Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs

 
CONTENT

Federal Register, Volume 82 Issue 239 (Thursday, December 14, 2017)

Federal Register Volume 82, Number 239 (Thursday, December 14, 2017)

Rules and Regulations

Pages 59216-59497

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

FR Doc No: R1-2017-23932

Page 59215

Vol. 82

Thursday,

No. 239

December 14, 2017

Part II

Book 2 of 2 Books

Pages 59215-59502

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 414, 416, and 419

Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Rule

Page 59216

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 414, 416, and 419

CMS-1678-FC

RIN 0938-AT03

Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs

Republication

Editorial Note: Rule document 2017-23932 was originally published on pages 52356 through 52637 in the issue of Monday, November 13, 2017. In that publication, a section of the document was omitted due to a printing error. The corrected document is published here in its entirety.

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule with comment period revises the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2018 to implement changes arising from our continuing experience with these systems. In this final rule with comment period, we describe the changes to the amounts and factors used to determine the payment rates for Medicare services paid under the OPPS and those paid under the ASC payment system. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

DATES: Effective date: This final rule with comment period is effective on January 1, 2018, unless otherwise noted.

Comment period: To be assured consideration, comments on the payment classifications assigned to HCPCS codes identified in Addenda B, AA, and BB with the comment indicator ``NI'' and on other areas specified throughout this final rule with comment period must be received at one of the addresses provided in the ADDRESSES section no later than 5 p.m. EST on December 31, 2017.

ADDRESSES: In commenting, please refer to file code CMS-1678-FC when commenting on the issues in this proposed rule. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

You may submit comments in one of four ways (no duplicates, please):

1. Electronically. You may (and we encourage you to) submit electronic comments on this regulation to http://www.regulations.gov. Follow the instructions under the ``submit a comment'' tab.

2. By regular mail. You may mail written comments to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1678-FC, P.O. Box 8013, Baltimore, MD 21244-1850.

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

3. By express or overnight mail. You may send written comments via express or overnight mail to the following address ONLY:

Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1678-FC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments before the close of the comment period to either of the following addresses:

  1. For delivery in Washington, DC--Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.

    (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-

    in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

  2. For delivery in Baltimore, MD--Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, please call the telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members.

    Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

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

    FOR FURTHER INFORMATION CONTACT: (We note that public comments must be submitted through one of the four channels outlined in the ADDRESSES section above. Comments may not be submitted via email.)

    Advisory Panel on Hospital Outpatient Payment (HOP Panel), contact the HOP Panel mailbox at email protected.

    Ambulatory Surgical Center (ASC) Payment System, contact Elisabeth Daniel via email email protected or at 410-

    786-0237.

    Ambulatory Surgical Center Quality Reporting (ASCQR) Program Administration, Validation, and Reconsideration Issues, contact Anita Bhatia via email email protected or at 410-786-7236.

    Ambulatory Surgical Center Quality Reporting (ASCQR) Program Measures, contact Vinitha Meyyur via email email protected or at 410-786-8819.

    Blood and Blood Products, contact Josh McFeeters via email email protected at 410-786-9732.

    Cancer Hospital Payments, contact Scott Talaga via email email protected or at 410-786-4142.

    Care Management Services, contact Scott Talaga via email email protected or at 410-786-4142.

    CPT Codes, contact Marjorie Baldo via email email protected or at 410-786-4617.

    CMS Web Posting of the OPPS and ASC Payment Files, contact Chuck Braver via email email protected or at 410-786-6719.

    Composite APCs (Low Dose Brachytherapy and Multiple Imaging), contact Twi Jackson via email email protected or at 410-786-

    1159.

    Comprehensive APCs (C-APCs), contact Lela Strong via email email protected or at 410-786-3213.

    Hospital Outpatient Quality Reporting (OQR) Program Administration, Validation, and Reconsideration Issues, contact Anita Bhatia via email email protected or at 410-786-7236.

    Hospital Outpatient Quality Reporting (OQR) Program Measures, contact Vinitha Meyyur via email email protected or at 410-786-8819.

    Hospital Outpatient Visits (Emergency Department Visits and Critical Care Visits), contact Twi Jackson via email email protected or at 410-786-1159.

    Inpatient Only (IPO) Procedures List, contact Lela Strong via email email protected or at 410-786-3213.

    New Technology Intraocular Lenses (NTIOLs), contact Scott Talaga via email email protected or at 410-786-4142.

    No Cost/Full Credit and Partial Credit Devices, contact Twi Jackson via email email protected or at 410-786-1159.

    OPPS Brachytherapy, contact Scott Talaga via email email protected or at 410-786-4142.

    OPPS Data (APC Weights, Conversion Factor, Copayments, Cost-to-

    Charge Ratios

    Page 59217

    (CCRs), Data Claims, Geometric Mean Calculation, Outlier Payments, and Wage Index), contact Erick Chuang via email email protected or at 410-786-1816 or Elisabeth Daniel via email email protected or at 410-786-0237.

    OPPS Drugs, Radiopharmaceuticals, Biologicals, and Biosimilar Products, contact Elisabeth Daniel via email email protected or at 410-786-0237.

    OPPS New Technology Procedures/Services, contact the New Technology APC email at email protected.

    OPPS Exceptions to the 2 Times Rule, contact Marjorie Baldo via email email protected or at 410-786-4617.

    OPPS Packaged Items/Services, contact Elisabeth Daniel via email email protected or at 410-786-0237.

    OPPS Pass-Through Devices, contact the Device Pass-Through email at email protected.

    OPPS Status Indicators (SI) and Comment Indicators (CI), contact Marina Kushnirova via email email protected or at 410-

    786-2682.

    Partial Hospitalization Program (PHP) and Community Mental Health Center (CMHC) Issues, contact the PHP Payment Policy Mailbox at email protected.

    Revisions to the Laboratory Date of Service Policy, contact Craig Dobyski via email email protected or at 410-786-4584 or Rasheeda Johnson via email email protected or at 410-786-3434 or Marjorie Baldo (for OPPS) via email email protected or at 410-786-4617.

    Rural Hospital Payments, contact Josh McFeeters via email email protected or at 410-786-9732.

    Skin Substitutes, contact Josh McFeeters via email email protected or at 410-786-9732.

    All Other Issues Related to Hospital Outpatient and Ambulatory Surgical Center Payments Not Previously Identified, contact Lela Strong via email email protected or at 410-786-3213.

    SUPPLEMENTARY INFORMATION:

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

    Comments received timely will also be available for public inspection, generally beginning approximately 3 weeks after publication of the rule, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244, on Monday through Friday of each week from 8:30 a.m. to 4 p.m. EST. To schedule an appointment to view public comments, phone 1-800-743-3951.

    Electronic Access

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

    Addenda Available Only Through the Internet on the CMS Web Site

    In the past, a majority of the Addenda referred to in our OPPS/ASC proposed and final rules were published in the Federal Register as part of the annual rulemakings. However, beginning with the CY 2012 OPPS/ASC proposed rule, all of the Addenda no longer appear in the Federal Register as part of the annual OPPS/ASC proposed and final rules to decrease administrative burden and reduce costs associated with publishing lengthy tables. Instead, these Addenda are published and available only on the CMS Web site. The Addenda relating to the OPPS are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. The Addenda relating to the ASC payment system are available at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

    Alphabetical List of Acronyms Appearing in This Federal Register Document

    AHA American Hospital Association

    AMA American Medical Association

    AMI Acute myocardial infarction

    APC Ambulatory Payment Classification

    API Application programming interface

    APU Annual payment update

    ASC Ambulatory surgical center

    ASCQR Ambulatory Surgical Center Quality Reporting

    ASP Average sales price

    AUC Appropriate use criteria

    AWP Average wholesale price

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

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

    BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000, Public Law 106-554

    BLS Bureau of Labor Statistics

    CAH Critical access hospital

    CAHPS Consumer Assessment of Healthcare Providers and Systems

    CAP Competitive Acquisition Program

    C-APC Comprehensive Ambulatory Payment Classification

    CASPER Certification and Survey Provider Enhanced Reporting

    CAUTI Catheter-associated urinary tract infection

    CBSA Core-Based Statistical Area

    CCM Chronic care management

    CCN CMS Certification Number

    CCR Cost-to-charge ratio

    CDC Centers for Disease Control and Prevention

    CED Coverage with Evidence Development

    CERT Comprehensive Error Rate Testing

    CFR Code of Federal Regulations

    CI Comment indicator

    CLABSI Central Line Catheter Associated Blood Stream Infection

    CLFS Clinical Laboratory Fee Schedule

    CMHC Community mental health center

    CMS Centers for Medicare & Medicaid Services

    CoP Condition of participation

    CPI-U Consumer Price Index for All Urban Consumers

    CPT Current Procedural Terminology (copyrighted by the American Medical Association)

    CR Change request

    CRC Colorectal cancer

    CSAC Consensus Standards Approval Committee

    CT Computed tomography

    CV Coefficient of variation

    CY Calendar year

    DFO Designated Federal Official

    DME Durable medical equipment

    DMEPOS Durable Medical Equipment, Prosthetic, Orthotics, and Supplies

    DOS Date of service

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

    DSH Disproportionate share hospital

    EACH Essential access community hospital

    EAM Extended assessment and management

    ECD Expanded criteria donor

    EBRT External beam radiotherapy

    ECG Electrocardiogram

    ED Emergency department

    EDTC Emergency department transfer communication

    EHR Electronic health record

    E/M Evaluation and management

    ESRD End-stage renal disease

    ESRD QIP End-Stage Renal Disease Quality Improvement Program

    FACA Federal Advisory Committee Act, Public Law 92-463

    FDA Food and Drug Administration

    FFS Medicare Fee-for-service

    FY Fiscal year

    GAO Government Accountability Office

    GI Gastrointestinal

    GME Graduate medical education

    HAI Healthcare-associated infection

    HCAHPS Hospital Consumer Assessment of Healthcare Providers and Systems

    HCERA Health Care and Education Reconciliation Act of 2010, Public Law 111-152

    HCP Health care personnel

    HCPCS Healthcare Common Procedure Coding System

    HCRIS Healthcare Cost Report Information System

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    HCUP Healthcare Cost and Utilization Project

    HEU Highly enriched uranium

    HH QRP Home Health Quality Reporting Program

    HHS Department of Health and Human Services

    HIE Health information exchange

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

    HOP Hospital Outpatient Payment Panel

    HOPD Hospital outpatient department

    HOP QDRP Hospital Outpatient Quality Data Reporting Program

    HPMS Health Plan Management System

    IBD Inflammatory bowel disease

    ICC Interclass correlation coefficient

    ICD Implantable cardioverter defibrillator

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

    ICD-10 International Classification of Diseases, Tenth Revision

    ICH In-center hemodialysis

    ICR Information collection requirement

    IDTF Independent diagnostic testing facility

    IGI IHS Global, Inc.

    IHS Indian Health Service

    I/OCE Integrated Outpatient Code Editor

    IOL Intraocular lens

    IORT Intraoperative radiation treatment

    IPFQR Inpatient Psychiatric Facility Quality Reporting

    IPPS Hospital Inpatient Prospective Payment System

    IQR Hospital Inpatient Quality Reporting

    IRF Inpatient rehabilitation facility

    IRF QRP Inpatient Rehabilitation Facility Quality Reporting Program

    IT Information technology

    LCD Local coverage determination

    LDR Low dose rate

    LTCH Long-term care hospital

    LTCHQR Long-Term Care Hospital Quality Reporting

    MAC Medicare Administrative Contractor

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

    MAP Measure Application Partnership

    MDH Medicare-dependent, small rural hospital

    MedPAC Medicare Payment Advisory Commission

    MEG Magnetoencephalography

    MFP Multifactor productivity

    MGCRB Medicare Geographic Classification Review Board

    MIEA-TRHCA Medicare Improvements and Extension Act under Division B, Title I of the Tax Relief Health Care Act of 2006, Public Law 109-

    432

    MIPPA Medicare Improvements for Patients and Providers Act of 2008, Public Law 110-275

    MLR Medical loss ratio

    MMA Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Public Law 108-173

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

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

    MPFS Medicare Physician Fee Schedule

    MR Medical review

    MRA Magnetic resonance angiography

    MRgFUS Magnetic Resonance Image Guided Focused Ultrasound

    MRI Magnetic resonance imaging

    MRSA Methicillin-Resistant Staphylococcus Aureus

    MS-DRG Medicare severity diagnosis-related group

    MSIS Medicaid Statistical Information System

    MUC Measure under consideration

    NCCI National Correct Coding Initiative

    NEMA National Electrical Manufacturers Association

    NHSN National Healthcare Safety Network

    NOTA National Organ and Transplantation Act

    NOS Not otherwise specified

    NPI National Provider Identifier

    NQF National Quality Forum

    NQS National Quality Strategy

    NTIOL New technology intraocular lens

    NUBC National Uniform Billing Committee

    OACT CMS Office of the Actuary

    OBRA Omnibus Budget Reconciliation Act of 1996, Public Law 99-509

    O/E Observed to expected event

    OIG HHS Office of the Inspector General

    OMB Office of Management and Budget

    ONC Office of the National Coordinator for Health Information Technology

    OPD Hospital Outpatient Department

    OPPS Hospital Outpatient Prospective Payment System

    OPSF Outpatient Provider-Specific File

    OQR Hospital Outpatient Quality Reporting

    OT Occupational therapy

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

    PCHQR PPS-Exempt Cancer Hospital Quality Reporting

    PCR Payment-to-cost ratio

    PDC Per day cost

    PDE Prescription Drug Event

    PE Practice expense

    PHP Partial hospitalization program

    PHSA Public Health Service Act, Public Law 96-88

    PN Pneumonia

    POS Place of service

    PPI Producer Price Index

    PPS Prospective payment system

    PQRI Physician Quality Reporting Initiative

    PQRS Physician Quality Reporting System

    QDC Quality data code

    QIO Quality Improvement Organization

    RFA Regulatory Flexibility Act

    RHQDAPU Reporting Hospital Quality Data for Annual Payment Update

    RTI Research Triangle Institute, International

    RVU Relative value unit

    SAD Self-administered drug

    SAMS Secure Access Management Services

    SCH Sole community hospital

    SCOD Specified covered outpatient drugs

    SES Socioeconomic status

    SI Status indicator

    SIA Systems Improvement Agreement

    SIR Standardized infection ratio

    SNF Skilled nursing facility

    SRS Stereotactic radiosurgery

    SRTR Scientific Registry of Transplant Recipients

    SSA Social Security Administration

    SSI Surgical site infection

    TEP Technical Expert Panel

    TOPs Transitional Outpatient Payments

    VBP Value-based purchasing

    WAC Wholesale acquisition cost

    Table of Contents

    1. Summary and Background

      1. Executive Summary of This Document

        1. Purpose

        2. Summary of the Major Provisions

        3. Summary of Costs and Benefits

      2. Legislative and Regulatory Authority for the Hospital OPPS

      3. Excluded OPPS Services and Hospitals

      4. Prior Rulemaking

      5. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the Panel)

        1. Authority of the Panel

        2. Establishment of the Panel

        3. Panel Meetings and Organizational Structure

      6. Public Comments Received in Response to CY 2017 OPPS/ASC Final Rule With Comment Period

    2. Updates Affecting OPPS Payments

      1. Recalibration of APC Relative Payment Weights

      1. Database Construction

  3. Database Source and Methodology

  4. Calculation and Use of Cost-to-Charge Ratios (CCRs)

    2. Data Development Process and Calculation of Costs Used for Ratesetting

  5. Calculation of Single Procedure APC Criteria-Based Costs

    (1) Blood and Blood Products

    (2) Brachytherapy Sources

  6. Comprehensive APCs (C-APCs) for CY 2018

    (1) Background

    (2) C-APCs for CY 2018

    (3) Brachytherapy Insertion Procedures

    (4) C-APC 5627 (Level 7 Radiation) Stereotactic Radiosurgery (SRS)

    (5) Complexity Adjustment for Blue Light Cystoscopy Procedures

    (6) Analysis of C-APC Packaging Under the OPPS

  7. Calculation of Composite APC Criteria-Based Costs

    (1) Mental Health Services Composite APC

    (2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)

    3. Changes to Packaged Items and Services

  8. Background and Rationale for Packaging in the OPPS

  9. CY 2018 Drug Administration Packaging Policies

    (1) Background of Drug Administration Packaging Policy

    (2) Packaging of Level 1 and Level 2 Drug Administration Services

    (3) Discussion and Summary of Comments Received in Response to Solicitation Regarding Unconditionally Packaging Drug Administration Add-On Codes

  10. Analysis of Packaging of Pathology Services in the OPPS

  11. Summary of Public Comments and Our Responses Regarding Packaging of Items and Services Under the OPPS

    4. Calculation of OPPS Scaled Payment Weights

    1. Conversion Factor Update

    2. Wage Index Changes

      Page 59219

    3. Statewide Average Default CCRs

    4. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the Act

    5. Payment Adjustment for Certain Cancer Hospitals for CY 2018

      1. Background

      2. Policy for CY 2018

    6. Hospital Outpatient Outlier Payments

      1. Background

      2. Outlier Calculation for CY 2018

    7. Calculation of an Adjusted Medicare Payment From the National Unadjusted Medicare Payment

      1. Beneficiary Copayments

        1. Background

        2. OPPS Copayment Policy

        3. Calculation of an Adjusted Copayment Amount for an APC Group

      2. OPPS Ambulatory Payment Classification (APC) Group Policies

    8. OPPS Treatment of New CPT and Level II HCPCS Codes

      1. Treatment of New HCPCS Codes That Were Effective April 1, 2017 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule

      2. Treatment of New HCPCS Codes Effective July 1, 2017 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule

      3. Process for New Level II HCPCS Codes That Are Effective October 1, 2017 and January 1, 2018 for Which We Are Soliciting Public Comments in This CY 2018 OPPS/ASC Final Rule With Comment Period

      4. Treatment of New and Revised CY 2018 Category I and III CPT Codes That Are Effective January 1, 2018 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule

    9. OPPS Changes--Variations Within APCs

      1. Background

      2. Application of the 2 Times Rule

      3. APC Exceptions to the 2 Times Rule

    10. New Technology APCs

      1. Background

      2. Revised and Additional New Technology APC Groups

      3. Procedures Assigned to New Technology APC Groups for CY 2018

  12. Overall Policy

  13. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5415)

  14. Retinal Prosthesis Implant Procedure

  15. Pathogen Test for Platelets

  16. Fractional Flow Reserve Derived From Computed Tomography (FFRCT)

    1. OPPS APC-Specific Policies

    1. Blood-Driven Hematopoietic Cell Harvesting

    2. Brachytherapy Insertion Procedures (C-APCs 5341 and 5092)

  17. C-APC 5341 (Abdominal/Peritoneal/Biliary and Related Procedures)

  18. C-APC 5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures)

    3. Care Management Coding Changes Effective January 1, 2018 (APCs 5821 and 5822)

    4. Cardiac Telemetry (APC 5721)

    5. Collagen Cross-Linking of Cornea (C-APC 5503)

    6. Cryoablation Procedures for Lung Tumors (C-APC 5361)

    7. Diagnostic Bone Marrow Aspiration and Biopsy (C-APC 5072)

    8. Discussion of the Comment Solicitation in the Proposed Rule on Intraocular Procedures APCs

    9. Endovascular APCs (C-APCs 5191 Through 5194)

    10. Esophagogastroduodenoscopy (C-APC 5362)

    11. Hemorrhoid Treatment by Thermal Energy (APC 5312)

    12. Ileoscopy Through Stoma With Stent Placement (C-APC 5303)

    13. Laparoscopic Nephrectomy (C-APC 5362)

    14. Multianalyte Assays With Algorithmic Analyses (MAAA)

    15. Musculoskeletal APCs (APCs 5111 Through 5116)

    16. Nasal/Sinus Endoscopy Procedures (C-APC 5155)

    17. Nuclear Medicine Services (APCs 5592 and 5593)

    18. Percutaneous Transluminal Mechanical Thrombectomy (C-APC 5192)

    19. Peripherally Inserted Central Venous Catheter (APC 5182)

    20. Pulmonary Rehabilitation Services (APCs 5732 and 5733) and Cardiac Rehabilitation Services (APC 5771)

    21. Radiology and Imaging Procedures and Services

  19. Imaging APCs

  20. Non-Ophthalmic Fluorescent Vascular Angiography (APC 5523)

    22. Sclerotherapy (APC 5054)

    23. Skin Substitutes (APCs 5053, 5054, and 5055)

    24. Subdermal Drug Implants for the Treatment of Opioid Addiction (APC 5735)

    25. Suprachoroidal Delivery of Pharmacologic Agent (APC 5694)

    26. Transperineal Placement of Biodegradable Material (C-APC 5375)

    27. Transcranial Magnetic Stimulation Therapy (TMS) (APCs 5721 and 5722)

    28. Transurethral Waterjet Ablation of Prostate (C-APC 5375)

    29. Transurethral Water Vapor Thermal Therapy of Prostate (C-APC 5373)

    1. OPPS Payment for Devices

    1. Pass-Through Payments for Devices

    1. Beginning Eligibility Date for Device Pass-Through Status and Quarterly Expiration of Device Pass-Through Payments

  21. Background

  22. Expiration of Transitional Pass-Through Payment for Certain Devices

    2. New Device Pass-Through Applications

  23. Background

  24. Applications Received for Device Pass-Through Payment for CY 2018

    1. Device-Intensive Procedures

    1. Background

    2. HCPCS Code-Level Device-Intensive Determination

    3. Device Edit Policy

    4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial Credit Devices

  25. Background

  26. Policy for No Cost/Full Credit and Partial Credit Devices

    5. Payment Policy for Low-Volume Device-Intensive Procedures

    1. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals

    1. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals

      1. Background

      2. 3-Year Transitional Pass-Through Payment Period for All Pass-

      Through Drugs, Biologicals, and Radiopharmaceuticals and Expiration of Pass-Through Status

      3. Drugs and Biologicals With Expiring Pass-Through Payment Status in CY 2017

      4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing Pass-Through Status in CY 2018

      5. Provisions for Reducing Transitional Pass-Through Payments for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals to Offset Costs Packaged Into APC Groups

    2. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Payment Status

      1. Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals

  27. Packaging Threshold

  28. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals Under the Cost Threshold (``Threshold-Packaged Policy'')

  29. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals

  30. High Cost/Low Cost Threshold for Packaged Skin Substitutes

  31. Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological But Different Dosages

    2. Payment for Drugs and Biologicals Without Pass-Through Status That Are Not Packaged

  32. Payment for Specified Covered Outpatient Drugs (SCODs) and Other Separately Payable and Packaged Drugs and Biologicals

  33. CY 2018 Payment Policy

  34. Biosimilar Biological Products

    3. Payment Policy for Therapeutic Radiopharmaceuticals

    4. Payment Adjustment Policy for Radioisotopes Derived From Non-

    Highly Enriched Uranium Sources

    5. Payment for Blood Clotting Factors

    6. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals With HCPCS Codes But Without OPPS Hospital Claims Data

    7. Alternative Payment Methodology for Drugs Purchased Under the 340B Program

  35. Background

  36. OPPS Payment Rate for 340B Purchased Drugs

  37. Summaries of Public Comments Received and Our Responses

  38. Summary of Final Policies for CY 2018

  39. Comment Solicitation on Additional 340B Considerations

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    1. Estimate of OPPS Transitional Pass-Through Spending for Drugs, Biologicals, Radiopharmaceuticals, and Devices

      1. Background

      2. Estimate of Pass-Through Spending

    2. OPPS Payment for Hospital Outpatient Visits and Critical Care Services

    3. Payment for Partial Hospitalization Services

      1. Background

      2. PHP APC Update for CY 2018

      1. PHP APC Geometric Mean per Diem Costs

      2. Development of the PHP APC Geometric Mean per Diem Costs

  40. CMHC Data Preparation: Data Trims, Exclusions, and CCR Adjustments

  41. Hospital-Based PHP Data Preparation: Data Trims and Exclusions

    3. PHP Service Utilization Updates

    4. Minimum Service Requirement: 20 Hours per Week

    1. Outlier Policy for CMHCs

      1. Procedures That Will Be Paid Only as Inpatient Procedures

    2. Background

    3. Changes to the Inpatient Only (IPO) List

      1. Methodology for Identifying Appropriate Changes to IPO List

      2. Removal of Procedures Described by CPT Code 55866

      3. Removal of the Total Knee Arthroplasty (TKA) Procedure Described by CPT Code 27447

      4. Recovery Audit Contractor (RAC) Review of TKA Procedures

      5. Public Requests for Additions to or Removal of Procedures on the IPO List

      6. Summary of Changes to the IPO List for CY 2018

    4. Discussion of Solicitation of Public Comments on the Possible Removal of Partial Hip Arthroplasty (PHA) and Total Hip Arthroplasty (THA) Procedures From the IPO List

      1. Background

      2. Topics and Questions Posed for Public Comments

      1. Nonrecurring Policy Changes

    5. Payment for Certain Items and Services Furnished by Certain Off-Campus Departments of a Provider

      1. Background

      2. Expansion of Services by Excepted Off-Campus Hospital Outpatient Departments

      3. Section 16002 of the 21st Century Cures Act (Treatment of Cancer Hospitals in Off-Campus Outpatient Department of a Provider Policy)

    6. Medicare Site-of-Service Price Transparency (Section 4011 of the 21st Century Cures Act)

    7. Appropriate Use Criteria for Advanced Diagnostic Imaging Services

    8. Enforcement Instruction for the Supervision of Outpatient Therapeutic Services in Critical Access Hospitals (CAHs) and Certain Small Rural Hospitals

    9. Payment Changes for Film X-Rays Services and Payment Changes for X-Rays Taken Using Computed Radiography Technology

    10. Revisions to the Laboratory Date of Service Policy

      1. CY 2018 OPPS Payment Status and Comment Indicators

    11. CY 2018 OPPS Payment Status Indicator Definitions

    12. CY 2018 Comment Indicator Definitions

      1. Updates to the Ambulatory Surgical Center (ASC) Payment System

    13. Background

      1. Legislative History, Statutory Authority, and Prior Rulemaking for the ASC Payment System

      2. Policies Governing Changes to the Lists of Codes and Payment Rates for ASC Covered Surgical Procedures and Covered Ancillary Services

      3. Definition of ASC Covered Surgical Procedures

    14. Treatment of New and Revised Codes

      1. Background on Current Process for Recognizing New and Revised Category I and Category III CPT Codes and Level II HCPCS Codes

      2. Treatment of New and Revised Level II HCPCS Codes Implemented in April 2017 for Which We Solicited Public Comments in the CY 2018 Proposed Rule

      3. Treatment of New and Revised Level II HCPCS Codes Implemented in July 2017 for Which We Solicited Public Comments in the CY 2018 Proposed Rule

      4. Process for New and Revised Level II HCPCS Codes That Are Effective October 1, 2017 and January 1, 2018 for Which We Are Soliciting Public Comments in this CY 2018 OPPS/ASC Final Rule With Comment Period

      5. Process for Recognizing New and Revised Category I and Category III CPT Codes That Are Effective January 1, 2018 for Which We Are Soliciting Public Comments in This CY 2018 OPPS/ASC Final Rule With Comment Period

    15. Update to the List of ASC Covered Surgical Procedures and Covered Ancillary Services

      1. Covered Surgical Procedures

  42. Covered Surgical Procedures Designated as Office-Based

    (1) Background

    (2) Changes for CY 2018 to Covered Surgical Procedures Designated as Office-Based

  43. ASC Covered Surgical Procedures Designated as Device-

    Intensive

    (1) Background

    (2) Changes to List of ASC Covered Surgical Procedures Designated as Device-Intensive for CY 2018

  44. Adjustment to ASC Payments for No Cost/Full Credit and Partial Credit Devices

  45. Additions to the List of ASC Covered Surgical Procedures

  46. Discussion of Comment Solicitation on Adding Additional Procedures to the ASC Covered Procedures List

    2. Covered Ancillary Services

    1. ASC Payment for Covered Surgical Procedures and Covered Ancillary Services

    1. ASC Payment for Covered Surgical Procedures

  47. Background

  48. Update to ASC Covered Surgical Procedure Payment Rates for CY2018

    2. Payment for Covered Ancillary Services

  49. Background

  50. Payment for Covered Ancillary Services for CY 2018

    1. New Technology Intraocular Lenses (NTIOLs)

      1. NTIOL Application Cycle

      2. Requests To Establish New NTIOL Classes for CY 2018

      3. Payment Adjustment

      4. Announcement of CY 2019 Deadline for Submitting Requests for CMS Review of Applications for a New Class of NTIOLs

    2. ASC Payment and Comment Indicators

      1. Background

      2. ASC Payment and Comment Indicators

    3. Calculation of the ASC Conversion Factor and the ASC Payment Rates

      1. Background

      2. Calculation of the ASC Payment Rates

  51. Updating the ASC Relative Payment Weights for CY 2018 and Future Years

  52. Updating the ASC Conversion Factor

    3. Discussion of Comment Solicitation on ASC Payment System Reform

    4. Display of CY 2018 ASC Payment Rates

    1. Requirements for the Hospital Outpatient Quality Reporting (OQR) Program

    1. Background

      1. Overview

      2. Statutory History of the Hospital OQR Program

      3. Regulatory History of the Hospital OQR Program

    2. Hospital OQR Program Quality Measures

      1. Considerations in the Selection of Hospital OQR Program Quality Measures

      2. Accounting for Social Risk Factors in the Hospital OQR Program

      3. Retention of Hospital OQR Program Measures Adopted in Previous Payment Determinations

      4. Removal of Quality Measures From the Hospital OQR Program Measure Set

  53. Considerations in Removing Quality Measures From the Hospital OQR Program

  54. Criteria for Removal of ``Topped-Out'' Measures

  55. Measure Removal From the Hospital OQR Program Measure Set

    5. Make Reporting of OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures Voluntary for CY 2018 Reporting and Subsequent Years

    6. Previously Adopted Hospital OQR Program Measure Set for the CY 2020 Payment Determination and Subsequent Years

    7. Newly Finalized Hospital OQR Program Measure Set for the CY 2020 Payment Determination and Subsequent Years

    8. Hospital OQR Program Measures and Topics for Future Consideration

  56. Future Measure Topics

  57. Possible Future Adoption of the Electronic Version of OP-2: Fibrinolytic Therapy Received Within 30 Minutes of Emergency Department Arrival

    9. Maintenance of Technical Specifications for Quality Measures

    10. Public Display of Quality Measures

  58. Background

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  59. Public Reporting of OP-18c: Median Time From Emergency Department Arrival to Emergency Department Departure for Discharged Emergency Department Patients--Psychiatric/Mental Health Patients

    1. Administrative Requirements

    1. QualityNet Account and Security Administrator

    2. Requirements Regarding Participation Status

  60. Background

  61. Changes to the NOP Submission Deadline

    1. Form, Manner, and Timing of Data Submitted for the Hospital OQR Program

    1. Hospital OQR Program Annual Payment Determinations

    2. Requirements for Chart-Abstracted Measures Where Patient-

    Level Data Are Submitted Directly to CMS for the CY 2021 Payment Determination and Subsequent Years

    3. Claims-Based Measure Data Requirements for the CY 2020 Payment Determination and Subsequent Years

    4. Data Submission Requirements for OP-37a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures for the CY 2020 Payment Determination and Subsequent Years

    5. Data Submission Requirements for Previously Finalized Measures for Data Submitted via a Web-Based Tool for the CY 2020 Payment Determination and Subsequent Years

    6. Population and Sampling Data Requirements for the CY 2020 Payment Determination and Subsequent Years

    7. Hospital OQR Program Validation Requirements for Chart-

    Abstracted Measure Data Submitted Directly to CMS for the CY 2020 Payment Determination and Subsequent Years

  62. Clarification

  63. Codification

  64. Modifications to the Educational Review Process for Chart-

    Abstracted Measures Validation

    8. Extraordinary Circumstances Exception Process for the CY 2020 Payment Determination and Subsequent Years

  65. ECE Policy Nomenclature

  66. Timeline for CMS Response to ECE Requests

    9. Hospital OQR Program Reconsideration and Appeals Procedures for the CY 2020 Payment Determination and Subsequent Years

    1. Payment Reduction for Hospitals That Fail To Meet the Hospital OQR Program Requirements for the CY 2018 Payment Determination

      1. Background

      2. Reporting Ratio Application and Associated Adjustment Policy for CY 2018

      1. Requirements for the Ambulatory Surgical Center Quality Reporting (ASCQR) Program

    2. Background

      1. Overview

      2. Statutory History of the ASCQR Program

      3. Regulatory History of the ASCQR Program

    3. ASCQR Program Quality Measures

      1. Considerations in the Selection of ASCQR Program Quality Measures

      2. Accounting for Social Risk Factors in the ASCQR Program

      3. Policies for Retention and Removal of Quality Measures From the ASCQR Program

  67. Retention of Previously Adopted ASCQR Program Measures

  68. Measure Removal

    4. Delay of ASC-15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures Beginning With the 2020 Payment Determination

    5. ASCQR Program Quality Measures Adopted in Previous Rulemaking

    6. ASCQR Program Quality Measures for the CY 2021 and CY 2022 Payment Determinations and Subsequent Years

  69. Adoption of ASC-16: Toxic Anterior Segment Syndrome Beginning With the CY 2021 Payment Determination

  70. Adoption of ASC-17: Hospital Visits After Orthopedic Ambulatory Surgical Center Procedures Beginning With the CY 2022 Payment Determination

  71. Adoption of ASC-18: Hospital Visits After Urology Ambulatory Surgical Center Procedures Beginning With the CY 2022 Payment Determination

  72. Summary of Previously Adopted Measurers and Newly Adopted ASCQR Program Measures for the CY 2022 Payment Determination and Subsequent Years

    7. ASCQR Program Measures and Topics for Future Consideration

    8. Maintenance of Technical Specifications for Quality Measures

    9. Public Reporting of ASCQR Program Data

    1. Administrative Requirements

      1. Requirements Regarding QualityNet Account and Security Administrator

      2. Requirements Regarding Participation Status

    2. Form, Manner, and Timing of Data Submitted for the ASCQR Program

      1. Requirements Regarding Data Processing and Collection Periods for Claims-Based Measures Using Quality Data Codes (QDCs)

      2. Minimum Threshold, Minimum Case Volume, and Data Completeness for Claims-Based Measures Using QDCs

      3. Requirements for Data Submitted via an Online Data Submission Tool

  73. Requirements for Data Submitted via a Non-CMS Online Data Submission Tool

  74. Requirements for Data Submitted via a CMS Online Data Submission Tool

    4. Requirements for Claims-Based Measure Data

    5. Requirements for Data Submission for ASC-15a-e: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OAS CAHPS) Survey-Based Measures

    6. Extraordinary Circumstances Extensions or Exemptions for the CY 2019 Payment Determination and Subsequent Years

  75. Background

  76. ECE Policy Nomenclature

  77. Timeline for CMS Response to ECE Requests

    7. ASCQR Program Reconsideration Procedures

    1. Payment Reduction for ASCs That Fail To Meet the ASCQR Program Requirements

      1. Statutory Background

      2. Reduction to the ASC Payment Rates for ASCs That Fail To Meet the ASCQR Program Requirements for a Payment Determination Year

      1. Files Available to the Public via the Internet

      2. Collection of Information Requirements

    2. Statutory Requirement for Solicitation of Comments

    3. ICRs for the Hospital OQR Program

    4. ICRs for the ASCQR Program

      1. Response to Comments

      2. Economic Analyses

    5. Regulatory Impact Analysis

      1. Introduction

      2. Statement of Need

      3. Overall Impacts for the OPPS and ASC Payment Provisions

      4. Regulatory Review Costs

      5. Detailed Economic Analyses

  78. Estimated Effects of OPPS Changes in This Final Rule With Comment Period

    (1) Limitations of Our Analysis

    (2) Estimated Effects of OPPS Changes to Part B Drug Payment on 340B Eligible Hospitals Paid Under the OPPS

    (3) Estimated Effects of OPPS Changes on Hospitals

    (4) Estimated Effects of OPPS Changes on CMHCs

    (5) Estimated Effects of OPPS Changes on Beneficiaries

    (6) Estimated Effects of OPPS Changes on Other Providers

    (7) Estimated Effects of OPPS Changes on the Medicare and Medicaid Programs

    (8) Alternative OPPS Policies Considered

  79. Estimated Effects of CY 2018 ASC Payment System Policies

    (1) Limitations of Our Analysis

    (2) Estimated Effects of CY 2018 ASC Payment System Policies on ASCs

    (3) Estimated Effects of ASC Payment System Policies on Beneficiaries

    (4) Alternative ASC Payment Policies Considered

  80. Accounting Statements and Tables

  81. Effects of Requirements for the Hospital OQR Program

  82. Effects of Requirements for the ASCQR Program

    1. Regulatory Flexibility Act (RFA) Analysis

    2. Unfunded Mandates Reform Act Analysis

    3. Reducing Regulation and Controlling Regulatory Costs

    4. Conclusion

      1. Federalism Analysis

        Regulation Text

      2. Summary and Background

    5. Executive Summary of This Document

      1. Purpose

      In this final rule with comment period, we are updating the payment

      Page 59222

      policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) beginning January 1, 2018. Section 1833(t) of the Social Security Act (the Act) requires us to annually review and update the payment rates for services payable under the Hospital Outpatient Prospective Payment System (OPPS). Specifically, section 1833(t)(9)(A) of the Act requires the Secretary to review certain components of the OPPS not less often than annually, and to revise the groups, relative payment weights, and other adjustments that take into account changes in medical practices, changes in technologies, and the addition of new services, new cost data, and other relevant information and factors. In addition, under section 1833(i) of the Act, we annually review and update the ASC payment rates. We describe these and various other statutory authorities in the relevant sections of this final rule with comment period. In addition, this final rule with comment period updates and refines the requirements for the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program.

      2. Summary of the Major Provisions

      OPPS Update: For CY 2018, we are increasing the payment rates under the OPPS by an Outpatient Department (OPD) fee schedule increase factor of 1.35 percent. This increase factor is based on the hospital inpatient market basket percentage increase of 2.7 percent for inpatient services paid under the hospital inpatient prospective payment system (IPPS), minus the multifactor productivity (MFP) adjustment of 0.6 percentage point, and minus a 0.75 percentage point adjustment required by the Affordable Care Act. Based on this update, we estimate that total payments to OPPS providers (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2018 is approximately $70 billion, an increase of approximately $5.8 billion compared to estimated CY 2017 OPPS payments.

      We are continuing to implement the statutory 2.0 percentage point reduction in payments for hospitals failing to meet the hospital outpatient quality reporting requirements, by applying a reporting factor of 0.980 to the OPPS payments and copayments for all applicable services.

      High Cost/Low Cost Threshold for Packaged Skin Substitutes: As we did for CY 2017, we are assigning skin substitutes with a geometric mean unit cost (MUC) or a per day cost (PDC) that exceeds either the MUC threshold or the PDC threshold to the high cost group. In addition, for CY 2018, we are establishing that a skin substitute product that does not exceed either the CY 2018 MUC or PDC threshold for CY 2018, but was assigned to the high cost group for CY 2017, is assigned to the high cost group for CY 2018. The goal of our policy is to maintain similar levels of payment for skin substitute products for CY 2018 while we study our current skin substitute payment methodology to determine whether refinements to our existing methodologies may be warranted.

      Supervision of Hospital Outpatient Therapeutic Services: In the CY 2009 and CY 2010 OPPS/ASC proposed rules and final rules with comment period, we clarified that direct supervision is required for hospital outpatient therapeutic services covered and paid by Medicare that are furnished in hospitals, CAHs, and in provider-based departments (PBDs) of hospitals, as set forth in the CY 2000 OPPS final rule with comment period. For several years, there has been a moratorium on the enforcement of the direct supervision requirement for CAHs and small rural hospitals, with the latest moratorium on enforcement expiring on December 31, 2016. In this final rule with comment period, as we proposed, we are reinstating the nonenforcement policy for direct supervision of outpatient therapeutic services furnished in CAHs and small rural hospitals having 100 or fewer beds and reinstating our enforcement instruction for CY 2018 and CY 2019.

      340B Drug Pricing: We are changing our current Medicare Part B drug payment methodology for 340B hospitals that we believe will better, and more appropriately, reflect the resources and acquisition costs that these hospitals incur. These changes will lower drug costs for Medicare beneficiaries for drugs acquired by hospitals under the 340B Program. For CY 2018, we are exercising the Secretary's authority to adjust the applicable payment rate as necessary for separately payable drugs and biologicals (other than drugs on pass-through payment status and vaccines) acquired under the 340B Program from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent. Rural sole community hospitals (SCHs), children's hospitals, and PPS-exempt cancer hospitals are excluded from this payment adjustment in CY 2018. In addition, in this final rule with comment period, we are establishing two modifiers to identify whether a drug billed under the OPPS was purchased under the 340B Program--one for hospitals that are subject to the payment reduction and another for hospitals not subject to the payment reduction but that acquire drugs under the 340B Program.

      Device Pass-Through Payment Applications: For CY 2018, we evaluated five devices for eligibility to receive pass through payments and sought public comments in the CY 2018 proposed rule on whether each of these items meet the criteria for device pass-through payment status. None of the applications were approved for device pass-through payments for CY 2018.

      Rural Adjustment: We are continuing the adjustment of 7.1 percent to the OPPS payments to certain rural SCHs, including essential access community hospitals (EACHs). This adjustment will apply to all services paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to cost.

      Cancer Hospital Payment Adjustment: For CY 2018, we are continuing to provide additional payments to cancer hospitals so that the cancer hospital's payment-to-cost ratio (PCR) after the additional payments is equal to the weighted average PCR for the other OPPS hospitals using the most recently submitted or settled cost report data. However, beginning CY 2018, section 16002(b) of the 21st Century Cures Act requires that this weighted average PCR be reduced by 1.0 percentage point. Based on the data and the required 1.0 percentage point reduction, a target PCR of 0.88 will be used to determine the CY 2018 cancer hospital payment adjustment to be paid at cost report settlement. That is, the payment adjustments will be the additional payments needed to result in a PCR equal to 0.88 for each cancer hospital.

      Changes to the Inpatient Only List: For CY 2018, we are finalizing our proposal to remove total knee arthroplasty (TKA) from the inpatient only list. In addition, we are precluding the Recovery Audit Contractors from reviewing TKA procedures for ``patient status'' (that is, site of service) for a period of 2 years. We note that we will monitor changes in site of service to determine whether changes may be necessary to certain CMS Innovation Center models. In addition, we are removing five other procedures from the inpatient only list and adding one procedure to the list.

      Comprehensive APCs: For CY 2018, we did not propose to create any new

      Page 59223

      C-APCs or make any extensive changes to the already established methodology used for C-APCs. There will be a total number of 62 C-APCs as of January 1, 2018. For CY 2018, for the C-APC for stereotactic radio surgery (SRS), specifically, C-APC 5627 (Level 7 Radiation Therapy), we are continuing to make separate payments for the 10 planning and preparation services adjunctive to the delivery of the SRS treatment using either the Cobalt-60-based or LINAC-based technology when furnished to a beneficiary within 30 days of the SRS treatment. In addition, the data collection period for SRS claims with modifier ``CP'' is set to conclude on December 31, 2017. Accordingly, for CY 2018, we are deleting this modifier and discontinuing its required use.

      Packaging Policies: In CY 2015, we implemented a policy to conditionally package ancillary services assigned to APCs with a geometric mean cost of $100 or less prior to packaging, with some exceptions, including drug administration services. For CY 2018, we are removing the exception for certain drug administration services and conditionally packaging payment for low-cost drug administration services. We did not propose to package drug administration add-on codes for CY 2018, but solicited comments on this policy. The public comments that we received are discussed in this final rule with comment period. In addition, we solicited comments on existing packaging policies that exist under the OPPS, including those related to drugs that function as a supply in a diagnostic test or procedure or in a surgical procedure. The public comments that we received are also discussed in this final rule with comment period.

      Payment Changes for X-rays Taken Using Computed Radiography Technology: Section 502(b) of Division O, Title V of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113) amended section 1833(t)(16) of the Act by adding new subparagraph (F). New section 1833(t)(16)(F)(ii) of the Act provides for a phased-in reduction of payments for imaging services that are taken using computed radiography technology. That section provides that payments for such services furnished during CYs 2018 through 2022 shall be reduced by 7 percent, and if such services are furnished during CY 2023 or a subsequent year, payments for such services shall be reduced by 10 percent. We are establishing a new modifier that will be reported on claims to identify those HCPCS codes that describe X-rays taken using computed radiography technology. Specifically, this modifier, as allowed under the provisions of new section 1833(t)(16)(F)(ii) of the Act, will be reported with the applicable HCPCS code to describe imaging services that are taken using computed radiography technology beginning January 1, 2018.

      ASC Payment Update: For CY 2018, we are increasing payment rates under the ASC payment system by 1.2 percent for ASCs that meet the quality reporting requirements under the ASCQR Program. This increase is based on a projected CPI-U update of 1.7 percent minus a multifactor productivity adjustment required by the Affordable Care Act of 0.5 percentage point. Based on this update, we estimate that total payments to ASCs (including beneficiary cost-sharing and estimated changes in enrollment, utilization, and case-mix) for CY 2018 is approximately $4.62 billion, an increase of approximately $130 million compared to estimated CY 2017 Medicare payments. In addition, in the CY 2018 proposed rule, we solicited comment on payment reform for ASCs, including the collection of cost data which may support a rate update other than CPI-U. We discuss the public comments that we received in response to this solicitation in this final rule with comment period.

      Comment Solicitation on ASC Payment Reform: In the CY 2018 proposed rule, we indicated that we were broadly interested in feedback from stakeholders and other interested parties on potential reforms to the current payment system, including, but not limited to (1) the rate update factor applied to ASC payments, (2) whether and how ASCs should submit data relating to costs, (3) whether ASCs should bill on the institutional claim form rather than the professional claim form, and (4) other ideas to improve payment accuracy for ASCs. We discuss the feedback we received in this final rule with comment period.

      Changes to the List of ASC Covered Surgical Procedures: For CY 2018, we are adding three procedures to the ASC covered procedures list. In addition, in the CY 2018 proposed rule, we solicited comment on whether total knee arthroplasty, partial hip arthroplasty and total hip arthroplasty meet the criteria to be added to the ASC covered procedures list. We also solicited comments from stakeholders on whether there are codes that are outside the AMA-CPT surgical code range that nonetheless, should be considered to be a covered surgical procedure. We discuss the public comments we received on this solicitation in this final rule with comment period.

      Revisions to the Laboratory Date of Service Policy: To better understand the potential impact of the current date of service (DOS) policy on billing for molecular pathology tests and advanced diagnostic laboratory tests (ADLTs) under the new private payor rate-

      based Clinical Laboratory Fee Schedule (CLFS), in the CY 2018 proposed rule, we solicited public comments on billing for molecular pathology tests and certain ADLTs ordered less than 14 days of a hospital outpatient discharge and discussed potential modifications to our DOS policy to address those tests. After considering the public comments received, we are adding an additional exception to our current laboratory DOS regulations at 42 CFR 414.510. This new exception to the laboratory DOS policy generally permits laboratories to bill Medicare directly for ADLTs and molecular pathology tests excluded from OPPS packaging policy if the specimen was collected from a hospital outpatient during a hospital outpatient encounter and the test was performed following the patient's discharge from the hospital outpatient department. We discuss the public comments we received on this solicitation in this final rule with comment period.

      Hospital Outpatient Quality Reporting (OQR) Program: For the Hospital OQR Program, we are finalizing our proposals to remove and delay certain measures for the CY 2020 payment determination and subsequent years. Specifically, beginning with the CY 2020 payment determination, we are finalizing our proposals to remove: (1) OP-21: Median Time to Pain Management for Long Bone Fracture; and (2) OP-26: Hospital Outpatient Volume Data on Selected Outpatient Surgical Procedures. While we proposed to remove: OP-1: Median Time to Fibrinolysis, OP-4: Aspirin at Arrival, OP-20: Door to Diagnostic Evaluation by a Qualified Medical Professional, and OP-25: Safe Surgery Checklist for the CY 2021 payment determination and subsequent years, we are finalizing these proposals with modification, such that we are removing them for the CY 2020 payment determination and subsequent years, one year earlier than proposed. We are also finalizing our proposal to delay the OAS CAHPS Survey-based measures (OP-37 a-e) beginning with the CY 2020 payment determination (CY 2018 reporting). In addition, for the CY 2020 payment determination and subsequent years we are: (1) Providing clarification on our procedures for validation of chart-abstracted measures for targeting the poorest performing outlier hospitals; (2)

      Page 59224

      formalizing the validation educational review process and updating it to allow corrections of incorrect validation results for chart-

      abstracted measures, and modifying the CFR accordingly; (3) aligning the first quarter for which to submit data for hospitals that did not participate in the previous year's Hospital OQR Program and make corresponding changes to the CFR; and (4) aligning the naming of the Extraordinary Circumstances Exceptions (ECE) policy with that used in our other quality reporting and value-based payment programs and making corresponding changes to the CFR. We are not finalizing our proposal to extend the Notice of Participation (NOP) deadline and make corresponding changes to the CFR. Lastly, we are finalizing with modifications, our proposal to publicly report OP-18c: Median Time from Emergency Department Arrival to Emergency Department Departure for Discharged Emergency Department Patients--Psychiatric/Mental Health Patients.

      Ambulatory Surgical Center Quality Reporting (ASCQR) Program: For the ASCQR Program, we are finalizing measures and policies for the CY 2019 payment determination, 2021 payment determination, and CY 2022 payment determination and subsequent years. Specifically, we are finalizing our proposals to, beginning with the CY 2019 payment determination, remove three measures from the ASCQR Program measure set: (1) ASC-5: Prophylactic Intravenous (IV) Antibiotic Timing; (2) ASC-6: Safe Surgery Checklist Use; and, (3) ASC-7: Ambulatory Surgical Center Facility Volume Data on Selected Ambulatory Surgical Center Surgical Procedures. In addition, we are also finalizing our proposal to delay the OAS CAHPS Survey measures (ASC-15a-e) beginning with the CY 2020 payment determination (CY 2018 data collection). Furthermore, starting with CY 2018, we are finalizing our proposals to: (1) Expand the CMS online tool to also allow for batch submission of measure data and make corresponding changes to the CFR; and (2) align the naming of the Extraordinary Circumstances Exceptions (ECE) policy with that used in our other quality reporting and value-based payment programs and make corresponding changes to the CFR. We are not finalizing our proposal to adopt one new measure, ASC-16: Toxic Anterior Segment Syndrome, beginning with the CY 2021 payment determination. However, we are finalizing proposals to adopt two new measures collected via claims, beginning with the CY 2022 payment determination, ASC-17: Hospital Visits after Orthopedic Ambulatory Surgical Center Procedures and ASC-18: Hospital Visits after Urology Ambulatory Surgical Center Procedures.

      3. Summary of Costs and Benefits

      In sections XVIII. and XIX. of this final rule with comment period, we set forth a detailed analysis of the regulatory and Federalism impacts that the changes will have on affected entities and beneficiaries. Key estimated impacts are described below.

  83. Impacts of the OPPS Update

    (1) Impacts of All OPPS Changes

    Table 88 in section XVIII. of this final rule with comment period displays the distributional impact of all the OPPS changes on various groups of hospitals and CMHCs for CY 2018 compared to all estimated OPPS payments in CY 2017. We estimate that policies in this final rule with comment period will result in a 1.4 percent overall increase in OPPS payments to providers. We estimate that total OPPS payments for CY 2018, including beneficiary cost-sharing, to the approximate 3,900 facilities paid under the OPPS (including general acute care hospitals, children's hospitals, cancer hospitals, and CMHCs) will increase by approximately $690 million compared to CY 2017 payments, excluding our estimated changes in enrollment, utilization, and case-mix.

    We estimated the isolated impact of our OPPS policies on CMHCs because CMHCs are only paid for partial hospitalization services under the OPPS. Continuing the provider-specific structure that we adopted beginning in CY 2011 and basing payment fully on the type of provider furnishing the service, we estimate a 17.2 percent increase in CY 2018 payments to CMHCs relative to their CY 2017 payments.

    (2) Impacts of the Updated Wage Indexes

    We estimate that our update of the wage indexes based on the FY 2018 IPPS final rule wage indexes results in no change for urban and rural hospitals under the OPPS. These wage indexes include the continued implementation of the OMB labor market area delineations based on 2010 Decennial Census data.

    (3) Impacts of the Rural Adjustment and the Cancer Hospital Payment Adjustment

    There are no significant impacts of our CY 2018 payment policies for hospitals that are eligible for the rural adjustment or for the cancer hospital payment adjustment. We are not making any change in policies for determining the rural hospital payment adjustments. While we are implementing the required reduction to the cancer hospital payment adjustment in Section 16002 of the 21st Century Cures Act for CY 2018, the adjustment amounts do not significantly impact the budget neutrality adjustments for these policies.

    (4) Impacts of the OPD Fee Schedule Increase Factor

    We estimate that, for most hospitals, the application of the OPD fee schedule increase factor of 1.35 percent to the conversion factor for CY 2018 will mitigate the impacts of the budget neutrality adjustments. As a result of the OPD fee schedule increase factor and other budget neutrality adjustments, we estimate that rural and urban hospitals will experience increases of approximately 1.3 percent for urban hospitals and 2.7 percent for rural hospitals. Classifying hospitals by teaching status, we estimate non-teaching hospitals will experience increases of 2.9 percent, minor teaching hospitals will experience increases of 1.7 percent, and major teaching hospitals will experience decreases of -0.9 percent. We also classified hospitals by type of ownership. We estimate that hospitals with voluntary ownership will experience increases of 1.3 percent, hospitals with proprietary ownership will experience increases of 4.5 percent and hospitals with government ownership will experience no change in payments.

  84. Impacts of the ASC Payment Update

    For impact purposes, the surgical procedures on the ASC list of covered procedures are aggregated into surgical specialty groups using CPT and HCPCS code range definitions. The percentage change in estimated total payments by specialty groups under the CY 2018 payment rates, compared to estimated CY 2017 payment rates, generally ranges between an increase of 1 to 5 percent, depending on the service, with some exceptions.

    1. Legislative and Regulatory Authority for the Hospital OPPS

      When Title XVIII of the Social Security Act was enacted, Medicare payment for hospital outpatient services was based on hospital-specific costs. In an effort to ensure that Medicare and its beneficiaries pay appropriately for services and to encourage more efficient delivery of care, the Congress mandated replacement of the reasonable cost-

      Page 59225

      based payment methodology with a prospective payment system (PPS). The Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33) added section 1833(t) to the Act, authorizing implementation of a PPS for hospital outpatient services. The OPPS was first implemented for services furnished on or after August 1, 2000. Implementing regulations for the OPPS are located at 42 CFR parts 410 and 419.

      The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113) made major changes in the hospital OPPS. The following Acts made additional changes to the OPPS: The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554); the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173); the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171), enacted on February 8, 2006; the Medicare Improvements and Extension Act under Division B of Title I of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) (Pub. L. 109-432), enacted on December 20, 2006; the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173), enacted on December 29, 2007; the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275), enacted on July 15, 2008; the Patient Protection and Affordable Care Act (Pub. L. 111-

      148), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), enacted on March 30, 2010 (these two public laws are collectively known as the Affordable Care Act); the Medicare and Medicaid Extenders Act of 2010 (MMEA, Pub. L. 111-309); the Temporary Payroll Tax Cut Continuation Act of 2011 (TPTCCA, Pub. L. 112-78), enacted on December 23, 2011; the Middle Class Tax Relief and Job Creation Act of 2012 (MCTRJCA, Pub. L. 112-96), enacted on February 22, 2012; the American Taxpayer Relief Act of 2012 (Pub. L. 112-240), enacted January 2, 2013; the Pathway for SGR Reform Act of 2013 (Pub. L. 113-67) enacted on December 26, 2013; the Protecting Access to Medicare Act of 2014 (PAMA, Pub. L. 113-93), enacted on March 27, 2014; the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 114-10), enacted April 16, 2015; the Bipartisan Budget Act of 2015 (Pub. L. 114-74), enacted November 2, 2015; the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), enacted on December 18, 2015, and the 21st Century Cures Act (Pub. L. 114-255), enacted on December 13, 2016.

      Under the OPPS, we generally pay for hospital Part B services on a rate-per-service basis that varies according to the APC group to which the service is assigned. We use the Healthcare Common Procedure Coding System (HCPCS) (which includes certain Current Procedural Terminology (CPT) codes) to identify and group the services within each APC. The OPPS includes payment for most hospital outpatient services, except those identified in section I.C. of this final rule with comment period. Section 1833(t)(1)(B) of the Act provides for payment under the OPPS for hospital outpatient services designated by the Secretary (which includes partial hospitalization services furnished by CMHCs), and certain inpatient hospital services that are paid under Medicare Part B.

      The OPPS rate is an unadjusted national payment amount that includes the Medicare payment and the beneficiary copayment. This rate is divided into a labor-related amount and a nonlabor-related amount. The labor-related amount is adjusted for area wage differences using the hospital inpatient wage index value for the locality in which the hospital or CMHC is located.

      All services and items within an APC group are comparable clinically and with respect to resource use (section 1833(t)(2)(B) of the Act). In accordance with section 1833(t)(2) of the Act, subject to certain exceptions, items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median cost (or mean cost, if elected by the Secretary) for an item or service in the APC group is more than 2 times greater than the lowest median cost (or mean cost, if elected by the Secretary) for an item or service within the same APC group (referred to as the ``2 times rule''). In implementing this provision, we generally use the cost of the item or service assigned to an APC group.

      For new technology items and services, special payments under the OPPS may be made in one of two ways. Section 1833(t)(6) of the Act provides for temporary additional payments, which we refer to as ``transitional pass-through payments,'' for at least 2 but not more than 3 years for certain drugs, biological agents, brachytherapy devices used for the treatment of cancer, and categories of other medical devices. For new technology services that are not eligible for transitional pass-through payments, and for which we lack sufficient clinical information and cost data to appropriately assign them to a clinical APC group, we have established special APC groups based on costs, which we refer to as New Technology APCs. These New Technology APCs are designated by cost bands which allow us to provide appropriate and consistent payment for designated new procedures that are not yet reflected in our claims data. Similar to pass-through payments, an assignment to a New Technology APC is temporary; that is, we retain a service within a New Technology APC until we acquire sufficient data to assign it to a clinically appropriate APC group.

    2. Excluded OPPS Services and Hospitals

      Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to designate the hospital outpatient services that are paid under the OPPS. While most hospital outpatient services are payable under the OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for ambulance, physical and occupational therapy, and speech-language pathology services, for which payment is made under a fee schedule. It also excludes screening mammography, diagnostic mammography, and effective January 1, 2011, an annual wellness visit providing personalized prevention plan services. The Secretary exercises the authority granted under the statute to also exclude from the OPPS certain services that are paid under fee schedules or other payment systems. Such excluded services include, for example, the professional services of physicians and nonphysician practitioners paid under the Medicare Physician Fee Schedule (MPFS); certain laboratory services paid under the Clinical Laboratory Fee Schedule (CLFS); services for beneficiaries with end-stage renal disease (ESRD) that are paid under the ESRD prospective payment system; and services and procedures that require an inpatient stay that are paid under the hospital IPPS. In addition, section 1833(t)(1)(B)(v) of the Act does not include applicable items and services (as defined in subparagraph (A) of paragraph (21)) that are furnished on or after January 1, 2017 by an off-campus outpatient department of a provider (as defined in subparagraph (B) of paragraph (21). We set forth the services that are excluded from payment under the OPPS in regulations at 42 CFR 419.22.

      Under Sec. 419.20(b) of the regulations, we specify the types of hospitals that are excluded from payment under the OPPS. These excluded hospitals include:

      Critical access hospitals (CAHs);

      Page 59226

      Hospitals located in Maryland and paid under the Maryland All-Payer Model;

      Hospitals located outside of the 50 States, the District of Columbia, and Puerto Rico; and

      Indian Health Service (IHS) hospitals.

    3. Prior Rulemaking

      On April 7, 2000, we published in the Federal Register a final rule with comment period (65 FR 18434) to implement a prospective payment system for hospital outpatient services. The hospital OPPS was first implemented for services furnished on or after August 1, 2000. Section 1833(t)(9)(A) of the Act requires the Secretary to review certain components of the OPPS, not less often than annually, and to revise the groups, relative payment weights, and other adjustments that take into account changes in medical practices, changes in technologies, and the addition of new services, new cost data, and other relevant information and factors.

      Since initially implementing the OPPS, we have published final rules in the Federal Register annually to implement statutory requirements and changes arising from our continuing experience with this system. These rules can be viewed on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Hospital-Outpatient-Regulations-and-Notices.html.

    4. Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the Panel)

      1. Authority of the Panel

      Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of Public Law 106-113, and redesignated by section 202(a)(2) of Public Law 106-113, requires that we consult with an external advisory panel of experts to annually review the clinical integrity of the payment groups and their weights under the OPPS. In CY 2000, based on section 1833(t)(9)(A) of the Act, the Secretary established the Advisory Panel on Ambulatory Payment Classification Groups (APC Panel) to fulfill this requirement. In CY 2011, based on section 222 of the PHS Act which gives discretionary authority to the Secretary to convene advisory councils and committees, the Secretary expanded the panel's scope to include the supervision of hospital outpatient therapeutic services in addition to the APC groups and weights. To reflect this new role of the panel, the Secretary changed the panel's name to the Advisory Panel on Hospital Outpatient Payment (the HOP Panel or the Panel). The HOP Panel is not restricted to using data compiled by CMS, and in conducting its review, it may use data collected or developed by organizations outside the Department.

      2. Establishment of the Panel

      On November 21, 2000, the Secretary signed the initial charter establishing the Panel, and at that time named the APC Panel. This expert panel is composed of appropriate representatives of providers (currently employed full-time, not as consultants, in their respective areas of expertise), reviews clinical data, and advises CMS about the clinical integrity of the APC groups and their payment weights. Since CY 2012, the Panel also is charged with advising the Secretary on the appropriate level of supervision for individual hospital outpatient therapeutic services. The Panel is technical in nature, and it is governed by the provisions of the Federal Advisory Committee Act (FACA). The current charter specifies, among other requirements, that the Panel--

      May advise on the clinical integrity of Ambulatory Payment Classification (APC) groups and their associated weights;

      May advise on the appropriate supervision level for hospital outpatient services;

      Continues to be technical in nature;

      Is governed by the provisions of the FACA;

      Has a Designated Federal Official (DFO); and

      Is chaired by a Federal Official designated by the Secretary.

      The Panel's charter was amended on November 15, 2011, renaming the Panel and expanding the Panel's authority to include supervision of hospital outpatient therapeutic services and to add critical access hospital (CAH) representation to its membership. The Panel's charter was also amended on November 6, 2014 (80 FR 23009), and the number of members was revised from up to 19 to up to 15 members. The Panel's current charter was approved on November 21, 2016, for a 2-year period (81 FR 94378).

      The current Panel membership and other information pertaining to the Panel, including its charter, Federal Register notices, membership, meeting dates, agenda topics, and meeting reports, can be viewed on the CMS Web site at: https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups.html.

      3. Panel Meetings and Organizational Structure

      The Panel has held multiple meetings, with the last meeting taking place on August 21, 2017. Prior to each meeting, we publish a notice in the Federal Register to announce the meeting and, when necessary, to solicit nominations for Panel membership, to announce new members and to announce any other changes of which the public should be aware. Beginning in CY 2017, we have transitioned to one meeting per year (81 FR 31941). Further information on the 2017 summer meeting can be found in the meeting notice titled ``Medicare Program: Announcement of the Advisory Panel on Hospital Outpatient Payment (the Panel) Meeting on August 21-22, 2017'' (82 FR 24128).

      In addition, the Panel has established an operational structure that, in part, currently includes the use of three subcommittees to facilitate its required review process. The three current subcommittees include the following:

      APC Groups and Status Indicator Assignments Subcommittee, which advises the Panel on the appropriate status indicators to be assigned to HCPCS codes, including but not limited to whether a HCPCS code or a category of codes should be packaged or separately paid, as well as the appropriate APC assignment of HCPCS codes regarding services for which separate payment is made;

      Data Subcommittee, which is responsible for studying the data issues confronting the Panel and for recommending options for resolving them; and

      Visits and Observation Subcommittee, which reviews and makes recommendations to the Panel on all technical issues pertaining to observation services and hospital outpatient visits paid under the OPPS.

      Each of these subcommittees was established by a majority vote from the full Panel during a scheduled Panel meeting, and the Panel recommended at the August 21, 2017 meeting that the subcommittees continue. We accepted this recommendation.

      In addition, discussions of the other recommendations made by the Panel at the August 21, 2017 Panel meeting are included in the sections of this final rule with comment period that are specific to each recommendation. For discussions of earlier Panel meetings and recommendations, we refer readers to previously published OPPS/ASC proposed and final rules, the CMS Web site mentioned earlier in this section, and the FACA database at http://facadatabase.gov.

      Page 59227

      We note that we received some public comments on the CY 2018 OPPS/

      ASC proposed rule related to the HOP Panel meeting presentations, which we address below.

      Comment: One commenter supported CMS' extension of the HOP Panel meeting presentation submission deadline when there is a truncated submittal timeframe due to delayed publication of the OPPS/ASC proposed rule. However, to avoid the need to modify the submission deadline in the future, the commenter suggested that CMS revise the submission deadline in the Federal Register notice from a firm date to a fluid 21 days from the proposed rule display date to avoid this deadline issue in the future.

      Response: We appreciate the commenter's request to modify the HOP Panel meeting submission deadline format. However, frequency, timing, and presentation deadlines are outside the scope of the proposed rule and are generally announced through either a separate Federal Register notice or subregulatory channel such as the CMS Web site, or both.

      Comment: One commenter requested that CMS reinstate the winter Panel meetings as part of a multifaceted process that would allow for multiple proposal refinements with Panel input prior to finalization of a policy. The commenter also suggested that CMS use this winter meeting as a vehicle to allow stakeholders to review and discuss updated cost data for HCPCS codes and APCs prior to the release of the data in the proposed rule.

      Response: We appreciate the commenter's request to modify the Panel meeting processes. However, the frequency of Panel meetings is outside the scope of the proposed rule; meetings are generally announced through either a separate Federal Register notice or a subregulatory channel such as the CMS Web site, or both.

    5. Public Comments Received on the CY 2017 OPPS/ASC Final Rule With Comment Period

      We received 39 timely pieces of correspondence on the CY 2017 OPPS/

      ASC final rule with comment period that appeared in the Federal Register on November 14, 2016 (81 FR 79562), some of which contained comments on the interim APC assignments and/or status indicators of new or replacement Level II HCPCS codes (identified with comment indicator ``NI'' in OPPS Addendum B, ASC Addendum AA, and ASC Addendum BB to that final rule), the potential limitation on clinical service line expansion or volume of service increases by nonexcepted off-campus provider-based departments, and the Medicare Physician Fee Schedule (MPFS) payment rates for nonexcepted items and services furnished and billed by nonexcepted off-campus provider-based departments of hospitals. Summaries of the public comments are set forth in the CY 2018 proposed rule and this final rule with comment period under the appropriate subject matter headings. Summaries of public comments on the MPFS payment rates for nonexcepted items and services are set forth in the CY 2018 MPFS final rule with comment period.

