood to other parts of the body, including the central nervous system (CNS), skin, and gums.

    Treatment of AML diagnoses usually consists of two phases; remission induction and post-remission therapy. Phase one, remission induction, is aimed at eliminating as many myeloblasts as possible. The most common used remission induction regimens for AML diagnoses are the ``7+3'' regimens using an antineoplastic and an anthracycline. Cytarabine and daunorubicin are two commonly used drugs for ``7+3'' remission induction therapy. Cytarabine is continuously administered intravenously over the course of 7 days, while daunorubicin is intermittently administered intravenously for the first 3 days. The ``7+3'' regimen typically achieves a 70 to 80 percent complete remission (CR) rate in most patients under 60 years of age.

    High rates of CR are not generally seen in older patients for a number of reasons, such as different leukemia biology, much higher incidence of adverse cytogenetic abnormalities, higher rate of multidrug resistant leukemic cells, and comparatively lower patient performance status (the standard criteria for measuring how the disease impacts a patient's daily living abilities). Intensive induction therapy has worse outcomes in this patient population.\76\ The applicant asserted that many older adults diagnosed with AML have a poor performance status \77\ at presentation and multiple medical comorbidities that make the use of intensive induction therapy quite difficult or contraindicated altogether. Moreover, the CR rates of poor-risk patients diagnosed with AML are substantially lower in patients over 60 years of age; owing to a higher proportion of secondary AML, disease developing in the setting of a prior myeloid disorder, or prior cytotoxic chemotherapy. Therefore, less than half of older adults diagnosed with AML achieve CR with combination induction regimens.\78\

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    \76\ Juliusson, G., Lazarevic, V., Horstedt, A.S., Hagberg, O., Hoglund, M., ``Acute myeloid leukemia in the real world: why population-based registries are needed'', Blood, 2012 Apr 26; vol. 119(17), pp. 3890-9.

    \77\ Stone, R.M., et al., (2004), ``Acute myeloid leukemia. Hematology'', Am Soc Hematol Educ Program, 2004, pp. 98-117.

    \78\ Appelbaum, F.R., Gundacker, H., Head, D.R., ``Age and acute myeloid leukemia'', Blood 2006, vol. 107, pp. 3481-3485.

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    According to the applicant, the combination of cytarabine and an anthracycline, either as ``7+3'' regimens or as part of a different regimen incorporating other cytotoxic agents, may be used as sodashcalled ``salvage'' induction therapy in the treatment of adults diagnosed with AML who experience relapse in an attempt to achieve CR. According to the applicant, while CR rates of success vary widely depending on underlying disease biology and host factors, there is a lower success rate overall in achievement of CR with ``7+3'' regimens compared to VYXEOSTM therapy. According to the applicant, ``7+3'' regimens produce a CR rate of approximately 50 percent in younger adult patients who have relapsed, but were in CR for at least 1 year.\79\

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    \79\ Kantarjian, H., Rayandi, F., O'Brien, S., et al., ``Intensive chemotherapy does not benefit most older patients (age 70 years and older) with acute myeloid leukemia,'' Blood, 2010, vol. 116(22), pp. 4422.

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    VYXEOSTM is a nano-scale liposomal formulation containing a fixed combination of cytarabine and daunorubicin in a 5:1 molar ratio. This formulation was developed by the applicant using a proprietary system known as CombiPlex. According to the applicant, CombiPlex addresses several fundamental shortcomings of conventional combination regimens, specifically the conventional ``7+3'' free drug dosing, as well as the challenges inherent in combination drug development, by identifying the most effective synergistic molar ratio of the

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    drugs being combined in vitro, and fixing this ratio in a nano-scale drug delivery complex to maintain the optimized combination after administration and ensuring exposure of this ratio to the tumor.

    Cytarabine and daunorubicin are co-encapsulated inside the VYXEOSTM liposome at a fixed ratiometrically, optimized 5:1 cytarabine:daunorubicin molar ratio. According to the applicant, encapsulation maintains the synergistic ratios, reduces degradation, and minimizes the impact of drug transporters and the effect of known resistant mechanisms. The applicant stated that the 5:1 molar ratio has been shown, in vitro, to maximize synergistic antitumor activity across multiple leukemic and solid tumor cell lines, including AML, and in animal model studies to be optimally efficacious compared to other cytarabine:daunorubicin ratios. In addition, the applicant stated that in clinical studies, the use of VYXEOSTM has demonstrated consistently more efficacious results than the conventional ``7+3'' free drug dosing. VYXEOSTM is intended for intravenous administration after reconstitution with 19 mL sterile water for injection. VYXEOSTM is administered as a 90dashminute intravenous infusion on days 1, 3, and 5 (induction therapy), as compared to the ``7+3'' free drug dosing, which consists of two individual drugs administered on different days, including 7 days of continuous infusion.

    With regard to the newness criterion, 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 criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that VYXEOSTM does not use the same or similar mechanism of action to achieve a therapeutic outcome as any other drug assigned to the same or a different MS-DRG. The applicant stated that no other AML treatment is designed, nor is able, to deliver a fixed, ratiometrically optimized and synergistic drug:drug ratio of 5:1 cytarabine to daunorubicin, and selectively target and accumulate at the site of malignancy, while minimizing unwanted exposure, which the applicant based on the data results of preclinical and clinical studies of the use of VYXEOSTM. The applicant indicated that VYXEOSTM is a nano-scale liposomal formulation of a fixed combination of cytarabine and daunorubicin. Further, the applicant stated that the rationale for the development of VYXEOSTM is based on prolonged delivery of synergistic drug ratios utilizing the applicant's proprietary, ratiometric CombiPlex technology. According to the applicant, conventional ``7+3'' free drug dosing has no delivery complex, and these individual drugs are administered without regard to their ratio dependent interaction. According to the applicant, enzymatic inactivation and imbalanced drug efflux and transporter expression reduce drug levels in the cell. Further, decreased cytotoxicity leads to cell survival, emergence of drug resistant cells, and decreased overall survival.

    The applicant provided the results of clinical studies to demonstrate that the CombiPlex technology and the ratiometric dosing of VYXEOSTM represent a shift in anticancer agent delivery, whereby the fixed, optimized dosing provides less drug to achieve improved efficacy, while maintaining a favorable risk-benefit profile. The results of this ratiometric dosing approach are in contrast to the typical combination chemotherapy development that establishes the recommended dose of one agent and then adds subsequent drugs to the combination at increasing concentrations until the aggregate effects of toxicity are considered to be limiting (the ``7+3'' drug regimen). According to the applicant, this current approach to combination chemotherapy development assumes that maximum therapeutic activity will be achieved with maximum dose intensity for all drugs in the combination, and ignores the possibility that more subtle concentration-dependent drug interactions could result in frankly synergistic outcomes.

    The applicant maintained that, while VYXEOSTM contains no novel active agents, its innovative drug delivery mechanism appears to be a superior way to deliver the two active compounds in an effort to optimize their efficacy in killing leukemic blasts. However, we are concerned it is possible that VYXEOSTM may use a similar mechanism of action compared to currently available treatment options because both the current treatment regimen and VYXEOSTM are used in the treatment of AML by intravenous administration of cytarabine and daunorubicin. We are concerned that the mechanism of action of the ratiometrically fixed liposomal formulation of VYXEOSTM is the same or similar to that of the current intravenous administration of cytarabine and daunorubicin.

    With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, we believe that potential cases representing patients who may be eligible for treatment involving VYXEOSTM would be assigned to the same MSdashDRGs as cases representing patients who receive treatment for diagnoses of AML.

    With respect 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 asserted that VYXEOSTM is indicated for use in the treatment of patients who have been diagnosed with high-risk AML. The applicant also asserted that VYXEOSTM is the first and only approved fixed combination of cytarabine and daunorubicin and is designed to uniquely control the exposure using a nano-scale drug delivery vehicle leading to statistically significant improvements in survival in patients who have been diagnosed with high-risk AML compared to the conventional ``7+3'' free drug dosing. We believe that VYXEOSTM involves the treatment of the same patient population as other AML treatment therapies.

    The following unique ICD-10-PCS codes were created to describe the administration of VYXEOSTM: XW033B3 (Introduction of cytarabine and caunorubicin liposome antineoplastic into peripheral vein, percutaneous approach, new technology group 3) and XW043B3 (Introduction of cytarabine and daunorubicin liposome antineoplastic into central vein, percutaneous approach, new technology group 3).

    We are inviting public comments on whether VYXEOSTM is substantially similar to existing technology, including whether the mechanism of action of VYXEOSTM differs from the mechanism of action of the currently available treatment regimen. We also are inviting public comments on whether VYXEOSTM meets the newness criterion.

    With regard to the cost criterion, the applicant conducted the following analysis. The applicant used the FY 2016 MedPAR Hospital Limited Data Set (LDS) to assess the MS-DRGs to which cases representing potential patient hospitalizations that may be eligible for treatment involving VYXEOSTM would most likely be assigned. These potential cases representing patients who may be VYXEOSTM candidates were identified if they: (1) Were diagnosed with acute myeloid leukemia (AML); and (2) received chemotherapy during their

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    hospital stay. The cohort was further limited by excluding patients who had received bone marrow transplants. The cohort used in the analysis is referred to in this discussion as the primary cohort.

    According to the applicant, the primary cohort of cases spans 131 unique MS-DRGs, 16 of which contained more than 10 cases. The most common MS-DRGs are MS-DRG 837, 834, 838, and 839. These 4 MS-DRGs account for 4,457 (81 percent) of the 5,483 potential cases in the cohort.

    The case-weighted unstandardized charge per case is approximately $185,844. The applicant then removed charges related to other chemotherapy agents because VYXEOSTM would replace the need for the use of current chemotherapy agents. The applicant explained that charges for chemotherapy drugs are grouped with charges for oncology, diagnostic radiology, therapeutic radiology, nuclear medicine, CT scans, and other imaging services in the ``Radiology Charge Amount.'' According to the applicant, removing 100 percent of the ``Radiology Charge Amount'' would understate the cost of care for treatment involving VYXEOSTM for patients who may be eligible because treatment involving VYXEOSTM would be unlikely to replace many of the services captured in the ``Radiology Charge Amount'' category. The applicant found that chemotherapy charges represent less than 20 percent of the charges associated with revenue centers grouped into the ``Radiology Charge Amount'' and removed 20 percent of the radiology charge amount in order to capture the effect of removing chemotherapy pharmacy charges. The applicant noted that regardless of the type of induction chemotherapy, patients being treated for AML have AML-related complications, such as bleeding or infection that require supportive care drug therapy. For this reason, it is expected that eligible patients receiving treatment involving VXYEOSTM will continue to incur other pharmacy and IV therapy charges for AMLdashrelated complications.

    After removing the charges for the prior technology, the applicant standardized the charges. The applicant then applied an inflation factor of 1.09357, the value used in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to update the charges from FY 2016 to FY 2018. According to the applicant, for the primary new technology add-on payment cohort, the cost criterion was met without consideration of VYXEOSTM charges. The average case-weighted standardized charge was $170,458, which exceeds the average casedashweighted Table 10 MS-DRG threshold amount of $82,561 by $87,897.

    The applicant provided additional analyses with the inclusion of VYXEOSTM charges under 3-vial, 4-vial, 6-vial, and 10-vial treatment scenarios. According to the applicant, the cost criterion was satisfied in each of these scenarios, with charges in excess of the average case-weighted threshold amount.

    Finally, the applicant also provided the following sensitivity analyses (that did not include charges for VYXEOSTM) using the methodology above:

    Sensitivity Analysis 1--limits the cohort to patients who have been diagnosed with AML without remission (C92.00 or C92.50) who received chemotherapy and did not receive bone marrow transplant.

    Sensitivity Analysis 2--the modified cohort was limited to patients who have been diagnosed with relapsed AML who received chemotherapy and did not receive bone marrow transplant.

    Sensitivity Analysis 3--the modified cohort was limited to patients who have been diagnosed with AML and who did not receive bone marrow transplant.

    Sensitivity Analysis 4--the primary cohort was maintained, but 100 percent of the charges for revenue centers grouped into the ``Pharmacy Charge Amount'' were excluded.

    Sensitivity Analysis 5--identifies patients who have been diagnosed with AML in remission.

    The applicant noted that, in all of the sensitivity analysis scenarios, the average casedashweighted standardized charge per case exceeded the average case-weighted Table 10 MS-DRG threshold amount. Based on all of the analyses above, the applicant maintained that VYXEOSTM meets the cost criterion. We are inviting public comments on whether VYXEOSTM meets the cost criterion.

    With regard to substantial clinical improvement, according to the applicant, clinical data results have shown that the use of VYXEOSTM represents a substantial clinical improvement for the treatment of AML in newly diagnosed highdashrisk, older (60 years of age and older) patients, marked by statistically significant improvements in overall survival, event free survival and response rates, and in relapsed patients age 18 to 65 years of age, where a statistically significant improvement in overall survival has been documented for the poordashrisk subset of patients as defined by the European Prognostic Index. In both groups of patients, the applicant stated that there was significant improvement in survival for the highdashrisk patient group. The applicant provided the following specific clinical data results.

    The applicant stated that clinical data results show that treatment with VYXEOSTM for older patients (60 years of age and older) who have been diagnosed with untreated, high-risk AML will result in superior survival rates, as compared to patients treated with conventional ``7+3'' free drug dosing. The applicant provided a summary of the pivotal Phase III Study 301 in which 309 patients were enrolled, with 153 patients randomized to the VYXEOSTM treatment arm and 156 to the ``7+3'' free drug dosing treatment arm. Among patients who were 60 to 69 years old, there were 96 patients in the VYXEOSTM treatment arm and 102 in the ``7+3'' free drug dosing treatment arm. For patients who were 70 to 75 years old, there were 57 and 54 patients in each treatment arm, respectively. The applicant noted that the data results from the Phase III Study 301 demonstrated that first-line treatment of patients diagnosed with high-

    risk AML in the VYXEOSTM treatment arm resulted in substantially greater median overall survival of 9.56 months versus 5.95 months in the ``7+3'' free drug dosing treatment arm (hazard ratio of 0.69; p =0.005).

    The applicant further asserted that high-risk, older patients (60 years old and older) previously untreated for diagnoses of AML will have a lower risk of early death when treated with VYXEOSTM than those treated with the conventional ``7+3'' free drug dosing. The applicant cited Medeiros, et al.,\80\ which reported a large observational study of Medicare beneficiaries and noted the following: The data result of the study showed that 50 to 60 percent of elderly patients diagnosed with AML remain untreated following diagnosis; treated patients were more likely younger, male, and married, and less likely to have secondary diagnoses of AML, poor performance indicators, and poor comorbidity scores compared to untreated patients; and in multivariate survival analyses, treated patients exhibited a significant 33 percent lower risk of death compared to untreated patients.

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    \80\ Medeiros, B., et al., ``Big data analysis of treatment patterns and outcomes among elderly acute myeloid leukemia patients in the United States'', Ann Hematol, 2015, vol. 94(7), pp. 1127-

    1138.

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    Based on data from the Phase III Study 301,\81\ the applicant cited the

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    following results: The rate of 60-day mortality was less in the VYXEOSTM treatment arm (13.7 percent) versus the ``7+3'' free drug dosing treatment arm (21.2 percent); the reduction in early mortality was due to fewer deaths from refractory AML (3.3 percent versus 11.3 percent), with very similar rates of 60-day mortality due to adverse events (10.4 percent versus 9.9 percent); there were fewer deaths in the VYXEOSTM treatment arm versus the ``7+3'' free drug dosing treatment arm during the treatment phase (7.8 percent versus 11.3 percent); and there were fewer deaths in the VYXEOSTM treatment arm during the follow-up phase than in the ``7+3'' free drug dosing treatment arm (59.5 percent versus 71.5 percent).

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    \81\ Lancet, J., et al., ``Final results of a Phase III randomized trial of VYXEOS (CPX-351) versus 7+3 in older patients with newly diagnosed, high-risk (secondary) AML''. Abstract and oral presentation at American Society of Clinical Oncology (ASCO), June 2016.

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    The applicant asserted that high-risk, older patients (60 years old and older) previously untreated for a diagnosis of AML exhibited statistically significant improvements in response rates after treatment with VYXEOSTM versus treatment with the conventional ``7+3'' free drug chemotherapy dosing, suggesting that the use of VYXEOSTM is a superior pre-transplant induction treatment versus ``7+3'' free drug dosing. Restoration of normal hematopoiesis is the ultimate goal of any therapy for AML diagnoses. The first phase of treatment consists of induction chemotherapy, in which the goal is to ``empty'' the bone marrow of all hematopoietic elements (both benign and malignant), and to allow repopulation of the marrow with normal cells, thereby yielding remission. According to the applicant, post-induction response rates were significantly higher following the use of VYXEOSTM, which elicited a 47.7 percent total response rate and a 37.3 percent rate for CR, whereas the total response and CR rates for the ``7+3'' free drug dosing arm were 33.3 percent and 25.6 percent, respectively. The CR + CRi rates for patients who were 60 to 69 years of age were 50.0 percent in the VYXEOSTM treatment arm and 36.3 percent in the ``7+3'' free drug dosing treatment arm, with an odds ratio of 1.76 (95 percent CI, 1.00-3.10). For patients who were 70 to 75 years old, the rates of CR + CRi were 43.9 percent in the VYXEOSTM treatment arm and 27.8 percent in the ``7+3'' free drug dosing treatment arm.

    The applicant asserted that VYXEOSTM treatment will enable highdashrisk, older patients (60 years old and older) to bridge to allogeneic transplant, and VYXEOSTM treated responding patients will have markedly better outcomes following transplant. The applicant stated that diagnoses of secondary AML are considered incurable with standard chemotherapy approaches and, as with other highdashrisk hematological malignancies, transplantation is a useful treatment alternative. The applicant further stated that autologous HSCT has limited effectiveness and at this time, only allogeneic HSCT with full intensity conditioning has been reported to produce longdashterm remissions. However, the applicant stated that the clinical study by Medeiros, et al. reported that, while the use of allogeneic HSCT is considered a potential cure for AML, its use is limited in older patients because of significant baseline comorbidities and increased transplant-related morbidity and mortality. Patients in either treatment arm of the Phase III Study 301 responding to induction with a CR or CR+CRi (n=125) were considered for allogeneic hematopoietic cell transplant (HCT) when possible. In total, 91 patients were transplanted: 52 (34 percent) from the VYXEOSTM treatment arm and 39 (25 percent) from the ``7+3'' free drug dosing treatment arm. Patient and AML characteristics were similar according to randomized arm, including percentage of patients in each treatment arm that underwent transplant in CR+CRi status. However, the applicant noted that the VYXEOSTM treatment arm contained a higher percentage of older patients (70 years old or older) who were transplanted (VYXEOSTM, 31 percent; ``7+3'' free drug dosing, 15 percent).\82\

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    \82\ Stone Hematology 2004; Gordon AACR 2016; NCI. Available at: www.cancer.gov.

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    According to the applicant, patient outcome following transplant strongly favored patients in the VYXEOSTM treatment arm. The Kaplan-Meier analysis of the 91 transplanted patients landmarked at the time of HCT showed that patients in the VYXEOSTM treatment arm had markedly better overall survival (hazard ratio 0.46; p=0.0046). The time-dependent Adjustment Model (Cox proportional hazard ratio) was used to evaluate the contribution of VYXEOSTM treatment to overall survival rate after adjustment for transplant and showed that VYXEOSTM treatment remained a significant contributor, even after adjusting for transplant. The time-dependent Cox hazard ratio for overall survival rates in the VYXEOSTM treatment arm versus the ``7+3'' free drug dosing treatment arm was 0.51 (95 percent CI, 0.35-0.75; p=.0007).

    The applicant asserted that VYXEOSTM treatment of previously untreated older patients (60 years old and older) diagnosed with high-risk AML increases the response rate and improves survival compared to conventional ``7+3'' free drug dosing treatment in patients diagnosed with FLT3 mutation. The applicant noted the following: Approximately 20 to 30 percent of AML patients harbor some form of FLT3 mutation, AML patients with a FLT3 mutation have a higher relapse rate and poorer prognosis than the overall population diagnosed with AML, and the most common type of mutation is internal tandem duplication (ITD) mutation localized to a membrane region of the receptor.

    The applicant cited Gordon, et al., 2016,\83\ which reported on the significant anti-leukemic activity of VYXEOSTM treatment in AML blasts exhibiting high-risk characteristics, including FLT3-ITD, that are typically associated with poor outcomes when treated with conventional ``7+3'' free drug dosing treatment. To determine whether the improved complete remission and overall survival rates of treatment using VYXEOSTM as compared to conventional ``7+3'' free drug dosing treatment are attributable to liposome-mediated altered drug PK or direct cellular interactions with specific AML blast samples, the authors evaluated cytotoxicity in 53 AML patient specimens. Cytotoxicity results were correlated with patient characteristics, as well as VYXEOSTM treatment cellular uptake and molecular phenotype status including FLT3-ITD, which is a predictor of poor patient outcomes to conventional ``7+3'' free drug dosing treatment. The applicant stated that a notable result from this research was the observation that AML blasts exhibiting the FLT3-ITD phenotype exhibited some of the lowest IC50 (the 50 percent inhibitory concentration) values and, as a group, were five-fold more sensitive to the VYXEOSTM treatment than those with wild type FLT3. In addition, there was evidence that increased sensitivity to VYXEOSTM treatment was associated with increased uptake of the drug-laden liposomes by the patient-derived AML blasts. The applicant noted that Gordon, et al. 2016, concluded taken together, the data are consistent with clinical observations where VYXEOSTM treatment retains significant anti-

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    leukemic activity in AML patients exhibiting high-risk characteristics. The applicant also noted that a subanalysis of Phase III Study 301 identified 22 patients who had been diagnosed with FLT3 mutation in the VYXEOSTM treatment arm and 20 in the ``7+3'' free drug dosing treatment arm, which resulted in the following response rates of FLT3 mutated patients, which were higher with VYXEOSTM treatments (15 of 22, 68.2 percent) versus ``7+3'' free drug dosing treatments (5 of 20, 25.0 percent); and the Kaplan-Meier analysis of the 42 FLT3 mutated patients showed that patients in the VYXEOSTM treatment arm had a trend towards better overall survival rates (hazard ratio 0.57; p=0.093).