      1. Updates Affecting OPPS Payments

    6. Recalibration of APC Relative Payment Weights

      1. Database Construction

  85. Database Source and Methodology

    Section 1833(t)(9)(A) of the Act requires that the Secretary review not less often than annually and revise the relative payment weights for APCs. In the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we explained in detail how we calculated the relative payment weights that were implemented on August 1, 2000 for each APC group.

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33568), for CY 2018, we proposed to recalibrate the APC relative payment weights for services furnished on or after January 1, 2018, and before January 1, 2019 (CY 2018), using the same basic methodology that we described in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79574 through 79595). For this final rule with comment period, for CY 2018, we recalibrated the APC relative payment weights for services furnished on or after January 1, 2018, and before January 1, 2019 (CY 2018), using the same basic methodology that we described in the CY 2017 OPPS/

    ASC final rule with comment period, using updated CY 2016 claims data. That is, we recalibrate the relative payment weights for each APC based on claims and cost report data for hospital outpatient department (HOPD) services, using the most recent available data to construct a database for calculating APC group weights.

    For the purpose of recalibrating the APC relative payment weights for CY 2018, we began with approximately 163 million final action claims (claims for which all disputes and adjustments have been resolved and payment has been made) for HOPD services furnished on or after January 1, 2016, and before January 1, 2017, before applying our exclusionary criteria and other methodological adjustments. After the application of those data processing changes, we used approximately 86 million final action claims to develop the CY 2018 OPPS payment weights. For exact numbers of claims used and additional details on the claims accounting process, we refer readers to the claims accounting narrative under supporting documentation for this CY 2018 OPPS/ASC final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

    Addendum N to this final rule with comment period (which is available via the Internet on the CMS Web site) includes the list of bypass codes for CY 2018. The list of bypass codes contains codes that were reported on claims for services in CY 2016 and, therefore, includes codes that were in effect in CY 2016 and used for billing, but were deleted for CY 2017. We retained these deleted bypass codes on the CY 2018 bypass list because these codes existed in CY 2016 and were covered OPD services in that period, and CY 2016 claims data are used to calculate CY 2018 payment rates. Keeping these deleted bypass codes on the bypass list potentially allows us to create more ``pseudo'' single procedure claims for ratesetting purposes. ``Overlap bypass codes'' that are members of the multiple imaging composite APCs are identified by asterisks (*) in the third column of Addendum N to this final rule with comment period. HCPCS codes that we are adding for CY 2018 are identified by asterisks (*) in the fourth column of Addendum N.

    Table 1 below contains the list of codes that we are removing from the CY 2018 bypass list.

    Table 1--HCPCS Codes Removed From the CY 2018 Bypass List

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

    HCPCS code HCPCS short descriptor

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

    77305........................... Teletx isodose plan simple.

    77310........................... Teletx isodose plan intermed.

    77315........................... Teletx isodose plan complex.

    77327........................... Brachytx isodose calc intern.

    90801........................... Psy dx interview.

    90802........................... Intac psy dx interview.

    90804........................... Psytx office 20-30 min.

    90805........................... Psytx off 20-30 min w/e&m.

    90806........................... Psytx off 45-50 min.

    90807........................... Psytx off 45-50 min w/e&m.

    90808........................... Psytx office 75-80 min.

    90809........................... Psytx off 75-80 w/e&m.

    90810........................... Intac psytx off 20-30 min.

    90811........................... Intac psytx 20-40 w/e&m.

    90812........................... Intac psytx off 45-50 min.

    90857........................... Intac group psytx.

    90862........................... Medication management.

    95115........................... Immunotherapy one injection.

    95117........................... Immunotherapy injections.

    Page 59228

    95144........................... Antigen therapy services.

    95147........................... Antigen therapy services.

    95165........................... Antigen therapy services.

    96402........................... Chemo hormon antineopl sq/im.

    99201........................... Office/outpatient visit new.

    99202........................... Office/outpatient visit new.

    99203........................... Office/outpatient visit new.

    99204........................... Office/outpatient visit new.

    99205........................... Office/outpatient visit new.

    99212........................... Office/outpatient visit est.

    99213........................... Office/outpatient visit est.

    99214........................... Office/outpatient visit est.

    C1300........................... Hyperbaric oxygen.

    G0340........................... Robt lin-radsurg fractx 2-5.

    G9141........................... Influenza A H1N1, admin w cou.

    M0064........................... Visit for drug monitoring.

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

  86. Calculation and Use of Cost-to-Charge Ratios (CCRs)

    For CY 2018, in this CY 2018 OPPS/ASC final rule with comment period, as we proposed, we are continuing to use the hospital-specific overall ancillary and departmental cost-to-charge ratios (CCRs) to convert charges to estimated costs through application of a revenue code-to-cost center crosswalk. To calculate the APC costs on which the CY 2018 APC payment rates are based, we calculated hospital-specific overall ancillary CCRs and hospital-specific departmental CCRs for each hospital for which we had CY 2016 claims data by comparing these claims data to the most recently available hospital cost reports, which, in most cases, are from CY 2015. For the final CY 2018 OPPS payment rates, we used the set of claims processed during CY 2016. We applied the hospital-specific CCR to the hospital's charges at the most detailed level possible, based on a revenue code-to-cost center crosswalk that contains a hierarchy of CCRs used to estimate costs from charges for each revenue code. That crosswalk is available for review and continuous comment on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

    To ensure the completeness of the revenue code-to-cost center crosswalk, we reviewed changes to the list of revenue codes for CY 2016 (the year of claims data we used to calculate the CY 2018 OPPS payment rates) and found that the National Uniform Billing Committee (NUBC) did not add any new revenue codes to the NUBC 2016 Data Specifications Manual.

    In accordance with our longstanding policy, we calculate CCRs for the standard and nonstandard cost centers accepted by the electronic cost report database. In general, the most detailed level at which we calculate CCRs is the hospital-specific departmental level. For a discussion of the hospital-specific overall ancillary CCR calculation, we refer readers to the CY 2007 OPPS/ASC final rule with comment period (71 FR 67983 through 67985). The calculation of blood costs is a longstanding exception (since the CY 2005 OPPS) to this general methodology for calculation of CCRs used for converting charges to costs on each claim. This exception is discussed in detail in the CY 2007 OPPS/ASC final rule with comment period and discussed further in section II.A.2.a.(1) of this final rule with comment period.

    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74840 through 74847), we finalized our policy of creating new cost centers and distinct CCRs for implantable devices, MRIs, CT scans, and cardiac catheterization. However, in response to the CY 2014 OPPS/ASC proposed rule, commenters reported that some hospitals currently use an imprecise ``square feet'' allocation methodology for the costs of large moveable equipment like CT scan and MRI machines. They indicated that while CMS recommended using two alternative allocation methods, ``direct assignment'' or ``dollar value,'' as a more accurate methodology for directly assigning equipment costs, industry analysis suggested that approximately only half of the reported cost centers for CT scans and MRIs rely on these preferred methodologies. In response to concerns from commenters, we finalized a policy for the CY 2014 OPPS to remove claims from providers that use a cost allocation method of ``square feet'' to calculate CCRs used to estimate costs associated with the CT and MRI APCs (78 FR 74847). Further, we finalized a transitional policy to estimate imaging APC relative payment weights using only CT and MRI cost data from providers that do not use ``square feet'' as the cost allocation statistic. We provided that this finalized policy would sunset in 4 years to provide a sufficient time for hospitals to transition to a more accurate cost allocation method and for the related data to be available for ratesetting purposes (78 FR 74847). Therefore, beginning CY 2018, with the sunset of the transition policy, we will estimate the imaging APC relative payment weight using cost data from all providers, regardless of the cost allocation statistic employed.

    As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33570), some stakeholders have raised concerns regarding using claims from all providers to calculate CT and MRI CCRs, regardless of the cost allocations statistic employed (78 FR 74840 through 74847). Stakeholders noted that providers continue to use the ``square feet'' cost allocation method and that including claims from such providers would cause significant reductions in imaging APC payment rates.

    Table 2 below demonstrates the relative effect on imaging APC payments after removing cost data for providers that report CT and MRI standard cost centers using ``square feet'' as the cost allocation method by extracting HCRIS data on Worksheet B-1. Table 3 below provides statistical values based on the CT and MRI standard cost center CCRs using the different cost allocation methods.

    Table 2--Percentage Change in Estimate Cost for CT and MRI APCs When

    Excluding Claims From Provider Using ``Square Feet'' as the Cost

    Allocation Method

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

    Percentage

    APC APC descriptor change

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

    5521.......................... Level 1 Imaging without -3.8

    Contrast.

    5522.......................... Level 2 Imaging without 5.3

    Contrast.

    5523.......................... Level 3 Imaging without 6.3

    Contrast.

    5524.......................... Level 4 Imaging without 5.0

    Contrast.

    5571.......................... Level 1 Imaging with 9.0

    Contrast.

    5572.......................... Level 2 Imaging with 7.0

    Contrast.

    5573.......................... Level 3 Imaging with 2.1

    Contrast.

    8005.......................... CT and CTA without 14.4

    Contrast Composite.

    8006.......................... CT and CTA with Contrast 11.9

    Composite.

    Page 59229

    8007.......................... MRI and MRA without 7.2

    Contrast Composite.

    8008.......................... MRI and MRA with 7.5

    Contrast Composite.

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

    Table 3--CCR Statistical Values Based on Use of Different Cost Allocation Methods

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

    CT MRI

    Cost allocation method ---------------------------------------------------------------

    Median CCR Mean CCR Median CCR Mean CCR

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

    All Providers................................... 0.0387 0.0538 0.0795 0.1059

    Square Feet Only................................ 0.0317 0.0488 0.0717 0.0968

    Direct Assign................................... 0.0557 0.0650 0.1032 0.1222

    Dollar Value.................................... 0.0457 0.0603 0.0890 0.1178

    Direct Assign and Dollar Value.................. 0.0457 0.0603 0.0893 0.1175

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

    Our analysis showed that since the CY 2014 OPPS in which we established the transition policy, the number of valid MRI CCRs has increased by 17.5 percent to 2,177 providers and the number of valid CT CCRs has increased by 15.1 percent to 2,251 providers. However, in the proposed rule, we noted that, as shown in Table 2 above, nearly all imaging APCs would see an increase in payment rates for CY 2018 if claims from providers that report ``square feet'' cost allocation method were removed. This can be attributed to the generally lower CCR values from providers that use a cost allocation method of ``square feet'' as shown in Table 3 above. We stated in the proposed rule that we believe that the imaging CCRs that we have are appropriate for ratesetting. However, in response to provider concerns and to provide added flexibility for hospitals to improve their cost allocation methods, we proposed to extend the transition policy an additional year, for the CY 2018 OPPS.

    For the CY 2018 OPPS, we proposed to continue to remove claims from providers that use a cost allocation method of ``square feet'' to calculate CCRs used to estimate costs with the CT and MRI APCs identified in Table 2 above. Beginning in CY 2019, we would estimate the imaging APC relative payment weights using cost data from all providers, regardless of the cost allocation statistic employed.

    Comment: Commenters supported CMS' proposal to extend the transition policy an additional year, for the CY 2018 OPPS. Several commenters recommended that CMS continue to remove claims from providers that use a cost allocation method of ``square feet'' to calculate CT and MRI CCRs in subsequent calendar years.

    Response: We thank the commenters for their support. As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33570), our analysis shows that the number of valid MRI and CT CCRs has increased since we established the transition policy. We believe extending our transition policy for 1 additional year will provide hospitals adequate time to implement a more accurate cost allocation method for the costs of large moveable equipment like CT scan and MRI machines.

    Comment: Some commenters recommended that CMS discontinue the use of CT and MRI cost centers for developing CT and MRI CCRs. One commenter believed that creating separate CT and MRI cost centers has resulted in a decline in geometric means for imaging APCs which can be attributed to costs being dropped out and changes in hospital charging practices.

    Response: We are not convinced that the change in CT and MRI CCRs over the previous years is a result of costs not being reported accurately. The standard cost centers for CT scans and MRIs have been in effect since cost reporting periods beginning on or after May 1, 2010, on the revised Medicare cost report Form CMS-2552-10. Therefore, the cost reports that we used to develop the CY 2018 OPPS relative payment weights were the fifth or sixth opportunity for hospitals to submit cost reports with the CT and MRI cost centers. However, we will continue to monitor cost reporting practices with respect to CT scan and MRI cost centers as well as trends in CT and MRI CCRs.

    After consideration of the public comments we received, we are finalizing our proposal to extend our transition policy for 1 additional year and continue to remove claims from providers that use a cost allocation method of ``square feet'' to calculate CT and MRI CCRs for the CY 2018 OPPS.

    2. Data Development Process and Calculation of Costs Used for Ratesetting

    In this section of this final rule with comment period, we discuss the use of claims to calculate the OPPS payment rates for CY 2018. The Hospital OPPS page on the CMS Web site on which this final rule with comment period is posted (http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html) provides an accounting of claims used in the development of the payment rates. That accounting provides additional detail regarding the number of claims derived at each stage of the process. In addition, below in this section we discuss the file of claims that comprises the data set that is available upon payment of an administrative fee under a CMS data use agreement. The CMS Web site, http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html, includes information about obtaining the ``OPPS Limited Data Set,'' which now includes the additional variables previously available only in the OPPS Identifiable Data Set, including ICD-10-CM diagnosis codes and revenue code payment amounts. This file is derived from the CY 2016 claims that were used to calculate the payment rates for the CY 2018 OPPS.

    In the history of the OPPS, we have traditionally established the scaled relative weights on which payments are based using APC median costs, which is a process described in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74188). However, as discussed in more detail in section II.A.2.f. of the CY 2013 OPPS/ASC final

    Page 59230

    rule with comment period (77 FR 68259 through 68271), we finalized the use of geometric mean costs to calculate the relative weights on which the CY 2013 OPPS payment rates were based. While this policy changed the cost metric on which the relative payments are based, the data process in general remained the same, under the methodologies that we used to obtain appropriate claims data and accurate cost information in determining estimated service cost. For CY 2018, in this CY 2018 OPPS/

    ASC final rule with comment period, as we proposed, we are continuing to use geometric mean costs to calculate the relative weights on which the CY 2018 OPPS payment rates are based.

    We used the methodology described in sections II.A.2.a. through II.A.2.c. of this final rule with comment period to calculate the costs we used to establish the relative payment weights used in calculating the OPPS payment rates for CY 2018 shown in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site). We refer readers to section II.A.4. of this final rule with comment period for a discussion of the conversion of APC costs to scaled payment weights.

    For details of the claims process used in this final rule with comment period, we refer readers to the claims accounting narrative under supporting documentation for this CY 2018 OPPS/ASC final rule with comment period on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

  87. Calculation of Single Procedure APC Criteria-Based Costs

    (1) Blood and Blood Products

    (a) Methodology

    Since the implementation of the OPPS in August 2000, we have made separate payments for blood and blood products through APCs rather than packaging payment for them into payments for the procedures with which they are administered. Hospital payments for the costs of blood and blood products, as well as for the costs of collecting, processing, and storing blood and blood products, are made through the OPPS payments for specific blood product APCs.

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33571), we proposed to continue to establish payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. This methodology has been our standard ratesetting methodology for blood and blood products since CY 2005. It was developed in response to data analysis indicating that there was a significant difference in CCRs for those hospitals with and without blood-specific cost centers, and past public comments indicating that the former OPPS policy of defaulting to the overall hospital CCR for hospitals not reporting a blood-specific cost center often resulted in an underestimation of the true hospital costs for blood and blood products. Specifically, in order to address the differences in CCRs and to better reflect hospitals' costs, we proposed to continue to simulate blood CCRs for each hospital that does not report a blood cost center by calculating the ratio of the blood-

    specific CCRs to hospitals' overall CCRs for those hospitals that do report costs and charges for blood cost centers. We also proposed to apply this mean ratio to the overall CCRs of hospitals not reporting costs and charges for blood cost centers on their cost reports in order to simulate blood-specific CCRs for those hospitals. We proposed to calculate the costs upon which the proposed CY 2018 payment rates for blood and blood products are based using the actual blood-specific CCR for hospitals that reported costs and charges for a blood cost center and a hospital-specific, simulated blood-specific CCR for hospitals that did not report costs and charges for a blood cost center.

    We continue to believe that the hospital-specific, simulated blood-

    specific CCR methodology better responds to the absence of a blood-

    specific CCR for a hospital than alternative methodologies, such as defaulting to the overall hospital CCR or applying an average blood-

    specific CCR across hospitals. Because this methodology takes into account the unique charging and cost accounting structure of each hospital, we believe that it yields more accurate estimated costs for these products. We continue to believe that this methodology in CY 2018 would result in costs for blood and blood products that appropriately reflect the relative estimated costs of these products for hospitals without blood cost centers and, therefore, for these blood products in general.

    We note that, as discussed in section II.A.2.e. of the CYs 2014 through 2017 OPPS/ASC final rules with comment period (78 FR 74861 through 74910, 79 FR 66798 through 66810, 80 FR 70325 through 70339, and 81 FR 79580 through 79585, respectively), we defined a comprehensive APC (C-APC) as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. Under this policy, we include the costs of blood and blood products when calculating the overall costs of these C-APCs. In the CY 2018 OPPS/ASC proposed rule (82 FR 33571), we proposed to continue to apply the blood-specific CCR methodology described in this section when calculating the costs of the blood and blood products that appear on claims with services assigned to the C-

    APCs. Because the costs of blood and blood products would be reflected in the overall costs of the C-APCs (and, as a result, in the proposed payment rates of the C-APCs), we proposed to not make separate payments for blood and blood products when they appear on the same claims as services assigned to the C-APCs (we refer readers to the CY 2015 OPPS/

    ASC final rule with comment period (79 FR 66796)).

    We also referred readers to Addendum B to the proposed rule (which is available via the Internet on the CMS Web site) for the proposed CY 2018 payment rates for blood and blood products (which are identified with status indicator ``R''). For a more detailed discussion of the blood-specific CCR methodology, we refer readers to the CY 2005 OPPS proposed rule (69 FR 50524 through 50525). For a full history of OPPS payment for blood and blood products, we refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66807 through 66810).

    We invited public comments on our proposals.

    Comment: Several commenters continued to support using the blood-

    specific CCR methodology to establish payment rates for blood and blood products, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. The commenters also supported using a blood-specific APC with a separate APC for each blood and blood product service code. The commenters viewed the blood-specific CCR methodology as the best current methodology to report the costs of blood and blood products.

    Response: We appreciate the commenters' support.

    Comment: Several commenters expressed concerns about reduced payment for several blood and blood products HCPCS codes, including HCPCS codes P9010 (Blood (whole), for transfusion, per unit), P9011 (Blood, split unit), P9012 (Cryoprecipitate, each

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    unit), P9016 (Red blood cells, leukocytes reduced, each unit), P9023 (Plasma, pooled multiple donor, solvent/detergent treated, frozen, each unit), P9035 (Platelets, pheresis, leukocytes reduced, each unit), P9043 (Infusion, plasma protein fraction (human), 5%, 50 ml), P9048 (Infusion, plasma protein fraction (human), 5%, 250 ml), P9055 (Platelets, leukocytes reduced, cmv-negative, apheresis/pheresis, each unit), and P9060 (Fresh frozen plasma, donor retested, each unit). Commenters supported the higher payment rates for several HCPCS codes, including HCPCS codes P9019 (Platelets, each unit) and P9034 (Platelets, pheresis, each unit).

    Response: We used claims data from CY 2016 and the same blood-

    specific CCR methodology we used in previous years to calculate these proposed payment rates and believe the changes in costs for the services mentioned by these commenters are a result of normal variations in the claims data.

    Comment: Two commenters expressed concern that the proposed payment rate for HCPCS code P9070 (Plasma, pooled multiple donor, pathogen reduced, frozen, each unit) does not accurately reflect the cost of the blood product.

    Response: HCPCS code P9070 was established on January 1, 2016, and for CY 2016 and CY 2017, we linked the payment of HCPCS code P9070 to a blood product, HCPCS code P9059 (Fresh frozen plasma between 8-24 hours of collection, each unit), that we believed would have a comparable cost to HCPCS code P9070. CY 2018 is the first year for which we have claims data that will allow us to directly determine the cost of HCPCS code P9070. In this case, the payment rate for HCPCS code P9070 in CY 2018 is lower than the CY 2017 payment rate. However, we believe the CY 2018 payment rate is appropriate because it is based on actual claims data for HCPCS code P9070 rather than for HCPCS code P9059.

    Comment: Commenters requested that CMS immediately include the cost of newly implemented FDA blood safety measures for blood and blood products prior to receiving claims data that would contain the costs for the new safety measures.

    Response: As stated earlier in this section, the OPPS covers hospital payments for the costs of blood and blood products, as well as for the costs of collecting, processing, and storing blood and blood products. The cost of blood and blood products is determined using claims data and blood-specific CCRs from hospitals. To the extent that compliance with blood safety measures is included in hospital reporting of the cost of collecting, processing and storing blood and blood products, these costs would be reflected in the hospital rates. It is not possible to estimate the potential costs of new safety measures outside of claims data.

    Comment: Several commenters resubmitted the comments they made in response to a solicitation for public comments in the CY 2017 OPPS/ASC proposed rule (81 FR 45617 through 45618) and summarized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79577) on the current set of active HCPCS P-codes that describe blood products regarding how the code descriptors could be revised and updated (if necessary) to reflect the current blood products provided to hospital outpatients.

    The commenters supported a thorough examination of the current set of HCPCS P-codes for blood products as a necessary undertaking because the HCPCS P-codes were created several years ago. Several commenters recommended that CMS convene a stakeholder group that includes representatives of hospitals, blood banks, the American Red Cross, and others to discuss a framework to systematically review and revise the HCPCS P-codes for blood products. Commenters also suggested that CMS establish a ``not otherwise classified (NOC)'' code for blood products, which would allow hospitals to begin immediately billing for a new blood product that is not described by a specific HCPCS P-code. One commenter supported the use of broader descriptions for HCPCS P-codes when more granular language is no longer meaningful for differentiating between different types of blood and blood products, and where the costs and volume of the HCPCS P-codes are similar. Other commenters suggested specific modifications to the order, classification, and code descriptors of the blood and blood product HCPCS P-codes.

    Response: We appreciate the commenters' detailed responses. The safety of the nation's blood supply continues to be among the highest priorities, and we will work with the commenters and other stakeholders to ensure that any future updates to the HCPCS P-codes will support our goal of maintaining the safety of the blood supply.

    After consideration of the public comments we received, we are finalizing our proposal, without modification, to establish payment rates for blood and blood products using our blood-specific CCR methodology. Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site) contains the final CY 2018 payment rates for blood and blood products (which are identified with status indicator ``R'').

    (b) Pathogen-Reduced Platelets and Rapid Bacterial Testing for Platelets

    In March 2016, the Food and Drug Administration (FDA) issued draft guidance for blood collection establishments and transfusion services entitled ``Bacterial Risk Control Strategies for Blood Collection Establishments and Transfusion Services to Enhance the Safety and Availability of Platelets for Transfusion'' (available at: https://www.fda.gov/downloads/BiologicsBloodVaccines/GuidanceComplianceRegulatoryInformation/Guidances/Blood/UCM425952.pdf). This draft guidance recommended, among other things, the use of rapid bacterial testing devices secondary to testing using a culture-based bacterial detection device or the implementation of pathogen-reduction technology for platelets to adequately control the risk of bacterial contamination of platelets.

    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322), we established HCPCS code P9072 (Platelets, pheresis, pathogen reduced, each unit). The CMS HCPCS Workgroup later revised HCPCS code P9072 to include the use of pathogen-reduction technology or rapid bacterial testing. Specifically, the descriptor for this code was revised, effective January 1, 2017, to read as follows: HCPCS code P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit). The payment rate for HCPCS code P9072 is based on a crosswalk to HCPCS code P9037 (Platelets, pheresis, leukocyte reduced, irradiated, each unit). We refer readers to the CY 2016 OPPS/ASC final rule with comment period for a further discussion of crosswalks for pathogen-reduced blood products (80 FR 70323).

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33571 and 33572), after the release of the CY 2017 OPPS/ASC final rule with comment period, several blood and blood product stakeholders expressed concerns about the revised code descriptor for HCPCS code P9072. The stakeholders believed that the revision to HCPCS code P9072 to describe both pathogen reduction and rapid bacterial testing was an inappropriate code descriptor. They stated that separate coding is needed to describe each service because each service is distinct. The stakeholders also noted that the code descriptor for

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    HCPCS code P9072 results in hospitals receiving the same payment rate for platelets undergoing rapid bacterial testing that the hospitals receive for platelets treated with pathogen reduction technology, despite the fact that pathogen reduction is significantly more expensive than rapid bacterial testing.

    After review of the concerns expressed by the blood and blood product stakeholders, the CMS HCPCS Workgroup deactivated HCPCS code P9072 for Medicare reporting and replaced the code with two new HCPCS codes effective July 1, 2017. Specifically, effective July 1, 2017, HCPCS code Q9988 (Platelets, pheresis, pathogen reduced, each unit) is used to report the use of pathogen-reduction technology and HCPCS code Q9987 (Pathogen(s) test for platelets) is used to report rapid bacterial testing or other pathogen tests for platelets, instead of HCPCS code P9072. We note that HCPCS code Q9987 should be reported to describe the test used for the detection of bacterial contamination in platelets as well as any other test that may be used to detect pathogen contamination. HCPCS code Q9987 should not be used for reporting donation testing for infectious agents such as viruses. The coding changes associated with these codes were published on the CMS HCPCS Quarterly Update Web site, effective July 2017, at: https://www.cms.gov/Medicare/Coding/HCPCSReleaseCodeSets/HCPCS-Quarterly-Update.html. In addition, for OPPS, we announced the new HCPCS codes that were effective July 1, 2017 through the July 2017 OPPS quarterly update Change Request (Transmittal 3783, Change Request 10122, dated May 26, 2017). We note that, effective July 1, 2017, HCPCS code Q9988 is assigned to APC 9536 (Pathogen Reduced Platelets), with a payment rate of $647.12, and HCPCS code Q9987 is assigned to New Technology APC 1493, with a payment rate of $25.50.

    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70322 through 70323), we reiterated that we calculate payment rates for blood and blood products using our blood-specific CCR methodology, which utilizes actual or simulated CCRs from the most recently available hospital cost reports to convert hospital charges for blood and blood products to costs. Because HCPCS code P9072 was new for CY 2016, there were no claims data available on the charges and costs for this blood product upon which to apply our blood-specific CCR methodology. Therefore, we established an interim payment rates for this HCPCS code based on a crosswalk to existing blood product HCPCS code P9037, which we believed provided the best proxy for the costs of the new blood product. In addition, we stated that once we had claims data for HCPCS code P9072, we would calculate its payment rate using the claims data that should be available for the code beginning in CY 2018, which is our practice for other blood product HCPCS codes for which claims data have been available for 2 years.

    We stated in the proposed rule that, although our standard practice for new codes involves using claims data to set payment rates once claims data become available, we are concerned that there may have been confusion among the provider community about the services that HCPCS code P9072 described. That is, as early as 2016, there were discussions about changing the descriptor for HCPCS code P9072 to include the phrase ``or rapid bacterial tested'', which is a much less costly technology than pathogen reduction. In addition, as noted above, effective January 2017, the code descriptor for HCPCS code P9072 was, in fact, changed to also describe rapid bacterial testing of platelets and, effective July 1, 2017, the descriptor for the temporary successor code for HCPCS code P9072 (that is, HCPCS code Q9988) was changed again back to the original descriptor for HCPCS code P9072 that was in place for 2016.

    Based on the ongoing discussions involving changes to the original HCPCS code P9072 established in CY 2016, we believe that claims for pathogen reduced platelets may potentially reflect certain claims for rapid bacterial testing of platelets. The geometric mean costs based on submitted claims for HCPCS code P9072 based on available claims data from CY 2016 is $491.53, which is a 24-percent reduction from the CY 2017 payment rate of $647.12. Because we believe that there may have been confusion related to ongoing discussions about changes to the original code descriptor for HCPCS code P9072, we believe it is appropriate to continue to crosswalk the payment amount for at least 1 additional year. Therefore, in the CY 2018 OPPS/ASC proposed rule (82 FR 33571 and 33572), we proposed for CY 2018 to determine the payment rate for HCPCS code Q9988 (the successor code to HCPCS code P9072) by continuing to use the payment rate that has been crosswalked from HCPCS code P9037 of $647.12.

    In the CY 2018 OPPS/ASC proposed rule, we solicited public comments on the proposed APC and status indicator assignments for HCPCS codes Q9987 and Q9988 for the CY 2018 OPPS update. The proposed payment rates for HCPCS codes Q9987 and Q9988 were included in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site).

    Comment: Commenters expressed their appreciation to CMS for working collaboratively with the American Red Cross and other stakeholders in the blood banking community to respond to their concerns about HCPCS code P9072. The commenters supported the actions of CMS to deactivate HCPCS code P9072 and replace it with HCPCS codes Q9987 and Q9988 to have coding options that more accurately reflect available technologies. The commenters also appreciated that separate payment for each code was established in the OPPS and is proposed to continue in CY 2018.

    Response: We appreciate the support for our actions in CY 2017 and our proposal for CY 2018.

    Comment: One commenter requested that the description of HCPCS code Q9987 (Pathogen(s) test for platelets) be modified by adding the word ``secondary'' to clarify in the procedure code descriptor that HCPCS code Q9987 is intended to be used for secondary bacterial testing of platelets.

    Response: We believe the guidance we have provided through the CY 2018 proposed rule (82 FR 33571 and 33572) and associated subregulatory guidance (Pub. 100-04 Medicare Claims Processing, Transmittal 3783, Change Request 10122) are sufficient for providers to understand how to appropriately report HCPCS code Q9987. We do not agree with the suggestion to modify the descriptor of HCPCS code Q9987, as we want the code to have the flexibility to be used to report new tests that may be developed in the future that are designed to identify pathogen contamination of platelets.

    After consideration of the public comments we received, we are finalizing our CY 2018 proposal for reporting pathogen-reduced platelets and rapid bacterial testing for platelets. The only changes are to replace HCPCS code Q9987 (Pathogen(s) test for platelets) with HCPCS code P9100 (Pathogen(s) test for platelets) and to replace HCPCS code Q9988 (Platelets, pheresis, pathogen-reduced, each unit) with HCPCS code P9073 (Platelets, pheresis, pathogen-reduced, each unit). Details of the replacement of HCPCS codes Q9987 and Q9988 with HCPCS codes P9100 and P9073, respectively, are found in Table 4 below. The final payment rates for HCPCS codes P9100 and P9073 can be found in Addendum B to this final rule with comment period

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    (which is available via the Internet on the CMS Web site).

    Table 4--Replacement Codes for HCPCS Codes Q9987 and Q9988 as of January 1, 2018

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

    Final CY 2018 Final CY 2018

    CY 2017 HCPCS code CY 2018 HCPCS code CY 2018 long descriptor SI APC

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

    Q9987.................... P9100 Pathogen(s) test for S 1493

    platelets.

    Q9988.................... P9073 Platelets, pheresis, R 9536

    pathogen-reduced, each

    unit.

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

    (2) Brachytherapy Sources

    Section 1833(t)(2)(H) of the Act mandates the creation of additional groups of covered OPD services that classify devices of brachytherapy consisting of a seed or seeds (or radioactive source) (``brachytherapy sources'') separately from other services or groups of services. The statute provides certain criteria for the additional groups. For the history of OPPS payment for brachytherapy sources, we refer readers to prior OPPS final rules, such as the CY 2012 OPPS/ASC final rule with comment period (77 FR 68240 through 68241). As we have stated in prior OPPS updates, we believe that adopting the general OPPS prospective payment methodology for brachytherapy sources is appropriate for a number of reasons (77 FR 68240). The general OPPS methodology uses costs based on claims data to set the relative payment weights for hospital outpatient services. This payment methodology results in more consistent, predictable, and equitable payment amounts per source across hospitals by averaging the extremely high and low values, in contrast to payment based on hospitals' charges adjusted to costs. We believe that the OPPS methodology, as opposed to payment based on hospitals' charges adjusted to cost, also would provide hospitals with incentives for efficiency in the provision of brachytherapy services to Medicare beneficiaries. Moreover, this approach is consistent with our payment methodology for the vast majority of items and services paid under the OPPS. We refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70323 through 70325) for further discussion of the history of OPPS payment for brachytherapy sources.

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33572), for CY 2018, we proposed to use the costs derived from CY 2016 claims data to set the proposed CY 2018 payment rates for brachytherapy sources because CY 2016 is the same year of data we proposed to use to set the proposed payment rates for most other items and services that would be paid under the CY 2018 OPPS. We proposed to base the payment rates for brachytherapy sources on the geometric mean unit costs for each source, consistent with the methodology that we proposed for other items and services paid under the OPPS, as discussed in section II.A.2. of the proposed rule. We also proposed to continue the other payment policies for brachytherapy sources that we finalized and first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537). We proposed to pay for the stranded and nonstranded not otherwise specified (NOS) codes, HCPCS codes C2698 and C2699, at a rate equal to the lowest stranded or nonstranded prospective payment rate for such sources, respectively, on a per source basis (as opposed to, for example, a per mCi), which is based on the policy we established in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66785). We also proposed to continue the policy we first implemented in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60537) regarding payment for new brachytherapy sources for which we have no claims data, based on the same reasons we discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66786; which was delayed until January 1, 2010 by section 142 of Pub. L. 110-275). Specifically, this policy is intended to enable us to assign new HCPCS codes for new brachytherapy sources to their own APCs, with prospective payment rates set based on our consideration of external data and other relevant information regarding the expected costs of the sources to hospitals.

    The proposed CY 2018 payment rates for brachytherapy sources were included in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site) and were identified with status indicator ``U''. For CY 2018, we proposed to assign status indicator ``E2'' (Items and Services for Which Pricing Information and Claims Data Are Not Available) to HCPCS code C2645 (Brachytherapy planar, palladium-

    103, per square millimeter) because this code was not reported on CY 2016 claims. Therefore, we are unable to calculate a proposed payment rate based on the general OPPS ratesetting methodology described earlier. Although HCPCS code C2645 became effective January 1, 2016, and although we would expect that if a hospital furnished a brachytherapy source described by this code in CY 2016, HCPCS code C2645 should appear on the CY 2016 claims, there were no CY 2016 claims reporting this code available for the proposed rule. In addition, unlike our policy for new brachytherapy sources HCPCS codes, we did not consider external data to determine a proposed payment rate for HCPCS code C2645 for CY 2018. Therefore, we proposed to assign status indicator ``E2'' to HCPCS code C2645.

    In addition, we assigned status indicator ``E2'' to HCPCS code C2644 (Brachytherapy, cesium-131 chloride, per square millimeter) because this code was not reported on any CY 2015 claims (that is, there were no Medicare claims submitted by any hospitals in 2015 that reported this HCPCS code). In our review of CY 2016 claims (which are used to set rates for CY 2018), we found that one hospital submitted one claim reporting HCPCS code C2644. Therefore, we proposed to assign status indicator ``U'' to HCPCS code C2644.

    We invited public comments on our proposals.

    Comment: One commenter suggested that CMS set the CY 2018 APC payment rate for HCPCS code C2636 (Brachytherapy linear, non-stranded, palladium-103, per 1mm) at $26.99 per millimeter.

    Response: As noted in past rulemaking cycles and in the CY 2018 OPPS/ASC proposed rule (82 FR 33572), we believe that adopting the general OPPS prospective payment methodology for brachytherapy sources is consistent with our payment methodology for the vast majority of items and services paid under the OPPS. Further, while we assign new HCPCS codes for new brachytherapy sources to their own APCs, with prospective payment rates set based on our consideration of external data and other

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    relevant information regarding the expected costs of the sources to hospitals, HCPCS code C2636 is neither new nor lacks claim information. HCPCS code C2636 became effective July 1, 2007. The final CY 2018 APC payment rate for HCPCS code C2636 is $27.08 based on data for the 8 claims we received for the CY 2018 OPPS standard ratesetting process and can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

    Comment: Some commenters suggested that HCPCS code C2645 (Brachytherapy, planar, palladium-103) had been incorrectly assigned status indicator ``E2'' (Items and Services for Which Pricing Information and Claims Data Are Not Available). These commenters stated that CMS has considered external data and other relevant information where no claims data exist for new HCPCS codes for new brachytherapy sources. For example, commenters included the following excerpt from the CY 2008 OPPS/ASC final rule with comment period regarding CMS' policy with respect to establishing a payment rate for HCPCS code C2637 (Brachytherapy non-stranded, ytterbium-169, per source) for which CMS lacked claims data: ``if in public comments to the proposed rule or later in CYs 2007 or 2008, we would receive relevant and reliable information on the hospital cost for ytterbium-169 and information that this source is being marketed, we could establish a prospective payment rate for the source in the CY 2008 final rule with comment period or in a quarterly OPPS update, respectively'' (72 FR 66786).

    In addition, commenters noted that, for CY 2016 and CY 2017, HCPCS code C2645 was assigned an OPPS status indicator of ``U'' (Brachytherapy Sources, Paid under OPPS; separate APC payment) and a payment rate of $4.69 per mm\2\ and that the payment rate was based upon external pricing data previously supplied by the developer of the brachytherapy source described by HCPCS code C2645. The developer of the brachytherapy source noted that there were no outpatient claims from CY 2016 for HCPCS code C2645 because all of the cases in CY 2016 that used the brachytherapy source were inpatient cases. However, the commenter noted its expectation that such source would begin to be used in the hospital outpatient department setting beginning approximately in mid-2018. This commenter noted that the ``E2'' status indicator would effectively render the outpatient payment rate as $0 for CY 2018. The commenter supplied external invoices to support maintaining the current payment rate of $4.69 per mm\2\.

    Response: We note that the CY 2008 final rule with comment period preamble language that the commenters referenced to support their argument that external data have been used in the past was in reference to a brachytherapy source for which there appeared to have been erroneous claims submitted since the claims were from 2006, but the brachytherapy source did not come to market until 2007. This is distinguishable from the situation with HCPCS code C2645 which has been on the market since August 29, 2014 and had a code effective date of January 1, 2016. Nonetheless, as the commenters noted, there are no Medicare claims data available at this time. While this brachytherapy source is no longer ``new,'' the absence of even a single Medicare claim in the outpatient hospital data leads us to agree with the commenter that using an external source of data would be appropriate at this time. Accordingly, for CY 2018, we are assigning status indicator ``U'' to HCPCS code C2645 and are using external data (invoice prices) and other relevant information to establish the APC payment rate for HCPCS code C2645. Specifically, we are setting the payment rate at $4.69 per mm\2\, the same rate that was in effect for CYs 2016 and 2017.

    After consideration of the public comments we received, we are finalizing our proposal to assign status indicator ``U'' to HCPCS code C2636 (Brachytherapy linear, non-stranded, palladium-103, per 1mm) and assigning an APC payment rate for HCPCS code C2636 at $27.08 based on the 8 claims we received for the CY 2018 OPPS standard ratesetting process. We also are finalizing our proposal to assign status indicator ``U'' to HCPCS code C2644 (Brachytherapy, cesium-131 chloride, per millicurie) and are modifying our proposal to assign status indicator ``E2'' to HCPCS code C2645 (Brachytherapy planar, palladium-103, per square millimeter) and instead adopting a status indicator of ``U'' for CY 2018. The final CY 2018 payment rates for brachytherapy sources can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site) and are identified with status indicator ``U''.

    We continue to invite hospitals and other parties to submit recommendations to us for new codes to describe new brachytherapy sources. Such recommendations should be directed to the Division of Outpatient Care, Mail Stop C4-01-26, Centers for Medicare and Medicaid Services, 7500 Security Boulevard, Baltimore, MD 21244. We will continue to add new brachytherapy source codes and descriptors to our systems for payment on a quarterly basis.

  88. Comprehensive APCs (C-APCs) for CY 2018

    (1) Background

    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74861 through 74910), we finalized a comprehensive payment policy that packages payment for adjunctive and secondary items, services, and procedures into the most costly primary procedure under the OPPS at the claim level. The policy was finalized in CY 2014, but the effective date was delayed until January 1, 2015, to allow additional time for further analysis, opportunity for public comment, and systems preparation. The comprehensive APC (C-APC) policy was implemented effective January 1, 2015, with modifications and clarifications in response to public comments received regarding specific provisions of the C-APC policy (79 FR 66798 through 66810).

    A C-APC is defined as a classification for the provision of a primary service and all adjunctive services provided to support the delivery of the primary service. We established C-APCs as a category broadly for OPPS payment and implemented 25 C-APCs beginning in CY 2015 (79 FR 66809 through 66810). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70332), we finalized 10 additional C-APCs to be paid under the existing C-APC payment policy and added one additional level to both the Orthopedic Surgery and Vascular Procedures clinical families. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584 through 79585), we finalized another 25 C-APCs.

    Under this policy, we designate a service described by a HCPCS code assigned to a C-APC as the primary service when the service is identified by OPPS status indicator ``J1''. When such a primary service is reported on a hospital outpatient claim, taking into consideration the few exceptions that are discussed below, we make payment for all other items and services reported on the hospital outpatient claim as being integral, ancillary, supportive, dependent, and adjunctive to the primary service (hereinafter collectively referred to as ``adjunctive services'') and representing components of a complete comprehensive service (78 FR 74865 and 79 FR 66799). Payments for adjunctive services are packaged into

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    the payments for the primary services. This results in a single prospective payment for each of the primary, comprehensive services based on the costs of all reported services at the claim level.

    Services excluded from the C-APC policy under the OPPS include services that are not covered OPD services, services that cannot by statute be paid for under the OPPS, and services that are required by statute to be separately paid. This includes certain mammography and ambulance services that are not covered OPD services in accordance with section 1833(t)(1)(B)(iv) of the Act; brachytherapy seeds, which also are required by statute to receive separate payment under section 1833(t)(2)(H) of the Act; pass-through payment drugs and devices, which also require separate payment under section 1833(t)(6) of the Act; self-administered drugs (SADs) that are not otherwise packaged as supplies because they are not covered under Medicare Part B under section 1861(s)(2)(B) of the Act; and certain preventive services (78 FR 74865 and 79 FR 66800 through 66801). A list of services excluded from the C-APC policy is included in Addendum J to this final rule with comment period (which is available via the Internet on the CMS Web site).

    The C-APC policy payment methodology set forth in the CY 2014 OPPS/

    ASC final rule with comment period for the C-APCs and modified and implemented beginning in CY 2015 is summarized as follows (78 FR 74887 and 79 FR 66800):

    Basic Methodology. As stated in the CY 2015 OPPS/ASC final rule with comment period, we define the C-APC payment policy as including all covered OPD services on a hospital outpatient claim reporting a primary service that is assigned to status indicator ``J1'', excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS. Services and procedures described by HCPCS codes assigned to status indicator ``J1'' are assigned to C-APCs based on our usual APC assignment methodology by evaluating the geometric mean costs of the primary service claims to establish resource similarity and the clinical characteristics of each procedure to establish clinical similarity within each APC.

    In the CY 2016 OPPS/ASC final rule with comment period, we expanded the C-APC payment methodology to qualifying extended assessment and management encounters through the ``Comprehensive Observation Services'' C-APC (C-APC 8011). Services within this APC are assigned status indicator ``J2''. Specifically, we make a payment through C-APC 8011 for a claim that:

    Does not contain a procedure described by a HCPCS code to which we have assigned status indicator ``T'' that is reported with a date of service on the same day or 1 day earlier than the date of service associated with services described by HCPCS code G0378;

    Contains 8 or more units of services described by HCPCS code G0378 (Observation services, per hour);

    Contains services provided on the same date of service or 1 day before the date of service for HCPCS code G0378 that are described by one of the following codes: HCPCS code G0379 (Direct referral of patient for hospital observation care) on the same date of service as HCPCS code G0378; CPT code 99281 (Emergency department visit for the evaluation and management of a patient (Level 1)); CPT code 99282 (Emergency department visit for the evaluation and management of a patient (Level 2)); CPT code 99283 (Emergency department visit for the evaluation and management of a patient (Level 3)); CPT code 99284 (Emergency department visit for the evaluation and management of a patient (Level 4)); CPT code 99285 (Emergency department visit for the evaluation and management of a patient (Level 5)) or HCPCS code G0380 (Type B emergency department visit (Level 1)); HCPCS code G0381 (Type B emergency department visit (Level 2)); HCPCS code G0382 (Type B emergency department visit (Level 3)); HCPCS code G0383 (Type B emergency department visit (Level 4)); HCPCS code G0384 (Type B emergency department visit (Level 5)); CPT code 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes); or HCPCS code G0463 (Hospital outpatient clinic visit for assessment and management of a patient); and

    Does not contain services described by a HCPCS code to which we have assigned status indicator ``J1''.

    The assignment of status indicator ``J2'' to a specific combination of services performed in combination with each other allows for all other OPPS payable services and items reported on the claim (excluding services that are not covered OPD services or that cannot by statute be paid for under the OPPS) to be deemed adjunctive services representing components of a comprehensive service and resulting in a single prospective payment for the comprehensive service based on the costs of all reported services on the claim (80 FR 70333 through 70336).

    Services included under the C-APC payment packaging policy, that is, services that are typically adjunctive to the primary service and provided during the delivery of the comprehensive service, include diagnostic procedures, laboratory tests, and other diagnostic tests and treatments that assist in the delivery of the primary procedure; visits and evaluations performed in association with the procedure; uncoded services and supplies used during the service; durable medical equipment as well as prosthetic and orthotic items and supplies when provided as part of the outpatient service; and any other components reported by HCPCS codes that represent services that are provided during the complete comprehensive service (78 FR 74865 and 79 FR 66800).

    In addition, payment for hospital outpatient department services that are similar to therapy services and delivered either by therapists or nontherapists is included as part of the payment for the packaged complete comprehensive service. These services that are provided during the perioperative period are adjunctive services and are deemed not to be therapy services as described in section 1834(k) of the Act, regardless of whether the services are delivered by therapists or other nontherapist health care workers. We have previously noted that therapy services are those provided by therapists under a plan of care in accordance with section 1835(a)(2)(C) and section 1835(a)(2)(D) of the Act and are paid for under section 1834(k) of the Act, subject to annual therapy caps as applicable (78 FR 74867 and 79 FR 66800). However, certain other services similar to therapy services are considered and paid for as hospital outpatient department services. Payment for these nontherapy outpatient department services that are reported with therapy codes and provided with a comprehensive service is included in the payment for the packaged complete comprehensive service. We note that these services, even though they are reported with therapy codes, are hospital outpatient department services and not therapy services. Therefore, the requirement for functional reporting under the regulations at 42 CFR 410.59(a)(4) and 42 CFR 410.60(a)(4) does not apply. We refer readers to the July 2016 OPPS Change Request 9658 (Transmittal 3523) for further instructions on reporting these services in the context of a C-APC service.

    Items included in the packaged payment provided in conjunction with the primary service also include all

    Page 59236

    drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass-through payment status and SADs, unless they function as packaged supplies (78 FR 74868 through 74869 and 74909 and 79 FR 66800). We refer readers to Section 50.2M, Chapter 15, of the Medicare Benefit Policy Manual for a description of our policy on SADs treated as hospital outpatient supplies, including lists of SADs that function as supplies and those that do not function as supplies.

    We define each hospital outpatient claim reporting a single unit of a single primary service assigned to status indicator ``J1'' as a single ``J1'' unit procedure claim (78 FR 74871 and 79 FR 66801). Line item charges for services included on the C-APC claim are converted to line item costs, which are then summed to develop the estimated APC costs. These claims are then assigned one unit of the service with status indicator ``J1'' and later used to develop the geometric mean costs for the C-APC relative payment weights. (We note that we use the term ``comprehensive'' to describe the geometric mean cost of a claim reporting ``J1'' service(s) or the geometric mean cost of a C-APC, inclusive of all of the items and services included in the C-APC service payment bundle.) Charges for services that would otherwise be separately payable are added to the charges for the primary service. This process differs from our traditional cost accounting methodology only in that all such services on the claim are packaged (except certain services as described above). We apply our standard data trims, which exclude claims with extremely high primary units or extreme costs.

    The comprehensive geometric mean costs are used to establish resource similarity and, along with clinical similarity, dictate the assignment of the primary services to the C-APCs. We establish a ranking of each primary service (single unit only) to be assigned to status indicator ``J1'' according to its comprehensive geometric mean costs. For the minority of claims reporting more than one primary service assigned to status indicator ``J1'' or units thereof, we identify one ``J1'' service as the primary service for the claim based on our cost-based ranking of primary services. We then assign these multiple ``J1'' procedure claims to the C-APC to which the service designated as the primary service is assigned. If the reported ``J1'' services on a claim map to different C-APCs, we designate the ``J1'' service assigned to the C-APC with the highest comprehensive geometric mean cost as the primary service for that claim. If the reported multiple ``J1'' services on a claim map to the same C-APC, we designate the most costly service (at the HCPCS code level) as the primary service for that claim. This process results in initial assignments of claims for the primary services assigned to status indicator ``J1'' to the most appropriate C-APCs based on both single and multiple procedure claims reporting these services and clinical and resource homogeneity.

    Complexity Adjustments. We use complexity adjustments to provide increased payment for certain comprehensive services. We apply a complexity adjustment by promoting qualifying paired ``J1'' service code combinations or paired code combinations of ``J1'' services and certain add-on codes (as described further below) from the originating C-APC (the C-APC to which the designated primary service is first assigned) to the next higher paying C-APC in the same clinical family of C-APCs. We apply this type of complexity adjustment when the paired code combination represents a complex, costly form or version of the primary service according to the following criteria:

    Frequency of 25 or more claims reporting the code combination (frequency threshold); and

    Violation of the 2 times rule in the originating C-APC (cost threshold).

    These criteria identify paired code combinations that occur commonly and exhibit materially greater resource requirements than the primary service. The CY 2017 OPPS/ASC final rule with comment period (81 FR 79582) included a revision to the complexity adjustment eligibility criteria. Specifically, we finalized a policy to discontinue the requirement that a code combination (that qualifies for a complexity adjustment by satisfying the frequency and cost criteria thresholds described above) also not create a 2 times rule violation in the higher level or receiving APC.

    After designating a single primary service for a claim, we evaluate that service in combination with each of the other procedure codes reported on the claim assigned to status indicator ``J1'' (or certain add-on codes) to determine if there are paired code combinations that meet the complexity adjustment criteria. For a new HCPCS code, we determine initial C-APC assignment and qualification for a complexity adjustment using the best available information, crosswalking the new HCPCS code to a predecessor code(s) when appropriate.

    Once we have determined that a particular code combination of ``J1'' services (or combinations of ``J1'' services reported in conjunction with certain add-on codes) represents a complex version of the primary service because it is sufficiently costly, frequent, and a subset of the primary comprehensive service overall according to the criteria described above, we promote the claim including the complex version of the primary service as described by the code combination to the next higher cost C-APC within the clinical family, unless the primary service is already assigned to the highest cost APC within the C-APC clinical family or assigned to the only C-APC in a clinical family. We do not create new APCs with a comprehensive geometric mean cost that is higher than the highest geometric mean cost (or only) C-

    APC in a clinical family just to accommodate potential complexity adjustments. Therefore, the highest payment for any claim including a code combination for services assigned to a C-APC would be the highest paying C-APC in the clinical family (79 FR 66802).

    We package payment for all add-on codes into the payment for the C-

    APC. However, certain primary service add-on combinations may qualify for a complexity adjustment. As noted in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70331), all add-on codes that can be appropriately reported in combination with a base code that describes a primary ``J1'' service are evaluated for a complexity adjustment.

    To determine which combinations of primary service codes reported in conjunction with an add-on code may qualify for a complexity adjustment for CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 33575), we proposed to apply the frequency and cost criteria thresholds discussed above, testing claims reporting one unit of a single primary service assigned to status indicator ``J1'' and any number of units of a single add-on code for the primary ``J1'' service. If the frequency and cost criteria thresholds for a complexity adjustment are met and reassignment to the next higher cost APC in the clinical family is appropriate (based on meeting the criteria outlined above), we make a complexity adjustment for the code combination; that is, we reassign the primary service code reported in conjunction with the add-on code to the next higher cost C-APC within the same clinical family of C-

    APCs. As previously stated, we package payment for add-on codes into the C-APC

    Page 59237

    payment rate. If any add-on code reported in conjunction with the ``J1'' primary service code does not qualify for a complexity adjustment, payment for the add-on service continues to be packaged into the payment for the primary service and is not reassigned to the next higher cost C-APC. We listed the complexity adjustments proposed for ``J1'' and add-on code combinations for CY 2018, along with all of the other proposed complexity adjustments, in Addendum J to the proposed rule (which is available via the Internet on the CMS Web site).

    Addendum J to the proposed rule included the cost statistics for each code combination that would qualify for a complexity adjustment (including primary code and add-on code combinations). Addendum J to the proposed rule also contained summary cost statistics for each of the paired code combinations that describe a complex code combination that would qualify for a complexity adjustment and were proposed to be reassigned to the next higher cost C-APC within the clinical family. The combined statistics for all proposed reassigned complex code combinations were represented by an alphanumeric code with the first 4 digits of the designated primary service followed by a letter. For example, the proposed geometric mean cost listed in Addendum J for the code combination described by complexity adjustment assignment 3320R, which is assigned to C-APC 5224 (Level 4 Pacemaker and Similar Procedures), included all paired code combinations that were proposed to be reassigned to C-APC 5224 when CPT code 33208 is the primary code. Providing the information contained in Addendum J to the proposed rule allowed stakeholders the opportunity to better assess the impact associated with the proposed reassignment of claims with each of the paired code combinations eligible for a complexity adjustment.

    Comment: Several commenters requested exceptions to the current complexity adjustment criteria of 25 or more claims reporting the code combination (frequency) and a violation of the 2 times rule in the originating C-APC (cost) to allow claims with code combinations that do not currently meet these criteria to be paid at the next higher paying C-APC. The C-APC complexity adjustments requested by the commenters are listed in Table 5 below. We did not propose for claims with these code combinations to receive complexity adjustments because they failed to meet either the cost or frequency criteria.

    Table 5--C-APC Complexity Adjustments Requested by the Commenters

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

    Requested

    Primary APC complexity

    Primary ``J1'' HCPCS code Secondary ``J1'' HCPCS code assignment adjusted APC

    assignment

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

    20983 (Ablation therapy for reduction or 22513 (Percutaneous vertebral 5114 5115

    eradication of 1 or more bone tumors augmentation, including cavity

    (e.g., metastasis including adjacent soft creation (fracture reduction and

    tissue when involved by tumor extension, bone biopsy included when

    percutaneous, including imaging guidance performed) using mechanical device

    when performed; radio frequency)). (e.g., kyphoplasty), 1 vertebral

    body, unilateral or bilateral

    cannulation, inclusive of all

    imaging guidance; thoracic).

    20983 (Ablation therapy for reduction or 22514 (Percutaneous vertebral 5114 5115

    eradication of 1 or more bone tumors augmentation, including cavity

    (e.g., metastasis including adjacent soft creation (fracture reduction and

    tissue when involved by tumor extension, bone biopsy included when

    percutaneous, including imaging guidance performed) using mechanical device

    when performed; radio frequency)). (e.g., kyphoplasty), 1 vertebral

    body, unilateral or bilateral

    cannulation, inclusive of all

    imaging guidance; lumbar).

    28297 (Correction, hallux valgus 28285 (Correction, hammertoe (e.g., 5114 5115

    (bunionectomy), with sesamoidectomy, when interphalangeal fusion, partial or

    performed; with first metatarsal and total phalangectomy)).

    medial cuneiform joint with arthrodesis,

    any method).

    28297 (Correction, hallux valgus 28292 (Correction, hallux valgus 5114 5115

    (bunionectomy), with sesamoidectomy, when (bunionectomy), with

    performed; with first metatarsal and sesamoidectomy, when performed;

    medial cuneiform joint with arthrodesis, with resection of proximal phalanx

    any method). base, when performed, any method).

    28740 (Arthrodesis, midtarsal or 28285 (Correction, hammertoe (e.g., 5114 5115

    tarsometatarsal, single joint). interphalangeal fusion, partial or

    total phalangectomy)).

    61885 (Insertion or replacement of cranial 61885 (Insertion or replacement of 5463 5464

    nuerostimulator pulse generator or cranial nuerostimulator pulse

    receiver, direct or inductive coupling; generator or receiver, direct or

    with connection to a single electrode inductive coupling; with

    array). connection to a single electrode

    array).

    28740 (Arthrodesis, midtarsal or 28292 (Correction, hallux valgus 5114 5115

    tarsometatarsal, single joint). (bunionectomy), with

    sesamoidectomy, when performed;

    with resection of proximal phalanx

    base, when performed, any method).

    52234 (Cystourethroscopy, with biopsy(s)).. C9738 * (Adjunctive blue light 5374 5375

    cystoscopy with fluorescent

    imaging agent (List separately in

    addition to code for primary

    procedure)).

    52235 (Cystourethroscopy, with fulguration C9738 * (Adjunctive blue light 5374 5375

    (including cryosurgery or laser surgery) cystoscopy with fluorescent

    of trigone, bladder neck, prostatic fossa, imaging agent (List separately in

    urethra, or periurethral glands). addition to code for primary

    procedure)).

    52240 (Cystourethroscopy with fulgration C9738 * (Adjunctive blue light 5375 5376

    (including cryosurgery or laser surgery) cystoscopy with fluorescent

    or treatment of MINOR (less than 0.5 cm) imaging agent (List separately in

    lesion(s) with or without biopsy). addition to code for primary

    procedure)).

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

    * HCPCS code C9738 was identified in the proposed rule as HCPCS code C97XX.

    Page 59238

    Other commenters requested various changes to the complexity adjustment criteria. One commenter requested that CMS amend the current cost criterion for a complexity adjustment to allow for code combinations that have qualified for a complexity adjustment in the previous year to qualify for a complexity adjustment for the subsequent year if the code combination is within 5 percent of the cost criterion for the subsequent year. Another commenter requested that CMS eliminate the criterion that the code combination must create a violation of the 2 times rule in the originating C-APC in order to qualify for a complexity adjustment.

    Some commenters recommended that CMS create a complexity adjustment for endoscopic sinus surgery claims that include a drug or device code (C-code or a J-code), or more than two ``J1'' procedures. Other commenters requested that CMS revise its complexity adjustment methodology to account for the higher costs that essential hospitals incur when performing complex procedures and treating sicker patients.

    Response: We appreciate these comments. However, at this time, we do not believe changes to the C-APC complexity adjustment criteria are necessary or that we should make exceptions to the criteria to allow claims with the code combinations suggested by the commenters to receive complexity adjustments. As stated previously (81 FR 79582), we continue to believe that the complexity adjustment criteria, which require a frequency of 25 or more claims reporting a code combination and a violation of the 2 times rule in the originating C-APC in order to receive payment in the next higher cost C-APC within the clinical family, are adequate to determine if a combination of procedures represents a complex, costly subset of the primary service. If a code combination meets these criteria, the combination receives payment at the next higher cost C-APC. Code combinations that do not meet these criteria receive the C-APC payment rate associated with the primary ``J1'' service.

    A minimum of 25 claims is already very low for a national payment system. Lowering the minimum of 25 claims further could lead to unnecessary complexity adjustments for service combinations that are rarely performed. The complexity adjustment cost threshold compares the code combinations to the lowest cost significant procedure assigned to the APC. If the cost of the code combination does not exceed twice the cost of the lowest cost significant procedure within the APC, no complexity adjustment is made. Lowering or eliminating this threshold could remove so many claims from the accounting for the primary ``J1'' service that the geometric mean costs attributed to the primary procedure could be skewed.

    Regarding the request for a code combination that qualified previously for a complexity adjustment to qualify for the subsequent year if the code combination is within 5 percent of the cost criterion for the subsequent year, we evaluate code combinations each year against our complexity adjustment criteria using the latest available data. We do not believe it is necessary to expand the ability for code combinations to meet the cost criterion in this manner.

    We also do not believe that it is necessary to adjust the complexity adjustment criteria to allow claims that include a drug or device code, more than two ``J1'' procedures, or procedures performed at certain hospitals to qualify for a complexity adjustment. As mentioned earlier, we believe the current criteria are adequate to determine if a combination of procedures represents a complex, costly subset of the primary service.

    Comment: Some commenters noted that there were certain code combinations that met the complexity adjustment criteria that were not included in Addendum J of the CY 2018 OPPS/ASC proposed rule. Specifically, commenters noted that the combinations of procedures described by the following codes were not included in Addendum J:

    CPT code 22510 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection, inclusive of all imaging guidance; cervicothoracic) and CPT code 22512 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection, inclusive of all imaging guidance; each additional cervicothoracic or lumbosacral vertebral body) for multi-level vertebroplasty in the cervicothoracic region);

    CPT code 22511 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection, inclusive of all imaging guidance; lumbosacral) and CPT code 22512 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection, inclusive of all imaging guidance; each additional cervicothoracic or lumbosacral vertebral body); and

    CPT code 22511 (Percutaneous vertebroplasty (bone biopsy included when performed), 1 vertebral body, unilateral or bilateral injection, inclusive of all imaging guidance; lumbosacral) and CPT code 20982 (Ablation therapy for reduction or eradication of 1 or more bone tumors (e.g., metastasis), including adjacent soft tissue when involved by tumor extension, percutaneous, including imaging guidance when performed; radiofrequency).

    Response: These code combinations were inadvertently excluded from Addendum J to the CY 2018 OPPS/ASC proposed rule. These code combinations and all other code combinations that qualify for complexity adjustments are included in Addendum J to this final rule with comment period.

    Comment: One commenter stated that CMS should have included the following add-on CPT codes in the complexity adjustment evaluation:

    CPT code 92978 (Endoluminal imaging of coronary vessel or graft using intravascular ultrasound (IVUS) or optical coherence tomography (OCT) during diagnostic evaluation and/or therapeutic intervention including imaging supervision, interpretation and report; initial vessel (List separately in addition to code for primary procedure);

    CPT code 92979 (Endoluminal imaging of coronary vessel or graft using intravascular ultrasound (IVUS) or optical coherence tomography (OCT) during diagnostic evaluation and/or therapeutic intervention including imaging supervision, interpretation and report; each additional vessel (List separately in addition to code for primary procedure));

    CPT code 93571 (Intravascular Doppler velocity and/or pressure derived coronary flow reserve measurement (coronary vessel or graft) during coronary angiography including pharmacologically induced stress; initial vessel (List separately in addition to code for primary procedure)); and

    CPT code 93572 ((Intravascular Doppler velocity and/or pressure derived coronary flow reserve measurement (coronary vessel or graft) during coronary angiography including pharmacologically induced stress; each additional vessel (List separately in addition to code for primary procedure)) in the complexity adjustment evaluation.

    Response: We note that CPT codes 92978 and 93571 were both included in the complexity adjustment evaluation in Addendum J to the CY 2018 OPPS/ASC proposed rule. However, CPT codes

    Page 59239

    92979 and 93572 are not add-on codes to primary ``J1'' services. As stated in the CY 2018 OPPS/ASC proposed rule, to determine the code combinations that qualify for complexity adjustments, we apply the established frequency and cost criteria thresholds and tests claims reporting one unit of a single primary service assigned to status indicator ``J1'' and any number of units of a single add-on code for the primary ``J1'' service (82 FR 33575). Accordingly, because CPT codes 92979 and 93572 are not add-on codes for any primary ``J1'' services, it would not have been appropriate to include them in our complexity adjustment evaluation.

    After consideration of the public comments we received, we are applying the complexity adjustment criteria as proposed. The finalized complexity adjustments for CY 2018 can be found in Addendum J to this final rule with comment period (which is available via the Internet on the CMS Web site).

    (2) C-APCs for CY 2018

    For CY 2018 and subsequent years, in the CY 2018 OPPS/ASC proposed rule (82 FR 33576), we proposed to continue to apply the C-APC payment policy methodology made effective in CY 2015 and updated with the implementation of status indicator ``J2'' in CY 2016. A discussion of the C-APC payment policy methodology can be found at 81 FR 79583.

    As a result of our annual review of the services and APC assignments under the OPPS, we did not propose any additional C-APCs to be paid under the existing C-APC payment policy beginning in CY 2018. Table 4 of the proposed rule listed the proposed C-APCs for CY 2018, all of which were established in past rules. All C-APCs were displayed in Addendum J to the proposed rule (which is available via the Internet on the CMS Web site). Addendum J to the proposed rule also contained all of the data related to the C-APC payment policy methodology, including the list of proposed complexity adjustments and other information.

    Comment: Several commenters supported the proposed C-APCs for CY 2018.

    Response: We appreciate the commenters' support.

    Comment: Several commenters noted that CPT code 67027 (Implantation of intravitreal drug delivery system (e.g., ganciclovir implant), includes concomitant removal of vitreous) is assigned to a single-

    procedure C-APC (C-APC 5494 (Level 4 Intraocular Procedures)) with status indicator ``J1''. The commenters stated that the C-APC policy packages payment for adjunctive services into the payment for the primary ``J1'' procedure at the claim level, and that when the drug Retisert (described by HCPCS code J7311) is included on the claim with CPT code 62707, payment for the drug is packaged into the C-APC payment. The commenters noted that the costs of claims for the procedure, including the drug (approximately $18,433), were more than twice the proposed CY 2018 geometric mean cost for C-APC 5494 (approximately $9,134) and that, as such, this represents a violation of the 2 times rule. The commenters suggested that CMS address this issue by either separately paying for Retisert (described by HCPCS code J7311) or creating a unique APC for procedures with which HCPCS code J7311 may be billed.

    Response: As stated in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79612), section 1833(t)(2) of the Act provides that items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest cost for an item or service in the APC group is more than 2 times greater than the lowest cost for an item or service within the same APC group (the 2 times rule). In accordance with section 1833(t)(2) of the Act and Sec. 419.31 of the regulations, we annually review the items and services within an APC group to determine if there are any APC violations of the 2 times rule and whether there are any appropriate revisions to APC assignments that may be necessary or exceptions to be made. In determining the APCs with a 2 times rule violation, we consider only those HCPCS codes that are significant based on the number of claims.

    It is the cost of the primary item or service that drives assignment to an APC group. In this case, the primary service is described by CPT code 67027, which is the only CPT code assigned to C-

    APC 5494 (Level 4 Intraocular Procedures). The costs of drugs or other packaged ancillary items or services that may be used with a primary service are packaged into the costs of the primary service and are not separately paid. In this case, because CPT code 67027 is assigned to a C-APC, the costs of drugs, such as Retisert, and any other items or services that are billed with the ``J1'' service are packaged into the geometric mean cost for HCPCS code 67027 and are bundled into the C-APC payment. The geometric mean cost is based on reported costs for all hospitals paid under the OPPS; to the extent that Retisert or other items are billed with the primary service, those costs are also reflected in the cost of the primary service. Therefore, because the cost of the Retisert drug is packaged into the cost of CPT code 67027, assignment of HCPCS code 67027 to C-APC 5494 does not create a 2 times rule violation.

    In addition, with regard to the packaging of the drug Retisert based on the C-APC policy, as stated in previous rules (78 FR 74868 through 74869 and 74909 and 79 FR 66800), items included in the packaged payment provided with the primary ``J1'' service include all drugs, biologicals, and radiopharmaceuticals, regardless of cost, except those drugs with pass-through payment status and SADs, unless they function as packaged supplies. Therefore, we believe that HCPCS code J3711 is appropriately packaged, and we are not providing separate payment for the drug.

    Comment: One commenter suggested that APC 5491 (Level 1 Intraocular Procedures) no longer be labeled a C-APC and instead be considered a traditional APC. The commenter noted that there was little cost difference for APC 5491 if it is considered a C-APC or a traditional APC and that no specific justification was given for making APC 5491 a C-APC. The commenter suggested that only higher level Intraocular Procedure APCs have enough complexity to suggest that they should be classified as C-APCs.

    Response: We continue to believe that the procedures assigned to C-

    APC 5491 are appropriately paid through a comprehensive APC. As stated in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584), procedures assigned to C-APCs are primary services (mostly major surgical procedures) that are typically the focus of the hospital outpatient stay. Therefore, we believe that these procedures are appropriately assigned to a C-APC.

    Comment: One commenter expressed concern that the proposal to continue to assign status indicator ``J2'' to CPT code 99291 (Critical care, evaluation and management of the critically ill or critically injured patient; first 30-74 minutes) and to assign it to C-APC 8011 (Comprehensive Observation Services) when certain criteria are met would have negative effects on critical care (CPT codes 99291 and 99292 (Critical care, evaluation and management of the critically ill or critically injured patient; each additional 30 minutes)) provided in the intensive care unit ICU). Specifically, the commenter was concerned that the proposal would impact payment for tests that were ordered and furnished in the emergency room when they are appropriately repeated in the ICU and urged CMS to

    Page 59240

    move with caution, and provide transparency and impact tables for hospitals, in continuing C-APC 8011.

    Response: We appreciate this comment and will continue to monitor the impact of this C-APC on critical care services. We note that in situations where a patient receives critical care services in the hospital outpatient setting and is subsequently transferred to the ICU as part of an appropriate hospital inpatient admission, payment for the services furnished in the hospital outpatient setting, including critical care services, may be bundled into the Part A hospital inpatient claim via the ``Payment Window for Outpatient Services Treated as Inpatient Services (also known as the 3-day payment rule), when certain criteria are met. In addition, when a patient receiving critical care services in the hospital outpatient setting is transferred to the ICU but is not admitted to the hospital as an inpatient, payment for all eligible services is made through C-APC 8011, when certain criteria are met. We also note that CPT code 99292 is an add-on code which is packaged under the OPPS and is not one of the codes eligible to trigger payment through C-APC 8011.

    After consideration of the public comments we received, we are finalizing the proposed C-APCs for CY 2018. Table 6 below lists the final C-APCs for CY 2018, all of which were established in past rules. All C-APCs are displayed in Addendum J to this final rule with comment period (which is available via the Internet on the CMS Web site). Addendum J to this final rule with comment period also contains all of the data related to the C-APC payment policy methodology, including the list of complexity adjustments and other information for CY 2018.

    Table 6--CY 2018 C-APCs

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

    C-APC CY 2018 APC title Clinical family

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

    5072.................. Level 2 Excision/Biopsy/ EBIDX

    Incision and Drainage.

    5073.................. Level 3 Excision/Biopsy/ EBIDX

    Incision and Drainage.

    5091.................. Level 1 Breast/Lymphatic BREAS

    Surgery and Related

    Procedures.

    5092.................. Level 2 Breast/Lymphatic BREAS

    Surgery and Related

    Procedures.

    5093.................. Level 3 Breast/Lymphatic BREAS

    Surgery & Related

    Procedures.

    5094.................. Level 4 Breast/Lymphatic BREAS

    Surgery & Related

    Procedures.

    5112.................. Level 2 Musculoskeletal ORTHO

    Procedures.

    5113.................. Level 3 Musculoskeletal ORTHO

    Procedures.

    5114.................. Level 4 Musculoskeletal ORTHO

    Procedures.

    5115.................. Level 5 Musculoskeletal ORTHO

    Procedures.

    5116.................. Level 6 Musculoskeletal ORTHO

    Procedures.

    5153.................. Level 3 Airway Endoscopy. AENDO

    5154.................. Level 4 Airway Endoscopy. AENDO

    5155.................. Level 5 Airway Endoscopy. AENDO

    5164.................. Level 4 ENT Procedures... ENTXX

    5165.................. Level 5 ENT Procedures... ENTXX

    5166.................. Cochlear Implant COCHL

    Procedure.

    5191.................. Level 1 Endovascular VASCX

    Procedures.

    5192.................. Level 2 Endovascular VASCX

    Procedures.

    5193.................. Level 3 Endovascular VASCX

    Procedures.

    5194.................. Level 4 Endovascular VASCX

    Procedures.

    5200.................. Implantation Wireless PA WPMXX

    Pressure Monitor.

    5211.................. Level 1 EPHYS

    Electrophysiologic

    Procedures.

    5212.................. Level 2 EPHYS

    Electrophysiologic

    Procedures.

    5213.................. Level 3 EPHYS

    Electrophysiologic

    Procedures.

    5222.................. Level 2 Pacemaker and AICDP

    Similar Procedures.

    5223.................. Level 3 Pacemaker and AICDP

    Similar Procedures.

    5224.................. Level 4 Pacemaker and AICDP

    Similar Procedures.

    5231.................. Level 1 ICD and Similar AICDP

    Procedures.

    5232.................. Level 2 ICD and Similar AICDP

    Procedures.

    5244.................. Level 4 Blood Product SCTXX

    Exchange and Related

    Services.

    5302.................. Level 2 Upper GI GIXXX

    Procedures.

    5303.................. Level 3 Upper GI GIXXX

    Procedures.

    5313.................. Level 3 Lower GI GIXXX

    Procedures.

    5331.................. Complex GI Procedures.... GIXXX

    5341.................. Abdominal/Peritoneal/ GIXXX

    Biliary and Related

    Procedures.

    5361.................. Level 1 Laparoscopy & LAPXX

    Related Services.

    5362.................. Level 2 Laparoscopy & LAPXX

    Related Services.

    5373.................. Level 3 Urology & Related UROXX

    Services.

    5374.................. Level 4 Urology & Related UROXX

    Services.

    5375.................. Level 5 Urology & Related UROXX

    Services.

    5376.................. Level 6 Urology & Related UROXX

    Services.

    5377.................. Level 7 Urology & Related UROXX

    Services.

    5414.................. Level 4 Gynecologic GYNXX

    Procedures.

    5415.................. Level 5 Gynecologic GYNXX

    Procedures.

    5416.................. Level 6 Gynecologic GYNXX

    Procedures.

    5431.................. Level 1 Nerve Procedures. NERVE

    5432.................. Level 2 Nerve Procedures. NERVE

    5462.................. Level 2 Neurostimulator & NSTIM

    Related Procedures.

    5463.................. Level 3 Neurostimulator & NSTIM

    Related Procedures.

    5464.................. Level 4 Neurostimulator & NSTIM

    Related Procedures.

    5471.................. Implantation of Drug PUMPS

    Infusion Device.

    5491.................. Level 1 Intraocular INEYE

    Procedures.

    Page 59241

    5492.................. Level 2 Intraocular INEYE

    Procedures.

    5493.................. Level 3 Intraocular INEYE

    Procedures.

    5494.................. Level 4 Intraocular INEYE

    Procedures.

    5495.................. Level 5 Intraocular INEYE

    Procedures.

    5503.................. Level 3 Extraocular, EXEYE

    Repair, and Plastic Eye

    Procedures.

    5504.................. Level 4 Extraocular, EXEYE

    Repair, and Plastic Eye

    Procedures.

    5627.................. Level 7 Radiation Therapy RADTX

    5881.................. Ancillary Outpatient N/A

    Services When Patient

    Dies.

    8011.................. Comprehensive Observation N/A

    Services.

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

    C-APC Clinical Family Descriptor Key: AENDO = Airway Endoscopy; AICDP =

    Automatic Implantable Cardiac Defibrillators, Pacemakers, and Related

    Devices; BREAS = Breast Surgery; COCHL = Cochlear Implant; EBIDX =

    Excision/Biopsy/Incision and Drainage; ENTXX = ENT Procedures; EPHYS =

    Cardiac Electrophysiology; EXEYE = Extraocular Ophthalmic Surgery;

    GIXXX = Gastrointestinal Procedures; GYNXX = Gynecologic Procedures;

    INEYE = Intraocular Surgery; LAPXX = Laparoscopic Procedures; NERVE =

    Nerve Procedures; NSTIM = Neurostimulators; ORTHO = Orthopedic

    Surgery; PUMPS = Implantable Drug Delivery Systems; RADTX = Radiation

    Oncology; SCTXX = Stem Cell Transplant; UROXX = Urologic Procedures;

    VASCX = Vascular Procedures; WPMXX = Wireless PA Pressure Monitor.

    (3) Brachytherapy Insertion Procedures

    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584), we finalized 25 new C-APCs. Some of the HCPCS codes assigned to the C-APCs established for CY 2017 described surgical procedures for inserting brachytherapy catheters/needles and other related brachytherapy procedures such as the insertion of tandem and/or ovoids and the insertion of Heyman capsules. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583), we stated that we received public comments which noted that claims that included several insertion codes for brachytherapy devices often did not also contain a brachytherapy treatment delivery code (CPT codes 77750 through 77799). The brachytherapy insertion codes that commenters asserted were not often billed with a brachytherapy treatment code included the following:

    CPT code 57155 (Insertion of uterine tandem and/or vaginal ovoids for clinical brachytherapy);

    CPT code 20555 (Placement of needles or catheters into muscle and/or soft tissue for subsequent interstitial radioelement application (at the time of or subsequent to the procedure));

    CPT code 31643 (Bronchoscopy, rigid or flexible, including fluoroscopic guidance, when performed; with placement of catheter(s) for intracavitary radioelement application);

    CPT code 41019 (Placement of needles, catheters, or other device(s) into the head and/or neck region (percutaneous, transoral, or transnasal) for subsequent interstitial radioelement application);

    CPT code 43241 (Esophagogastroduodenoscopy, flexible, transoral; with insertion of intraluminal tube catheter);

    CPT code 55920 (Placement of needles or catheters into pelvic organs and/or genitalia (except prostate) for subsequent interstitial radioelement application); and

    CPT code 58346 (Insertion of Heyman capsules for clinical brachytherapy).

    The commenters concluded that brachytherapy delivery charges are being underrepresented in ratesetting under the C-APC methodology because a correctly coded claim should typically include an insertion and treatment delivery code combination. The commenters stated that the insertion procedure and brachytherapy treatment delivery generally occur on the same day or within the same week and therefore the services should appear on a claim together. In the CY 2017 OPPS/ASC final rule with comment period, we indicated that we would not exclude claims from the CY 2017 ratesetting calculation because we generally do not remove claims from the claims accounting when stakeholders believe that hospitals included incorrect information on some claims (81 FR 79583). However, we stated that we would examine the claims for the brachytherapy insertion codes in question and determine if any future adjustment to the methodology (or possibly code edits) would be appropriate.

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33577 through 33578), we analyzed the claims that include brachytherapy insertion codes assigned to status indicator ``J1'' and that received payment through a C-APC, and we determined that several of these codes are frequently billed without an associated brachytherapy treatment code. As mentioned above, stakeholders have expressed concerns that using claims for ratesetting for brachytherapy insertion procedures that do not also include a brachytherapy treatment code may not capture all of the costs associated with the insertion procedure. To address this issue and base payment on claims for the most common clinical scenario, for CY 2018 and subsequent years, we indicated in the CY 2018 OPPS/ASC proposed rule (82 FR 33578) that we were establishing a code edit that requires a brachytherapy treatment code when a brachytherapy insertion code is billed.

    As noted in section II.A.2.c. of the proposed rule and this final rule with comment period, we also proposed to delete composite APC 8001 (LDR Prostate Brachytherapy Composite) and assign HCPCS code 55875 (Transperineal placement of needles or catheters into prostate for interstitial radioelement application, with or without cystoscopy) to status indicator ``J1'' and to provide payment for this procedure through the C-APC payment methodology, similar to the payment methodology for other surgical insertion procedures related to brachytherapy. Specifically, when HCPCS code 55875 is the primary service reported on a hospital outpatient claim, we proposed to package payments for all adjunctive services reported on the claim into the payment for HCPCS code 55875. We proposed to assign HCPCS code 55875 to C-APC 5375 (Level 5 Urology and Related Services). The code edit for claims with brachytherapy services described above that will be effective January 1, 2018, will require the brachytherapy application HCPCS code 77778 (Interstitial radiation source application; complex) to be included on the claim with the brachytherapy insertion procedure (HCPCS code 55875).

    Comment: Several commenters opposed the implementation of a code

    Page 59242

    edit that requires a brachytherapy treatment code when a brachytherapy insertion code is billed. These commenters noted that, in some cases, the insertion procedure and the brachytherapy treatment are performed on different days and reported on separate claims. The commenters also noted that the brachytherapy insertion procedure and radiation treatment delivery are not always performed in the same facility, in which case they would be on different claims. The commenters stated that this practice pattern is especially common in the treatment of breast cancer and related breast brachytherapy catheter codes.

    Response: We appreciate the commenters' views. We intended to address the concerns raised by commenters in CY 2017 rulemaking regarding ratesetting for C-APCs for brachytherapy insertion procedures by establishing a code edit to require a brachytherapy treatment code when a brachytherapy insertion code is billed. This was largely based on information received from commenters last year, in which commenters had suggested that brachytherapy insertion procedures and brachytherapy radiation treatment are often performed on the same day or within the same week and are often billed on the same claim. However, based on comments received in response to the code edit, it appears that there may be some clinical scenarios where that is not the case. Accordingly, in light of the numerous comments opposing this code edit and the information provided by commenters that suggests that brachytherapy insertion and treatment services may be appropriately furnished on different dates and different claims, we have decided not to implement an edit which would require a brachytherapy treatment code when a brachytherapy insertion code is billed. As we have previously stated, we rely on hospitals to bill all HCPCS codes accurately in accordance with their code descriptors and CPT and CMS instructions, as applicable, and to report charges on claims and charges and costs on their Medicare hospital cost reports appropriately (77 FR 68324). We will continue to examine the issues involving ratesetting for brachytherapy insertion procedures assigned to C-APCs and welcome the public's input regarding alternative payment policies that could appropriately address the issue while maintaining the C-APC policy.

    Comment: Some commenters requested that CMS discontinue the C-APC payment policy for all brachytherapy insertion codes identified in the CY 2018 OPPS/ASC proposed rule. These commenters expressed concerns that hospital billing practices for radiation oncology services are variable and inconsistent with the C-APC policy which packages services at the claim level. The commenters stated that, in some cases, needles or catheters are surgically placed prior to the brachytherapy treatment delivery, which consists of multiple fractions over several days or weeks and may be delivered at a different site of service. The commenters also requested that CMS continue the composite APC for Low Dose Rate Brachytherapy instead of assigning CPT code 55875 (Transperineal placement of needles or catheters into prostate for interstitial radioelement application, with or without cystoscopy) to a C-APC (Level 5 Urology and Related Services). The commenters stated that CPT codes 55920 and 19298 should be assigned to a different C-APC if CMS maintained the C-APC payment policy for brachytherapy insertion procedures in CY 2018.

    Response: We continue to believe that the C-APC payment policy is appropriately applied to brachytherapy insertion procedures, including the procedure described by CPT code 55875. These procedures, like other procedures assigned to C-APCs, are primary services (mostly major surgical procedures) that are typically the focus of the hospital outpatient stay. As mentioned previously, we welcome input on alternative payment policies to address concerns surrounding the variation in hospital billing practices for radiation oncology while maintaining the C-APC policy, and we will continue to monitor this issue. The APC assignments for CPT codes 55920 and 19298 are discussed in greater detail in section XII.D.2. of this final rule with comment period.

    Comment: Some commenters requested that CMS continue to provide payment for the brachytherapy insertion procedures through the C-APC policy, but exclude all radiation oncology codes on the claim (defined as CPT codes 77261 through 77799) and make separate payment for the brachytherapy treatment delivery and related planning and preparation services in addition to the C-APC payment for the brachytherapy insertion procedures. These commenters stated that this was similar to the C-APC policy for stereotactic radiosurgery (SRS) treatment.

    Response: The policy intent of C-APCs is to bundle payment for all services related and adjunctive to the primary ``J1'' procedure. We do not believe that providing separate payment for radiation oncology codes that are included on a claim with a brachytherapy insertion procedure assigned to status indicator ``J1'' is in accordance with the C-APC policy. With regard to the SRS treatment policy to pay separately for the planning and preparation procedures, as stated in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583), this policy is a temporary special exception to the C-APC packaging policy that packages all adjunctive services (with a few exceptions listed in Addendum J to this final rule with comment period).

    After consideration of the public comments we received, we are not establishing a code edit that requires a brachytherapy treatment code when a brachytherapy insertion code is billed. We are finalizing our proposal to delete composite APC 8001 (LDR Prostate Brachytherapy Composite) and assign HCPCS code 55875 (Transperineal placement of needles or catheters into prostate for interstitial radioelement application, with or without cystoscopy) to status indicator ``J1'' and to provide payment for this procedure through the C-APC payment methodology, similar to the payment methodology for other surgical insertion procedures related to brachytherapy.

    (4) C-APC 5627 (Level 7 Radiation Therapy) Stereotactic Radiosurgery (SRS)

    Stereotactic radiosurgery (SRS) is a type of radiation therapy that targets multiple beams of radiation to precisely deliver radiation to a brain tumor while sparing the surrounding normal tissue. SRS treatment can be delivered by Cobalt-60-based (also referred to as gamma knife) technology or robotic linear accelerator-based (LINAC)-based technology. As stated in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70336), section 634 of the American Taxpayer Relief Act (ATRA) of 2012 (Pub. L. 112-240) amended section 1833(t)(16) of the Act by adding a new subparagraph (D) to require that OPPS payments for Cobalt-60-based SRS be reduced to equal that of payments for LINAC-

    based SRS for covered OPD services furnished on or after April 1, 2013. Because section 1833(t)(16)(D) of the Act requires equal payment for SRS treatment delivered by Cobalt-60-based or LINAC-based technology, the two types of services involving SRS delivery instruments (which are described by HCPCS code 77371 (Radiation treatment delivery, stereotactic radiosurgery SRS, complete course of treatment cranial lesion(s) consisting of 1 session; multi-source Cobalt 60-based) and

    Page 59243

    HCPCS code 77372 (Linear accelerator-based)) are assigned to the same C-APC (C-APC 5627 Level 7 Radiation Therapy).

    In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70336), we stated that we had identified differences in the billing patterns for SRS procedures delivered using Cobalt-60-based and LINAC-

    based technologies. In particular, our claims data analysis revealed that services involving SRS delivered by Cobalt-60-based technologies (as described by HCPCS code 77371) typically included SRS treatment planning services (for example, imaging studies, radiation treatment aids, and treatment planning) and the actual deliveries of SRS treatment on the same date of service and reported on the same claim. In contrast, claims data analysis results revealed that services involving SRS delivered by LINAC-based technologies (as described by HCPCS code 77372) frequently included services related to SRS treatment (for example, imaging studies, radiation treatment aids, and treatment planning) that were provided on different dates of service and reported on claims separate from the actual delivery of SRS treatment.

    We stated in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70336) that the intent of the C-APC policy is to package payment for all services adjunctive to the primary ``J1'' procedure and that we believed that all essential planning and preparation services related to the SRS treatment are adjunctive to the SRS treatment delivery procedure. Therefore, payment for these adjunctive services should be packaged into the C-APC payment for the SRS treatment instead of reported on a different claim and paid separately. To identify services that are adjunctive to the primary SRS treatment described by HCPCS codes 77371 and 77372, but reported on a different claim, we established modifier ``CP'' which became effective in CY 2016 and required the use of the modifier for CY 2016 and CY 2017.

    To ensure appropriate ratesetting for the SRS C-APC, we believed it was necessary to unbundle payment for the adjunctive services for CY 2016 and CY 2017. Therefore, we finalized a policy to change the payment for SRS treatment for the 10 SRS planning and preparation services identified in our claims data (HCPCS codes 70551, 70552, 70553, 77011, 77014, 77280, 77285, 77290, 77295, and 77336) that were reported differentially using HCPCS codes 77371 and 77372 both on the same claim as the SRS services and on claims 1 month prior to the delivery of SRS services. These codes were removed from the geometric mean cost calculations for C-APC 5627. In addition, for CY 2016 and CY 2017, we provided separate payment for the 10 planning and preparation services adjunctive to the delivery of the SRS treatment using either the Cobalt-60-based or LINAC-based technology, even when the planning service was included on the same claim as the primary ``J1'' SRS treatment service. The use of the modifier ``CP'' was not required to identify these 10 planning and preparation codes.

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33564 and 33465), the data collection period for SRS claims with modifier ``CP'' began on January 1, 2016 and concludes on December 31, 2017. Based on our analysis of preliminary data collected with modifier ``CP'', we have identified some additional services that are adjunctive to the primary SRS treatment and reported on a different claim outside of the 10 SRS planning and preparation codes that were removed from the SRS C-

    APC costs calculations and paid separately.

    However, the ``CP'' modifier has been used by a small number of providers since its establishment. In addition, our analysis showed that several of the HCPCS codes that were billed with modifier ``CP'' belonged to the group of 10 SRS planning and preparation codes that we pay separately and do not require the use of modifier ``CP''. Also, some providers erroneously included the modifier when reporting the HCPCS code for the delivery of the LINAC-based SRS treatment. As stated above, the data collection period for SRS claims with modifier ``CP'' was set to conclude on December 31, 2017. Accordingly, for CY 2018, we are deleting this modifier and discontinuing its required use.

    For CY 2018, we also proposed to continue to make separate payments for the 10 planning and preparation services adjunctive to the delivery of the SRS treatment using either the Cobalt-60-based or LINAC-based technology when furnished to a beneficiary within 1 month of the SRS treatment. The continued separate payment of these services will allow us to complete our analysis of the claims data including modifier ``CP'' from both CY 2016 and CY 2017 claims. As stated in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79583), we will consider in the future whether repackaging all adjunctive services (planning, preparation, and imaging, among others) back into cranial single session SRS is appropriate.

    We invited public comments on these proposals.

    Comment: Commenters generally supported the proposal to continue to make separate payments for the planning and preparation services adjunctive to the delivery of the SRS treatment and requested that CMS continue to pay separately for these services in the future. Commenters also supported the deletion of modifier ``CP''.

    Response: We appreciate the commenters' support.

    After consideration of the public comments we received, we are finalizing our proposal to make separate payments for the 10 planning and preparation services adjunctive to the delivery of the SRS treatment using either the Cobalt-60-based or LINAC-based technology when furnished to a beneficiary within 1 month of the SRS treatment.

    (5) Complexity Adjustment for Blue Light Cystoscopy Procedures

    As discussed in prior OPPS/ASC final rules with comment period, and most recently in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79668), we continue to believe that Cysviewsupreg (hexaminolevulinate HCl) (described by HCPCS code C9275) is a drug that functions as a supply in a diagnostic test or procedure and is therefore packaged with payment for the primary procedure. In addition, as discussed in section II.A.2.b.(1) of the CY 2018 OPPS/ASC proposed rule and this final rule with comment period, drugs that are not eligible for pass-through payment are always packaged when billed with a comprehensive service. To maintain the integrity of the OPPS, we believe it is generally not appropriate to allow exceptions to our drug packaging policy or comprehensive APC policy that would result in separate payment for the drug based on the product's ASP+6 percent payment rate. While we did not propose in the CY 2018 proposed rule to pay separately for Cysviewsupreg, we have heard concerns from stakeholders that the payment for blue light cystoscopy procedures involving Cysviewsupreg may be creating a barrier to beneficiaries receiving access to reasonable and necessary care for which there may not be a clinically comparable alternative. Therefore, as we stated in the proposed rule, we revisited our payment policy for blue light cystoscopy procedures. As described in more detail below, we believe certain code combinations for blue light cystoscopy procedures should be eligible to qualify for a complexity

    Page 59244

    adjustment, given the unique properties of the procedure and resource costs.

    Traditionally, white light (or standard) cystoscopy, typically performed by urologists, has been the gold standard for diagnosing bladder cancer. Enhanced bladder cancer diagnostics, such as narrow band imaging or blue light cystoscopy, increase tumor detection in nonmuscle invasive bladder cancer over white light cystoscopy alone, thus enabling more precise tumor removal by the urologist. Blue light cystoscopy can only be performed after performance of white light cystoscopy. Because blue light cystoscopy requires specialized imaging equipment to view cellular uptake of the dye that is not otherwise used in white light cystoscopy procedures, some practitioners consider blue light cystoscopy to be a distinct and adjunctive procedure to white light cystoscopy. However, the current CPT coding structure for cystoscopy procedures does not identify blue light cystoscopy in the coding descriptions separate from white light cystoscopy. Therefore, the existing cystoscopy CPT codes do not distinguish cystoscopy procedures involving only white light cystoscopy from those involving both white and blue light cystoscopy, which require additional resources compared to white light cystoscopy alone.

    As discussed in the CY 2018 OPPS/ASC proposed rule, after discussion with our clinical advisors (including a urologist), we believe that blue light cystoscopy represents an additional elective but distinguishable service as compared to white light cystoscopy that, in some cases, may allow greater detection of bladder tumors in beneficiaries relative to white light cystoscopy alone. Given the additional equipment, supplies, operating room time, and other resources required to perform blue light cystoscopy in addition to white light cystoscopy, for CY 2018, in the proposed rule, we proposed to create a new HCPCS C-code to describe blue light cystoscopy and to allow for a complexity adjustment to APC 5374 (Level 4 Urology and Related Services) for certain code combinations in APC 5373 (Level 3 Urology and Related Services). (In the proposed rule, we cited HCPCS code ``C97XX'' as a placeholder for the new code. However, for ease of reading, hereafter in this section, we refer to the replacement code HCPCS code C9738 (Adjunctive blue light cystoscopy with fluorescent imaging agent (List separately in addition to code for primary procedure)) instead of the placeholder code.) Specifically, to determine which code pair combinations of a procedure described by proposed new HCPCS code C9738 and a cystoscopy procedure would qualify for a complexity adjustment, we first crosswalked the costs of the procedure described by HCPCS code C9275 (Hexaminolevulinate hcl) to the procedure described by proposed new HCPCS code C9738 assigned status indicator ``N''. Next, we identified the procedure codes used to describe white light cystoscopy of the bladder which include the following CPT codes and APC assignments:

    APC 5372 (Level 2 Urology and Related Services)

    squ CPT code 52000

    APC 5373 (Level 3 Urology and Related Services)

    squ CPT code 52204

    squ CPT code 52214

    squ CPT code 52224

    APC 5374 (Level 4 Urology and Related Services)

    squ CPT code 52234

    squ CPT code 52235

    APC 5375 (Level 5 Urology and Related Services)

    squ CPT code 52240

    Because APC 5372 is not a C-APC, cystoscopy procedures assigned to Level 2 Urology are not eligible for a complexity adjustment, and therefore, we did not analyze these codes to determine whether they met the criteria for this adjustment. We modeled the data to determine which code pair combinations exceed the claim frequency and cost threshold in APC 5373, APC 5374, and APC 5375, which are all C-APCs. In the proposed rule, we stated that the results of our analysis indicate that the code pair combination of procedures described by proposed new HCPCS code C9738 and cystoscopy procedures assigned to APC 5373 would be eligible for a complexity adjustment based on current criteria and cost data because they meet the frequency and cost criteria thresholds. Likewise, our results indicated that the combination of procedures described by proposed new HCPCS code C9738 and cystoscopy procedures assigned to APC 5374 and APC 5375 would not qualify for a complexity adjustment because they do not meet the frequency and cost criteria thresholds.

    We indicated in the proposed rule that, under the C-APC policy, blue light cystoscopy would be packaged, but when performed with a cystoscopy procedure in APC 5373 and reported with proposed new HCPCS code C9738 in addition to the cystoscopy CPT code, there would be a complexity adjustment to the next higher level APC in the series, resulting in a higher payment than for the white light cystoscopy procedure alone. That is, if the code pair combination of proposed new HCPCS code C9738 with CPT code 52204, 52214, or 52224 is reported on a claim, the claim will qualify for payment reassignment from APC 5373 to APC 5374. We stated that we plan to track the utilization and the costs associated with white light/blue light cystoscopy procedure combinations that will receive a complexity adjustment.

    We invited public comments on our CY 2018 proposal to allow for a complexity adjustment when a white light cystoscopy procedure followed by a blue light cystoscopy procedure is performed. In addition, we sought public comments on whether alternative procedures, such as narrow band imaging, may be disadvantaged by this proposed policy.

    Comment: One commenter agreed that there are differences in resource utilization between cystoscopy procedures involving white light only and cystoscopy procedures involving both white light and blue light. However, the commenter recommended that a proposal to expand the cystoscopy CPT codes be submitted to the American Medical Association (AMA) to capture the resource distinction. The commenter stated that the use of CPT codes and HCPCS C-codes (for example, the proposed HCPCS code C9738) to capture cystoscopy procedures is duplicative, administratively burdensome, and can affect the quality of claims data.

    Response: We appreciate the commenter's concerns. However, we proposed to establish this code based on programmatic need under the OPPS to accurately describe blue light cystoscopy procedures. Given that a CPT code that describes blue light cystoscopy with an optical imaging agent does not exist in the CY 2018 CPT code set published by the AMA, it is unclear to us why the commenter believes HCPCS code C9738 would be duplicative, administratively burdensome, or affect the quality of claims data. Moreover, it is the combination of two different procedures that trigger a complexity adjustment; therefore, two distinct CPT or HCPCS codes are necessary to effectuate a complexity adjustment. If the AMA establishes a CPT code that describes blue light cystoscopy with an optical imaging agent, we would consider recognizing that CPT code under the OPPS as a replacement for HCPCS code C9738.

    Comment: A few commenters generally supported the proposal to allow for a complexity adjustment for

    Page 59245

    blue light cystoscopy with Cysview procedures. Many commenters, including several commenters with experience utilizing blue light cystoscopy with Cysview, shared their views on how this procedure has positively affected patient care management. These commenters recommended that CMS apply a complexity adjustment to all blue light cystoscopy with Cysview procedures performed in HOPDs to improve utilization and beneficiary access to care. Alternatively, the commenters recommended that CMS pay separately for Cysview to allow access in both white light and blue light cystoscopies in HOPD and ASC settings or establish a payment methodology conceptually similar to the device-intensive payment procedure for ASCs. The commenters suggested that a ``device-intensive like'' payment for a cystoscopy procedure performed in the ASC would be set based on the service cost and the drug cost (as determined by the manufacturer-reported average sales price).

    Response: We appreciate the commenters' support. In developing the blue light cystoscopy procedure complexity adjustment payment proposal, we considered the unique properties and resources required to perform blue light cystoscopy with Cysview. As described in the proposal, we approximated the costs for the additional resources required to perform blue light cystoscopy by crosswalking the costs associated with HCPCS code C9275 to HCPCS code C9738. We then applied the established complexity adjustment criteria to determine which cystoscopy procedures, when performed with blue light cystoscopy, would qualify for a complexity adjustment. For this final rule with comment period, we repeated the analysis to determine which code pair combinations of HCPCS code C9738 with a cystoscopy procedure CPT code satisfied the complexity adjustment criteria. Consistent with the proposed rule results, based on the updated final rule with comment period claims data, the code pair combination of HCPCS code C9738 with CPT code 52204, 52214, or 52224 each will qualify for a complexity adjusted payment from APC 5373 to APC 5374. Because APC 5372 is not a C-APC, cystoscopy procedures assigned to Level 2 Urology are not eligible for a complexity adjustment. Therefore, we did not analyze these codes to determine whether they were eligible for a complexity adjustment. Likewise, our analysis of the final rule claims data indicated that the combination of proposed HCPCS code C9738 and cystoscopy procedures assigned to APC 5374 and APC 5375 would not qualify for a complexity adjustment because they do not meet the frequency and cost criteria thresholds.

    We did not propose and the commenters did not provide evidence to support waiving application of the complexity adjustment criteria and allowing for a complexity adjustment whenever a blue light cystoscopy procedure is performed with any white light cystoscopy procedure. To allow for a complexity adjustment under any circumstance would require a change to the complexity adjustment criteria, which we did not propose. Therefore, we are finalizing the blue light cystoscopy complexity adjustment proposal, without modification. In addition we are establishing HCPCS code C9738 (Adjunctive blue light cystoscopy with fluorescent imaging agent (List separately in addition to code for primary procedure)), which replaces proposed HCPCS code C97XX. For CY 2018, the code pair combination of HCPCS code C9738 with CPT code 52204, 52214, or 52224 will qualify for a complexity adjusted payment from APC 5373 to APC 5374.

    With respect to the public comments on unpackaging Cysview to allow for separate payment in both the HOPD and ASC settings, as we stated in the background section for the proposal, we continue to believe that Cysview is a drug that functions as a supply in a diagnostic test or procedure and therefore is packaged with payment for the primary procedure. In the CY 2018 OPPS/ASC proposed rule, we did not propose to make any changes to the ``drugs that function as a supply'' packaging policy or make any corresponding proposals to pay separately for Cysview in the HOPD and ASC settings. Therefore, Cysview will remain packaged.

    With respect to the recommendation that we establish a payment methodology for blue light cystoscopy with Cysview procedures conceptually similar to the ASC device intensive payment policy, we did not propose revisions to the ASC device-intensive procedure policy. In addition, it is unclear to us exactly how such a policy would work and to what precise procedures in addition to blue light cystoscopy it might apply. Further, we believe that the C-APC payment adequately reflects the average resources expended by hospitals as reflected in hospital claims data. In addition, for especially costly cases, we believe our proposed policy appropriately recognizes the additional costs of blue light cystoscopy with white light cystoscopy through the complexity adjustment. We will continue to analyze the data and evaluate whether refinements to the C-APC policy, including the complexity adjustment criteria, should be considered in future rulemaking.

    Comment: A few commenters responded to the solicitation for public comments on whether an alternative procedure, such as narrow band imaging, would be disadvantaged by the blue light cystoscopy with Cysview complexity adjustment proposal. One commenter, the manufacturer of Cysview, requested that CMS not establish a complexity adjustment for narrow band imaging because this imaging does not require a drug, additional technology, or additional resource. The commenter stated that the equipment used in narrow band imaging cystoscopy procedures is not different than the equipment for white light cystoscopy and does not require more resource time, expense, or cost to the hospital because narrow band imaging technology is part of the standard equipment available for cystoscopic procedures. Another commenter, the developer of narrow band imaging, contended that the procedure shares many clinical and procedural similarities with blue light cystoscopy with Cysview procedures, and therefore narrow band imaging should be eligible for a complexity adjustment. In addition, the commenter expressed concern that a complexity adjustment for blue light cystoscopy with Cysview and not narrow band imaging would provide a financial incentive for providers to choose one technology over the other. However, the commenter did not provide cost information for narrow band imaging.

    Response: We appreciate the commenters' responses. We do not believe that the information presented supports a complexity adjustment for narrow band imaging. The lack of cost information for narrow band imaging and the fact that narrow band imaging does not require use of a contrast agent (and, therefore, avoids the cost of contrast and the time associated with the administration of contrast) lead us to question whether the resource costs of narrow band imaging are the same as those of blue light cystoscopy with Cysview. For these reasons, we do not believe it is appropriate to modify the proposal to allow for a complexity adjustment when narrow band imaging is performed with white light cystoscopy.

    After consideration of the public comments we received, we are

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    finalizing our proposal, without modification, to allow for a complexity adjustment when HCPCS code C9738 is reported on the same claim as CPT code 52204, 52214, or 52224. The result of billing any one of these three code pair combinations is a payment reassignment from APC 5373 to APC 5374.

    (6) Analysis of C-APC Packaging Under the OPPS

    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79584), we accepted a recommendation made at the August 22, 2016 HOP Panel meeting to analyze the effects of C-APCs. The HOP panel recommendation did not elucidate specific concerns with the C-APC policy or provide detailed recommendations on particular aspects of the policy to analyze. Therefore, we took a broad approach in studying HCPCS codes and APCs subject to the C-APC policy to determine whether aberrant trends in the data existed. Overall, we observed no such aberrancies and believe that the C-APC policy is working as intended.

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33580), specifically, using OPPS claims data for the CY 2016 final rule with comment period, the CY 2017 final rule with comment period, and the CY 2018 proposed rule, which reflect an observation period of CY 2014 to CY 2016, we examined the effects of C-APCs and their impact on OPPS payments. We started with all hospital outpatient claims billed on the 13X claim-type and, from that, separately identified HCPCS codes and APCs that were subject to the comprehensive methodology in CYs 2015 and 2016 (that is, HCPCS codes or APCs assigned status indicator ``J1'' or ``J2''). Next, we analyzed the claims to create a subset of claims that contain the HCPCS codes and APCs that were subject to the comprehensive methodology. Using the claims noted above, we analyzed claim frequency, line frequency, number of billing units, and the total OPPS payment between CYs 2014 and 2016 for each HCPCS code and APC that had been previously identified. In reviewing the cost statistics for HCPCS codes for procedures with status indicator ``S'', ``T'', or ``V'' in CY 2014 that were assigned to a C-APC in either CY 2015 or CY 2016, overall, we observed an increase in claim line frequency, units billed, and Medicare payment, which suggest that the C-APC payment policy did not adversely affect access to care or reduce payments to hospitals. Decreases in these cost statistics would suggest our comprehensive packaging logic is not working as intended and/or the C-APC payment rates were inadequate, resulting in lower volume due to migration of services to other settings or the cessation of providing these services. Likewise, because the cost statistics of major separately payable codes (that is, HCPCS codes with status indicator ``S'', ``T'', or ``V'') that were packaged into a C-APC prospectively were consistent with the cost statistics of the codes packaged on the claim, in actuality, indicate that costs were appropriately redistributed, we believe the C-APC payment methodology is working as intended.

    Comment: A few commenters appreciated CMS' analysis of C-APC packaging under the OPPS and urged CMS to continue to monitor the data and report on any changes in billing patterns or utilization for particular items or services.

    Response: We appreciate the commenters' support. We will continue to monitor the impact of our C-APC policy on OPPS rate setting and evaluate if future adjustments are needed.

  89. Calculation of Composite APC Criteria-Based Costs

    As discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66613), we believe it is important that the OPPS enhance incentives for hospitals to provide necessary, high quality care as efficiently as possible. For CY 2008, we developed composite APCs to provide a single payment for groups of services that are typically performed together during a single clinical encounter and that result in the provision of a complete service. Combining payment for multiple, independent services into a single OPPS payment in this way enables hospitals to manage their resources with maximum flexibility by monitoring and adjusting the volume and efficiency of services themselves. An additional advantage to the composite APC model is that we can use data from correctly coded multiple procedure claims to calculate payment rates for the specified combinations of services, rather than relying upon single procedure claims which may be low in volume and/or incorrectly coded. Under the OPPS, we currently have composite policies for low dose rate (LDR) prostate brachytherapy, mental health services, and multiple imaging services. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for a full discussion of the development of the composite APC methodology (72 FR 66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) for more recent background.

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33580), for CY 2018 and subsequent years, we proposed to continue our composite APC payment policies for mental health services and multiple imaging services, as discussed below. As discussed in section II.A.2.b. of the proposed rule and this final rule with comment period, we proposed to assign CPT code 55875 (Transperineal placement of needs or catheters into prostate for interstitial radioelement application, with or without cystoscopy) a status indicator of ``J1'' and assign it to a C-APC. In conjunction with this proposal, we also proposed to delete the low dose rate (LDR) prostate brachytherapy composite APC for CY 2018 and subsequent years. We refer readers to section II.A.2.b. of the CY 2018 OPPS/ASC proposed rule and this final rule with comment period for our discussion on our low dose rate (LDR) prostate brachytherapy APC proposal for CY 2018 and subsequent years.

    (1) Mental Health Services Composite APC

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33580), we proposed to continue our longstanding policy of limiting the aggregate payment for specified less resource-intensive mental health services furnished on the same date to the payment for a day of partial hospitalization services provided by a hospital, which we consider to be the most resource intensive of all outpatient mental health services. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18452 through 18455) for the initial discussion of this longstanding policy and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74168) for more recent background.

    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79588 through 79589), we finalized a policy to combine the existing Level 1 and Level 2 hospital-based PHP APCs into a single hospital-based PHP APC and, thereby, discontinue APCs 5861 (Level 1 Partial Hospitalization (3 services) for Hospital-Based PHPs) and 5862 (Level 2 Partial Hospitalization (4 or more services) for Hospital-Based PHPs) and replace them with APC 5863 (Partial Hospitalization (3 or more services per day)). For CY 2018, and subsequent years, we proposed that when the aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a single date of service, based on the payment rates associated with the APCs for the individual services, exceeds the maximum per diem payment rate for partial hospitalization services provided

    Page 59247

    by a hospital, those specified mental health services would be paid through composite APC 8010 (Mental Health Services Composite) for CY 2018. In addition, we proposed to set the payment rate for composite APC 8010 for CY 2018 at the same payment rate that we proposed for APC 5863, which is the maximum partial hospitalization per diem payment rate for a hospital, and that the hospital continue to be paid the payment rate for composite APC 8010. Under this policy, the I/OCE would continue to determine whether to pay for these specified mental health services individually, or to make a single payment at the same payment rate established for APC 5863 for all of the specified mental health services furnished by the hospital on that single date of service. We stated that we continue to believe that the costs associated with administering a partial hospitalization program at a hospital represent the most resource intensive of all outpatient mental health services. Therefore, we do not believe that we should pay more for mental health services under the OPPS than the highest partial hospitalization per diem payment rate for hospitals.

    We did not receive any public comments on these proposals. Therefore, we are finalizing our CY 2018 proposal, without modification, that when aggregate payment for specified mental health services provided by one hospital to a single beneficiary on a date of service, based on the payment rates with the APCs for the individual services, exceeds the maximum per diem payment rate for partial hospitalization services provided by a hospital, those specified mental health services will be paid through composite APC 8010 for CY 2018. In addition, we are finalizing our CY 2018 proposal, without modification, to set the payment rate for composite APC 8010 for CY 2018 at the same payment rate that we established for APC 5863, which is the maximum partial hospitalization per diem payment rate for a hospital, and that the hospital continue to be paid the payment rate for composite APC 8010.

    (2) Multiple Imaging Composite APCs (APCs 8004, 8005, 8006, 8007, and 8008)

    Effective January 1, 2009, we provide a single payment each time a hospital submits a claim for more than one imaging procedure within an imaging family on the same date of service, in order to reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session (73 FR 41448 through 41450). We utilize three imaging families based on imaging modality for purposes of this methodology: (1) Ultrasound; (2) computed tomography (CT) and computed tomographic angiography (CTA); and (3) magnetic resonance imaging (MRI) and magnetic resonance angiography (MRA). The HCPCS codes subject to the multiple imaging composite policy and their respective families are listed in Table 12 of the CY 2014 OPPS/ASC final rule with comment period (78 FR 74920 through 74924).

    While there are three imaging families, there are five multiple imaging composite APCs due to the statutory requirement under section 1833(t)(2)(G) of the Act that we differentiate payment for OPPS imaging services provided with and without contrast. While the ultrasound procedures included under the policy do not involve contrast, both CT/

    CTA and MRI/MRA scans can be provided either with or without contrast. The five multiple imaging composite APCs established in CY 2009 are:

    APC 8004 (Ultrasound Composite);

    APC 8005 (CT and CTA without Contrast Composite);

    APC 8006 (CT and CTA with Contrast Composite);

    APC 8007 (MRI and MRA without Contrast Composite); and

    APC 8008 (MRI and MRA with Contrast Composite).

    We define the single imaging session for the ``with contrast'' composite APCs as having at least one or more imaging procedures from the same family performed with contrast on the same date of service. For example, if the hospital performs an MRI without contrast during the same session as at least one other MRI with contrast, the hospital will receive payment based on the payment rate for APC 8008, the ``with contrast'' composite APC.

    We make a single payment for those imaging procedures that qualify for payment based on the composite APC payment rate, which includes any packaged services furnished on the same date of service. The standard (noncomposite) APC assignments continue to apply for single imaging procedures and multiple imaging procedures performed across families. For a full discussion of the development of the multiple imaging composite APC methodology, we refer readers to the CY 2009 OPPS/ASC final rule with comment period (73 FR 68559 through 68569).

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33581), we proposed, for CY 2018 and subsequent years, to continue to pay for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite APC payment methodology. We stated that we continue to believe that this policy would reflect and promote the efficiencies hospitals can achieve when performing multiple imaging procedures during a single session.

    The proposed CY 2018 payment rates for the five multiple imaging composite APCs (APCs 8004, 8005, 8006, 8007, and 8008) were based on proposed geometric mean costs calculated from a partial year of CY 2016 claims available for the CY 2018 OPPS/ASC proposed rule that qualified for composite payment under the current policy (that is, those claims reporting more than one procedure within the same family on a single date of service). To calculate the proposed geometric mean costs, we used the same methodology that we used to calculate the final geometric mean costs for these composite APCs since CY 2014, as described in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918). The imaging HCPCS codes referred to as ``overlap bypass codes'' that we removed from the bypass list for purposes of calculating the proposed multiple imaging composite APC geometric mean costs, in accordance with our established methodology as stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74918), were identified by asterisks in Addendum N to the CY 2018 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site) and were discussed in more detail in section II.A.1.b. of the CY 2018 OPPS/ASC proposed rule.

    For the CY 2018 OPPS/ASC proposed rule, we were able to identify approximately 634,918 ``single session'' claims out of an estimated 1.7 million potential claims for payment through composite APCs from our ratesetting claims data, which represents approximately 36 percent of all eligible claims, to calculate the proposed CY 2018 geometric mean costs for the multiple imaging composite APCs. Table 6 of the CY 2018 OPPS/ASC proposed rule listed the proposed HCPCS codes that would be subject to the multiple imaging composite APC policy and their respective families and approximate composite APC proposed geometric mean costs for CY 2018.

    Comment: One commenter supported the composite APC policy for imaging services and recommended that CMS pay composite imaging APCs separately when billed on a claim with a service

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    that has been assigned a ``J1'' status indicator, that is, as a C-APC.

    Response: We appreciate the commenter's support. Regarding the recommendation about paying for composite APCs separately when billed on a claim with a service that has been assigned a ``J1'' status indicator, procedures assigned to C-APCs are primary services that are typically the focus of the hospital outpatient stay. As discussed in section II.A.2.b. of this final rule with comment period, our C-APC policy packages payment for adjunctive and secondary items, services, and procedures, including diagnostic procedures, into the most costly procedure under the OPPS at the claim level. We believe that paying for composite APCs separately when billed with a service that has been assigned a ``J1'' status indicator would be in conflict with the intent of our C-APC policy and would not be appropriate.

    After consideration of the public comments we received, we are finalizing our proposal to continue the use of multiple imaging composite APCs to pay for services providing more than one imaging procedure from the same family on the same date, without modification. Table 7 below lists the HCPCS codes that will be subject to the multiple imaging composite APC policy and their respective families and approximate composite APC proposed geometric mean costs for CY 2018.

    Table 7--OPPS Imaging Families and Multiple Imaging Procedure Composite

    APCs

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

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

    CY 2018 APC 8004 (ultrasound composite) CY 2018 approximate APC

    geometric mean cost = $300

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

    Family 1--Ultrasound

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

    76700.................................. Us exam, abdom, complete.

    76705.................................. Echo exam of abdomen.

    76770.................................. Us exam abdo back wall, comp.

    76776.................................. Us exam k transpl w/Doppler.

    76831.................................. Echo exam, uterus.

    76856.................................. Us exam, pelvic, complete.

    76857.................................. Us exam, pelvic, limited.

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

    CY 2018 APC 8005 (CT and CTA without CY 2018 approximate APC

    contrast composite) * geometric mean cost = $275

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

    Family 2--CT and CTA with and without Contrast

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

    70450.................................. Ct head/brain w/o dye.

    70480.................................. Ct orbit/ear/fossa w/o dye.

    70486.................................. Ct maxillofacial w/o dye.

    70490.................................. Ct soft tissue neck w/o dye.

    71250.................................. Ct thorax w/o dye.

    72125.................................. Ct neck spine w/o dye.

    72128.................................. Ct chest spine w/o dye.

    72131.................................. Ct lumbar spine w/o dye.

    72192.................................. Ct pelvis w/o dye.

    73200.................................. Ct upper extremity w/o dye.

    73700.................................. Ct lower extremity w/o dye.

    74150.................................. Ct abdomen w/o dye.

    74261.................................. Ct colonography, w/o dye.

    74176.................................. Ct angio abd & pelvis.

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

    CY 2018 APC 8006 (CT and CTA with CY 2018 approximate APC

    contrast composite) geometric mean cost = $501

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

    70487.................................. Ct maxillofacial w/dye.

    70460.................................. Ct head/brain w/dye.

    70470.................................. Ct head/brain w/o & w/dye.

    70481.................................. Ct orbit/ear/fossa w/dye.

    70482.................................. Ct orbit/ear/fossa w/o & w/dye.

    70488.................................. Ct maxillofacial w/o & w/dye.

    70491.................................. Ct soft tissue neck w/dye.

    70492.................................. Ct sft tsue nck w/o & w/dye.

    70496.................................. Ct angiography, head.

    70498.................................. Ct angiography, neck.

    71260.................................. Ct thorax w/dye.

    71270.................................. Ct thorax w/o & w/dye.

    71275.................................. Ct angiography, chest.

    72126.................................. Ct neck spine w/dye.

    72127.................................. Ct neck spine w/o & w/dye.

    72129.................................. Ct chest spine w/dye.

    72130.................................. Ct chest spine w/o & w/dye.

    72132.................................. Ct lumbar spine w/dye.

    72133.................................. Ct lumbar spine w/o & w/dye.

    72191.................................. Ct angiograph pelv w/o & w/dye.

    72193.................................. Ct pelvis w/dye.

    72194.................................. Ct pelvis w/o & w/dye.

    73201.................................. Ct upper extremity w/dye.

    73202.................................. Ct uppr extremity w/o & w/dye.

    73206.................................. Ct angio upr extrm w/o & w/dye.

    73701.................................. Ct lower extremity w/dye.

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    73702.................................. Ct lwr extremity w/o & w/dye.

    73706.................................. Ct angio lwr extr w/o & w/dye.

    74160.................................. Ct abdomen w/dye.

    74170.................................. Ct abdomen w/o & w/dye.

    74175.................................. Ct angio abdom w/o & w/dye.

    74262.................................. Ct colonography, w/dye.

    75635.................................. Ct angio abdominal arteries.

    74177.................................. Ct angio abd & pelv w/contrast.

    74178.................................. Ct angio abd & pelv 1+ regns.

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

    * If a ``without contrast'' CT or CTA procedure is performed during the

    same session as a ``with contrast'' CT or CTA procedure, the I/OCE

    assigns the procedure to APC 8006 rather than APC 8005..

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

    CY 2018 APC 8007 (MRI and MRA without CY 2018 approximate APC

    contrast composite) * geometric mean cost = $556

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

    Family 3--MRI and MRA with and without Contrast

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

    70336.................................. Magnetic image, jaw joint.

    70540.................................. Mri orbit/face/neck w/o dye.

    70544.................................. Mr angiography head w/o dye.

    70547.................................. Mr angiography neck w/o dye.

    70551.................................. Mri brain w/o dye.

    70554.................................. Fmri brain by tech.

    71550.................................. Mri chest w/o dye.

    72141.................................. Mri neck spine w/o dye.

    72146.................................. Mri chest spine w/o dye.

    72148.................................. Mri lumbar spine w/o dye.

    72195.................................. Mri pelvis w/o dye.

    73218.................................. Mri upper extremity w/o dye.

    73221.................................. Mri joint upr extrem w/o dye.

    73718.................................. Mri lower extremity w/o dye.

    73721.................................. Mri jnt of lwr extre w/o dye.

    74181.................................. Mri abdomen w/o dye.

    75557.................................. Cardiac mri for morph.

    75559.................................. Cardiac mri w/stress img.

    C8901.................................. MRA w/o cont, abd.

    C8904.................................. MRI w/o cont, breast, uni.

    C8907.................................. MRI w/o cont, breast, bi.

    C8910.................................. MRA w/o cont, chest.

    C8913.................................. MRA w/o cont, lwr ext.

    C8919.................................. MRA w/o cont, pelvis.

    C8932.................................. MRA, w/o dye, spinal canal.

    C8935.................................. MRA, w/o dye, upper extr.

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

    CY 2018 APC 8008 (MRI and MRA with CY 2018 approximate APC

    contrast composite) geometric mean cost = $871

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

    70549.................................. Mr angiograph neck w/o & w/dye.

    70542.................................. Mri orbit/face/neck w/dye.

    70543.................................. Mri orbt/fac/nck w/o & w/dye.

    70545.................................. Mr angiography head w/dye.

    70546.................................. Mr angiograph head w/o & w/dye.

    70547.................................. Mr angiography neck w/o dye.

    70548.................................. Mr angiography neck w/dye.

    70552.................................. Mri brain w/dye.

    70553.................................. Mri brain w/o & w/dye.

    71551.................................. Mri chest w/dye.

    71552.................................. Mri chest w/o & w/dye.

    72142.................................. Mri neck spine w/dye.

    72147.................................. Mri chest spine w/dye.

    72149.................................. Mri lumbar spine w/dye.

    72156.................................. Mri neck spine w/o & w/dye.

    72157.................................. Mri chest spine w/o & w/dye.

    72158.................................. Mri lumbar spine w/o & w/dye.

    72196.................................. Mri pelvis w/dye.

    72197.................................. Mri pelvis w/o & w/dye.

    73219.................................. Mri upper extremity w/dye.

    73220.................................. Mri uppr extremity w/o & w/dye.

    73222.................................. Mri joint upr extrem w/dye.

    73223.................................. Mri joint upr extr w/o & w/dye.

    73719.................................. Mri lower extremity w/dye.

    73720.................................. Mri lwr extremity w/o & w/dye.

    73722.................................. Mri joint of lwr extr w/dye.

    73723.................................. Mri joint lwr extr w/o & w/dye.

    74182.................................. Mri abdomen w/dye.

    74183.................................. Mri abdomen w/o & w/dye.

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    75561.................................. Cardiac mri for morph w/dye.

    75563.................................. Card mri w/stress img & dye.

    C8900.................................. MRA w/cont, abd.

    C8902.................................. MRA w/o fol w/cont, abd.

    C8903.................................. MRI w/cont, breast, uni.

    C8905.................................. MRI w/o fol w/cont, brst, un.

    C8906.................................. MRI w/cont, breast, bi.

    C8908.................................. MRI w/o fol w/cont, breast.

    C8909.................................. MRA w/cont, chest.

    C8911.................................. MRA w/o fol w/cont, chest.

    C8912.................................. MRA w/cont, lwr ext.

    C8914.................................. MRA w/o fol w/cont, lwr ext.

    C8918.................................. MRA w/cont, pelvis.

    C8920.................................. MRA w/o fol w/cont, pelvis.

    C8931.................................. MRA, w/dye, spinal canal.

    C8933.................................. MRA, w/o&w/dye, spinal canal.

    C8934.................................. MRA, w/dye, upper extremity.

    C8936.................................. MRA, w/o&w/dye, upper extr.

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

    * If a ``without contrast'' MRI or MRA procedure is performed during the

    same session as a ``with contrast'' MRI or MRA procedure, the I/OCE

    assigns the procedure to APC 8008 rather than APC 8007.

    3. Changes to Packaged Items and Services

  90. Background and Rationale for Packaging in the OPPS

    Like other prospective payment systems, the OPPS relies on the concept of averaging to establish a payment rate for services. The payment may be more or less than the estimated cost of providing a specific service or a bundle of specific services for a particular patient. The OPPS packages payments for multiple interrelated items and services into a single payment to create incentives for hospitals to furnish services most efficiently and to manage their resources with maximum flexibility. Our packaging policies support our strategic goal of using larger payment bundles in the OPPS to maximize hospitals' incentives to provide care in the most efficient manner. For example, where there are a variety of devices, drugs, items, and supplies that could be used to furnish a service, some of which are more costly than others, packaging encourages hospitals to use the most cost-efficient item that meets the patient's needs, rather than to routinely use a more expensive item, which often occurs if separate payment is provided for the item.

    Packaging also encourages hospitals to effectively negotiate with manufacturers and suppliers to reduce the purchase price of items and services or to explore alternative group purchasing arrangements, thereby encouraging the most economical health care delivery. Similarly, packaging encourages hospitals to establish protocols that ensure that necessary services are furnished, while scrutinizing the services ordered by practitioners to maximize the efficient use of hospital resources. Packaging payments into larger payment bundles promotes the predictability and accuracy of payment for services over time. Finally, packaging may reduce the importance of refining service-

    specific payment because packaged payments include costs associated with higher cost cases requiring many ancillary items and services and lower cost cases requiring fewer ancillary items and services. Because packaging encourages efficiency and is an essential component of a prospective payment system, packaging payments for items and services that are typically integral, ancillary, supportive, dependent, or adjunctive to a primary service has been a fundamental part of the OPPS since its implementation in August 2000. For an extensive discussion of the history and background of the OPPS packaging policy, we refer readers to the CY 2000 OPPS final rule (65 FR 18434), the CY 2008 OPPS/

    ASC final rule with comment period (72 FR 66580), the CY 2014 OPPS/ASC final rule with comment period (78 FR 74925), the CY 2015 OPPS/ASC final rule with comment period (79 FR 66817), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70343), and the CY 2017 OPPS/ASC final rule with comment period (81 FR 79592). As we continue to develop larger payment groups that more broadly reflect services provided in an encounter or episode of care, we have expanded the OPPS packaging policies. Most, but not necessarily all, items and services currently packaged in the OPPS are listed in 42 CFR 419.2(b). Our overarching goal is to make OPPS payments for all services paid under the OPPS more consistent with those of a prospective payment system and less like those of a per-service fee schedule, which pays separately for each coded item. As a part of this effort, we have continued to examine the payment for items and services provided under the OPPS to determine which OPPS services can be packaged to further achieve the objective of advancing the OPPS toward a more prospective payment system.

    For CY 2018, we examined the items and services currently provided under the OPPS, reviewing categories of integral, ancillary, supportive, dependent, or adjunctive items and services for which we believe payment would be appropriately packaged into payment of the primary service that they support. Specifically, we examined the HCPCS code definitions (including CPT code descriptors) and outpatient hospital billing patterns to determine whether there were categories of codes for which packaging would be appropriate according to existing OPPS packaging policies or a logical expansion of those existing OPPS packaging policies. In the CY 2018 OPPS/ASC proposed rule (82 FR 33584 through 33585), for CY 2018, we proposed to conditionally package the costs of selected newly identified ancillary services into payment with a primary service where we believe that the packaged item or service is integral, ancillary, supportive, dependent, or adjunctive to the provision of care that was reported by the primary service HCPCS code. Below we discuss the items and services that we proposed to package beginning in CY 2018.

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  91. Drug Administration Packaging Policy

    (1) Background of Drug Administration Packaging Policy

    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74942 through 74945), we finalized a policy to unconditionally package procedures described by add-on codes. Procedures described by add-on codes represent an extension or continuation of a primary procedure, which means that they are typically supportive, dependent, or adjunctive to a primary service. The primary code defines the purpose and typical scope of the patient encounter and the add-on code describes incremental work, when the extent of the procedure encompasses a range rather than a single defined endpoint applicable to all patients. Given the dependent nature and adjunctive characteristics of procedures described by add-on codes and in light of longstanding OPPS packaging principles, we finalized a policy to unconditionally package add-on codes with the primary procedure. However, in response to stakeholder comments on the appropriateness of packaging drug administration add-on codes, we did not finalize our proposal to package drug administration add-on codes (78 FR 74945).

    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66819 through 66822), we conditionally packaged payment for ancillary services assigned to APCs with a geometric mean cost of less than or equal to $100 (prior to application of the conditional packaging status indicator). The ancillary services that we identified are primarily minor diagnostic tests and procedures that are often performed with a primary service, although there are instances where hospitals provide such services alone and without another primary service during the same encounter. Under this policy, we assigned the conditionally packaged services to status indicator ``Q1'', which indicates that the service is separately payable when not billed on the same claim as a HCPCS code assigned status indicator ``S'', ``T'', or ``V''. Exclusions to this ancillary service packaging policy include preventive services, certain psychiatric and counseling-related services, and certain low-cost drug administration services. In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66819), we indicated that we did not propose to package certain low-cost drug administration services because we were examining various alternative payment policies for drug administration, including the associated drug administration add-on codes.

    (2) Packaging of Level 1 and Level 2 Drug Administration Services

    As stated earlier, our overarching goal is to make OPPS payments for all services paid under the OPPS more consistent with those of a prospective payment system and less like those of a per-service fee schedule. To achieve this goal, it is important that we are consistent in our approach to packaging items and services under the established packaging categories. Although we excluded packaging of low-cost drug administration services from the ancillary services packaging policy in the CY 2015 rulemaking, separate payment for drug administration services is an example of inconsistent application of our packaging policy where we are continuing to pay separately for a service, regardless of cost and performance with another service. Given the frequency of drug administration in hospital outpatient care, in the CY 2018 OPPS/ASC proposed rule, we stated that we believe it is appropriate for us to reconsider whether payment for drug administration services with a geometric mean cost of less than or equal to $100 (prior to application of the conditional packaging status indicator) should continue to be excluded from the ancillary services packaging policy.

    As part of our review of CY 2016 claims data used for ratesetting in the CY 2018 OPPS/ASC proposed rule, we examined drug administration billing patterns and payment for drug administration services under the OPPS. Based on our analysis of CY 2016 claims data used for the CY 2018 proposed rule ratesetting, we found that the geometric mean cost for APC 5691 (Level 1 Drug Administration) is approximately $37 and the geometric mean cost for APC 5692 (Level 2 Drug Administration) is approximately $59. In addition, we observed that drug administration services in APC 5692 are frequently reported on the same claim with other separately payable services, such as an emergency department or clinic visit, while drug administration services in APC 5691 are sometimes reported with other separately payable services. Accordingly, Medicare data show that these drug administration services are currently being provided as part of another separately payable service for which two separate payments are made, and support that packaging these services, when they are reported with another separately payable service, is appropriate. Further, packaging for Levels 1 and 2 Drug Administration services is consistent with the ancillary packaging policy that was adopted in CY 2015, as noted earlier in this section. Therefore, given the low geometric mean costs of drug administration services in APC 5691 and APC 5692 as well as their associated billing patterns, we stated in the CY 2018 OPPS/ASC proposed rule that we believe that when these services are performed with another separately payable service, they should be packaged, but that they should be separately paid when performed alone. That is, we stated that we believe it is no longer necessary to exclude low-cost drug administration services from packaging under the ancillary services packaging policy adopted in CY 2015.

    In addition, as we examine payment differences between the hospital outpatient department and the physician office for similar services, under the OPPS, hospitals may receive separate payments for a clinic (office) visit and a drug administration service. In contrast, physicians are not eligible to receive payment for an office visit when a drug administration service is also provided. As a result, for furnishing the same drug administration service, hospitals receive an additional payment for which physician offices are not eligible. We stated in the proposed rule that we believe that conditional packaging of drug administration services would promote equitable payment between the physician office and the hospital outpatient hospital department. Accordingly, for CY 2018, we proposed to conditionally package payment for HCPCS codes describing drug administration services in APC 5691 and APC 5692, except for add-on codes and preventive services, when these services are performed with another service.

    Because preventive services are excluded from our packaging policies, we proposed to continue to pay separately for Medicare Part B vaccine administration services. In addition, at that time, we did not propose to package any drug administration services in APC 5693 (Level 3 Drug Administration) or APC 5694 (Level 4 Drug Administration), but indicated our interest in public comments pertaining to whether payment for the services in these APCs may be appropriate for packaging. The proposed status indicators for drug administration services in APC 5691 and APC 5692 were listed in Table 7 of the proposed rule.

    Comment: Numerous commenters disagreed with CMS' proposal to conditionally package low-cost drug administration services assigned to APC

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    5691 and APC 5692. The commonly cited concerns among the commenters who opposed the proposal were as follows:

    Low-cost drug administration services are dissimilar from other low cost ancillary services in that drug administration services are separate and distinct stand-alone services and not adjunctive, supportive, or dependent to a primary procedure.

    The proposal would not promote equitable payment between the physician's office and the hospital outpatient department because, in accordance with CMS guidelines, there are clinical circumstances where a physician may receive payment for both a drug administration service and an office visit.

    Because all drugs are separately payable in the physician's office, unlike under the OPPS, the proposal, if implemented, would exacerbate differences in payment between the hospital outpatient department and the physician office setting. Commenters expressed doubt that the full cost of a packaged drug administration service or drug would be appropriately and accurately reflected in the payment for another separately payable procedure.

    Packaging drug administration services with other services could result in hospitals scheduling patients for multiple visits, thereby reducing access to care and quality of care.

    Further analysis of the impact packaging drug administration services would have on APCs should be conducted prior to making a policy change.

    In general, packaging discourages full reporting of hospital costs, which impacts the accuracy of cost data that are used to calculate OPPS payment rates.

    In addition, at the summer 2017 meeting of the HOP Panel, the HOP Panel recommended that CMS not implement its proposal to package drug administration services described under APC 5691 (Level 1 Drug Administration) and APC 5692 (Level 2 Drug Administration).

    Response: We appreciate the detailed responses to our proposal and agree with the statements concerning the importance of payment accuracy to maintain access to care. However, we disagree that conditional packaging of low-level drug administration services, which are commonly furnished both in the hospital outpatient setting and in the physician office setting, would lead to payment inaccuracy for hospital rates for these services (which would include the packaged costs of these services) or to decreased access to drug administration services. As stated in the proposed rule, we believe it is no longer necessary to exclude low-cost drug administration services from packaging under the ancillary services packaging policy adopted in CY 2015, which is supported by our analysis of drug administration billing patterns. As described earlier in the introduction to this section, our analysis of CY 2016 OPPS claims data showed that low-cost drug administration services are currently being provided as part of another separately payable service for which two separate payments are made, and supported a policy that packaging low-cost drug administration services, when they are reported with another separately payable service, is appropriate. In response to the commenters who raised concerns regarding potential behavioral changes by providers as a consequence of the proposal, we will continue to monitor the data for changes in drug administration billing patterns.

    Furthermore, regarding the comments that low-cost drug administration services are separate and distinct standalone services and not adjunctive, supportive, or dependent to a primary procedure, we disagree based on typical billing patterns for these services. As stated earlier in the introduction to this section, ancillary services are often performed with a primary service. Because these low-cost drug administration services are typically furnished with another primary service and are assigned to APCs with a geometric mean cost of less than or equal to $100 (prior to the application of the conditional packaging status indicator), we believe these services fall under the ancillary services packaging policy.

    In addition, as stated in the proposed rule, we believe that conditional packaging of drug administration services will promote equitable payment between the physician office and the hospital outpatient department. However, we clarify that while typically physicians are not eligible to receive payment for an office visit when a drug administration service is also provided, we acknowledge that Medicare will pay for both services when the office visit CPT code is reported with Modifier 25 (Significant, separately identifiable evaluation and management services by the same physician on the day of the procedure).

    With respect to data availability and general requests for further CMS analysis, we believe that the data made available to the public as part of the proposed rule were appropriate, clear, and sufficient for interested parties to conduct analyses to evaluate facility-specific impacts of the proposed policy. It is unclear what the commenters meant by requesting that CMS further analyze the effects of the proposal on APCs, as the commenters did not specify any particular analysis that CMS should conduct or data that CMS should provide that is not already available to the public. Because the OPPS is a budget neutral payment system, packaging a procedure does not remove its costs from ratesetting.