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    \83\ Gordon, M., Tardi, P., Lawrence, M.D., et al., ``CPX-351 cytotoxicity against fresh AML blasts increased for FLT3-ITD+ cells and correlates with drug uptake and clinical outcomes,'' Abstract 287 and poster presented at AACR (American Association for Cancer Research), April 2016.

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    The applicant asserted that younger patients (18 to 65 years old) with poor risk first relapse AML have shown higher response rates with VYXEOSTM treatment versus conventional ``salvage'' chemotherapy. Overall, the applicant stated that the use of VYXEOSTM had an acceptable safety profile in this patient population based on 60-day mortality data. Study 205 \84\ was a randomized study comparing VYXEOSTM treatment against the investigator's choice of first ``salvage'' chemotherapy in patients who had been diagnosed with relapsed AML after a first remission lasting greater than 1 month (VYXEOSTM treatment arm, n=81 and ``7+3'' free drug dosing treatment arm, n=44; 18 to 65 years old). Investigator's choice was almost always based on cytarabine + anthracycline, usually with the addition of one or two new agents. According to the applicant, treatment involving VYXEOSTM demonstrated a higher rate of morphological leukemia clearance among all patients, 43.2 percent versus 40.0 percent, and the advantage was most apparent in poordashrisk patients, 78.7 percent versus 44.4 percent, as defined by the European Prognostic Index (EPI). In the subset analysis of this EPI poordashrisk patient subset, the applicant stated there was a significant improvement in survival rate (6.6 versus 4.2 months median, hazard ratio=0.55, p=0.02) and improved response rate (39.3 percent versus 27 percent). The applicant also noted the following: the safety profile for the use of VYXEOSTM was qualitatively similar to that of control ``salvage'' therapy, with nearly identical 60-day mortality rates (14.8 percent versus 15.9 percent); among VYXEOSTM treated patients, those with no history of prior HSCT (n=59) had higher response rates (54.2 percent versus 37.8 percent) and lower 60-day mortality (10.2 percent versus 16.2 percent); overall, the use of VYXEOSTM had acceptable safety based on 60-day mortality data, with somewhat higher frequency of neutropenia and thrombocytopenia-related grade III-IV adverse events. Even though these patients are younger (18 to 65 years old) than the population studied in Phase III Study 301 (60 years old and older), Study 205 patients were at a later stage of the disease and almost all had responded to first-line therapy (cytarabine + anthracycline) and had relapsed. The applicant also cited Cortes, et al. 2015,\85\ which reported that patients who have been diagnosed with first relapse AML have limited likelihood of response and short expected survival following ``salvage'' treatment with the results from literature showing that:

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    \84\ Cortes, J., et al., ``Significance of prior HSCT on the outcome of salvage therapy with CPX-351 or conventional chemotherapy among first relapse AML patients.'' Abstract and poster presented at ASH 2011.

    \85\ Cortes, J., et al., (2015), ``Phase II, multicenter, randomized trial of CPX-351 (cytarabine:daunorubicin) liposome injection versus intensive salvage therapy in adults with first relapse AML,'' Cancer, January 2015, pp. 234-42.

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    Mitoxantrone, etoposide, and cytarabine induced response in 23 percent of patients, with median overall survival of only 2 months.

    Modulation of deoxycitidine kinase by fludarabine led to the combination of fludarabine and cytarabine, resulting in a 36 percent CR rate with median remission duration of 39 weeks.

    First salvage gemtuzumab ozogamicin induced CR+CRp (or CR+CRi) response in 30 percent of patients with CD33+ AML and, for patients with short first CR durations, appeared to be superior to cytarabine-based therapy.

    The applicant noted that Study 205 results showed the use of VYXEOSTM retained greater anti-leukemic efficacy in patients who have been diagnosed with poordashrisk first relapse AML, and produced higher morphological leukemia clearance rates (78.7 percent) compared to conventional ``salvage'' therapy (44 percent). The applicant further noted that, overall, the use of VYXEOSTM had acceptable safety profile in this patient population based on 60-

    day mortality data.

    Based on all of the data presented above, the applicant concluded that VYXEOSTM represents a substantial clinical improvement over existing technologies. However, we are concerned that, although there was an improvement in a number of outcomes in Phase III Study 301, specifically overall survival rate, lower risk of early death, improved response rates, better outcomes following transplant, increased response rate and overall survival in patients diagnosed with FLT3 mutation, and higher response rates versus conventional ``salvage'' chemotherapy in younger patients diagnosed with poordashrisk first relapse, the improved outcomes may not be statistically significant. Furthermore, we are concerned that the overall improvement in survival from 5.95 months to 9.56 months may not represent a substantial clinical improvement. In addition, the rate of adverse events in both treatment arms of Study 205, given the theoretical benefit of reduced toxicity with the liposomal formulation, was similar for both the VYXEOSTM and ``7+3'' free drug treatment groups. Therefore, we also are concerned that there is a similar rate of adverse events, such as febrile neutropenia (68 percent versus 71 percent), pneumonia (20 percent versus 15 percent), and hypoxia (13 percent versus 15 percent), with the use of VYXEOSTM as compared with the conventional ``7+3'' free drug regimen.

    We are inviting public comments on whether VYXEOSTM meets the substantial clinical improvement criterion.

    Below we summarize and respond to a written public comment we received regarding the VYXEOSTM during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register.

    Comment: The applicant provided a written comment to provide notification of the addition of VYXEOSTM to the Category 1 Clinical Practice Guidelines in Oncology recommendation by the National Comprehensive Cancer Network. The applicant reported that the resources made available by NCCN are the NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelinesreg). The intent of the guidelines is to assist in the decision-making process of individuals involved in cancer treatment and care. According to the NCCN Guidelinesreg, Category 1 clinical practices are based upon highdashlevel evidence, and there is uniform NCCN consensus that the intervention is appropriate. The February 7, 2018 NCCN Guidelinesreg for Acute Myeloid Leukemia include a recommendation for cytarabine and daunorubicin for the treatment of adult patients 60 years of age or older who have been newly diagnosed with therapy-related AML (t-AML) or AML with myelodysplasia-related changes

    Page 20300

    (AML-RMC) to be included as a Category 1 clinical practice.\86\

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    \86\ NCCN Clinical Practice Guidelines in Oncology (NCCN Guidelinesreg), Acute Myeloid Leukemia, Version I--2018, February 7, 2018, https://www.nccn.org/professionals/physician_gls/pdf/aml.pdf.

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    Response: We appreciate the applicant's submission of additional information. We will take these comments into consideration when deciding whether to approve new technology add-on payments for VYXEOSTM for FY 2019.

  59. VABOMERETM (Meropenem-Vaborbactam)

    Melinta Therapeutics, Inc., submitted an application for new technology add-on payments for VABOMERETM for FY 2019. VABOMERETM is indicated for use in the treatment of adult patients who have been diagnosed with complicated urinary tract infections (cUTIs), including pyelonephritis, caused by specific bacteria. VABOMERETM received FDA approval on August 29, 2017.

    Complicated urinary tract infections (cUTIs) are defined as chills, rigors, or fever (temperature of greater than or equal to 38.0degC); elevated white blood cell count (greater than 10,000/mm\3\), or left shift (greater than 15 percent immature PMNs); nausea or vomiting; dysuria, increased urinary frequency, or urinary urgency; lower abdominal pain or pelvic pain. Acute pyelonephritis is defined as chills, rigors, or fever (temperature of greater than or equal to 38.0degC); elevated white blood cell count (greater than 10,000/

    mm\3\), or left shift (greater than 15 percent immature PMNs); nausea or vomiting; dysuria, increased urinary frequency, or urinary urgency; flank pain; costodashvertebral angle tenderness on physical examination. Risk factors for infection with drug-resistant organisms do not, on their own, indicate a cUTI.\87\ The increasing incidence of multidrug-resistant gram-negative bacteria, such as carbapenem-

    resistant Enterobacteriacea (CRE), has resulted in a critical need for new antimicrobials.

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    \87\ Hooton, T. and Kalpana, G., 2018, ``Acute complicated urinary tract infection (including pyelonephritis) in adults,'' In A. Bloom (Ed.), UpToDate. Available at: https://www.uptodate.com/contents/acute-complicated-urinary-tract-infection-including-pyelonephritis-in-adults.

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    The applicant reported that it has developed a beta-lactamase combination antibiotic, VABOMERETM, to treat cUTIs, including those caused by certain carbapenemdashresistant organisms. By combining the carbapenem class antibiotic meropenem with vaborbactam, VABOMERETM protects meropenem from degradation by certain CRE strains.

    The applicant stated that meropenem, a carbapenem, is a broad spectrum betadashlactam antibiotic that works by inhibiting cell wall synthesis of both gram-positive and gram-negative bacteria through binding of penicillin-binding proteins (PBP). Carbapenemase producing strains of bacteria have become more resistant to beta-lactam antibiotics, such as meropenem. However, meropenem in combination with vaborbactam, inhibits the carbapenemase activity, thereby allowing the meropenem to bind PBP and kill the bacteria.

    According to the applicant, vaborbactam, a boronic acid inhibitor, is a first-in class beta-lactamase inhibitor. Vaborbactam blocks the breakdown of carbapenems, such as meropenem, by bacteria containing carbapenemases. Although vaborbactam has no antibacterial properties, it allows for the treatment of resistant infections by increasing bacterial sensitivity to meropenem. New carbapenemase producing strains of bacteria have become more resistant to beta-lactam antibiotics. However, meropenem in combination with vaborbactam, can inhibit the carbapenemase enzyme, thereby allowing the meropenem to bind PBP and kill the bacteria. The applicant stated that the vaborbactem component of VABOMERETM helps to protect the meropenem from degradation by certain beta-lactamases, such as Klebsiella pneumonia carbapenemase (KPC). According to the applicant, VABOMERETM is the first of a novel class of betadashlactamase inhibitors. The applicant asserted that VABOMERETM's use of vaborbactam to restore the efficacy of meropenem is a novel approach to fighting antimicrobial resistance.

    The applicant stated that VABOMERETM is indicated for use in the treatment of adult patients 18 years old and older who have been diagnosed with cUTIs, including pyelonephritis. The recommended dosage of VABOMERETM is 4 grams (2 grams of meropenem and 2 grams of vaborbactam) administered every 8 hours by intravenous (IV) infusion over 3 hours with an estimated glomerular filtration rate (eGFR) greater than or equal to 50 mL/min/1.73 m\2\. The recommended dosage of VABOMERETM for patients with varying degrees of renal function is included in the prescribing information. The duration of treatment is for up to 14 days.

    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 criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, VABOMERETM is designed primarily for the treatment of gram-negative bacteria that are resistant to other current antibiotic therapies. The applicant stated that VABOMERETM does not use the same or similar mechanism of action to achieve a therapeutic outcome. The applicant asserted that the vaborbactam component of VABOMERETM is a new class of beta-lactamase inhibitor that protects meropenem from degradation by certain enzymes such as carbapenamases. The applicant indicated that the structure of vaborbactam is distinctly optimized for inhibition of serine carbapenamases and for combination with a carbapenem antibiotic. Beta-lactamase inhibitors are agents that inhibit bacterial enzymes--

    enzymes that destroy beta-lactam antibiotics and result in resistance to firstdashline as well as ``last defense'' antimicrobials used in hospitals. According to the applicant, in order for carbapenems to be effective these enzymes must be inhibited. The applicant stated that the addition of vaborbactam as a potent inhibitor against Class A and C serine beta-lactamases, particularly KPC, represents a new mechanism of action. According to the applicant, VABOMERETM's use of vaborbactam to restore the efficacy of meropenem is a novel approach and that the FDA's approval of VABOMERETM for the treatment of cUTIs represents a significant label expansion because mereopenem alone (without the addition of vaborbactam) is not indicated for the treatment of patients with cUTI infections. Therefore, the applicant maintained that this technology and resistance-fighting mechanism involved in the therapeutic effect achieved by VABOMERETM is distinct from any other existing product. The applicant noted that VABOMERETM was designated as a qualified infectious disease product (QIDP) in January 2014. This designation is given to antibacterial products that treat serious or lifedashthreatening infections under the Generating Antibiotic Incentives Now (GAIN) title of the FDA Safety and Innovation Act.

    We believe that, although the molecular structure of the vaborbactam component of VABOMERETM is unique, the bactericidal action of VABOMERETM is the same as meropenem alone. In

    Page 20301

    addition, we note that there are other similar beta-lactam/beta-

    lactamase inhibitor combination therapies currently available as treatment options. We are inviting public comments on whether VABOMERETM's mechanism of action is similar to other existing technologies.

    With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant asserted that patients who may be eligible to receive treatment involving VABOMERETM include hospitalized patients who have been diagnosed with a cUTI. These potential cases can be identified by a variety of ICD-10-CM diagnosis codes. Therefore, potential cases representing patients who have been diagnosed with a cUTI who may be eligible for treatment involving VABOMERETM can be mapped to multiple MS-DRGs. The following are the most commonly used MS-DRGs for patients who have been diagnosed with a cUTI: MS-DRG 690 (Kidney and Urinary Tract Infections without MCC); MS-DRG 853 (Infectious and Parasitic Diseases with O.R. Procedure with MCC); MS-DRG 870 (Septicemia or Sever Sepsis with Mechanical Ventilation 96+ Hours); MS-

    DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ Hours with MCC); and MS-DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ Hours without MCC). Potential cases representing patients who may be eligible for treatment with VABOMERETM would be assigned to the same MS-DRGs as cases representing hospitalized patients who have been diagnosed with a cUTI.

    With respect to the third criterion, whether the use of the technology involves the treatment of the same or similar type of disease and the same or similar patient population, the applicant asserted that the use of VABOMERETM would treat a different patient population than existing and currently available treatment options. According to the applicant, VABOMERETM's use of vaborbactam to restore the efficacy of meropenem is a novel approach to fighting the global and national public health crisis of antimicrobial resistance, and as such, the use of VABOMERETM reaches different and expanded patient populations. The applicant further asserted that future patient populations are saved as well because the growth of resistant infections is slowed. The applicant believed that, because of the threat posed by gram-negative bacterial infections and the limited number of available treatments currently on the market or in development, the combination structure and development of VABOMERETM and its potential expanded use is new. While the applicant believes that VABOMERETM treats a different patient population, we note that VABOMERETM is only approved for use in the treatment of adult patients who have been diagnosed with cUTIs. Therefore, it appears that VABOMERETM treats the same population (adult patients with a cUTI) and there are already other treatment options available for diagnoses of cUTIs.

    We are concerned that VABOMERETM may be substantially similar to existing betadashlactam/beta-lactamase inhibitor combination therapies. As noted above, we are concerned that VABOMERETM may have a similar mechanism of action, treats the same population (patients with a cUTI) and would be assigned to the same MS-DRGs (similar to existing betadashlactam/beta-lactamase inhibitor combination therapies currently available as treatment options). We are inviting public comments on whether VABOMERETM meets the substantial similarity criteria and the newness criterion.

    With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. In order to identify the range of MS-DRGs to which cases representing potential patients who may be eligible for treatment using VABOMERETM may map, the applicant used the Premier Research Database from 2nd Quarter 2015 to 4th Quarter 2016. According to the applicant, Premier is an electronic laboratory, pharmacy, and billing data repository that collects data from over 600 hospitals and captures nearly 20 percent of U.S. hospitalizations. The applicant's list of most common MS-DRGs is based on data regarding CRE from the Premier Research Database. According to the applicant, approximately 175 member hospitals also submit microbiology data, which allowed the applicant to identify specific pathogens such as CRE infections. Using the Premier Research Database, the applicant identified over 350 MS-DRGs containing data for 2,076 cases representing patients who had been hospitalized for CRE infections. The applicant used the top five most common MS-

    DRGs: MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation >96 Hours with MCC), MS-DRG 853 (Infectious and Parasitic Disease with O.R. Procedure with MCC), MS-DRG 870 (Septicemia or Severe Sepsis with Mechanical Ventilation >96 Hours), MS-DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation >96 Hours without MCC), and MS-DRG 690 (Kidney and Urinary Tract Infections without MCC), to which 627 cases representing potential patients who may be eligible for treatment involving VABOMERETM, or approximately 30.2 percent of the total cases identified, mapped.

    The applicant reported that the resulting 627 cases from the identified top 5 MS-DRGs have an average case-weighted unstandardized charge per case of $74,815. We note that, instead of using actual charges from the Premier Research Database, the applicant computed this amount based on the average case-weighted threshold amounts in Table 10 from the FY 2018 IPPS/LTCH PPS final rule. For the rest of the analysis, the applicant adjusted the average case-weighted threshold amounts (referred to above as the average casedashweighted unstandardized charge per case) rather than the actual average casedashweighted unstandardized charge per case from the Premier Research Database. According to the applicant, based on the Premier data, $1,999 is the mean antibiotic costs of treating patients hospitalized with CRE infections with current therapies. The applicant explained that it identified 69 different regimens that ranged from 1 to 4 drugs from a study conducted to understand the current management of patients diagnosed with CRE infections. Accordingly, the applicant estimated the removal of charges for a prior technology of $1,999. The applicant then standardized the charges. The applicant applied an inflation factor of 9.357 percent from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to inflate the charges. The applicant noted that it does not yet have sufficient charge data from hospitals and will work to supplement its application with the information once it is available. However, for purposes of calculating charges, the applicant used the average charge as the wholesale acquisition cost (WAC) price for a treatment duration of 14 days and added this amount to the average charge per case. Using this estimate, the applicant calculated the final inflated casedashweighted standardized charge per case as $91,304, which exceeds the average casedashweighted threshold amount of $74,815. Therefore, the applicant asserted that VABOMERETM meets the cost criterion.

    We are concerned that, as noted earlier, instead of using actual charges from the Premier Research Database, the applicant computed the average casedashweighted unstandardized charge per case based on the average case-weighted threshold amounts in Table 10

    Page 20302

    from the FY 2018 IPPS/LTCH PPS final rule. Because the applicant did not demonstrate that the average case-weighted standardized charge per case for VABOMERETM (using actual charges from the Premier Research Database) would exceed the average case-weighted threshold amounts in Table 10, we are unable to determine if the applicant meets the cost criterion. We are inviting public comments on whether VABOMERETM meets the cost criterion, including with respect to the concern regarding the applicant's analysis.

    With regard to the substantial clinical improvement criterion, the applicant believed that the results from the VABOMERETM clinical trials clearly establish that VABOMERETM represents a substantial clinical improvement for treatment of deadly, antibiotic resistant infections. Specifically, the applicant asserted that VABOMERETM offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatments, and the use of VABOMERETM significantly improves clinical outcomes for a patient population as compared to currently available treatments. The applicant provided the results of the Targeting Antibiotic Non-sensitive Gram-Negative Organisms (TANGO) I and II clinical trials to support its assertion. TANGOdashI \88\ was a prospective, randomized, double-blinded trial of VABOMERETM versus piperacillin-tazobactam in patients with cUTIs and acute pyelonephritis (A/P). TANGOdashI is also a noninferiority (NI) trial powered to evaluate the efficacy, safety, and tolerability of VABOMERETM compared to piperacillin-

    tazobactam in the treatment of cUTI, including AP, in adult patients. There were two primary endpoints for this study, one for the FDA, which was cure or improvement and microbiologic outcome of eradication at the enddashofdashtreatment (EOT) (day 5 to 14) in the proportion of patients in the Microbiologic Evaluable Modified Intent-to-Treat (m-

    MITT) population who achieved overall success (clinical cure or improvement and eradication of baseline pathogen to TM as a 3-hour IV infusion every 8 hours, or piperacillin 4g-tazobactam 500mg as a 30 minute IV infusion every 8 hours, for at least 5 days for the treatment of a cUTI. Therapy was set at a minimum of 5 days to fully assess the efficacy and safety of VABOMERETM. After a minimum of 5 days of IV therapy, patients could be switched to oral levofloxacin (500 mg once every 24 hours) to complete a total of 10-day treatment course (IV + oral), if they met pre-specified criteria. Treatment was allowed for up to 14 days, if clinically indicated.

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    \88\ Vabomere Prescribing Information, Clinical Studies (August 2017), available at: https://www.accessdata.fda.gov/drugsatfda_docs/label/2017/209776lbl.pdf.

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    Patient demographic and baseline characteristics were balanced between treatment groups in the m-MITT population.

    Approximately 93 percent of patients were Caucasian and 66 percent were females in both treatment groups.

    The mean age was 54 years old with 32 percent and 42 percent of the patients 65 years old and older in the VABOMERETM and piperacillin/tazobactam treatment groups, respectively.

    Mean body mass index was approximately 26.5 kg/m\2\ in both treatment groups.

    Concomitant bacteremia was identified in 12 (6 percent) and 15 (8 percent) of the patients at baseline in the VABOMERETM and piperacillin/tazobactam treatment groups, respectively.

    The proportion of patients who were diagnosed with diabetes mellitus at baseline was 17 percent and 19 percent in the VABOMERETM and piperacillin/tazobactam treatment groups, respectively.

    The majority of the patients (approximately 90 percent) were enrolled from Europe, and approximately 2 percent of the patients were enrolled from North America. Overall, in both treatment groups, 59 percent of the patients had pyelonephritis and 40 percent had a cUTI, with 21 percent and 19 percent of the patients having a nondashremovable and removable source of infection, respectively.

    Mean duration of IV treatment in both treatment groups was 8 days and mean total treatment duration (IV and oral) was 10 days; patients with baseline bacteremia could receive up to 14 days of therapy (IV and oral). Approximately 10 percent of the patients in each treatment group in the m-MITT population had a levofloxacin-resistant pathogen at baseline and received levofloxacin as the oral switch therapy. According to the applicant, this protocol violation may have impacted the assessment of the outcomes at the TOC visit. These patients were not excluded from the analysis of adverse reactions (headache, phlebitis, nausea, diarrhea, and others) occurring in 1 percent or more of the patients receiving VABOMERETM, as the decision to switch to oral levofloxacin was based on post-randomization factors.

    Regarding the FDA primary endpoint, the applicant stated the following:

    Overall success rate at the end of IV treatment (day 5 to 14) was 98.4 percent and 94 percent for the VABOMERETM and piperacillin/tazobactam treatment groups, respectively.

    The TOC--7 days post IV therapy was 76.5 percent (124 of 162 patients) for the VABOMERETM group and 73.2 percent (112 of 153 patients) for the piperacillin/tazobactam group.