    With respect to commenters' concerns on reporting of hospital costs for packaged services, we remind commenters that hospitals are expected to report all HCPCS codes that describe the services provided, regardless of whether or not those services are separately paid or their payment is packaged. The calculation of OPPS relative payment weights that reflect the relative resources required for HOPD services is the foundation of the OPPS. We rely on hospitals to bill all HCPCS codes accurately in accordance with their code descriptors and CPT and CMS instructions, as applicable, and to report charges on claims and charges and costs on their Medicare hospital cost report appropriately (77 FR 68324).

    Therefore, for the reasons stated above, we believe that it is appropriate, and a logical expansion of our ancillary services policy, to finalize our proposal to unconditionally package low-cost drug administration services assigned to APCs 5691 and 5692. Accordingly, we are not accepting the HOP Panel's recommendation to not finalize our proposal.

    Comment: One commenter stated that the packaging proposal is a logical expansion of the current ancillary packaging policy but recommended a 1-year implementation delay to allow providers time to assess the administrative and fiscal impact.

    Response: We appreciate the commenter's support. Packaging is a longstanding payment principle under the OPPS and CMS has packaged a number of items and services through the years and makes OPPS data available to all interested parties on its Web site. Therefore, we do not see a reason to delay implementation of the policy. With each proposed and final rule release, CMS posts on its Web site various public use files (PUFs), including payment rates and cost statistics for applicable items and procedures. Stakeholders interested in a more comprehensive analysis of OPPS claims data used to derive the CY 2018 OPPS/ASC payment rates may purchase the ``OPPS Limited Data Set'' (LDS) that is available on the CMS Web site at:

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    https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/LimitedDataSets/HospitalOPPS.html. We believe the information contained in the PUF and LDS files is sufficient to allow stakeholders to analyze the effects of our policies on their areas of interest. Therefore, we are finalizing our proposal to conditionally package low-

    cost drug administration services assigned to APC 5691 and APC 5692, effective January 1, 2018.

    Comment: Some commenters believed that the proposal would conditionally package Medicare Part B vaccine administration. In addition, some commenters believed that if a hospital provides a low-

    cost drug administration service for a drug that is unconditionally packaged, CMS would make no payment to the hospital.

    Response: We believe that some commenters may have misunderstood the proposal. Consistent with our existing policy to exclude preventive services from packaging, administration of Part B vaccines--influenza, pneumococcal, and hepatitis B--are exempt from packaging and will continue to be paid separately. With respect to payment for a conditionally packaged low-cost drug administration service and an unconditionally packaged drug, the drug administration service is separately payable when not billed on the same claim as a HCPCS code with status indicator ``S'', ``T'', or ``V''. Payment for the threshold-packaged drug would be packaged with the payment for the highest paying separately payable procedure reported on the claim. For example, if a threshold-packaged drug, a low-cost drug administration service, and a clinic visit are reported on the same claim, payment for the drug and drug administration service would be packaged with the clinic visit payment.

    In summary, after consideration of the public comments we received, we are finalizing, without modification, the proposed policy to conditionally package low-cost drug administration services assigned to APC 5691 and APC 5692.

    Because preventive services are excluded from our packaging policies, we are continuing to pay separately for Medicare Part B vaccine administration services. In addition, at this time, we are not packaging any drug administration services assigned to APC 5693 (Level 3 Drug Administration) or APC 5694 (Level 4 Drug Administration). The status indicators for drug administration services in APC 5691 and APC 5692 for CY 2018 are listed in Table 8 below.

    Table 8--CY 2018 Status Indicators for Drug Administration Services in

    Level 1 and Level 2 Drug Administration APCs

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

    CY 2018

    HCPCS code Short descriptor status

    indicator

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

    APC 5691--Level 1 Drug Administration

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

    95115........................... Immunotherapy one Q1

    injection.

    95117........................... Immunotherapy injections Q1

    95144........................... Antigen therapy services Q1

    95145........................... Antigen therapy services Q1

    95146........................... Antigen therapy services Q1

    95165........................... Antigen therapy services Q1

    95170........................... Antigen therapy services Q1

    96361........................... Hydrate iv infusion add- S

    on.

    96366........................... Ther/proph/diag iv inf S

    addon.

    96370........................... Sc ther infusion addl hr S

    96375........................... Tx/pro/dx inj new drug S

    addon.

    96377........................... Application on-body Q1

    injector.

    96379........................... Ther/prop/diag inj/inf Q1

    proc.

    96423........................... Chemo ia infuse each S

    addl hr.

    96549........................... Chemotherapy unspecified Q1

    G0008........................... Admin influenza virus S

    vac.

    G0009........................... Admin pneumococcal S

    vaccine.

    G0010........................... Admin hepatitis b S

    vaccine.

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

    APC 5692--Level 2 Drug Administration

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

    90471........................... Immunization admin...... Q1

    90473........................... Immune admin oral/nasal. Q1

    95147........................... Antigen therapy services Q1

    95148........................... Antigen therapy services Q1

    95149........................... Antigen therapy services Q1

    96367........................... Tx/proph/dg addl seq iv S

    inf.

    96371........................... Sc ther infusion reset Q1

    pump.

    96372........................... Ther/proph/diag inj sc/ Q1

    im.

    96401........................... Chemo anti-neopl sq/im.. Q1

    96402........................... Chemo hormon antineopl Q1

    sq/im.

    96405........................... Chemo intralesional up Q1

    to 7.

    96411........................... Chemo iv push addl drug. S

    96415........................... Chemo iv infusion addl S

    hr.

    96417........................... Chemo iv infus each addl S

    seq.

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

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    (3) Discussion of Comment Solicitation Regarding Unconditionally Packaging Drug Administration Add-On Codes

    With respect to drug administration add-on codes, as discussed in the CY 2014 OPPS/ASC proposed rule (78 FR 43573), we proposed to unconditionally package all drug administration services described by add-on codes. In response to the proposal, commenters objected to packaging drug administration add-on codes, which typically describe each additional hour of infusion or each additional intravenous push, among others, in addition to the initial drug administration service. The commenters believed that such a policy could disadvantage providers of longer drug administration services, which are often protocol-driven and are not necessarily dictated by the hospital, but by the characteristics of the specific drug or biological being administered to the patient. In response to these comments, we stated in the CY 2014 OPPS/ASC final rule with comment period (78 FR 74945) that, given the frequency of drug administration services in the hospital outpatient department and their use in such a wide variety of different drug treatment protocols for various diseases in all types of hospitals, further study of the payment methodology for these services was warranted at that time. Therefore, we did not finalize our proposal to package the drug administration add-on codes in CY 2014. However, we stated we would continue to explore other payment options, including packaging and variations on packaging, in future years.

    In the CY 2018 OPPS/ASC proposed rule, we did not propose to package drug administration add-on codes for CY 2018 because we wanted stakeholder input on a payment methodology that supports the principles of a prospective payment system while ensuring patient access to prolonged infusion services. Instead, we solicited public comment on whether conditionally or unconditionally packaging such codes would create access to care issues or have other unintended consequences. Specifically, we requested public comments on the following: (1) Whether we should conditionally or unconditionally package drug administration services add-on codes; (2) how we should consider or incorporate the varied clinical drug protocols that result in different infusion times into a drug administration service add-on code payment proposal; and (3) other recommendations on an encounter-based payment approach for drug administration services that are described by add-on codes when furnished in the hospital outpatient department setting.

    Comment: Many commenters raised concerns about the appropriateness of packaging drug administration services add-on codes, given the variation in clinical treatment protocols. The commenters believed that packaging drug administration services add-on codes could create a barrier to access for drugs or biologicals with a long infusion time. Without explicit incremental payment for additional hours of infusion, some commenters suggested hospitals could discontinue offering the infusion. A few commenters suggested that CMS consider the creation of a drug administration C-APC for common drug administration encounters but did not provide details on what specific services should comprise the C-APC.

    Response: We appreciate the comments we received on this topic and will take them into consideration for future rulemaking.

  92. Analysis of Packaging of Pathology Services in the OPPS

    At the August 22, 2016 HOP Panel meeting, a stakeholder expressed concern regarding conditional packaging of multiple pathology services. When multiple conditionally packaged services are billed on the same claim, the costs of the lowest paying services are bundled into the cost of the highest paying service and payment is made based on the highest single payable service. The stakeholder requested that CMS create a pathology composite APC to more appropriately pay for claims with only multiple pathology services and no other separately payable service such as a surgical procedure or a clinic visit. The HOP panel recommended that CMS develop a composite APC for pathology services when multiple pathology services are provided on a claim with no other payable services. The HOP Panel also requested that CMS take into consideration the stakeholder presentation comments made at the August 22, 2016 HOP Panel meeting regarding hospital pathology laboratories as CMS evaluates conditional packaging to determine whether an accommodation can be made. Specifically, the stakeholder expressed concern with conditional packaging of pathology services, particularly when payment is limited to the single highest paying code, regardless of the number of services provided or specimens tested.

    In response to these HOP Panel requests and recommendation, we stated that we may consider the stakeholders' request for a pathology composite APC as well as additional composite APCs for future rulemaking (81 FR 79588). In light of these requests and recommendation, in development of the CY 2018 OPPS/ASC proposed rule, we evaluated and considered a pathology composite APC when multiple pathology services are performed and billed without a separately payable service on the same claim. To understand the frequency of billing multiple pathology services and no other separately payable codes on the same claim by hospital outpatient departments, we examined currently available claims data to identify the frequency distribution of pathology codes within the CPT code range 88300 to 88361. The claim frequency breakdown was displayed in Table 8 of the proposed rule (82 FR 33587).

    Based on our analysis of claims data for the proposed rule, the majority of pathology only OPPS claims are reported with one pathology code. Therefore, as we stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33588), we believe that it is neither a frequent occurrence nor a common occurrence for a provider to submit a claim for payment under the OPPS with multiple pathology services and no other separately payable service.

    With regard to the HOP Panel's recommendation to develop a composite APC for pathology services when multiple pathology services are provided on a claim with no other payable services, we used CY 2016 claims data available for the CY 2018 OPPS/ASC proposed rule to model four hypothetical pathology composite APCs. That is, following our standard packaging methodology, we modeled four hypothetical pathology composite APCs based on the following clinical scenarios that were specifically requested by a stakeholder at the August 2016 HOP Panel meeting:

    Hypothetical Composite APC A: Claims that contain 2-4 pathology units (CPT codes 88302 through 88309) with or without special stains (CPT codes 88312 through 88314);

    Hypothetical Composite APC B: Claims that contain 5 or more pathology units (CPT codes 88302 through 88309) with or without special stains (CPT codes 88312 through 88314);

    Hypothetical Composite APC C: Claims that contain 2-4 pathology units (CPT codes 88302 through 88309) with immunostains (CPT codes 88341, 88342, 88346, 88350, 88360, 88361); and

    Hypothetical Composite APC D: Claims that contain 5 or more pathology units (CPT codes 88302 through 88309)

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    with immunostains (CPT codes 88341, 88342, 88346, 88350, 88360, 88361).

    In addition, for the proposed rule, we evaluated the volume of services and costs for each hypothetical composite. Results from modeling the four composite scenarios showed low claim volume, which indicates that the suggested pathology code combinations are infrequently billed by hospital outpatient departments and which may mean that these are not likely clinical scenarios in hospital outpatient departments. A summary of the results from our composite analysis was presented in Table 9 of the proposed rule (82 FR 33587). We refer readers to Addendum B to the CY 2018 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site) for the CPT code descriptors.

    As we move toward larger payment bundles under the OPPS, the necessity of composite APCs diminishes. For example, in the CY 2018 OPPS/ASC proposed rule, we proposed to delete composite APC 8001 (LDR Prostate Brachytherapy Composite) and to provide payment for the component procedures through the C-APC payment methodology. Composite APCs were a precursor to C-APCs. In CY 2008, we implemented composite APCs to provide a single payment for groups of services that are typically performed together during a single clinical encounter and that result in the provision of a complete service (72 FR 66650 through 66652). Because a C-APC would treat all individually reported codes as representing components of the comprehensive service, all of the elements of the composite service are included in the C-APC payment. In addition, given the infrequent occurrence of multiple pathology services on the same claim without a separately payable service, we do not believe a composite APC is necessary or warranted.

    Therefore, for CY 2018, we did not propose to create a pathology composite APC or additional composite APCs for stakeholder-requested services, such as X-ray services, respiratory services, cardiology services, or allergy testing services. However, we solicited public comments on our packaging policies, as discussed under section II.A.3.d. of this final rule with comment period.

    We did not receive any public comments on our analysis of packaging of pathology services.

  93. Summary of Public Comments and Our Responses Regarding Packaging of Items and Services Under the OPPS

    As previously noted, packaging is an inherent principle of a prospective payment system. The OPPS, like other prospective payment systems, relies on the concept of averaging, where the payment may be more or less than the estimated costs of providing a service or package of services for a particular patient, but with the exception of outlier cases, is adequate to ensure access to appropriate care. Packaging and bundling payments for multiple interrelated services into a single payment create incentives for providers to furnish services in the most efficient way by enabling hospitals to manage their resources with maximum flexibility, thereby encouraging long-term cost containment. Decisions about packaging and bundling payment involve a balance between ensuring some separate payment for individual services or items while establishing incentives for efficiency through larger units of payment.

    As the OPPS continues to move toward prospectively determined encounter-based payments and away from separate fee schedule-like payments, we continue to hear concerns from stakeholders that our packaging policies may be hampering patient access or resulting in other undesirable consequences. However, we have not observed significant fluctuations in our data that show a sharp decline of the volume of packaged items and services, nor have we heard from Medicare beneficiaries specifically about access issues or other concerns with packaged items and services. However, given that aggregate spending and utilization continue to increase for covered hospital outpatient services, it is unclear what, if any, adverse effect packaging has on beneficiary access to care. Specifically, in the CY 2018 OPPS/ASC proposed rule (82 FR 33588), within the framework of existing packaging categories, such as drugs that function as supplies in a surgical procedure or diagnostic test or procedure, we expressed interest in stakeholder feedback on common clinical scenarios involving currently packaged HCPCS codes for which stakeholders believe packaged payment is not appropriate under the OPPS. Likewise, outside the framework of existing packaging categories, we expressed interest in stakeholder feedback on common clinical scenarios involving separately payable HCPCS codes for which payment would be most appropriately packaged under the OPPS. In the proposed rule, we solicited public comments from a broad cross-section of stakeholders, including beneficiaries, patient advocates, hospital providers, clinicians, manufacturers, and other interested parties.

    Comment: Commenters expressed a variety of views on packaging under the OPPS. The comments ranged from requests to unpackage most items and services that are either conditionally or unconditionally packaged under the OPPS, including drugs and devices, to specific requests to unpackage a specific drug or device.

    Response: We appreciate the comments received and will review them as we continue to explore and evaluate packaging policies that apply under the OPPS and take them into consideration for future rulemaking.

    4. Calculation of OPPS Scaled Payment Weights

    We established a policy in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68283) of using geometric mean-based APC costs to calculate relative payment weights under the OPPS. In the CY 2017 OPPS/

    ASC final rule with comment period (81 FR 79594 through 79595), we applied this policy and calculated the relative payment weights for each APC for CY 2017 that were shown in Addenda A and B to that final rule with comment period (which were made available via the Internet on the CMS Web site) using the APC costs discussed in sections II.A.1. and II.A.2. of that final rule with comment period. For CY 2018, as we did for CY 2017, we proposed to continue to apply the policy established in CY 2013 and calculate relative payment weights for each APC for CY 2018 using geometric mean-based APC costs (82 FR 33588).

    For CY 2012 and CY 2013, outpatient clinic visits were assigned to one of five levels of clinic visit APCs, with APC 0606 representing a mid-level clinic visit. In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75036 through 75043), we finalized a policy that created alphanumeric HCPCS code G0463 (Hospital outpatient clinic visit for assessment and management of a patient), representing any and all clinic visits under the OPPS. HCPCS code G0463 was assigned to APC 0634 (Hospital Clinic Visits). We also finalized a policy to use CY 2012 claims data to develop the CY 2014 OPPS payment rates for HCPCS code G0463 based on the total geometric mean cost of the levels one through five CPT E/M codes for clinic visits previously recognized under the OPPS (CPT codes 99201 through 99205 and 99211 through 99215). In addition, we finalized a policy to no longer recognize a distinction between new and established patient clinic visits.

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    For CY 2016, we deleted APC 0634 and reassigned the outpatient clinic visit HCPCS code G0463 to APC 5012 (Level 2 Examinations and Related Services) (80 FR 70351). In the CY 2018 OPPS/ASC proposed rule (82 FR 33588), for CY 2018, as we did for CY 2017, we proposed to continue to standardize all of the relative payment weights to APC 5012. We stated that we believe that standardizing relative payment weights to the geometric mean of the APC to which HCPCS code G0463 is assigned maintains consistency in calculating unscaled weights that represent the cost of some of the most frequently provided OPPS services. For CY 2018, as we did for CY 2017, we proposed to assign APC 5012 a relative payment weight of 1.00 and to divide the geometric mean cost of each APC by the geometric mean cost for APC 5012 to derive the unscaled relative payment weight for each APC. The choice of the APC on which to standardize the relative payment weights does not affect payments made under the OPPS because we scale the weights for budget neutrality.

    We did not receive any public comments on our proposal to use the geometric mean cost of APC 5012 to standardize relative payment weights for CY 2018. Therefore, we are finalizing our proposal and assigning APC 5012 the relative payment weight of 1.00, and using the relative payment weight for APC 5012 to derive the unscaled relative payment weight for each APC for CY 2018.

    Section 1833(t)(9)(B) of the Act requires that APC reclassification and recalibration changes, wage index changes, and other adjustments be made in a budget neutral manner. Budget neutrality ensures that the estimated aggregate weight under the OPPS for CY 2018 is neither greater than nor less than the estimated aggregate weight that would have been made without the changes. To comply with this requirement concerning the APC changes, in the CY 2018 OPPS/ASC proposed rule (82 FR 33588), we proposed to compare the estimated aggregate weight using the CY 2017 scaled relative payment weights to the estimated aggregate weight using the proposed CY 2018 unscaled relative payment weights.

    For CY 2017, we multiplied the CY 2017 scaled APC relative payment weight applicable to a service paid under the OPPS by the volume of that service from CY 2016 claims to calculate the total relative payment weight for each service. We then added together the total relative payment weight for each of these services in order to calculate an estimated aggregate weight for the year. For CY 2018, we proposed to apply the same process using the estimated CY 2018 unscaled relative payment weights rather than scaled relative payment weights. We proposed to calculate the weight scalar by dividing the CY 2017 estimated aggregate weight by the unscaled CY 2018 estimated aggregate weight.

    For a detailed discussion of the weight scalar calculation, we refer readers to the OPPS claims accounting document available on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. Click on the CY 2018 OPPS final rule link and open the claims accounting document link at the bottom of the page.

    We proposed to compare the estimated unscaled relative payment weights in CY 2018 to the estimated total relative payment weights in CY 2017 using CY 2016 claims data, holding all other components of the payment system constant to isolate changes in total weight. Based on this comparison, we proposed to adjust the calculated CY 2018 unscaled relative payment weights for purposes of budget neutrality. We proposed to adjust the estimated CY 2018 unscaled relative payment weights by multiplying them by a proposed weight scalar of 1.328 to ensure that the proposed CY 2018 relative payment weights are scaled to be budget neutral. The proposed CY 2018 relative payment weights listed in Addenda A and B to the proposed rule (which are available via the Internet on the CMS Web site) were scaled and incorporated the recalibration adjustments discussed in sections II.A.1. and II.A.2. of the proposed rule.

    The final CY 2018 relative payment weights listed in Addenda A and B to the final rule with comment period (which are available via the Internet on the CMS Web site) were scaled and incorporate the recalibration adjustments discussed in sections II.A.1. and II.A.2. of this final rule with comment period.

    Section 1833(t)(14) of the Act provides the payment rates for certain SCODs. Section 1833(t)(14)(H) of the Act provides that additional expenditures resulting from this paragraph shall not be taken into account in establishing the conversion factor, weighting, and other adjustment factors for 2004 and 2005 under paragraph (9), but shall be taken into account for subsequent years. Therefore, the cost of those SCODs (as discussed in section V.B.2. of this final rule with comment period) is included in the budget neutrality calculations for the CY 2018 OPPS.

    We did not receive any public comments on the proposed weight scalar calculation. Therefore, we are finalizing our proposal to use the calculation process described in the proposed rule, without modification, for CY 2018. Using updated final rule claims data, we are updating the estimated CY 2018 unscaled relative payment weights by multiplying them by a weight scalar of 1.4457 to ensure that the final CY 2018 relative payment weights are scaled to be budget neutral.

    1. Conversion Factor Update

      Section 1833(t)(3)(C)(ii) of the Act requires the Secretary to update the conversion factor used to determine the payment rates under the OPPS on an annual basis by applying the OPD fee schedule increase factor. For purposes of section 1833(t)(3)(C)(iv) of the Act, subject to sections 1833(t)(17) and 1833(t)(3)(F) of the Act, the OPD fee schedule increase factor is equal to the hospital inpatient market basket percentage increase applicable to hospital discharges under section 1886(b)(3)(B)(iii) of the Act. As stated in the CY 2018 OPPS/

      ASC proposed rule, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19931), consistent with current law, based on IHS Global, Inc.'s fourth quarter 2016 forecast of the FY 2018 market basket increase, the proposed FY 2018 IPPS market basket update was 2.9 percent. However, sections 1833(t)(3)(F) and 1833(t)(3)(G)(v) of the Act, as added by section 3401(i) of the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111-148) and as amended by section 10319(g) of that law and further amended by section 1105(e) of the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), provide adjustments to the OPD fee schedule increase factor for CY 2018.

      Specifically, section 1833(t)(3)(F)(i) of the Act requires that, for 2012 and subsequent years, the OPD fee schedule increase factor under subparagraph (C)(iv) be reduced by the productivity adjustment described in section 1886(b)(3)(B)(xi)(II) of the Act. Section 1886(b)(3)(B)(xi)(II) of the Act defines the productivity adjustment as equal to the 10-year moving average of changes in annual economy-wide, private nonfarm business multifactor productivity (MFP) (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) (the ``MFP adjustment''). In the FY 2012 IPPS/LTCH PPS final rule (76 FR 51689 through 51692), we finalized our methodology for calculating and applying the MFP adjustment, and then

      Page 59257

      revised this methodology as discussed in the FY 2016 IPPS/LTCH PPS final rule (80 FR 49509). In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19931 through 19932), the proposed MFP adjustment for FY 2018 was 0.4 percentage point.

      In the CY 2018 OPPS/ASC proposed rule, we proposed that if more recent data became subsequently available after the publication of the proposed rule (for example, a more recent estimate of the market basket increase and the MFP adjustment), we would use such updated data, if appropriate, to determine the CY 2018 market basket update and the MFP adjustment, which are components in calculating the OPD fee schedule increase factor under sections 1833(t)(3)(C)(iv) and 1833(t)(3)(F) of the Act, in this CY 2018 OPPS/ASC final rule with comment period. Consistent with that proposal, and the FY 2018 IPPS/LTCH PPS final rule (82 FR 38177), we applied the final FY 2018 market basket percentage increase (2.7 percent) and the final FY 2018 MFP adjustment (0.6 percent) to the OPD fee schedule increase factor for the CY 2018 OPPS.

      In addition, section 1833(t)(3)(F)(ii) of the Act requires that, for each of years 2010 through 2019, the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act be reduced by the adjustment described in section 1833(t)(3)(G) of the Act. For CY 2018, section 1833(t)(3)(G)(v) of the Act provides a 0.75 percentage point reduction to the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act. Therefore, in accordance with sections 1833(t)(3)(F)(ii) and 1833(t)(3)(G)(v) of the Act, in the CY 2018 OPPS/

      ASC proposed rule, we proposed to apply a 0.75 percentage point reduction to the OPD fee schedule increase factor for CY 2018.

      We note that section 1833(t)(3)(F) of the Act provides that application of this subparagraph may result in the OPD fee schedule increase factor under section 1833(t)(3)(C)(iv) of the Act being less than 0.0 percent for a year, and may result in OPPS payment rates being less than rates for the preceding year. As described in further detail below, we are applying an OPD fee schedule increase factor of 1.35 percent for the CY 2018 OPPS (which is 2.7 percent, the final estimate of the hospital inpatient market basket percentage increase, less the final 0.6 percentage point MFP adjustment, and less the 0.75 percentage point additional adjustment).

      Hospitals that fail to meet the Hospital OQR Program reporting requirements are subject to an additional reduction of 2.0 percentage points from the OPD fee schedule increase factor adjustment to the conversion factor that would be used to calculate the OPPS payment rates for their services, as required by section 1833(t)(17) of the Act. For further discussion of the Hospital OQR Program, we refer readers to section XIII. of this final rule with comment period.

      In the CY 2018 OPPS/ASC proposed rule, we proposed to amend 42 CFR 419.32(b)(1)(iv)(B) by adding a new paragraph (9) to reflect the requirement in section 1833(t)(3)(F)(i) of the Act that, for CY 2018, we reduce the OPD fee schedule increase factor by the MFP adjustment as determined by CMS, and to reflect the requirement in section 1833(t)(3)(G)(v) of the Act, as required by section 1833(t)(3)(F)(ii) of the Act, that we reduce the OPD fee schedule increase factor by an additional 0.75 percentage point for CY 2018.

      We did not receive any public comments on our proposal. Therefore, we are implementing our proposal without modification.

      To set the OPPS conversion factor for the CY 2018 OPPS/ASC proposed rule, we proposed to increase the CY 2017 conversion factor of $75.001 by 1.75 percent (82 FR 33589). In accordance with section 1833(t)(9)(B) of the Act, we proposed further to adjust the conversion factor for CY 2018 to ensure that any revisions made to the wage index and rural adjustment were made on a budget neutral basis. We proposed to calculate an overall budget neutrality factor of 0.9999 for wage index changes by comparing proposed total estimated payments from our simulation model using the proposed FY 2018 IPPS wage indexes to those payments using the FY 2017 IPPS wage indexes, as adopted on a calendar year basis for the OPPS.

      For the CY 2018 OPPS/ASC proposed rule, we proposed to maintain the current rural adjustment policy, as discussed in section II.E. of this final rule with comment period. Therefore, the proposed budget neutrality factor for the rural adjustment was 1.0000.

      For the CY 2018 OPPS/ASC proposed rule, we proposed to continue previously established policies for implementing the cancer hospital payment adjustment described in section 1833(t)(18) of the Act, as discussed in section II.F. of this final rule with comment period. We proposed to calculate a CY 2018 budget neutrality adjustment factor for the cancer hospital payment adjustment by comparing estimated total CY 2018 payments under section 1833(t) of the Act, including the proposed CY 2018 cancer hospital payment adjustment, to estimated CY 2018 total payments using the CY 2017 final cancer hospital payment adjustment as required under section 1833(t)(18)(B) of the Act. The CY 2018 proposed estimated payments applying the proposed CY 2018 cancer hospital payment adjustment were less than estimated payments applying the CY 2017 final cancer hospital payment adjustment. Therefore, we proposed to apply a budget neutrality adjustment factor of 1.0003 to the conversion factor for the cancer hospital payment adjustment. In accordance with section 16002(b) of the 21st Century Cures Act, we stated in the proposed rule that we are applying a budget neutrality factor calculated as if the proposed cancer hospital adjustment target payment-to-cost ratio was 0.90, not the 0.89 target payment-to-cost ratio we are applying as stated in section II.F. of the proposed rule.

      For the CY 2018 OPPS/ASC proposed rule, we estimated that proposed pass-through spending for drugs, biologicals, and devices for CY 2018 would equal approximately $26.2 million, which represented 0.04 percent of total projected CY 2018 OPPS spending. Therefore, the proposed conversion factor would be adjusted by the difference between the 0.26 percent estimate of pass-through spending for CY 2017 and the 0.04 percent estimate of proposed pass-through spending for CY 2018, resulting in a proposed adjustment for CY 2018 of 0.22 percent. Proposed estimated payments for outliers would remain at 1.0 percent of total OPPS payments for CY 2018. We estimated for the proposed rule that outlier payments would be 1.04 percent of total OPPS payments in CY 2017; the 1.0 percent for proposed outlier payments in CY 2018 would constitute a 0.04 percent decrease in payment in CY 2018 relative to CY 2017.

      For the CY 2018 OPPS/ASC proposed rule, we also proposed that hospitals that fail to meet the reporting requirements of the Hospital OQR Program would continue to be subject to a further reduction of 2.0 percentage points to the OPD fee schedule increase factor. For hospitals that fail to meet the requirements of the Hospital OQR Program, we proposed to make all other adjustments discussed above, but use a reduced OPD fee schedule update factor of -0.25 percent (that is, the proposed OPD fee schedule increase factor of 1.75 percent further reduced by 2.0 percentage points). This would result in a proposed reduced conversion factor for CY 2018 of $74.953 for hospitals that fail to meet the Hospital OQR Program requirements (a difference of -

      1.530 in

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      the conversion factor relative to hospitals that met the requirements).

      In summary, for CY 2018, we proposed to amend Sec. 419.32(b)(1)(iv)(B) by adding a new paragraph (9) to reflect the reductions to the OPD fee schedule increase factor that are required for CY 2018 to satisfy the statutory requirements of sections 1833(t)(3)(F) and (t)(3)(G)(v) of the Act. We proposed to use a reduced conversion factor of $74.953 in the calculation of payments for hospitals that fail to meet the Hospital OQR Program requirements (a difference of -1.530 in the conversion factor relative to hospitals that met the requirements).

      For CY 2018, we proposed to use a conversion factor of $76.483 in the calculation of the national unadjusted payment rates for those items and services for which payment rates are calculated using geometric mean costs; that is, the proposed OPD fee schedule increase factor of 1.75 percent for CY 2018, the required proposed wage index budget neutrality adjustment of approximately 0.9999, the proposed cancer hospital payment adjustment of 1.0003, and the proposed adjustment of 0.22 percentage point of projected OPPS spending for the difference in the pass-through spending and outlier payments that resulted in a proposed conversion factor for CY 2018 of $76.483.

      We invited public comments on these proposals. However, we did not receive any public comments. Therefore, we are finalizing these proposals without modification, as discussed below.

      For CY 2018, we proposed to continue previously established policies for implementing the cancer hospital payment adjustment described in section 1833(t)(18) of the Act, as discussed in section II.F. of this final rule with comment period. Based on the updated claims data for this final rule with comment period used in calculating the cancer hospital payment adjustment in section II.F. of this final rule with comment period, the target PCR for the cancer hospital payment adjustment, which was 0.91 for CY 2017, is 0.88 for CY 2018. Because we budget neutralize using the target PCR ratio prior to implementation of section 16002 (b) of the 21st Century Cures Act, we are applying a budget neutrality adjustment factor of 1.0008 to the conversion factor for the cancer hospital payment adjustment for CY 2018.

      In the CY 2018 OPPS/ASC proposed rule (82 FR 33712), we estimated a 1.4 percent adjustment to nondrug OPPS payment rates as a result of the proposed payment adjustment to separately payable nonpass-through drugs purchased under the 340B Program. As part of that proposed policy, we noted that our adjustment in the final rule could potentially change as a result of changes such as updated data, modifications to the estimate methodology, and other factors. Applying the final payment policy for drugs purchased under the 340B Program, as described in section V.B.7. of this final rule with comment period, results in an estimated reduction of approximately $1.6 billion in separately paid OPPS drug payments. To ensure budget neutrality under the OPPS after applying this alternative payment methodology for drugs purchased under the 340B Program, we applied an offset of approximately $1.6 billion into the OPPS conversion factor, which results in a final adjustment of 1.0319 to the OPPS conversion factor.

      As a result of these finalized policies, the OPD fee schedule increase factor for the CY 2018 OPPS is 1.35 percent (which is 2.7 percent, the estimate of the hospital inpatient market basket percentage increase, less the 0.6 percentage point MFP adjustment, and less the 0.75 percentage point additional adjustment). For CY 2018, we are using a conversion factor of $78.636 in the calculation of the national unadjusted payment rates for those items and services for which payment rates are calculated using geometric mean costs; that is, the OPD fee schedule increase factor of 1.35 percent for CY 2018, the required wage index budget neutrality adjustment of approximately 0.9997, the cancer hospital payment adjustment of 1.0008, the adjustment for drugs purchased under the 340B Program of 1.0319, and the adjustment of 0.2 percentage point of projected OPPS spending for the difference in the pass-through spending and outlier payments that result in a conversion factor for CY 2018 of $78.636.

    2. Wage Index Changes

      Section 1833(t)(2)(D) of the Act requires the Secretary to determine a wage adjustment factor to adjust the portion of payment and coinsurance attributable to labor-related costs for relative differences in labor and labor-related costs across geographic regions in a budget neutral manner (codified at 42 CFR 419.43(a)). This portion of the OPPS payment rate is called the OPPS labor-related share. Budget neutrality is discussed in section II.B. of this final rule with comment period.

      The OPPS labor-related share is 60 percent of the national OPPS payment. This labor-related share is based on a regression analysis that determined that, for all hospitals, approximately 60 percent of the costs of services paid under the OPPS were attributable to wage costs. We confirmed that this labor-related share for outpatient services is appropriate during our regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS final rule with comment period (70 FR 68553). In the CY 2018 OPPS/ASC proposed rule (82 FR 33590), we proposed to continue this policy for the CY 2018 OPPS. We refer readers to section II.H. of this final rule with comment period for a description and an example of how the wage index for a particular hospital is used to determine payment for the hospital. We did not receive any public comments on this proposal. Therefore, for the reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 FR 33590), we are finalizing our proposal to continue this policy as discussed above for the CY 2018 OPPS without modification.

      As discussed in the claims accounting narrative included with the supporting documentation for this final rule with comment period (which is available via the Internet on the CMS Web site), for estimating APC costs, we standardize 60 percent of estimated claims costs for geographic area wage variation using the same FY 2018 pre-reclassified wage index that the IPPS uses to standardize costs. This standardization process removes the effects of differences in area wage levels from the determination of a national unadjusted OPPS payment rate and copayment amount.

      Under 42 CFR 419.41(c)(1) and 419.43(c) (published in the OPPS April 7, 2000 final rule with comment period (65 FR 18495 and 18545)), the OPPS adopted the final fiscal year IPPS post-reclassified wage index as the calendar year wage index for adjusting the OPPS standard payment amounts for labor market differences. Therefore, the wage index that applies to a particular acute care, short-stay hospital under the IPPS also applies to that hospital under the OPPS. As initially explained in the September 8, 1998 OPPS proposed rule (63 FR 47576), we believe that using the IPPS wage index as the source of an adjustment factor for the OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. In accordance with section 1886(d)(3)(E) of the Act, the IPPS wage index is updated annually.

      The Affordable Care Act contained several provisions affecting the wage index. These provisions were discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74191). Section 10324 of the Affordable Care Act added section 1886(d)(3)(E)(iii)(II)

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      to the Act, which defines a frontier State and amended section 1833(t) of the Act to add paragraph (19), which requires a frontier State wage index floor of 1.00 in certain cases, and states that the frontier State floor shall not be applied in a budget neutral manner. We codified these requirements at Sec. 419.43(c)(2) and (3) of our regulations. For the CY 2018 OPPS, we proposed to implement this provision in the same manner as we have since CY 2011 (82 FR 33591). Under this policy, the frontier State hospitals would receive a wage index of 1.00 if the otherwise applicable wage index (including reclassification, the rural floor, and rural floor budget neutrality) is less than 1.00 (as discussed below and in the CY 2018 OPPS/ASC proposed rule (82 FR 33591 through 33592)), we proposed not to extend the imputed floor under the OPPS for CY 2018 and subsequent years, consistent with our proposal in the FY 2018 IPPS/LTCH PPS proposed rule (81 FR 19904 through 19905) not to extend the imputed floor under the IPPS for FY 2018 and subsequent fiscal years). Because the HOPD receives a wage index based on the geographic location of the specific inpatient hospital with which it is associated, we stated that the frontier State wage index adjustment applicable for the inpatient hospital also would apply for any associated HOPD. In the proposed rule (82 FR 33591), we referred readers to the FY 2011 through FY 2017 IPPS/

      LTCH PPS final rules for discussions regarding this provision, including our methodology for identifying which areas meet the definition of ``frontier States'' as provided for in section 1886(d)(3)(E)(iii)(II) of the Act. We invited public comments on this proposal.

      We did not receive any public comments on this proposal. Therefore, for the reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 FR 33591), we are finalizing our proposal to implement the frontier State floor under the OPPS in the same manner as we have since CY 2011. We note that, after we made our proposal in the FY 2018 IPPS/

      LTCH PPS proposed rule not to extend the imputed floor under the IPPS for FY 2018 and subsequent fiscal years (82 FR 19904 through 19905), and our proposal in the CY 2018 OPPS/ASC proposed rule not to extend the imputed floor under the OPPS for CY 2018 and subsequent years (82 FR 33592), we decided in the FY 2018 IPPS/LTCH PPS final rule not to finalize our proposal to discontinue the imputed floor under the IPPS (82 FR 38138 through 38142). As discussed below, consistent with the FY 2018 IPPS/LTCH PPS final rule, we are not finalizing our proposal to discontinue application of the imputed floor under the OPPS. This means that the applicable wage index, which can be superseded by the frontier State wage index if the applicable criteria are met, could also be affected by the imputed floor. We discuss our policy on the extension of the imputed floor under the IPPS as finalized in the FY 2018 IPPS/

      LTCH PPS final rule (82 FR 38142), and under the OPPS as finalized in this rule, in more detail later in this section.

      In addition to the changes required by the Affordable Care Act, we note that the FY 2018 IPPS wage indexes continue to reflect a number of adjustments implemented over the past few years, including, but not limited to, reclassification of hospitals to different geographic areas, the rural floor provisions, an adjustment for occupational mix, and an adjustment to the wage index based on commuting patterns of employees (the out-migration adjustment). In the CY 2018 OPPS/ASC proposed rule, we referred readers to the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19898 through 19915) for a detailed discussion of all proposed changes to the FY 2018 IPPS wage indexes. We note that, in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19905), we proposed not to apply the imputed floor to the IPPS wage index computations for FY 2018 and subsequent fiscal years. Consistent with this, we proposed in the CY 2018 OPPS/ASC proposed rule (82 FR 33592) not to extend the imputed floor policy under the OPPS beyond December 31, 2017 (the date the imputed floor policy is set to expire under the OPPS). However, in the FY 2018 IPPS/LTCH PPS final rule, we did not finalize our proposal to discontinue the imputed floor under the IPPS, and instead decided to temporarily extend the imputed floor for an additional year through FY 2018, while we continue to assess the effects of this policy and whether to continue or discontinue the imputed floor for the long term. As discussed below, consistent with the FY 2018 IPPS/LTCH PPS final rule, we are not finalizing our proposal to discontinue application of the imputed floor under the OPPS, but are instead continuing the imputed floor policy under the OPPS for an additional year, through December 31, 2018. We refer readers to the FY 2018 IPPS/LTCH PPS proposed and final rules (82 FR 19898 through 19915 and 82 FR 38129 through 38157, respectively) for a detailed discussion of all proposed and final changes to the FY 2018 IPPS wage indexes (including our proposed and final policy regarding the imputed floor for FY 2018 and subsequent fiscal years). In addition, we refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65842 through 65844) and subsequent OPPS rules for a detailed discussion of the history of these wage index adjustments as applied under the OPPS.

      Summarized below are comments we received regarding the application of the rural and imputed floor policies under the OPPS, along with our responses.

      Comment: One commenter opposed applying budget neutrality for the rural floor under the OPPS on a national basis. The commenter believed applying budget neutrality on a national basis disadvantages hospitals in most States while benefiting hospitals in a few States that have taken advantage of the system where a rural hospital has a wage index higher than most or all urban hospitals in a State. The commenter stated that rural floor budget neutrality currently requires all wage indexes for hospitals throughout the nation to be reduced. However, hospitals in those States that have higher wage indexes because of the rural floor are not substantially affected by the wage index reductions. Therefore, the commenter supported calculating rural floor budget neutrality under the OPPS for each individual State.

      Response: We appreciate this comment. We acknowledge that the application of the wage index and applicable wage index adjustments to OPPS payment rates may create distributional payment variations, especially within a budget neutral system. However, we continue to believe it is reasonable and appropriate to continue the current policy of applying budget neutrality for the rural floor under the OPPS on a national basis, consistent with the IPPS. We believe that hospital inpatient and outpatient departments are subject to the same labor cost environment, and therefore, the wage index and any applicable wage index adjustments (including the rural floor and rural floor budget neutrality) should be applied in the same manner under the IPPS and OPPS. Furthermore, we believe that applying the rural floor and rural floor budget neutrality in the same manner under the IPPS and OPPS is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall. In addition, we believe the application of different wage indexes and wage index adjustments under the IPPS and OPPS would add a level of administrative complexity that is overly burdensome and unnecessary.

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      Therefore, we are continuing the current policy of applying budget neutrality for the rural floor under the OPPS on a national basis, consistent with the IPPS.

      Comment: One commenter supported the proposal to not apply the imputed floor to the IPPS wage index computations for FY 2018 and subsequent fiscal years when calculating the hospital wage indexes for the OPPS.

      Response: In the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19905), we proposed not to apply the imputed floor to the IPPS wage index computations for FY 2018 and subsequent fiscal years. Consistent with this proposal, we proposed in the CY 2018 OPPS/ASC proposed rule (82 FR 33592) not to extend the imputed floor policy under the OPPS beyond December 31, 2017 (the date the imputed floor policy is set to expire under the OPPS). As discussed in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142), after consideration of the many comments we received both in support of and against our proposal to discontinue the imputed floor under the IPPS, we decided to temporarily extend the imputed floor for an additional year under the IPPS through FY 2018, while we continue to assess the effects of this policy and whether to continue or discontinue the imputed floor for the long term. Therefore, in the FY 2018 IPPS/LTCH PPS final rule, we extended the imputed floor policy under both the original methodology and the alternative methodology for an additional year, through September 30, 2018. We refer readers to the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142) for a detailed discussion of our final policy and rationale regarding application of the imputed floor under the IPPS for FY 2018. Given the inseparable, subordinate status of the HOPD within the hospital overall, we believe that using the IPPS wage index and wage index adjustments, including the imputed floor, as the source of an adjustment factor for the OPPS is reasonable and logical. Furthermore, as we previously stated, we believe that hospital inpatient and outpatient departments are subject to the same labor cost environment and, therefore, the wage index and any applicable wage index adjustments (including the imputed floor) should be applied in the same manner under the IPPS and OPPS. In addition, as discussed above, we believe the application of different wage index adjustments under the IPPS and OPPS would add a level of administrative complexity that is overly burdensome and unnecessary. Thus, as discussed further below, consistent with the FY 2018 IPPS/LTCH PPS final rule, we are not finalizing our proposal to discontinue application of the imputed floor under the OPPS, and instead are temporarily extending the imputed floor policy under the OPPS for an additional year.

      After consideration of the public comments we received and for the reasons discussed above, consistent with the FY 2018 IPPS/LTCH PPS final rule, we have decided to extend the imputed floor policy under the OPPS for an additional year, through December 31, 2018, while we continue to assess the effects of this policy and whether to continue or discontinue the imputed floor for the long term. Therefore, we are not finalizing our proposal to discontinue the imputed floor policy under the OPPS. We continue to believe that using the final fiscal year IPPS post-reclassified wage index, inclusive of any adjustments (including the imputed floor), as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment standardized amount is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall.

      As discussed in the FY 2015 IPPS/LTCH PPS final rule (79 FR 49951 through 49963), the FY 2016 IPPS/LTCH PPS final rule (80 FR 49488 through 49489 and 49494 through 49496), and the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), the Office of Management and Budget (OMB) issued revisions to the labor market area delineations on February 28, 2013 (based on 2010 Decennial Census data), that included a number of significant changes such as new Core Based Statistical Areas (CBSAs), urban counties that became rural, rural counties that became urban, and existing CBSAs that were split apart (OMB Bulletin 13-01). This bulletin can be found at: https://obamawhitehouse.archives.gov/sites/default/files/omb/bulletins/2013/b13-01.pdf. In the FY 2015 IPPS/LTCH PPS final rule (79 FR 49950 through 49985), we adopted the use of the OMB labor market area delineations contained in OMB Bulletin No. 13-01, effective October 1, 2014. In the FY 2017 IPPS/LTCH PPS final rule (81 FR 56913), we adopted revisions to statistical areas contained in OMB Bulletin No. 15-01, issued on July 15, 2015, which provided updates to and superseded OMB Bulletin No. 13-01 that was issued on February 28, 2013. We believe that it is important for the OPPS to use the latest labor market area delineations available as soon as is reasonably possible in order to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. Therefore, for purposes of the OPPS, in the CY 2017 OPPS/

      ASC final rule with comment period (81 FR 79598), we adopted the revisions to the OMB statistical area delineations contained in OMB Bulletin No. 15-01, effective January 1, 2017, beginning with the CY 2017 OPPS wage indexes.

      CBSAs are made up of one or more constituent counties. Each CBSA and constituent county has its own unique identifying codes. The FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19898 through 19899) and final rule (82 FR 38130) discuss the two different lists of codes to identify counties: Social Security Administration (SSA) codes and Federal Information Processing Standard (FIPS) codes. Historically, CMS has listed and used SSA and FIPS county codes to identify and crosswalk counties to CBSA codes for purposes of the IPPS and OPPS wage indexes. However, the SSA county codes are no longer being maintained and updated, although the FIPS codes continue to be maintained by the U.S. Census Bureau. The Census Bureau's most current statistical area information is derived from ongoing census data received since 2010; the most recent data are from 2015. In the FY 2018 IPPS/LTCH PPS proposed rule (81 FR 19898), for purposes of crosswalking counties to CBSAs for the IPPS wage index, we proposed to discontinue the use of the SSA county codes and begin using only the FIPS county codes. (We note that we finalized the proposal to discontinue use of SSA county codes and begin using only the FIPS county codes for purposes of crosswalking counties to CBSAs in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130)). Similarly, for the purposes of crosswalking counties to CBSAs for the OPPS wage index, in the CY 2018 OPPS/ASC proposed rule (82 FR 33591), we proposed to discontinue the use of SSA county codes and begin using only the FIPS county codes. We invited public comments on this proposal. We did not receive any public comments on this proposal. Thus, for the reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 FR 33591), we are finalizing, without modification, our proposal to discontinue the use of SSA county codes and begin using only the FIPS county codes for the purposes of crosswalking counties to CBSAs for the OPPS wage index.

      The Census Bureau maintains a complete list of changes to counties or county equivalent entities on the Web site at: https://

      www.census.gov/geo/

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      reference/county-changes.html. In our proposed transition to using only FIPS codes for counties for the IPPS wage index, in the FY 2018 IPPS/

      LTCH PPS proposed rule (82 FR 19899), we proposed to update the FIPS codes used for crosswalking counties to CBSAs for the IPPS wage index effective October 1, 2017, to incorporate changes to the counties or county equivalent entities included in the Census Bureau's most recent list. We proposed to include these updates to calculate the area wage indexes in a manner that is generally consistent with the CBSA-based methodologies finalized in the FY 2005 IPPS final rule and the FY 2015 IPPS/LTCH PPS final rule. Based on information included in the Census Bureau's Web site, since 2010, the Census Bureau has made the following updates to the FIPS codes for counties or county equivalent entities:

      Petersburg Borough, AK (FIPS State County Code 02-195), CBSA 02, was created from part of former Petersburg Census Area (02-

      195) and part of Hoonah-Angoon Census Area (02-105). The CBSA code remains 02.

      The name of La Salle Parish, LA (FIPS State County Code 22-059), CBSA 14, is now LaSalle Parish, LA (FIPS State County Code 22-

      059). The CBSA code remains as 14.

      The name of Shannon County, SD (FIPS State County Code 46-

      113), CBSA 43, is now Oglala Lakota County, SD (FIPS State County Code 46-102). The CBSA code remains as 43.

      In the FY 2018 IPPS/LTCH PPS final rule (82 FR 38130), for the IPPS, we finalized our proposal to implement these FIPS code updates, effective October 1, 2017, beginning with the FY 2018 wage indexes. We note that while the county update changes listed earlier changed the county names, the CBSAs to which these counties map did not change from the prior counties. Therefore, there is no impact or change to hospitals in these counties; they continue to be considered rural for the IPPS wage index under these changes. Consistent with the FY 2018 IPPS/LTCH PPS proposed rule, in the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we proposed to implement these revisions for purposes of the OPPS, effective January 1, 2018, beginning with the CY 2018 OPPS wage indexes. We stated that we believe it is important to use the latest counties or county equivalent entities in order to properly crosswalk hospitals from a county to a CBSA for purposes of the OPPS wage index. In addition, we stated we believe that using the latest FIPS codes will allow us to maintain a more accurate and up-to-date payment system that reflects the reality of population shifts and labor market conditions. We invited public comments on this proposal.

      We did not receive any public comments on this proposal. Therefore, for the reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 FR 33591 through 33592), we are finalizing our proposal, without modification, to implement the FIPS code updates described above, effective January 1, 2018, beginning with the CY 2018 OPPS wage indexes. Tables 2 and 3 associated with the FY 2018 IPPS/LTCH PPS final rule and the County to CBSA Crosswalk File and Urban CBSAs and Constituent Counties for Acute Care Hospitals File posted on the CMS Web site reflect these county changes.

      In the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we proposed to use the FY 2018 hospital IPPS post-reclassified wage index for urban and rural areas as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment standardized amount for CY 2018. Therefore, we stated in the proposed rule that any adjustments for the FY 2018 IPPS post-reclassified wage index would be reflected in the final CY 2018 OPPS wage index. (We refer readers to the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 19898 through 19915) and final rule (82 FR 38129 through 38157), and the proposed and final FY 2018 hospital wage index files posted on the CMS Web site.) We invited public comments on this proposal. As discussed above, we received public comments regarding the application of the rural and imputed floors under the OPPS. We refer readers to our earlier discussion of these comments and our responses. After consideration of these comments, for the reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we are finalizing this proposal without modification. As stated earlier, we continue to believe that using the final fiscal year IPPS post-reclassified wage index, inclusive of any adjustments, as the wage index for the OPPS to determine the wage adjustments for both the OPPS payment rate and the copayment standardized amount is reasonable and logical, given the inseparable, subordinate status of the HOPD within the hospital overall.

      Hospitals that are paid under the OPPS, but not under the IPPS, do not have an assigned hospital wage index under the IPPS. Therefore, for non-IPPS hospitals paid under the OPPS, it is our longstanding policy to assign the wage index that would be applicable if the hospital were paid under the IPPS, based on its geographic location and any applicable wage index adjustments. In the CY 2018 OPPS/ASC proposed rule, we proposed to continue this policy for CY 2018, and included a brief summary of the major proposed FY 2018 IPPS wage index policies and adjustments that we proposed to apply to these hospitals under the OPPS for CY 2018. These proposals are summarized below. We invited public comments on these proposals.

      It has been our longstanding policy to allow non-IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a section 505 out-migration county (section 505 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA)). Applying this adjustment is consistent with our policy of adopting IPPS wage index policies for hospitals paid under the OPPS. We note that, because non-IPPS hospitals cannot reclassify, they are eligible for the out-migration wage adjustment if they are located in a section 505 out-migration county. This is the same out-migration adjustment policy that applies if the hospital were paid under the IPPS. For CY 2018, we proposed to continue our policy of allowing non-

      IPPS hospitals paid under the OPPS to qualify for the out-migration adjustment if they are located in a section 505 out-migration county (section 505 of the MMA). We did not receive any public comments on this proposal. Therefore, for the reasons discussed above and in the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we are finalizing this proposal without modification.

      As stated earlier, in the FY 2015 IPPS/LTCH PPS final rule, we adopted the OMB labor market area delineations issued by OMB in OMB Bulletin No. 13-01 on February 28, 2013, based on standards published on June 28, 2010 (75 FR 37246 through 37252) and the 2010 Census data to delineate labor market areas for purposes of the IPPS wage index. For IPPS wage index purposes, for hospitals that were located in urban CBSAs in FY 2014 but were designated as rural under these revised OMB labor market area delineations, we generally assigned them the urban wage index value of the CBSA in which they were physically located for FY 2014 for a period of 3 fiscal years (79 FR 49957 through 49960). To be consistent, we applied the same policy to hospitals paid under the OPPS but not under the IPPS so that such hospitals will maintain the wage index of the CBSA in which they were physically located for FY 2014 for 3 calendar years (until December 31, 2017). Because this 3-

      year transition will end at the end of CY

      Page 59262

      2017, it will no longer be applied in CY 2018.

      In addition, under the IPPS, the imputed floor policy was set to expire effective October 1, 2017. However, as discussed above and in the FY 2018 IPPS/LTCH PPS final rule (82 FR 38138 through 38142), we did not finalize our proposal not to extend the imputed floor policy under the IPPS for FY 2018 and subsequent fiscal years (82 FR 38132), and instead decided to extend the imputed floor policy for one additional year, through FY 2018. For purposes of the CY 2018 OPPS, we proposed not to extend the imputed floor policy beyond December 31, 2017. However, consistent with the FY 2018 IPPS/LTCH PPS final rule, as discussed above, we are extending the imputed floor policy under the OPPS for one additional year, through December 31, 2018. Therefore, for CY 2018, for hospitals paid under the OPPS but not under the IPPS, the imputed floor policy will continue to apply through December 31, 2018.

      For CMHCs, for CY 2018, we proposed to continue to calculate the wage index by using the post-reclassification IPPS wage index based on the CBSA where the CMHC is located. As with OPPS hospitals and for the same reasons, for CMHCs previously located in urban CBSAs that were designated as rural under the revised OMB labor market area delineations in OMB Bulletin No. 13-01, we finalized a policy to maintain the urban wage index value of the CBSA in which they were physically located for CY 2014 for 3 calendar years (until December 31, 2017). Because this 3-year transition will end at the end of CY 2017, it will not be applied in CY 2018. Furthermore, in the CY 2018 OPPS/ASC proposed rule (82 FR 33592), we proposed that the wage index that applies to CMHCs would include the rural floor adjustment, but not the imputed floor adjustment, given that we had proposed not to extend the imputed floor policy under the OPPS beyond December 31, 2017 (the expiration date for the imputed floor under the OPPS). We also proposed that the wage index that applies to CMHCs would not include the out-

      migration adjustment because that adjustment only applies to hospitals. We did not receive any public comments regarding these proposals, and are finalizing these proposals with the following modification. Because, as discussed above, we are extending the application of the imputed floor under the OPPS for an additional year, through December 31, 2018, the wage index that applies to CMHCs will continue to include the imputed floor adjustment through December 31, 2018.

      Table 2 associated with the FY 2018 IPPS/LTCH PPS final rule (available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html) identifies counties eligible for the out-migration adjustment and IPPS hospitals that will receive the adjustment for FY 2018. We are including the out-migration adjustment information from Table 2 associated with the FY 2018 IPPS/LTCH PPS final rule as Addendum L to this final rule with comment period with the addition of non-IPPS hospitals that will receive the section 505 out-migration adjustment under the CY 2018 OPPS. Addendum L is available via the Internet on the CMS Web site. We refer readers to the CMS Web site for the OPPS at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. At this link, readers will find a link to the final FY 2018 IPPS wage index tables and Addendum L.

    3. Statewide Average Default CCRs

      In addition to using CCRs to estimate costs from charges on claims for ratesetting, CMS uses overall hospital-specific CCRs calculated from the hospital's most recent cost report to determine outlier payments, payments for pass-through devices, and monthly interim transitional corridor payments under the OPPS during the PPS year. MACs cannot calculate a CCR for some hospitals because there is no cost report available. For these hospitals, CMS uses the statewide average default CCRs to determine the payments mentioned earlier until a hospital's MAC is able to calculate the hospital's actual CCR from its most recently submitted Medicare cost report. These hospitals include, but are not limited to, hospitals that are new, hospitals that have not accepted assignment of an existing hospital's provider agreement, and hospitals that have not yet submitted a cost report. CMS also uses the statewide average default CCRs to determine payments for hospitals that appear to have a biased CCR (that is, the CCR falls outside the predetermined ceiling threshold for a valid CCR) or for hospitals in which the most recent cost report reflects an all-inclusive rate status (Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 10.11).

      In the CY 2018 OPPS/ASC proposed rule (82 FR 33593), we proposed to update the default ratios for CY 2018 using the most recent cost report data. We discussed our policy for using default CCRs, including setting the ceiling threshold for a valid CCR, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599) in the context of our adoption of an outlier reconciliation policy for cost reports beginning on or after January 1, 2009. For detail on our process for calculating the statewide average CCRs, we referred readers to the CY 2018 OPPS proposed rule Claims Accounting Narrative that is posted on the CMS Web site. Table 10 published in the proposed rule (82 FR 33593 through 33594) listed the proposed statewide average default CCRs for OPPS services furnished on or after January 1, 2018, based on proposed rule data.

      We did not receive any public comments on our proposal to use statewide average default CCRs if a MAC cannot calculate a CCR for a hospital and to use these CCRs to adjust charges to costs on claims data for setting the final CY 2018 OPPS relative payment weights. Therefore, we are finalizing our proposal without modification.

      Table 9 below lists the statewide average default CCRs for OPPS services furnished on or after January 1, 2018, based on final rule data.

      Table 9--CY 2018 Statewide Average CCRs

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

      Previous

      CY 2018 default CCR

      State Urban/rural default CCR (CY 2017 OPPS

      final rule)

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

      ALASKA........................................ RURAL........................... 0.659 0.449

      ALASKA........................................ URBAN........................... 0.218 0.237

      ALABAMA....................................... RURAL........................... 0.190 0.196

      ALABAMA....................................... URBAN........................... 0.155 0.158

      ARKANSAS...................................... RURAL........................... 0.186 0.196

      Page 59263

      ARKANSAS...................................... URBAN........................... 0.200 0.205

      ARIZONA....................................... RURAL........................... 0.232 0.238

      ARIZONA....................................... URBAN........................... 0.160 0.176

      CALIFORNIA.................................... RURAL........................... 0.181 0.179

      CALIFORNIA.................................... URBAN........................... 0.193 0.188

      COLORADO...................................... RURAL........................... 0.346 0.354

      COLORADO...................................... URBAN........................... 0.204 0.208

      CONNECTICUT................................... RURAL........................... 0.324 0.402

      CONNECTICUT................................... URBAN........................... 0.249 0.253

      DISTRICT OF COLUMBIA.......................... URBAN........................... 0.279 0.286

      DELAWARE...................................... URBAN........................... 0.295 0.288

      FLORIDA....................................... RURAL........................... 0.158 0.169

      FLORIDA....................................... URBAN........................... 0.138 0.143

      GEORGIA....................................... RURAL........................... 0.222 0.230

      GEORGIA....................................... URBAN........................... 0.198 0.196

      HAWAII........................................ RURAL........................... 0.332 0.338

      HAWAII........................................ URBAN........................... 0.322 0.319

      IOWA.......................................... RURAL........................... 0.296 0.291

      IOWA.......................................... URBAN........................... 0.254 0.252

      IDAHO......................................... RURAL........................... 0.339 0.341

      IDAHO......................................... URBAN........................... 0.369 0.401

      ILLINOIS...................................... RURAL........................... 0.214 0.241

      ILLINOIS...................................... URBAN........................... 0.208 0.209

      INDIANA....................................... RURAL........................... 0.299 0.272

      INDIANA....................................... URBAN........................... 0.213 0.218

      KANSAS........................................ RURAL........................... 0.264 0.269

      KANSAS........................................ URBAN........................... 0.199 0.194

      KENTUCKY...................................... RURAL........................... 0.184 0.194

      KENTUCKY...................................... URBAN........................... 0.187 0.189

      LOUISIANA..................................... RURAL........................... 0.212 0.217

      LOUISIANA..................................... URBAN........................... 0.195 0.201

      MASSACHUSETTS................................. RURAL........................... 0.322 0.316

      MASSACHUSETTS................................. URBAN........................... 0.348 0.345

      MAINE......................................... RURAL........................... 0.419 0.425

      MAINE......................................... URBAN........................... 0.422 0.413

      MARYLAND...................................... RURAL........................... 0.258 0.264

      MARYLAND...................................... URBAN........................... 0.227 0.229

      MICHIGAN...................................... RURAL........................... 0.302 0.295

      MICHIGAN...................................... URBAN........................... 0.318 0.324

      MINNESOTA..................................... RURAL........................... 0.379 0.398

      MINNESOTA..................................... URBAN........................... 0.302 0.319

      MISSOURI...................................... RURAL........................... 0.220 0.222

      MISSOURI...................................... URBAN........................... 0.240 0.261

      MISSISSIPPI................................... RURAL........................... 0.213 0.224

      MISSISSIPPI................................... URBAN........................... 0.160 0.167

      MONTANA....................................... RURAL........................... 0.486 0.450

      MONTANA....................................... URBAN........................... 0.350 0.368

      NORTH CAROLINA................................ RURAL........................... 0.206 0.216

      NORTH CAROLINA................................ URBAN........................... 0.212 0.223

      NORTH DAKOTA.................................. RURAL........................... 0.366 0.411

      NORTH DAKOTA.................................. URBAN........................... 0.369 0.334

      NEBRASKA...................................... RURAL........................... 0.313 0.294

      NEBRASKA...................................... URBAN........................... 0.233 0.238

      NEW HAMPSHIRE................................. RURAL........................... 0.307 0.320

      NEW HAMPSHIRE................................. URBAN........................... 0.255 0.279

      NEW JERSEY.................................... URBAN........................... 0.200 0.195

      NEW MEXICO.................................... RURAL........................... 0.224 0.225

      NEW MEXICO.................................... URBAN........................... 0.284 0.280

      NEVADA........................................ RURAL........................... 0.175 0.196

      NEVADA........................................ URBAN........................... 0.114 0.123

      NEW YORK...................................... RURAL........................... 0.299 0.309

      NEW YORK...................................... URBAN........................... 0.303 0.292

      OHIO.......................................... RURAL........................... 0.280 0.292

      OHIO.......................................... URBAN........................... 0.203 0.207

      OKLAHOMA...................................... RURAL........................... 0.215 0.231

      OKLAHOMA...................................... URBAN........................... 0.169 0.180

      OREGON........................................ RURAL........................... 0.290 0.280

      OREGON........................................ URBAN........................... 0.336 0.344

      Page 59264

      PENNSYLVANIA.................................. RURAL........................... 0.267 0.274

      PENNSYLVANIA.................................. URBAN........................... 0.173 0.179

      PUERTO RICO................................... URBAN........................... 0.577 0.527

      RHODE ISLAND.................................. URBAN........................... 0.276 0.291

      SOUTH CAROLINA................................ RURAL........................... 0.170 0.185

      SOUTH CAROLINA................................ URBAN........................... 0.191 0.190

      SOUTH DAKOTA.................................. RURAL........................... 0.391 0.383

      SOUTH DAKOTA.................................. URBAN........................... 0.242 0.229

      TENNESSEE..................................... RURAL........................... 0.173 0.181

      TENNESSEE..................................... URBAN........................... 0.174 0.180

      TEXAS......................................... RURAL........................... 0.205 0.214

      TEXAS......................................... URBAN........................... 0.168 0.177

      UTAH.......................................... RURAL........................... 0.391 0.349

      UTAH.......................................... URBAN........................... 0.304 0.315

      VIRGINIA...................................... RURAL........................... 0.177 0.191

      VIRGINIA...................................... URBAN........................... 0.215 0.226

      VERMONT....................................... RURAL........................... 0.393 0.426

      VERMONT....................................... URBAN........................... 0.378 0.340

      WASHINGTON.................................... RURAL........................... 0.256 0.271

      WASHINGTON.................................... URBAN........................... 0.323 0.294

      WISCONSIN..................................... RURAL........................... 0.348 0.354

      WISCONSIN..................................... URBAN........................... 0.308 0.290

      WEST VIRGINIA................................. RURAL........................... 0.253 0.266

      WEST VIRGINIA................................. URBAN........................... 0.297 0.285

      WYOMING....................................... RURAL........................... 0.407 0.429

      WYOMING....................................... URBAN........................... 0.327 0.311

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

    4. Adjustment for Rural Sole Community Hospitals (SCHs) and Essential Access Community Hospitals (EACHs) Under Section 1833(t)(13)(B) of the Act for CY 2018

      In the CY 2006 OPPS final rule with comment period (70 FR 68556), we finalized a payment increase for rural sole community hospitals (SCHs) of 7.1 percent for all services and procedures paid under the OPPS, excluding drugs, biologicals, brachytherapy sources, and devices paid under the pass-through payment policy in accordance with section 1833(t)(13)(B) of the Act, as added by section 411 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173). Section 1833(t)(13) of the Act provided the Secretary the authority to make an adjustment to OPPS payments for rural hospitals, effective January 1, 2006, if justified by a study of the difference in costs by APC between hospitals in rural areas and hospitals in urban areas. Our analysis showed a difference in costs for rural SCHs. Therefore, for the CY 2006 OPPS, we finalized a payment adjustment for rural SCHs of 7.1 percent for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, brachytherapy sources, and devices paid under the pass-

      through payment policy, in accordance with section 1833(t)(13)(B) of the Act.

      In the CY 2007 OPPS/ASC final rule with comment period (71 FR 68010 and 68227), for purposes of receiving this rural adjustment, we revised Sec. 419.43(g) of the regulations to clarify that essential access community hospitals (EACHs) also are eligible to receive the rural SCH adjustment, assuming these entities otherwise meet the rural adjustment criteria. Currently, two hospitals are classified as EACHs, and as of CY 1998, under section 4201(c) of Public Law 105-33, a hospital can no longer become newly classified as an EACH.

      This adjustment for rural SCHs is budget neutral and applied before calculating outlier payments and copayments. We stated in the CY 2006 OPPS final rule with comment period (70 FR 68560) that we would not reestablish the adjustment amount on an annual basis, but we may review the adjustment in the future and, if appropriate, would revise the adjustment. We provided the same 7.1 percent adjustment to rural SCHs, including EACHs, again in CYs 2008 through 2017. Further, in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68590), we updated the regulations at Sec. 419.43(g)(4) to specify, in general terms, that items paid at charges adjusted to costs by application of a hospital-specific CCR are excluded from the 7.1 percent payment adjustment.

      In the CY 2018 OPPS/ASC proposed rule (82 FR 33594 through 33595), for the CY 2018 OPPS, we proposed to continue our policy of a 7.1 percent payment adjustment that is done in a budget neutral manner for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to costs.

      Comment: Commenters supported the proposed payment adjustment for rural SCHs and EACHs, and stated that this adjustment would support access to care in rural areas and provide additional resources for rural SCHs and EACHs.

      Response: We appreciate the commenters' support.

      After consideration of the public comments we received, we are finalizing the proposal for CY 2017 to continue our policy of a 7.1 percent payment adjustment that is done in a budget neutral manner for rural SCHs, including EACHs, for all services and procedures paid under the OPPS, excluding separately payable drugs and biologicals, devices paid under the pass-through payment policy, and items paid at charges reduced to costs.