    Despite being an NI trial, TANGO-I showed a statistically significant difference favoring VABOMERETM in the primary efficacy endpoint over piperacillin/tazobactam (a commonly used agent for gram-negative infections in U.S. hospitals).

    VABOMERETM demonstrated statistical superiority over piperacillin-tazobactam with overall success of 98.4 percent of patients treated with VABOMERETM in the TANGO-I clinical trial compared to 94.0 percent for patients treated with piperacillin/

    tazobactam, with a treatment difference of 4.5 percent and 95 percent CI of (0.7 percent, 9.1 percent).

    Because the lower limit of the 95 percent CI is also greater than 0 percent, VABOMERETM was statistically superior to piperacillin/tazobactam.

    Because non-inferiority was demonstrated, then superiority was tested. Further, the applicant asserted that a noninferiority design may have a ``superiority'' hypothesis imbedded within the study design that is appropriately tested using a nondashinferiority design and statistical analysis. As such, according to the applicant, superiority trials concerning antibiotics are impractical and even unethical in many cases because one cannot randomize patients to receive inactive therapies. The applicant stated that it would be unethical to leave a patient with a severe infection without any treatment.

    The EMA endpoint of eradication rates at TOC were higher in the VABOMERETM group compared to the piperacillin/

    tazobactam group in both the m-MITT (66.7 percent versus 57.7 percent) and ME (66.3 percent and 60.4 percent) populations; however, it was

    Page 20303

    not a statistically significant improvement.

    We note that the eradication rates of the EMA endpoint were not statistically significant. We are inviting public comments with respect to our concern as to whether the FDA endpoints demonstrating noninferiority are statistically sufficient data to support that VABOMERETM is a substantial clinical improvement in the treatment of patients with a cUTI.

    In TANGO-I the applicant offers data comparing VABOMERETM to piperacillin-tazobactam EOT/TOC rates in the setting of cUTIs/AP, but does not offer a comparison to other antibiotic treatments of cUTIs known to be effective against gram-

    negative uropathogens, specifically other carbapenems.\89\ We also note that the study population is largely European (98 percent), and given the variable geographic distribution of antibiotic resistance we are concerned that the use of piperacillin/tazobactam as the comparator may have skewed the eradication rates in favor of VABOMERETM, or that the favorable results would not be applicable to patients in the United States. We are inviting public comments regarding the lack of a comparison to other antibiotic treatments of cUTIs known to be effective against gram-negative uropathogens, whether the comparator the applicant used in its trial studies may have skewed the eradication rates in favor of VABOMERETM, and if the favorable results would be applicable to patients in the United States to allow for sufficient information in evaluating substantial clinical improvement.

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    \89\ Golan, Y., 2015, ``Empiric therapy for hospital-acquired, Gram-negative complicated intra-abdominal infection and complicated urinary tract infections: a systematic literature review of current and emerging treatment options,'' BMC Infectious Diseases, vol. 15, pp. 313. http://doi.org/10.1186/s12879-015-1054-1.

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    The applicant asserted that the TANGOdashII study \90\ of monotherapy with VABOMERETM compared to best available therapy (BAT) (salvage care of cocktails of toxic/poorly efficacious last resort agents) for the treatment of CRE infections showed important differences in clinical outcomes, including reduced mortality, higher clinical cure at EOT and TOC, benefit in important patient subgroups of HABP/VABP, bacteremia, renal impairment, and immunocompromised and reduced AEs, particularly lower nephrotoxicity in the study group. TANGOdashII is a multidashcenter, randomized, Phase III, open-label trial of patients with infections due to known or suspected CRE, including cUTI, AP, HABP/VABP, bacteremia, or complicated intra-abdominal infection (cIAI). Eligible patients were randomized 2:1 to monotherapy with VABOMERETM or BAT for 7 to 14 days. There were no consensus BAT regimes, it could include (alone or in combination) a carbapenem, aminoglycoside, polymyxin B, colistin, tigecycline or ceftazidime-avibactam.

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    \90\ Alexander, et al., ``CRE Infections: Results From a Retrospective Series and Implications for the Design of Prospective Clinical Trials,'' Open Forum Infectious Diseases.

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    A total of 72 patients were enrolled in the TANGOdashII trial. Of these, 50 of the patients (69.4 percent) had a gram-negative baseline organism (m-MITT population), and 43 of the patients (59.7 percent) had a baseline CRE (mCRE-MITT population). Within the mCRE-MITT population, 20 of the patients had bacteremia, 15 of the patients had a cUTI/AP, 5 of the patients had HABP/VABP, and 3 of the patients had a cIAI. The most common baseline CRE pathogens were K. pneumoniae (86 percent) and Escherichia coli (7 percent). Cure rates of the mCRE-MITT population at EOT for VABOMERETM and BAT groups were 64.3 percent and 40 percent, respectively, TOC, 7 days after EOT, were 57.1 percent and 26.7 percent, respectively, 28-day mortality was 17.9 percent (5 of 28 patients) and 33.3 percent (5 of 15 patients), respectively. The applicant asserted that with further sensitivity analysis, taking into account prior antibiotic failures among the VABOMERETM study arm, the 28dashday all-cause mortality rates were even lower among VABOMERETM versus BAT patients (5.3 percent (1 of 19 patients) versus 33.3 percent (5 of 15 patients)). Additionally, in July 2017, randomization in the trial was stopped early following a recommendation by the TANGOdashII Data Safety Monitoring Board (DSMB) based on risk-benefit considerations that randomization of additional patients to the BAT comparator arm should not continue.

    According to the applicant, subgroup analyses of the TANGOdashII studies include an analysis of adverse events in which VABOMERETM compared to BAT demonstrated the following:

    VABOMERETM was associated with less severe treatment emergent adverse events of 13.3 percent versus 28 percent.

    VABOMERETM was less likely to be associated with a significant increase in creatinine 3 percent versus 26 percent.

    Efficacy results of the TANGOdashII trial cUTI/AP subgroup demonstrated VABOMERETM was associated with an overall success rate at EOT for the mCRE-MITT populations of 72 percent (8 of 11 patients) versus 50 percent (2 of 4 patients) and an overall success rate at TOC of 27.3 percent (3 of 7 patients) versus 50 percent (2 of 4 patients).

    We note that many of the TANGOdashII trial outcomes showing improvements in the use of VABOMERETM over BAT are not statistically significant. We also note that the TANGOdashII study included a small number of patients; the study population in the mCREdashMITT only included 43 patients. Additionally, the cUTI/AP subgroup analysis only included a total of 15 patients and did not show an increased overall success rate at TOC (27.3 percent versus 50 percent) over the BAT group. We are inviting public comments with respect to our concern as to whether the lack of statistically significant outcomes and the small number of study participants allows for enough information to evaluate substantial clinical improvement.

    We are inviting public comments on whether the VABOMERETM technology meets the substantial clinical improvement criterion, including with respect to the specific concerns we have raised.

    Below we summarize and respond to written public comments we received regarding VABOMERETM during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register.

    Comment: The applicant submitted information regarding the comparison of VABOMERETM to other antibiotic treatments for a cUTI known to be effective against gramdashnegative uropathogens. The applicant asserted that doripenem is a carbapenem antibiotic and, therefore, is subject to degradation and inactivation by carbapenemases, including the Klebsiella pneumoniae carbapenemase (KPC). The applicant stated that doripenem has been shown to have poor activity in vitro against CRE and VABOMERETM, in contrast, takes a novel, first in class beta-lactamase inhibitor, vaborbactam, and combines it with the carbapenem drug meropenem in a manner that--

    because of the unique, novel, and new properties of vaborbactam when combined with meropenem to create VABOMERETM--to effectively restore the effectiveness of meropenem (a carbapenem) in fighting against carbapenem-resistant bacteria. The applicant indicated that extensive in vitro studies have been conducted and show that carbapenems such as doripenem have poor activity in vitro against KPC-

    producing CRE. Because the in vitro data show that doripenem has poor activity against KPC-producing CRE, the applicant stated that no comparative clinical efficacy data

    Page 20304

    between doripenem and VABOMERETM exists.

    Response: We appreciate the applicant's comments. However, we believe that because the study population for VABOMERETM is patients with cUTIs and not UTIs with KPCs, we are concerned that the applicant does not offer comparison data to other antibiotic treatments of cUTIs known to be effective against gramdashnegative uropathogens. As noted, we are inviting public comments on whether the VABOMERETM technology meets the substantial clinical improvement criterion, including with respect to the specific concerns we have raised.

  60. DURAGRAFTreg Vascular Conduit Solution

    Somahlution, Inc. submitted an application for new technology add-

    on payments for DURAGRAFTreg for FY 2019. DURAGRAFTreg is designed to protect the endothelium of the vein graft following harvesting and prior to grafting to prevent vascular graft disease (VGD) and vein graft failure (VGF), and to reduce the clinical complications associated with graft failure. These complications include myocardial infarction and repeat revascularization. DURAGRAFTreg is formulated into a solution that is used during standard graft handling, flushing, and bathing steps.

    VGD is the principal cause of both early (within 30 days) and intermediate/late (months to years) VGF. The principal mediator of VGD following grafting in bypass surgeries is damage that occurs during intra-operative vascular graft harvesting and handling.91 92 Endothelium can be destroyed or damaged intraoperatively through the acute physical stress of harvesting, storage, and handling, and through more insidious processes such as those associated with ischemic injury, metabolic stress and oxidative damage. According to the applicant, more recently, it has been demonstrated that damage associated with graft storage solution has the highest correlation with the development of 12-month VGF.93 94 This is likely due not only to the active tissue damage associated with commonly used storage solutions, but also to their inability to protect against ischemic injury.95 96 97 VGD encompasses the pathophysiological changes that occur in damaged vein grafts following their use in surgical grafting. These changes, apparent within minutes to hours of grafting, are manifested as endothelial dysfunction, death and/or denudation and include pro-inflammatory, pro-thrombogenic and proliferative changes within the graft. These initial responses to damage cause even more damage in a domino-like effect, thereby perpetuating the response-damage cycle that is the basis of VGD progression.

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    \91\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial'', Jama Surg, 2014, vol. 149(8), pp. 798-805.

    \92\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein Graft Disease: `Never Ending Story' of the Eternal Return,'' Res Cardiovasc Med, 2014, vol. 3(3), pp. e21092.

    \93\ Ibid.

    \94\ Ibid.

    \95\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive deendothelialization and thrombogenicity in routinely prepared vein grafts for coronary bypass operations: facts and remedy,'' Century Publishing Corporation, International Journal of Clinical Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.

    \96\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ``Even short-time storage in physiological saline solution impairs endothelial vascular function of saphenous vein grafts,'' Elsevier Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, vol. 40(4), pp. 811-815.

    \97\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-

    photon microscopic evaluation of saphenous vein endothelium and its preservation with a new solution,'' GALA, Elsevier Science Inc., Ann Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.

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

    The applicant further noted that endothelial dysfunction and inflammation also result in the diminished ability of the graft to respond appropriately to new blood flow patterns and adaptive positive remodeling may be thwarted. This is because proper remodeling is dependent upon a functional endothelial response to shear stress that involves the production of remodeling factors by the endothelium including nitro vasodilators, prostaglandins, lipoxyoxygenases, hyperpolarizing factors and other growth factors. Therefore, damaged, missing and/or dysfunctional endothelial cells prevent, to varying extents, graft adaption which makes the graft susceptible to shear-

    mediated endothelial damage. The collective damage results in intimal hyperplasia or graft wall thickening that is the basis for atheroma development and subsequent lumen narrowing and graft failure, which is the end state of VGD. The applicant pointed to several references to highlight pathologic changes leading to VGD, occlusion and loss of vasomotor function.98 99 100 101 102 103 104 105 The applicant summarized, that when the damaged luminal surface of a vein graft is presented to the bloodstream at time of reperfusion, a dominodasheffect of further damage is triggered through inflammatory, thrombogenic and aberrant hyper-proliferative processes that lead to both early and late VGF. Presenting an intact functional endothelial layer at the time of grafting is, therefore, tantamount to protecting the graft and its associated endothelium from damage that occurs post-

    grafting, in turn conferring protection against graft failure. Given the low success rate of failed graft intervention, addressing graft endothelial protection at the time of surgery is critical.\106\

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

    \98\ Verrier, E.D., Boyle, E.M., ``Endothelial cell injury in cardiovascular surgery: an overview,'' Ann Thorac Surg, 1997, vol. 64, pp. S2-S8.

    \99\ Harskamp, R.E., Lopes, R.D., Baisden, C.E., et al., ``Saphenous vein graft failure after coronary artery bypass surgery: pathophysiology, management, and future directions,'' Ann Thorac Surg., 2013 May, vol. 257(5), pp. 824-33.

    \100\ Hess, C.N., Lopes, R.D., Gibson, C.M., et al., ``Saphenous vein graft failure after coronary artery bypass surgery: insights from PREVENT IV,'' Circulation 2014 Oct 21, vol. 130(17), pp. 1445-

    51.

    \101\ Sellke, F.W., Boyle, E.M., Verrier, E.D., ``The pathophysiology of vasomotor dysfunction,'' Ann Thorac Surg, 1997, vol. 64, pp. S9-S15.

    \102\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein graft disease: pathogenesis, predisposition and prevention,'' Circulation 1998, vol. 97(9), pp. 916-31.

    \103\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr Opin Cardiol, 1995, vol. 10, pp. 562-8.

    \104\ Davies, M.G., Hagen, P.O., ``Pathophysiology of vein graft failure: a review,'' Eur J Vasc Endovasc Surg, 1995, vol. 9, pp. 7-

    18.

    \105\ Edmunds, L.H., ``Techniques of myocardial revascularization. In: Edmunds LH, ed. Cardiac surgery in the adult,'' New York: McGraw-Hill, 1997, pp. 481-534.

    \106\ Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al., ``Saphenous vein graft disease: review of pathophysiology, prevention, and treatment,'' Cardiol, Rev 2013, vol. 21(2), pp. 101-

    9.

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

    With respect to the newness criterion, DURAGRAFTreg has not received FDA approval at the time of the development of this proposed rule. The applicant indicated that it anticipates FDA approval of its premarket application by the second quarter of 2018. The applicant also indicated that ICD-10-PCS code XY0VX83 (Extracorporeal introduction of endothelial damage inhibitor to vein graft, new technology group 3) would identify procedures involving the use of the DURAGRAFTreg technology.

    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 criterion, whether a product uses the same or similar mechanism of action to achieve a therapeutic outcome, according to the applicant, there are currently no other treatment options available with the

    Page 20305

    same mechanism of action as that of DURAGRAFTreg. Moreover, the applicant conveyed there are currently no commercial solutions approved for treating arteries or veins intended for bypass surgery. The applicant explained that the DURAGRAFTreg treatment has been formulated into a solution so that it can be used to treat grafts during handling, flushing, and bathing steps without changing surgical practice to perform the treatment. According to the applicant, DURAGRAFTreg is specifically designed to inhibit endothelial cell damage and death, as well as prevent damage to other cells of the vascular conduit, which achieves a superior clinical outcome in coronary artery bypass grafting (CABG).

    The applicant did not directly address within its application the second and third criteria; whether a product is assigned to the same or a different MS-DRG and 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. However, the applicant stated, as previously indicated, that there are currently no other treatment options available that utilize the same mechanism of action as that of the DURAGRAFTreg.

    Based on the applicant's statements presented above, we are concerned that the mechanism of action of the DURAGRAFTreg may be the same or similar to other vein graft storage solutions. We also are concerned with the lack of information regarding how the technology meets the substantial similarity criteria. Specifically, we understand that there are other vein graft storage solutions available, such as various saline, blood, and electrolyte solutions. We believe that additional information would be helpful regarding whether the use of the technology treats the same or similar patient population or type of disease, and whether the product is assigned to the same or different MS-DRG as compared to the other storage solutions. We are inviting public comments on whether DURAGRAFTreg meets the substantial similarity criteria and the newness criterion.

    With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. In order to identify the range of MS-DRGs that cases representing potential patients who may be eligible for treatment using DURAGRAFTreg may map to, the applicant identified all MS-DRGs for patients who underwent coronary artery bypass grafting (CABG). Specifically, the applicant searched the FY 2016 MedPAR file for claims that included IPPS patients and identified potential cases by the following ICD-10-PCS procedure codes:

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

    ICD-10-PCS procedure code Code title

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

    021009W................... Bypass coronary artery, one artery from

    aorta with autologous venous tissue, open

    approach.

    02100AW................... Bypass coronary artery, one artery from

    aorta with autologous arterial tissue, open

    approach.

    021049W................... Drainage of intracranial subdural space,

    percutaneous approach

    02104AW................... Bypass cerebral ventricle to cerebral

    cisterns, percutaneous approach.

    021109W................... Bypass coronary artery, two arteries from

    aorta with autologous venous tissue, open

    approach.

    02110AW................... Bypass coronary artery, two arteries from

    aorta with autologous arterial tissue, open

    approach.

    021149W................... Bypass coronary artery, two arteries from

    aorta with autologous venous tissue,

    percutaneous endoscopic approach.

    02114AW................... Bypass coronary artery, two arteries from

    aorta with autologous arterial tissue,

    percutaneous endoscopic approach.

    021209W................... Bypass coronary artery, three arteries from

    aorta with autologous venous tissue, open

    approach.

    02120AW................... Bypass coronary artery, three arteries from

    aorta with autologous arterial tissue, open

    approach.

    021249W................... Bypass coronary artery, three arteries from

    aorta with autologous venous tissue,

    percutaneous endoscopic approach.

    02124AW................... Bypass coronary artery, three arteries from

    aorta with autologous arterial tissue,

    percutaneous endoscopic approach.

    021309W................... Bypass coronary artery, four or more

    arteries from aorta with autologous venous

    tissue, open approach.

    02130AW................... Bypass coronary artery, four or more

    arteries from aorta with autologous

    arterial tissue, open approach.

    021349W................... Bypass coronary artery, four or more

    arteries from aorta with autologous venous

    tissue, percutaneous endoscopic approach.

    02134AW................... Bypass coronary artery, four or more

    arteries from aorta with autologous

    arterial tissue, percutaneous endoscopic

    approach.

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

    This resulted in potential cases spanning 98 MS-DRGs, with approximately 93 percent of all potential cases, 59,139, mapping to the following 10 MS-DRGs:

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

    MS-DRG MS-DRG title

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

    MS-DRG 3................. Extracorporeal Membrane Oxygenation (ECMO) or

    Tracheostomy with Mechanical Ventilation 96+

    Hours or Principal Diagnosis Except Face,

    Mouth & Neck with Major Operating Room.

    MS-DRG 216............... Cardiac Valve and Other Major Cardiothoracic

    Procedure with Cardiac Catheterization with

    MCC.

    MS-DRG 219............... Cardiac Valve and Other Major Cardiothoracic

    Procedure without Cardiac Catheterization

    with MCC.

    MS-DRG 220............... Cardiac Valve and Other Major Cardiothoracic

    Procedure without Cardiac Catheterization

    with CC.

    MS-DRG 228............... Other Cardiothoracic Procedures with MCC.

    MS-DRG 229............... Other Cardiothoracic Procedures without CC.

    MS-DRG 233............... Coronary Bypass with Cardiac Catheterization

    with MCC.

    MS-DRG 234............... Coronary Bypass with Cardiac Catheterization

    without MCC.

    MS-DRG 235............... Coronary Bypass without Cardiac

    Catheterization with MCC.

    MS-DRG 236............... Coronary Bypass without Cardiac

    Catheterization without MCC.

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

    Using the 59,139 identified cases, the average case-weighted unstandardized charge per case was $200,886. The applicant then standardized the charges. The applicant did not remove charges for any current treatment because, as

    Page 20306

    discussed above, the applicant indicated there are no other current treatment options available. The applicant noted that it did not provide an inflation factor to project future charges. The applicant added charges for the DURAGRAFTreg technology. This charge was created by applying the national average CCR for implantable devices of 0.332 from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38103) to the cost of the device. According to the applicant, no further charges or related charges were added. Based on the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average case-weighted threshold amount was $164,620. The final average case-weighted standardized charge per case was $185,575. Because the final average case-weighted standardized charge per case exceeds the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion. We are inviting public comments on whether DURAGRAFTreg meets the cost criterion.

    With respect to the substantial clinical improvement criterion, the applicant asserted that the substitutional use of DURAGRAFTreg significantly reduces clinical complications associated with VGF following CABG surgery.

    According to the applicant, DURAGRAFTreg provides a benefit by protecting vascular grafts and their fragile luminal endothelial layer from the point of harvest until the point of grafting; an intradashoperative ischemic interval lasting from about 10 minutes to 3 hours depending on the complexity of the surgery. According to the applicant, there are currently no products available to protect vascular grafts during this time interval. The current standard practice is to place grafts in heparinized saline or heparinized autologous blood to keep them wet; a practice which has been shown to cause significant damage to the graft within minutes, and which has been shown to clinically and statistically correlate with the development of 12-month VGF.107 108 109 110 Therefore, neglecting to protect the endothelial layer prior to implantation can have long-term consequences.

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

    \107\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial'', Jama Surg, 2014, vol. 149(8), pp. 798-805.

    \108\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive deendothelialization and thrombogenicity in routinely prepared vein grafts for coronary bypass operations: facts and remedy,'' Century Publishing Corporation, International Journal of Clinical Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.

    \109\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ``Even short-time storage in physiological saline solution impairs endothelial vascular function of saphenous vein grafts,'' Elsevier Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, vol. 40(4), pp. 811-815.

    \110\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-

    photon microscopic evaluation of saphenous vein endothelium and its preservation with a new solution,'' GALA, Elsevier Science Inc., Ann Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.

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

    When a damaged luminal surface (endothelium) of a vascular graft is presented to the bloodstream at the time of reperfusion, a dominodasheffect of further damage is triggered in vivo through inflammatory, thrombogenic, and aberrant adaptive responses including hyper-proliferative processes that lead to VGF. These pathophysiologic responses occur within minutes of reperfusion of a graft that has received sub-optimal treatment/handling initiating a cascade of exacerbating damage that can continue for years later. Presenting an intact functional endothelial layer at the time of grafting is, therefore, tantamount to protecting the graft from damage that occurs post-grafting, in turn conferring protection against graft failure. Given the low success rate of failed graft intervention addressing the graft, endothelial protection at the time of surgery is critical.\111\

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

    \111\ Kim, F.Y., Marhefka, G., Ruggiero, N.J., et al., ``Saphenous vein graft disease: review of pathophysiology, prevention, and treatment,'' Cardiol Rev 2013, vol. 21(2), pp. 101-

    9.