      Page 59265

    5. Payment Adjustment for Certain Cancer Hospitals for CY 2018

      1. Background

      Since the inception of the OPPS, which was authorized by the Balanced Budget Act of 1997 (BBA) (Pub. L. 105-33), Medicare has paid the 11 hospitals that meet the criteria for cancer hospitals identified in section 1886(d)(1)(B)(v) of the Act under the OPPS for covered outpatient hospital services. These cancer hospitals are exempted from payment under the IPPS. With the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act of 1999 (Pub. L. 106-113), Congress established section 1833(t)(7) of the Act, ``Transitional Adjustment to Limit Decline in Payment,'' to determine OPPS payments to cancer and children's hospitals based on their pre-BBA payment amount (often referred to as ``held harmless'').

      As required under section 1833(t)(7)(D)(ii) of the Act, a cancer hospital receives the full amount of the difference between payments for covered outpatient services under the OPPS and a ``pre-BBA amount.'' That is, cancer hospitals are permanently held harmless to their ``pre-BBA amount,'' and they receive transitional outpatient payments (TOPs) or hold harmless payments to ensure that they do not receive a payment that is lower in amount under the OPPS than the payment amount they would have received before implementation of the OPPS, as set forth in section 1833(t)(7)(F) of the Act. The ``pre-BBA amount'' is the product of the hospital's reasonable costs for covered outpatient services occurring in the current year and the base payment-

      to-cost ratio (PCR) for the hospital defined in section 1833(t)(7)(F)(ii) of the Act. The ``pre-BBA amount'' and the determination of the base PCR are defined at 42 CFR 419.70(f). TOPs are calculated on Worksheet E, Part B, of the Hospital Cost Report or the Hospital Health Care Complex Cost Report (Form CMS-2552-96 or Form CMS-

      2552-10, respectively) as applicable each year. Section 1833(t)(7)(I) of the Act exempts TOPs from budget neutrality calculations.

      Section 3138 of the Affordable Care Act amended section 1833(t) of the Act by adding a new paragraph (18), which instructs the Secretary to conduct a study to determine if, under the OPPS, outpatient costs incurred by cancer hospitals described in section 1886(d)(1)(B)(v) of the Act with respect to APC groups exceed outpatient costs incurred by other hospitals furnishing services under section 1833(t) of the Act, as determined appropriate by the Secretary. Section 1833(t)(18)(A) of the Act requires the Secretary to take into consideration the cost of drugs and biologicals incurred by cancer hospitals and other hospitals. Section 1833(t)(18)(B) of the Act provides that, if the Secretary determines that cancer hospitals' costs are higher than those of other hospitals, the Secretary shall provide an appropriate adjustment under section 1833(t)(2)(E) of the Act to reflect these higher costs. In 2011, after conducting the study required by section 1833(t)(18)(A) of the Act, we determined that outpatient costs incurred by the 11 specified cancer hospitals were greater than the costs incurred by other OPPS hospitals. For a complete discussion regarding the cancer hospital cost study, we refer readers to the CY 2012 OPPS/ASC final rule with comment period (76 FR 74200 through 74201).

      Based on these findings, we finalized a policy to provide a payment adjustment to the 11 specified cancer hospitals that reflects their higher outpatient costs as discussed in the CY 2012 OPPS/ASC final rule with comment period (76 FR 74202 through 74206). Specifically, we adopted a policy to provide additional payments to the cancer hospitals so that each cancer hospital's final PCR for services provided in a given calendar year is equal to the weighted average PCR (which we refer to as the ``target PCR'') for other hospitals paid under the OPPS. The target PCR is set in advance of the calendar year and is calculated using the most recently submitted or settled cost report data that are available at the time of final rulemaking for the calendar year. The amount of the payment adjustment is made on an aggregate basis at cost report settlement. We note that the changes made by section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs are assessed as usual after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period. For CYs 2012 and 2013, the target PCR for purposes of the cancer hospital payment adjustment was 0.91. For CY 2014, the target PCR for purposes of the cancer hospital payment adjustment was 0.89. For CY 2015, the target PCR was 0.90. For CY 2016, the target PCR was 0.92, as discussed in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70362 through 70363). For CY 2017, the target PCR was 0.91, as discussed in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79603 through 7960).

      2. Proposed and Finalized Policy for CY 2018

      Section 16002(b) of the 21st Century Cures Act (Pub. L. 114-255) amended section 1833(t)(18) of the Act by adding subparagraph (C), which requires that in applying 42 CFR 419.43(i), that is, the payment adjustment for certain cancer hospitals, for services furnished on or after January 1, 2018, the target PCR adjustment be reduced by 1.0 percentage point less than what would otherwise apply. Section 16002(b) also provides that, in addition to the percentage reduction, the Secretary may consider making an additional percentage point reduction to the target PCR that takes into account payment rates for applicable items and services described under section 1833(t)(21)(C) of the Act for hospitals that are not cancer hospitals described under section 1886(d)(1)(B)(v) of the Act. Further, in making any budget neutrality adjustment under section 1833(t) of the Act, the Secretary shall not take into account the reduced expenditures that result from application of section 1833(t)(18)(C) of the Act. In the CY 2018 OPPS/ASC proposed rule (82 FR 33595), for CY 2018, we proposed to provide additional payments to the 11 specified cancer hospitals so that each cancer hospital's final PCR is equal to the weighted average PCR (or ``target PCR'') for the other OPPS hospitals using the most recent submitted or settled cost report data that were available at the time of the development of the proposed rule, reduced by 1.0 percentage point to comply with section 16002(b) of the 21st Century Cures Act. We did not propose an additional reduction beyond the 1.0 percentage point reduction required by section 16002(b) for CY 2018. To calculate the proposed CY 2018 target PCR, we used the same extract of cost report data from HCRIS, as discussed in section II.A. of the proposed rule, used to estimate costs for the CY 2018 OPPS. Using these cost report data, we included data from Worksheet E, Part B, for each hospital, using data from each hospital's most recent cost report, whether as submitted or settled.

      We then limited the dataset to the hospitals with CY 2016 claims data that we used to model the impact of the proposed CY 2018 APC relative payment weights (3,701 hospitals) because it is appropriate to use the same set of hospitals that we are using to calibrate the modeled CY 2018 OPPS. The cost report data for the hospitals in this dataset were from cost report periods with fiscal year ends ranging

      Page 59266

      from 2013 to 2016. We then removed the cost report data of the 49 hospitals located in Puerto Rico from our dataset because we do not believe that their cost structure reflects the costs of most hospitals paid under the OPPS and, therefore, their inclusion may bias the calculation of hospital-weighted statistics. We also removed the cost report data of 16 hospitals because these hospitals had cost report data that were not complete (missing aggregate OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in the study would have both the payment and cost data necessary to calculate a PCR for each hospital, leading to a proposed analytic file of 3,636 hospitals with cost report data.

      Using this smaller dataset of cost report data, we estimated that, on average, the OPPS payments to other hospitals furnishing services under the OPPS were approximately 90 percent of reasonable cost (weighted average PCR of 0.90). Therefore, after applying the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act, we proposed that the payment amount associated with the cancer hospital payment adjustment to be determined at cost report settlement would be the additional payment needed to result in a proposed target PCR equal to 0.89 for each cancer hospital.

      Table 11 of the proposed rule indicated the proposed estimated percentage increase in OPPS payments to each cancer hospital for CY 2018 due to the cancer hospital payment adjustment policy. We stated in the proposed rule that the actual amount of the CY 2018 cancer hospital payment adjustment for each cancer hospital will be determined at cost report settlement and will depend on each hospital's CY 2018 payments and costs. We noted that the requirements contained in section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs will be assessed as usual after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period.

      Comment: Several commenters supported the proposed cancer hospital payment adjustment for CY 2018.

      Response: We appreciate the commenters' support.

      After consideration of the public comments we received, we are finalizing our cancer hospital payment adjustment methodology as proposed. For this final rule with comment period, we are using the most recent cost report data through June 30, 2017 to update the adjustment. This update yields a target PCR of 0.88. We limited the dataset to the hospitals with CY 2016 claims data that we used to model the impact of the CY 2018 APC relative payment weights (3,724 hospitals) because it is appropriate to use the same set of hospitals that we are using to calibrate the modeled CY 2018 OPPS. The cost report data for the hospitals in this dataset were from cost report periods with fiscal year ends ranging from 2012 to 2017. We then removed the cost report data of the 49 hospitals located in Puerto Rico from our dataset because we do not believe that their cost structure reflects the costs of most hospitals paid under the OPPS and, therefore, their inclusion may bias the calculation of hospital-

      weighted statistics. We also removed the cost report data of 14 hospitals because these hospitals had cost report data that were not complete (missing aggregate OPPS payments, missing aggregate cost data, or missing both), so that all cost reports in the study would have both the payment and cost data necessary to calculate a PCR for each hospital, leading to an analytic file of 3,661 hospitals with cost report data.

      Using this smaller dataset of cost report data, we estimated a target PCR of 0.89. Therefore, after applying the 1.0 percentage point reduction as required by section 16002(b) of the 21st Century Cures Act, we are finalizing that the payment amount associated with the cancer hospital payment adjustment to be determined at cost report settlement will be the additional payment needed to result in a PCR equal to 0.88 for each cancer hospital. Table 10 below indicates the estimated percentage increase in OPPS payments to each cancer hospital for CY 2018 due to the cancer hospital payment adjustment policy. We note that the requirements contained in section 1833(t)(18) of the Act do not affect the existing statutory provisions that provide for TOPs for cancer hospitals. The TOPs will be assessed as usual after all payments, including the cancer hospital payment adjustment, have been made for a cost reporting period.

      Table 10--Estimated CY 2018 Hospital-Specific Payment Adjustment for

      Cancer Hospitals To Be Provided at Cost Report Settlement

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

      Estimated

      percentage

      increase in

      Provider No. Hospital name OPPS payments

      for CY 2018

      due to payment

      adjustment

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

      050146......................... City of Hope 31.5

      Comprehensive Cancer

      Center.

      050660......................... USC Norris Cancer 16.4

      Hospital.

      100079......................... Sylvester Comprehensive 22.9

      Cancer Center.

      100271......................... H. Lee Moffitt Cancer 21.7

      Center & Research

      Institute.

      220162......................... Dana-Farber Cancer 44.2

      Institute.

      330154......................... Memorial Sloan- 46.9

      Kettering Cancer

      Center.

      330354......................... Roswell Park Cancer 20.0

      Institute.

      360242......................... James Cancer Hospital & 27.5

      Solove Research

      Institute.

      390196......................... Fox Chase Cancer Center 7.6

      450076......................... M.D. Anderson Cancer 74.9

      Center.

      500138......................... Seattle Cancer Care 52.2

      Alliance.

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

      Page 59267

    6. Hospital Outpatient Outlier Payments

      1. Background

      The OPPS provides outlier payments to hospitals to help mitigate the financial risk associated with high-cost and complex procedures, where a very costly service could present a hospital with significant financial loss. As explained in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66832 through 66834), we set our projected target for aggregate outlier payments at 1.0 percent of the estimated aggregate total payments under the OPPS for the prospective year. Outlier payments are provided on a service-by-service basis when the cost of a service exceeds the APC payment amount multiplier threshold (the APC payment amount multiplied by a certain amount) as well as the APC payment amount plus a fixed-dollar amount threshold (the APC payment plus a certain amount of dollars). In CY 2017, the outlier threshold was met when the hospital's cost of furnishing a service exceeded 1.75 times (the multiplier threshold) the APC payment amount and exceeded the APC payment amount plus $3,825 (the fixed-dollar amount threshold) (81 FR 79604 through 79606). If the cost of a service exceeds both the multiplier threshold and the fixed-dollar threshold, the outlier payment is calculated as 50 percent of the amount by which the cost of furnishing the service exceeds 1.75 times the APC payment amount. Beginning with CY 2009 payments, outlier payments are subject to a reconciliation process similar to the IPPS outlier reconciliation process for cost reports, as discussed in the CY 2009 OPPS/ASC final rule with comment period (73 FR 68594 through 68599).

      It has been our policy to report the actual amount of outlier payments as a percent of total spending in the claims being used to model the OPPS. Our estimate of total outlier payments as a percent of total CY 2016 OPPS payments, using CY 2016 claims available for this proposed rule, is approximately 1.0 percent of the total aggregated OPPS payments. Therefore, for CY 2016, we estimate that we paid the outlier target of 1.0 percent of total aggregated OPPS payments.

      As stated in the proposed rule, using CY 2016 claims data and CY 2017 payment rates, we estimated that the aggregate outlier payments for CY 2017 would be approximately 1.0 percent of the total CY 2017 OPPS payments. Using an updated claims dataset and OPPS ancillary CCRs, we estimate that we paid approximately 1.11 percent of the total CY 2017 OPPS payments, in OPPS outliers. We provided estimated CY 2018 outlier payments for hospitals and CMHCs with claims included in the claims data that we used to model impacts in the Hospital-Specific Impacts--Provider-Specific Data file on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html.

      2. Outlier Calculation for CY 2018

      In the CY 2018 OPPS/ASC proposed rule (82 FR 33596), for CY 2018, we proposed to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS. We proposed that a portion of that 1.0 percent, an amount equal to less than 0.01 percent of outlier payments (or 0.0001 percent of total OPPS payments) would be allocated to CMHCs for PHP outlier payments. This is the amount of estimated outlier payments that would result from the proposed CMHC outlier threshold as a proportion of total estimated OPPS outlier payments. As discussed in section VIII.C. of the proposed rule, we proposed to continue our longstanding policy that if a CMHC's cost for partial hospitalization services, paid under APC 5853 (Partial Hospitalization for CMHCs), exceeds 3.40 times the payment rate for proposed APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the proposed APC 5853 payment rate. For further discussion of CMHC outlier payments, we refer readers to section VIII.D. of the proposed rule.

      To ensure that the estimated CY 2018 aggregate outlier payments would equal 1.0 percent of estimated aggregate total payments under the OPPS, we proposed that the hospital outlier threshold be set so that outlier payments would be triggered when a hospital's cost of furnishing a service exceeds 1.75 times the APC payment amount and exceeds the APC payment amount plus $4,325.

      We calculated the proposed fixed-dollar threshold of $4,325 using the standard methodology most recently used for CY 2017 (81 FR 79604 through 79605). For purposes of estimating outlier payments for the proposed rule, we used the hospital-specific overall ancillary CCRs available in the April 2017 update to the Outpatient Provider-Specific File (OPSF). The OPSF contains provider-specific data, such as the most current CCRs, which are maintained by the MACs and used by the OPPS Pricer to pay claims. The claims that we use to model each OPPS update lag by 2 years.

      In order to estimate the CY 2018 hospital outlier payments for the proposed rule, we inflated the charges on the CY 2016 claims using the same inflation factor of 1.104055 that we used to estimate the IPPS fixed-dollar outlier threshold for the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20173). We used an inflation factor of 1.05074 to estimate CY 2017 charges from the CY 2016 charges reported on CY 2016 claims. The methodology for determining this charge inflation factor is discussed in the FY 2017 IPPS/LTCH PPS final rule (81 FR 57286). As we stated in the CY 2005 OPPS final rule with comment period (69 FR 65845), we believe that the use of these charge inflation factors are appropriate for the OPPS because, with the exception of the inpatient routine service cost centers, hospitals use the same ancillary and outpatient cost centers to capture costs and charges for inpatient and outpatient services.

      As noted in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68011), we are concerned that we could systematically overestimate the OPPS hospital outlier threshold if we did not apply a CCR inflation adjustment factor. Therefore, we proposed to apply the same CCR inflation adjustment factor that we proposed to apply for the FY 2018 IPPS outlier calculation to the CCRs used to simulate the proposed CY 2018 OPPS outlier payments to determine the fixed-dollar threshold. Specifically, for CY 2018, we proposed to apply an adjustment factor of 0.979187 to the CCRs that were in the April 2017 OPSF to trend them forward from CY 2017 to CY 2018. The methodology for calculating this proposed adjustment was discussed in the FY 2018 IPPS/LTCH PPS proposed rule (82 FR 20173).

      To model hospital outlier payments for the proposed rule, we applied the overall CCRs from the April 2017 OPSF after adjustment (using the proposed CCR inflation adjustment factor of 0.979187 to approximate CY 2018 CCRs) to charges on CY 2016 claims that were adjusted (using the proposed charge inflation factor of 1.104055 to approximate CY 2018 charges). We simulated aggregated CY 2018 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiplier threshold constant and assuming that outlier payments would continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payments

      Page 59268

      equaled 1.0 percent of aggregated estimated total CY 2018 OPPS payments. We estimated that a proposed fixed-dollar threshold of $4,325, combined with the proposed multiplier threshold of 1.75 times the APC payment rate, would allocate 1.0 percent of aggregated total OPPS payments to outlier payments. For CMHCs, we proposed that, if a CMHC's cost for partial hospitalization services, paid under APC 5853, exceeds 3.40 times the payment rate for APC 5853, the outlier payment would be calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 5853 payment rate.

      Section 1833(t)(17)(A) of the Act, which applies to hospitals as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to report data required for the quality measures selected by the Secretary, in the form and manner required by the Secretary under section 1833(t)(17)(B) of the Act, incur a 2.0 percentage point reduction to their OPD fee schedule increase factor; that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that will apply to certain outpatient items and services furnished by hospitals that are required to report outpatient quality data and that fail to meet the Hospital OQR Program requirements. For hospitals that fail to meet the Hospital OQR Program requirements, we proposed to continue the policy that we implemented in CY 2010 that the hospitals' costs will be compared to the reduced payments for purposes of outlier eligibility and payment calculation. For more information on the Hospital OQR Program, we referred readers to section XIII. of the proposed rule.

      We did not receive any public comments on our hospital outpatient outlier payment methodology. Therefore, we are finalizing our proposal to continue our policy of estimating outlier payments to be 1.0 percent of the estimated aggregate total payments under the OPPS and to use our established methodology to set the OPPS outlier fixed-dollar loss threshold for CY 2018.

      3. Final Outlier Calculation

      Consistent with historical practice, we used updated data for this final rule with comment period for outlier calculations. For CY 2018, we are applying the overall CCRs from the July 2017 OPSF file after adjustment (using the CCR inflation adjustment factor of 0.9856 to approximate CY 2018 CCRs) to charges on CY 2016 claims that were adjusted using a charge inflation factor of 1.0936 to approximate CY 2018 charges. These are the same CCR adjustment and charge inflation factors that were used to set the IPPS fixed-dollar thresholds for the FY 2018 IPPS/LTCH PPS final rule (82 FR 38527). We simulated aggregated CY 2018 hospital outlier payments using these costs for several different fixed-dollar thresholds, holding the 1.75 multiple threshold constant and assuming that outlier payments will continue to be made at 50 percent of the amount by which the cost of furnishing the service would exceed 1.75 times the APC payment amount, until the total outlier payment equaled 1.0 percent of aggregated estimated total CY 2018 OPPS payments. We estimate that a fixed-dollar threshold of $4,150, combined with the multiple threshold of 1.75 times the APC payment rate, will allocate 1.0 percent of aggregated total OPPS payments to outlier payments. We note that the difference in our calculation of the final fixed-dollar threshold of $4,150 and the proposed fixed-dollar threshold of $4,350 is largely attributed to finalized proposals related to reducing payments for drugs purchased under the 340B drug program for CY 2018, as discussed in section V.B.7. of this final rule with comment period.

      For CMHCs, if a CMHC's cost for partial hospitalization services, paid under APC 5853, exceeds 3.40 times the payment rate, the outlier payment will be calculated as 50 percent of the amount by which the cost exceeds 3.40 times APC 5853.

    7. Calculation of an Adjusted Medicare Payment From the National Unadjusted Medicare Payment

      The basic methodology for determining prospective payment rates for HOPD services under the OPPS is set forth in existing regulations at 42 CFR part 419, subparts C and D. For this CY 2018 OPPS/ASC final rule with comment period, the payment rate for most services and procedures for which payment is made under the OPPS is the product of the conversion factor calculated in accordance with section II.B. of this final rule with comment period and the relative payment weight determined under section II.A. of this final rule with comment period. Therefore, the national unadjusted payment rate for most APCs contained in Addendum A to this final rule with comment period (which is available via the Internet on the CMS Web site) and for most HCPCS codes to which separate payment under the OPPS has been assigned in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site) was calculated by multiplying the CY 2018 scaled weight for the APC by the CY 2018 conversion factor. We note that this is the same methodology proposed in the CY 2018 OPPS/ASC proposed rule (82 FR 33598), on which we did not receive any public comments.

      We note that section 1833(t)(17) of the Act, which applies to hospitals as defined under section 1886(d)(1)(B) of the Act, requires that hospitals that fail to submit data required to be submitted on quality measures selected by the Secretary, in the form and manner and at a time specified by the Secretary, incur a reduction of 2.0 percentage points to their OPD fee schedule increase factor, that is, the annual payment update factor. The application of a reduced OPD fee schedule increase factor results in reduced national unadjusted payment rates that apply to certain outpatient items and services provided by hospitals that are required to report outpatient quality data and that fail to meet the Hospital OQR Program (formerly referred to as the Hospital Outpatient Quality Data Reporting Program (HOP QDRP)) requirements. For further discussion of the payment reduction for hospitals that fail to meet the requirements of the Hospital OQR Program, we refer readers to section XIII. of this final rule with comment period.

      We demonstrate below the steps on how to determine the APC payments that will be made in a calendar year under the OPPS to a hospital that fulfills the Hospital OQR Program requirements and to a hospital that fails to meet the Hospital OQR Program requirements for a service that has any of the following status indicator assignments: ``J1'', ``J2'', ``P'', ``Q1'', ``Q2'', ``Q3'', ``Q4'', ``R'', ``S'', ``T'', ``U'', or ``V'' (as defined in Addendum D1 to this final rule with comment period, which is available via the Internet on the CMS Web site), in a circumstance in which the multiple procedure discount does not apply, the procedure is not bilateral, and conditionally packaged services (status indicator of ``Q1'' and ``Q2'') qualify for separate payment. We note that, although blood and blood products with status indicator ``R'' and brachytherapy sources with status indicator ``U'' are not subject to wage adjustment, they are subject to reduced payments when a hospital fails to meet the Hospital OQR Program requirements.

      Individual providers interested in calculating the payment amount that they will receive for a specific service from the national unadjusted payment

      Page 59269

      rates presented in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site) should follow the formulas presented in the following steps. For purposes of the payment calculations below, we refer to the national unadjusted payment rate for hospitals that meet the requirements of the Hospital OQR Program as the ``full'' national unadjusted payment rate. We refer to the national unadjusted payment rate for hospitals that fail to meet the requirements of the Hospital OQR Program as the ``reduced'' national unadjusted payment rate. The reduced national unadjusted payment rate is calculated by multiplying the reporting ratio of 0.980 times the ``full'' national unadjusted payment rate. The national unadjusted payment rate used in the calculations below is either the full national unadjusted payment rate or the reduced national unadjusted payment rate, depending on whether the hospital met its Hospital OQR Program requirements in order to receive the full CY 2018 OPPS fee schedule increase factor.

      Step 1. Calculate 60 percent (the labor-related portion) of the national unadjusted payment rate. Since the initial implementation of the OPPS, we have used 60 percent to represent our estimate of that portion of costs attributable, on average, to labor. We refer readers to the April 7, 2000 OPPS final rule with comment period (65 FR 18496 through 18497) for a detailed discussion of how we derived this percentage. During our regression analysis for the payment adjustment for rural hospitals in the CY 2006 OPPS final rule with comment period (70 FR 68553), we confirmed that this labor-related share for hospital outpatient services is appropriate.

      The formula below is a mathematical representation of Step 1 and identifies the labor-related portion of a specific payment rate for a specific service.

      X is the labor-related portion of the national unadjusted payment rate.

      X = .60 * (national unadjusted payment rate).

      Step 2. Determine the wage index area in which the hospital is located and identify the wage index level that applies to the specific hospital. We note that, under the CY 2018 OPPS policy for continuing to use the OMB labor market area delineations based on the 2010 Decennial Census data for the wage indexes used under the IPPS, a hold harmless policy for the wage index may apply, as discussed in section II.C. of this final rule with comment period. The wage index values assigned to each area reflect the geographic statistical areas (which are based upon OMB standards) to which hospitals are assigned for FY 2018 under the IPPS, reclassifications through the Metropolitan Geographic Classification Review Board (MGCRB), section 1886(d)(8)(B) ``Lugar'' hospitals, reclassifications under section 1886(d)(8)(E) of the Act, as defined in Sec. 412.103 of the regulations, and hospitals designated as urban under section 601(g) of Public Law 98-21. For further discussion of the changes to the FY 2018 IPPS wage indexes, as applied to the CY 2018 OPPS, we refer readers to section II.C. of this final rule with comment period. We are continuing to apply a wage index floor of 1.00 to frontier States, in accordance with section 10324 of the Affordable Care Act of 2010.

      Step 3. Adjust the wage index of hospitals located in certain qualifying counties that have a relatively high percentage of hospital employees who reside in the county, but who work in a different county with a higher wage index, in accordance with section 505 of Public Law 108-173. Addendum L to this final rule with comment period (which is available via the Internet on the CMS Web site) contains the qualifying counties and the associated wage index increase developed for the FY 2018 IPPS, which are listed in Table 2 in the FY 2018 IPPS/LTCH PPS final rule available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html. (Click on the link on the left side of the screen titled ``FY 2018 IPPS Final Rule Home Page'' and select ``FY 2018 Final Rule Tables.'') This step is to be followed only if the hospital is not reclassified or redesignated under section 1886(d)(8) or section 1886(d)(10) of the Act.

      Step 4. Multiply the applicable wage index determined under Steps 2 and 3 by the amount determined under Step 1 that represents the labor-

      related portion of the national unadjusted payment rate.

      The formula below is a mathematical representation of Step 4 and adjusts the labor-related portion of the national unadjusted payment rate for the specific service by the wage index.

      Xa is the labor-related portion of the national unadjusted payment rate (wage adjusted).

      Xa = .60 * (national unadjusted payment rate) * applicable wage index.

      Step 5. Calculate 40 percent (the nonlabor-related portion) of the national unadjusted payment rate and add that amount to the resulting product of Step 4. The result is the wage index adjusted payment rate for the relevant wage index area.

      The formula below is a mathematical representation of Step 5 and calculates the remaining portion of the national payment rate, the amount not attributable to labor, and the adjusted payment for the specific service.

      Y is the nonlabor-related portion of the national unadjusted payment rate.

      Y = .40 * (national unadjusted payment rate).

      Adjusted Medicare Payment = Y + Xa.

      Step 6. If a provider is an SCH, as set forth in the regulations at Sec. 412.92, or an EACH, which is considered to be an SCH under section 1886(d)(5)(D)(iii)(III) of the Act, and located in a rural area, as defined in Sec. 412.64(b), or is treated as being located in a rural area under Sec. 412.103, multiply the wage index adjusted payment rate by 1.071 to calculate the total payment.

      The formula below is a mathematical representation of Step 6 and applies the rural adjustment for rural SCHs.

      Adjusted Medicare Payment (SCH or EACH) = Adjusted Medicare Payment * 1.071.

      We are providing examples below of the calculation of both the full and reduced national unadjusted payment rates that will apply to certain outpatient items and services performed by hospitals that meet and that fail to meet the Hospital OQR Program requirements, using the steps outlined above. For purposes of this example, we used a provider that is located in Brooklyn, New York that is assigned to CBSA 35614. This provider bills one service that is assigned to APC 5071 (Level 1 Excision/Biopsy/Incision and Drainage). The CY 2018 full national unadjusted payment rate for APC 5071 is approximately $572.81. The reduced national unadjusted payment rate for APC 5071 for a hospital that fails to meet the Hospital OQR Program requirements is approximately $561.35. This reduced rate is calculated by multiplying the reporting ratio of 0.980 by the full unadjusted payment rate for APC 5071.

      The FY 2018 wage index for a provider located in CBSA 35614 in New York is 1.2876. The labor-related portion of the full national unadjusted payment is approximately $442.53 (.60 * $572.81 * 1.2876). The labor-related portion of the reduced national unadjusted payment is approximately $433.68 (.60 * $561.35 * 1.2876). The nonlabor-related portion of the full national unadjusted payment is approximately $229.12 (.40 * $572.81). The nonlabor-related portion of the

      Page 59270

      reduced national unadjusted payment is approximately $224.54 (.40 * $561.35). The sum of the labor-related and nonlabor-related portions of the full national adjusted payment is approximately $671.65 ($442.53 + $229.12). The sum of the portions of the reduced national adjusted payment is approximately $658.22 ($433.68 + $224.54).

      1. Beneficiary Copayments

        1. Background

        Section 1833(t)(3)(B) of the Act requires the Secretary to set rules for determining the unadjusted copayment amounts to be paid by beneficiaries for covered OPD services. Section 1833(t)(8)(C)(ii) of the Act specifies that the Secretary must reduce the national unadjusted copayment amount for a covered OPD service (or group of such services) furnished in a year in a manner so that the effective copayment rate (determined on a national unadjusted basis) for that service in the year does not exceed a specified percentage. As specified in section 1833(t)(8)(C)(ii)(V) of the Act, the effective copayment rate for a covered OPD service paid under the OPPS in CY 2006, and in calendar years thereafter, shall not exceed 40 percent of the APC payment rate.

        Section 1833(t)(3)(B)(ii) of the Act provides that, for a covered OPD service (or group of such services) furnished in a year, the national unadjusted copayment amount cannot be less than 20 percent of the OPD fee schedule amount. However, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year.

        Section 4104 of the Affordable Care Act eliminated the Medicare Part B coinsurance for preventive services furnished on and after January 1, 2011, that meet certain requirements, including flexible sigmoidoscopies and screening colonoscopies, and waived the Part B deductible for screening colonoscopies that become diagnostic during the procedure. Our discussion of the changes made by the Affordable Care Act with regard to copayments for preventive services furnished on and after January 1, 2011, may be found in section XII.B. of the CY 2011 OPPS/ASC final rule with comment period (75 FR 72013).

        2. OPPS Copayment Policy

        In the CY 2018 OPPS/ASC proposed rule (82 FR 33599), for CY 2018, we proposed to determine copayment amounts for new and revised APCs using the same methodology that we implemented beginning in CY 2004. (We refer readers to the November 7, 2003 OPPS final rule with comment period (68 FR 63458).) In addition, we proposed to use the same standard rounding principles that we have historically used in instances where the application of our standard copayment methodology would result in a copayment amount that is less than 20 percent and cannot be rounded, under standard rounding principles, to 20 percent. (We refer readers to the CY 2008 OPPS/ASC final rule with comment period (72 FR 66687) in which we discuss our rationale for applying these rounding principles.) The proposed national unadjusted copayment amounts for services payable under the OPPS that would be effective January 1, 2018 were included in Addenda A and B to the proposed rule (which are available via the Internet on the CMS Web site).

        We did not receive any public comments on the proposed copayment amounts for new and revised APCs using the same methodology we implemented beginning in CY 2004 or the standard rounding principles we apply to our copayment amounts. Therefore, we are finalizing our proposed copayment policies, without modification.

        As discussed in section XIII.E. of this final rule with comment period, for CY 2018, the Medicare beneficiary's minimum unadjusted copayment and national unadjusted copayment for a service to which a reduced national unadjusted payment rate applies will equal the product of the reporting ratio and the national unadjusted copayment, or the product of the reporting ratio and the minimum unadjusted copayment, respectively, for the service.

        We note that OPPS copayments may increase or decrease each year based on changes in the calculated APC payment rates due to updated cost report and claims data, and any changes to the OPPS cost modeling process. However, as described in the CY 2004 OPPS final rule with comment period, the development of the copayment methodology generally moves beneficiary copayments closer to 20 percent of OPPS APC payments (68 FR 63458 through 63459).

        In the CY 2004 OPPS final rule with comment period (68 FR 63459), we adopted a new methodology to calculate unadjusted copayment amounts in situations including reorganizing APCs, and we finalized the following rules to determine copayment amounts in CY 2004 and subsequent years.

        When an APC group consists solely of HCPCS codes that were not paid under the OPPS the prior year because they were packaged or excluded or are new codes, the unadjusted copayment amount would be 20 percent of the APC payment rate.

        If a new APC that did not exist during the prior year is created and consists of HCPCS codes previously assigned to other APCs, the copayment amount is calculated as the product of the APC payment rate and the lowest coinsurance percentage of the codes comprising the new APC.

        If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is equal to or greater than the prior year's rate, the copayment amount remains constant (unless the resulting coinsurance percentage is less than 20 percent).

        If no codes are added to or removed from an APC and, after recalibration of its relative payment weight, the new payment rate is less than the prior year's rate, the copayment amount is calculated as the product of the new payment rate and the prior year's coinsurance percentage.

        If HCPCS codes are added to or deleted from an APC and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in a decrease in the coinsurance percentage for the reconfigured APC, the copayment amount would not change (unless retaining the copayment amount would result in a coinsurance rate less than 20 percent).

        If HCPCS codes are added to an APC and, after recalibrating its relative payment weight, holding its unadjusted copayment amount constant results in an increase in the coinsurance percentage for the reconfigured APC, the copayment amount would be calculated as the product of the payment rate of the reconfigured APC and the lowest coinsurance percentage of the codes being added to the reconfigured APC.

        We noted in the CY 2004 OPPS final rule with comment period that we would seek to lower the copayment percentage for a service in an APC from the prior year if the copayment percentage was greater than 20 percent. We noted that this principle was consistent with section 1833(t)(8)(C)(ii) of the Act, which accelerates the reduction in the national unadjusted coinsurance rate so that beneficiary liability will eventually equal 20 percent of the OPPS payment rate for all OPPS services to which a copayment

        Page 59271

        applies, and with section 1833(t)(3)(B) of the Act, which achieves a 20-percent copayment percentage when fully phased in and gives the Secretary the authority to set rules for determining copayment amounts for new services. We further noted that the use of this methodology would, in general, reduce the beneficiary coinsurance rate and copayment amount for APCs for which the payment rate changes as the result of the reconfiguration of APCs and/or recalibration of relative payment weights (68 FR 63459).

        3. Calculation of an Adjusted Copayment Amount for an APC Group

        As we stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33600), individuals interested in calculating the national copayment liability for a Medicare beneficiary for a given service provided by a hospital that met or failed to meet its Hospital OQR Program requirements should follow the formulas presented in the following steps.

        Step 1. Calculate the beneficiary payment percentage for the APC by dividing the APC's national unadjusted copayment by its payment rate. For example, using APC 5071, $114.57 is approximately 20 percent of the full national unadjusted payment rate of $572.81. For APCs with only a minimum unadjusted copayment in Addenda A and B to this final rule with comment period rule (which are available via the Internet on the CMS Web site), the beneficiary payment percentage is 20 percent.

        The formula below is a mathematical representation of Step 1 and calculates the national copayment as a percentage of national payment for a given service.

        B is the beneficiary payment percentage.

        B = National unadjusted copayment for APC/national unadjusted payment rate for APC.

        Step 2. Calculate the appropriate wage-adjusted payment rate for the APC for the provider in question, as indicated in Steps 2 through 4 under section II.H. of this final rule with comment period. Calculate the rural adjustment for eligible providers as indicated in Step 6 under section II.H. of this final rule with comment period.

        Step 3. Multiply the percentage calculated in Step 1 by the payment rate calculated in Step 2. The result is the wage-adjusted copayment amount for the APC.

        The formula below is a mathematical representation of Step 3 and applies the beneficiary payment percentage to the adjusted payment rate for a service calculated under section II.H. of this final rule with comment period, with and without the rural adjustment, to calculate the adjusted beneficiary copayment for a given service.

        Wage-adjusted copayment amount for the APC = Adjusted Medicare Payment * B.

        Wage-adjusted copayment amount for the APC (SCH or EACH) = (Adjusted Medicare Payment * 1.071) * B.

        Step 4. For a hospital that failed to meet its Hospital OQR Program requirements, multiply the copayment calculated in Step 3 by the reporting ratio of 0.980.

        The unadjusted copayments for services payable under the OPPS that will be effective January 1, 2018, are shown in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site). We note that the national unadjusted payment rates and copayment rates shown in Addenda A and B to this final rule with comment period reflect the CY 2018 OPD fee schedule increase factor discussed in section II.B. of this final rule with comment period.

        In addition, as noted earlier, section 1833(t)(8)(C)(i) of the Act limits the amount of beneficiary copayment that may be collected for a procedure performed in a year to the amount of the inpatient hospital deductible for that year.

      2. OPPS Ambulatory Payment Classification (APC) Group Policies

    8. OPPS Treatment of New CPT and Level II HCPCS Codes

      CPT and Level II HCPCS codes are used to report procedures, services, items, and supplies under the hospital OPPS. Specifically, CMS recognizes the following codes on OPPS claims:

      Category I CPT codes, which describe surgical procedures and medical services;

      Category III CPT codes, which describe new and emerging technologies, services, and procedures; and

      Level II HCPCS codes, which are used primarily to identify products, supplies, temporary procedures, and services not described by CPT codes.

      CPT codes are established by the American Medical Association (AMA) and the Level II HCPCS codes are established by the CMS HCPCS Workgroup. These codes are updated and changed throughout the year. CPT and HCPCS code changes that affect the OPPS are published both through the annual rulemaking cycle and through the OPPS quarterly update Change Requests (CRs). CMS releases new Level II HCPCS codes to the public or recognizes the release of new CPT codes by the AMA and makes these codes effective (that is, the codes can be reported on Medicare claims) outside of the formal rulemaking process via OPPS quarterly update CRs. Based on our review, we assign the new CPT and Level II HCPCS codes to interim status indicators (SIs) and APCs. These interim assignments are finalized in the OPPS/ASC final rules. This quarterly process offers hospitals access to codes that may more accurately describe items or services furnished and provides payment or more accurate payment for these items or services in a timelier manner than if we waited for the annual rulemaking process. We solicit public comments on these new codes and finalize our proposals related to these codes through our annual rulemaking process.

      We note that, under the OPPS, the APC assignment determines the payment rate for an item, procedure, or service. Those items, procedures, or services not paid separately under the hospital OPPS are assigned to appropriate status indicators. Certain payment status indicators provide separate payment, while other payment status indicators do not. Section XI. of this final rule with comment period discusses the various status indicators used under the OPPS.

      As we did in the CY 2018 OPPS/ASC proposed rule, in Table 11 below, we summarize our current process for updating codes through our OPPS quarterly update CRs, seeking public comments, and finalizing the treatment of these new codes under the OPPS.

      Table 11--Comment Timeframe for New or Revised HCPCS Codes

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

      OPPS quarterly update CR Type of code Effective date Comments sought When finalized

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

      April 1, 2017................... Level II HCPCS April 1, 2017..... CY 2018 OPPS/ASC CY 2018 OPPS/ASC

      Codes. proposed rule. final rule with

      comment period.

      Page 59272

      July 1, 2017.................... Level II HCPCS July 1, 2017...... CY 2018 OPPS/ASC CY 2018 OPPS/ASC

      Codes. proposed rule. final rule with

      comment period.

      Category I July 1, 2017...... CY 2018 OPPS/ASC CY 2018 OPPS/ASC

      (certain vaccine proposed rule. final rule with

      codes) and III comment period.

      CPT codes.

      October 1, 2017................. Level II HCPCS October 1, 2017... CY 2018 OPPS/ASC CY 2019 OPPS/ASC

      Codes. final rule with final rule with

      comment period. comment period.

      January 1, 2018................. Level II HCPCS January 1, 2018... CY 2018 OPPS/ASC CY 2019 OPPS/ASC

      Codes. final rule with final rule with

      comment period. comment period.

      Category I and III January 1, 2018... CY 2018 OPPS/ASC CY 2018 OPPS/ASC

      CPT Codes. proposed rule. final rule with

      comment period.

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

      1. Treatment of New HCPCS Codes That Were Effective April 1, 2017 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule

      Through the April 2017 OPPS quarterly update CR (Transmittal 3728, Change Request 10005, dated March 3, 2017), we made effective five new Level II HCPCS codes for separate payment under the OPPS. In the CY 2018 OPPS/ASC proposed rule (82 FR 33601), we solicited public comments on the proposed APC and status indicator assignments for these Level II HCPCS codes, which were displayed in Table 13 of the proposed rule and are now listed in Table 12 of this final rule with comment period. Specifically, we solicited public comments on HCPCS codes C9484, C9485, C9486, C9487, and C9488. We note that HCPCS code C9487 was deleted on June 30, 2017, and replaced with HCPCS code Q9989, effective July 1, 2017. We indicated that the proposed payment rates for these codes were included in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site).

      Table 12--New Level II HCPCS Codes Effective April 1, 2017

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

      Final CY 2018 Final CY 2018

      CY 2017 HCPCS code CY 2018 HCPCS code CY 2018 long descriptor SI APC

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

      C9484.................... J1428 Injection, eteplirsen, 10 G 9484

      mg.

      C9485.................... J9285 Injection, olaratumab, 10 G 9485

      mg.

      C9486.................... J1627 Injection, granisetron, G 9486

      extended-release, 0.1 mg.

      C9487 *.................. J3358 Ustekinumab, for G 9487

      intravenous injection, 1

      mg.

      C9488.................... C9488 Injection, conivaptan G 9488

      hydrochloride, 1 mg.

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

      * HCPCS code C9487, which was effective April 1, 2017, was deleted June 30, 2017 and replaced with HCPCS code

      Q9989 (Ustekinumab, for intravenous injection, 1 mg) effective July 1, 2017.

      We did not receive any public comments on the proposed APC and status indicator assignments for the new Level II HCPCS codes implemented in April 2017. Therefore, we are finalizing the proposed APC and status indicator assignments for these codes, as indicated in Table 12 above. We note that several of the HCPCS C-codes have been replaced with HCPCS J-codes effective January 1, 2018. Their replacement codes are listed in Table 12 above. The final payment rates for these codes can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site). In addition, the status indicator meanings can be found in Addendum A to this final rule with comment period (which is available via the Internet on the CMS Web site).

      2. Treatment of New HCPCS Codes That Were Effective July 1, 2017 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule

      As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33602), through the July 2017 OPPS quarterly update CR (Transmittal 3783, Change Request 10122, dated May 26, 2017), we made 10 new Category III CPT codes and 13 Level II HCPCS codes effective July 1, 2017, and assigned them to appropriate interim OPPS status indicators and APCs. In the CY 2018 OPPS/ASC proposed rule, we solicited public comments on the proposed APC and status indicator assignments for CY 2018 for the CPT and Level II HCPCS codes implemented on July 1, 2017, all of which were displayed in Table 14 of the proposed rule, and are now listed in Table 13 of this final rule with comment period. We note that three of the new HCPCS codes effective July 1, 2017 replaced four existing HCPCS codes. Specifically, HCPCS code Q9986 replaced HCPCS code J1725 (Injection, hydroxyprogesterone caproate, 1 mg), HCPCS codes Q9987 and Q9988 replaced HCPCS code P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit), and HCPCS code Q9989 replaced HCPCS code C9487 (Ustekinumab, for intravenous injection, 1 mg). With the establishment of HCPCS codes Q9986, Q9987, and Q9988, we made their predecessor HCPCS codes J1725 and P9072 inactive for reporting and revised the status indicators for both codes to ``E1'' (Not Payable by Medicare) effective July 1, 2017. In addition, because HCPCS code Q9989 describes the same drug as HCPCS code C9487, in the CY 2018 OPPS/ASC proposed rule, we proposed to continue the drug's pass-through payment status and to assign HCPCS code Q9989 to the same APC and status indicator as its predecessor HCPCS code

      Page 59273

      C9487, as shown in Table 14 of the proposed rule. The proposed payment rates and status indicators for these codes, where applicable, were included in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site).

      We did not receive any public comments on the proposed APC and status indicator assignments for the new Category III CPT codes and Level II HCPCS codes implemented in July 2017. Therefore, we are finalizing the proposed APC and status indicator assignments for these codes, as indicated in Table 13 below. We note that several of the HCPCS C and Q-codes have been replaced with HCPCS J-codes effective January 1, 2018. Their replacement codes are listed in Table 13 below. The final payment rates for these codes can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site). In addition, the status indicator meanings can be found in Addendum A to this final rule with comment period (which is available via the Internet on the CMS Web site).

      Table 13--New Category III CPT and Level II HCPCS Codes Effective July 1, 2017

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

      Final CY 2018 Final CY 2018

      CY 2017 HCPCS code CY 2018 HCPCS code CY 2018 long descriptor SI APC

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

      C9489.................... J2326................... Injection, nusinersen, 0.1 G 9489

      mg.

      C9490.................... J0565................... Injection, bezlotoxumab, G 9490

      10 mg.

      C9745.................... C9745................... Nasal endoscopy, surgical; J1 5165

      balloon dilation of

      eustachian tube.

      C9746.................... C9746................... Transperineal implantation J1 5377

      of permanent adjustable

      balloon continence

      device, with

      cystourethroscopy, when

      performed and/or

      fluoroscopy, when

      performed.

      C9747.................... C9747................... Ablation of prostate, J1 5376

      transrectal, high

      intensity focused

      ultrasound (HIFU),

      including imaging

      guidance.

      K0553.................... K0553................... Supply allowance for Y N/A

      therapeutic continuous

      glucose monitor (CGM),

      includes all supplies and

      accessories, 1 month

      supply = 1 Unit Of

      Service.

      K0554.................... K0554................... Receiver (monitor), Y N/A

      dedicated, for use with

      therapeutic glucose

      continuous monitor system.

      Q9984.................... J7296................... Levonorgestrel-releasing E1 N/A

      intrauterine

      contraceptive system

      (Kyleena), 19.5 mg.

      Q9985.................... J1729................... Injection, N N/A

      hydroxyprogesterone

      caproate, not otherwise

      specified, 10 mg.

      Q9986.................... J1726................... Injection, K 9074

      hydroxyprogesterone

      caproate (Makena), 10 mg.

      Q9987.................... P9100................... Pathogen(s) test for S 1493

      platelets.

      Q9988.................... P9073................... Platelets, pheresis, R 9536

      pathogen reduced, each

      unit.

      Q9989.................... J3358................... Ustekinumab, for G 9487

      intravenous injection, 1

      mg.

      0469T.................... 0469T................... Retinal polarization scan, E1 N/A

      ocular screening with on-

      site automated results,

      bilateral.

      0470T.................... 0470T................... Optical coherence M N/A

      tomography (OCT) for

      microstructural and

      morphological imaging of

      skin, image acquisition,

      interpretation, and

      report; first lesion.

      0471T.................... 0471T................... Optical coherence N N/A

      tomography (OCT) for

      microstructural and

      morphological imaging of

      skin, image acquisition,

      interpretation, and

      report; each additional

      lesion (List separately

      in addition to code for

      primary procedure).

      0472T.................... 0472T................... Device evaluation, Q1 5743

      interrogation, and

      initial programming of

      intra- ocular retinal

      electrode array (eg,

      retinal prosthesis), in

      person, with iterative

      adjustment of the

      implantable device to

      test functionality,

      select optimal permanent

      programmed values with

      analysis, including

      visual training, with

      review and report by a

      qualified health care

      professional.

      0473T.................... 0473T................... Device evaluation and Q1 5742

      interrogation of intra-

      ocular retinal electrode

      array (eg, retinal

      prosthesis), in person,

      including reprogramming

      and visual training, when

      performed, with review

      and report by a qualified

      health care professional.

      0474T.................... 0474T................... Insertion of anterior J1 5492

      segment aqueous drainage

      device, with creation of

      intraocular reservoir,

      internal approach, into

      the supraciliary space.

      0475T.................... 0475T................... Recording of fetal M N/A

      magnetic cardiac signal

      using at least 3

      channels; patient

      recording and storage,

      data scanning with signal

      extraction, technical

      analysis and result, as

      well as supervision,

      review, and

      interpretation of report

      by a physician or other

      qualified health care

      professional.

      0476T.................... 0476T................... Recording of fetal Q1 5734

      magnetic cardiac signal

      using at least 3

      channels; patient

      recording, data scanning,

      with raw electronic

      signal transfer of data

      and storage.

      0477T.................... 0477T................... Recording of fetal Q1 5734

      magnetic cardiac signal

      using at least 3

      channels; signal

      extraction, technical

      analysis, and result.

      0478T.................... 0478T................... Recording of fetal M N/A

      magnetic cardiac signal

      using at least 3

      channels; review,

      interpretation, report by

      physician or other

      qualified health care

      professional.

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

      Page 59274

      3. Process for New Level II HCPCS Codes That Became Effective October 1, 2017 and New Level II HCPCS Codes That Will Be Effective January 1, 2018 for Which We Are Soliciting Public Comments in This CY 2018 OPPS/

      ASC Final Rule With Comment Period

      As has been our practice in the past, we incorporate those new Level II HCPCS codes that are effective October 1 and January 1 in the final rule with comment period, thereby updating the OPPS for the following calendar year, as displayed in Table 11 of this final rule with comment period. These codes are released to the public through the October and January OPPS quarterly update CRs and via the CMS HCPCS Web site (for Level II HCPCS codes). For CY 2018, these codes are flagged with comment indicator ``NI'' in Addendum B to this OPPS/ASC final rule with comment period to indicate that we are assigning them an interim payment status which is subject to public comment. Specifically, the status indicators and the APC assignments for codes flagged with comment indicator ``NI'' are open to public comment in this final rule with comment period, and we will respond to these public comments in the OPPS/ASC final rule with comment period for the next year's OPPS/

      ASC update. In the CY 2018 OPPS/ASC proposed rule (82 FR 33603), we proposed to continue this process for CY 2018. Specifically, for CY 2018, we proposed to include in Addendum B to the CY 2018 OPPS/ASC final rule with comment period the following new HCPCS codes:

      New Level II HCPCS codes effective October 1, 2017, that would be incorporated in the October 2017 OPPS quarterly update CR; and

      New Level II HCPCS codes effective January 1, 2018, that would be incorporated in the January 2018 OPPS quarterly update CR.

      As stated above, the October 1, 2017 and January 1, 2018 codes are flagged with comment indicator ``NI'' in Addendum B to this CY 2018 OPPS/ASC final rule with comment period to indicate that we have assigned these codes an interim OPPS payment status for CY 2018. We are inviting public comments on the interim status indicator and APC assignments for these codes, if applicable, that will be finalized in the CY 2019 OPPS/ASC final rule with comment period.

      4. Treatment of New and Revised Category I and III CPT Codes That Will Be Effective January 1, 2018 for Which We Solicited Public Comments in the CY 2018 OPPS/ASC Proposed Rule

      In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66841 through 66844), we finalized a revised process of assigning APC and status indicators for new and revised Category I and III CPT codes that would be effective January 1. Specifically, for the new/revised CPT codes that we receive in a timely manner from the AMA's CPT Editorial Panel, we finalized our proposal to include the codes that would be effective January 1 in the OPPS/ASC proposed rules, along with proposed APC and status indicator assignments for them, and to finalize the APC and status indicator assignments in the OPPS/ASC final rules beginning with the CY 2016 OPPS update. For those new/revised CPT codes that were received too late for inclusion in the OPPS/ASC proposed rule, we finalized our proposal to establish and use HCPCS G-codes that mirror the predecessor CPT codes and retain the current APC and status indicator assignments for a year until we can propose APC and status indicator assignments in the following year's rulemaking cycle. We note that even if we find that we need to create HCPCS G-codes in place of certain CPT codes for the MPFS proposed rule, we do not anticipate that these HCPCS G-codes will always be necessary for OPPS purposes. We will make every effort to include proposed APC and status indicator assignments for all new and revised CPT codes that the AMA makes publicly available in time for us to include them in the proposed rule, and to avoid the resort to HCPCS G-codes and the resulting delay in utilization of the most current CPT codes. Also, we finalized our proposal to make interim APC and status indicator assignments for CPT codes that are not available in time for the proposed rule and that describe wholly new services (such as new technologies or new surgical procedures), solicit public comments, and finalize the specific APC and status indicator assignments for those codes in the following year's final rule.

      For the CY 2018 OPPS update, we received the CY 2018 CPT codes from AMA in time for inclusion in the CY 2018 OPPS/ASC proposed rule. The new, revised, and deleted CY 2018 Category I and III CPT codes were included in Addendum B to the CY 2018 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site). We noted in the proposed rule that the new and revised codes are assigned to new comment indicator ``NP'' to indicate that the code is new for the next calendar year or the code is an existing code with substantial revision to its code descriptor in the next calendar year as compared to the current calendar year with a proposed APC assignment, and that comments will be accepted on the proposed APC assignment and status indicator.

      Further, in the CY 2018 OPPS/ASC proposed rule, we reminded readers that the CPT code descriptors that appear in Addendum B are short descriptors and do not fully describe the complete procedure, service, or item described by the CPT code. Therefore, we included the 5-digit placeholder codes and their long descriptors for the new and revised CY 2018 CPT codes in Addendum O to the proposed rule (which is available via the Internet on the CMS Web site) so that the public could adequately comment on our proposed APCs and status indicator assignments. We indicated that the 5-digit placeholder codes were included in Addendum O, specifically under the column labeled ``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' to the proposed rule. We stated that the final CPT code numbers will be included in the CY 2018 OPPS/ASC final rule with comment period. We noted that not every code listed in Addendum O is subject to comment. For the new and revised Category I and III CPT codes, we requested comments on only those codes that are assigned to comment indicator ``NP''. We indicated that public comments would not be accepted for new Category I CPT laboratory codes that were not assigned to the ``NP'' comment indicator in Addendum O to the proposed rule. We stated that comments to these codes must be submitted at the Clinical Laboratory Fee Schedule (CLFS) Public Meeting, which was scheduled on July 31-August 1, 2017.

      In summary, we solicited public comments on the proposed APC and status indicator assignments for the new and revised Category I and III CPT codes that will be effective January 1, 2018. The CPT codes were listed in Addendum B to the proposed rule with short descriptors only. We listed them again in Addendum O to the proposed rule with long descriptors. We also proposed to finalize the status indicator and APC assignments for these codes (with their final CPT code numbers) in the CY 2018 OPPS/ASC final rule with comment period.

      Commenters addressed several of the new CPT codes that were assigned to comment indicator ``NP'' in Addendum

      Page 59275

      B to the CY 2018 OPPS/ASC proposed rule. We have responded to those public comments in sections II.A.2.b. (Comprehensive APCs), III.D. (OPPS APC-Specific Policies), V. (OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals), and XII. (Updates to the ASC Payment System) of this CY 2018 OPPS/ASC final rule with comment period.

      The final status indicators, APC assignments, and payment rates for the new CPT codes that are effective January 1, 2018 can be found in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site). In addition, the status indicator meanings can be found in Addendum A to this final rule with comment period (which is available via the Internet on the CMS Web site).

    9. OPPS Changes--Variations Within APCs

      1. Background

      Section 1833(t)(2)(A) of the Act requires the Secretary to develop a classification system for covered hospital outpatient department services. Section 1833(t)(2)(B) of the Act provides that the Secretary may establish groups of covered OPD services within this classification system, so that services classified within each group are comparable clinically and with respect to the use of resources. In accordance with these provisions, we developed a grouping classification system, referred to as Ambulatory Payment Classifications (APCs), as set forth in Sec. thinsp419.31 of the regulations. We use Level I and Level II HCPCS codes to identify and group the services within each APC. The APCs are organized such that each group is homogeneous both clinically and in terms of resource use. Using this classification system, we have established distinct groups of similar services. We also have developed separate APC groups for certain medical devices, drugs, biologicals, therapeutic radiopharmaceuticals, and brachytherapy devices that are not packaged into the payment for the procedure.

      We have packaged into the payment for each procedure or service within an APC group the costs associated with those items and services that are typically ancillary and supportive to a primary diagnostic or therapeutic modality and, in those cases, are an integral part of the primary service they support. Therefore, we do not make separate payment for these packaged items or services. In general, packaged items and services include, but are not limited to, the items and services listed in Sec. 419.2(b) of the regulations. A further discussion of packaged services is included in section II.A.3. of this final rule with comment period.

      Under the OPPS, we generally pay for covered hospital outpatient services on a rate-per-service basis, where the service may be reported with one or more HCPCS codes. Payment varies according to the APC group to which the independent service or combination of services is assigned. In the CY 2018 OPPS/ASC proposed rule (82 FR 33604), for CY 2018, we proposed that each APC relative payment weight represents the hospital cost of the services included in that APC, relative to the hospital cost of the services included in APC 5012 (Clinic Visits and Related Services). The APC relative payment weights are scaled to APC 5012 because it is the hospital clinic visit APC and clinic visits are among the most frequently furnished services in the hospital outpatient setting.

      2. Application of the 2 Times Rule

      Section 1833(t)(9)(A) of the Act requires the Secretary to review, not less often than annually, and revise the APC groups, the relative payment weights, and the wage and other adjustments described in paragraph (2) to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. Section 1833(t)(9)(A) of the Act also requires the Secretary to consult with an expert outside advisory panel composed of an appropriate selection of representatives of providers to review (and advise the Secretary concerning) the clinical integrity of the APC groups and the relative payment weights. We note that the HOP Panel recommendations for specific services for the CY 2018 OPPS and our responses to them are discussed in the relevant specific sections throughout this final rule with comment period.

      In addition, section 1833(t)(2) of the Act provides that, subject to certain exceptions, the items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest cost for an item or service in the group is more than 2 times greater than the lowest cost for an item or service within the same group (referred to as the ``2 times rule''). The statute authorizes the Secretary to make exceptions to the 2 times rule in unusual cases, such as low-volume items and services (but the Secretary may not make such an exception in the case of a drug or biological that has been designated as an orphan drug under section 526 of the Federal Food, Drug, and Cosmetic Act).

      Therefore, in accordance with section 1833(t)(2) of the Act and Sec. 419.31 of the regulations, we annually review the items and services within an APC group to determine if there are any APC violations of the 2 times rule and whether there are any appropriate revisions to APC assignments that may be necessary or exceptions to be made. In determining the APCs with a 2 times rule violation, we consider only those HCPCS codes that are significant based on the number of claims. We note that, for purposes of identifying significant procedure codes for examination under the 2 times rule, we consider procedure codes that have more than 1,000 single major claims or procedure codes that have both greater than 99 single major claims and contribute at least 2 percent of the single major claims used to establish the APC cost to be significant (75 FR 71832). This longstanding definition of when a procedure code is significant for purposes of the 2 times rule was selected because we believe that a subset of 1,000 claims (or less than 1,000 claims) is negligible within the set of approximately 100 million single procedure or single session claims we use for establishing costs. Similarly, a procedure code for which there are fewer than 99 single claims and which comprises less than 2 percent of the single major claims within an APC will have a negligible impact on the APC cost. In the CY 2018 OPPS/ASC proposed rule (81 FR 33604 through 33605), we proposed to make exceptions to this limit on the variation of costs within each APC group in unusual cases, such as low-volume items and services.

      For the CY 2018 OPPS update, we identified the APCs with violations of the 2 times rule, and we proposed changes to the procedure codes assigned to these APCs in Addendum B to the CY 2018 OPPS/ASC proposed rule. We noted that Addendum B did not appear in the printed version of the Federal Register as part of the CY 2018 OPPS/ASC proposed rule. Rather, it was published and made available via the Internet on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html. In these cases, to eliminate a violation of the 2 times rule or to improve clinical and resource homogeneity, in the CY 2018 OPPS/ASC proposed rule (81 FR 33604 through 33605), we proposed to reassign these procedure codes to new APCs that contain services that are similar with regard to both their clinical and

      Page 59276

      resource characteristics. In many cases, the proposed procedure code reassignments and associated APC reconfigurations for CY 2018 included in the proposed rule are related to changes in costs of services that were observed in the CY 2016 claims data newly available for CY 2018 ratesetting. We also proposed changes to the status indicators for some procedure codes that were not specifically and separately discussed in the proposed rule. In these cases, we proposed to change the status indicators for these procedure codes because we believe that another status indicator would more accurately describe their payment status from an OPPS perspective based on the policies that we proposed for CY 2018. Addendum B to the CY 2018 OPPS/ASC proposed rule identified with the comment indicator ``CH'' those procedure codes for which we proposed a change to the APC assignment or status indicator, or both, that were initially assigned in the July 1, 2017 OPPS Addendum B update (available via the Internet on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Addendum-A-and-Addendum-B-Updates.html). Addendum B to this final rule with comment period (available via the Internet on the CMS Web site) identifies with the ``CH'' comment indicator the final CY 2018 changes compared to the HCPCS codes' status as reflected in the October 2017 Addendum B update.

      3. APC Exceptions to the 2 Times Rule

      Taking into account the APC changes that we proposed for CY 2018, we reviewed all of the APCs to determine which APCs would not meet the requirements of the 2 times rule. We used the following criteria to evaluate whether to propose exceptions to the 2 times rule for affected APCs:

      Resource homogeneity;

      Clinical homogeneity;

      Hospital outpatient setting utilization;

      Frequency of service (volume); and

      Opportunity for upcoding and code fragments.

      Based on the CY 2016 claims data available for the CY 2018 proposed rule, we found 12 APCs with violations of the 2 times rule. We applied the criteria as described above to identify the APCs for which we proposed to make exceptions under the 2 times rule for CY 2018, and found that all of the 12 APCs we identified met the criteria for an exception to the 2 times rule based on the CY 2016 claims data available for the proposed rule. We did not include in that determination those APCs where a 2 times rule violation was not a relevant concept, such as APC 5401 (Dialysis), which only has two HCPCS codes assigned to it that have similar geometric mean costs and do not create a 2 times rule violation. Therefore, we have only identified those APCs, including those with criteria-based costs, such as device-

      dependent CPT/HCPCS codes, with 2 times rule violations.

      We note that, for cases in which a recommendation by the HOP Panel appears to result in or allow a violation of the 2 times rule, we may accept the HOP Panel's recommendation because those recommendations are based on explicit consideration (that is, a review of the latest OPPS claims data and group discussion of the issue) of resource use, clinical homogeneity, site of service, and the quality of the claims data used to determine the APC payment rates.

      Table 16 of the proposed rule listed the 12 APCs for which we proposed to make exceptions under the 2 times rule for CY 2018 based on the criteria cited above and claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. We indicated that, for the final rule with comment period, we intended to use claims data for dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017, and updated CCRs, if available.

      Based on the updated final rule CY 2016 claims data used for this CY 2018 final rule with comment period, we were able to remedy 6 APC violations out of the 12 APCs that appeared in Table 16 of the CY 2018 OPPS/ASC proposed rule. Specifically, we found that the following 6 APCs no longer met the criteria for exception to the 2 times rule in this final rule with comment period:

      APC 5161 (Level 1 ENT Procedures);

      APC 5311 (Level 1 Lower GI Procedures);

      APC 5461 (Level 1 Neurostimulator and Related Procedures);

      APC 5573 (Level 3 Imaging with Contrast);

      APC 5611 (Level 1 Therapeutic Radiation Treatment Preparation); and

      APC 5735 (Level 5 Minor Procedures).

      Secondly, based on our analysis of the final rule claims data, we found a total of 11 APCs with violations of the 2 times rule. Of these 11 total APCs, 6 were identified in the proposed rule and 5 are newly identified APCs. Specifically, we found the following 6 APCs from the proposed rule continued to have violations of the 2 times rule for this final rule with comment period:

      APC 5112 (Level 2 Musculoskeletal Procedures);

      APC 5521 (Level 1 Imaging without Contrast);

      APC 5691 (Level 1 Drug Administration);

      APC 5731 (Level 1 Minor Procedures);

      APC 5771 (Cardiac Rehabilitation); and

      APC 5823 (Level 3 Health and Behavior Services).

      In addition, we found that the following 5 additional APCs violated the 2 times rule using the final rule with comment period claims data:

      APC 5522 (Level 2 Imaging without Contrast);

      APC 5524 (Level 4 Imaging without Contrast);

      APC 5571 (Level 1 Imaging with Contrast);

      APC 5721 (Level 1 Diagnostic Tests and Related Services); and

      APC 5732 (Level 2 Minor Procedures).

      Comment: Some commenters requested that CMS not adopt the exception to C-APCs, including C-APC 5112 (Level 2 Musculoskeletal Procedures), because they believed it would result in lowering the payments for the procedures assigned to C-APCs. According to the commenters, because C-

      APCs involve complex combinations of items and services where appropriate valuation is critical, CMS should not adopt exceptions that have the result of lowering the overall payment rate for associated procedures. Instead, as one commenter suggested, CMS should establish additional APC levels to avoid any exceptions to the 2 times rule.

      Response: We do not agree that we should establish a new APC for every group that violates the 2 times rule. We believe that excepting certain APCs from the 2 times rule is necessary, especially for procedures assigned to the same APC based on clinical homogeneity. As we have seen throughout the years since the implementation of the OPPS on August 1, 2000, APCs excepted in one year are usually resolved the following year based on our analysis of the latest claims data used for ratesetting. For example, we listed C-APC 5165 (Level 5 ENT Procedures) in Table 19 of the CY 2016 OPPS/ASC final rule with comment period (80 FR 70374) as one of the APCs that violated the 2 times rule for CY 2016. However, this same APC no longer appeared in Table 9 of the CY 2017 OPPS/ASC final rule with comment period (81 FR 79614) as excepted from the 2 times rule. We

      Page 59277

      believe that the anomalies seen in one year but not the next year for a given APC are the result of more accurate coding and charge master identification by HOPDs.

      After considering the public comments we received on APC assignments and our analysis of the CY 2016 costs from hospital claims and cost report data available for this CY 2018 final rule with comment period, we are finalizing our proposals with some modifications. Specifically, we are finalizing our proposal to except 6 of the 12 proposed APCs from the 2 times rule for CY 2018 (APCs 5112, 5521, 5691, 5731, 5771, and 5823), and also excepting 5 additional APCs (APCs 5522, 5524, 5571, 5721, and 5732). As noted above, we were able to remedy the other 6 of the proposed rule 2 time violations in this final rule with comment period.

      Table 14 below lists the 11 APCs that we are excepting from the 2 times rule for CY 2018 based on the criteria described earlier and a review of updated claims data for dates of service between January 1, 2016 and December 31, 2016, that were processed on or before June 30, 2017, and updated CCRs, if available. We note that, for cases in which a recommendation by the HOP Panel appears to result in or allow a violation of the 2 times rule, we generally accept the HOP Panel's recommendation because those recommendations are based on explicit consideration of resource use, clinical homogeneity, site of service, and the quality of the claims data used to determine the APC payment rates. The geometric mean costs for hospital outpatient services for these and all other APCs that were used in the development of this final rule with comment period can be found on the CMS Web site at: http://www.cms.gov.

      Table 14--APC Exceptions to the 2 Times Rule for CY 2018

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

      APC CY 2018 APC title

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

      5112........................... Level 2 Musculoskeletal Procedures.

      5521........................... Level 1 Imaging without Contrast.

      5522........................... Level 2 Imaging without Contrast.

      5524........................... Level 4 Imaging without Contrast.

      5571........................... Level 1 Imaging with Contrast.

      5691........................... Level 1 Drug Administration.

      5721........................... Level 1 Diagnostic Tests and Related.

      Services

      5731........................... Level 1 Minor Procedures.

      5732........................... Level 2 Minor Procedures.

      5771........................... Cardiac Rehabilitation.

      5823........................... Level 3 Health and Behavior Services.

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

    10. New Technology APCs

      1. Background

      In the November 30, 2001 final rule (66 FR 59903), we finalized changes to the time period in which a service can be eligible for payment under a New Technology APC. Beginning in CY 2002, we retain services within New Technology APC groups until we gather sufficient claims data to enable us to assign the service to an appropriate clinical APC. This policy allows us to move a service from a New Technology APC in less than 2 years if sufficient data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient data upon which to base a decision for reassignment have not been collected.

      For CY 2017, there are 51 New Technology APC levels, ranging from the lowest cost band assigned to APC 1491 (New Technology--Level 1A ($0-$10)) through the highest cost band assigned to APC 1906 (New Technology--Level 51 ($140,001-$160,000)). In the CY 2004 OPPS final rule with comment period (68 FR 63416), we restructured the New Technology APCs to make the cost intervals more consistent across payment levels and refined the cost bands for these APCs to retain two parallel sets of New Technology APCs, one set with a status indicator of ``S'' (Significant Procedures, Not Discounted when Multiple. Paid under OPPS; separate APC payment) and the other set with a status indicator of ``T'' (Significant Procedure, Multiple Reduction Applies. Paid under OPPS; separate APC payment). These current New Technology APC configurations allow us to price new technology services more appropriately and consistently.

      We note that the cost bands for the New Technology APCs, specifically, APCs 1491 through 1599 and 1901 through 1906, vary with increments ranging from $10 to $19,999. These cost bands identify the APCs to which new technology procedures and services with estimated service costs that fall within those cost bands are assigned under the OPPS. Payment for each APC is made at the mid-point of the APC's assigned cost band. For example, payment for New Technology APC 1507 (New Technology--Level 7 ($501-$600)) is made at $550.50.

      Every year, we receive several requests for higher payment amounts under the New Technology APCs for specific procedures paid under the OPPS because they require the use of expensive equipment. As we did in the CY 2018 OPPS/ASC proposed rule, we are taking this opportunity to reiterate our response, in general, to the issue of hospitals' capital expenditures as they relate to the OPPS and Medicare, as specified in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70374).

      Under the OPPS, one of our goals is to make payments that are appropriate for the services that are necessary for the treatment of Medicare beneficiaries. The OPPS, like other Medicare payment systems, is budget neutral and increases are limited to the annual hospital inpatient market basket increase. We believe that our payment rates generally reflect the costs that are associated with providing care to Medicare beneficiaries. Furthermore, we believe that our payment rates are adequate to ensure access to services (80 FR 70374).

      For many emerging technologies, there is a transitional period during which utilization may be low, often because providers are first learning about the techniques and their clinical utility. Quite often, parties request that Medicare make higher payment amounts under the New Technology APCs for new procedures in that transitional phase. These requests, and their accompanying estimates for expected total patient utilization, often reflect very low rates of patient use of expensive equipment, resulting in high per use costs for which requesters believe Medicare should make full payment. Medicare does not, and we believe should not, assume responsibility for more than its share of the costs of procedures based on projected utilization for Medicare beneficiaries and does not set its payment rates based on initial projections of low utilization for services that require expensive capital equipment. For the OPPS, we rely on hospitals to make informed business decisions regarding the acquisition of high-cost capital equipment, taking into consideration their knowledge about their entire patient base (Medicare beneficiaries included) and an understanding of Medicare's and other payers' payment policies. (We refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68314) for further discussion regarding this payment policy.)

      We note that, in a budget neutral environment, payments may not fully cover hospitals' costs in a particular circumstance, including those for the purchase and maintenance of capital equipment. We rely on hospitals to make their decisions regarding the acquisition of high-

      cost equipment with the understanding that the Medicare program must be careful to establish its

      Page 59278

      initial payment rates, including those made through New Technology APCs, for new services that lack hospital claims data based on realistic utilization projections for all such services delivered in cost-efficient hospital outpatient settings. As the OPPS acquires claims data regarding hospital costs associated with new procedures, we regularly examine the claims data and any available new information regarding the clinical aspects of new procedures to confirm that our OPPS payments remain appropriate for procedures as they transition into mainstream medical practice (77 FR 68314).

      2. Revised and Additional New Technology APC Groups

      As stated earlier, for CY 2017, there are currently 51 levels of New Technology APCs. To improve our ability to have payments for services over $100,000 more closely match the cost of the service, in the CY 2018 OPPS/ASC proposed rule (82 FR 33606), for CY 2018, we proposed to narrow the increments for New Technology APCs 1901-1906 from $19,999 cost bands to $14,999 cost bands. We also proposed to add New Technology APCs 1907 and 1908 (New Technology Level 52 ($145,001-

      $160,000), which would allow for an appropriate payment of retinal prosthesis implantation procedures, which is discussed later in this section. Table 17 of the proposed rule included the complete list of the proposed modified and additional New Technology APC groups for CY 2018.

      We did not receive any public comments on our proposal. Therefore, we are finalizing the proposal, without modification. Table 15 below includes the complete list of the final modified and additional New Technology APC groups for CY 2018.

      Table 15--CY 2018 Additional New Technology APC Groups

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

      CY 2018 APC CY 2018 APC title CY 2018 SI Updated or new APC

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

      1901........................... New Technology--Level 49 S Updated.

      ($100,001-$115,000).

      1902........................... New Technology--Level 49 T Updated.

      ($100,001-$115,000).

      1903........................... New Technology--Level 50 S Updated.

      ($115,001-$130,000).

      1904........................... New Technology--Level 50 T Updated.

      ($115,001-$130,000).

      1905........................... New Technology--Level 51 S Updated.

      ($130,001-$145,000).

      1906........................... New Technology--Level 51 T Updated.

      ($130,001-$145,000).

      1907........................... New Technology--Level 52 S New.

      ($145,001-$160,000).

      1908........................... New Technology--Level 52 T New.

      ($145,001-$160,000).

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

      The final payment rates for New Technology APCs 1901 through 1908 are included in Addendum A to this final rule with comment period (which is available via the Internet on the CMS Web site).

      3. Procedures Assigned to New Technology APC Groups for CY 2018

      As we explained in the CY 2002 OPPS final rule with comment period (66 FR 59902), we generally retain a procedure in the New Technology APC to which it is initially assigned until we have obtained sufficient claims data to justify reassignment of the procedure to a clinically appropriate APC.

      In addition, in cases where we find that our initial New Technology APC assignment was based on inaccurate or inadequate information (although it was the best information available at the time), where we obtain new information that was not available at the time of our initial New Technology APC assignment, or where the New Technology APCs are restructured, we may, based on more recent resource utilization information (including claims data) or the availability of refined New Technology APC cost bands, reassign the procedure or service to a different New Technology APC that more appropriately reflects its cost (66 FR 59903).

      Consistent with our current policy, for CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 33606), we proposed to retain services within New Technology APC groups until we obtain sufficient claims data to justify reassignment of the service to a clinically appropriate APC. The flexibility associated with this policy allows us to reassign a service from a New Technology APC in less than 2 years if sufficient claims data are available. It also allows us to retain a service in a New Technology APC for more than 2 years if sufficient claims data upon which to base a decision for reassignment have not been obtained (66 FR 59902).

  94. Magnetic Resonance-Guided Focused Ultrasound Surgery (MRgFUS) (APCs 1537, 5114, and 5414)

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33607), currently, there are four CPT/HCPCS codes that describe magnetic resonance image guided high intensity focused ultrasound (MRgFUS) procedures, three of which we proposed to continue to assign to standard APCs and one of which we proposed to continue to assign to a New Technology APC for CY 2018. These codes include CPT codes 0071T, 0072T, and 0398T, and HCPCS code C9734. CPT codes 0071T and 0072T are used for the treatment of uterine fibroids, CPT code 0398T is used for the treatment of essential tremor, and HCPCS code C9734 is used for pain palliation for metastatic bone cancer.

    As shown in Table 18 of the proposed rule, and as listed in Addendum B of the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT codes 0071T and 0072T to APC 5414 (Level 4 Gynecologic Procedures), with a proposed payment rate of approximately $2,189 for CY 2018. We also proposed to continue to assign the APC to status indicator ``J1'' (Hospital Part B services paid through a comprehensive APC) to indicate that all covered Part B services on the claim are packaged with the payment for the primary ``J1'' service for the claim, except for services assigned to OPPS status indicator ``F'', ``G'', ``H'', ``L'', and ``U''; ambulance services; diagnostic and screening mammography; all preventive services; and certain Part B inpatient services. In addition, we proposed to continue to assign HCPCS code C9734 (Focused ultrasound ablation/therapeutic intervention, other than uterine leiomyomata, with magnetic resonance (mr) guidance) to APC 5114 (Level 4 Musculoskeletal Procedures), with a proposed payment rate of approximately $5,385 for CY 2018. We also proposed to continue to assign HCPCS code C9734 to status indicator ``J1''.

    Further, we proposed to continue to assign CPT code 0398T to APC 1537 (New Technology--Level 37 ($9,501-

    Page 59279

    $10,000)), with a proposed payment rate of $9,750.50 for CY 2018. At the time the proposed rule was developed, there was only one claim for CPT code 0398T with a geometric mean cost of $27,516. We referred readers to Addendum B to the proposed rule for the proposed payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

    Comment: Several commenters stated that the proposed payment rate for CPT code 0398T is too low and recommended that CPT code 0398T be assigned to either New Technology APC 1578 (New Technology--Level 41 ($25,001-$30,000)) or APC 5464 (Level 4 Neurostimulator and Related Procedures), which have payment rates closer to the reported cost of the procedure of $27,500 based on the one claim available at the time of the development of the proposed rule. Commenters also noted that the resources required for the procedure described by CPT code 0398T are substantially more than the resources required for the procedure described by CPT code C9734, which had been used by CMS to attempt to model the cost of the procedure described by CPT code 0398T.

    Response: We appreciate the concerns of the commenters and, for the reasons set forth below, agree that the proposed payment rate for CPT code 0398T may be too low and the procedure should be reassigned to a different APC. The proposed payment rate for CPT code 0398T was based on the payment rate for HCPCS code C9734 because the MRgFUS equipment used in the performance of the procedure described by CPT code 0398T is very similar to the MRgFUS equipment used in the performance of the procedure described by HCPCS code C9734. Both machines are made by the same manufacturer (81 FR 79642). However, based on information from the manufacturer, resources involved for the procedure described by CPT code 0398T appear to be higher than those involved for the procedure described by HCPCS code C9734. In addition, we still have concerns that the costs reported from the one claim for the procedure described by CPT code 0398T may not accurately reflect the geometric mean costs of the procedure. However, the geometric mean cost of $29,254 for the one claim means the cost of CPT code 0398T is substantially higher than the proposed payment rate of $9,750.50. We note that, for CY 2017, the manufacturer indicated that an appropriate payment for the procedure described by CPT code 0398T would be approximately $18,000 and that either a New Technology APC paying that amount or assignment to clinical APC 5463 (Level 3 Neurostimulator and Related Procedures) would be appropriate. Based on the presence of only one claim along with the reported costs associated with the procedure described by CPT code 0398T presented to us last year by the manufacturer, we believe that it is appropriate to assign the procedure described by CPT code 0398T to APC 1576 (New Technology--Level 39 ($15,001-$20,000)), with a payment rate of $17,500.50 for CY 2018. The continued New Technology APC assignment will allow time to collect more claims data before assigning CPT code 0398T to a clinical APC.

    Comment: One commenter supported the proposal to assign CPT code C9734 to APC 5114.

    Response: We appreciate the commenter's support.

    In summary, after consideration of the public comments we received, we are modifying our proposal for the APC assignment of CPT code 0398T. Instead of continuing to assign this code to New Technology APC 1537 (New Technology--Level 37 ($9,501-$10,000)), with a payment rate of $9,750.50, for CY 2018, we are reassigning CPT code 0398T to New Technology APC 1576 (New Technology--Level 39 ($15,001-$20,000)), with a payment rate of $17,500.50. In addition, we are finalizing our proposal, without modification, to reassign HCPCS code C9734 to APC 5114. We did not receive any public comments related to our proposal for CPT codes 0071T and 0072T. Therefore, we are finalizing our proposal to continue to assign these CPT codes to APC 5414 without modification. Table 16 below lists the final CY 2018 status indicator and APC assignments for the magnetic resonance image guided high intensity focused ultrasound (MRgFUS) procedures. We refer readers to Addendum B of this final rule with comment period for the final payment rates for all codes reportable under the OPPS. Addendum B is available via the Internet on the CMS Web site.

    Table 16--CY 2018 Status Indicator (SI) and APC Assignment for the Magnetic Resonance Image Guided High Intensity Focused Ultrasound (MRgFUS) Procedures

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT/HCPCS code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    0071T..................... Focused ultrasound ablation J1 5414 $2,084.59 J1 5414 Refer to OPPS Addendum B.

    of uterine leiomyomata,

    including mr guidance;

    total leiomyomata volume

    less than 200 cc of tissue.

    0072T..................... Focused ultrasound ablation J1 5414 2,084.59 J1 5414 Refer to OPPS Addendum B.

    of uterine leiomyomata,

    including mr guidance;

    total leiomyomata volume

    greater or equal to 200 cc

    of tissue.

    0398T..................... Magnetic resonance image S 1537 9,750.50 S 1576 Refer to OPPS Addendum B.

    guided high intensity

    focused ultrasound

    (mrgfus), stereotactic

    ablation lesion,

    intracranial for movement

    disorder including

    stereotactic navigation and

    frame placement when

    performed.

    Page 59280

    C9734..................... Focused ultrasound ablation/ J1 5114 5,219.36 J1 5114 Refer to OPPS Addendum B.

    therapeutic intervention,

    other than uterine

    leiomyomata, with magnetic

    resonance (mr) guidance.

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

  95. Retinal Prosthesis Implant Procedure

    CPT code 0100T (Placement of a subconjunctival retinal prosthesis receiver and pulse generator, and implantation of intra-ocular retinal electrode array, with vitrectomy) describes the implantation of a retinal prosthesis, specifically, a procedure involving the use of the Argussupreg II Retinal Prosthesis System. This first retinal prosthesis was approved by the FDA in 2013 for adult patients diagnosed with advanced retinitis pigmentosa. Pass-through payment status was granted for the Argussupreg II device under HCPCS code C1841 (Retinal prosthesis, includes all internal and external components) beginning October 1, 2013, and this status expired on December 31, 2015. We note that after pass-through payment status expires for a medical device, the payment for the device is packaged into the payment for the associated surgical procedure. Consequently, for CY 2016, the device described by HCPCS code C1841 was assigned to OPPS status indicator ``N'' to indicate that payment for the device is packaged and included in the payment rate for the surgical procedure described by CPT code 0100T. For CY 2016, CPT code 0100T was assigned to New Technology APC 1599 with a payment rate of $95,000, which was the highest paying New Technology APC for that year. This payment includes both the surgical procedure (CPT code 0100T) and the use of the Argussupreg II device (HCPCS code C1841). However, stakeholders (including the device manufacturer and hospitals) believed that the CY 2016 payment rate for the procedure involving the Argussupreg II System was insufficient to cover the hospital cost of performing the procedure, which includes the cost of the retinal prosthesis with a retail price of approximately $145,000.

    For CY 2017, analysis of the CY 2015 OPPS claims data used for the CY 2017 final rule with comment period showed 9 single claims (out of 13 total claims) for CPT code 0100T, with a geometric mean cost of approximately $142,003 based on claims submitted between January 1, 2015, through December 31, 2015, and processed through June 30, 2016. Based on the CY 2015 OPPS claims data available for the final rule with comment period and our understanding of the Argussupreg II procedure, we reassigned CPT code 0100T from New Technology APC 1599 to New Technology APC 1906, with a final payment rate of $150,000.50 for CY 2017. We noted that this payment rate included the cost of both the surgical procedure (CPT code 0100T) and the retinal prosthesis device (HCPCS code C1841).

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33607 through 33608), for the CY 2018 update, analysis of the CY 2016 OPPS claims data used for the CY 2018 proposed rule showed 3 single claims (out of 3 total claims) for CPT code 0100T, with a geometric mean cost of approximately $116,239 based on the claims submitted between January 1, 2016 through December 31, 2016, and processed through December 31, 2016. We stated in the proposed rule that, for the CY 2018 OPPS/ASC final rule with comment period, the final payment rate would be based on claims submitted between January 1, 2016 and December 31, 2016, and processed through June 30, 2017.

    In the proposed rule, based on the CY 2016 OPPS claims data available, which showed a geometric mean cost of approximately $116,239, we proposed to reassign the Argussupreg II procedure to a New Technology APC with a payment band that covers the geometric mean cost of the procedure. Therefore, we proposed to reassign CPT code 0100T to APC 1904 (New Technology--Level 50 ($115,001-$130,000)), with a proposed payment of $122,500.50 for CY 2018. We invited public comments on this proposal.

    Comment: One commenter, the manufacturer, opposed the proposal to reassign CPT code 0100T to APC 1904, with a proposed payment of $122,500.50 for CY 2018. Instead, the commenter requested that CMS reassign CPT code 0100T to a New Technology APC that would establish a payment rate near the CY 2017 payment rate of $150,000.50. The commenter stated that the estimated cost of the service generated from 3 claims reported in CY 2016 is much lower than the actual cost of the procedure. The commenter believed the lower cost of the procedure described by CPT code 0100T is a result of CMS' decision to set the payment rate of the procedure at $95,000 for CY 2016 based on 2 claims, for which the submitting hospital stated the charges reported were mistakenly low. The commenter asserted that the lower payment rate forced the manufacturer of the Argussupreg II to provide a substantial discount for the device, which is reflected in the lower reported cost for the Argussupreg II procedure in CY 2016. This commenter and a second commenter were concerned with the high level of variation in payment for a low volume service like the Argussupreg II procedure from year to year. The commenters requested payment of approximately $150,000 for CPT code 0100T in CY 2018 to break the cycle of extremely volatile year-to-year shifts of the payment for the procedure described by this CPT code and noted its expectation that claims for CY 2017 (which would be used for the CY 2019 rulemaking) would reflect a significantly higher average cost than those for CY 2016.

    Response: We understand the concerns of the commenters. The reported cost of the Argussupreg II procedure based on the updated CY 2016 hospital outpatient claims data, which include additional claims received after issuance of the CY 2018 proposed rule and finalized as of June 30, 2017, is approximately $94,455, which is more than $55,000 less than the payment rate for the procedure in CY 2017. We note that the costs of the Argussupreg II procedure are extraordinarily high compared to many other procedures paid under the OPPS. In addition, the number of claims

    Page 59281

    submitted has, to date, been very low and has not exceeded 10 claims. We believe it is important to mitigate significant payment differences, especially shifts of several tens of thousands of dollars, while also basing payment rates on available costs information and claims data. In CY 2016, the payment rate for the Argussupreg II procedure was $95,000.50. The payment rate increased to $150,000.50 in CY 2017. For CY 2018, we proposed a payment rate of $122,500.50 based on the most recent claims data available at the time of the development of the proposed rule. However, if we were to assign the payment rate based on updated final rule claims data, the payment rate would decrease, to $95,000.50 for CY 2018, a decrease of $55,000 relative to CY 2017. We are concerned that these large changes in payment could potentially create an access to care issue for the Argussupreg II procedure. While we believe that the proposed payment rate of $122,500.50 is a significant decrease, we believe that it would be appropriate to finalize the proposed rate to mitigate a much sharper decline in payment from one year to the next (as well as from the proposed rule to the final rule).

    In accordance with section 1833(t)(2)(B) of the Act, we must establish that services classified within each APC are comparable clinically and with respect to the use of resources. Accordingly, we are using our equitable adjustment authority under section 1833(t)(2)(E) of the Act, which states that the Secretary shall establish, in a budget neutral manner, other adjustments as determined to be necessary to ensure equitable payments, to maintain the proposed rate for this procedure, despite the lower geometric mean costs available in the claims data used for this final rule with comment period. As stated earlier, we believe that this situation is unique, given the high cost and very limited number of claims for the procedure. Therefore, for CY 2018, we are reassigning the Argussupreg II procedure to APC 1904 (New Technology--Level 50 ($115,001-

    $130,000)). This APC assignment will establish a payment rate for the Argussupreg II procedure of $122,500.50, which is the arithmetic mean of the payment rates for the service for CY 2016 and CY 2017. As we do each year, we acquire claims data regarding hospital costs associated with new procedures. We regularly examine the claims data and any available new information regarding the clinical aspects of new procedures to confirm that our OPPS payments remain appropriate for procedures like the Argussupreg II procedure as they transition into mainstream medical practice (77 FR 68314).

    After consideration of the public comments we received, we are finalizing our proposal to reassign CPT code 0100T to APC 1904 through use of our equitable adjustment authority. We are reassigning CPT code 0100T from APC 1906 (New Technology--Level 51 ($140,001-$160,000)), which has a final payment rate of $150,000.50 for CY 2017, to APC 1904 (New Technology--Level 50 $115,001-$130,000)), which has a final payment rate of $122,500.50 for CY 2018. We note this payment includes both the surgical procedure (CPT code 0100T) and the use of the Argussupreg II device (HCPCS code C1841).

  96. Pathogen Test for Platelets

    As stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33608), the CMS HCPCS Workgroup established HCPCS code Q9987 (Pathogen(s) test for platelets), effective July 1, 2017. HCPCS code Q9987 will be used to report any test used to identify bacterial or other pathogen contamination in blood platelets. Currently, there is one test approved by the FDA that is described by HCPCS code Q9987. The test is a rapid bacterial test, and the manufacturer estimates the cost of the test to be between $26 and $35. HCPCS code Q9987 was established after concerns from blood and blood product stakeholders that the previous CPT code used to describe pathogen tests for platelets, CPT code P9072 (Platelets, pheresis, pathogen reduced or rapid bacterial tested, each unit), inappropriately described rapid bacterial testing by combining the test with the pathogen reduction of platelets. CPT code P9072 is inactive effective on July 1, 2017.

    In the CY 2018 OPPS/ASC proposed rule, we sought more information on the actual costs of pathogen tests for platelets before assigning HCPCS code Q9987 to a clinical APC. Effective July 1, 2017, HCPCS code Q9987 is assigned to New Technology APC 1493 (New Technology--Level 1C ($21-$30)), with a payment rate of $25.50. We proposed to continue to assign HCPCS code Q9987 to New Technology APC 1493, with a proposed payment rate of $25.50, until such time as claims data are available to support the assignment to a clinical APC. We invited public comments on this proposal.

    Comment: Two commenters supported the proposal to continue to provide separate payment for HCPCS code Q9987.

    Response: We appreciate the commenters' support.

    After consideration of the public comments we received, we are finalizing our proposal to continue separate payment for HCPCS code Q9987 for CY 2018, with a modification that HCPCS code Q9987 will be replaced by HCPCS code P9100 (Pathogen(s) test for platelets). Table 17 below contains more information on the coding change.

    Table 17--Replacement Code for HCPCS Code Q9987 as of January 1, 2018

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

    CY 2018 long Final CY 2018 Final CY 2018

    CY 2017 HCPCS code CY 2018 HCPCS code descriptor SI APC

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

    Q9987............................ P9100.................. Pathogen(s) test S 1493

    for platelets.

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

  97. Fractional Flow Reserve Derived From Computed Tomography (FFRCT)

    For CY 2018, the AMA CPT Editorial Panel established four new CPT codes for fractional flow reserve derived from computed tomography (FFRCT). Table 18 below lists the new CPT codes along with their complete descriptors. These codes were listed in Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site). Addendum B included the proposed status indicator assignments for the new codes and their assignment to comment indicator ``NP'' (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code). Addendum O included the proposed/placeholder CY 2018 CPT codes and the long descriptors.

    We note that the CPT code descriptors that appeared in Addendum B were short descriptors and did not fully describe the complete procedure,

    Page 59282

    service, or item identified for the CPT codes. Therefore, we included the 5-digit placeholder codes and their long descriptors in Addendum O to the proposed rule, specifically under the column labeled ``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code,'' so that the public could adequately comment on our proposed APC and status indicator assignments. We also indicated that the final CPT code numbers would be included in this CY 2018 OPPS/ASC final rule with comment period. The final CPT code numbers, along with their corresponding 5-digit placeholder codes, can be found in Table 19 below.

    As displayed in Table 18 and in Addendum B of the CY 2018 OPPS/ASC proposed rule, we proposed to assign CPT codes 0501T and 0504T to status indicator ``M'' (Not paid under OPPS; Items and Services Not Billable to the MAC) to indicate that these services are not paid under the OPPS, and to assign CPT codes 0502T and 0503T to status indicator ``N'' (packaged) to indicate that the payment for these services is packaged into the primary service or procedure that is reported with the codes.

    Table 18--Proposed CY 2018 Status Indicator (SI) Assignment for the New FFRCT CPT Codes Effective January 1,

    2018

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

    CY 2018 OPPS/ASC Proposed CY Proposed CY

    CPT code proposed rule Long descriptor Proposed CY 2018 OPPS 2018 OPPS

    placeholder code 2018 OPPS SI APC payment

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

    0501T................. 02X4T................. Non-invasive estimated M N/A N/A

    coronary fractional

    flow reserve (FFR)

    derived from coronary

    computed tomography

    angiography data using

    computation fluid

    dynamics physiologic

    simulation software

    analysis of functional

    data to assess the

    severity of coronary

    artery disease; data

    preparation and

    transmission, analysis

    of fluid dynamics and

    simulated maximal

    coronary hyperemia,

    generation of estimated

    FFR model, with

    anatomical data review

    in comparison with

    estimated FFR model to

    reconcile discordant

    data, interpretation

    and report.

    0502T................. 02X5T................. Non-invasive estimated N N/A N/A

    coronary fractional

    flow reserve (FFR)

    derived from coronary

    computed tomography

    angiography data using

    computation fluid

    dynamics physiologic

    simulation software

    analysis of functional

    data to assess the

    severity of coronary

    artery disease; data

    preparation and

    transmission.

    0503T................. 02X6T................. Non-invasive estimated N N/A N/A

    coronary fractional

    flow reserve (FFR)

    derived from coronary

    computed tomography

    angiography data using

    computation fluid

    dynamics physiologic

    simulation software

    analysis of functional

    data to assess the

    severity of coronary

    artery disease;

    analysis of fluid

    dynamics and simulated

    maximal coronary

    hyperemia, and

    generation of estimated

    FFR model.

    0504T................. 02X7T................. Non-invasive estimated M N/A N/A

    coronary fractional

    flow reserve (FFR)

    derived from coronary

    computed tomography

    angiography data using

    computation fluid

    dynamics physiologic

    simulation software

    analysis of functional

    data to assess the

    severity of coronary

    artery disease;

    anatomical data review

    in comparison with

    estimated FFR model to

    reconcile discordant

    data, interpretation

    and report.

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

    According to the FDA, FFRCT uses post-processing software to create ``a mathematically derived quantity, computed from simulated pressure, velocity and blood flow information obtained from a 3D computer model generated from static coronary CT images.'' \1\ FFRCT is performed outside the outpatient hospital setting by HeartFlow, which uses proprietary software to conduct the analysis. Hospital outpatient providers use industry-leading protocols and technologies at every step to ensure protection of patient data and that the CT images are securely transferred to HeartFlow.\2\ After FFRCT is performed, a report is generated that provides fractional flow reserve values throughout the coronary blood vessels, which allows providers to determine treatment strategies based on the findings of the report while considering the patient's medical history, symptoms, and results of other diagnostic tests.

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

    \1\ Available at: https://www.accessdata.fda.gov/cdrh_docs/reviews/DEN130045.pdf, page 1.

    \2\ Available at: http://www.heartflow.com/.

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

    The developer of FFRCT first submitted an application for the procedure to be given a temporary procedure code and assigned to a New Technology APC in March 2016. CMS denied the developer's application because we considered the FFRCT procedure to be an image guidance, processing, supervision, or interpretation service whose payment should be packaged into the payment for the related computed tomography service, in accordance with our regulations at 42 CFR 419.2(b)(13). The developer then filed a New Technology APC reconsideration request in March 2017 asking that CMS reverse its denial of the developer's application to have the FFRCT assigned to a New Technology APC. We reviewed the reconsideration request and denied the request for the same reason as we did in March 2016.

    In a New Technology APC application for HeartFlow for CY 2018, the developer of the FFRCT service proposed that the service be reported with CPT code 0503T (Non-invasive estimated coronary fractional flow reserve (FFR) derived from coronary computed tomography angiography data using computation fluid dynamics physiologic simulation software analysis of functional data to assess the severity of

    Page 59283

    coronary artery disease; analysis of fluid dynamics and simulated maximal coronary hyperemia, and generation of estimated FFR model) and requested that the service be assigned to APC 1517 (New Technology--

    Level 17 ($1501-$1600)), with a payment rate of $1,550.50. Because both the initial New Technology APC application and the reconsideration request were denied, we did not describe the associated New Technology APC application for HeartFlow in the CY 2018 OPPS/ASC proposed rule.

    Comment: Several commenters, including the developer of HeartFlow and some clinicians who have experience with it, supported having a FFRCT service paid as a separate service and not packaged into the payment for the coronary computed tomography angiography. The commenters stated that FFRCT is performed separately from a coronary computed tomography angiography by an independent testing company that is not affiliated with any outpatient hospital provider and is performed at locations owned by the testing company. These commenters noted that the service may be performed several days or weeks after the original coronary computed tomography angiography is performed. Also, commenters noted that several physician societies involved in cardiac care recognize FFRCT as a separate service from a coronary computed tomography angiography and requested that new CPT codes 0501T, 0502T, 0503T, and 0504T be established for FFRCT services, effective January 1, 2018. The commenters stated that the physician societies and the AMA determined that a coronary computed tomography angiography and a FFRCT service are not connected services.

    Commenters asserted that a FFRCT service provides information that cannot be obtained from standard analysis of a coronary computed tomography angiography image. Several commenters stated that FFRCT services can improve the quality of screening for coronary artery disease (CAD) while reducing costs. That is, the commenters stated that, unlike a coronary computed tomography angiography service, which merely produces images, the FFRCT service is able to directly produce FFRCT values by creating a 3-D model of the patient's coronary arteries using the previously acquired image. Moreover, the commenters contended that, because the FFRCT service does not produce images, it is improper to package the costs of FFRCT into the payment for the associated coronary computed tomography angiography service.

    Commenters stated that, many times, a coronary computed tomography angiography indicates that a beneficiary may potentially have CAD and that without FFRCT, providers will often request an invasive coronary angiogram to verify the presence of CAD. In many cases, the invasive coronary angiogram finds no occurrence of CAD. FFRCT services can provide analytic services not otherwise available to determine fractional flow rates in coronary arteries using the original coronary computed tomography angiography image and show whether a beneficiary has CAD without performing a coronary procedure.

    The developer also stated that hospitals incur a cost charged by HeartFlow of $1,500 to perform the FFRCT analysis, and certain other modest costs (for example, overhead for interpretation and entering results into medical record). Therefore, the commenters stated that bundling the payment for FFRCT with the payment for the coronary computed tomography angiography imaging service would prevent hospitals from using FFRCT because the payment rate for the bundled coronary computed tomography angiography service would be less than $300. One commenter (the developer) requested that the service be assigned to APC 1517 (New Technology--Level 17 ($1501-

    $1600)), with a payment rate of $1,550.50.

    Some commenters, including the developer, stated that CMS did not properly interpret the regulation at 42 CFR 419.2(b)(13) in its previous decisions to deny the FFRCT application and reconsideration request to receive separate payment in a New Technology APC. Specifically, the FFRCT developer and other commenters stated that the FFRCT service was not an image guidance service because CMS stated in prior preamble language that an image guidance service must produce images. The commenters stated that a FFRCT service does not produce images, but instead produces FFR values. They stated that the FFRCT service is also not an image processing service because such processing services help to compile diagnostic data to create an image, and noted that, although the FFRCT service analyzes image data, it is not used to construct an anatomic image. In addition, the commenters asserted that the FFRCT service is not an imaging supervision or interpretation service. The commenters believed that imaging supervision and interpretation services should be performed on the same day and at the provider location as the independent imaging service; whereas the FFRCT service can be performed days or weeks after the original coronary computed tomography angiography service is performed and is performed in a specialized location outside of hospital. In addition, the commenters stated that imaging supervision and interpretation services are for radiological services that are mostly billed with the CPT radiological code set (CPT codes 70000-

    79999) and the FFRCT service is not a radiological service and does not involve supervision or interpretation.

    Response: We appreciate the comments we have received about the FFRCT service. We have reviewed our image packaging regulations under 42 CFR 419.2(b)(13). This regulation states, in relevant part, that in determining the packaged costs for hospital outpatient prospective payment rates, the prospective payment system establishes a national payment rate, standardized for geographic wage differences, that includes operating and capital-related costs that are integral, ancillary, supportive, dependent, or adjunctive to performing a procedure or furnishing a service on an outpatient basis. In general, these packaged costs may include, but are not limited to, among other items and services, image guidance, processing, supervision, and interpretation services, the payment for which are packaged or conditionally packaged into the payment for the related procedures or services.

    After reviewing the public comments, we agree with the commenters that the FFRCT service is not image guidance or supervision because FFRCT does not produce images, does not appear to be a supportive guidance service that aids in the performance of an independent procedure, and, unlike typical supervision services, is not generally reported when the initial image is acquired. However, we are concerned that it may be image processing and/or interpretation. We discuss these concerns below.

    With respect to image processing, in the CY 2008 OPPS/ASC interim and final rule with comment period, we stated that an ``image processing service processes and integrates diagnostic test data that were captured during another independent procedure, usually one that is separately payable under the OPPS. The image processing service is not necessarily provided on the same date of service as the independent procedure. In fact, several of the image processing services that we proposed to package for CY 2008 do not need to be provided face-to-face with the patient in the same encounter as the independent service'' (72 FR 66625). In addition, we stated that we believed it was important

    Page 59284

    to package payment for supportive dependent services that accompany independent services but that may not need to be provided face-to-face with the patient in the same encounter because the supportive services utilize data that were collected during the preceding independent services and packaging their payment encourages the most efficient use of hospital resources. We noted that we were particularly concerned with any OPPS payment policies that could encourage certain inefficient and more costly service patterns. In addition, we stated that packaging encourages hospitals to establish protocols that ensure that services are furnished only when they are medically necessary and to carefully scrutinize the services ordered by practitioners to minimize unnecessary use of hospital resources (72 FR 66625).

    FFRCT services necessarily require the use of the prior coronary computed tomography angiography image; the fact that the FFRCT service is done on a different date, at a different site, and by nonhospital staff does not, in and of itself, mean that the service is separate and distinct, from the CCTA. This is especially true because it is using a prior image acquired by the hospital for the patient and is used for the same purpose to diagnose CAD.

    With respect to imaging interpretation, as stated in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66630), we define ``imaging supervision and interpretation codes'' as HCPCS codes for services that are defined as ``radiological supervision and interpretation'' in the radiology series, codes 70000 through 79999 of the book of AMA CPT codes, with the addition of some services in other code ranges of CPT, Category III CPT tracking codes, or Level II HCPCS codes that are clinically similar or directly crosswalk to codes defined as radiological supervision and interpretation services in the CPT radiology range. The current CPT FFRCT codes are Category III codes, and we believe they may be clinically similar to codes in the 70000 through 79999 range of the AMA book of CPT codes.

    Nonetheless, we were persuaded by the commenters that the FFRCT service is a separate and distinct service from the original coronary computed tomography angiography service and should receive separate payment. Specifically, the commenters provided additional details since the denial of the new technology reconsideration request that FFRCT is not covered by the image packaging regulations under 42 CFR 419.2(b)(13). Most of the additional detail focuses on whether FFRCT is an image processing service. In particular, the FFRCT service generates data on FFR values that can only be obtained by performing the FFRCT service. Accordingly, we now believe that the FFRCT service should not be considered to be an image processing service because the diagnostic output of the FFRCT service yields functional values (that is, FFR values), which reflect the drop in pressure across a narrowing in a coronary artery as opposed to anatomic images. The CY 2008 OPPS/ASC final rule with comment period (72 FR 66625) states that image processing covers ``supportive dependent services to process and integrate diagnostic test data in the development of images, indicating that an image processing service must help develop or otherwise visually enhance an image and the FFRCT service does neither. Further, we agree that the quantitative diagnostic information about the function of the coronary arteries produced by the FFRCT service is not possible to derive from examining anatomic images of the arteries. Additionally, we agree with the commenters that the FFRCT service does not support the diagnostic output of CCTA. Notably, CPT code 0503T does not mention processing, interpretation, or supervision. Further, the FDA clearance refers to the FFRCT service as ``post-processing image analysis software . . . using graphics and text FFRCT to aid the clinician in the assessment of coronary artery disease.''

    Therefore, we conclude, based on the information available to us at this time, that the costs of the FFRCT service, as described by CPT code 0503T, should not be a packaged service under the regulation at 42 CFR 419.2(b)(13). Accordingly, we are assigning CPT code 0503T to a New Technology APC for CY 2018. We remind hospitals that, according to the Medicare statute, this service should only be furnished when reasonable and medically necessary for the purposes of diagnosis of and treatment a Medicare beneficiary.

    In summary, after consideration of the public comments we received, we are finalizing our proposal for CPT codes 0501T, 0502T, and 0504T without modification. However, for CPT code 0503T, we are finalizing our proposal with modification. Specifically, we are reassigning CPT code 0503T from packaged status (status indicator ``N'') to New Technology APC 1516 (New Technology--Level 16 ($1401-$1500)), with a payment rate of $1,450.50 for CY 2018. We note our belief that CPT code 0503T covers payment for the majority of hospital resources involved in the HeartFlow service, and that CPT 0502T, which reflects data preparation and transmission, will be packaged under the OPPS.

    Table 19 lists the final status indicator assignments for CPT codes 0501T, 0502T, 0503T, and 0504T. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and B are available via the Internet on the CMS Web site.

    Page 59285

    Table 19--Final CY 2018 Status Indicator (SI) Assignment for the New FFRCT CPT Codes Effective

    January 1, 2018

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

    CY 2018 OPPS/ASC proposed CY 2018 OPPS

    CPT code rule placeholder code Long descriptor CY 2018 OPPS SI APC CY 2018 OPPS payment

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

    0501T....................... 02X4T...................... Non-invasive estimated M N/A N/A.

    coronary fractional flow

    reserve (FFR) derived from

    coronary computed tomography

    angiography data using

    computation fluid dynamics

    physiologic simulation

    software analysis of

    functional data to assess

    the severity of coronary

    artery disease; data

    preparation and

    transmission, analysis of

    fluid dynamics and simulated

    maximal coronary hyperemia,

    generation of estimated FFR

    model, with anatomical data

    review in comparison with

    estimated FFR model to

    reconcile discordant data,

    interpretation and report.

    0502T....................... 02X5T...................... Non-invasive estimated N N/A N/A.

    coronary fractional flow

    reserve (FFR) derived from

    coronary computed tomography

    angiography data using

    computation fluid dynamics

    physiologic simulation

    software analysis of

    functional data to assess

    the severity of coronary

    artery disease; data

    preparation and transmission.

    0503T....................... 02X6T...................... Non-invasive estimated S 1516 Refer to OPPS Addendum B.

    coronary fractional flow

    reserve (FFR) derived from

    coronary computed tomography

    angiography data using

    computation fluid dynamics

    physiologic simulation

    software analysis of

    functional data to assess

    the severity of coronary

    artery disease; analysis of

    fluid dynamics and simulated

    maximal coronary hyperemia,

    and generation of estimated

    FFR model.

    0504T....................... 02X7T...................... Non-invasive estimated M N/A N/A.

    coronary fractional flow

    reserve (FFR) derived from

    coronary computed tomography

    angiography data using

    computation fluid dynamics

    physiologic simulation

    software analysis of

    functional data to assess

    the severity of coronary

    artery disease; anatomical

    data review in comparison

    with estimated FFR model to

    reconcile discordant data,

    interpretation and report.

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

    1. OPPS APC-Specific Policies

    1. Blood-Derived Hematopoietic Cell Harvesting

    HCPCS code 38205 describes blood-derived hematopoietic progenitor cell harvesting for transplantation, per collection; allogeneic. This code represents a donor acquisition cost for an allogeneic hematopoietic stem cell transplant (HSCT). In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60575), we assigned HCPCS code 38205 to status indicator ``B'', which indicates that this code is not recognized by the OPPS when submitted on an outpatient hospital Part B bill (type 12x and 13x).

    In CY 2017, we finalized a C-APC for HSCT (81 FR 79586 through 79587). Payment for donor acquisition services for HSCT is included in the C-APC payment for the allogeneic stem cell transplant when the transplant occurs in the hospital outpatient setting. All donor acquisition costs, including the costs for HCPCS code 38205, should be reported on the same date of service as the transplant procedure (HCPCS code 38240 (Hematopoietic progenitor (HPC); allogeneic transplantation per donor)) in order to be appropriately packaged for payment purposes. Hospitals are instructed to identify services required to acquire stem cells from a donor for allogeneic HSCT separately in Field 42 on Form CMS-1450 (or UB-04), with revenue code 0815 when an allogeneic stem cell transplant occurs. (We refer readers to the Medicare Claims Processing Manual (Pub. 100-04), Chapter 4, Section 231.11, and Chapter 3, Section 90.3.1.)

    There are other donor acquisition costs, namely those costs for the procedure described by HCPCS code 38230 (Bone marrow harvesting for transplantation; allogeneic), that are assigned to status indicator ``S''. For consistency and to ensure that the donor acquisition costs are captured accurately, in the CY 2018 OPPS/ASC proposed rule (82 FR 33608), for CY 2018, we proposed to change the status indicator assignment for the procedure described by HCPCS code 38205 from ``B'' to ``S'', which indicates that the procedure is paid under the OPPS and receives separate payment.

    The CY 2016 claims data used for the proposed rule, which included claims submitted between January 1, 2016, and December 31, 2016, and processed on or before December 31, 2016, showed a geometric mean cost of approximately $580 for HCPCS code 38205 based on 2 single claims (out of 8 total claims). The procedure described by HCPCS code 38205 has resource and clinical similarities to procedures assigned to APC 5242 (Level 2 Blood Product Exchange and Related Services). Therefore, we proposed to assign HCPCS code 38205 to APC 5242. We invited public comments on these proposals.

    Comment: Several commenters opposed the proposal to change the status indicator assignment for the procedure described by HCPCS code 38205 from ``B'' to ``S''. The commenters stated that this procedure represents a donor acquisition cost for allogeneic hematopoietic stem cell transplants for

    Page 59286

    which Medicare does not make separate payment because hospitals may bill and receive payment only for services provided to the Medicare beneficiary who is the recipient of the stem cell transplant and whose illness is being treated with the stem cell transplant. The commenters believed that a change from status indicator ``B'' to ``S'' may indicate to providers that they can bill donors for these services and lead to potential for erroneous separate payments if this code is billed with status indicator ``S''. In addition, the HOP Panel recommended that CMS retain status indicator ``B'' for HCPCS code 38205. The commenters also encouraged CMS to look at the entire series of bone marrow and stem cell transplant-related CPT codes to ensure consistency in terms of coding, billing guidance, appropriate APC assignment, and payment.

    Response: We appreciate the commenters' responses. We believed that changing the status indicator assignment from ``B'' to ``S'' for HCPCS code 38205 would be consistent with other donor acquisition costs and ensure that the donor acquisition costs for allogeneic HSCT are captured accurately. However, we agree with the commenters that this change could result in erroneous billing or misinterpretations by providers.

    After consideration of the public comments we received, we are not finalizing our proposal to change the status indicator assignment for the procedure described by HCPCS code 38205 from ``B'' to ``S'' and to assign HCPCS code 38205 to APC 5242.

    2. Brachytherapy Insertion Procedures (C-APCs 5341 and 5092)

  98. C-APC 5341 (Abdominal/Peritoneal/Biliary and Related Procedures)

    For CY 2018, as displayed in Table 20 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 55920 to C-APC 5341 (Abdominal/Peritoneal/Biliary and Related Procedures), with a proposed payment rate of $2,788.26.

    Table 20--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 55920

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    55920................................ Placement of needles or catheters J1 5341 $2,861.53 J1 5341 $2,788.26

    into pelvic organs and/or

    genitalia (except prostate) for

    subsequent interstitial

    radioelement application.

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

    Comment: Commenters disagreed with the proposed APC assignment for CPT code 55920 and recommended that this code be reassigned to an APC that includes gynecologic procedures, specifically C-APC 5415 (Level 5 Gynecologic Procedures). The commenters noted that radiation therapy is an important adjuvant treatment for gynecological malignancies and the vignette for the procedure described by CPT 55920 describes a gynecological implant with a Syed-type intracavitary applicator insertion to the vagina, cervix, or female urethra. The commenters stated that the procedure described by CPT code 55920 was similar, from a clinical and resource perspective, to procedures assigned to C-APC 5415.

    Response: Our analysis of the final rule updated claims data revealed a geometric mean cost of approximately $4,791 for CPT code 55920 based on 134 single claims (out of 135 total claims), which is comparable to the geometric mean cost of approximately $4,109 for C-APC 5415. The geometric mean cost for C-APC 5341 is approximately $2,909. After reviewing the procedures assigned to C-APC 5415, we agree with the commenters that CPT code 55920 would be more appropriately reassigned to C-APC 5415 based on its clinical homogeneity and resource costs.

    After consideration of the public comments we received, we are finalizing our CY 2018 proposal with modification. Specifically, we are reassigning CPT code 55920 from C-APC 5341 to C-APC 5415 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the final CY 2018 payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS for CY 2018. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

  99. C-APC 5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures)

    For CY 2018, as displayed in Table 21 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 19298 to C-APC 5092 (Level 2 Breast/Lymphatic Surgery and Related Procedures), with a proposed payment rate of $4,616.48.

    Page 59287

    Table 21--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 19298

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    19298............................. Placement of radiotherapy J1 5092 $4,417.60 J1 5092 $4,616.48

    afterloading brachytherapy

    catheters (multiple tube and button

    type) into breast for interstitial;

    radioelement application following

    (at the time of or subsequent to)

    partial mastectomy, includes image

    guidance).

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

    Comment: Commenters disagreed with the proposed continued APC assignment for CPT code 19298 to C-APC 5092. These commenters stated that the CY 2018 proposed payment is inadequate and does not cover the costs associated with the surgical placement of the breast brachytherapy catheter or the brachytherapy treatment delivery and related planning and preparation codes included on the claim. The commenters also stated that, previously, both breast brachytherapy catheter placement codes 19296 (Breast interstitial radiation treatment, delayed (expandable) and 19298 have been assigned to the same APC as they are similar clinically and with regard to resource cost. The commenters requested that CPT code 19298 be assigned to the same C-APC as CPT code 19296 proposed for CY 2018; that is, C-APC 5093 (Level 3 Breast/Lymphatic Surgery and Related Procedures).

    Response: Our analysis of the final rule updated claims data revealed a geometric mean cost of approximately $5,944 for CPT code 19298 based on 68 single claims (out of 69 total claims). Based on our updated analysis, we believe that CPT code 19298 is appropriately assigned to C-APC 5092, which has a geometric mean cost of approximately $4,809, rather than to C-APC 5093, which has a geometric mean cost of approximately $7,383 as suggested by the commenters. In addition, our updated analysis showed that the geometric mean cost of approximately $5,944 for CPT code 19298 is within the range of the significant procedures assigned to C-APC 5092, which is between $4,276 (for CPT code 19380) and $6,134 (for CPT code 19340).

    After consideration of the public comments we received and based on updated claims data, we are finalizing our proposal to continue to assign CPT code 19298 to C-APC 5092 for CY 2018.

    3. Care Management Coding Changes Effective January 1, 2018 (APCs 5821 and 5822)

    As noted in the CY 2018 MPFS proposed rule (82 FR 34079), we continue to be interested in the ongoing work of the medical community to refine the set of codes used to describe care management services, including chronic care management. In the CY 2018 OPPS/ASC proposed rule (82 FR 33603 and 33604), we proposed to adopt CPT replacement codes for CY 2018 for several of the care management services finalized last year and sought public comment on ways we might further reduce the burden on reporting providers, including through stronger alignment between CMS requirements and CPT guidance for existing and potential new codes. Table 15 of the CY 2018 OPP/ASC proposed rule detailed the proposed care management coding changes. We referred readers to Addendum B to the proposed rule (which is available via the Internet on the CMS Web site) for the proposed CY 2018 payment rates for the replacement codes.

    Comment: Commenters supported CMS' proposed replacement codes for CY 2018 for several of the care management services finalized for CY 2017. One commenter recommended that the new chronic care management codes be removed from the financial settlement of accountable care organizations (ACOs). This commenter also recommended that CMS develop documentation and billing workflow to reduce administrative burden on providers billing transitional care management and chronic care management codes.

    Response: We appreciate the commenters' support. We also appreciate the suggestion for reducing provider burden with respect to billing and documentation requirements for chronic care management and will consider these suggestions in future rulemaking. However, we note that ACOs are outside the scope of this final rule with comment period.

    After consideration of the public comments we received, we are finalizing our proposal to adopt CPT replacement codes for CY 2018 for several of the care management services finalized last year. Table 22 below details the final care management coding changes. We refer readers to Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site) for the final CY 2018 payment rates for the replacement codes.

    Table 22--Care Management Coding Changes Effective January 1, 2018

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

    CY 2018

    CY 2017 HCPCS code CY 2017 HCPCS code short CY 2017 OPPS CY 2017 replacement CY 2018 replacement HCPCS CY 2018 OPPS CY 2018

    descriptor SI OPPS ASC CPT code code short descriptor * SI OPPS APC

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

    G0502........................ Init psych care Manag, S 5822 99492 1st Psyc collab care mgmt. S 5822

    70min.

    G0503........................ Subseq psych care man, S 5822 99493 Sbsg psyc collab care mgmt S 5822

    60mi.

    Page 59288

    G0504........................ Init/sub psych Care add 30 N N/A 99494 1st/sbsq psyc collab care. N N/A

    m.

    G0505........................ Cog/func assessment outpt. S 5822 99483 Assmt & care pln pt cog S 5822

    imp.

    G0507........................ Care manage serv minimum S 5821 99484 Care mgmt. svc bhvl hlth S 5821

    20. cond.

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

    * The long descriptors for the final CPT codes can be found in Addendum O (New Category I and Category III CPT Codes Effective January 1, 2018) to this

    final rule with comment period, which is available via the Internet on the CMS Web site.

    4. Cardiac Telemetry (APC 5721)

    For CY 2018, as noted in Table 23 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to reassign CPT code 93229 from APC 5733 (Level 3 Minor Procedures) to APC 5734 (Level 4 Minor Procedures), with a proposed payment rate of $94.27.

    Table 23--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 93229

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT Code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    93229................................ External mobile cardiovascular S 5733 $54.55 S 5734 $94.27

    telemetry with

    electrocardiographic recording,

    concurrent computerized real

    time data analysis and greater

    than 24 hours of accessible ecg

    data storage (retrievable with

    query) with ecg triggered and

    patient selected events

    transmitted to a remote attended

    surveillance center for up to 30

    days; technical support for

    connection and patient

    instructions for use, attended

    surveillance, analysis and

    transmission of daily and

    emergent data reports as

    prescribed by a physician or

    other qualified health care

    professional.

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

    We proposed to revise the APC assignment for CPT code 93229 based on claims data used for the CY 2018 OPPS/ASC proposed rule. We note that the proposed rule data were based on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. Our analysis of the claims data revealed a geometric mean cost of approximately $156 for CPT code 93229 based on 1,518 single claims (out of 3,370 total claims). Our analysis further revealed a geometric mean cost of approximately $98 for APC 5734. Based on the geometric mean cost, we believed that it was necessary to revise the APC assignment for CPT code 93229 from APC 5733 to APC 5734 to pay appropriately for the service.

    Comment: Some commenters disagreed with the proposed reassignment of CPT code 93229 to APC 5734, and instead requested a reassignment to APC 5722 (Level 2 Diagnostic Tests and Related Services), which had a proposed payment rate of $242.21 and which is the same APC assignment for CPT code 93229 as in CY 2016. The commenters believed that the cost data used to set the payment rate for the CY 2017 OPPS update was based on miscoding of the service because mobile outpatient telemetry is a low-volume service in the HOPD setting that is performed by a small number of hospitals. The commenters indicated that since the publication of a 2016 coding guidance in the AHA Coding Clinic for HCPCS on the proper coding of remote cardiac monitoring services, they have noticed that the top billers of this service from prior years are no longer inappropriately reporting the service. In addition, the commenters believed that APC 5734 is an inappropriate assignment both from the clinical and resource cost perspectives. The commenters further indicated that the service is not a minor procedure, as described by the group description for APC 5734, and added that CPT code 93229 is the only code in APC 5734 with a status indicator assignment of ``S'' (Procedure or Service, Not Discounted When Multiple), while all the other codes in the APC are assigned to status indicator ``Q1'' (conditionally packaged).

    Response: Although CPT code 93229 was assigned to status indicator ``S'' in APC 5734, it was not the only status indicator assigned to the codes in this APC. As indicated in OPPS Addendum B that was released with the CY 2018 OPPS/ASC proposed rule, three separate status indicators were assigned to the codes in APC 5734. Specifically, CPT code 93229 was assigned to status indicator ``S'', CPT codes 30903 and 30905 were assigned to status indicator ``T'' (Procedure or Service, Discounted

    Page 59289

    When Multiple), and the remaining codes were assigned to status indicator ``Q1''. We note that a specific status indicator assignment does not preclude a code's assignment to a specific APC.

    In addition, as we have stated since the implementation of the OPPS in August 2000, section 1833(t)(9) of the Act requires that we annually review all the items and services within an APC group and revise the APC structures accordingly. Included in this review is the identification of any 2 times rule violations as provided under section 1833(t)(2) of the Act and, to the extent possible, rectification of these violations. We review the most recently available OPPS claims data every year and determine whether changes to the current APC assignment are necessary. Although CPT code 93229 was assigned to APC 5722 in CY 2016, we revised the APC assignment to APC 5733 for CY 2017 based on the latest claims data available at that time. The discussion related to this APC revision can be found in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79616 through 79617).

    For this CY 2018 OPPS/ASC final rule with comment period, we again reviewed the claims data associated with CPT code 93229. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016 that were processed on or before June 30, 2017. Our analysis revealed a geometric mean cost of approximately $160 for CPT code 93229 based on 1,750 single claims (out of 3,869 total claims). Based on our review of the four levels of Diagnostic Tests and Related Services APCs, we believe that CPT code 93229 appropriately fits in APC 5721 (Level 1 Diagnostic Tests and Related Services), which has a geometric mean cost of approximately $136, rather than in APC 5722, which has a geometric mean cost of approximately $249. In addition, our review shows that the geometric mean cost of approximately $160 for CPT code 93229 is within the range of the significant procedures in APC 5721, which is between $60 (for CPT code 93702) and $181 (for CPT code 94727). Consequently, we believe that a reassignment of CPT code 93229 to APC 5721 is more appropriate.

    In summary, after consideration of the public comments we received, we are finalizing our CY 2018 proposal with modification. Specifically, we are revising the assignment for CPT code 93229 to APC 5721 for CY 2018 rather than the proposed APC 5734. Consistent with our policy of reviewing APC assignments annually, we will reevaluate the cost of CPT code 93229 and its APC assignment for the CY 2019 rulemaking. Table 24 below lists the final status indicator and APC assignment for CPT code 93229 for CY 2018. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addenda A and B are available via the Internet on the CMS Web site.

    Table 24--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 93229

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    93229....................... External mobile S 5733 $54.55 S 5721 Refer to OPPS Addendum B.

    cardiovascular

    telemetry with

    electrocardiographic

    recording, concurrent

    computerized real time

    data analysis and

    greater than 24 hours

    of accessible ecg data

    storage (retrievable

    with query) with ecg

    triggered and patient

    selected events

    transmitted to a remote

    attended surveillance

    center for up to 30

    days; technical support

    for connection and

    patient instructions

    for use, attended

    surveillance, analysis

    and transmission of

    daily and emergent data

    reports as prescribed

    by a physician or other

    qualified health care

    professional.

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

    5. Collagen Cross-Linking of Cornea (C-APC 5503)

    For CY 2018, as noted in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 0402T (Collagen cross-linking of cornea (including removal of the corneal epithelium and intraoperative pachymetry when performed)) to APC 5502 (Level 2 Extraocular, Repair, and Plastic Eye Procedures) for CY 2018.

    Comment: One commenter requested that CMS reassign CPT code 0402T from APC 5502 to APC 5504 (Level 4 Extraocular, Repair, and Plastic Eye Procedures). The commenter recommended reassignment to APC 5504 because it believed that assignment to that APC would more accurately reflect the level of resource utilization (particularly labor time and capital equipment) involved in the corneal collagen cross-linking procedure. In addition, the commenter provided resource information on the supplies, equipment, and labor required to perform the procedure described by CPT code 0402T. According to the commenter, the capital equipment required for the procedure costs approximately $90,000, and disposable supplies and at least one technician or registered nurse are also required. In addition, the commenter stated that the average procedure time can last from 1.25 to 2 hours. The commenter acknowledged that there are no Medicare claims data for CPT code

    Page 59290

    0402T because it was established on January 1, 2016.

    Response: We reviewed the updated CY 2016 claims data used for this final rule with comment period. Based on our review, and with consideration of the resource information provided by the commenter, in the absence of data and based on the resources and operating expenses to perform the procedure as described by the commenter, we disagree with the commenter's recommendation that CPT code 0402T should be reassigned to APC 5504, which has a geometric mean cost of approximately $3,000 in CY 2018. In the absence of claims data, we may use other data, such as invoices, to assign a new procedure to a clinical APC. In this case, the commenter did not provide invoices, but did supply some cost information in its comment. We note that the payment rate is not designed to pay for capital equipment costs on a per claim basis. However, taking into account the disposable costs as well as information from the commenter about the time to perform the procedure and the hospital staff involved, we are persuaded to modify our proposal. Given the resource cost and clinical congruence of CPT code 0402T with other procedures assigned to APC 5503 (approximate geometric mean cost of $1,800), such as CPT code 65436 (Removal of corneal epithelium; with application of chelating agent, eg., EDTA), we believe that the reassignment to APC 5503 is more appropriate for CY 2018. Therefore, we are modifying our proposal, and reassigning CPT code 0402T to APC 5503 (Level 3 Extraocular, Repair, and Plastic Eye Procedures) for CY 2018. We will consider reassignment of CPT code 0402T to APC 5504 in the CY 2019 rulemaking.

    6. Cryoablation Procedure for Lung Tumors (C-APC 5361)

    For CY 2018, the AMA CPT Editorial Panel deleted CPT code 0340T and replaced the code with CPT code 32994, effective January 1, 2018. We note that CPT code 0340T was effective January 1, 2014, and deleted on December 31, 2017. Table 25 below lists the complete descriptors for the deleted and replacement code. We note that the deleted and replacement code were both listed in Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which are available via the Internet on the CMS Web site). Addendum B listed the proposed status indicator assignment for the replacement code and assigned it to comment indicator ``NP'' (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code), while Addendum O listed the proposed/placeholder CY 2018 CPT codes and the long descriptors.

    Table 25--Coding Changes for CPT Code 32994

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

    CY 2018 OPPS/ASC

    CPT Code proposed rule Long descriptor

    placeholder code

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

    0340T................. ...................... Ablation, pulmonary

    tumor(s), including

    pleura or chest wall

    when involved by tumor

    extension,

    percutaneous,

    cryoablation,

    unilateral, includes

    imaging guidance.

    32994................. 32X99................. Ablation therapy for

    reduction or

    eradication of 1 or

    more pulmonary tumor(s)

    including pleura or

    chest wall when

    involved by tumor

    extension,

    percutaneous, including

    imaging guidance when

    performed, unilateral;

    cryoablation.

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

    As noted in Table 26 below and in Addendum B to the CY 2018 OPPS/

    ASC proposed rule, we proposed to delete CPT code 0340T (status indicator ``D'') and assign its replacement code, CPT code 32994 (placeholder code 32X99), to C-APC 5361 (Level 1 Laparoscopy and Related Services), with a proposed payment rate of $4,340.65. As noted in Table 26, for CY 2017, CPT code 0340T was assigned to C-APC 5361, which is the same APC assignment for CPT code 32994.

    Table 26--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 32994

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

    Proposed CY

    CY 2018 OPPS/ASC CY 2017 OPPS CY 2017 CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code proposed rule Short descriptor SI OPPS APC payment rate 2018 OPPS SI 2018 OPPS payment

    placeholder code APC rate

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

    0340T................... ....................... Ablate pulm tumors + J1 5361 $4,199.13 D N/A N/A

    extnsn.

    32994................... 32X99.................. Ablate pulm tumor N/A N/A N/A J1 5361 $4,340.65

    perq crybl.

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

    Comment: Commenters presented opposing recommendations on the proposed APC assignment for CPT code 32994. Some commenters supported the proposed APC assignment to C-APC 5361. One commenter stated that the APC assignment maintains clinical homogeneity for services within the APC and addresses resource cost fluctuation and volatility, and suggested that CMS finalize the proposal. However, other commenters disagreed with the proposed APC assignment and recommended that CPT code 32994 be assigned to C-APC 5362 (Level 2 Laparoscopy and Related Services), which had a proposed payment rate of $7,213.53. One commenter understood why CMS proposed to assign CPT code 32994 to C-APC 5361, which is the same APC to which its predecessor code was assigned. However, the commenter believed that the cost of the procedure will only increase as hospitals gain

    Page 59291

    experience with it. Consequently, the commenter suggested that CMS assign the CPT code to C-APC 5362. Another commenter recommended that CMS assign CPT code 32994 to C-APC 5362 and further noted the importance of new codes to be priced correctly before they are subject to APC placement based on their actual cost data.

    Response: Because CPT code 0340T is a predecessor code to CPT code 32994, we have historical claims data on which to base the payment rate for CPT code 32994. Review of our claims data for this final rule with comment period shows a geometric mean cost of approximately $5,471 for CPT code 0340T based on 27 single claims (out of 27 total claims), which is more comparable to the geometric mean cost of approximately $4,486 for C-APC 5361 than to the geometric mean cost of approximately $7,591 for C-APC 5362. We do not agree that we should assign CPT code 32994 to C-APC 5362 because the geometric mean cost for this APC is significantly greater than that of CPT code 32994 (cross-walked from CPT code 0340T) as indicated in our claims data available for this final rule with comment period. In addition, if the cost of the procedure increases, this will be identified through our annual review of the claims data. Consistent with our policy of reviewing APC assignments annually, we will reevaluate the geometric mean cost of CPT code 32994 and its APC assignment in next year's rulemaking for the CY 2019 OPPS update.

    In summary, after consideration of the public comments we received and our analysis of the updated claims data for this final rule with comment period, we are finalizing our CY 2018 proposal without modification, and assigning CPT code 32994 to C-APC 5361. The final CY 2018 geometric mean cost for C-APC 5361 is approximately $4,486. Table 27 below lists the final status indicator and APC assignment for CPT code 32994 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addenda A and B are available via the Internet on the CMS Web site.

    Table 27--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 32994

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

    CY 2017

    CY 2018 OPPS/ASC CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018 CY 2018 OPPS payment

    CPT code proposed rule Short descriptor SI OPPS APC payment SI OPPS APC rate

    placeholder code rate

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

    0340T............... N/A................. Ablate pulm J1 5361 $4,199.13 D N/A N/A.

    tumors + extnsn.

    32994............... 32X99............... Ablate pulm tumor N/A N/A N/A J1 5361 Refer to OPPS Addendum

    perq crybl. B.

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

    7. Diagnostic Bone Marrow Aspiration and Biopsy (C-APC 5072)

    For CY 2018, the AMA CPT Editorial Panel revised the bone marrow and aspiration CPT codes. Specifically, the descriptors for CPT codes 38220 and 38221 were revised and new CPT codes 20939 (placeholder code 2093X) and 38222 (placeholder code 382X3) were established, effective January 1, 2018. In addition, add-on HCPCS code G0364, which was effective January 1, 2005, will be deleted on December 31, 2017 and replaced with CPT codes 38220, 38221, and 38222, effective January 1, 2018. The deleted and replacement codes were listed in Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule. Addendum B listed the proposed status indicator assignment for revised CPT codes 38220 and 38221 and new CPT code 38222, which was assigned to comment indicator ``NP'' (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code), while Addendum O listed the proposed/placeholder CY 2018 CPT codes and the long descriptors.

    Table 28 below lists the complete descriptors for the bone marrow aspiration and biopsy codes.

    Table 28--Coding Changes for the Bone Marrow Aspiration and Biopsy Codes

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

    CY 2018 OPPS/ASC

    HCPCS code proposed rule Long descriptor

    placeholder code

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

    20939................. 2093X................. Bone marrow aspiration

    for bone grafting,

    spine surgery only,

    through separate skin

    or fascial incision

    (List separately in

    addition to code for

    primary procedure).

    38220................. N/A................... Diagnostic bone marrow;

    aspiration.

    38221................. N/A................... Diagnostic bone marrow;

    biopsy(ies).

    38222................. 382X3................. Diagnostic bone marrow;

    biopsy(ies) and

    aspiration(s).

    G0364................. N/A................... Bone marrow aspiration

    performed with bone

    marrow biopsy through

    the same incision on

    the same date of

    service.

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

    As noted in Table 29 below and in Addendum B of the CY 2018 OPPS/

    ASC proposed rule, we proposed to delete HCPCS code G0364 (status indicator ``D'') and assign revised CPT codes 38220 and 38221, as well as new CPT code 38222 (placeholder code 382X3) to C-APC 5072 (Level 2 Excision/Biopsy/Incision and Drainage), with a proposed payment rate of $1,268.53. We note that, under the OPPS, we packaged the payment for HCPCS code G0364 (status

    Page 59292

    indicator ``N'') into the primary service or procedure that is reported with the code because we considered the service to be an add-on furnished as part of a comprehensive service. In addition, we proposed to assign CPT code 20939 (placeholder 2093X) to status indicator ``N'' (Packaged status) because it is an add-on code. Under Medicare regulations at 42 CFR 419.2(b)(18), add-on codes are packaged under the OPPS. Further, we proposed to continue to assign revised CPT codes 38220 and 38221 to C-APC 5072 for CY 2018.

    Table 29--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for the Bone Marrow Aspiration and Biopsy Codes

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

    Proposed

    CY 2017 Proposed CY Proposed CY 2018

    HCPCS Code CY 2018 OPPS/ASC proposed Short descriptor CY 2017 CY 2017 OPPS 2018 OPPS CY 2018 OPPS

    rule placeholder code OPPS SI OPPS APC payment SI OPPS APC payment

    rate rate

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

    20939.................... 2093X.................... Bone marrow aspir bone N/A N/A N/A N N/A N/A

    grfg.

    38220.................... N/A...................... Dx bone marrow J1 5072 $1,236.62 J1 5072 $1,268.53

    aspirations.

    38221.................... N/A...................... Dx bone marrow biopsies. J1 5072 $1,236.62 J1 5072 $1,268.53

    38222.................... 382X3.................... Dx bone marrow bx & N/A N/A N/A J1 5072 $1,268.53

    aspir.

    G0364.................... N/A...................... Bone marrow aspirate N N/A N/A D N/A N/A

    &biopsy.

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

    Comment: One commenter disagreed with the proposed APC assignment of new CPT code 38222 to C-APC 5072 and recommended that the code be assigned to C-APC 5073 (Level 3 Excision/Biopsy/Incision and Drainage), which had a proposed payment rate of $2,222.47. This commenter further noted the importance of new codes being priced correctly before they are subject to APC assignment based on their actual cost data.