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

    The combined PREVENT IV sub-analyses of Hess and Harskamp demonstrate that from dozens of factors evaluated for impact on the development of 12-month VGF, exposure to solutions used for intradashoperative graft wetting and storage have the largest correlation with the development of VGF.112, 113 Short-term exposure of free vascular grafts to these solutions is routine in CABG operations, where 10 minutes to 3 hours may elapse between the vein harvest and reperfusion.114, 115 According to the applicant, standard of care solutions are heparinized saline and heparinized autologous blood, which were never designed to protect vascular grafts and have also demonstrated an inability to protect against ischemic injury, actively harming the graft endothelium as well.116 117 118 119 According to the applicant, given the criticality of presenting an intact functional endothelium at the time of reperfusion, it should not be surprising that the use of these solutions is so highly associated with 12-month VGF. Based on these data, DURAGRAFTreg treatment has been designed to be a fully protective solution. DURAGRAFTreg is formulated into a flushing, wetting, and storage solution replacing solutions traditionally used for this purpose and, therefore, does not change surgical practice.

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

    \112\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial'', Jama Surg, 2014, vol. 149(8), pp. 798-805.

    \113\ Testa, L., Bedogni, F., ``Treatment of Saphenous Vein Graft Disease: `Never Ending Story' of the Eternal Return,'' Res Cardiovasc Med, 2014, vol. 3(3), pp. e21092.

    \114\ Motwani, J.G., Topol, E.J., ``Aortocoronary saphenous vein graft disease: pathogenesis, predisposition and prevention,'' Circulation 1998, vol. 97(9), pp. 916-31.

    \115\ Mills, N.L., Everson, C.T., ``Vein graft failure,'' Curr Opin Cardiol, 1995, vol. 10, pp. 562-8.

    \116\ Harskamp, Ralf E., MD, Alexander, John H., MD, MHS, Schulte, Phillip J., Phd, et al., ``Vein Graft Preservation Solutions, Patency, and Outcomes After Coronary Artery Bypass Graft Surgery: follow-up from the PREVENT IV randomized clinical trial,'' Jama Surg, 2014, vol. 149(8), pp. 798-805.

    \117\ Weiss, D.R., Juchem, G., Kemkes, B.M., et al., ``Extensive deendothelialization and thrombogenicity in routinely prepared vein grafts for coronary bypass operations: facts and remedy,'' Century Publishing Corporation, International Journal of Clinical Experimental Medicine, 2009 May 28, vol. 2(2), pp. 95-113.

    \118\ Wilbring, M., Tugtekin, S.M., Zatschler, B., et al., ``Even short-time storage in physiological saline solution impairs endothelial vascular function of saphenous vein grafts,'' Elsevier Science Inc., European Journal of Cardio-Thoracic Surgery, 2011 Oct, vol. 40(4), pp. 811-815.

    \119\ Thatte, H.S., Biswas, K.S., Najjar, S.F., et al., ``Multi-

    photon microscopic evaluation of saphenous vein endothelium and its preservation with a new solution,'' GALA, Elsevier Science Inc., Ann Thorac Surg, 2003 Apr, vol. 75(4), pp. 1145-1152.

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

    The applicant noted that retrospective studies designed to assess clinical effectiveness and safety were conducted based on the readily available databases already in existence as a result of the use of DURAGRAFTreg treatment in two hospitals that had noncommercial access to the product through hospital pharmacies. These studies evaluated the effect of DURAGRAFTreg use during CABG surgery on post-CABG clinical complications associated with VGF, including myocardial infarction (MI) and repeat revascularization. The applicant conveyed that because of the time, resources and funding required for randomized studies evaluating clinical outcomes following CABG surgery, conducting such a study was not a viable approach for a small company such as Somahlution.

    The first retrospective study (Protocol 001), an unpublished, independent Physician Investigator (PI), single-center, multi-surgeon retrospective,

    Page 20307

    comparative study (DURAGRAFTreg vs. Saline or Blood Solutions), was a pilot study conducted at the University of CHU in Angers France, which followed patients for 5 years post-CABG surgery. This pilot study was conducted to assess the safety and effect of DURAGRAFTreg treatment on both short and long-term clinical outcomes. This study also served as the basis for the design of a larger retrospective study conducted at the U.S. Department of Veterans Affairs (VA) Medical Centers, discussed later. The objective of this singledashcenter clinical study in CABG patients was to evaluate the potential benefits of DURAGRAFTreg treatment as compared to a nodashtreatment control group (saline). The investigator who prepared the analysis remained blinded to individual patient data. Eligibility criteria included patients with firstdashtime CABG surgery in which at least one vein graft was used. Patients with in-situ internal mammary artery (IMA) graft(s) only (no saphenous vein or free arterial grafts) and concomitant valve surgery and/or aortic aneurysm repair were excluded. The institutional review board of the University Health Alliance (UHA) approved the protocol, and patients gave written informed consent for their follow-up. A total of 630 patients who underwent elective and isolated CABG surgery with at least one saphenous vein graft at a singledashcenter in Europe between January 2002 and December 2008 were included. The no-treatment control group (saline) included 375 patients who underwent CABG surgery from January 2002 to May 2005 and the DURAGRAFTreg treatment group included 255 patients who underwent CABG surgery from June 2005 to December 2008. At long-term follow-up (greater than 30 days and up to 5 years), 5 patients were lost to follow-up (10 died before the 30-day followdashup). Therefore, a total of 247 patients from the DURAGRAFTreg treatment group (97 percent) and 368 patients from the no-treatment control group (saline) (98 percent) were available for the long-term analysis. Patients undergoing CABG surgery whose vascular grafts were treated intraoperatively with DURAGRAFTreg demonstrated no statistically significant differences in major adverse cardiac events (MACE) within the first 30 days following CABG surgery. According to the applicant, these data suggest that DURAGRAFTreg treatment is at least as safe as the standard of care used in CABG surgeries in that long-term outcomes between the two groups were not statistically different. However, also according to the applicant, a consistent numerical trend toward improved clinical effectiveness outcomes for the DURAGRAFTreg treatment group compared to the no-treatment control (saline) group was clearly identified. Although statistically insignificant, there was a consistent reduction observed in the rates for multiple endpoints such as all-cause death, MI, MACE, and revascularization. This study found reductions in DURAGRAFTreg-treated grafts relative to saline for revascularization (57 percent), MI (70 percent), MACE (37 percent) and alldashcause death (23 percent) compared to standard of care (heparinized saline/blood) through 5 years followdashup. Based on the small sample-size for this evaluation of only 630 patients, and the known frequencies of these events following CABG surgeries, statistical differences were not expected. A subsequent post-hoc analysis also was performed by the researchers at CHU-Angers to evaluate whether any long-term clinical variables (such as dual antiplatelet therapy, beta-

    blockers, angiotensin receptor-blockers, statins, diabetes, lifestyle and other factors) had any impact on the study endpoints. The conclusions of the post-hoc analyses were that the assessed clinical variables did not impact the clinical study findings and so any differences between groups were likely due to ``test article'' effect. According to the applicant, importantly, the data collected from this feasibility study are consistent with data collected in the statisticallydashpowered VA study in which statistically significant reductions of MI, repeat revascularization, and MACE were observed in the DURAGRAFTreg treatment group, lending confidence that the observed trends in this study, as well as the VA study, represent real differences associated with DURAGRAFTreg use.

    The second study, the U.S. VA Hospital Study (Protocol 002), was an unpublished, independent PI initiated, single-center, multi-surgeon, retrospective, comparative (DURAGRAFTreg vs. Saline) clinical trial, which was conducted to assess the safety and impact of DURAGRAFTreg treatment on both short and long-term clinical outcomes in patients who underwent isolated CABG surgery with saphenous vein grafts (SVGs) at the Boston (West Roxbury) VA Medical Center between 1996 and 2004. The time interval from 1996 through 1999 represents a time period when DURAGRAFTreg treatment was not available and heparinized saline was routinely used to wet and store grafts, while 2001 through 2004 represents a time period after the center began exclusively using DURAGRAFTreg, which was prepared by the hospital's pharmacy. The year 2000 was omitted from this analysis by the PI due to the transition of the implementation of DURAGRAFTreg treatment into the clinic and the uncertainty of its use in CABG patients during the transition period. Data were extracted from a total of 2,436 patients who underwent a CABG procedure with at least one SVG from 1996 through 1999 (Control n=1,400 pts.) and 2001 through 2004 (DURAGRAFTreg treatment n=1,036 pts.). The median age was 66 years old for the control treatment group and 67 years old for the DURAGRAFTreg treatment group. Patients were excluded from the study if they had a prior history of CABG procedures, had no use of SVG, or underwent additional procedures during the CABG surgery. Mean follow-up in the DURAGRAFTreg treatment group was 8.54.2 years and 9.95.6 years in the control treatment group. According to the applicant, this study supports not only safety, but also improved long-term clinical outcomes in DURAGRAFTregdashtreated CABG patients. Thirty-day MI also was significantly reduced in this study. The VA study found statistically significant reductions in DURAGRAFTreg-treated grafts relative to saline for revascularization (35 percent), MI (45 percent), and MACE (19 percent) from the follow-up period of 1,000 days to 15 years post-

    surgery.

    According to the applicant, in addition to the retrospective studies, a multidashcenter, within-patient randomized, prospective study utilizing multidetector computed tomography (MDCT) angiography was conducted to assess safety and the effect of the use of DURAGRAFTreg on the graft by assessing early anatomic markers of VGD such as graft wall thickening and early stenotic events. The study was based on an ``in-patient control'' design in which both the control saline exposed vascular graft and a DURAGRAFTregdashtreated graft were grafted within the same patient to reduce patient bias and allow a paired analysis of the grafts. The study was conducted under two protocols. The first study protocol evaluated patients up to 3 months post-CABG and included 1dash and 3-month protocol driven MDCT scans in 125 patients (250 grafts). The second study, a longer-term safety and efficacy study of 97 patients, included a 12-month protocol driven angiogram. The 3 month (full data set) and 12 month (interim data set) data demonstrate that safety and efficacy appear to be equivalent for

    Page 20308

    DURAGRAFTreg and standard of care (SoC) at 3 months, but between 3 months and 9 months a separation between DURAGRAFTreg and SoC begins to emerge and by 12 months DURAGRAFTreg use is associated with a numerical trend towards improved safety relative to SoC. Furthermore by 12 months, the interim analysis demonstrated that differences in markers of early graft disease were able to be discerned between DURAGRAFTregdashtreated grafts and SoC. Reductions in both wall thickness and degree of stenosis were observed in DURAGRAFTregdashtreated grafts relative to SoC grafts. These reductions were observed when the entire graft was assessed and were more profound when the proximal region of the graft was specifically evaluated. According to the applicant, this is of note because the proximal region of the graft is the region in which early graft disease has been shown to more frequently manifest in many grafting indications, including CABG, peripheral bypass, aortic grafting, and AV fistula grafting indications, and is thought to be due to hemodynamic perturbations that occur in this region where arterial flow is just entering the venous environment. While there are no notable differences at 3 months in either safety or efficacy, there are trends towards better safety at 12 months in patients in the DURAGRAFTreg treatment group compared to the control group.\120\ The efficacy results of the prospective study were presented at the October 2017 meeting of the TCT Congress in Denver.

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

    \120\ Perrault, L., ``SOMVC001 (DuraGraft) Vascular Graft Treatment in Patients Undergoing Coronary Artery Bypass Grafting,'' American Heart Association, Inc, Circulation, 2016, vol. 134, pp. A23242, originally published November 11, 2016.

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

    The retrospective studies demonstrated an association of reduced risk of non-fatal myocardial infarction, repeat revascularization, and MACE with DURAGRAFTreg treatment. However, we have a number of concerns relating to these studies. In addition to the studies being unpublished, we are concerned that they leave too many variables unaccounted for that could affect vein integrity such as method of vein harvest, vein distention pressure, and post-operative care (including use of anti-platelet and anti-lipid treatments). Also, control groups underwent CABG procedures many years earlier than the DURAGRAFTreg treatment groups in both studies. Over the years, with advances in medical management and surgical techniques, long-term survival and risk of cardiac events are expected to improve. Finally, it may be helpful to gain more insight from data that will be available upon completion and results of the multi-center, prospective, randomized, double-blind, comparative, withindashperson (DURAGRAFTreg vs. Saline) control trial that is currently ongoing.

    We are inviting public comments on whether DURAGRAFTreg meets the substantial clinical improvement criterion.

    Below we summarize and respond to written public comments we received regarding the DURAGRAFTreg during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register.

    Comment: One commenter, a cardiothoracic surgeon, stated that after practicing cardiac surgery for over 30 years, authoring peerdashreviewed publications in Cardiac Surgery, and participating in several clinical studies, it supported the approval of new technology add-on payments for the DURAGRAFTreg technology. The commenter indicated that one of the reasons why vein grafts get occluded could be because of poor handling during and after harvest. The commenter expressed that there are currently no other solutions used in treatment options available that protect vascular conduits once they are harvested aside from the standard practice of storing them in saline or blood-based solutions until they are ready for implantation. The commenter stated that saline and blood-based solutions are very damaging to vein segments, and the damage that occurs is linked to poor clinical outcomes including increased risk of myocardial infarction (MI) and increased rates of repeat revascularization. The commenter indicated that it had many years of first-hand experience with the use of DURAGRAFTreg because the commenter served as the Principal Investigator for a retrospective clinical study that evaluated the DURAGRAFTreg's effect on clinical outcomes compared to standard-of-

    care treatment options. The commenter conveyed that the results of the retrospective clinical study included statistically significant reductions in MI and repeat revascularization rates. The commenter also pointed out its awareness of a prospective clinical study the DURAGRAFTreg's manufacturer has conducted evaluating radiologic assessments to analyze graft disease, which precedes loss of patency. According to the commenter, the study demonstrated increased wall thickness and increased stenosis in grafts stored in saline compared to grafts stored using the DURAGRAFTreg. The commenter stated that this finding from the prospective clinical study is very consistent with the clinical results of the retrospective study. The commenter concluded by stating that it supported the commercial availability and use of the DURAGRAFTreg, including use in the treatment of its own patients.

    Response: We appreciate the commenter's input. We will take these comments into consideration when deciding whether to approve new technology add-on payment for the DURAGRAFTreg for FY 2019.

    Comment: Another commenter, a cardiovascular and thoracic surgeon with clinical expertise in coronary artery bypass grafting surgery (CABG) who has been involved in endothelial dysfunction as a primary field of study and the Principal Investigator for the multidashcenter, within-patient, randomized, prospective study that Somahlution submitted to the FDA in support of U.S. product clearance, supported the approval of new technology add-on payments for the DURAGRAFTreg. The commenter indicated that as an author and co-author of more than 250 articles in peer-reviewed publications, a senior author of more than 75 papers and writer of several book chapters, and having delivered over 40 conference presentations worldwide, the study results, specifically of the 12-month multidector computed tomography (MDCT) imaging showing less lumen narrowing or stenosis, and less wall thickening as a resulting outcome of the DURAGRAFTregdashtreated veins compared to heparinized-saline, are critically important from a clinical perspective. According to the commenter, the primary mechanism of the DURAGRAFTreg technology is to protect the endothelial cells in the vein graft and this has been repeatedly demonstrated in pre-

    clinical studies. The commenter explained that the findings of the clinical anatomic changes in the graft demonstrated in the prospective study are consistent with the pre-clinical findings and the literature that has clearly pointed to damaged endothelium of the graft as the starting insult for later development of poor patient outcomes from graft disease and failure. Finally, the commenter noted that surgeons in all countries currently use a variety of graft storage and preservation solutions during a CABG procedure because there has been no other available solution used in treatment options, aside from the DURAGRAFTreg, with systematic evaluation demonstrating a clear safety

    Page 20309

    profile and benefit to patient outcomes. The commenter encouraged CMS to approve new technology add-on payments for the DURAGRAFTreg technology to provide additional support for this new preservation solution to become available to surgeons in the United States.

    Response: We appreciate the commenter's input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for DURAGRAFTreg for FY 2019.

  61. remedemacrreg System

    Respicardia, Inc. submitted an application for new technology add-

    on payments for the remedemacrreg System for FY 2019. According to the applicant, the remedemacrreg System is indicated for use as a transvenous phrenic nerve stimulator in the treatment of adult patients who have been diagnosed with moderate to severe central sleep apnea. The remedemacrreg System consists of an implantable pulse generator, and a stimulation and sensing lead. The pulse generator is placed under the skin, in either the right or left side of the chest, and it functions to monitor the patient's respiratory signals. A transvenous lead for unilateral stimulation of the phrenic nerve is placed either in the left pericardiophrenic vein or the right brachiocephalic vein, and a second lead to sense respiration is placed in the azygos vein. Both leads, in combination with the pulse generator, function to sense respiration and, when appropriate, generate an electrical stimulation to the left or right phrenic nerve to restore regular breathing patterns.

    The applicant's application describes central sleep apnea (CSA) as a chronic respiratory disorder characterized by fluctuations in respiratory drive, resulting in the cessation of respiratory muscle activity and airflow during sleep.\121\ The applicant reported that CSA, as a primary disease, has a low prevalence in the United States population; and it is more likely to occur in those individuals who have cardiovascular disease, heart failure, atrial fibrillation, stroke, or chronic opioid usage. The apneic episodes which occur in patients with CSA cause hypoxia, increased blood pressure, increased preload and afterload, and promotes myocardial ischemia and arrhythmias. In addition, CSA ``enhances oxidative stress, causing endothelial dysfunction, inflammation, and activation of neurohormonal systems, which contribute to progression of underlying diseases.'' \122\

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    \121\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, A., Khayat, R., Abraham, W.T., 2016, ``Transvenous Stimulation of the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months' experience with the remederegsystem,'' European Journal of Heart Failure, pp. 1-8.

    \122\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,'' Lancet, 2016, vol. 388, pp. 974-982.

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    According to the applicant, prior to the introduction of the remedemacrreg System, typical treatments for CSA took the form of positive airway pressure devices. Positive airway pressure devices, such as continuous positive airway pressure (CPAP), have previously been used to treat patients diagnosed with obstructive sleep apnea. Positive airway devices deliver constant pressurized air via a mask worn over the mouth and nose, or nose alone. For this reason, positive airway devices may only function when the patient wears the necessary mask. Similar to CPAP, adaptive servo-ventilation (ASV) provides noninvasive respiratory assistance with expiratory positive airway pressure. However, ASV adds servo-controlled inspiratory pressure, as well, in an effort to maintain airway patency.\123\

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    \123\ Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C., d'Ortho, M.P., Erdmann, E., Teschler, H., ``Adaptive Servo-

    Ventilation for Central Sleep Apneain Systolic Heart Failure,'' N Eng Jour of Med, 2015, pp. 1-11.

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    On October 6, 2017, the remedemacrreg System was approved by the FDA as an implantable phrenic nerve stimulator indicated for the use in the treatment of adult patients who have been diagnosed with moderate to severe CSA. The device was available commercially upon FDA approval. Therefore, the newness period for the remedemacrreg System is considered to begin on October 6, 2017. The applicant has indicated that the device also is designed to restore regular breathing patterns in the treatment of CSA in patients who also have been diagnosed with heart failure.

    The applicant was approved for two unique ICD-10-PCS procedure codes for the placement of the leads: 05H33MZ (Insertion of neurostimulator lead into right innominate (brachiocephalic) vein) and 05H03MZ (Insertion of neurostimulator lead into azygos vein), effective 10/01/2016. The applicant indicated that implantation of the pulse generator is currently reported using ICD-10-PCS procedure code 0JH60DZ (Insertion of multiple array stimulator generator into chest subcutaneous tissue).

    As discussed above, 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.

    With regard to the first criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, the remedemacrreg System provides stimulation to nerves to stimulate breathing. Typical treatments for hyperventilation CSA include supplemental oxygen and CPAP. Mechanical ventilation also has been used to maintain a patent airway. The applicant asserted that the remedemacrreg System is a neurostimulation device resulting in negative airway pressure, whereas devices such as CPAP and ASV utilize positive airway pressure.

    With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, the applicant stated that the remedemacrreg System is assigned to MS-DRGs 040 (Peripheral, Cranial Nerve and Other Nervous System Procedures with MCC), 041 (Peripheral, Cranial Nerve and Other Nervous System Procedures with CC or Peripheral Neurostimulator), and 042 (Peripheral, Cranial Nerve and Other Nervous System Procedures without CC/MCC). The current procedures for the treatment options of CPAP and ASV are not assigned to these MS-

    DRGs.

    With respect 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, according to the applicant, the remedemacrreg System is indicated for the use as a transvenous unilateral phrenic nerve stimulator in the treatment of adult patients who have been diagnosed with moderate to severe CSA. The applicant stated that the remedemacrreg System reduces the negative symptoms associated with CSA, particularly among patients who have been diagnosed with heart failure. The applicant asserted that patients who have been diagnosed with heart failure are particularly negatively affected by CSA and currently available CSA treatment options of CPAP and ASV. According to the applicant, the currently available treatment options, CPAP and ASV, have been found to have worsened mortality and morbidity outcomes for patients who have been diagnosed with both CSA and heart failure. Specifically, ASV is currently contraindicated in the treatment of CSA in patients who have been diagnosed with heart failure.

    The applicant also suggested that the remedemacrreg System is particularly suited for the treatment of CSA in patients who

    Page 20310

    also have been diagnosed with heart failure. We are concerned that, while the remedemacrreg System may be beneficial to patients who have been diagnosed with both CSA and heart failure, the FDA approved indication is for use in the treatment of adult patients who have been diagnosed with moderate to severe CSA. We note that the applicant's clinical analyses and data results related to patients who specifically were diagnosed with CSA and heart failure. We are inviting public comments on whether the remedemacrreg System meets the newness criterion.