    Response: As displayed in Table 29, we proposed to make no change to the APC assignments for CPT codes 38220 and 38221. Specifically, we proposed to continue to assign both codes to C-APC 5072 for CY 2018 based on claims data used for the CY 2018 OPPS/ASC proposed rule. We note that the proposed rule data was based on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. For CPT code 38220, our examination of the claims data revealed a geometric mean cost of approximately $1,645 based on 5,361 single claims (out of 5,431 total claims). For CPT code 38221, our claims data showed a geometric mean cost of approximately $1,615 based on 53,789 single claims (out of 54,335 total claims). We believe that the geometric mean costs of approximately $1,645 for CPT code 38220 and $1,615 for CPT code 38221 are comparable to the geometric mean cost of approximately $1,319 for C-APC 5072. Consequently, we proposed to maintain both codes in C-APC 5072 for CY 2018. We note that we had no claims data for HCPCS code G0364 because this is an add-on code whose payment is packaged into the primary service that is reported with the code.

    For this final rule with comment period, we again analyzed updated claims data associated with the four codes. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our review of the final rule claims data revealed a similar pattern for both codes. For CPT code 38220, we found a geometric mean cost of approximately $1,787 based on 5,908 single claims (out of 5,993 total claims), and for CPT code 38221, our claims data revealed a geometric mean cost of approximately $1,799 based on 59,892 single claims (out of 60,467 total claims). Because the geometric mean costs of approximately $1,787 for CPT code 38220 and $1,799 for CPT code 38221 are similar to the geometric mean cost of approximately $1,347 for C-APC 5072, we continue to believe that C-APC 5072 is the most appropriate APC assignment for both codes for CY 2018.

    In addition, based on input from our medical advisors, we believe that C-APC 5072 is the most appropriate APC assignment for new CPT code 38222, consistent with the APC assignment for similar diagnostic bone marrow aspiration and biopsy procedures. As noted in Table 29, CPT codes 38220 and 38221 are assigned to C-APC 5072, and we believe that the service described by new CPT code 38222 is similar to the existing bone marrow aspiration and biopsy codes. Consistent with the statutory requirement under section 1833(t)(9)(A) of the Act, we will reevaluate the APC groupings during the next rulemaking cycle.

    After consideration of the public comment we received, we are finalizing our CY 2018 proposals, without modification, for the bone marrow aspiration and biopsy codes, specifically, CPT codes 20939, 38220, 38221, and 38222. Table 30 below lists the final APC and status indicator assignments for CPT codes 20939, 38220, 38221, and 38222 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 30--Final CY 2018 Status Indicator (SI) and APC Assignment for the Bone Marrow Aspiration and Biopsy Codes

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

    CY 2017

    CY 2018 OPPS/ASC CY 2017 CY 2017 OPPS CY 2018 CY 2018 CY 2018 OPPS payment

    HCPCS code proposed rule Short descriptor OPPS SI OPPS APC payment OPPS SI OPPS APC rate

    placeholder code rate

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

    20939................. 2093X................. Bone marrow aspir N/A N/A N/A N N/A N/A.

    bone grfg.

    38220................. N/A................... Dx bone marrow J1 5072 $1,236.62 J1 5072 Refer to OPPS

    aspirations. Addendum B.

    Page 59293

    38221................. N/A................... Dx bone marrow J1 5072 $1,236.62 J1 5072 Refer to OPPS

    biopsies. Addendum B.

    38222................. 382X3................. Dx bone marrow bx & N/A N/A N/A J1 5072 Refer to OPPS

    aspir. Addendum B.

    G0364................. ...................... Bone marrow aspirate N N/A N/A D N/A N/A.

    &biopsy.

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

    8. Discussion of Comment Solicitation in the Proposed Rule on Intraocular Procedure APCs

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33609 through 33610), as part of our CY 2018 comprehensive review of the structure of the APCs and procedure code assignments, we evaluated the intraocular procedure APCs with a particular focus on C-APC 5491 (Level 1 Intraocular Procedures) that contains cataract surgery procedures. We strive to maintain APCs that contain procedures that are relatively homogenous in resource costs and clinical characteristics. While it is impracticable and contrary to the principles of a prospective payment system to assign each procedure to its own APC, thus resulting in a cost-based, fee schedule payment system, we seek to ensure our clinical groupings appropriately group like items and services while maintaining the integrity of a prospective payment system under which bundled, encounter-based payments are essential.

    For CY 2018, we considered proposing a new intraocular procedure APC that would further distinguish the resource costs and clinical characteristics between cataract surgery and complex cataract surgery. As listed in Addendum B of the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 66984 (Cataract surgery with IOL 1 stage procedure) and CPT code 66982 (Cataract surgery complex) to C-APC 5491. However, because the 2017 AMA CPT Code manual describes a complex cataract surgery case as ``requiring devices or techniques not generally used in routine cataract surgery (e.g., iris expansion device, suture support for intraocular lens, or primary posterior capsulorrhexis),'' we stated that we believe it may be more appropriate to assign CPT code 66982 to a C-APC that is separate from the C-APC assignment for CPT code 66984. However, because this potential APC grouping would assign CPT code 66982 to a higher paying C-APC than CPT code 66984, we indicated that we would monitor claims data for changes in the distribution of coding complex cataract surgery and routine cataract surgery if we were to adopt this change. In the proposed rule, we sought public comments from stakeholders, including ophthalmologists, organizations representing ophthalmologists, beneficiaries, hospitals, and all other interested parties on whether we should create a new C-APC that includes complex cataract surgeries identified by CPT code 66982 (along with other intraocular procedures that are similar in resources) in a newly created C-APC that is separate from those identified by CPT code 66984. That is, we are considering whether to establish a new Level 2 Intraocular Procedures C-APC in between existing C-APCs 5491 and 5492.

    Comment: Commenters, including several ophthalmologists and organizations representing ophthalmologists, did not support separation of complex cataract surgery identified by CPT code 66982 and simple cataract surgery identified by CPT code 66984 into separate APCs. Commenters recommended that CMS maintain the current assignment of CPT code 66982 and 66984 in the same APC (APC 5491) because the procedures are similar clinically and the modest variation in cost between the two procedures does not warrant reassignment of CPT code 66982 into a higher payment APC. However, commenters supported CMS' intent to monitor the data for these procedures and make future changes, if needed. In addition, one commenter indicated that variations in payment between simple and complex cataract surgery should be reflected in the physician payment rather than the facility fee.

    Response: We thank the commenters for providing detailed responses to the comment solicitation on whether to separate simple and complex cataract surgery into separate APCs. Based on the points raised in response to the comment solicitation with respect to the facility resource costs and clinical similarity between simple and complex cataract surgery, it does not appear necessary to separate these procedures into separate APCs.

    After consideration of the public comments we received, we are continuing the assignment of simple and complex cataract surgery procedures (described by CPT codes 66984 and 66982, respectively) to the same APC for CY 2018. We appreciate the commenters' support of CMS' continuing efforts to monitor both the cost and utilization of simple and complex cataract surgery to determine if an APC reassignment or other change may be needed in the future.

    9. Endovascular APCs (C-APCs 5191 through 5194)

    For CY 2018, we proposed to continue the existing four levels of Endovascular C-APCs (C-APCs 5191 through 5194) as displayed in Table 31 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule.

    Table 31--Proposed CY 2018 Geometric Mean Cost and Payment for

    Endovascular C-APCs

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

    CY 2018 Proposed CY

    C-APC geometric mean 2018 OPPS

    cost payment

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

    5191--Level 1 Endovascular Procedures... $2,958.89 $2,844

    Page 59294

    5192--Level 2 Endovascular Procedures... 5,199.87 4,999

    5193--Level 3 Endovascular Procedures... 10,627.86 10,218

    5194--Level 4 Endovascular Procedures... 16,197.55 15,572

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

    Comment: Commenters disagreed with the proposal to continue the four levels of the endovascular C-APCs and requested that CMS create more levels within the endovascular C-APCs to improve resource homogeneity within these C-APCs. Specifically, the commenters requested that CMS create a six-level endovascular C-APC family by reassigning endovascular procedures with costs greater than approximately $7,000 up one level, from the current C-APC 5192 (Level 2 Endovascular Procedures) to a new Level 3 Endovascular Procedures C-APC (519X), and reassigning procedures with costs less than approximately $9,000 down one level, from the current C-APC 5193 (Level 3 Endovascular Procedures) to the new requested Level 3 Endovascular Procedures C-APC. Commenters also requested that procedures with costs greater than approximately $12,000 in the current C-APC 5193 be moved up one level to a new Level 5 Endovascular Procedures C-APC (519Y), and those procedures with costs greater than approximately $13,000 to be moved down one level from current C-APC 5194 (Level 4 Endovascular Procedures) to the new requested Level 5 C-APC (519Y). The commenters' requested the C-APC structure and estimated payment amount for each C-

    APC as listed in Table 32 below.

    Table 32--CY 2018 Structure for Endovascular C-APCs Requested by

    Commenters

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

    Estimated CY

    C-APC 2018 OPPS

    payment

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

    5191--Level 1 Endovascular Procedures................... $2,845

    5192--Level 2 Endovascular Procedures................... 4,875

    519X--New Level 3 Endovascular Procedures............... 8,042

    5193--Current Level 3 Endovascular Procedures/New Level 10,084

    4 Endovascular Procedures..............................

    519Y--New Level 5 Endovascular Procedures............... 12,149

    5194--Current Level 4 Endovascular Procedures/New Level 15,713

    6 Endovascular Procedures..............................

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

    At the annual meeting for the HOP Panel held on August 21, 2017, the HOP Panel recommended that, for CY 2018, CMS examine the number of APCs for endovascular procedures. The HOP Panel also recommended that the appropriate Panel subcommittee review the APCs for endovascular procedures to determine whether more granularity (that is, more APCs) is warranted.

    Other commenters opposed a reorganization of the endovascular C-

    APCs for CY 2018 and expressed concerns regarding changing the number of C-APCs in this family without a chance for the public to comment. These commenters encouraged CMS to consider the impact that adding APCs for the endovascular procedures may have on other procedures in existing APCs and recommended that, if CMS plans to make a change to the endovascular APCs, it include a proposal in the CY 2019 OPPS/ASC proposed rule to allow the opportunity for the public to comment.

    Response: We thank the commenters for their input. At this time, we continue to believe that the current C-APC levels for the endovascular C-APC family provide an appropriate distinction between the resource costs at each level and provide clinical homogeneity. We will continue to review this C-APC structure, including consultation with the appropriate HOP Panel subcommittee, to determine if additional granularity is necessary for this C-APC family.

    10. Esophagogastroduodenoscopy (EGD) (C-APC 5362)

    For CY 2018, as displayed in Table 33 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 43210 to APC 5331 (Complex GI Procedures), with a proposed payment rate of $4,119.27.

    Page 59295

    Table 33--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 43210

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    43210................................ Esophagogastroduo-denoscopy, J1 5331 $3,940.61 J1 5331 $4,119.27

    flexible, transoral; with

    esophagogastric fundoplasty,

    partial or complete, includes

    duodenoscopy when performed.

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

    Comment: One commenter disagreed with the proposed APC assignment for CPT code 43210 and stated that that the proposed payment is inadequate to cover the cost of the procedure. The commenter stated that the device associated with the procedure costs approximately $4,100. The commenter elaborated that because of the inadequate payment for the procedure, providers are reluctant to perform the procedure, and instead are opting to perform the higher paying procedures for the treatment of gastroesophageal reflux disease (GERD). The commenter also stated that, based on the geometric mean cost of $7,013 for CPT code 43210, the code is inappropriately assigned to APC 5331, which has a geometric mean cost of approximately $4,284. To correct the inadequate payment for the procedure, the commenter suggested that CMS either reassign CPT code 43210 to C-APC 5362 (Level 2 Laparoscopy and Related Services), which had a proposed payment rate of $7,214, or establish a new Level 2 Complex GI Procedures APC that contains only the surgical procedures described by the following CPT codes:

    43210 (Esophagogastroduodenoscopy, flexible, transoral; with esophagogastric fundoplasty, partial or complete, includes duodenoscopy when performed);

    43257 (Esophagogastroduodenoscopy, flexible, transoral; with delivery of thermal energy to the muscle of lower esophageal sphincter and/or gastric cardia, for treatment of gastroesophageal reflux disease);

    43280 (Laparoscopy, surgical, esophagogastric fundoplasty (e.g., nissen, toupet procedures));

    43281 (Laparoscopy, surgical, repair of paraesophageal hernia, includes fundoplasty, when performed; without implantation of mesh);

    43284 (Laparoscopy, surgical, esophageal sphincter augmentation procedure, placement of sphincter augmentation device (i.e., magnetic band), including cruroplasty when performed);

    43770 (Laparoscopy, surgical, gastric restrictive procedure; placement of adjustable gastric restrictive device (e.g., gastric band and subcutaneous port components)); and

    46762 (Sphincteroplasty, anal, for incontinence, adult; implantation artificial sphincter).

    Response: For the second suggestion, we believe the grouping of procedures in the suggested APC may be inappropriate based on lack of clinical homogeneity. Specifically, CPT code 46762 describes a sphincteroplasty procedure, which is unlike that of the other GERD-

    related procedures in the suggested APC. However, for the first suggestion, based on our analysis of the final rule claims data, we believe that it would be appropriate to reassign CPT code 43210 to C-

    APC 5362. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our analysis of the final rule claims data revealed a geometric mean cost of approximately $6,759 for CPT code 43210 based on 91 single claims (out of 92 total claims), which is comparable to the geometric mean cost of approximately $7,591 for C-APC 5362. Compared to the geometric mean cost of approximately $4,291 for C-APC 5331, we agree with the commenter that C-APC 5362 is the more appropriate C-APC assignment for CPT code 43210 based on its clinical homogeneity and resource costs.

    In summary, after consideration of the public comment we received, we are finalizing our CY 2018 proposal with modification. Specifically, we are reassigning CPT code 43210 from C-APC 5331 to C-APC 5362 for CY 2018. As we do every year under the OPPS, we will reevaluate the cost of the procedure and its APC assignment for next year's OPPS rulemaking. Table 34 below lists the final status indicator and APC assignments for CPT code 43210. We refer readers to Addendum B of this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A of this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 34--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 43210

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    43210....................... Esophagogastroduo- J1 5331 $3,940.61 J1 5362 Refer to OPPS Addendum B.

    denoscopy, flexible,

    transoral; with

    esophagogastric

    fundoplasty, partial or

    complete, includes

    duodenoscopy when

    performed.

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

    Page 59296

    11. Hemorrhoid Treatment by Thermal Energy (APC 5312)

    For CY 2018, as displayed in Table 35 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 46930 to APC 5311 (Level 1 Lower GI Procedures), with a proposed payment rate of $690.37.

    Table 35--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 46930

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    HCPCS code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    46930................................ Destruction of internal T 5311 $667.67 T 5311 $690.37

    hemorrhoid(s) by thermal energy

    (e.g., infrared coagulation,

    cautery, radiofrequency).

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

    Comment: One commenter requested a reassignment of CPT code 46930 to APC 5312 (Level 2 Lower GI Procedures), which had a CY 2018 proposed payment rate of $907.04. The commenter indicated that review of the geometric mean cost of approximately $879 for CPT code 46930 from the CY 2018 proposed rule claims data is more in line with the geometric mean cost for APC 5312. Specifically, the commenter noted that the geometric mean cost for APC 5312 is approximately $943, which is comparable to the geometric cost of $879 for CPT code 46930, rather than the geometric mean cost of approximately $718 for APC 5311.

    Response: For this final rule with comment period, we reviewed the claims data associated with CPT codes 46930. We used claims data for this final rule with comment period with dates of service between January 1, 2016, and December 31, 2016 that were processed on or before June 30, 2017. Our analysis of the final rule claims data revealed that a change in the APC assignment to APC 5312 for CPT code 46930 is appropriate. Specifically, we found a geometric mean cost of approximately $858 for CPT code 46930 based on 363 single claims (out of 970 total claims), which is similar to the geometric mean cost of approximately $936 for APC 5312 rather than the geometric mean cost of approximately $710 for APC 5311. In addition, our analysis of the range of geometric mean costs for the significant procedures within APCs 5311 and 5312 shows that the geometric mean cost for CPT code 46930 is comparable to the costs of procedures assigned to APC 5312. Specifically, the geometric mean costs of the significant procedures assigned to APC 5311 range between approximately $382 (for CPT code 46221) and $750 (for CPT code 45378), while the range for procedures assigned to APC 5312 is between approximately $824 (for CPT code 45341) and $1,579 (for CPT 45390). Consequently, we agree that a reassignment of CPT code 46930 to APC 5312 is more appropriate.

    Therefore, after consideration of the public comment we received, we are finalizing our CY 2018 proposal with modification to the APC assignment for CPT code 46930. Specifically, we are reassigning CPT code 46930 from C-APC 5311 to C-APC 5312 for CY 2018. Table 36 below lists the final status indicator and APC assignments for CPT code 49630. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 36--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 46930

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    46930....................... Destruction of internal T 5311 $667.67 T 5312 Refer to OPPS Addendum B.

    hemorrhoid(s) by

    thermal energy (e.g.,

    infrared coagulation,

    cautery,

    radiofrequency).

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

    12. Ileoscopy Through Stoma With Stent Placement (C-APC 5303)

    For CY 2018, as displayed in Table 37 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT code 44384 to C-APC 5303 (Level 3 Upper GI Procedures).

    Page 59297

    Table 37--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 44384

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    44384................................ Ileoscopy, through stoma; with J1 5303 $2,510.70 J1 5303 $2,630.93

    placement of endoscopic stent

    (includes pre- and post-dilation

    and guide wire passage, when

    performed).

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

    Comment: Several commenters opposed the proposed continued assignment of CPT code 44384 to C-APC 5303. The commenters stated that the procedure includes the use of a stent that costs approximately $1,500, and that the resources required to perform the procedure are similar to those other small and large bowel procedures that require stent placement in C-APC 5331 (Complex GI Procedures), which had a CY 2018 proposed payment rate of $4,119.27. The commenters further added that because C-APC 5303 is not a device-dependent designated APC, the continued assignment of CPT code 44384 to C-APC 5303 results in an ASC payment that is below the cost of performing the procedure. Consequently, the commenters urged CMS to revise the APC assignment for CPT code 44384 back to its CY 2016 APC assignment, specifically, C-APC 5331.

    Response: We proposed to continue the APC assignment for CPT code 44384 based on claims data used for the CY 2018 OPPS/ASC proposed rule. We note that the proposed rule data was based on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. For CPT code 44384, our analysis of the claims data revealed a geometric mean cost of approximately $2,404 for the CPT code based on 25 single claims (out of 26 total claims), which is similar to the geometric mean cost of approximately $2,736 for C-APC 5303 rather than the geometric mean cost of approximately $4,284 for C-

    APC 5331. Consequently, we proposed to continue the APC assignment for CPT code 44384 to C-APC 5303 for CY 2018.

    For this final rule with comment period, we again examined updated claims data associated with CPT code 44384. We note that for this final rule with comment period we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our examination of the final rule claims data revealed a similar pattern for CPT code 44384. Specifically, we found a geometric mean cost of approximately $2,492 for CPT code 44384 based on 32 single claims (out of 33 total claims), which is similar to the geometric mean cost of approximately $2,742 for C-APC 5303 rather than the geometric mean cost of approximately $4,291 for C-APC 5331. Assigning CPT code 43384 to C-APC 5331 would result in an overpayment for the procedure. C-APC 5303 contains several GI-related procedures, which are similar to those procedures described by CPT code 44384, based on clinical homogeneity and resource costs.

    In response to the comment related to device-dependent APCs, we note that device-dependent APCs are no longer recognized under the OPPS as of CY 2015 and that, effective January 1, 2017, device-intensive status is assigned at the HCPCS code level, not at the APC level. We note that when we implemented the C-APC policy in CY 2015, we eliminated the device-dependent APC policy and replaced it with the device-intensive policy, effective January 1, 2015. For more information on this change, we refer readers to the CY 2015 OPPS/ASC final rule with comment period (79 FR 66793 through 66795), the CY 2016 OPPS/ASC final rule with comment period (80 FR 70421 through 70422), and the CY 2017 OPPS/ASC final rule with comment period (81 FR 79657 through 79659). In addition, we refer readers to section IV.B. of this final rule with comment period for the discussion related to the device-intensive policy under the OPPS. For a discussion of ASC procedures designated as device-intensive, we refer readers to section XII.C.1.c. of this final rule with comment period.

    Finally, we remind readers that, as we have stated since the implementation of the OPPS in August 2000, section 1833(t)(9) of the Act requires that we annually review all the items and services within an APC group and revise the APC structures accordingly. Included in this review is the identification of any 2 times rule violations as provided under section 1833(t)(2) of the Act and, to the extent possible, rectification of these violations. We review our claims data every year and determine whether we need to make changes to the current APC assignment for the following year. Although CPT code 44384 was assigned to C-APC 5331 in CY 2016, we revised the assignment to C-APC 5303 for CY 2017 based on the latest claims data.

    In summary, after consideration of the public comments we received, we are finalizing our CY 2018 proposal without modification to continue the assignment of CPT code 44384 to C-APC 5303. Table 38 below lists the final status indicator and APC assignments for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Page 59298

    Table 38--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 44384

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptors SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    44384....................... Ileoscopy, through J1 5303 $2,510.70 J1 5303 Refer to OPPS Addendum B.

    stoma; with placement

    of endoscopic stent

    (includes pre- and post-

    dilation and guide wire

    passage, when

    performed).

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

    13. Laparoscopic Nephrectomy (C-APC 5362)

    For CY 2018, as displayed in Table 39 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to reassign CPT code 50543 from C-APC 5377 (Level 7 Urology and Related Services), which had a proposed payment rate of $15,220.83 to C-APC 5362 (Level 2 Laparoscopy and Related Services), which had a proposed payment rate of $7,213.53.

    Table 39--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 50543

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

    CY 2017 Proposed CY Proposed CY

    CPT code Long descriptor CY 2017 OPPS CY 2017 OPPS Proposed CY 2018 OPPS 2018 OPPS

    SI OPPS APC payment 2018 OPPS SI APC payment

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

    50543................................ Laparoscopy, surgical; partial J1 5377 $14,363.61 J1 5362 $7,213.53

    nephrectomy.

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

    Comment: One commenter applauded CMS' proposal to remove CPT code 50543 from C-APC 5377. The commenter indicated that the code was inappropriately placed in C-APC 5377 because the procedure involves no implantable device, which is in contrast to the device-related procedures in C-APC 5377. The commenter believed that the addition of this CPT code to C-APC 5377 for CY 2017 was an error that disrupted the clinical homogeneity of the APC. The commenter suggested that CMS finalize the proposal to reassign CPT code 50543 from C-APC 5377 to APC 5362.

    Response: We appreciate the commenter's support. For this final rule with comment period, we again reviewed the updated claims data associated with CPT code 50543 and continue to believe that C-APC 5362 is the more appropriate assignment for the CPT code based on its clinical coherence and resource similarity to the other procedures in the APC. Although our analysis showed a geometric mean cost of approximately $7,591 for C-APC 5362, which is lower than the geometric mean cost of approximately $10,247 for CPT code 50543 based on 1,008 single claims (out of 1,016 total claims), we found that the geometric mean cost for the CPT code falls within the range of costs for significant procedures assigned to C-APC 5362. Specifically, the cost range for procedures assigned to C-APC 5362 is between approximately $5,997 (for CPT code 50593) and $10,247 (for CPT code 50543). Based on the final rule claims data, we believe that CPT code 50543 is more appropriately assigned to C-APC 5362 based on its clinical coherence and resource similarity to the other procedures assigned to C-APC 5362.

    Therefore, after consideration of the public comment we received, we are finalizing our proposal, without modification, to reassign CPT code 50543 to C-APC 5362 for CY 2018. As we do every year, we will review our claims data for the procedure for the CY 2019 OPPS rulemaking. Table 40 below lists the final CY 2018 status indicator and APC assignments for CPT code 50543. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 40--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 50543

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    50543....................... Laparoscopy, surgical; J1 5377 $14,363.61 J1 5362 Refer to OPPS Addendum B.

    partial nephrectomy.

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

    14. Multianalyte Assays With Algorithmic Analyses (MAAA)

    For CY 2018, as displayed in Table 41 below and as listed in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to continue to assign CPT codes 81490, 81503, 81535, 81536, 81538, and 81539, to status indicator ``Q4'' to indicate that the codes are conditionally packaged. Specifically, as defined in Addendum D1 to the CY 2018 OPPS/ASC proposed rule, an

    Page 59299

    assignment to status indicator ``Q4'' indicates that payment for the laboratory test is either packaged if billed on the same claim as a HCPCS code assigned to status indicator ``J1'', ``J2'', ``S'', ``T'', ``V'', ``Q1'', ``Q2'', or ``Q3'', or in other circumstances, is paid through the CLFS.

    Table 41--Proposed CY 2018 Status Indicator (SI) for CPT Codes 81490,

    81503, 81535, 81536, 81538, and 81539

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

    CY 2017 OPPS Proposed CY

    CPT code Long descriptor SI 2018 OPPS SI

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

    81490.................. Autoimmune Q4 Q4

    (rheumatoid

    arthritis),

    analysis of 12

    biomarkers using

    immunoassays,

    utilizing serum,

    prognostic

    algorithm reported

    as a disease

    activity score.

    81503.................. Oncology (ovarian), Q4 Q4

    biochemical assays

    of five proteins

    (ca-125,

    apolipoprotein a1,

    beta-2

    microglobulin,

    transferrin, and

    pre-albumin),

    utilizing serum,

    algorithm reported

    as a risk score.

    81535.................. Oncology Q4 Q4

    (gynecologic),

    live tumor cell

    culture and

    chemotherapeutic

    response by dapi

    stain and

    morphology,

    predictive

    algorithm reported

    as a drug response

    score; first

    single drug or

    drug combination.

    81536.................. Oncology Q4 Q4

    (gynecologic),

    live tumor cell

    culture and

    chemotherapeutic

    response by dapi

    stain and

    morphology,

    predictive

    algorithm reported

    as a drug response

    score; each

    additional single

    drug or drug

    combination (list

    separately in

    addition to code

    for primary

    procedure).

    81538.................. Oncology (lung), Q4 Q4

    mass spectrometric

    8-protein

    signature,

    including amyloid

    a, utilizing

    serum, prognostic

    and predictive

    algorithm reported

    as good versus

    poor overall

    survival.

    81539.................. Oncology (high- Q4 Q4

    grade prostate

    cancer),

    biochemical assay

    of four proteins

    (total psa, free

    psa, intact psa,

    and human

    kallikrein-2

    hk2), utilizing

    plasma or serum,

    prognostic

    algorithm reported

    as a probability

    score.

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

    Comment: Some commenters requested a revision to the status indicator assignment for the six MAAA codes (CPT codes 81490, 81503, 81535, 81536, 81538, and 81539) from ``Q4'' to ``A'' (Not paid under the OPPS but may be paid under a different Medicare payment system), consistent with the status indicator assignment for the DNA and RNA-

    based MAAA tests. The commenters stated that these tests are generally not performed in the HOPD setting. Also, the commenters indicated that all of the Category I CPT MAAA codes are already assigned to status indicator ``A'' except for CPT codes 81490, 81503, 81535, 81536, 81538, and 81539, which are protein-based MAAA codes. The commenters asserted that, based on the June 23, 2016 CLFS final rule entitled ``Medicare Program; Medicare Clinical Diagnostic Laboratory Tests Payment System,'' CMS defined an ADLT under section 1834A(d)(5)(A) of the Act to include DNA, RNA, and protein-based tests, and, as such, the six protein-based MAAA codes should be reassigned to status indicator ``A''.

    Response: As we stated in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79594), we will assign status indicator ``A'' (Separate payment under the CLFS) to ADLTs once a laboratory test is designated as an ADLT under the CLFS. Before a test can be designated as an ADLT, applicants must submit an application for successful designation as an ADLT by CMS. These 6 codes (CPT codes 81490, 81503, 81535, 81536, 81538, and 81539) have not been designated as ADLTs by CMS at this time, and therefore we do not believe they should be reassigned to status indicator ``A''. However, once a code has been designated under the CLFS as an ADLT that meets the criteria of section 1834A(d)(5)(A) of the Act, we will update the OPPS payment file (Addendum B) on a quarterly basis to reflect the appropriate status indicator assignment.

    Therefore, after consideration of the public comments, we are finalizing our proposal, without modification, for CPT codes 81490, 81503, 81535, 81536, 81538, and 81539. As stated earlier, we will update the OPPS payment file (Addendum B) to appropriately reflect the status indicator assignment once a CPT code has been designated under the CLFS as an ADLT that meets the criteria of section 1834A(d)(5)(A) of the Act. Table 42 below lists the final status indicator for the CPT codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 42--Final CY 2018 Status Indicator (SI) for CPT Codes 81490,

    81503, 81535, 81536, 81538, and 81539

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

    CY 2017 OPPS CY 2018 OPPS

    CPT code Long descriptor SI SI

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

    81490.................. Autoimmune Q4 Q4

    (rheumatoid

    arthritis),

    analysis of 12

    biomarkers using

    immunoassays,

    utilizing serum,

    prognostic

    algorithm reported

    as a disease

    activity score.

    81503.................. Oncology (ovarian), Q4 Q4

    biochemical assays

    of five proteins

    (ca-125,

    apolipoprotein a1,

    beta-2

    microglobulin,

    transferrin, and

    pre-albumin),

    utilizing serum,

    algorithm reported

    as a risk score.

    81535.................. Oncology Q4 Q4

    (gynecologic),

    live tumor cell

    culture and

    chemotherapeutic

    response by dapi

    stain and

    morphology,

    predictive

    algorithm reported

    as a drug response

    score; first

    single drug or

    drug combination.

    81536.................. Oncology Q4 Q4

    (gynecologic),

    live tumor cell

    culture and

    chemotherapeutic

    response by dapi

    stain and

    morphology,

    predictive

    algorithm reported

    as a drug response

    score; each

    additional single

    drug or drug

    combination (list

    separately in

    addition to code

    for primary

    procedure).

    81538.................. Oncology (lung), Q4 Q4

    mass spectrometric

    8-protein

    signature,

    including amyloid

    a, utilizing

    serum, prognostic

    and predictive

    algorithm reported

    as good versus

    poor overall

    survival.

    Page 59300

    81539.................. Oncology (high- Q4 Q4

    grade prostate

    cancer),

    biochemical assay

    of four proteins

    (total psa, free

    psa, intact psa,

    and human

    kallikrein-2

    hk2), utilizing

    plasma or serum,

    prognostic

    algorithm reported

    as a probability

    score.

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

    15. Musculoskeletal APCs (APC 5111 Through 5116)

    For CY 2018, we proposed to continue the existing C-APCs for the six levels of musculoskeletal procedures (C-APCs 5111 through 5116), as displayed in Table 43 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule.

    Table 43--Proposed CY 2018 Geometric Mean Cost and Payment for

    Musculoskeletal C-APCs

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

    CY 2018 Proposed CY

    C-APC geometric mean 2018 OPPS

    cost payment

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

    5111--Level 1 Musculoskeletal Procedures $222.10 $214

    5112--Level 2 Musculoskeletal Procedures 1,311.47 1,261

    5113--Level 3 Musculoskeletal Procedures 2,600.94 2,501

    5114--Level 4 Musculoskeletal Procedures 5,602.87 5,385

    5115--Level 5 Musculoskeletal Procedures 10,310.27 9,913

    5116--Level 6 Musculoskeletal Procedures 15,783.57 15,175

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

    Comment: Commenters disagreed with the proposal for six levels of the musculoskeletal C-APCs and requested that CMS create two additional levels within the musculoskeletal C-APCs. The commenters stated concerns about the range of costs of procedures assigned to Level 4, Level 5, and Level 6. The commenters believed that the gap between the musculoskeletal procedure levels and payments is too large and results in APCs that include disparate procedures in terms of clinical complexity and resource use.

    Response: At this time, we continue to believe that the proposed C-

    APC levels for the musculoskeletal procedures C-APC family provide an appropriate distinction between the resource costs at each level and provide clinical homogeneity. We will continue to review this C-APC structure to determine if additional granularity is necessary for this C-APC family.

    16. Nasal/Sinus Endscopy Procedures (C-APC 5155)

    For CY 2018, the AMA CPT Editorial Panel established several new bundled nasal/sinus endoscopy CPT codes. Table 44 below lists the complete descriptors for the new CPT codes. These codes were listed in Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which is available via the Internet on the CMS Web site). Addendum B listed the proposed status indicator assignments for the new codes and assigned them to comment indicator ``NP'' (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code), while Addendum O listed the proposed/placeholder CY 2018 CPT codes and the long descriptors. We note that the CPT code descriptors that appeared in the OPPS Addendum B were short descriptors and did not accurately describe the complete procedure, service, or item described by the CPT code. Therefore, we included the 5-digit placeholder codes and their long descriptors in Addendum O to the proposed rule, specifically under the column labeled ``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code'' so that the public could adequately comment on our proposed APC and status indicator assignments. We also indicated that the final CPT code numbers would be included in this CY 2018 OPPS/ASC final rule with comment period. The final CPT code numbers, along with their corresponding 5-digit placeholder codes, can be found in Table 45 below.

    As displayed in Table 44 below and in Addendum B of the CY 2018 OPPS/ASC proposed rule, we proposed to assign CPT code 31241 to status indicator ``C'' to indicate that this is an inpatient only procedure, and to assign CPT codes 31253, 31257, 31259, and 31298 to C-APC 5155 (Level 5 Airway Endoscopy), with a proposed payment rate of $4,628.89.

    Page 59301

    Table 44--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for the New Nasal/Sinus

    Endoscopy CPT Codes Effective January 1, 2018

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

    Proposed CY

    CY 2018 OPPS/ASC Proposed CY Proposed CY 2018 OPPS

    CPT code proposed rule Long descriptor 2018 OPPS SI 2018 OPPS payment

    placeholder code APC rate

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

    31241................... 31XX1................... Nasal/sinus C N/A N/A

    endoscopy,

    surgical; with

    ligation of

    sphenopalatine

    artery.

    31253................... 31XX2................... Nasal/sinus J1 5155 $4,628.89

    endoscopy, surgical

    with ethmoidectomy;

    total (anterior and

    posterior),

    including frontal

    sinus exploration,

    with removal of

    tissue from frontal

    sinus, when

    performed.

    31257................... 31XX3................... Nasal/sinus J1 5155 4,628.89

    endoscopy, surgical

    with ethmoidectomy;

    total (anterior and

    posterior),

    including

    sphenoidotomy.

    31259................... 31XX4................... Nasal/sinus J1 5155 4,628.89

    endoscopy, surgical

    with ethmoidectomy;

    total (anterior and

    posterior),

    including

    sphenoidotomy, with

    removal of tissue

    from the sphenoid

    sinus.

    31298................... 31XX5................... Nasal/sinus J1 5155 4,628.89

    endoscopy,

    surgical; with

    dilation of frontal

    and sphenoid sinus

    ostia (e.g.,

    balloon dilation).

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

    Comment: Several commenters expressed concern with the APC placement and indicated that assignment to C-APC 5155 in the OPPS would reduce the ASC payment for the procedures by 32 percent. The commenters requested that CMS assign the new bundled codes to a higher paying APC to provide appropriate payment in the ASC setting. Some commenters clarified that, in CY 2017, these bundled procedures were reported under two separate codes that were separately payable. Because of the effect on the ASC payment, the commenters recommended that CMS establish a new APC for multiple (five or more) sinus procedures, reconfigure the airway APCs to better recognize the complexity associated with performing multiple sinus procedures in a single surgery, or create a complexity adjustment for sinus procedures billed with a device or drug HCPCS C-code or J-code.

    Response: C-APC 5155 contains several endoscopic sinus procedures, including the single endoscopic sinus surgeries. Based on input from our medical advisors, we believe this APC is the most appropriate assignment for CPT codes 31253, 31257, 31259, and 31298. C-APC 5155, which has a final rule geometric mean cost of approximately $4,861, is currently the highest paying APC within the airway endoscopy APC series. Because CPT codes 31253, 31257, 31259, and 31298 are new codes for CY 2018, we believe that we should assign these codes to C-APC 5155 where similar endoscopic sinus procedures are assigned.

    With regards to the comment recommending separate payment for the single endoscopic sinus procedures performed in 2017, because the codes describing single endoscopic sinus surgery are assigned to status indicator ``J1'', HOPDs receive one payment for the multiple surgeries, regardless of the number of endoscopic sinus procedures performed in a day. The status indicator assignment of ``J1'' to C-APC 5155 indicates that the APC is designated as a comprehensive APC (C-APC) under the OPPS. C-APCs provide a single payment for a primary service, and payment for all adjunctive services reported on the same claim is packaged into payment for the primary service. With few exceptions, all other services reported on a hospital outpatient claim in combination with the primary service are considered to be related to the delivery of the primary service and packaged into the single payment for the primary service and, therefore, separate payment is not available. We note that C-APCs do not apply to ASCs; consequently, the procedures would not be packaged. Instead, the procedures would be separately payable in the ASC setting. As we stated in the CY 2017 OPPS/ASC final rule with comment period, we did not implement C-APCs in the ASC payment system, and consequently, procedures paid separately through the ASC payment system are paid based on the standard ASC methodology (81 FR 79738). We refer readers to section II.A.2.b. (Comprehensive APCs) of this final rule with comment period for the discussion on the payment methodology for C-APCs and to section XII. (ASC Payment System) of this final rule with comment period for the discussion on the ASC Payment System. For the history on the establishment of C-APCs under the OPPS, we refer readers to the CY 2014 OPPS/ASC final rule (78 FR 74861-4910).

    In summary, after consideration of the public comments we received, we are finalizing our proposal for CPT codes 31241, 31253, 31257, 31259, and 31298 without modification. Consistent with the statutory requirement under section 1833(t)(9)(A) of the Act, we will reevaluate the APC assignment for these codes in the next rulemaking cycle. Table 45 below lists the final status indicator and APC assignments for CPT codes 31241, 31253, 31257, 31259, and 31298 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Page 59302

    Table 45--Final CY 2018 Status Indicator (SI) and APC Assignment for the New Nasal/Sinus Endoscopy CPT Codes

    Effective January 1, 2018

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

    CY 2018 OPPS/ASC

    CPT code proposed rule Long descriptor CY 2018 OPPS CY 2018 CY 2018 OPPS payment

    placeholder code SI OPPS APC rate

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

    31241............... 31XX1............... Nasal/sinus C N/A Refer to OPPS Addendum

    endoscopy, B.

    surgical; with

    ligation of

    sphenopalatine

    artery.

    31253............... 31XX2............... Nasal/sinus J1 5155 Refer to OPPS Addendum

    endoscopy, B.

    surgical with

    ethmoidectomy;

    total (anterior

    and posterior),

    including

    frontal sinus

    exploration,

    with removal of

    tissue from

    frontal sinus,

    when performed.

    31257............... 31XX3............... Nasal/sinus J1 5155 Refer to OPPS Addendum

    endoscopy, B.

    surgical with

    ethmoidectomy;

    total (anterior

    and posterior),

    including

    sphenoidotomy.

    31259............... 31XX4............... Nasal/sinus J1 5155 Refer to OPPS Addendum

    endoscopy, B.

    surgical with

    ethmoidectomy;

    total (anterior

    and posterior),

    including

    sphenoidotomy,

    with removal of

    tissue from the

    sphenoid sinus.

    31298............... 31XX5............... Nasal/sinus J1 5155 Refer to OPPS Addendum

    endoscopy, B.

    surgical; with

    dilation of

    frontal and

    sphenoid sinus

    ostia (eg,

    balloon

    dilation).

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

    17. Nuclear Medicine Services (APCs 5592 and 5593)

    For CY 2018, as illustrated in Table 46 below, we proposed to continue to assign CPT codes 78018 and 78121 to APC 5592 (Level 2 Nuclear Medicine and Related Services) and to also continue to assign CPT codes 78110 and 78111 to APC 5593 (Level 3 Nuclear Medicine and Related Services).

    Table 46--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 78018, 78110, 78111, and 78121

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC Rate

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

    78018................................ Thyroid carcinoma metastases S 5592 $429.13 S 5592 $439.56

    imaging; whole body.

    78110................................ Plasma volume, S 5593 1,138.94 S 5593 1,163.30

    radiopharmaceutical volume-

    dilution technique (separate

    procedure); single sampling.

    78111................................ Plasma volume, S 5593 1,138.94 S 5593 1,163.30

    radiopharmaceutical volume-

    dilution technique (separate

    procedure); multiple samplings.

    78121................................ Red cell volume determination S 5592 429.13 S 5592 439.56

    (separate procedure); multiple

    samplings.

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

    Comment: One commenter stated that CMS proposed to reassign CPT codes 78018, 78110, 78111 and 78121 to new APC groups, and recommended that CMS maintain the CPT codes in the ``new APC groups'' to ensure stability within the coding structure. The commenter added that CMS has moved these codes several times over the years and believed they are currently assigned to appropriate APC groups. This commenter noted that the codes are low volume with high costs, and recommended that CMS defer to the specialty societies for appropriate APC assignment.

    Response: For the CY 2017 update, as indicated in the OPPS Addendum B that was released with the CY 2017 OPPS/ASC final rule with comment period, we assigned CPT codes 78018, 78110, 78111 and 78121 to comment indicator ``CH'' to indicate that their APC assignments were revised. However, as displayed in Table 46, we proposed to make no change to the APC assignments for all four codes for the CY 2018 OPPS update. Specifically, we proposed to continue to assign CPT codes 78018, 78110, 78111, and 78121 to the same CY 2017 APCs for CY 2018 based on claims data used for the CY 2018 OPPS/ASC proposed rule. We note that the proposed rule data was based on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. For CPT code 78018, our examination of the claims data revealed a geometric mean cost of approximately $418 based on 5,604 single claims (out of 6,327 total claims). Because the geometric mean cost of $418 is similar to the geometric mean cost of approximately $457 for APC 5592, we proposed to maintain the assignment of this code to APC 5592. For CPT code 78110, our claims data showed a geometric mean cost of approximately $1,046 based on 12 single claims (out of 14 total claims). We believe that the geometric mean cost of $1,046 for CPT code 78110 is comparable to the geometric mean cost of approximately $1,210 for APC 5593. Consequently, we proposed to maintain the assignment of this code to APC 5593. For CPT code 78111, we had no claims data. However, based on its clinical similarity to CPT code 78110, we proposed to continue to assign the CPT code to APC 5593. For CPT code 78121, our analysis revealed a geometric mean cost of approximately $807 based on 3 single claims (out of 3 total claims). Based on the low volume and because revising the assignment to

    Page 59303

    APC 5593, which had a proposed geometric mean cost of approximately $1,210 would result in an overpayment for the test, we proposed to continue to assign CPT code 78121 to APC 5592, and to review the claims data for the final rule to determine whether a revision to the APC assignment would be necessary.

    For this final rule with comment period, we again analyzed updated claims data associated with the four codes. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our review of the final rule claims data revealed a similar pattern for all four codes. For CPT code 78018, we found a geometric mean cost of approximately $418 based on 6,113 single claims (out of 6,923 total claims), which is similar to the geometric mean cost of approximately $453 for APC 5592. Consequently, we believe that it continues to be appropriate to assign CPT code 78018 to APC 5592. For CPT code 78110, our claims data revealed a geometric mean cost of approximately $1,037 based on 12 single claims (out of 14 total claims), which is similar to the geometric mean cost of approximately $1,202 for APC 5593.

    Consequently, we are maintaining CPT code 78110 in APC 5593. For CPT code 78111, we again had no claims data. However, because of its clinical similarity to CPT code 78110, we will maintain the assignment to APC 5593. For CPT code 78121, we found a geometric mean cost of approximately $808 based on 3 single claims (out of 3 total claims). Based on the comment received that the APC assignment is appropriate, we will retain CPT code 78121 in APC 5592, whose geometric mean cost is approximately $453, for CY 2018. In addition, given the low volume for the CPT code, we do not believe that we should reassign CPT code 78121 to APC 5593, whose geometric mean cost is approximately $1,202 for CY 2018. To reassign CPT code 78121 to APC 5593 would result in an overpayment for CPT code 78121.

    Further, we remind the commenter, that as we do every year, we review the latest OPPS claims data to set the payment rates for the following year. Section 1833(t)(9) of the Act requires that we annually review all the items and services within an APC group and revise the APC structures accordingly. Included in this review is the identification of any 2 times rule violations as provided under section 1833(t)(2) of the Act and, to the extent possible, rectification of these violations.

    With regard to the comment of deferring to specialty societies for appropriate APC placement for designated codes, while we rely on our latest claims data to appropriately set payment rates under the OPPS, we welcome and appreciate comments from all stakeholders on our proposals. We note that every year we publish the OPPS/ASC proposed rules with requests for public comments on the OPPS and ASC payment assignments from interested parties, including hospitals, specialty societies, physicians, nurses, health care technicians, other health care professionals, interested individuals, patients, and any other stakeholders interested on commenting on our proposed payment assignments.

    In summary, after consideration of the public comment we received, we are finalizing our CY 2018 proposals, without modification, for CPT codes 78018, 78110, 78111, and 78121. Table 47 below lists the final status indicator and APC assignments for the CPT codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 47--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 78018, 78110, 78111, and 78121

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptors SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    78018....................... Thyroid carcinoma S 5592 $429.13 S 5592 Refer to OPPS Addendum B.

    metastases imaging;

    whole body.

    78110....................... Plasma volume, S 5593 1,138.94 S 5593 Refer to OPPS Addendum B.

    radiopharmaceutical

    volume-dilution

    technique (separate

    procedure); single

    sampling.

    78111....................... Plasma volume, S 5593 1,138.94 S 5593 Refer to OPPS Addendum B.

    radiopharmaceutical

    volume-dilution

    technique (separate

    procedure); multiple

    samplings.

    78121....................... Red cell volume S 5592 429.13 S 5592 Refer to OPPS Addendum B.

    determination (separate

    procedure); multiple

    samplings.

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

    18. Percutaneous Transluminal Mechanical Thrombectomy (C-APC 5192)

    For CY 2018, as noted in Table 48 below and in Addendum B to the CY 2018 OPPS/ASC proposed rule, we proposed to revise the APC assignment for the percutaneous transluminal mechanical thrombectomy procedures, specifically, CPT codes 37184 and 37187. Specifically, we proposed to reassign CPT codes 37184 and 37187 from APC 5183 (Level 3 Vascular Procedures) to APC 5184 (Level 4 Vascular Procedures), with a proposed payment rate of $4,084.25.

    Page 59304

    Table 48--Proposed CY 2018 U (SI), APC Assignment, and Payment Rate for CPT Codes 37184 and 37187

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    37184................................ Primary percutaneous transluminal T 5183 $3,924.28 T 5184 $4,084.25

    mechanical thrombectomy,

    noncoronary, non-intracranial,

    arterial or arterial bypass

    graft, including fluoroscopic

    guidance and intraprocedural

    pharmacological thrombolytic

    injection(s); initial vessel.

    37187................................ Percutaneous transluminal T 5183 3,924.28 T 5184 4,084.25

    mechanical thrombectomy,

    vein(s), including

    intraprocedural pharmacological

    thrombolytic injections and

    fluoroscopic guidance.

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

    Comment: One commenter requested that CMS revise the proposed APC assignment for CPT codes 37184 and 37187 from APC 5184 to C-APC 5192 based on their clinical and resource homogeneity to the procedures assigned to C-APC 5192 (Level 2 Endovascular Procedures). The commenter indicated that both procedures are clinically similar to other percutaneous transluminal procedures assigned to C-APC 5192, including CPT code 36904 (Percutaneous transluminal mechanical thrombectomy and/

    or infusion for thrombolysis, dialysis circuit, any method, including all imaging and radiological supervision and interpretation, diagnostic angiography, fluoroscopic guidance, catheter placement(s), and intraprocedural pharmacological thrombolytic injection(s)), which CMS proposed to assign to C-APC 5192 for CY 2018, with a proposed payment of $4,999.36. This commenter added that the geometric mean costs associated with the procedures described by CPT codes 37184 and 37187 are similar to the geometric mean costs of other procedures currently assigned to C-APC 5192.

    Response: For this final rule with comment period, we reviewed the updated CY 2016 claims data associated with CPT codes 37184 and 37187. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our analysis of the final rule claims data revealed that a change in the APC assignment for CPT codes 37184 and 37187 to C-APC 5192 (rather than proposed APC 5184) is appropriate. Specifically, we found a geometric mean cost of approximately $8,459 for CPT code 37184 based on 149 single claims (out of 150 total claims), and a geometric mean cost of approximately $6,343 for CPT code 37187 based on 188 single claims (out of 190 total claims). We believe that the geometric mean costs for CPT codes 37184 and 37187 are more similar to the geometric mean costs of other procedures assigned to C-APC 5192, whose geometric mean cost is approximately $5,082, rather than the geometric mean costs of procedures assigned to APC 5184, whose geometric mean cost is approximately $4,262. We note that we also considered whether we should reassign CPT codes 37184 and 37187 to C-APC 5193 (Level 3 Endovascular Procedures), which has a geometric mean cost of approximately $10,504. However, based on our review, we believe that C-APC 5192 is more appropriate. Therefore, based on their clinical homogeneity and resource costs in relation to the other procedures assigned to C-APC 5192, we agree with the commenter that C-APC 5192 is the most appropriate APC assignment for CPT codes 37184 and 37187.

    After consideration of the public comment we received, we are finalizing our CY 2018 proposal, with modification, for CPT codes 37184 and 37187. Specifically, we are reassigning CPT codes 37184 and 37187 from APC 5183 to C-APC 5192 for CY 2018. As we do every year under the OPPS, we will reevaluate the cost of CPT codes 37184, and 37187 and their APC assignment for next year's OPPS update. Table 49 below lists the final status indicator and APC assignments for both CPT codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Page 59305

    Table 49--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 37184 and 37187

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    37184....................... Primary percutaneous T 5183 $3,924.28 J1 5192 Refer to OPPS Addendum B.

    transluminal mechanical

    thrombectomy,

    noncoronary, non-

    intracranial, arterial

    or arterial bypass

    graft, including

    fluoroscopic guidance

    and intraprocedural

    pharmacological

    thrombolytic

    injection(s); initial

    vessel.

    37187....................... Percutaneous T 5183 3,924.28 J1 5192 Refer to OPPS Addendum B.

    transluminal mechanical

    thrombectomy, vein(s),

    including

    intraprocedural

    pharmacological

    thrombolytic injections

    and fluoroscopic

    guidance.

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

    19. Peripherally Inserted Central Venous Catheter (PICC) (APC 5182)

    For CY 2018, as noted in Table 50 below, we proposed to reassign CPT code 36569 from APC 5181 (Level 1 Vascular Procedures) to APC 5182 (Level 2 Vascular Procedures), with a proposed payment rate of $945.33.

    Table 50--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 36569

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    36569................................ Insertion of peripherally T 5181 $684.13 T 5182 $945.33

    inserted central venous catheter

    (picc), without subcutaneous

    port or pump; age 5 years or

    older.

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

    We proposed to revise the APC assignment for CPT code 36569 based on claims data used for the CY 2018 OPPS/ASC proposed rule. We note that the proposed rule data was based on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. Our analysis of the proposed rule claims data revealed a geometric mean cost of approximately $934 for CPT code 36569 based on 29,514 single claims (out of 52,035 total claims). Our analysis further revealed a geometric mean cost of approximately $983 for APC 5182 and $610 for APC 5181. Based on the geometric mean costs of APCs 5181 and 5182, we believed it was necessary to revise the APC assignment for CPT code 36569 from APC 5181 to APC 5182 to pay appropriately for the procedure. Consequently, we proposed to revise the APC assignment for CPT code 36569, whose geometric mean cost of approximately $934 is comparable to the geometric mean cost of approximately $983 for APC 5182.

    For this final rule with comment period, we again reviewed the updated claims data associated with CPT code 36569. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our analysis of the final rule claims data revealed a similar pattern for CPT code 36569. Specifically, we found a geometric mean cost of approximately $929 for CPT code 36569 based on 31,559 single claims (out of 56,891 total claims). We also found the geometric mean cost of approximately $982 for APC 5182 to be similar to the geometric mean cost of CPT code 36569 compared to the geometric mean cost of approximately $612 for APC 5181.

    Comment: One commenter supported the proposed APC reassignment for CPT code 36569 and stated that APC 5182 more appropriately reflects the resources to perform the procedure.

    Response: We appreciate the commenter's support. Based on our latest analysis of the final rule claims data, we are finalizing our proposal to reassign CPT code 36569 from APC 5181 to APC 5182.

    In summary, after consideration of the public comment we received, we are finalizing our CY 2018 proposal, without modification, to reassign CPT code 36569 to APC 5182. Table 51 below lists the final status indicator and APC assignments for CPT code 36569 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Page 59306

    Table 51--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 36569

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    36569....................... Insertion of T 5181 $684.13 T 5182 Refer to OPPS Addendum B.

    peripherally inserted

    central venous catheter

    (picc), without

    subcutaneous port or

    pump; age 5 years or

    older.

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

    20. Pulmonary Rehabilitation Services (APCs 5732 and 5733) and Cardiac Rehabilitation Services (APC 5771)

    For CY 2018, as displayed in Table 52 below, and as listed in Addendum B of the CY 2018 OPPS/ASC proposed rule, we did not propose to make any change to the APC assignments for the pulmonary rehabilitation services and cardiac rehabilitation services codes. Currently, there are four HCPCS codes that describe pulmonary rehabilitation services, specifically, HCPCS codes G0237, G0238, G0239, and G0424. For CY 2018, we proposed to continue to assign HCPCS codes G0237, G0238, and G0239 to APC 5732 (Level 2 Minor Procedures) and to continue to assign HCPCS code G0424 to APC 5733 (Level 3 Minor Procedures) for CY 2018. In addition, there are currently four HCPCS codes that describe the cardiac rehabilitation services, specifically, HCPCS codes 93797, 93798, G0422, and G0423. For CY 2018, we proposed to continue to assign the cardiac rehabilitation services codes to APC 5771 (Cardiac Rehabilitation) for CY 2018.

    Table 52--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for the Pulmonary Rehabilitation Services and Cardiac Rehabilitation

    Services HCPCS Codes

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    HCPCS code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    Pulmonary Rehabilitation Services

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

    G0237................................ Therapeutic procedures to S 5732 $28.38 S 5732 $29.65

    increase strength or endurance

    of respiratory muscles, face to

    face, one on one, each 15

    minutes (includes monitoring).

    G0238................................ Therapeutic procedures to improve S 5732 28.38 S 5732 29.65

    respiratory function, other than

    described by g0237, one on one,

    face to face, per 15 minutes

    (includes monitoring).

    G0239................................ Therapeutic procedures to improve S 5732 28.38 S 5732 29.65

    respiratory function or increase

    strength or endurance of

    respiratory muscles, two or more

    individuals (includes

    monitoring).

    G0424................................ Pulmonary rehabilitation, S 5733 54.55 S 5733 53.22

    including exercise (includes

    monitoring), one hour, per

    session, up to two sessions per

    day.

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

    Cardiac Rehabilitation Services

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

    93797................................ Physician or other qualified S 5771 $110.22 S 5771 $113.71

    health care professional

    services for outpatient cardiac

    rehabilitation; without

    continuous ecg monitoring (per

    session).

    93798................................ Physician or other qualified S 5771 110.22 S 5771 113.71

    health care professional

    services for outpatient cardiac

    rehabilitation; with continuous

    ecg monitoring (per session).

    G0422................................ Intensive cardiac rehabilitation; S 5771 110.22 S 5771 113.71

    with or without continuous ecg

    monitoring with exercise, per

    session.

    G0423................................ Intensive cardiac rehabilitation; S 5771 110.22 S 5771 113.71

    with or without continuous ecg

    monitoring; without exercise,

    per session.

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

    Page 59307

    Comment: Several commenters expressed concern that the payment rates for the pulmonary rehabilitation services are significantly less than those for the cardiac rehabilitation services. The commenters stated that, despite the legislative and clinical similarity between both services, CMS has taken different approaches to implementing the services, with pulmonary rehabilitation services paid less than cardiac rehabilitation services. One commenter indicated that, since 2010, the code describing pulmonary rehabilitation services has had three different status indicator assignments and payment volatility. This commenter recommended that CMS reassign the pulmonary rehabilitation HCPCS code G0464 from APC 5733 to the cardiac rehabilitation APC group, specifically, APC 5771. Another commenter recommended that CMS revisit its approach to payment for pulmonary rehabilitation services to improve access to care. One commenter recommended that both types of services be placed in one composite APC under the OPPS.

    Response: The payment rates for both the pulmonary and cardiac rehabilitation services are based on claims data that are analyzed each year. As we do every year, we review the latest OPPS claims data to set the payment rates for the following year. We note that section 1833(t)(9) of the Act requires that we annually review all the items and services within an APC group and revise the APC structures accordingly. Included in this review is the identification of any 2 times rule violations as provided under section 1833(t)(2) of the Act and, to the extent possible, rectification of these violations.

    For the proposed rule, we based the proposed payment rates on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. Based on our analysis, we found the costs for both types of services to be significantly different.

    For the pulmonary rehabilitation services, our analysis revealed a geometric mean cost of approximately $26 for HCPCS code G0237 (based on 19,925 single claims), $22 for HCPCS code G0238 (based on 17,361 single claims), and $33 for HCPCS code G0239 (based on 168,295 single claims). We note that the range of costs (between $26 and $33) for HCPCS codes G0237, G0238, and G0239 are similar to the geometric mean cost of approximately $31 for APC 5732. Consequently, we proposed to continue to assign all three pulmonary rehabilitation services HCPCS codes to APC 5732 for CY 2018. In addition, we found a geometric mean cost of approximately $45 for HCPCS code G0424 (based on 468,571 single claims) that is comparable to the geometric mean cost of approximately $55 for APC 5733. Therefore, we proposed to continue to assign HCPCS code G0424 to APC 5733.

    For the cardiac rehabilitation services, our analysis revealed a geometric mean cost of approximately $101 for HCPCS code 93797 (based on 129,124 single claims), $118 for HCPCS code 93798 (based on 2,698,534 single claims), $212 for HCPCS code G0422 (based on 38,094 single claims), and $174 for HCPCS code G0423 (based on 18,001 single claims). Because the range of costs (between $101 and $212) for the cardiac rehabilitation services are comparable to the geometric mean cost of approximately $118 for APC 5771, we proposed to continue to assign the cardiac rehabilitation HCPCS codes to APC 5771 for CY 2018.

    For this final rule with comment period, we again analyzed the updated claims data associated with the pulmonary and cardiac rehabilitation services. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Similar to our proposed rule findings, we found the costs to be different for both services.

    For the pulmonary rehabilitation services, our final rule claims data revealed a geometric mean cost of approximately $25 for HCPCS code G0237 (based on 22,097 single claims), $22 for HCPCS code G0238 (based on 18,900 single claims), and $33 for HCPCS code G0239 (based on 187,134 single claims). Based on the range of costs (between $22 and $33), we believe that HCPCS codes G0237, G0238, and G0239 are appropriately assigned to APC 5732, whose geometric mean cost is approximately $32. Similarly, we believe that the geometric mean cost of approximately $44 (based on 514,478 single claims) for HCPCS code G0424 is comparable to the geometric mean costs of those services assigned to APC 5733, whose geometric mean cost is approximately $56 for CY 2018.

    For the cardiac rehabilitation services, our final rule claims data revealed a geometric mean cost of approximately $224 for HCPCS code G0422 (based on 44,754 single claims), $186 for HCPCS code G0423 (based on 22,188 single claims), $101 for HCPCS code 93797 (based on 143,507 single claims), and $116 for HCPCS code 93798 (based on 2,991,759 single claims). Based on the costs for the cardiac rehabilitation HCPCS codes (between $101 to $224), we believe that the geometric mean cost of approximately $117 for APC 5771 appropriately reflects the resources in providing cardiac rehabilitation services.

    In addition, while the commenters believed that pulmonary and cardiac rehabilitation services are similar, our analysis of the available OPPS data reveals that their costs are significantly different. Consequently, we do not agree that we should assign both services to one APC, or even assign the pulmonary rehabilitation HCPCS code G0424 to the cardiac rehabilitation services group (APC 5771). We note that the commenters did not provide data to suggest that the hospital reported costs in our data are incorrect or that the resources (costs) incurred to furnish these two types of services are equal. Accordingly, we have no reason to believe that the data reported to us by hospitals are incorrect.

    Moreover, we do not agree that we should create a composite APC for the pulmonary and cardiac rehabilitation services. Composite APCs provide a single payment for groups of services that are typically performed together during a single clinical encounter that result in the provision of a complete service. Combining payment for multiple, independent services into a single OPPS payment in this way enables hospitals to manage their resources with maximum flexibility by monitoring and adjusting the volume and efficiency of services themselves. Establishing a composite APC for these services would not be appropriate because pulmonary and cardiac rehabilitation services are generally not performed on the same day. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for a full discussion of the development of the composite APC methodology (72 FR 66611 through 66614 and 66650 through 66652) and the CY 2012 OPPS/ASC final rule with comment period (76 FR 74163) for more recent background.

    Comment: Some commenters stated that, despite evidence that pulmonary rehabilitation is a valuable service, few patients with chronic obstructive pulmonary disease (COPD) are able to access this treatment. The commenters further indicated that a study of Medicare beneficiaries revealed that only 3.7 percent of COPD patients received pulmonary rehabilitation in 2012, and believe this number may be higher for non-Medicare beneficiaries. The commenters noted that payment for pulmonary rehabilitation is lower than cardiac rehabilitation (a similar service) in the Medicare program, and believed

    Page 59308

    this difference is based on idiosyncratic hospital billing and OPPS rules, not based on rational policy or evidence. Specifically, the commenter indicated that, for CY 2017, payment for 1 hour of pulmonary rehabilitation is $54.55 under the OPPS. These commenters suggested that the payment discrepancy between cardiac services and pulmonary rehabilitation services may be a contributing factor to inadequate access of the pulmonary rehabilitation services.

    Response: As stated in section III.B. of this final rule with comment period, payments for OPPS services and procedures are based on our analysis of the latest claims data. Under the OPPS, we pay for covered hospital outpatient services on a rate-per-service basis, where the service may be reported with one or more HCPCS codes. Payment varies according to the APC group to which the independent service or combination of services is assigned. Under the Medicare program, we pay separately for both cardiac and pulmonary rehabilitation services. We have not found evidence that there is an access to care issue for pulmonary rehabilitation services compared to cardiac rehabilitation services. We note that there are a variety of treatment options for patients with COPD and pulmonary rehabilitation remains a covered service for those beneficiaries for whom physicians order this service. We note that, under the Medicare program, when the service is provided in the hospital outpatient setting, we make two payments, one to the hospital outpatient department under the OPPS and another for the professional services under the MPFS.

    In addition, as illustrated in Table 52-1 below, the number of services paid by Medicare for both cardiac rehabilitation and pulmonary rehabilitation has grown in the last several years. For the CY 2018 OPPS update, our claims data reveal over 514,000 single claims for pulmonary rehabilitation services as described by HCPCS code G0424 alone. Accordingly, we do not believe that beneficiary access to pulmonary rehabilitation services is inadequate. Details pertaining to the volume of these services furnished in the physician office setting can be derived from the CY 2018 MPFS final rule and associated public use files.

    Table 52-1--OPPS Claims Data for the Pulmonary and Cardiac (Including Intensive Cardiac) Rehabilitation HCPCS Codes for the CY 2014 Through CY 2018 OPPS

    Updates

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

    2014 OPPS 2015 OPPS 2016 OPPS 2017 OPPS 2018 OPPS

    HCPCS code Short descriptor single claims single claims single claims single claims single claims

    data data data data data

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

    Cardiac Rehabilitation Services

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

    93797............................. Cardiac rehab....................... 87,689 94,769 109,420 120,821 143,507

    93798............................. Cardiac rehab/monitor............... 2,428,984 2,481,175 2,581,446 2,761,806 2,991,759

    G0422............................. Intens cardiac rehab w/exerc........ 12,060 12,043 17,646 30,165 44,754

    G0423............................. Intens cardiac rehab no exer........ 703 1,325 6,654 11,979 22,188

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

    Pulmonary Rehabilitation Services

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

    G0237............................. Therapeutic procd strg endur........ 15,337 43,591 47,046 19,098 22,097

    G0238............................. Oth resp proc, indiv................ 14,437 22,736 23,960 18,482 18,900

    G0239............................. Oth resp proc, group................ 132,475 111,755 127,425 165,799 187,134

    G0424............................. Pulmonary rehab w exer.............. 457,226 459,572 454,121 443,777 514,478

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

    In summary, after consideration of the public comments we received and after our analysis of the updated claims data for this final rule with comment period, we believe that the current APC assignments for the pulmonary and cardiac rehabilitation services appropriately reflects their clinical coherence and resource costs. Consequently, we are finalizing our proposal to continue the current APC assignment of the pulmonary and cardiac rehabilitation HCPCS codes, without modification, for CY 2018. As we do every year, we will review our claims data for these services for the CY 2019 OPPS rulemaking. Table 53 below lists the final status indicator and APC assignments for the codes for pulmonary and cardiac rehabilitation services. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 53--Final CY 2018 Status Indicator (SI) and APC Assignment for the Pulmonary Rehabilitation Services and Cardiac Rehabilitation Services

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    HCPCS code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    Pulmonary Rehabilitation Services

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

    G0237....................... Therapeutic procedures S 5732 $28.38 S 5732 Refer to OPPS Addendum B.

    to increase strength or

    endurance of

    respiratory muscles,

    face to face, one on

    one, each 15 minutes

    (includes monitoring).

    Page 59309

    G0238....................... Therapeutic procedures S 5732 28.38 S 5732 Refer to OPPS Addendum B.

    to improve respiratory

    function, other than

    described by g0237, one

    on one, face to face,

    per 15 minutes

    (includes monitoring).

    G0239....................... Therapeutic procedures S 5732 28.38 S 5732 Refer to OPPS Addendum B.

    to improve respiratory

    function or increase

    strength or endurance

    of respiratory muscles,

    two or more individuals

    (includes monitoring).

    G0424....................... Pulmonary S 5733 54.55 S 5733 Refer to OPPS Addendum B.

    rehabilitation,

    including exercise

    (includes monitoring),

    one hour, per session,

    up to two sessions per

    day.

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

    Cardiac Rehabilitation Services

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

    93797....................... Physician or other S 5771 $110.22 S 5771 Refer to OPPS Addendum B.

    qualified health care

    professional services

    for outpatient cardiac

    rehabilitation; without

    continuous ecg

    monitoring (per

    session).

    93798....................... Physician or other S 5771 110.22 S 5771 Refer to OPPS Addendum B.

    qualified health care

    professional services

    for outpatient cardiac

    rehabilitation; with

    continuous ecg

    monitoring (per

    session).

    G0422....................... Intensive cardiac S 5771 110.22 S 5771 Refer to OPPS Addendum B.

    rehabilitation; with or

    without continuous ecg

    monitoring with

    exercise, per session.

    G0423....................... Intensive cardiac S 5771 110.22 S 5771 Refer to OPPS Addendum B.

    rehabilitation; with or

    without continuous ecg

    monitoring; without

    exercise, per session.

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

    21. Radiology and Imaging Procedures and Services

  100. Imaging APCs

    Section 1833(t)(9)(A) of the Act requires the Secretary to review not less often than annually, and revise the APC group assignments, relative payment weights, and the wage and other adjustments to take into account changes in medical practice, changes in technology, the addition of new services, new cost data, and other relevant information and factors. In addition, section 1833(t)(2)(G) of the Act requires the Secretary to create additional groups of covered OPD services that classify separately those procedures that utilize contrast agents from those procedures that do not utilize contrast agents.