    With regard to the cost criterion, the applicant provided the following analysis to demonstrate that the technology meets the cost criterion. The applicant identified cases representing potential patients who may be eligible for treatment involving the remedemacrreg System within MS-DRGs 040, 041, and 042. Using the Standard Analytical File (SAF) Limited Data Set (MedPAR) for FY 2015, the applicant included all claims for the previously stated MS-DRGs for its cost threshold calculation. The applicant stated that typically claims are selected based on specific ICD-10-PCS parameters, however this is a new technology for which no ICD-10-PCS procedure code and ICD-10-CM diagnosis code combination exists. Therefore, all claims for the selected MS-DRGs were included in the cost threshold analysis. This process resulted in 4,462 cases representing potential patients who may be eligible for treatment involving the remedemacrreg System assigned to MS-DRG 040; 5,309 cases representing potential patients who may be eligible for treatment involving the remedemacrreg System assigned to MS-DRG 041; and 2,178 cases representing potential patients who may be eligible for treatment involving the remedemacrreg System assigned to MS-DRG 042, for a total of 11,949 cases.

    Using the 11,949 identified cases, the applicant determined that the average unstandardized case-weighted charge per case was $85,357. Using the FY 2015 MedPAR dataset to identify the total mean charges for revenue code 0278, the applicant removed charges associated with the current treatment options for each MS-DRG as follows: $9,153.83 for MS-

    DRG 040; $12,762.31 for MS-DRG 041; and $21,547.73 for MS-DRG 042. The applicant anticipated that no other related charges would be eliminated or replaced. The applicant then standardized the charges and applied a 2-year inflation factor of 1.104055 obtained from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38524). The applicant then added charges for the new technology to the inflated average case-weighted standardized charges per case. No other related charges were added to the cases. The applicant calculated a final inflated average case-weighted standardized charge per case of $175,329 and a Table 10 average case-

    weighted threshold amount of $78,399. Because the final inflated average case-weighted standardized charge per case exceeded the average case-weighted threshold amount, the applicant maintained that the technology meets the cost criterion. With regard to the analysis above, we are concerned that all cases in MS-DRGs 040, 041, and 042 were used in the analysis. We are unsure if all of these cases represent patients that may be truly eligible for treatment involving the remedemacrreg System. We are inviting public comments on whether the remedemacrreg System meets the cost criterion.

    With respect to the substantial clinical improvement criterion, the applicant asserted that the remedemacrreg System meets the substantial clinical improvement criterion. The applicant stated that the remedemacrreg System offers a treatment option for a patient population unresponsive to, or ineligible for, treatment involving currently available options. According to the applicant, patients who have been diagnosed with CSA have no other available treatment options than the remedemacr System. The applicant stated that published studies on both CPAP and ASV have proven that primary endpoints have not been met for treating patients who have been diagnosed with CSA. In addition, according to the ASV study, there was an increase in cardiovascular mortality.

    According to the applicant, the remedemacrreg System will prove to be a better treatment for the negative effects associated with CSA in patients who have been diagnosed with heart failure, such as cardiovascular insults resulting from sympathetic nervous system activation, pulmonary hypertension, and arrhythmias, which ultimately contribute to the downward cycle of heart failure,\124\ when compared to the currently available treatment options. The applicant also indicated that prior studies have assessed CPAP and ASV as options for the treatment of diagnoses of CSA primarily in patients who have been diagnosed with heart failure.

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    \124\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart Failure, 2015, vol. 3(5), pp. 360-369.

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    The applicant shared the results from two studies concerning the effects of positive airway pressure ventilation treatment:

    The Canadian Continuous Positive Airway Pressure for Patients with Central Sleep Apnea and Heart Failure trial found that, while CPAP managed the negative symptoms of CSA, such as improved nocturnal oxygenation, increased ejection fraction, lower norepinephrine levels, and increased walking distance, it did not affect overall patient survival; \125\ and

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    \125\ Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F., Morrison, D., Ferguson, K., Phil, D., 2005, ``Continous Positive Airway Pressure for Central Sleep Apnea and Heart Failure,'' N Eng Jour of Med, vol. 353(19), pp. 2025-2033.

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    In a randomized trial of 1,325 patients who had been diagnosed with heart failure who received treatment with ASV plus standard treatment or standard treatment alone, ASV was found to increase all-cause and cardiovascular mortality as compared to the control treatment.\126\

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    \126\ Cowie, M.R., Woehrle, H., Wegscheider, K., Andergmann, C., d'Ortho, M.-P., Erdmann, E., Teschler, H., ``Adaptive Servo-

    Ventilation for Central Sleep Apneain Systolic Heart Failure,'' N Eng Jour of Med, 2015, pp. 1-11.

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    The applicant also stated that published literature indicates that currently available treatment options do not meet primary endpoints with concern to the treatment of CSA; patients treated with ASV experienced an increased likelihood of mortality,\127\ and patients treated with CPAP experienced alleviation of symptoms, but no change in survival.\128\ The applicant provided further research, which suggested that a primary drawback of CPAP in the treatment of diagnoses of CSA is a lack of patient adherence to therapy.\129\

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    \127\ Ibid.

    \128\ Bradley, T.D., Logan, A.G., Kimoff, R.J., Series, F., Morrison, D., Ferguson, K., Phil, D., 2005, ``Continous Positive Airway Pressure for Central Sleep Apnea and Heart Failure,'' N Engl Jour of Med, vol. 353(19), pp. 2025-2033.

    \129\ Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart, B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ``Transvenous Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea in Heart Failure,'' European Heart Journal, 2012, vol. 33, pp. 889-

    894.

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    The applicant also stated that the remedemacr System represents a substantial clinical improvement over existing technologies because of the reduction in the number of future hospitalizations, few devicedashrelated complications, and improvement in CSA symptoms and quality of life. Specifically, the applicant stated that the clinical data has shown a statistically significant reduction in Apnea-hypopnea index (AHI), improvement in quality of life, and significantly improved Minnesota Living with Heart Failure Questionnaire score. In addition, the applicant

    Page 20311

    indicated that study results showed the remedemacr System demonstrated an acceptable safety profile, and there was a trend toward fewer heart failure hospitalizations.

    The applicant provided six published articles as evidence. All six articles were prospective studies. In three of the six studies, the majority of patients studied had been diagnosed with CSA with a heart failure comorbidity, while the remaining three studies only studied patients who had been diagnosed with CSA with a heart failure comorbidity. The first study \130\ assessed the treatment of patients who had been diagnosed with CSA in addition to heart failure. According to the applicant, as referenced in the results of the published study, Ponikowski, et al., assessed the treatment effects of 16 of 31 enrolled patients with evidence of CSA within 6 months prior to enrollment who met inclusion criteria (apnea-hypopnea index of greater than or equal to 15 and a central apnea index of greater than or equal to 5) and who did not meet exclusion criteria (a baseline oxygen saturation of less than 90 percent, being on supplemental oxygen, having evidence of phrenic nerve palsy, having had severe chronic obstructive pulmonary disease (COPD), having hard angina or a myocardial infarction in the past 3 months, being pacemaker dependent, or having inadequate capture of the phrenic nerve during neurostimulation). Of the 16 patients whose treatment was assessed, all had various classifications of heart failure diagnoses: 3 (18.8 percent) were classified as class I on the New York Heart Association classification scale (No limitation of physical activity. Ordinary physical activity does not cause undue fatigue, palpitation, dyspnea (shortness of breath)); 8 (50 percent) were classified as a class II (Slight limitation of physical activity. Comfortable at rest. Ordinary physical activity results in fatigue, palpitation, dyspnea (shortness of breath)); and 5 (31.3 percent) were classified as class III (Marked limitation of physical activity. Comfortable at rest. Less than ordinary activity causes fatigue, palpitation, or dyspnea).\131\ After successful surgical implantation of a temporary transvenous lead for unilateral phrenic nerve stimulation, patients underwent a control night without nerve stimulation and a therapy night with stimulation, while undergoing polysomnographic (PSG) testing. Comparison of both nights was performed.

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    \130\ Ponikowski, P., Javaheri, S., Michalkiewicz, D., Bart, B.A., Czarnecka, D., Jastrzebski, M., Abraham, W.T., ``Transvenous Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnoea in Heart Failure,'' European Heart Journal, 2012, vol. 33, pp. 889-

    894.

    \131\ ``Classes of Heart Failure,'' 2017, May 8, Retrieved from American Heart Association: Available at: http://www.heart.org/HEARTORG/Conditions/HeartFailure/AboutHeartFailure/Classes-of-Heart-Failure_UCM_306328_Article.jsp#.WmE2rlWnGUk.

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    According to the applicant, some improvements of CSA symptoms were identified in statistical analyses. Sleep time and efficacy were not statistically significantly different for control night and therapy night, with median sleep times of 236 minutes and 245 minutes and sleep efficacy of 78 percent and 71 percent, respectively. There were no statistical differences across categorical time spent in each sleep stage (for example, N1, N2, N3, and REM) between control and therapy nights. The average respiratory rate and hypopnea index did not differ statistically across nights. Marginal positive statistical differences occurred between control and therapy nights for the baseline oxygen saturation median values (95 and 96 respectively) and obstructive apnea index (OAI) (1 and 4, respectively). Beneficial statistically significant differences occurred from control to therapy nights for the average heart rate (71 to 70, respectively), arousal index events per hour (32 to 12, respectively), apnea-hypopnea index (AHI) (45 to 23, respectively), central apnea index (CAI) (27 to 1, respectively), and oxygen desaturation index of 4 percent (ODI = 4 percent) (31 to 14, respectively). Two adverse events were noted: (1) Lead tip thrombus noted when lead was removed; the patient was anticoagulated without central nervous system sequelae; and (2) an episode of ventricular tachycardia upon lead placement and before stimulation was initiated. The episode was successfully treated by defibrillation of the patient's implanted ICD. Neither adverse event was directly related to the phrenic nerve stimulation therapy.

    The second study \132\ was a prospective, multi-center, nonrandomized study that followed patients diagnosed with CSA and other underlying comorbidities. According to the applicant, as referenced in the results of the published study, Abraham, et al., 49 of the 57 enrolled patients who were followed indicated a primary endpoint of a reduction of AHI with secondary endpoints of feasibility and safety of the therapy. Patients were included if they had an AHI of 20 or greater and apneic events that were related to CSA. Among the study patient population, 79 percent had diagnoses of heart failure, 2 percent had diagnoses of atrial fibrillation, 13 percent had other cardiac etiology diagnoses, and the remainder of patients had other cardiac unrelated etiology diagnoses. Exclusion criteria were similar to the previous study (that is, (Ponikowski P., 2012)), with the addition of a creatinine of greater than 2.5 mg/dl. After implantation of the remedemacrreg System, patients were assessed at baseline, 3 months (n=47) and 6 months (n=44) on relevant measures. At 3 months, statistically nonsignificant results occurred for the OAI and hypopnea index (HI) measures. The remainder of the measures showed statistically significant differences from baseline to 3 months: AHI with a -27.1 episodes per hour of sleep difference; CAI with a -23.4 episodes per hour of sleep difference; MAI with a -3 episodes per hour of sleep difference; ODI = 4 percent with a -23.7 difference; arousal index with -12.5 episodes per hour of sleep difference; sleep efficiency with a 8.4 percent increase; and REM sleep with a 4.5 percent increase. Similarly, among those assessed at 6 months, statistically significant improvements on all measures were achieved, including OAI and HI. Regarding safety, a data safety monitoring board (DSMB) adjudicated and found the following 3 of 47 patients (6 percent) as having serious adverse events (SAE) related to the device, implantation procedure or therapy. None of the DSMB adjudicated SAEs was due to lead dislodgement. Two SAEs of hematoma or headache were related to the implantation procedure and occurred as single events in two patients. A single patient experienced atypical chest discomfort during the first night of stimulation, but on reinitiation of therapy on the second night no further discomfort occurred.

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    \132\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart Failure, 2015, vol. 3(5), pp. 360-369.

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    The third study \133\ assessed the safety and feasibility of phrenic nerve stimulation for 6 monthly follow-ups of 8 patients diagnosed with heart failure with CSA. Of the eight patients assessed, one was lost to follow-up and one died from pneumonia. According to the applicant, as referenced in the results in the published study, Zheng, et al. (2015), no unanticipated serious adverse events were found to be related to the therapy; in one patient, a lead became dislodged and subsequently successfully repositioned. Three

    Page 20312

    patients reported improved sleep quality, and all patients reported increased energy. A reduction in sleep apneic events and decreases in AHI and CAI were related to application of the treatment. Gradual increases to the 6-minute walking time occurred through the study.

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    \133\ Zhang, X., Ding, N., Ni, B., Yang, B., Wang, H., & Zhang, S.J., 2015, ``Satefy and Feasibility of Chronic Transvenous Phrenic Nerve Stimulation for Treatment of Central Sleep Apnea in Heart Failure Patients,'' The Clinical Respiratory Journal, pp. 1-9.

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    The fourth study \134\ extended the previous Phase I study \135\ from 6 months to 12 months, and included only 41 of the original 49 patients continuing in the study. Of the 57 patients enrolled at the time of the Phase I study, 41 were evaluated at the 12-month follow-up. Of the 41 patients examined at 12 months, 78 percent had diagnoses of CSA related to heart failure, 2 percent had diagnoses of atrial fibrillation with related CSA, 12 percent had diagnoses of CSA related to other cardiac etiology diagnoses, and the remainder of patients had diagnoses of CSA related to other noncardiac etiology diagnoses. At 12 months, 6 sleep parameters remained statistically different and 3 were no longer statistically significant. The HI, OAI, and arousal indexes were no longer statistically significantly different from baseline values. A new parameter, time spent with peripheral capillary oxygen saturation (SpO2) below 90 percent was not statistically different at 12 months (31.4 minutes) compared to baseline (38.2 minutes). The remaining 6 parameters showed maintenance of improvements at the 12-month time point as compared to the baseline: AHI from 49.9 to 27.5 events per hour; CAI from 28.2 to 6.0 events per hour; MAI from 3.0 to 0.5 events per hour; ODI = 4 percent from 46.1 to 26.9 events per hour; sleep efficiency from 69.3 percent to 75.6 percent; and REM sleep from 11.4 percent to 17.1 percent. At the 3-month, 6-month, and 12-month time points, patient quality of life was assessed to be 70.8 percent, 75.6 percent, and 83.0 percent, respectively, indicating that patients experienced mild, moderate, or marked improvement. Seventeen patients were followed at 18 months with statistical differences from baseline for AHI and CAI. Three patients died over the 12-month follow-

    up period: 2 died of end-stage heart failure and 1 died from sudden cardiac death. All three deaths were adjudicated by the DSMB and none were related to the procedure or to phrenic nerve stimulation therapy. Five patients were found to have related serious adverse events over the 12-month study time. Three events were previously described in the results referenced in the published study, Abraham, et al., and an additional 2 SAEs occurred during the 12-month follow-up. One patient experienced impending pocket perforation resulting in pocket revision, and another patient experienced lead failure.

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    \134\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, A., Khayat, R., & Abraham, W.T., 2016, ``Transvenous Stimulation of the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months' experience with the remederegsystem,'' European Journal of Heart Failure, 2016, pp. 1-8.

    \135\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., 2015, ``Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart Failure, 2015, vol. 3(5), pp. 360-369.

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    The fifth study \136\ was a randomized control trial with a primary outcome of achieving a reduction in AHI of 50 percent or greater from baseline to 6 months enrolling 151 patients with the neurostimulation treatment (n=73) and no stimulation control (n=78). Of the total sample, 96 (64 percent) of the patients had been diagnosed with heart failure; 48 (66 percent) of the treated patients had been diagnosed with heart failure, and 48 (62 percent) of the control patients had been diagnosed with heart failure. Sixty-four (42 percent) of all of the patients included in the study had been diagnosed with atrial fibrillation and 84 (56 percent) had been diagnosed with coronary artery disease. All of the patients had been treated with the remedemacrreg System device implanted; the system was activated in the treatment group during the first month. ``Over about 12 weeks, stimulation was gradually increased in the treatment group until diaphragmatic capture was consistently achieved without disrupting sleep.'' \137\ While patients and physicians were unblinded, the polysomnography core laboratory remained blinded. The per-protocol population from which statistical comparisons were made is 58 patients treated with the remedemacrreg System and 73 patients in the control group. The authors appropriately controlled for Type I errors (false positives), which arise from performing multiple tests. Thirty-

    five treated patients and 8 control patients met the primary end point, the number of patients with a 50 percent or greater reduction in AHI from baseline; the difference of 41 percent is statistically significant. All seven of the secondary endpoints were assessed and found to have statistically significant difference in change from baseline between groups at the 6-month follow-up after controlling for multiple comparisons: CAI of -22.8 events per hour lower for the treatment group; AHI (continuous) of -25.0 events per hour lower for the treatment group; arousal events per hour of -15.2 lower for the treatment group; percent of sleep in REM of 2.4 percent higher for the treatment group; patients with marked or moderate improvement in patient global assessment was 55 percent higher in the treatment group; ODI = 4 percent was -22.7 events per hour lower for the treatment group; and the Epworth sleepiness scale was -3.7 lower for the treatment group. At 12 months, 138 (91 percent) of the patients were free from device, implant, and therapy related adverse events.

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    \136\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T.,''Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,'' Lancet, 2016, vol. 388, pp. 974-982.

    \137\ Ibid.

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    The final study data was from the pivotal study with limited information in the form of an abstract \138\ and an executive summary.\139\ The executive summary detailed an exploratory analysis of the 141 patients enrolled in the pivotal trial which were patients diagnosed with CSA. The abstract indicated that the 141 patients from the pivotal trial were randomized to either the treatment arm (68 patients) in which initiation of treatment began 1 month after implantation of the remedemacrreg System device with a 6dashmonth followdashup period, or to the control group arm (73 patients) in which the initiation of treatment with the remedemacrreg System device was delayed for 6 months after implantation. Randomization efficacy was compared across baseline polysomnography and associated respiratory indices in which four of the five measures showed no statistical differences between those treated and controls; treated patients had an average MAI score of 3.1 as compared to control patients with an average MAI score of 2.2 (p=0.029). Patients included in the trial must have been medically stable, at least 18 years old, have had an electroencephalogram within 40 days of scheduled implantation, had an apnoea-hypopnoea index (AHI) of 20 events per hour or greater, a central apnoea index at least 50 percent of all apneas, and an obstructive apnea index less than or equal to 20 percent.\140\ Primary exclusion criteria were CSA caused by pain medication, heart failure of state D from the American Heart Association, a

    Page 20313

    new implantable cardioverter defibrillator, pacemaker dependent subjects without any physiologic escape rhythm, evidence of phrenic nerve palsy, documented history of psychosis or severe bipolar disorder, a cerebrovascular accident within 12 months of baseline testing, limited pulmonary function, baseline oxygen saturation less than 92 percent while awake and on room air, active infection, need for renal dialysis, or poor liver function.\141\ Patients included in this trial were primarily male (89 percent), white (95 percent), with at least one comorbidity with cardiovascular conditions being most prevalent (heart failure at 64 percent), with a concomitant implantable cardiovascular stimulation device in 42 percent of patients at baseline. The applicant stated that, after randomization, there were no statistically significant differences between the treatment and control groups, with the exception of the treated group having a statistically higher rate of events per hour on the mixed apnea index (MAI) at baseline than the control group.

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    \138\ Goldberg, L., Ponikowski, P., Javaheri, S., Augostini, R., McKane, S., Holcomb, R., Costanzo, M.R., ``In Heart Failure Patients with Central Sleep Apnea, Transvenous Stimulation of the Phrenic Nerve Improves Sleep and Quality of Life,'' Heart Failure Society of America, 21st annual meeting. 2017.

    \139\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/NCT01816776.

    \140\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/NCT01816776.

    \141\ Ibid.

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    The applicant asserted that the results from the pivotal trial \142\ allow for the comparison of heart failure status in patients; we note that patients with American Heart Association objective assessment Class D (Objective evidence of severe cardiovascular disease. Severe limitations. Experiences symptoms even while at rest) were excluded from this pivotal trial. The primary endpoint in the pivotal trial was the proportion of patients with an AHI reduction greater than or equal to 50 percent at 6 months. When controlling for heart failure status, both treated groups experienced a statistically greater proportion of patients with AHI reductions than the controls at 6 months (58 percent more of treated patients with diagnoses of heart failure and 35 percent more of treated patients without diagnoses of heart failure as compared to their respective controls). The secondary endpoints assessed were the CAI average events per hour, AHI average events per hour, arousal index (ArI) average events per hour, percent of sleep in REM, and oxygen desaturation index 4 percent (ODI = 4 percent) average events per hour. Excluding the percent of sleep in REM, the treatment groups for both patients with diagnoses of heart failure and non-heart failure conditions experienced statistically greater improvements at 6 months on all secondary endpoints as compared to their respective controls. Lastly, quality of life secondary endpoints were assessed by the Epworth sleepiness scale (ESS) average scores and the patient global assessment (PGA). For both the ESS and PGA assessments, both treatment groups of patients with diagnoses of heart failure and non-heart failure conditions had statistically beneficial changes between baseline and 6 months as compared to their respective control groups.

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    \142\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/NCT01816776.

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    The applicant provided analyses from the above report focusing on the primary and secondary polysomnography endpoints, specifically, across patients who had been diagnosed with CSA with heart failure and non-heart failure. Eighty patients included in the study from the executive summary report had comorbid heart failure, while 51 patients did not. Of those patients with heart failure, 35 were treated while 45 patients were controls. Of those patients without heart failure, 23 were treated and 28 patients were controls. The applicant did not provide baseline descriptive statistical comparisons between treated and control groups controlling for heart failure status. Across all primary and secondary endpoints, the patient group who were diagnosed with CSA and comorbid heart failure experienced statistically significant improvements. Excepting percent of sleep in REM, the patient group who were diagnosed with CSA without comorbid heart failure experienced statistically significant improvements in all primary and secondary endpoints. We are inviting public comments on whether this current study design is sufficient to support substantial clinical improvement of the remedemacrreg System with respect to all patient populations, particularly the non-heart failure population.

    As previously noted, the applicant also contends that the technology offers a treatment option for a patient population unresponsive to, or ineligible for, currently available treatment options. Specifically, the applicant stated that the remedemacrreg System is the only treatment option for patients who have been diagnosed with moderate to severe CSA; published studies on positive pressure treatments like CPAP and ASV have not met primary endpoints; and there was an increase in cardiovascular mortality according to the ASV study. According to the applicant, approximately 40 percent of patients who have been diagnosed with CSA have heart failure. The applicant asserted that the use of the remedemacr System not only treats and improves the symptoms of CSA, but there is evidence of reverse remodeling in patients with reduced left ventricular ejection fraction (LVEF).

    We are concerned that the remedemacrreg System is not directly compared to the CPAP or ASV treatment options, which, to our understanding, are the current treatment options available for patients who have been diagnosed with CSA without heart failure. We note that the FDA indication for the implantation of the remedemacrreg System is for use in the treatment of adult patients who have been diagnosed with CSA. We also note that the applicant's supporting studies were directed primarily at patients who had been treated with the remedemacrreg System who also had been diagnosed with heart failure. The applicant asserted that it would not be appropriate to use CPAP and ASV treatment options when comparing CPAP and ASV to the remedemacrreg System in the patient population of heart failure diagnoses because these treatment options have been found to increase mortality outcomes in this population. In light of the limited length of time in which the remedemacrreg System has been studied, we are concerned that any claims on mortality as they relate to treatment involving the use of the remedemacrreg System may be limited. Therefore, we are concerned as to whether there is sufficient data to determine that the technology represents a substantial clinical improvement with respect to patients who have been diagnosed with CSA without heart failure.

    The applicant has shown that, among the subpopulation of patients who have been diagnosed with CSA and heart failure, the remedemacrreg System decreases morbidity outcomes as compared to the CPAP and ASV treatment options. We understand that not all patients evaluated in the applicant's supporting clinical trials had been diagnosed with CSA with a comorbidity of heart failure. However, in all of the supporting studies for this application, the vast majority of study patients did have this specific comorbidity of CSA and heart failure. Of the three studies which enrolled both patients diagnosed with CSA with and without heart failure,143 144 145 146 only two studies

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    performed analyses controlling for heart failure status.147 148 The data from these two studies, the Costanzo, et al. (2016) and the Respicardia, Inc. executive report, are analyses based on the same pivotal trial data and, therefore, do not provide results from two separate samples. Descriptive comparisons are made in the executive summary of the pivotal trial \149\ between all treated and control patients. However, we are unable to determine the similarities and differences between patients with heart failure and non-heart failure treated versus controlled groups. Because randomization resulted in one difference between the overall treated and control groups (MAI events per hour), it is possible that further failures of randomization may have occurred when controlling for heart failure status in unmeasured variables. Finally, the sample size analyzed and the subsample sizes of the heart failure patients (80) and non-heart failure patients (51) are particularly small. It is possible that these results are not representative of the larger population of patients who have been diagnosed with CSA.

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    \143\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/NCT01816776.

    \144\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,'' Lancet, 2016, vol. 388, pp. 974-982.

    \145\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/NCT01816776.

    \146\ Jagielski, D., Ponikowski, P., Augostini, R., Kolodziej, A., Khayat, R., & Abraham, W.T., ``Transvenous Stimulation of the Phrenic Nerve for the Treatment of Central Sleep Apnoea: 12 months' experience with the remederegsystem,'' European Journal of Heart Failure, 2016, pp. 1-8.

    \147\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/NCT01816776.

    \148\ Costanzo, M.R., Ponikowski, P., Javaheri, S., Augostini, R., Goldberg, L., Holcomb, R., Abraham, W.T., ``Transvenous Neurostimulation for Centra Sleep Apnoea: A randomised controlled trial,'' Lacet, 2016, vol. 388, pp. 974-982.

    \149\ Respicardia, Inc. (n.d.). Remede System Pivotal Trial. https://clinicaltrials.gov/ct2/show/NCT01816776.

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    Therefore, we are concerned that differences in morbidity and mortality outcomes between CPAP, ASV, and the remedemacrreg System in the general CSA patient population have not adequately been tested or compared. Specifically, the two patient populations, those who have been diagnosed with heart failure and CSA versus those who have been diagnosed with CSA alone, may experience different symptoms and outcomes associated with their disease processes. Patients who have been diagnosed with CSA alone present with excessive sleepiness, poor sleep quality, insomnia, poor concentration, and inattention.\150\ Conversely, patients who have been diagnosed with the comorbid conditions of CSA as a result of heart failure experience significant cardiovascular insults resulting from sympathetic nervous system activation, pulmonary hypertension, and arrhythmias, which ultimately contribute to the downward cycle of heart failure.\151\

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    \150\ Badr, M.S., 2017, Dec 11, ``Central sleep apnea: Risk factors, clinical presentation, and diagnosis,'' Available at: https://www.uptodate.com/contents/central-sleep-apnea-risk-factors-clinical-presentation-and-diagnosis?csi=d3a535e6-1cca-4cd5-ab5e-50e9847bda6c&source=contentShare.

    \151\ Abraham, W., Jagielski, D., Oldenburg, O., Augostini, R., Kreuger, S., Kolodziej, A., Ponikowski, P., ``Phrenic Nerve Stimulation for the Treatment of Central Sleep Apnea,'' JACC: Heart Failure, 2015, vol. 3(5), pp. 360-369.

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    We also note that the clinical study had a small patient population (n=151), with followdashup for 6 months. We are interested in longer followdashup data that would further validate the points made by the applicant regarding the beneficial outcomes seen in patients who have been diagnosed with CSA who have been treated using the remedemacrreg System. We also are interested in additional information regarding the possibility of electrical stimulation of unintended targets and devices combined with the possibility of interference from outside devices. Furthermore, we are unsure with regard to the longevity of the implanted device, batteries, and leads because it appears that the technology is meant to remain in use for the remainder of a patient's life. We are inviting public comments on whether the remedemacrreg System represents a substantial clinical improvement over existing technologies.

    We did not receive any public comments in response to the published notice in the Federal Register regarding the substantial clinical improvement criterion for the remedemacrreg System or at the New Technology Town Hall Meeting.

  62. Titan Spine nanoLOCKreg (Titan Spine nanoLOCKreg Interbody Device)

    Titan Spine submitted an application for new technology add-on payments for the Titan Spine nanoLOCKreg Interbody Device (the Titan Spine nanoLOCKreg) for FY 2019. (We note that the applicant previously submitted an application for new technology add-on payments for this device for FY 2017.) The Titan Spine nanoLOCKreg is a 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 nanodashsurface 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 nanoLOCKreg'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 nanoLOCKreg received FDA clearance for the use of five lumbar interbody devices and one cervical interbody device: The nanoLOCKreg TA--Sterile Packaged Lumbar ALIF Interbody Fusion Device with nanoLOCKreg surface, available in multiple sizes to accommodate anatomy; the nanoLOCKreg TAS--Sterile Packaged Lumbar ALIF Stand Alone Interbody Fusion Device with nanoLOCKreg surface, available in multiple sizes to accommodate anatomy; the nanoLOCKreg TL--Sterile Packaged Lumbar Lateral Approach Interbody Fusion Device with nanoLOCKreg surface, available in multiple sizes to accommodate anatomy; the nanoLOCKreg TO--Sterile Packaged Lumbar Oblique/PLIF Approach Interbody Fusion Device with nanoLOCKreg surface, available in multiple sizes to accommodate anatomy; the nanoLOCKreg TT--Sterile Packaged Lumbar TLIF Interbody Fusion Device with nanoLOCKreg surface, available in multiple sizes to accommodate anatomy; and the nanoLOCKreg TC--Sterile Packaged Cervical Interbody Fusion Device with nanoLOCKreg surface, available in multiple sizes to accommodate anatomy.

    The applicant received FDA clearance on December 14, 2015, for the nanoLOCKreg TCS-- Sterile Package Cervical Stand Alone Interbody Fusion Device with nanoLOCKreg surface, available in multiple sizes to accommodate anatomy. According to the applicant, July 8, 2016 was the first date that the nanotechnology production facility completed validations and clearances needed to manufacture the nanoLOCKreg interbody fusion devices. Once validations and clearances were completed, the technology was available on the U.S. market on October 1, 2016. Therefore, the applicant believes that the newness period for nanoLOCKreg would begin on October 1, 2016. Procedures involving the Titan Spine nanoLOCKreg technology can be identified by the following ICD-10-PCS Section ``X'' New Technology codes:

    XRG0092 (Fusion of occipital-cervical joint using nanotextured

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    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).

    We note that the applicant expressed concern that interbody fusion devices that have failed to gain or apply for FDA clearance with nanoscale features could confuse health care providers with marketing and advertising using terms related to nanotechnology and ultimately adversely affect patient outcomes. Therefore, the applicant believed that there is a need for additional clarity to the current ICD-10-PCS Section ``X'' codes previously identified for health care providers regarding interbody fusion nanotextured surface devices. The applicant submitted a request for code revisions at the March 2018 ICD-10 Coordination and Maintenance Meeting regarding the ICD-10-PCS Section ``X'' New Technology codes used to identify procedures involving the Titan Spine nanoLOCKreg technology.

    As discussed previously, 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 interbody devices because all of the devices use the Titan Spine nanoLOCKreg 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 nanoLOCKreg's surface stimulates osteogenic cellular response to assist in bone formation during fusion. According to the applicant, the mechanism of action exhibited by the Titan Spine's nanoLOCKreg surface technology involves the ability to create surface features that are meaningful to cellular regeneration at the nano-scale level. During the manufacturing process, the surface produces macro, micro, and nano-surface textures. The applicant believes that this unique combination and use of these surface topographies represents a new approach to stimulating osteogenic cellular response. The applicant further 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; and 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 stated that when correctly manufactured, an interbody fusion device includes a hierarchy of complex surface features, visible at different levels of magnification, that work collectively to impact cellular response through mechanical, cellular, and biochemical properties. The applicant stated that Titan Spine's proprietary and unique surface technology, the Titan Spine nanoLOCKreg interbody devices, contain optimized nanodashsurface characteristics, which generate the distinct cellular responses necessary for improved bone growth, fusion, and stability. The applicant further stated that the Titan Spine nanoLOCKreg's surface engages with the strongest portion of the vertebral endplate, which enables better resistance to subsidence because a unique dual acid-etched titanium surface promotes earlier bone in-growth. According to the applicant, the Titan Spine nanoLOCKreg's surface is created by using a reductive process of the titanium itself. The applicant asserted that use of the Titan Spine nanoLOCKreg significantly reduces the potential for debris generated during impaction when compared to treatments using Polyetheretherketone (PEEK)-based implants coated with titanium. According to the results of an in vitro study \152\ (provided by the applicant), which examined factors produced by human mesenchymal stem cells on spine implant materials that 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. Human mesenchymal stem cells were cultured on tissue culture polystyrene, PEEK, smooth TiAlV, or macro-/micro-/nanotextured rough TiAlV (mmnTiAlV) disks. Osteoblastic differentiation and secreted inflammatory interleukins were assessed after 7 days. The results of an additional study \153\ 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 microdashtexture, and whether it differs from the effects generated by PEEK-based substrates. This in vitro study compared angiogenic factor production and integrin gene expression of human osteoblast-like MG63 cells cultured on PEEK or titanium-aluminum vanadium (titanium alloy). Based on these study results, the applicant asserted that the use of microdashtextured surfaces has demonstrated greater promotion of osteoblast differentiation when compared to use of PEEK-based surfaces.

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    \152\ Olivares-Navarrete, R., Hyzy, S., Gittens, R., ``Rough Titanium Alloys Regulate Osteoblast Production of Angiogenic Factors,'' The Spine Journal, 2013, vol. 13(11), pp. 1563-1570.

    \153\ Olivares-Navarrete, R., Hyzy, S., Slosar, P., et al., ``Implant Materials Generate Different Peri-implant Inflammatory Factors,'' SPINE, 2015, vol. 40(6), pp. 339-404.

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    The applicant maintains that the nanoLOCKreg was the first, and remains the only, device in spinal fusion, to apply for and successfully obtain a clearance for nanotechnology from the FDA. According to the applicant, in order for a medical device to receive a nanotechnology FDA clearance, the burden of proof includes each of the following to be present on the medical device in question: (1) Proof of specific nano scale features, (2) proof of capability to manufacture nano-scale features with repeatability and documented frequency across an entire

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    device, and (3) proof that those nano-scale features provide a scientific benefit, not found on devices where the surface features are not present. The applicant further stated that many of the commercially available interbody fusion devices are created using additive manufacturing processes to mold or build surface from the ground up. Conversely, Titan Spine applied a subtractive surface manufacturing to remove pieces of a surface. The surface features that remain after this subtractive process generate features visible at magnifications that additive manufacturing has not been able to produce. According to the applicant, this subtractive process has been validated by the White House Office of Science and Technology, the National Nanotechnology Initiative, and the FDA that provide clearances to products that exhibit unique and repeatable features at predictive frequency due to a manufacturing technique.

    With regard to the second criterion, whether a product is assigned to the same or a different MS-DRG, cases representing patients that may be eligible for treatment involving the Titan Spine nanoLOCKreg technology would 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 nanoLOCKreg can be used in the treatment of patients who have been 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 nanoLOCKreg technology has a different mechanism of action when compared to other spinal fusion devices. Therefore, the applicant did not believe that the Titan Spine nanoLOCKreg technology is substantially similar to existing technologies.

    We are concerned that the Titan Spine nanoLOCKreg interbody devices may be substantially similar to currently available titanium interbody devices because other rougheneddashsurface interbody devices also stimulate bone growth. While there is a uniqueness to the nanotechnology used by the applicant, other devices also stimulate bone growth such as PEEK-based surfaces and, therefore, we remain concerned that the Titan Spine nanoLOCKreg interbody devices use the same or similar mechanism of action as other devices.

    We are inviting public comments on whether the Titan Spine nanoLOCKreg interbody devices are substantially similar to existing technologies and whether these devices meet the newness criterion.

    The applicant provided three analyses of claims data from the FY 2016 MedPAR file to demonstrate that the Titan Spine nanoLOCKreg interbody devices meet the cost criterion. We note that cases reporting procedures involving lumbar and cervical interbody devices would map to different MS-DRGs. As discussed in the Inpatient New Technology AdddashOn 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 would not be expected to be assigned to the same MS-DRGs as cases representing patients receiving treatment for diagnoses associated with cervical procedures that may be eligible for use of the technology under the second indication. Specifically, cases representing patients who have been diagnosed with lumbar DDD and who have received treatment that involved implanting a lumbar interbody device would map to MS-DRG 028 (Spinal Procedures with MCC), MS-DRG 029 (Spinal Procedures with CC or Spinal Neurostimulators), MS-DRG 030 (Spinal Procedures without CC/MCC), MS-

    DRG 453 (Combined Anterior/Posterior Spinal Fusion with MCC), MS-DRG 454 (Combined Anterior/Posterior Spinal Fusion with CC), MS-DRG 455 (Combined Anterior/Posterior Spinal Fusion without CC/MCC), MS-DRG 456 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions with MCC), MS-DRG 457 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusion without MCC), MS-DRG 458 (Spinal Fusion Except Cervical with Spinal Curvature or Malignancy or Infection or Extensive Fusions without CC/MCC), MS-DRG 459 (Spinal Fusion Except Cervical with MCC), and MS-DRG 460 (Spinal Fusion Except Cervical without MCC). Cases representing patients who have been diagnosed with cervical DDD and who have received treatment that involved implanting a cervical interbody device would map to MS-DRG 471 (Cervical Spinal Fusion with MCC), MS-

    DRG 472 (Cervical Spinal Fusion with CC), and MS-DRG 473 (Cervical Spinal Fusion without CC/MCC). Procedures involving the implantation of lumbar and cervical interbody devices are assigned to separate MS-DRGs. Therefore, the devices categorized as lumbar interbody devices and the devices categorized as cervical interbody devices must distinctively (each category) meet the cost criterion and the substantial clinical improvement criterion in order to be eligible for new technology adddashon payments beginning in FY 2019.

    The first analysis searched for any of the ICD-10-PCS procedure codes within the code series Lumbar--0SG body parts 0 1 3 open approach only 0 device A only anterior column only 0, J, which typically are assigned to MS-DRGs 028, 029, 030, and 453 through 460. The average case-weighted unstandardized charge per case was $153,005. The applicant then removed charges related to the predicate technology and then standardized the charges. The applicant then applied an inflation factor of 1.09357, the value used in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to update the charges from FY 2016 to FY 2018. The applicant added charges related to the Titan Spine nanoLOCKreg lumbar interbody devices. This resulted in a final inflated average case-weighted standardized charge per case of $174,688, which exceeds the average case-weighted Table 10 MS-DRG threshold amount of $83,543.

    The second analysis searched for any of the ICD-10-PCS procedure codes within the code series Cervical--0RG body parts 0--A open approach only 0 device A only anterior column only 0, J, which typically are assigned to MS-DRGs 028, 029, 030, 453 through 455, and 471 through 473. The average case-weighted unstandardized charge per case was $88,034. The methodology used in the first analysis was used for the second analysis, which resulted in a final inflated average case-weighted standardized charge per case of $101,953, which exceeds the average case-weighted Table 10 MS-DRG threshold amount of $83,543.

    The third analysis was a combination of the first and second analyses described earlier that searched for any of the ICD-10-PCS procedure codes within the Lumbar and Cervical code series listed above that are assigned to the MS-DRGs in the analyses above. The average casedashweighted unstandardized charge per case was $127,736. The methodology used for the first and second analysis was used for the third analysis, which resulted in a

    Page 20317

    final inflated average case-weighted standardized charge per case of $149,915, which exceeds the average case-weighted Table 10 MS-DRG threshold amount of $104,094.

    Because the final inflated average case-weighted standardized charge per case exceeds the average case-weighted threshold amount in all of the applicant's analyses, the applicant maintained that the technology meets the cost criterion.

    We are inviting public comments on whether the Titan Spine nanoLOCKreg meets the cost criterion.

    With regard to the substantial clinical improvement criterion for the Titan Spine nanoLOCKreg Interbody Lumbar and Cervical Devices, the applicant submitted the results of two clinical evaluations. The first clinical evaluation was a case series and the second was a case control study. Regarding the case series, 4 physicians submitted clinical information on 146 patients. The 146 patients resulted from 2 surgery groups: a cervical group of 73 patients and a lumbar group of 73 patients. The division into cervical and lumbar groups was due to differences in surgical procedure and expected recovery time. Subsequently, the collection and analyses of data were presented for lumbar and cervical nanoLOCKreg device implants. Data was collected using medical record review. Patient baseline characteristics, the reason for cervical and lumbar surgical intervention, inclusion and exclusion criteria, details on the types of pain medications and the pattern of usage preoperatively and postoperatively were not provided. We note that the applicant did not provide an explanation of why the outcomes studied in the case series were chosen for review. However, the applicant noted that the case series data were restricted to patients treated with the Titan Spine nanoLOCKreg device, with both retrospective and prospective data collection. These data appeared to be clinically related and included: (1) Pain medication usage; (2) extremity and back pain (assessed using the Numeric Pain Rating Scale (NPRS)); and (3) function (assessed using the Oswestry Disability Index (ODI)). Clinical data collection began with time points defined as ``Baseline (pre-operation), Month 1 (0-4 weeks), Month 2 (5-8 weeks), Month 3 (9-12 weeks), Month 4 (13-16 weeks), Month 5 (17-20 weeks) and Month 6+ (>20 weeks)''. The n, mean, and standard deviation were presented for continuous variables (NPRS extremity pain, back pain, and ODI scores), and the n and percentage were presented for categorical variables (subjects taking pain medications). All analyses compared the time point (for example, Month 1) to the baseline.

    Pain scores for extremities (leg and arm) were assessed using the NPRS, an 11dashcategory ordinal scale where 0 is the lowest value and 10 is the highest value and, therefore, higher scores indicate more severe pain. Of the 73 patients in the lumbar group, the applicant presented data on 18 cases for leg or arm pain at baseline that had a mean score of 6.4, standard deviation (SD) 2.3. Between Month 1 and Month 6+ the number of lumbar patients for which data was submitted for leg or arm pain ranged from 3 patients (Month 5, mean score 3.7, SD 3.5) to 15 patients (Month 6+, mean score 2.5, SD 2.4), with varying numbers of patients for each of the other defined time points of Month 1 through Month 4. None of the defined time points of Month 1 through Month 4 had more than 14 patients or less than 3 patients that were assessed.

    Of the 73 patients in the cervical group, 7 were assessed for leg or arm pain at baseline and had a mean score of 5.1, SD 3.5. Between Month 1 and Month 6+ the number of cervical patients assessed for leg or arm pain ranged from 0 patients (Month 5, no scores) to 5 patients (Month 1, mean score 4.2, SD 2.6), with varying numbers of patients for each of the other defined time points of Month 1 through Month 4. None of the defined time points of Month 1 through Month 4 had more than 5 patients or less than 2 patients that were assessed.

    Back pain scores were also assessed using the NPRS, where 0 is the lowest value and 10 is the highest value and, therefore, higher scores indicate more severe pain. Of the 73 patients in the lumbar group, 66 were assessed for back pain at baseline and had a mean score of 7.9, SD 1.8. Between Month 1 and Month 6+ the number of lumbar patients assessed for back pain ranged from 4 patients (Month 5, mean score 4.0, SD 2.7) to 43 patients (Month 1, mean score 4.5, SD 2.7), with varying numbers of patients for each defined time point.

    Of the 73 patients in the cervical group, 71 were assessed for back pain at baseline and had a mean score of 7.5, SD 2.3. Between Month 1 and Month 6+ the number of cervical patients assessed for back pain ranged from 2 patients (Month 5, mean score 7.0, SD 2.8) to 47 patients (Month 1, mean score 4.4, SD 2.9), with varying numbers of patients for each defined time point.

    Function was assessed using the ODI, which ranges from 0 to 100, with higher scores indicating increased disability/impairment. Of the 73 patients in the lumbar group, 59 were assessed for ODI scores at baseline and had a mean score of 52.5, SD 18.7. Between Month 1 and Month 6+ the number of lumbar patients assessed for ODI scores ranged from 3 patients (Month 5, mean score 33.3, SD 19.8) to 38 patients (Month 1, mean score 48.1, SD 19.7), with varying numbers of patients for each defined time point. Of the 73 patients in the cervical group, 56 were assessed for ODI scores at baseline and had a mean score of 53.6, SD 18.2. Between Month 1 and Month 6+ the number of cervical patients assessed for ODI score ranged from 1 patient (Month 5, mean score 80, no SD noted) to 41 patients (Month 1, mean score 48.6, SD 20.5), with varying numbers of patients for each defined time point.

    The percentages of patients not taking pain medicines per day for the lumbar and cervical groups over time were assessed. Of the 73 patients in the lumbar group, 69 were assessed at baseline and 27.5 percent of the 69 patients were not taking pain medication. Between Month 1 and Month 6+ the number of lumbar patients assessed for not taking pain medicines ranged from 5 patients (Month 5, 80 percent were not taking pain medicines) to 46 patients (Month 1, 54.3 percent were not taking pain medicines), with varying numbers of patients for each defined time point. Of the 73 patients in the cervical group, 72 were assessed and 22.2 percent of the 72 patients were not taking pain medicines at baseline. Between Month 1 and Month 6+ the number of cervical patients assessed for not taking pain medicines ranged from 2 patients (Month 5, 100 percent were not taking pain medicines) to 50 patients (Month 1, 70 percent were not taking pain medicines), with varying numbers of patients for each defined time point.

    According to the applicant, both the lumbar and cervical groups showed a trend of improvement in all four clinical outcomes over time for which they collected data in their case series. However, the applicant also indicated that the trend was difficult to assess due to the relatively limited number of subjects with available assessments more than 4 months post-implant. The applicant shared that it had missing values for over 80 percent of the subjects in the study after the 4th post-operative month. According to the applicant and its results of the clinical evaluation, which was based on data from less than 20 percent of subjects, there was a statistically significant reduction in back pain for nanoLOCKreg patients from ``Baseline,'' based on improvement at earlier than standard time points.

    Page 20318

    We are concerned that the small sample size of patients assessed at each timed follow-up point for each of the clinical outcomes evaluated in the case series limits our ability to draw meaningful conclusions from these results. The applicant provided t-test results for the lumbar and cervical groups assessed for pain (back, leg, and arm). We are concerned that the t-test resulting from small sample sizes (for example, 2 of 73 patients in Month 5, and 5 of 73 patients in Month 6+) does not indicate a statistically meaningful improvement in pain scores.

    Based on the results of the case series provided by the applicant, we are unable to determine whether the findings regarding extremity and back pain, ODI scores, and percentage of subjects not taking pain medication for patients who received treatment involving the Titan Spine nanoLOCKreg devices represent a substantial clinical improvement due to the inconsistent sample size over time across both treatment arms in all evaluated outcome measures. The quantity of missing data in this case series, along with the lack of explanation for the missing data, raises concerns for the interpretation of these results. We also are unable to determine based on this case series whether there were improvements in extremity pain and back pain, ODI scores, and percentage of subjects not taking pain medicines for patients who received treatment involving the Titan Spine nanoLOCKreg devices versus conventional and other intervertebral body fusion devices, as there were no comparisons to current therapies. As noted above, the applicant did not provide an explanation of why the outcomes studied in the case series were chosen for review. Therefore, we believe that we may have insufficient information to determine if the outcomes studied in the case series are validated proxies for evidence that the nanoLOCKreg's surface promotes greater osteoblast differentiation when compared to use of PEEK-based surfaces. We are inviting public comments regarding our concerns, including with respect to why the outcomes studied in the case series were chosen for review.

    The applicant's second clinical evaluation was a case-control study with a 1:5 case control ratio. The applicant used deterministically linked, de-identified, individualdashlevel health care claims, electronic medical records (EMR), and other data sources to identify 70 cases and 350 controls for a total sample size of 420 patients. The applicant also identified OM1TM data source and noted that the OM1TM data source reflects data from all U.S. States and territories and is representative of the U.S. national population. The applicant used OM1TM data between January 2016 and June 2017, and specifically indicated that these data contain medical and pharmacy claims information, laboratory data, vital signs, problem lists, and other clinical details. The applicant indicated that cases were selected using the ICD-10-PCS Section ``X'' New Technology codes listed above and controls were chosen from fusion spine procedures (Fusion Spine Anterior Cervical, Fusion Spine Anterior Cervical and Discectomy, Fusion Spine Anterior Posterior Cervical, Fusion Spine Transforaminal Interbody Lumbar, Fusion Spine Cervical Thoracic, Fusion Spine Transforaminal Interbody Lumbar with Navigation, and Fusion Spine Transforaminal Interbody Lumber Robot-Assisted). Further, the applicant stated that cases and controls were matched by age (within 5 years), year of surgery, Charlson Comorbidity Index, and gender. According to the applicant, regarding clinical outcomes studied, unlike the case series, the case-control study captured Charlson Comorbidity Index, the average length of stay (ALOS), and 30-day unplanned readmissions; like the case series, this case-control study captured the use of pain medications by assessing the cumulative post-surgical opioid use.

    The mean age for all patients in the study was 55 years old, and 47 percent were male. For the clinical length of stay outcome, the applicant noted that the mean length of stay was slightly longer among control patients, 3.9 days (SD = 5.4) versus 3.2 days (SD = 2.9) for cases, and a larger proportion of patients in the control group had lengths of stay equal to or longer than 5 days (21 percent versus 17 percent). Three control patients (0.8 percent) were readmitted within 30 days compared to zero readmissions among case patients. A slightly lower proportion of case patients were on opioids 3 months post-surgery compared to control patients (15 percent versus 16 percent).

    We are concerned that there may be significant outliers not identified in the case and control arms because for the mean length of stay outcome, the standard deviation for control patients (5.4 days) is larger than the point estimate (3.9 days). Based on the results of this clinical evaluation provided by the applicant, we are unable to determine whether the findings regarding lengths of stay and cumulative post-surgical opioid use for patients who received treatment involving the nanoLOCKreg devices versus conventional intervertebral body fusion devices represent a substantial clinical improvement. Without further information on selection of controls and whether there were adjustments in the statistical analyses controlling for confounding factors (for example, cause of back pain, level of experience of the surgeon, BMI and length of pain), we are concerned that the interpretation of the results may be limited. Finally, we are concerned that the current data does not adequately support a strong association between the outcome measures of length of stay, readmission rates, and use of opioids and the use of nano-surface textures in the manufacturing of the Titan Spine nanoLOCKreg device. For these reasons, we are concerned that the current data do not support a substantial clinical improvement over the currently available devices used for lumbar and cervical DDD treatment.

    We note that the applicant indicated its intent to submit the results of additional ongoing studies to support the evidence of substantial clinical improvement over existing technologies for patients who receive treatment involving the nanoLOCKreg devices versus patients receiving treatment involving other interbody fusion devices. We are inviting public comments on whether the Titan Spine nanoLOCKreg meets the substantial clinical improvement criterion.

    Below we summarize and respond to written public comments received regarding the nanoLOCKreg during the open comment period in response to the New Technology Town Hall meeting notice published in the Federal Register.

    Comment: One commenter focused on two items related to the substantial clinical improvement and the lack of real-world evidence and published studies regarding the nanoLOCKreg technologies. The first item referenced by the commenter related to CMS' concern presented in the FY 2017 IPPS/LTCH PPS final rule that the results of the in vitro studies that the applicant for the nanoLOCKreg technology relied upon in its application may not have necessarily correlated with the clinical results specified by the applicant. Specifically, because at that time the applicant had only conducted in vitro studies, without obtaining any clinical data from live patients during a specific clinical trial, CMS stated that it was 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, CMS stated that it was concerned that the results of the studies provided by the

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    applicant did not demonstrate that the Titan Spine nanoLOCKreg technologies met the substantial clinical improvement criterion. The commenter also indicated that it believed the applicant has yet to publish data that would satisfy the concerns CMS noted in the FY 2017 IPPS/LTCH PPS final rule. In addition, the commenter noted that the applicant suggested that the health care community has started to move away from randomized controlled trials toward real-world evidence, and then presented claims analyses that attempted to link any assumed substantial clinical improvement in patient outcomes from fusion surgery to the nanoLOCKreg technology. In response to this assertion, the commenter stated that without a randomized controlled study of this technology as compared to the standard of care or, as CMS noted in FY 2017, clinical data from live patients during a specific clinical trial, these links cannot be scientifically substantiated. The commenter also noted that none of the studies presented during the February 13, 2018 New Technology Town Hall meeting appear to be published at this time, which would subject them to a rigorous peer-

    reviewed process. The commenter continued to support CMS' concern previously expressed in the FY 2017 IPPS/LTCH PPS final rule regarding whether substantial clinical improvement has been demonstrated.

    The second item of focus referenced by the commenter was also presented by CMS in the FY 2017 IPPS/LTCH PPS final rule. The commenter noted that there are other titanium surfaced devices currently available on the U.S. market. In the FY 2017 IPPS/LTCH PPS final rule, CMS stated that, while these devices do not use the Titan Spine nanoLOCKreg technology, their surfaces also are made of titanium. Therefore, CMS believed that the Titan Spine nanoLOCKreg interbody devices may be substantially similar to currently available titanium interbody devices. The commenter stated that it agreed with the statements CMS made in the FY 2017 IPPS/LTCH PPS final rule and also believed that the Titan Spine nanoLOCKreg technology is not only substantially similar to other currently available titanium interbody devices, but also is similar to other technologies with microscopic, roughened surfaces with nano-scale features. The commenter indicated that the verification of these surfaces and visualization of nano-scale features in other orthopedic and spinal implants have been confirmed in consensus standards, as well as in electron microscopy techniques, including atomic force microscopy. In addition, the commenter stated that the success of these devices at an in vitro level has been reported in the peer-reviewed literature, similar to that published on the nanoLOCKreg. Despite verification of the applicant's claims regarding these surfaces, visualization of nano-scale features, and success of these devices at an in vitro level being reported in peer-

    reviewed literature, the commenter believed that, at this time, there is not enough scientificallydashvalidated evidence of improvement in patient outcomes to substantiate approval of new technology add-on payments for any device manufactured with nano-scale features, including the Titan Spine nanoLOCKreg technology.

    Response: We appreciate the commenter's input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for the Titan Spine nanoLockreg for FY 2019.

    Comment: One commenter supported the approval of new technology add-on payments for the Titan Spine nanoLockreg technology. The commenter stated that Titan Spine is the only company that has received FDA approval for the use of ``nanotechnology'' in its indication for treatment use and has published substantial research on the cellular impact of its unique topographic, nano-textured surface. (We note, as described above, this technology is currently FDA cleared (not FDA approved) and the technology was available on the U.S. market once validations and clearances were completed.) The commenter asserted that, for these reasons, the nanoLOCKreg represents an emerging technology that should not be considered substantially similar to other spinal technologies on the market. The commenter further asserted that the realdashworld evidence gathered from multiple, independent data sources (including actual electronic medical records (EMR) and healthcare claims) on nanoLOCKreg usage in the treatment of patients consistently shows patient improvement in terms of clinically and economically relevant outcomes--faster recovery times, reduced length of hospital stays, and reductions in downstream medical costs such as opiate utilization, among others. The commenter stated that impressive patient outcomes by use of the nanoLOCKreg are unmatched by other competing devices, improving patient outcomes of Medicare beneficiaries with serious spinal pathologies.

    Response: We appreciate the commenters' input. We will take these comments into consideration when deciding whether to approve new technology add-on payments for the Titan Spine nanoLockreg for FY 2019.

  63. Plazomicin

    Achaogen, Inc. submitted an application for new technology add-on payments for Plazomicin for FY 2019. According to the applicant, Plazomicin is a next-generation aminoglycoside antibiotic, which has been found in vitro to have enhanced activity against many multi-drug resistant (MDR) gram-negative bacteria. The proposed indication for the use of Plazomicin, which had not received FDA approval as of the time of the development of this proposed rule, is for the treatment of adult patients who have been diagnosed with the following infections caused by designated susceptible microorganisms: (1) Complicated urinary tract infection (cUTI), including pyelonephritis; and (2) bloodstream infections (BSIs). The applicant stated that it expects that Plazomicin would be reserved for use in the treatment of patients who have been diagnosed with these types of infections who have limited or no alternative treatment options, and would be used only to treat infections that are proven or strongly suspected to be caused by susceptible microorganisms.

    The applicant stated that there is a strong need for antibiotics that can treat infections caused by MDR Enterobacteriaceae, specifically carbapenem resistant Enterobacteriaceae (CRE). Lifedashthreatening infections caused by MDR bacteria have increased over the past decade, and the patient population diagnosed with infections caused by CRE is projected to double within the next 5 years, according to the Centers for Disease Control and Prevention (CDC). Infections caused by CRE are often associated with poor patient outcomes due to limited treatment options. Patients who have been diagnosed with BSIs due to CRE face mortality rates of up to 50 percent. Patients most at risk for CRE infections are those with CRE colonization, recent hospitalization or stay in a long-term care or skilled-nursing facility, an extensive history of antibacterial use, and whose care requires invasive devices like urinary catheters, intravenous (IV) catheters, or ventilators. The applicant estimated, using data from the Center for Disease Dynamics, Economics & Policy (CDDEP), that the Medicare population that has been diagnosed with antibiotic-resistant cUTI numbers approximately 207,000 and approximately 7,000 for BSIs/sepsis due to CRE.

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    The applicant noted that due to the public health concern of increasing antibiotic resistance and the need for new antibiotics to effectively treat MDR infections, Plazomicin has received the following FDA designations: Breakthrough Therapy; Qualified Infectious Disease product, Priority Review; and Fast Track. The applicant noted that Breakthrough Therapy designation was granted on May 17, 2017, for the treatment of bloodstream infections (BSIs) caused by certain Enterobacteriaceae in patients who have been diagnosed with these types of infections who have limited or no alternative treatment options. The applicant noted that Plazomicin is the first antibacterial agent to receive this designation. The applicant noted that on December 18, 2014, the FDA designated Plazomicin as a Qualified Infectious Disease Product (QIDP) for the indications of hospital-acquired bacterial pneumonia (HAPB), ventilator-associated bacterial pneumonia (VABP), and complicated urinary tract infection (cUTI), including pyelonephritis and catheter-related blood stream infections (CRBSI). The applicant noted that Fast Track designation was granted by the FDA on August 12, 2012, for the Plazomicin development program for the treatment of serious and life-threatening infections due to CRE. Plazomicin had not received approval from the FDA as of the time of the development of this proposed rule. However, the applicant indicated that it anticipates receiving approval from the FDA by July 1, 2018. The applicant has submitted a request for approval for a unique ICD-10-PCS procedure code for the use of Plazomicin, beginning with FY 2019.

    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 criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, the applicant asserted that Plazomicin does not use the same or similar mechanism of action to achieve a therapeutic outcome as any other drug assigned to the same or a different MS-DRG. The applicant stated that Plazomicin has a unique chemical structure designed to improve activity against aminoglycoside-resistant bacteria, which also are often resistant to other key classes of antibiotics, including beta-lactams and carbapenems. Bacterial resistance to aminoglycosides usually occurs through enzymatic modification by aminoglycoside modifying enzymes (AMEs) to compromise binding the target bacterial site. According to the applicant, AMEs were found in 98.6 percent of aminoglycoside nonsusceptible E. coli, Klebsiella spp, Enterobacter spp, and Proteus spp collected in 2016 U.S. surveillance studies. Genes encoding AMEs are typically located on elements that also carry other causes of antibiotic resistance like B-lactamase and/or carbapenemase genes. Therefore, extended spectrum beta-lactamases (ESBL) producing Enterobacteriaceae and CRE are commonly resistant to currently available aminoglycosides. According to the applicant, Plazomicin contains unique structural modifications at key positions in the molecule to overcome antibiotic resistance, specifically at the 6 and N1 positions. These side chain substituents shield Plazomicin from inactivation by AMEs, such that Plazomicin is not inactivated by any known AMEs, with the exception of Ndashacetyltransferase (AAC) 2'-Ia, -Ib, and -Ic, which is only found in Providencia species. According to the applicant, as an aminoglycoside, Plazomicin also is not hydrolyzed by B-lactamase enzymes like ESBLs and carbapenamases. Therefore, the applicant asserted that Plazomicin is a potent therapeutic agent for treating MDR Enterobacteriaceae, including aminoglycoside-resistant isolates, CRE strains, and ESBL-producers.

    The applicant asserted that the mechanism of action is new due to the unique chemical structure. With regard to the general mechanism of action against bacteria, we are concerned that the mechanism of action of Plazomicin appears to be similar to other aminoglycoside antibiotics. As with other aminoglycosides, Plazomicin is bactericidal through inhibition of bacterial protein synthesis. The applicant maintained that the structural changes to the antibiotic constitute a new mechanism of action because it allows the antibiotic to remain active despite AMEs. Additionally, the applicant stated that Plazomicin would be the first, new aminoglycoside brought to market in over 40 years.

    We are inviting public comments on whether Plazomicin's mechanism of action is new, including comments in response to our concern that its mechanism of action to eradicate bacteria (inhibition of bacterial protein synthesis) may be similar to that of other aminoglycosides, even if improvements to its structure may allow Plazomicin to be active even in the presence of common AMEs that inactivate currently marketed aminoglycosides.

    With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, we believe that potential cases representing patients who may be eligible for treatment involving Plazomicin would be assigned to the same MS-DRGs as cases representing patients who receive treatment for UTI or bacteremia.

    With respect 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 asserted that Plazomicin is intended for use in the treatment of patients who have been diagnosed with cUTI, including pyelonephritis, and bloodstream infections, who have limited or no alternative treatment options. Because the applicant anticipates that Plazomicin will be reserved for use in the treatment of patients who have limited or no alternative treatment options, the applicant believed that Plazomicin may be indicated to treat a new patient population for which no other technologies are available. However, it is possible that existing antimicrobials could also be used to treat those same bacteria Plazomicin is intended to treat. Specifically, the applicant is seeking FDA approval for use in the treatment of patients who have been diagnosed with cUTI, including pyelonephritis, caused by the following susceptible microorganisms: Escherichia coli (including cases with concurrent bacteremia), Klebsiella pneumoniae, Proteus spp (including P. mirabilis and P. vulgaris), and Enterobactercloacae, and for use in the treatment of patients who have been diagnosed with BSIs caused by the following susceptible microorganisms: Klebsiella pneumonia and Escherichia coli. Because the susceptible organisms for which Plazomicin is proposed to be indicated include nonresistant strains that existing antibiotics may effectively treat, we are concerned that Plazomicin may not treat a new patient population. Therefore, we are inviting public comments on whether Plazomicin treats a new type of disease or a new patient population. We also are inviting public comments on whether Plazomicin is substantially similar to any existing technologies and whether it meets the newness criterion.

    With regard to the cost criterion, the applicant conducted the following analysis to demonstrate that the technology meets the cost criterion. In order to identify the range of MS-DRGs that potential cases representing

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    patients who have been diagnosed with the specific types of infections for which the technology has been proposed to be indicated for use in the treatment of and who may be potentially eligible for treatment involving Plazomicin may map to, the applicant identified all MS-DRGs in claims that included cases representing patients who have been diagnosed with UTI or Septicemia. The applicant searched the FY 2016 MedPAR data for claims reporting 16 ICD-10-CM diagnosis codes for UTI and 45 ICD-10-CM diagnosis codes for Septicemia and identified a total of 2,046,275 cases assigned to 702 MS-DRGs. The applicant also performed a similar analysis based on 75 percent of identified claims, which spanned 43 MS-DRGs. MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC) accounted for roughly 25 percent of all cases in the first analysis of the 702 MS-

    DRGs identified, and almost 35 percent of the cases in the second analysis of the 43 MS-DRGs identified. Other MS-DRGs with a high volume of cases based on mapping the ICD-10-CM diagnosis codes, in order of number of discharges, were: MS-DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC); MS-DRG 690 (Kidney and Urinary Tract Infections without MCC); MS-DRG 689 (Kidney and Urinary Tract Infections with MCC); MS-DRG 853 (Infectious and Parasitic Diseases with O.R. Procedure with MCC); and MS-DRG 683 (Renal Failure with CC).

    The applicant calculated an average unstandardized case-weighted charge per case using 2,046,275 identified cases (100 percent of all cases) and using 1,533,449 identified cases (75 percent of all cases) of $69,414 and $63,126, respectively. The applicant removed 50 percent of the charges associated with other drugs (associated with revenue codes 025x, 026x, and 063x) from the MedPAR data because the applicant anticipates that the use of Plazomicin would reduce the charges associated with the use of some of the other drugs, noting that this was a conservative estimate because other drugs would still be required for these patients during their hospital stay. The applicant then standardized the charges and applied the 2dashyear inflation factor of 9.357 percent from the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527) to inflate the charges from FY 2016 to FY 2018. No charges for Plazomicin were added in the analysis because the applicant explained that the anticipated price for Plazomicin has yet to be determined. Based on the FY 2018 IPPS/LTCH PPS Table 10 thresholds, the average case-weighted threshold amount was $56,996 in the first scenario utilizing 100 percent of all cases, and $55,363 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $62,511 in the first scenario and $57,054 in the second analysis. Because the inflated average case-

    weighted standardized charge per case exceeds the average case-weighted threshold amount in both scenarios, the applicant maintained that the technology meets the cost criterion. The applicant noted that the case-

    weighted threshold amount is met before including the average per patient cost of the technology in both analyses. As such, the applicant anticipated that the inclusion of the cost of Plazomicin, at any price point, would further increase charges above the average case-weighted threshold amount.

    The applicant also supplied additional cost analyses, directing attention at each of the two proposed indications individually; the cost analyses considered potential cases representing patients who have been diagnosed with cUTI who may be eligible for treatment involving Plazomicin separately from potential cases representing patients who have been diagnosed with BSI/Bacteremia who may be eligible for treatment involving Plazomicin, with the cost analysis for each considering 100 percent and 75 percent of identified cases using the FY 2016 MedPAR data and the FY 2018 GROUPER Version 36. The applicant reported that, for potential cases representing patients who have been diagnosed with Bacteremia and who may be eligible for treatment involving Plazomicin, 100 percent of identified cases spanned 539 MS-

    DRGs, with 75 percent of the cases mapping to the following 4 MS-DRGs: 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC), 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC), 853 (Infectious and Parasitic Diseases with O.R. Procedure with MCC), and 870 (Septicemia or Severe Sepsis with Mechanical Ventilation 96+ hours).

    According to the applicant, for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin, 100 percent of identified cases mapped to 702 MS-DRGs, with 75 percent of the cases mapping to 56 MS-DRGs. Potential cases representing patients who have been diagnosed with cUTIs and who may be eligible for treatment involving Plazomicin assigned to MS-DRG 871 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours with MCC) accounted for approximately 18 percent of all of the cases assigned to any of the identified 56 MS-DRGs (75 percent of cases sensitivity analysis), followed by MS-DRG 690 (Kidney and Urinary Tract Infections without MCC), which comprised almost 13 percent of all of the cases assigned to any of the identified 56 MS-

    DRGs. Two other common MS-DRGs containing potential cases representing potential patients who may be eligible for treatment involving Plazomicin who have been diagnosed with the specific type of indicated infections for which the technology is intended to be used, using the applicant's analysis approach for UTI based on mapping the ICD-10-CM diagnosis codes were: MS-DRG 872 (Septicemia or Severe Sepsis without Mechanical Ventilation 96+ hours without MCC) and MS-DRG 689 (Kidney and Urinary Tract Infections with MCC).

    For potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin, the applicant calculated the average unstandardized case-weighted charge per case using 1,013,597 identified cases (100 percent of all cases) and using 760,332 identified cases (75 percent of all cases) of $87,144 and $67,648, respectively. The applicant applied the same methodology as the combined analysis above. Based on the FY 2018 IPPS/

    LTCH PPS final rule Table 10 thresholds, the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with BSI assigned to the MS-DRGs identified in the sensitivity analysis was $66,568 in the first scenario utilizing 100 percent of all cases, and $61,087 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $77,004 in the first scenario and $60,758 in the second scenario; in the 100 percent of Bacteremia cases sensitivity analysis, the final inflated case-weighted standardized charge per case exceeded the average casedashweighted threshold amount for potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin assigned to the MS-

    DRGs identified in the sensitivity analysis by $10,436 before including costs of Plazomicin. In the 75 percent of all cases sensitivity analysis scenario, the

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    final inflated case-weighted standardized charge per case did not exceed the average casedashweighted threshold amount for potential cases representing patients who have been diagnosed with BSI assigned to the MS-DRGs identified in the sensitivity analysis, at $329 less than the average case-weighted threshold amount. Because the applicant has not yet determined pricing for Plazomicin, however, it is possible that Plazomicin may also exceed the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with BSI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the 75 percent cases sensitivity analysis.

    For potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin, the applicant calculated the average unstandardized case-weighted charge per case using 100 percent of all cases and 75 percent of all cases of $59,908 and $48,907, respectively. The applicant applied the same methodology as the combined analysis above. Based on the FY 2018 IPPS/LTCH PPS final rule Table 10 thresholds, the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the first scenario utilizing 100 percent of all cases was $51,308, and $46,252 in the second scenario utilizing 75 percent of all cases. The inflated average case-weighted standardized charge per case was $53,868 in the first scenario and $45,185 in the second scenario. In the 100 percent of cUTI cases sensitivity analysis, the final inflated casedashweighted standardized charge per case exceeded the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the 100 percent of all cases sensitivity analysis by $2,560 before including costs of Plazomicin. In the 75 percent of all cases scenario, the final inflated case-weighted standardized charge per case did not exceed the average case-weighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the 75 percent sensitivity analysis, at $1,067 less than the average case-weighted threshold amount. Because the applicant has not yet determined pricing for Plazomicin, however, it is possible that Plazomicin may also exceed the average casedashweighted threshold amount for potential cases representing patients who have been diagnosed with cUTI and who may be eligible for treatment involving Plazomicin assigned to the MS-DRGs identified in the 75 percent of all cases sensitivity analysis if charges for Plazomicin are more than $1,067. We are inviting public comments on whether Plazomicin meets the cost criterion.

    With respect to the substantial clinical improvement criterion, the applicant asserted that Plazomicin is a next generation aminoglycoside that offers a treatment option for a patient population who have limited or no alternative treatment options. Patients who have been diagnosed with BSI or cUTI caused by MDR Enterobacteria, particularly CRE, are difficult to treat because carbapenem resistance is often accompanied by resistance to additional antibiotic classes. For example, CRE may be extensively drug resistant (XDR) or even pandrug resistant (PDR). CRE are resistant to most antibiotics, and sometimes the only treatment option available to health care providers is a last-

    line antibiotic (such as colistin and tigecycline) with higher toxicity. According to the applicant, Plazomicin would give the clinician an alternative treatment option for patients who have been diagnosed with MDR bacteria like CRE because it has demonstrated activity against clinical isolates that possess a broad range of resistance mechanisms, including ESBLs, carbapenemases, and aminoglycoside modifying enzymes that limit the utility of different classes of antibiotics. Plazomicin also can be used to treat patients who have been diagnosed with BSI caused by resistant pathogens, such as ESBLdashproducing Enterobacteriaceae, CRE, and aminoglycoside-

    resistant Enterobacteriaceae. The applicant maintained that Plazomicin is a substantial clinical improvement because it offers a treatment option for patients who have been diagnosed with serious bacterial infections that are resistant to current antibiotics. We note that Plazomicin is not indicated exclusively for resistant bacteria, but rather for certain susceptible organisms of gramdashnegative bacteria, including resistant and nonresistant strains for which existing antibiotics may be effective. We are concerned that the applicant focused solely on Plazomicin's activity for resistant bacteria and did not supply information demonstrating substantial clinical improvement in treating nonresistant strains in the bacteria families for which Plazomicin is indicated.

    The applicant stated that Plazomicin also meets the substantial clinical improvement criterion because it significantly improves clinical outcomes for a patient population compared to currently available treatment options. Specifically, the applicant asserted that Plazomicin has: (1) A mortality benefit and improved safety profile in treating patients who have been diagnosed with BSI due to CRE; and (2) statistically better outcomes at test-of-cure in patients who have been diagnosed with cUTI, including higher eradication rates for ESBL-

    producing pathogens, and lower rate of subsequent clinical relapses. The applicant conducted two Phase III studies, CARE and EPIC. The CARE trial compared Plazomicin to colistin, a last-line antibiotic that is a standard of care agent for patients who have been diagnosed with BSI when caused by CRE. The EPIC trial compared Plazomicin to meropenem for the treatment of patients who have been diagnosed with cUTI/acute polynephritis.

    The CARE clinical trial was a randomized, open label, multidashcenter Phase III study comparing the efficacy of Plazomicin against colistin in the treatment of patients who have been diagnosed with BSIs or hospitaldashacquired bacterial pneumonia (HABP)/

    ventilator-acquired bacterial pneumonia (VABP) due to CRE. Due to the small number of enrolled patients with HAPB/VABP, however, results were only analyzed for patients who had been diagnosed with BSI due to CRE. The primary endpoint was day 28 all-cause mortality or significant disease complications. Patients were randomized to receive 7 to 14 days of IV Plazomicin or colistin, along with an adjunctive therapy of meropenem or tigecycline. All-cause mortality and significant disease complications were consistent regardless of adjunctive antibiotics received, suggesting that the difference in outcomes was driven by Plazomicin and colistin, with little impact from meropenem and tigecycline. Followdashup was done at testdashofdashcure (TOC; 7 days after last dose of IV study drug), end of study (EOS; day 28), and long-term followdashup (LFU; day 60). Safety analysis included all patients; microbiological modified intent-to-treat (mMITT) analysis included 17/18 Plazomicin and 20/21 colisitin patients. Baseline characteristics like age, gender, APACHE II score, infection type,

    Page 20323

    baseline pathogens, creatinine clearance, and adjunctive therapy with either meropenem or tigecycline were comparable in the Plazomicin and colistin groups.

    According to the applicant, the following results demonstrate a reduced mortality benefit in the patients who had been diagnosed with BSI subset. All-cause mortality at day 28 in the Plazomicin group was more than 5 times less than in the colistin group and all-cause mortality or significant complications at day 28 was reduced by 39 percent in the Plazomicin group compared to the colistin group. There was a large sustained 60dashday survival benefit in the patients who had been diagnosed with BSI subset, with survival approximately 70 percent in the Plazomicin group compared to 40 percent in the colistin group. Additionally, according to the applicant, faster median time to clearance of CRE bacteremia of 1.5 versus 6 days for Plazomicin versus colistin and higher rate of documented clearance by day 5 (86 percent versus 46 percent) supported the reduced mortality benefit due to faster and more sustained clearance of bacteremia and also demonstrated clinical improvement in terms of more rapid beneficial resolution of the disease.

    The applicant maintained that Plazomicin also represents a substantial clinical improvement in improved safety outcomes. Patients treated with Plazomicin had a lower incidence of renal events (10 percent versus 41.7 percent when compared to colistin), fewer Treatment Emergent Adverse Events (TEAEs), specifically blood creatinine increases and acute kidney injury, and approximately 30 percent fewer serious adverse events were in the Plazomicin group. According to the applicant, other substantial clinical improvements demonstrated by the CARE study for use of Plazomicin in patients who had been diagnosed with BSI included lower rate of superinfections or new infections, occurring in half as many patients treated with Plazomicin versus colistin (28.6 percent versus 66.7 percent).

    According to the applicant, the CARE study demonstrates decreased all-cause mortality and significantly reduced disease complications at day 28 (EOS) and day 60 for patients who had been diagnosed with BSI, in addition to a superior safety profile to colistin. However, the applicant stated that, with the achieved enrollment, this study was not powered to support formal hypothesis testing and p-values and 90 percent confidence intervals are provided for descriptive purposes. The total number of patients who had been diagnosed with BSI was 29, with 14 receiving Plazomicin and 15 receiving colistin. While we understand the difficulty enrolling a large number of patients who have been diagnosed with BSI caused by CRE due to severity of the illness and the need for administering treatment promptly, we are concerned that results indicating reduced mortality and treatment advantages over existing standard of care for patients who have been diagnosed with BSI due to CRE are not statistically significant due to the small sample size. Therefore, we are concerned that the results from the CARE study cannot be used to support substantial clinical improvement.

    The EPIC clinical trial was a randomized, multidashcenter, multidashnational, doubledashblind study evaluating the efficacy and safety of Plazomicin compared with meropenem in the treatment of patients who have been diagnosed with cUTI based on composite cure endpoint (achieving both microbiological eradication and clinical cure) in the microbiological modified intent-to-treat (mMITT) population. Patients received between 4 to 7 days of IV therapy, followed by optional oral therapy like levofloxacin (or any other approved oral therapy) as step down therapy for a total of 7 to 10 days of therapy. Testdashofdashcure (TOC) was done 15 to 19 days and late followdashup (LFU) 24 to 32 days after the first dose of IV therapy. Six hundred nine patients fulfilled inclusion criteria, and were randomized to receive either Plazomicin or meropenem, with 306 patients receiving Plazomicin and 303 patients receiving meropenem. Safety analysis included 303 (99 percent) Plazomicin patients and 301 (99.3 percent) meropenem patients. mMITT analysis included 191 (62.4 percent) Plazomicin patients and 197 (65 percent) meropenem patients; exclusion from mMITT analysis was due to lack of studydashqualifying uropathogen, which were pathogens susceptible to both Plazomicin and meropenem. In the mMITT population, both groups were comparable in terms of gender, age, percentage of patients who had been diagnosed with cUTI/acute pyelonephritis (AP)/urosepsis/bacteremia/moderate renal impairment at baseline.

    According to the applicant, Plazomicin successfully achieved the primary efficacy endpoint of composite cure (combined microbiological eradication and clinical cure). At the TOC visit, 81.7 percent of Plazomicin patients versus 70.1 percent of meropenem patients achieved composite cure; this was statistically significant with a 95 percent confidence interval. Plazomicin also demonstrated higher eradication rates for key resistant pathogens than meropenem at both TOC (89.4 percent versus 75.5 percent) and LFU (77 percent versus 60.4 percent), suggesting that the Plazomicin treatment benefit observed at TOC was sustained. Specifically, Plazomicin demonstrated higher eradication rates, defined as baseline uropathogen reduced to less than 104, against the most common gram-negative uropathogens, including ESBL producing (82.4 percent Plazomicin versus 75.0 percent meropenem) and aminoglycoside resistant (78.8 percent Plazomicin versus 68.6 percent meropenem) pathogens. This was statistically significant, although of note, as total numbers of Enterobacteriaceae exceeded population of mMITT (191 Plazomicin, 197 meropenem) this presumably included patients who were otherwise excluded from the mMITT population.

    According to the applicant, importantly, higher microbiological eradication rates at the TOC and LFU visits were associated with a lower rate of clinical relapse at LFU for Plazomicin treated patients (3 versus 14, or 1.8 percent Plazomicin versus 7.9 percent meropenem), with majority of the meropenem failures having had asymptomatic bacteriuria; that is, positive urine cultures without clinical symptoms, at TOC (21.1 percent), suggesting that the higher microbiological eradication rate at the TOC visit in Plazomicin-treated patients decreased the risk of subsequent clinical relapse. Plazomicin decreased recurrent infection by four-fold compared to meropenem, suggesting improved patient outcomes, such as reduced need for additional therapy and re-hospitalization for patients who have been diagnosed with cUTI. The safety profile of Plazomicin compared to meropenem was similar. The applicant noted that higher bacteria eradication results for Plazomicin were not due to meropenem resistance, as only patients with isolates susceptible to both drugs were included in the study. According to the applicant, the EPIC clinical trial results demonstrate clear differentiation of Plazomicin from meropenem, an agent considered by some as a gold-standard for treatment of patients who have been diagnosed with cUTI in cases due to resistant pathogens.

    While the EPIC clinical trial was a non-inferiority study, the applicant contended that statistically significant improved outcomes and lower clinical relapse rates for patients treated with Plazomicin demonstrate that Plazomicin meets the substantial clinical

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    improvement criterion for the cUTI indication. Specifically, according to the applicant, the efficacy results for Plazomicin combined with a generally favorable safety profile provide a compelling benefit-risk profile for patients who have been diagnosed with cUTI, and particularly those with infections due to resistant pathogens. Most patients enrolled in the EPIC clinical trial were from Eastern Europe. It is unclear how generalizable these results would be to patients in the United States as the susceptibilities of bacteria vary greatly by location. The applicant maintains that this is consistent with prior studies and is unlikely to have affected the results of the study because the pharmacokinetics of Plazomicin and meropenem are not expected to be affected by race or ethnicity. However, bacterial resistance can vary regionally and we are interested in how this data can be extrapolated to a majority of the U.S. population. It is also unknown how quickly resistance to Plazomicin might develop. Additionally, the microbiological breakdown of the bacteria is unknown without the full published results, and patients outside of the mMITT population were included when the applicant reported the statistically superior microbiological eradication rates of Enterobacteriaceae at TOC. We are concerned whether there is still statistical superiority of Plazomicin in the intended bacterial targets in the mMITT. Finally, because both Plazomicin and meropenem were also utilized in conjunction with levofloxacin, it is unclear to us whether combined antibiotic therapy will continue to be required in clinical practice, and how levofloxacin activity or resistance might affect the clinical outcome in both patient groups.

    We are inviting public comments on whether Plazomicin meets the substantial clinical improvement criterion for patients who have been diagnosed with BSI and cUTI, including with respect to whether Plazomicin constitutes a substantial clinical improvement for the treatment of patients who have been diagnosed with BSI who have limited or no alternative treatment options, and whether statistically better outcomes at test-of-cure visit, including higher eradication rates for ESBL-producing pathogens, and lower rate of subsequent clinical relapses constitute a substantial clinical improvement for patients who have been diagnosed with cUTI.

    We did not receive any public comments in response to the published notice in the Federal Register regarding the substantial clinical improvement criterion for Plazomicin or at the New Technology Town Hall meeting.

  64. GIAPREZATM

    The La Jolla Pharmaceutical Company submitted an application for new technology add-on payments for GIAPREZATM for FY 2019. GIAPREZATM, a synthetic human angiotensin II, is administered through intravenous infusion to raise blood pressure in adult patients who have been diagnosed with septic or other distributive shock.

    The applicant stated that shock is a life-threatening critical condition characterized by the inability to maintain blood flow to vital tissues due to dangerously low blood pressure (hypotension). Shock can result in organ failure and imminent death, such that mortality is measured in hours and days rather than months or years. Standard therapy for shock currently uses fluid and vasopressors to raise the mean arterial pressure (MAP). The two classes of standard of care (SOC) vasopressors are catecholamines and vasopressins. Patients do not always respond to existing standard of care therapies. Therefore, a diagnosis of shock can be a difficult and costly condition to treat. According to the applicant, 35 percent of patients who are diagnosed with shock fail to respond to standard of care treatment options using catecholamines and go on to second-line treatment, which is typically vasopressin. Eighty percent of patients on vasopressin fail to respond and have no other alternative treatment options. The applicant estimated that CMS covered charges to treat patients who are diagnosed with vasodilatory shock who fail to respond to standard of care therapy are approximately 2 to 3 times greater than the costs of other conditions, such as acute myocardial infarction, heart failure, and pneumonia. According to the applicant, onedashthird of patients in the intensive care unit are affected by vasodilatory shock, with 745,000 patients who have been diagnosed with shock being treated annually, of whom approximately 80 percent are septic.

    With respect to the newness criterion, according to the applicant, the expanded access program (EAP), or FDA authorization for the ``compassionate use'' of an investigational drug outside of a clinical trial, was initiated August 8, 2017. GIAPREZATM was granted Priority Review status and received FDA approval on December 21, 2017, for the use in the treatment of adults who have been diagnosed with septic or other distributive shock as an intravenous infusion to increase blood pressure. We note that the applicant has submitted a request for approval for a unique ICDdash10dashPCS code for the administration of GIAPREZATM beginning in FY 2019. Currently, there are no ICD-10-PCS procedure codes to uniquely identify procedures involving GIAPREZATM.

    As discussed above, 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 criterion, whether a product uses the same or a similar mechanism of action to achieve a therapeutic outcome, according to the applicant, GIAPREZATM is the first synthetic formulation of human angiotensin II, a naturally occurring peptide hormone in the human body. Angiotensin II is one of the major bioactive components of the renin-angiotensin-aldosterone system (RAAS), which serves as one of the body's central regulators of blood pressure. Angiotensin II increases blood pressure through vasoconstriction, increased aldosterone release, and renal control of fluid and electrolyte balance. Current therapies for the treatment of patients who have been diagnosed with shock do not leverage the RAAS. The applicant asserted that GIAPREZATM is a novel treatment with a unique mechanism of action relative to SOC treatments for patients who have been diagnosed with shock, which is adequate fluid resuscitation and vasopressors. Specifically, the two classes of SOC vasopressors are catecholamines like Norepinephrine, epinephrine, dopamine, and phenylephrine IV solutions, and vasopressins like Vasostrictreg and vasopressin-sodium chloride IV solutions. Catecholamines leverage the sympathetic nervous system and vasopressin leverages the arginine-vasopressin system to regulate blood pressure. However, the third system that works to regulate blood pressure, the RAAS, is not currently leveraged by any available therapies to raise mean arterial pressure in the treatment of patients who have been diagnosed with shock. The applicant maintained that GIAPREZATM is the first synthetic human angiotensin II approved by the FDA and the only FDA-approved vasopressor that leverages the RAAS and, therefore, GIAPREZATM utilizes a different mechanism of action than currently available treatment options.

    The applicant explained that GIAPREZATM leverages the RAAS, which is a body system not used by existing vasopressors to raise blood pressure through inducing

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    vasoconstriction. We are concerned that GIAPREZATM's general mechanism of action, increasing blood pressure by inducing vasoconstriction through binding to certain Gdashprotein receptors to stimulate smooth muscle contraction, may be similar to that of norepinephrine, albeit leveraging a different body system. We are inviting public comments on whether GIAPREZATM uses a different mechanism of action to achieve a therapeutic outcome with respect to currently available treatment options, including comments or additional information regarding whether the mechanism of action used by GIAPREZATM is different from that of other treatment methods of stimulating vasoconstriction.

    With respect to the second criterion, whether a product is assigned to the same or a different MS-DRG, we believe that potential cases representing patients who may be eligible for treatment involving GIAPREZATM would be assigned to the same MS-DRGs as cases representing patients who receive SOC treatment for a diagnosis of shock. As explained below in the discussion of the cost criterion, the applicant believed that potential cases representing patients who may be eligible for treatment involving GIAPREZATM would be assigned to MS-DRGs that contain cases representing patients who have failed to respond to administration of fluid and vasopressor therapies.

    With respect 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, according to the applicant, once patients have failed treatment using catecholamines, treatment options for patients who have been diagnosed with severe septic or other distributive shock are limited. Agents that were previously available are each associated with their own adverse events (AEs). The applicant noted that primary options that have been investigated include vasopressin, corticosteroids, methylene blue, and blood purification techniques. Of these options, the applicant stated that only vasopressin has a recommendation as add on vasopressor therapy in current treatment guidelines, but the recommendations are listed as weak with moderate quality of evidence. According to the applicant, there is uncertainty regarding vasopressin's effect on mortality due to mixed clinical trial results, and higher doses of vasopressin have been associated with cardiac, digital, and splanchnic ischemia. Therefore, the applicant asserted that there is a significant unmet medical need for treatments for patients who have been diagnosed with septic or distributive shock who remain hypotensive, despite adequate fluid and vasopressor therapy and for medications that can provide catecholamine-sparing effects.

    The applicant also noted that there is currently no standard of care for addressing the clinical state of septic or other distributive shock experienced by patients who fail to respond to fluid and available vasopressor therapy. Additionally, no clinical evidence or consensus for treatments is available.

    Based on the applicant's statements as summarized above, it appears that the applicant is asserting that GIAPREZATM provides a new therapeutic treatment option for criticallydashill patients who have been diagnosed with shock who have limited options and worsening prognosis. However, we are concerned that GIAPREZATM may not offer a treatment option to a new patient population, specifically because the FDA approval for GIAPREZATM does not reserve the use of GIAPREZATM only as a last-line drug or adjunctive therapy for a subset of the patient population who have been diagnosed with shock who have failed to respond to standard of care treatment options. According to the FDA labeling, GIAPREZATM is a vasoconstrictor to increase blood pressure in adult patients who have been diagnosed with septic or other distributive shock. Patients who have been diagnosed with septic or other distributive shock are not a new patient population. Therefore, it appears that GIAPREZATM is used to treat the same or similar type of disease (a diagnosis of shock) and a similar patient population receiving SOC therapy for the treatment of shock. We are inviting public comments on whether GIAPREZATM meets the substantial similarity criteria and the newness criterion.

    With regard to the cost criterion, the applicant conducted an analysis for a narrower indic