    In CY 2016, as a part of our comprehensive review of the structure of the APCs and procedure code assignments, we restructured the APCs that contain imaging services (80 FR 70392). The purpose of this restructuring was to more appropriately reflect the resource costs and clinical characteristics of the services classified within the imaging APCs. The restructuring of the imaging APCs resulted in broader groupings that removed the excessive granularity of grouping imaging services according to organ or physiologic system, which did not necessarily reflect either significant differences in resources or how these services are delivered in the hospital outpatient setting. In CY 2017, in response to public comments on the CY 2017 OPPS/ASC proposed rule, we further consolidated the imaging APCs from 17 APCs in CY 2016 to 7 APCs in CY 2017 (81 FR 79633). These included four imaging APCs without contrast and three imaging APCs with contrast.

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33608), for CY 2018, we reviewed the services assigned to the imaging without contrast APCs and imaging with contrast APCs. Specifically, we evaluated the resource costs and clinical coherence of the procedures associated with the four levels of imaging without contrast APCs and the three levels of imaging with contrast APCs, as well as identified and corrected any 2 times rule violations as discussed in section III.B.2. of the CY 2018 OPPS/ASC proposed rule. In addition, we reviewed and considered stakeholder recommendations to make additional refinements to the structure of the APC groupings of the imaging procedures classified within the imaging APCs that would maintain clinical homogeneity while more appropriately addressing resource cost fluctuation and volatility. As a result of our analysis and review of the claims data used for CY 2018 ratesetting, we stated in the proposed rule that we believed a Level 5 Imaging without Contrast APC was needed to more appropriately group certain imaging services with higher resource costs. Specifically, we stated our belief that

    Page 59310

    the data supported splitting the current (CY 2017) Level 4 Imaging without Contrast APC into two APCs such that the Level 4 Imaging without Contrast APC would include high frequency, low-cost services and the proposed Level 5 Imaging without Contrast APC would include low frequency high-cost services. Therefore, for CY 2018, we proposed to add a fifth level within the Imaging without Contrast APCs. In Table 19 of the proposed rule, we listed the CY 2017 imaging APCs, and in Table 20 of the proposed rule, we listed the proposed CY 2018 imaging APCs with the addition of a fifth level within the Imaging without Contrast APCs. The specific APC assignments for each service grouping were listed in Addendum B to the proposed rule, which is available via the Internet on the CMS Web site. We stated that this proposal would increase the imaging APCs from 7 APCs in CY 2017 to 8 in CY 2018. The specific APC assignments for each imaging service HCPCS code were listed in Addendum B to the proposed rule, which is available via the Internet on the CMS Web site. We noted that some of the imaging procedures are assigned to APCs that are not listed in the tables (for example, the vascular procedures APCs). Also, the nuclear medicine services APCs were not included in this proposal. These imaging services were not included in this proposal because we did not propose changes to their APC structure.

    We invited public comments on our proposal to add a Level 5 Imaging without Contrast APC in CY 2018.

    Comment: Commenters generally disagreed with CMS' proposal to add a fifth level within the Imaging without Contrast APC series. These commenters represented various imaging specialty societies and individual practitioners who utilize various imaging modalities. Many of the commenters opposed adding a fifth level because of the proposed resultant reduction in payment to several vascular ultrasound procedures. The commenters urged CMS to not finalize the proposal because it would destabilize and drastically decrease payments for certain imaging services compared to CY 2017 rates. The commenters noted that the proposed rate for certain imaging services would cause certain providers to no longer be able to furnish these services, thereby impeding access to these important services for Medicare beneficiaries. However, some commenters recommended various alternative HCPCS code placements within the Imaging without Contrast APC series if CMS finalized its proposal to add a fifth level. Some of these same commenters suggested that maintaining the CY 2017 APC groupings and payment rates, to the extent possible, would address their concerns.

    Response: We appreciate these comments and recommendations on how to structure and assign HCPCS codes to the Imaging without Contrast APC series. We analyzed the various alternative suggestions for the various recommended HCPCS code placements, including maintaining the CY 2017 APC groupings. After consideration of the public comments and suggestions we received, we are not finalizing our proposal to add a fifth level to the Imaging without Contrast APC series. Instead, we are maintaining the CY 2017 APC structure of four levels of Imaging Without Contrast APCs and making minor reassignments to the HCPCS codes within this series to resolve or mitigate any violations of the 2 times rule or both. We understand the importance of payment stability for providers and believe that continuation of the four levels of Imaging without Contrast APCs would minimize fluctuation in payment rates from CY 2017 to CY 2018. As displayed in the ``2 Times Rule'' for this final rule with comment period, which is available via the Internet on the CMS Web site, the APC geometric mean costs for APCs 5521 through 5524 are consistent with the CY 2017 APC geometric mean costs for the same APCs, indicating the cost-based relative weights that are used to calculate payment are stable.

    Comment: A few commenters objected to the proposed exception to the violation of the 2 times rule for APC 5573 (Level 3 Imaging With Contrast) and recommended alternative approaches to resolving the violation, such as the creation of a Level 4 Imaging With Contrast or maintaining the CY 2017 APC groupings. Commenters stated that the proposed reassignment of nine high-volume contrast magnetic resonance imaging (MRI) procedures from Level 2 (CY 2017 placement) to Level 3 (proposed CY 2018 placement) would result in a significant reduction and underpayment for contrast echocardiography procedures and would significantly lower the payment rate for contrast echocardiography procedures, which has been relatively stable for the past several years, consistent with the procedure costs. These nine high-volume contrast MRI procedures are described by the following CPT codes:

    CPT code 70543 (Magnetic resonance imaging, orbit, face, and/or neck; without contrast material(s) and further sequences);

    CPT code 70553 (Magnetic resonance imaging, brain (including brain stem); without contrast material, followed by contrast material(s) and further sequences);

    CPT code 71552 (Magnetic resonance imaging, chest; without contrast material(s), followed by contrast material(s) and further sequences);

    CPT code 72156 (Magnetic resonance imaging, spinal canal and contents, without contrast material, followed by contrast material(s) and further sequences; cervical);

    CPT code 72157 (Magnetic resonance imaging spinal canal and contents, without contrast material, followed by contrast material(s) and further sequences; thoracic);

    CPT code 72158 (Magnetic resonance imaging spinal canal and contents, without contrast material, followed by contrast material(s) and further sequences; lumbar);

    CPT code 72197 (Magnetic resonance imaging pelvis; without contrast material(s), followed by contrast material(s) and further sequences);

    CPT code 73223 (Magnetic resonance imaging, any joint of upper extremity; without contrast material(s), followed by contrast material(s) and further sequences); and

    CPT code 74183 (Magnetic resonance imaging abdomen; without contrast material(s), followed by with contrast material(s) and further sequences).

    Response: We were persuaded by the points raised by the commenters and agree that continuation of the CY 2017 groupings is appropriate to maintain payment stability for imaging services assigned to APC 5572 and APC 5573. Although the proposed grouping for APC 5573 achieved clinical similarity, based on analysis of the claims data used for this final rule with comment period, we believe we should take a deliberate approach to maintain consistency in payment assignment by not adopting the proposals to reassign the nine high-volume contrast MRI procedures from APC 5572 to APC 5573 and to allow for an exception for APC 5573 from the 2 times rule. Therefore, we are modifying our proposed grouping for APC 5573 by moving the nine high-volume contrast MRI procedures from Level 3 (Imaging with Contrast) to Level 2 (Imaging with Contrast), which is consistent with their CY 2017 APC assignment. In addition, we are making a few other code reassignments to resolve the 2 times rule violation in APC 5573.

    Page 59311

    In summary, after consideration of the public comments we received and for the reasons discussed above, we are not finalizing the proposal to create a Level 5 (Imaging without Contrast) APC or the proposal to assign nine high-volume contrast MRI procedures to Level 3 (Imaging with Contrast) for CY 2018. Table 54 below compares the CY 2017 and 2018 APC geometric mean costs for the imaging APCs.

    Table 54--Comparison of CY 2017 and CY 2018 Geometric Mean Costs for the

    Imaging APCs

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

    CY 2017 APC CY 2018 APC

    APC APC group title geometric geometric

    mean cost mean cost

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

    5521................. Level 1 Imaging $61.53 $62.08

    without Contrast.

    5522................. Level 2 Imaging 115.88 118.68

    without Contrast.

    5523................. Level 3 Imaging 232.21 245.08

    without Contrast.

    5524................. Level 4 Imaging 462.23 486.38

    without Contrast.

    5571................. Level 1 Imaging 272.40 252.58

    with Contrast.

    5572................. Level 2 Imaging 438.42 456.08

    with Contrast.

    5573................. Level 3 Imaging 675.23 681.45

    with Contrast.

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

    The specific APC assignments for each imaging procedure grouping are listed in Addendum B to this final rule with comment period, which is available via the Internet on the CMS Web site.

  101. Non-Ophthalmic Fluorescent Vascular Angiography (APC 5523)

    As discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33609), for the CY 2018 OPPS update, we proposed to reassign HCPCS code C9733 (Non-ophthalmic fluorescent vascular angiography) from APC 5523 (Level 3 Imaging without Contrast) to APC 5524 (Level 4 Imaging without Contrast) based on the latest claims data available for the proposed rule. We proposed to maintain the status indicator assignment of ``Q2'' (T-packaged) to indicate that the service is conditionally packaged when performed in conjunction with other procedures on the same day but paid separately when performed as a stand-alone service.

    Our claims data used for the proposed rule, which included claims submitted between January 1, 2016, and December 31, 2016, and processed on or before December 31, 2016, showed a geometric mean cost of approximately $236 for HCPCS code C9733 based on 216 single claims (out of 953 total claims), which is closely aligned with the geometric mean cost of approximately $275 for APC 5524. Because HCPCS code C9733 is an imaging service which is similar to the codes assigned to APC 5524, we proposed to reassign HCPCS code C9733 from APC 5523 to APC 5524. We stated that we believe this proposed reassignment would improve the clinical homogeneity of APC 5524 and appropriately align the resource costs of HCPCS code C9733 to the resource costs of those procedures assigned to APC 5524.

    As we have stated in previous OPPS/ASC final rules, specifically, in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68345 through 68346), the CY 2014 OPPS/ASC final rule with comment period (78 FR 74976 through 74977), and the CY 2017 OPPS/ASC final rule with comment period (81 FR 79632), the service described by HCPCS code C9733 is primarily an intraoperative imaging service that is performed in combination with a number of primary procedures, including facial reconstruction and reanimation, muscle flaps, trauma reconstruction, digital and limb reattachment, and breast reconstruction. Therefore, payment for the service described by HCPCS code C9733 is conditionally packaged under 42 CFR 419.2(b)(14), which contains the policies governing packaging of intraoperative items and services. Consequently, we proposed to maintain the status indicator assignment of ``Q2'' to indicate that the payment for the service will be packaged in the APC payment if billed on the same date of service as a HCPCS code assigned to status indicator ``T'', but in all other circumstances, a separate APC payment for the service will be made. We believe that the OPPS payments, separate or packaged, for surgical procedures with which this service is performed are more than adequate to cover the cost of the service described by HCPCS code C9733 for Medicare beneficiaries in need of this service.

    Comment: Several commenters supported the proposed APC reassignment for HCPCS code C9733 to APC 5524. A few commenters also suggested assignment of HCPCS code C9733 in a higher payment APC (compared to the CY 2017 payment rate) that would cover the cost of the service, but did not recommend a specific APC. In addition, commenters requested that CMS change the status indicator assignment from ``Q2'' to a separately payable status indicator ``S''. The commenters noted that status indicator ``Q2'' indicates that payment for the procedure described by HCPCS code C9733 is conditionally packaged when provided in conjunction with other procedures assigned to status indicator ``T,'' which are primarily surgical procedures.

    Response: Regarding the status indicator assignment of HCPCS code C9733, we have addressed this comment in prior rules (81 FR 79632). The service described by HCPCS code C9733 is primarily an intraoperative imaging service. Therefore, payment for the service is conditionally packaged under Sec. 419.2(b)(14), which packages intraoperative items and services. When the procedure described by HCPCS code C9733 is not furnished in conjunction with a surgical procedure, the service is paid separately. We believe that the OPPS payments, separate or packaged, for surgical procedures with which this test is performed (for example, breast reconstruction) are more than adequate to cover the cost of the service described by HCPCS code C9733 for Medicare beneficiaries in need of this service. With respect to the APC reassignment for APC 5524, because we are maintaining the CY 2017 APC group assignments for imaging services, we are not finalizing our proposal to reassign HCPCS code C9733 from APC 5523 to APC 5524. Rather, we are maintaining the assignment of the procedure described by HCPCS code C9733 to APC 5523 for CY 2018. Based on our review of the CY 2018 final rule claims data, the procedure described by HCPCS code C9733 has a geometric mean unit cost of approximately $237 and the geometric mean cost of APC 5523 is approximately $245 for CY 2018. Therefore, it is not necessary to reassign the procedure described by HCPCS code C9733 to APC 5524, which has a geometric mean unit cost of about $486. It is more appropriate to maintain the assignment

    Page 59312

    of the procedure described by HCPCS code C9733 to APC 5523 because of the similarity in clinical characteristics and resource use for this procedure and other imaging procedures assigned to APC 5523.

    After consideration of the public comments we received, we are not finalizing our proposal to reassign HCPCS code C9733 from APC 5523 to APC 5524 for CY 2018. Instead, for CY 2018, we are continuing to assign HCPCS code C9733 to APC 5523 and continuing to assign the code to status indicator ``Q2'' to indicate that the service is conditionally packaged. The final CY 2018 OPPS payment rate for HCPCS code C9733 can be found in OPPS Addendum B to this final rule with comment period, which is available via the Internet on the CMS Web site.

    22. Sclerotherapy (APC 5054)

    For CY 2018, the AMA CPT Editorial Panel established two new codes to describe the injection of a noncompounded foam sclerosant for treatment of incompetent veins. Table 55 below lists the complete descriptors for the new CPT codes. These codes were listed in Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which are available via the Internet on the CMS Web site). Addendum B listed the proposed status indicator assignments for the new codes and assigned them to comment indicator ``NP'' (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code), while Addendum O listed the proposed/

    placeholder CY 2018 CPT codes and the long descriptors. We note that the CPT code descriptors that appeared in Addendum B to the CY 2018 proposed rule were short descriptors and did not accurately describe the complete procedure, service, or item described of the CPT code. Therefore, we included the 5-digit placeholder codes and their long descriptors in Addendum O to the proposed rule, specifically under the column labeled ``CY 2018 OPPS/ASC Proposed Rule 5-Digit AMA Placeholder Code'' so that the public could adequately comment on our proposed APC and status indicator assignments. We also indicated that the final CPT code numbers would be included in this CY 2018 OPPS/ASC final rule with comment period. The final CPT code numbers, along with their corresponding 5-digit placeholder codes, can be found in Table 55 below.

    As displayed in Table 55 below and in Addendum B of the CY 2018 OPPS/ASC proposed rule, we proposed to assign CPT codes 36465 and 36466 to APC 5053 (Level 3 Skin Procedures), with a proposed payment rate of $468.82.

    Table 55--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rates for CPT Codes 36465 and

    36466

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

    Proposed

    CY 2018 OPPS/ASC Proposed CY 2018

    CPT code proposed rule Long descriptor Proposed CY CY 2018 OPPS

    placeholder code 2018 OPPS SI OPPS APC payment

    rate

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

    36465................... 364X5................... Injection of non- T 5053 $468.82

    compounded foam

    sclerosant with

    ultrasound

    compression

    maneuvers to guide

    dispersion of the

    injectate,

    inclusive of all

    imaging guidance

    and monitoring;

    single incompetent

    extremity truncal

    vein (e.g., great

    saphenous vein,

    accessory saphenous

    vein).

    36466................... 364X6................... Injection of non- T 5053 468.82

    compounded foam

    sclerosant with

    ultrasound

    compression

    maneuvers to guide

    dispersion of the

    injectate,

    inclusive of all

    imaging guidance

    and monitoring;

    multiple

    incompetent truncal

    veins (e.g., great

    saphenous vein,

    accessory saphenous

    vein), same leg.

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

    Comment: Several commenters opposed the proposed assignment of new CPT codes 36465 and 36466 to APC 5053 and requested the assignment to APC 5183 (Level 3 Vascular Procedures), which had a proposed payment rate of $2,409.72. The commenters stated that CMS inappropriately proposed to assign these codes to APC 5053 based on a comparison to CPT codes 36470 (Injection of sclerosing solution; single vein) and 36471 (Injection of sclerosing solution; multiple veins, same leg). However, the commenters indicated that CPT codes 36465 and 36466 are dissimilar to the procedures assigned to APC 5053, which describe simple skin procedures (for example, debridement, Moh's surgery, and skin lesion destruction). They stated that the procedures assigned to APC 5053 are not comparable to the procedures described by new CPT codes 36465 and 36466 based on complexity, staff type, staff time, and use of ultrasound guidance. The commenters further added that the two procedures are most similar to the endovenous ablative procedures that treat incompetent veins in APC 5183, specifically, the procedures described by the following CPT codes:

    CPT code 36473 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, mechanochemical; first vein treated);

    CPT code 36474 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, mechanochemical; subsequent vein(s) treated in a single extremity, each through separate access sites (list separately in addition to code for primary procedure));

    CPT code 36475 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; first vein treated);

    CPT code 36476 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, radiofrequency; subsequent vein(s) treated in a single extremity, each through separate access sites (list separately in addition to code for primary procedure))

    CPT code 36478 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, laser; first vein treated); and

    Page 59313

    CPT code 36479 (Endovenous ablation therapy of incompetent vein, extremity, inclusive of all imaging guidance and monitoring, percutaneous, laser; subsequent vein(s) treated in a single extremity, each through separate access sites (list separately in addition to code for primary procedure)).

    One commenter stated that the procedures described by CPT codes 36465 and 36466 share similar characteristics and comparable anticipated costs as the procedures assigned to APC 5183, and consequently, requested an assignment to APC 5183 for the two new CPT codes. Another commenter noted that CPT codes 36473, 36475, and 36478 are currently assigned to APC 5183, and requested that CMS also assign new CPT codes 36465 and 36466 to APC 5183. One commenter reported that, in the CY 2018 MPFS proposed rule, CMS proposed a nonfacility payment of $1,605.17 for new CPT code 36465 and $1,678.23 for new CPT code 36466 for CY 2018. This commenter also listed a practice expense input price of $1,054 for the Varithena (foam) used in the procedures.

    Response: Because CPT codes 36465 and 36466 are new codes for CY 2018, we have no claims data on which to base our payment rate. However, in the absence of claims data, we reviewed the clinical characteristics of the procedures to determine whether they are similar to existing procedures. After reviewing information from the public commenters and input from our clinical advisors, we believe that new CPT codes 36465 and 36466 are clinically similar to those procedures assigned to APC 5053. However, in light of the commenter's reported supply expense of $1,054 for the Varithena (foam), we believe that an assignment to APC 5054 is necessary. We note that the final CY 2018 geometric mean cost for APC 5054 is approximately $1,567. Therefore, we believe that APC 5054 is a more appropriate APC assignment for the new CPT codes. Consistent with the statutory requirement under section 1833(t)(9)(A) of the Act, we will reevaluate the APC assignment for CPT codes 36465 and 36466 in the next rulemaking cycle.

    In summary, after consideration of the public comments we received, we are finalizing our proposal for the APC assignment of the procedures described by new CPT codes 36465 and 36466, with modification. Specifically, we are assigning both codes to APC 5054, instead of proposed APC 5053, for CY 2018. Table 56 below lists the final status indicator and APC assignments for CPT codes 36465 and 36466 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 56--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 36465 and 36466

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

    CY 2018 OPPS/ASC Proposed CY

    CPT code proposed rule Long descriptor Proposed CY 2018 OPPS CY 2018 OPPS payment

    placeholder code 2018 OPPS SI APC rate

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

    36465............... 364X5............... Injection of non- T 5054 Refer to OPPS Addendum

    compounded foam B.

    sclerosant with

    ultrasound

    compression

    maneuvers to

    guide dispersion

    of the

    injectate,

    inclusive of all

    imaging guidance

    and monitoring;

    single

    incompetent

    extremity

    truncal vein

    (e.g., great

    saphenous vein,

    accessory

    saphenous vein).

    36466............... 364X6............... Injection of non- T 5054 Refer to OPPS Addendum

    compounded foam B.

    sclerosant with

    ultrasound

    compression

    maneuvers to

    guide dispersion

    of the

    injectate,

    inclusive of all

    imaging guidance

    and monitoring;

    multiple

    incompetent

    truncal veins

    (e.g., great

    saphenous vein,

    accessory

    saphenous vein),

    same leg.

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

    23. Skin Substitutes (APCs 5053, 5054, and 5055)

    For CY 2018, we proposed to assign skin substitute procedures to APCs 5053 through 5055 (Level 3 through 5 Skin Procedures). The cost of the procedures is affected by whether the skin substitute product is low cost or high cost, the surface area of the wound, and the location of the wound.

    Comment: Commenters requested that CPT codes for large wounds be assigned to higher paying APCs. One commenter asked that HCPCS code C5277 (Application of low cost skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, total wound surface area greater than or equal to 100 sq cm; first 100 sq cm wound surface area, or 1% of body area of infants and children) be moved from APC 5053 (Level 3 Skin Procedures) to APC 5054 (Level 4 Skin Procedures) and that CPT code 15277 (Application of skin substitute graft to face, scalp, eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or multiple digits, total wound surface area greater than or equal to 100 sq cm; first 100 sq cm wound surface area, or 1% of body area of infants and children) be moved from APC 5054 (Level 4 Skin Procedures) to APC 5055 (Level 5 Skin Procedures). Another commenter focused on the payment for large venous leg ulcers that are over 100 cm\2\. This commenter requested that the skin substitute procedures used to treat large venous leg ulcers and other large wounds be moved to a higher paying APC.

    Response: We reviewed the procedures assigned to both APC 5053 and APC 5054 and continue to believe that the procedures described by HCPCS code C5277 and CPT code 15277 are appropriately assigned to APCs 5053 and 5054, respectively. While the geometric mean cost of the procedure described by HCPCS code C5277 ($2,187) is higher than the geometric mean cost of other procedures assigned to APC 5053 ($488), there are fewer than 25 single claims billed for the procedure described by HCPCS code C5277. Therefore, HCPCS code C5277 is not a significant procedure code and does not create a 2 times rule violation in APC 5053. Likewise, while the geometric mean cost of the procedure described by CPT code 15277 ($2,464) is higher than the geometric mean cost for all procedures assigned to APC 5054 ($1,567), there are fewer than 80 single claims billed for the procedure described by CPT code 15277.

    Page 59314

    Therefore, CPT code 15277 is not a significant procedure and does not create a 2 times violation in APC 5054. Accordingly, we continue to believe that both HCPCS code C5277 and CPT code 15277 are appropriately assigned to APCs 5053 and 5054, respectively. As we do every year, we will evaluate the costs and APC assignment of both of these codes in the next annual rulemaking cycle.

    After consideration of the public comments we received, we are finalizing our proposal for CY 2018 for assignment of skin substitute procedures to APCs 5053 through 5055, including the assignment of HCPCS code C5277 to APC 5053 and CPT code 15277 to APC 5054.

    24. Subdermal Drug Implants for the Treatment of Opioid Addiction (APC 5735)

    In the CY 2018 MPFS proposed rule (82 FR 34011 through 34012), CMS proposed to establish three G-codes to appropriately report the insertion and removal of buprenorphine hydrochloride, formulated as a 4-rod, 80 mg, long-acting subdermal drug implant for the treatment of opioid addiction (82 FR 34011 through 34012). Specifically, we proposed to establish the following HCPCS G-codes:

    Placeholder HCPCS Code GDDD1 (Insertion, non-biodegradable drug delivery implants, 4 or more);

    Placeholder HCPCS Code GDDD2 (Removal, non-biodegradable drug delivery implants, 4 or more); and

    Placeholder HCPCS code GDDD3 (Removal with reinsertion, non-biodegradable drug delivery implants, 4 or more).

    We did not make any proposal related to HCPCS codes GDDD1 through GDDD3 in the CY 2018 OPPS/ASC proposed rule because there are existing codes that can be used to report the insertion and removal of buprenorphine hydrochloride, as well as a HCPCS J-code to report use of the buprenorphine hydrochloride drug. Listed below in Table 57 are the specific CPT and HCPCS codes for the buprenorphine hydrochloride subdermal drug and its administration, and the proposed OPPS payment rates for CY 2018.

    Table 57--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 11981, 11982, and 11983 and HCPCS Code J0570

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

    Proposed

    CY 2017 Proposed CY 2018

    HCPCS code Long descriptor CY 2017 OPPS CY 2017 OPPS Proposed CY CY 2018 OPPS

    SI OPPS APC payment 2018 OPPS SI OPPS APC payment

    rate rate

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

    11981................................ Insertion, non-biodegradable drug Q1 5734 $100.02 Q1 5734 $94.27

    delivery implant.

    11982................................ Removal, non-biodegradable drug Q1 5735 263.61 Q1 5735 265.20

    delivery implant.

    11983................................ Removal with reinsertion, non- Q1 5735 263.61 Q1 5735 265.20

    biodegradable drug delivery

    implant.

    J0570................................ Buprenorphine implant, 74.2 mg... G 9058 * 1,260.59 G 9058 ** 1,261.31

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

    * The proposed payment rate of $1,260.59 was based on the April 1, 2017 OPPS update.

    ** The payment rate of $1,261.31 was based on the October 1, 2017 OPPS update. Payments for the HCPCS drug codes are updated on a quarterly basis, and

    this payment rate will be updated for the January 2018 OPPS update. Refer to the January 2018 OPPS Addendum B payment file for the payment rate.

    Comment: Some commenters requested that the MPFS proposal for establishment of HCPCS G-codes for insertion and removal of buprenorphine hydrochloride also apply to the OPPS and ASC payment systems. In addition, the commenters recommended that CMS assign the HCPCS G-codes to APC 5735 (Level 5 Minor Procedures), which had a proposed payment rate of $265.20, for CY 2018.

    Response: We agree with the commenters that the HCPCS G-codes GDDD1 through GDDD3 (now HCPCS codes G0516, G0517, and G0518 in this final rule with comment period) should also be recognized under the OPPS because the service associated with the insertion and removal of buprenorphine hydrochloride can be performed in the hospital outpatient department. However, because these services are conditionally packaged under the OPPS, they will be packaged when performed in the ASC and, therefore, not separately paid. Accordingly, to adequately track and improve data collection and analysis associated with subdermal buprenorphine implants, we are recognizing these HCPCS G-codes in the OPPS.

    In summary, after consideration of the public comments we received, we are establishing HCPCS G-codes G0516, G0517, and G0518 under the OPPS, effective January 1, 2018. Table 58 below lists the final status indicator and APC assignments for HCPCS G-codes G0516, G0517, G0518, and HCPCS code J0570 for CY 2018. We remind hospitals that the HCPCS drug code for buprenorphine hydrochloride (HCPCS code J0570) should also be reported when billing for the subdermal administration of the drug. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Page 59315

    Table 58--Final CY 2018 Status Indicator (SI) and APC Assignment for HCPCS Codes G0516, G0517, G0518 and HCPCS

    Code J0570

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

    CY 2018 MPFS

    HCPCS code proposed rule Long descriptor CY 2018 OPPS CY 2018 CY 2018 OPPS payment

    placeholder code SI OPPS APC rate

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

    G0516............... GDDD1............... Insertion of non- Q1 5735 Refer to OPPS Addendum

    biodegradable B.

    drug delivery

    implants, 4 or

    more (services

    for subdermal

    implants).

    G0517............... GDDD2............... Removal of non- Q1 5735 Refer to OPPS Addendum

    biodegradable B.

    drug delivery

    implants, 4 or

    more (services

    for subdermal

    implants).

    G0518............... GDDD3............... Removal with Q1 5735 Refer to OPPS Addendum

    reinsertion, non- B.

    biodegradable

    drug delivery

    implants, 4 or

    more (services

    for subdermal

    implants).

    J0570............... N/A................. Buprenorphine G 9058 Refer to OPPS Addendum

    implant, 74.2 mg. B.

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

    25. Suprachoroidal Delivery of Pharmacologic Agent (APC 5694)

    For CY 2018, as noted in Table 59 below, we proposed to continue to assign CPT codes 67028 and 0465T to APC 5694 (Level 4 Drug Administration), with a proposed payment rate of $286.62. We also proposed to continue to assign CPT code 67028 to status indicator ``S'' (Procedure or Service, Not Discounted When Multiple) and to continue to assign CPT code 0465T to status indicator ``T'' (Procedure or Service, Multiple Procedure Reduction Applies).

    Table 59--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Codes 67028 and 0465T

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptors SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    67028................................ Intravitreal injection of a S 5694 $279.45 S 5694 $286.62

    pharmacologic agent (separate

    procedure).

    0465T................................ Suprachoroidal injection of a T 5694 279.45 T 5694 286.62

    pharmacologic agent (does not

    include supply of medication).

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

    Comment: Some commenters stated that the different status indicator assignment for both CPT codes 67028 and 0465T appears to be an error and contradicts CMS' decision in the CY 2017 OPPS/ASC final rule with comment period where CMS indicated that both procedures are similar from a clinical and resource consideration (81 FR 79617). The commenters reported that the different status indicators suggest that the procedures are not similar. Consequently, the commenters requested the reassignment of CPT code 0465T from status indicator ``T'' to ``S''.

    Response: We note that while many HCPCS codes within a given APC may have the same status indicator, having an identical status indicator is not a prerequisite for APC assignment. That is, assignment of a HCPCS code to an APC is based on the resource and clinical similarity of the service described by the HCPCS code, while assignment of a status indicator is based on service-specific characteristics. Status indicator ``T'' is used to denote that the procedure is subject to the multiple procedure reduction under the OPPS, while status indicator ``S'' describes a procedure or service that is not discounted. Within APC 5694, there are four CPT codes that are assigned to status indicator ``T''. These include the following procedures:

    CPT code 0465T (Suprachoroidal injection of a pharmacologic agent (does not include supply of medication));

    CPT code 36593 (Declotting by thrombolytic agent of implanted vascular access device or catheter);

    CPT code 37195 (Thrombolysis, cerebral, by intravenous infusion); and

    CPT code 92977 (Thrombolysis, coronary; by intravenous infusion).

    As stated earlier, status indicator ``T'' indicates that the service will be reduced by 50 percent if it is the lower priced service on the same claim with another procedure that is also assigned to a status indicator ``T''. For CPT code 0465T, we expect this reduction to occur when there is a separate procedure performed on the same day as the suprachoroidal injection due to significant efficiencies in administering the pharmacologic agent. If the suprachoroidal injection is performed by itself or with a visit, or with a service or procedure assigned to status indicator ``S'', the multiple procedure reduction will not apply. We remind hospitals that, when reporting CPT code 0465T, the appropriate HCPCS drug code should also be reported on the claim.

    Therefore, after consideration of the public comments we received, we are finalizing our CY 2018 proposal, without modification, to continue to assign CPT codes 67028 and 0465T to status indicator ``S'' and ``T'' respectively, and to continue to assign the CPT codes to APC 5694. Table 60 below lists the final status indicator and APC assignments for both codes for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Page 59316

    Table 60--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Codes 67028 and 0465T

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    HCPCS code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    67028....................... Intravitreal injection S 5694 $279.45 S 5694 Refer to OPPS Addendum B.

    of a pharmacologic

    agent (separate

    procedure).

    0465T....................... Suprachoroidal injection T 5694 279.45 T 5694 Refer to OPPS Addendum B.

    of a pharmacologic

    agent (does not include

    supply of medication).

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

    26. Transperineal Placement of Biodegradeable Material (C-APC 5375)

    For CY 2018, the AMA CPT Editorial Panel deleted CPT code 0438T and replaced the code with CPT code 55874, effective January 1, 2018. CPT code 0438T was effective July 1, 2016 and will be deleted on December 31, 2017. Prior to July 2016, the transperineal placement of biodegradable material procedure was described by HCPCS code C9743 (Injection/implantation of bulking or spacer material (any type) with or without image guidance (not to be used if a more specific code applies)), which was effective October 1, 2015 and was deleted on June 30, 2016, when it was replaced with CPT code 0438T, effective July 1, 2016.

    Table 61 below lists the complete descriptors for the deleted and replacement CPT codes. We note that the deleted and replacement CPT codes were both listed in Addendum B and Addendum O to the CY 2018 OPPS/ASC proposed rule (which are available via the Internet on the CMs Web site). Addendum B listed the proposed status indicator assignment for the replacement code and assigned it to comment indicator ``NP'' (New code for the next calendar year or existing code with substantial revision to its code descriptor in the next calendar year as compared to current calendar year, proposed APC assignment; comments will be accepted on the proposed APC assignment for the new code), while Addendum O listed the proposed/placeholder CY 2018 CPT codes and the long descriptors.

    Table 61--Coding Changes for CPT Code 55874

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

    CY 2018 OPPS/ASC

    CPT code proposed rule Long descriptor

    placeholder code

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

    0438T................. N/A................... Transperineal placement

    of biodegradable

    material, peri-

    prostatic (via needle),

    single or multiple,

    includes image

    guidance.

    55874................. 55X87................. Transperineal placement

    of biodegradable

    material, peri-

    prostatic, single or

    multiple injection(s),

    including image

    guidance, when

    performed.

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

    As listed in Table 63 below and in Addendum B of the CY 2018 OPPS/

    ASC proposed rule, we proposed to delete CPT code 0438T (status indicator ``D'') and assign its replacement code, CPT code 55874 (placeholder code 55X87), to C-APC 5375 (Level 5 Urology and Related Services) with a proposed payment rate of $3,597.65. As noted in Table 62, the predecessor code 0438T was assigned to C-APC 5374 (Level 4 Urology and Related Services), while this replacement code is proposed to be reassigned to C-APC 5375. We proposed to revise the APC assignment for CPT code 55874 based on claims data used for the CY 2018 OPPS/ASC proposed rule. We note that the proposed rule claims data was based on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. For the predecessor codes HCPCS codes C9743 and 0438T that were in effect during CY 2016, our analysis of the proposed rule claims data revealed a geometric mean cost of approximately $4,504 based on 157 single claims (out of 159 total claims), which is similar to the geometric mean cost of approximately $3,742 for C-APC 5375 rather than the geometric mean cost of approximately $2,714 for C-APC 5374 or the geometric mean cost of approximately $7,747 for C-APC 5376 (Level 6 Urology and Related Services). Based on its clinical homogeneity and resource similarity to the other procedures assigned to C-APC 5375, we proposed to reassign replacement CPT code 55874 from C-APC 5374 to C-

    APC 5375 for CY 2018.

    Table 62--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for CPT Code 55874

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

    Proposed

    CY 2017 Proposed CY Proposed CY 2018

    CPT code CY 2018 OPPS/ASC proposed Short descriptor CY 2017 CY 2017 OPPS 2018 OPPS CY 2018 OPPS

    rule placeholder code OPPS SI OPPS APC payment SI OPPS APC payment

    rate rate

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

    0438T.................... ......................... Tprnl plmt biodegrdabl T 5374 $2,542.56 D N/A N/A

    matrl.

    55874.................... 55X87.................... Tprnl plmt biodegrdabl N/A N/A N/A T 5375 $3,597.65

    matrl.

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

    Page 59317

    Comment: One commenter supported the reassignment to C-APC 5375 for CPT code 55874 and urged CMS to finalize the proposal. The commenter further indicated that C-APC 5375 is the appropriate APC assignment for CPT code 55874 based on its clinical and resource coherence to the other procedures assigned to C-APC 5375. While supportive of the assignment to C-APC 5375, this same commenter expressed concern with the payment for the procedure under the ASC payment system. The commenter suggested that CPT code 55874 should be designated as a device-intensive procedure.

    Response: We appreciate the commenter's support. For this final rule with comment period, we again reviewed the updated claims data associated with predecessor HCPCS codes C9743 and 0438T. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our analysis of the final rule claims data shows a similar pattern for the predecessor codes. Specifically, we found a geometric mean cost of approximately $4,452 for the predecessor codes based on 157 single claims (out of 160 total claims), which is similar to the geometric mean cost of approximately $3,704 for C-APC 5375. In addition, our analysis of the significant procedures within C-APC 5375 shows that the geometric mean cost of $4,452 for the predecessor codes are similar to the costs of the procedures assigned to C-APC 5375. Specifically, our analysis revealed the range of the significant procedures assigned to C-APC 5375 is between $3,134 (for CPT code 52320) and $5,004 (for CPT code 55875). Consequently, we believe that C-APC 5375 is the most appropriate APC assignment for CPT code 55874.

    With regards to the device-intensive designation for CPT code 55874, based on our analysis of the predecessor HCPCS code C9743, this code is not eligible for device-intensive status because it does not meet the criteria of a device offset that is greater than 40 percent. For more information on how codes are designated as device-intensive status, we refer readers to section IV.B. of this final rule with comment period.

    In summary, after consideration of the public comments we received and our analysis of the updated claims data for this final rule with comment period, we are finalizing our CY 2018 proposal, without modification, and assigning CPT code 55874 to C-APC 5375. Table 63 below lists the final status indicator and APC assignments for CPT code 55874 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 63--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT Code 55874

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

    CY 2017

    CY 2018 OPPS/ASC CY 2017 CY 2017 OPPS CY 2018 CY 2018 CY 2018 OPPS payment

    CPT code proposed rule Short descriptor OPPS SI OPPS APC payment OPPS SI OPPS APC rate

    placeholder code rate

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

    0438T................ .................... Tprnl plmt T 5374 $2,542.56 D N/A N/A.

    biodegrdabl matrl.

    55874................ 55X87............... Tprnl plmt N/A N/A N/A T 5375 Refer to OPPS Addendum

    biodegrdabl matrl. B.

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

    27. Transcranial Magnetic Stimulation (TMS) Therapy (APCs 5721 and 5722)

    For CY 2018, as listed in Table 64 below, we proposed to continue to assign CPT code 90867 to APC 5722 (Level 2 Diagnostic Tests and Related Services) and to also continue to assign CPT code 90869 to APC 5721 (Level 1 Diagnostic Tests and Related Services). However, we proposed to reassign CPT code 90868 from APC 5722 to APC 5721.

    Table 64--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment Rate for the Transcranial Magnetic Stimulation (TMS) Therapy CPT Codes

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    90867.................................. Therapeutic repetitive S 5722 $232.31 S 5722 $242.21

    transcranial magnetic

    stimulation (tms) treatment;

    initial, including cortical

    mapping, motor threshold

    determination, delivery and

    management.

    90868.................................. Therapeutic repetitive S 5722 232.31 S 5721 129.59

    transcranial magnetic

    stimulation (tms) treatment;

    subsequent delivery and

    management, per session.

    90869.................................. Therapeutic repetitive S 5721 127.10 S 5721 129.59

    transcranial magnetic

    stimulation (tms) treatment;

    subsequent motor threshold re-

    determination with delivery

    and management.

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

    Comment: Several commenters disagreed with CMS' proposal to reassign CPT code 90868 to APC 5721 and stated that the proposed payment rate does not cover the cost of providing the service. One commenter stated that

    Page 59318

    transcranial magnetic stimulation (TMS) therapy requires the use of an expensive machine, technicians to assist with the service, staff to work on insurance approvals, and significant time with physicians. Another commenter stated that the proposed payment rate for CPT codes 90868 and 90869 is insufficient, and that the cost of providing the service exceeds the payment rate. Several commenters requested that CMS reconsider and increase the payment rates for CPT codes 90868 and 90869.

    Response: We proposed to revise the APC assignment for CPT code 90868 and to continue the APC assignment for CPT code 90869 based on CY 2016 claims data used for the CY 2018 OPPS/ASC proposed rule. We note that the proposed rule data was based on claims data submitted between January 1, 2016, and December 31, 2016, that were processed on or before December 31, 2016. For CPT code 90868, our analysis of the claims data showed a geometric mean cost of approximately $152 for the code based on 6,433 single claims (out of 6,493 total claims), which is similar to the geometric mean cost of approximately $135 for APC 5721 rather than the geometric mean cost of approximately $252 for APC 5722. Consequently, we proposed to revise the APC assignment for CPT code 90868 to APC 5721 rather than continue to assign it to APC 5722. For CPT code 90869, our claims data showed a geometric mean cost of approximately $119 for CPT code 90869 based on 95 single claims (out of 96 total claims), which is similar to the geometric mean cost of approximately $135 for APC 5721. Consequently, we proposed to continue to assign CPT code 90869 to APC 5721.

    For this final rule with comment period, we again reviewed the updated claims data associated with CPT codes 90868 and 90869. We note that, for this final rule with comment period, we used claims data with dates of service between January 1, 2016, and December 31, 2016, that were processed on or before June 30, 2017. Our analysis of the final rule claims data revealed a similar pattern for both codes. Specifically, we found a geometric mean cost of approximately $148 for CPT code 90868 based on 7,258 single claims (out of 7,312 total claims), which is similar to the geometric mean cost of approximately $136 for APC 5721, rather than the geometric mean cost of approximately $249 for APC 5722. Our analysis also revealed a geometric mean cost of approximately $125 for CPT code 90869 based on 105 single claims (out of 106 total claims), which is comparable to the geometric mean cost of $136 for APC 5721. Based on our analysis of the final rule claims data, we believe that APC 5721 is the appropriate APC assignment for both CPT codes 90868 and 90869 based on their clinical homogeneity and resource costs to the other procedures in APC 5721.

    With regards to the comment that TMS therapy requires significant time with physicians, we remind readers that payments under the OPPS are for services provided by hospital outpatient facilities, not physician services. We note that physician services are paid under the MPFS. Medicare payment rates for physician services can be found on the CMS Physician Fee Schedule Web site, specifically at: https://www.cms.gov/apps/physician-fee-schedule/overview.aspx.

    In summary, after consideration of the public comments we received, we are finalizing our CY 2018 proposal, without modification, for CPT codes 90867, 90868, and 90869. Table 65 below lists the final status indicator and APC assignments for all three CPT codes. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 65--Final CY 2018 Status Indicator (SI) and APC Assignment for the Transcranial Magnetic Stimulation (TMS) Therapy CPT Codes

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptor SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    90867....................... Therapeutic repetitive S 5722 $232.31 S 5722 Refer to OPPS Addendum B.

    transcranial magnetic

    stimulation (tms)

    treatment; initial,

    including cortical

    mapping, motor

    threshold

    determination, delivery

    and management.

    90868....................... Therapeutic repetitive S 5722 232.31 S 5721 Refer to OPPS Addendum B.

    transcranial magnetic

    stimulation (tms)

    treatment; subsequent

    delivery and

    management, per session.

    90869....................... Therapeutic repetitive S 5721 127.10 S 5721 Refer to OPPS Addendum B.

    transcranial magnetic

    stimulation (tms)

    treatment; subsequent

    motor threshold re-

    determination with

    delivery and management.

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

    28. Transurethral Waterjet Ablation of the Prostate (C-APC 5375)

    On June 5, 2017, the Category B Investigational Device Exemption (IDE) study associated with the ``Waterjet Ablation Therapy for Endoscopic Resection of Prostate Tissue II (WATER)'' met CMS' standards for coverage. According to the National Institutes of Health (NIH) clinicaltrials.gov Web site, the estimated completion date of this study is August 2020. Under Medicare, studies with Category A designation are approved for coverage of routine services only, while studies with the Category B designation are approved for coverage of the Category B device and related services, and routine services. We note that the procedure associated with this study is currently described by CPT code 0421T. Based on the recent Medicare coverage of the IDE study, we revised the OPPS status indicator assignment for CPT

    Page 59319

    code 0421T from ``E1'' (Not paid by Medicare when submitted on outpatient claims (any outpatient bill type)) to ``J1'' (Hospital Part B services paid through a comprehensive APC) and assigned the code to C-APC 5374 (Level 4 Urology and Related Services) to indicate that the procedure would be paid separately under the OPPS. We announced this change through the October 2017 OPPS quarterly update CR (Transmittal 3864, Change Request 10236, dated September 15, 2017), and further stated in this same CR that the payment would be effective on June 5, 2017, which is the date of Medicare's approval for coverage.

    In the CY 2018 OPPS/ASC proposed rule, we solicited public comments on the proposed APC and status indicator assignments for the code. Specifically, as listed in Table 66 below, we proposed to continue to assign CPT code 0421T to C-APC 5374 for CY 2018.

    Table 66--Proposed CY 2018 Status Indicator (SI), APC Assignment, and Payment for CPT Code 0421T

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

    CY 2017 Proposed CY

    CY 2017 OPPS CY 2017 OPPS Proposed CY Proposed CY 2018 OPPS

    CPT code Long descriptor SI OPPS APC payment 2018 OPPS SI 2018 OPPS payment

    rate APC rate

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

    0421T................................ Transurethral waterjet ablation J1 5374 $2,542.56 J1 5374 $2,609.60

    of prostate, including control

    of post-operative bleeding,

    including ultrasound guidance,

    complete (vasectomy, meatotomy,

    cystourethroscopy, urethral

    calibration and/or dilation, and

    internal urethrotomy are

    included when performed).

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

    Comment: Several commenters expressed concern over the proposed payment rate for CPT code 0421T and requested a reassignment to either C-APC 5375 (Level 5 Urology and Related Services), which had a proposed payment rate of $3,597.65, or C-APC 5376 (Level 6 Urology and Related Services), which had a proposed payment rate of $7,448.11 for the Aquablation procedure. The commenters stated that the proposed payment rate for C-APC 5374 does not take into account the cost of the device, the overhead costs, and the personnel costs associated with providing the Aquablation procedure. One commenter stated that the Aquablation procedure is dissimilar to the other procedures assigned to C-APC 5374, some of which require the use of reusable equipment. This same commenter reported that the level of complexity in the performing the Aquablation procedure is comparable to those procedures in C-APC 5375 and C-APC 5376. Specifically, as indicated by the commenter, the Aquablation procedure is similar to implanting brachytherapy seeds into the prostate (CPT code 55875, proposed for assignment to C-APC 5375), cryoablation of the prostate (CPT code 55873, proposed for assignment to C-APC 5376), and high intensity focused ultrasound (HIFU) of the prostate (HCPCS code C9747, proposed for assignment to C-APC 5376). Another commenter believed the Aquablation procedure requires more effort than the traditional transurethral resection of the prostate (TURP) procedure (CPT code 52601, proposed for assignment to C-APC 5375) or the laser ablation of the prostate procedure (GreenLight Laser Therapy described by CPT code 52648, proposed for assignment to C-APC 5375), and added that the TURP and Aquablation each require general anesthesia and take approximately 1 hour to perform. Several commenters stated that the complexity of performing the Aquablation procedure is similar to the cryoablation of the prostate and HIFU procedures, of which both were proposed to be assigned to C-APC 5376. Consequently, these same commenters requested that CMS revisit the APC assignment for CPT code 0421T and consider a reassignment to C-APC 5376.

    Response: Based on our review of the procedure and input from our clinical advisors, we believe that a reassignment from C-APC 5374 to C-

    APC 5375 for the Aquablation is appropriate. We note that this procedure is currently in clinical trial with an estimated study completion date of August 2020. We believe that the procedure is clinically similar to other procedures that are currently assigned to C-APC 5375. As we do every year under the OPPS, we will reevaluate the cost of the procedure described by CPT code 0421T and its APC assignment for next year's rulemaking update.

    In summary, after consideration of the public comments, we are finalizing our CY 2018 proposal with modification. Specifically, we are revising the APC assignment for CPT code 0421T from proposed C-APC 5374 to C-APC 5375 for CY 2018. Table 67 below lists the final status indicator and APC assignments for CPT code 0421T for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Page 59320

    Table 67--Final CY 2018 Status Indicator (SI) and APC Assignment for CPT U0421T

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

    CY 2017

    CY 2017 OPPS CY 2017 OPPS CY 2018 OPPS CY 2018

    CPT code Long descriptors SI OPPS APC payment SI OPPS APC CY 2018 OPPS payment rate

    rate

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

    0421T....................... Transurethral waterjet J1 5374 $2,542.56 J1 5375 Refer to OPPS Addendum B.

    ablation of prostate,

    including control of

    post-operative

    bleeding, including

    ultrasound guidance,

    complete (vasectomy,

    meatotomy,

    cystourethroscopy,

    urethral calibration

    and/or dilation, and

    internal urethrotomy

    are included when

    performed).

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

    29. Transurethral Water Vapor Thermal Therapy of the Prostate (C-APC 5373)

    For CY 2018, CMS received a New Technology APC application requesting a new HCPCS code for the Rezumacrm therapy. The Rezumacrm procedure is a new treatment, and the Rezumacrm System associated with this procedure received a 510(k) FDA clearance on August 27, 2015. The procedure utilizes water vapor for the treatment of benign prostatic hypertrophy (BPH). The applicant maintained that there was coding confusion about whether the procedure could be described by existing CPT code 53852 (Transurethral destruction of prostate tissue; by radiofrequency thermotherapy). We note that CPT code 53852 is assigned to C-APC 5375 (Level 5 Urology and Related Services), which has a geometric mean cost of approximately $3,704 for CY 2018.

    Based on our review of the application, the procedure, and input from our clinical advisors, we agree that CPT code 53852 does not appropriately describe the Rezumacrm procedure. Consequently, we are establishing HCPCS code C9748 to appropriately describe the procedure. Effective January 1, 2018, HOPDs should report HCPCS code C9748 to report the use of the Rezumacrm procedure for the treatment of BPH. In addition, based on cost information submitted to CMS in the application, we believe that the procedure should appropriately be assigned to C-APC 5373 (Level 3 Urology and Related Services), which has a geometric mean cost of approximately $1,695. We believe the Rezumacrm procedure shares similar resource and clinical homogeneity to the other procedures currently assigned to C-APC 5373.

    Table 68 below lists the final status indicator and APC assignments for HCPCS code C9748 for CY 2018. We refer readers to Addendum B to this final rule with comment period for the payment rates for all codes reported under the OPPS. In addition, we refer readers to Addendum A to this final rule with comment period for the status indicator meanings for all codes reported under the OPPS. Both Addendum A and Addendum B are available via the Internet on the CMS Web site.

    Table 68--Final CY 2018 Status Indicator (SI) and APC Assignment for the Transurethral Water Vapor Thermal

    Therapy of the Prostate

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

    CY 2018 OPPS CY 2018

    HCPCS code Long descriptor SI OPPS APC CY 2018 OPPS payment rate

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

    C9748....................... Transurethral J1 5373 Refer to OPPS Addendum B.

    destruction of prostate

    tissue; by

    radiofrequency water

    vapor (steam) thermal

    therapy.

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

    We note that HCPCS code C9748 is assigned to comment indicator ``NI'' in Addendum B to this CY 2018 OPPS/ASC final rule with comment period to indicate that we have assigned the code an interim OPPS payment status for CY 2018. We are inviting public comments on the interim status indicator and APC assignments that will be finalized in the CY 2019 OPPS/ASC final rule with comment period.

    1. OPPS Payment for Devices

    1. Pass-Through Payments for Devices

    1. Beginning Eligibility Date for Device Pass-Through Status and Quarterly Expiration of Device Pass-Through Payments

  102. Background

    Under section 1833(t)(6)(B)(iii) of the Act, the period for which a device category eligible for transitional pass-through payments under the OPPS can be in effect is at least 2 years but not more than 3 years. Prior to CY 2017, our regulation at 42 CFR 419.66(g) provided that this pass-through payment eligibility period began on the date CMS established a particular transitional pass-through category of devices, and we based the pass-through status expiration date for a device category on the date on which pass-through payment was effective for the category. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79654), in accordance with section 1833(t)(6)(B)(iii)(II) of the Act, we amended Sec. 419.66(g) to provide that the pass-through eligibility period for a device category begins on the first date on which pass-through payment is made under the OPPS for any medical device described by such category.

    In addition, prior to CY 2017, our policy was to propose and finalize the dates for expiration of pass-through status for device categories as part of the OPPS annual update. This means that device pass-through status would expire

    Page 59321

    at the end of a calendar year when at least 2 years of pass-through payments have been made, regardless of the quarter in which the device was approved. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79655), we changed our policy to allow for quarterly expiration of pass-through payment status for devices, beginning with pass-through devices approved in CY 2017 and subsequent calendar years, to afford a pass-through payment period that is as close to a full 3 years as possible for all pass-through payment devices. We refer readers to the CY 2017 OPPS/ASC final rule with comment period (81 FR 79648 through 79661) for a full discussion of the changes to the device pass-through payment policy. We also have an established policy to package the costs of the devices that are no longer eligible for pass-through payments into the costs of the procedures with which the devices are reported in the claims data used to set the payment rates (67 FR 66763).

  103. Expiration of Transitional Pass-Through Payments for Certain Devices

    As stated earlier, section 1833(t)(6)(B)(iii) of the Act requires that, under the OPPS, a category of devices be eligible for transitional pass-through payments for at least 2 years, but not more than 3 years. There currently are three device categories eligible for pass-through payment: (1) HCPCS code C2623 (Catheter, transluminal angioplasty, drug-coated, non-laser), which was established effective April 1, 2015; (2) HCPCS code C2613 (Lung biopsy plug with delivery system), which was established effective July 1, 2015; and (3) HCPCS code C1822 (Generator, neurostimulator (implantable), high frequency, with rechargeable battery and charging system), which was established effective January 1, 2016. The pass-through payment status of the device categories for HCPCS codes C2623, C2613, and C1822 will end on December 31, 2017. We note that our new policy adopted in the CY 2017 OPPS/ASC final rule with comment period to allow for quarterly expiration of pass-through payment status for devices applies to devices approved in CY 2017 and subsequent years. As all the devices in these three device categories were approved prior to CY 2017, we are applying our policy to expire them at the end of the calendar year when at least 2 years of pass-through payments have been made. Therefore, in the CY 2018 OPPS/ASC proposed rule (82 FR 33610), we proposed, beginning in CY 2018, to package the costs of each of the devices described by HCPCS codes C2623, C2613, and C1822 into the costs related to the procedure with which each device is reported in the hospital claims data.

    Comment: Various stakeholders, including physicians, device manufacturers, and professional societies, opposed the proposal to package the costs of the device described by HCPCS code C2623 into the costs related to the procedure(s) with which the device is reported. The commenters specifically opposed packaging of the cost of the drug-

    coated balloons into the procedure described by CPT code 37224 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with transluminal angioplasty). These commenters stated concerns that the proposed payment rate for this procedure did not adequately reflect the additional costs of drug-

    coated balloons over non-drug-coated balloons, which could limit patient access to the technology. Several commenters described the clinical benefits provided by the drug-coated balloon in the treatment of peripheral arterial disease (PAD) and supported the continuation of the pass-through status of the device category for HCPCS code C2623 beyond December 31, 2017. At the August 21, 2017 meeting of the HOP Panel, the HOP Panel made a recommendation that CMS continue to track CPT code 37224 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with transluminal angioplasty) with HCPCS code C2623, and that the appropriate HOP Panel subcommittee review the APCs for endovascular procedures to determine whether more granularity (that is, more APCs) is warranted. One commenter supported the proposal to package the costs of the device described by HCPCS code C2623 into the costs related to the procedure(s) with which the device is reported. The commenter stated that the proposed payment rate provided under the OPPS for procedures using drug-coated balloons was appropriate. This commenter also stated concerns over a lack of scientific evidence of the effectiveness of these devices outside of clinical trials.

    Response: As mentioned earlier, under section 1833(t)(6)(B)(iii) of the Act, the period for which a device category eligible for transitional pass-through payments under the OPPS can be in effect is at least 2 years but not more than 3 years. Our policy for devices approved for pass-through payment status prior to CY 2017 is to propose and finalize the dates for expiration of pass-through payment status for device categories as part of the OPPS annual update. This means that device pass-through payment status would expire at the end of a calendar year when at least 2 years of pass-through payments had been made, regardless of the quarter in which the device was approved for pass-through payment status. According to our established policy (67 FR 66763), after this eligibility period expires, payments for the costs of the device(s) are packaged into payment for the procedures with which they are billed. The device category for HCPCS code C2623 was established effective April 1, 2015, and will have been in effect for a period of at least 2 years, but not more than 3 years, when its eligibility expires on December 31, 2017. Therefore, this category is no longer eligible for pass-through payments. In accordance with our established policy, we are finalizing our proposal to package payment for the costs of the device(s) described by this category into payment for the costs of the procedures with which they are reported. In response to the recommendation of the HOP Panel from the August 21, 2017 meeting, we will continue to track CPT code 37224 (Revascularization, endovascular, open or percutaneous, femoral, popliteal artery(s), unilateral; with transluminal angioplasty) with HCPCS code C2623. We will share information on all items and services paid under the OPPS, including endovascular procedures, so that the appropriate HOP Panel subcommittee may review the APCs for endovascular procedures and advise on whether more granularity (that is, more APCs) is warranted.

    Comment: Some commenters, including device manufacturers and associations, stated that the geometric mean costs of the procedure described by CPT code 37224 involving a drug-coated balloon were higher than the geometric mean costs of the same angioplasty procedure when a drug-coated balloon was not used and a plain balloon angioplasty catheter was used instead. Specifically, these commenters presented their analysis of Medicare claims data which suggested that when CPT code 37224 is billed with HCPCS code C2623, the geometric mean cost of these claims is $8,483, while the geometric mean cost of claims including CPT code 37224 without HCPCS code C2623 is $6,396. The commenters also noted that the total geometric mean costs for CPT code 37224, regardless of whether HCPCS code C2623 is billed with CPT code 37224, is approximately $7,153. These commenters requested that CMS create a new procedural HCPCS C-code or G-code for hospitals to

    Page 59322

    use to differentiate procedures described by CPT code 37224 that use drug-coated balloons from procedures described by CPT code 37224 that use plain balloon angioplasty catheters, with a suggested descriptor of ``Revascularization, endovascular, open percutaneous, femoral, popliteal artery(s), unilateral; with transluminal drug-coated balloon angioplasty''.

    One commenter also referenced the proposal in the CY 2018 OPPS/ASC proposed rule (82 FR 33579 and 33580) to establish a HCPCS C-code to describe blue light cystoscopy (HCPCS code C9738 (Adjunctive blue light cystoscopy with fluorescent imaging agent (List separately in addition to code for primary procedure)) and to apply the C-APC complexity adjustment policy when this C-code is billed with specific white light cystoscopy codes. The commenter pointed out that, in the proposed rule, CMS stated that establishment of this C-code was appropriate because CMS believed that blue light cystoscopy is a distinguishable service in comparison to white light cystoscopy alone. CMS further stated that, with the C-APC complexity adjustment, qualifying combinations of the blue light cystoscopy C-code and white light cystoscopy codes are paid at the next higher paying C-APC when billed together on the same claim. The commenter requested that CMS take comparable steps to separately identify and pay for angioplasty procedures involving drug-coated balloons.

    Finally, several commenters referenced the HOP Panel's recommendation that CMS examine the number of APCs for endovascular procedures for CY 2018 and requested CMS create two new levels within the Endovascular C-APCs to provide higher payment for angioplasty procedures using a drug-coated balloon.

    Response: We believe that procedures with which the drug-coated balloons are used, specifically the procedure described by CPT code 37224, are appropriately described by the existing procedure code and do not believe it is necessary at this time to establish a HCPCS C-code or G-code to distinguish an angioplasty procedure with a drug-coated balloon from an angioplasty procedure without a drug-coated balloon. The OPPS is a prospective payment system that relies on the principles of averaging, with some cases in an APC being more costly than others (and some cases being less costly). Although there is some evidence of higher geometric mean costs when a drug-coated balloon is used for certain angioplasty procedures versus a plain balloon angioplasty catheter, the higher costs of the procedures involving the drug-coated balloon are reflected in the claims data. Our analysis of the final rule claims data revealed a geometric mean cost of approximately $7,029 for CPT code 37224 based on 11,346 single claims (out of 11,437 total claims). CPT code 37224 is assigned to C-APC 5192 (Level 2 Endovascular Procedures), which has a geometric mean cost of approximately $5,081. There is no 2 times violation in this C-APC. We also do not believe a C-APC complexity adjustment would be applicable, based on existing criteria used to assign a complexity adjustment. We do not believe that the example the commenter raised is entirely analogous because the HCPCS C-code that the commenter referenced necessarily involves an additional procedure (blue light cystoscopy) in addition to white light cystoscopy and the administration of the fluorescent imaging agent is required, which adds additional procedure time. In contrast, the use of a drug coated balloon does not involve a separate procedure.

    We note that stakeholders who are interested in the establishment of a CPT procedure code to describe angioplasty procedures involving the use of drug-coated balloons may request a new procedure code from the AMA CPT Editorial Panel.

    With regard to the request to create additional levels within the Vascular C-APC clinical family, this issue is discussed in greater detail in section III.D. of this final rule with comment period. As we do every year, we will review and evaluate the APC groupings based on the latest available data in the next rulemaking cycle.

    Comment: Several commenters requested that HCPCS code C1822 (Generator, neurostimulator (implantable), high frequency, with rechargeable battery and charging system), otherwise known as the Senza SCS System, receive an additional year of pass-through payment status for CY 2018. Reasons stated by the commenters included: (1) A belief that CMS has the authority under current law to extend pass-through payment status for one more year, for a total of 3 years, and that, although CMS' policy to allow devices with transitional pass-through payment status as close to 3 years as possible was effective for device approvals on or after January 1, 2017, CMS has the authority to grant the third year of pass-through payment status on a case-by-case basis for devices that were granted pass-through payment status prior to CY 2017 based on specific characteristics of the device and procedure with which it is used; (2) the reported costs for devices described by HCPCS code C1822 in CY 2016 were lower than actual cost for the device due to hospital CCR ratios used to calculate device cost instead of implantable device CCRs, which were used for many hospitals to calculate device costs starting in CY 2017; (3) the reported costs for devices described by HCPCS C1822 in CY 2016 were lower than actual costs due to hospital cost reporting errors, billing of HCPCS code C1822 by hospitals that, according to the device manufacturer, had not purchased the device, hospitals not reporting use of the device, and other claims reporting problems; and (4) ending pass-through payment status would reduce access to the Senza SCS System. The commenters stated that the Senza SCS System helps beneficiaries manage chronic pain and reduces opioid usage among beneficiaries with the device.

    Response: Historically, a device approved for pass-through payment status under the OPPS had an eligibility period of at least 2 years but no more than 3 years--with the pass-through payment period starting on the date when CMS established a particular transitional category of devices (80 FR 70415) and expiring at the end of a calendar year when at least 2 years but no more than 3 years have passed. Effective January 1, 2017, we revised our policy to allow for a quarterly expiration of pass-through payment status for devices to afford a pass-

    through payment period that is as close to a full 3 years as possible for all pass-through payment devices (81 FR 79655). HCPCS code C1822 was established as a pass-through payment category on January 1, 2016, and will have received 2 years of pass-through payment status on December 31, 2017, in accordance with the statutory requirement of receiving at least 2 years of pass-through payments, but not more than 3 years, and consistent with the policy in effect at the time the device pass-through payment period began for HCPCS code C1822. Accordingly, the policy adopted in CY 2017 does not apply to devices approved for pass-through payment status prior to that date. Likewise, the change in CY 2017 from using the average hospital-wide CCR to the implantable device CCR also was a prospective policy change to use the best available data in a given year to determine device pass-through payment.

    With respect to comments expressing concerns that the reported costs for HCPCS code C1822 for CY 2016 were lower due to hospital cost reporting

    Page 59323

    errors, as we have stated in Section 20.5 (Clarification of HCPCS Code to Revenue Code Reporting) of Chapter 4 of the Medicare Claims Processing Manual, hospitals are responsible for reporting the correct revenue code on the claim form. Specifically, we state that we do not instruct hospitals on how to report the assignment of HCPCS codes to revenue codes for services provided under OPPS because hospitals' costs vary. Where explicit instructions are not provided, providers should report their charges under the revenue code that will result in the charges being assigned to the same cost center to which the cost of those services are assigned in the cost report. We note that the Medicare cost report form allows hospitals to report in a manner that is consistent with their own financial accounting systems and, therefore, should be accurate for each individual hospital. Moreover, we believe that the cost report data and their use in the OPPS cost estimation and payment rate development process, combined with potential penalties for inaccurate reporting, provide financial incentives for hospitals to report costs accurately. Furthermore, as we have stated repeatedly, beyond our standard OPPS trimming methodology that we apply to those claims that have passed various types of claims processing edits, it is not our general policy to judge the accuracy of hospital coding and charging for purposes of ratesetting. (We refer readers to the CY 2011 OPPS/ASC final rule with comment period (75 FR 71838) for further discussion.)

    Commenters writing in support of extending the pass-through payment period for HCPCS code C1822 also stated that access to the service covered by HCPCS code C1822 could be reduced if pass-through payment status for HCPCS code C1822 is removed. Because reported costs for CPT code 63685 appear to be consistent with or without being reported in combination with HCPCS code C1822, we do not anticipate a significant impact to the payment amount for CPT code 63685 once HCPCS code C1822 is removed from pass-through payment status. We anticipate that hospitals will be able to adjust to any possible changes to the payment for the service.

    Comment: One commenter, another device manufacturer, agreed with CMS' proposal to end pass-through payment status of HCPCS code C1822 on December 31, 2017, stating that the decision to end pass-through payment status is consistent with CMS policy and there is no need to apply the policy established in CY 2017 retroactively.

    Response: We appreciate the commenter's support.

    We did not receive any public comments regarding the proposal to package the payment for the costs of the device described by HCPCS code C2623 into the payment for the costs related to the procedure with which the device is reported.

    After consideration of the public comments we received, we are finalizing our proposal, without modification, to package the payment for the costs of each of the devices described by HCPCS codes C2623, C2613, and C1822 into the payment for the costs related to the procedure with which each device is reported in the hospital claims data.

    2. New Device Pass-Through Applications

  104. Background

    Section 1833(t)(6) of the Act provides for pass-through payments for devices, and section 1833(t)(6)(B) of the Act requires CMS to use categories in determining the eligibility of devices for pass-through payments. As part of implementing the statute through regulations, we have continued to believe that it is important for hospitals to receive pass-through payments for devices that offer substantial clinical improvement in the treatment of Medicare beneficiaries to facilitate access by beneficiaries to the advantages of the new technology. Conversely, we have noted that the need for additional payments for devices that offer little or no clinical improvement over previously existing devices is less apparent. In such cases, these devices can still be used by hospitals, and hospitals will be paid for them through appropriate APC payment. Moreover, a goal is to target pass-through payments for those devices where cost considerations might be most likely to interfere with patient access (66 FR 55852; 67 FR 66782; and 70 FR 68629).

    As specified in regulations at 42 CFR 419.66(b)(1) through (b)(3), to be eligible for transitional pass-through payment under the OPPS, a device must meet the following criteria: (1) If required by FDA, the device must have received FDA approval or clearance (except for a device that has received an FDA investigational device exemption (IDE) and has been classified as a Category B device by the FDA), or another appropriate FDA exemption; and the pass-through payment application must be submitted within 3 years from the date of the initial FDA approval or clearance, if required, unless there is a documented, verifiable delay in U.S. market availability after FDA approval or clearance is granted, in which case CMS will consider the pass-through payment application if it is submitted within 3 years from the date of market availability; (2) the device is determined to be reasonable and necessary for the diagnosis or treatment of an illness or injury or to improve the functioning of a malformed body part, as required by section 1862(a)(1)(A) of the Act; and (3) the device is an integral part of the service furnished, is used for one patient only, comes in contact with human tissue, and is surgically implanted or inserted (either permanently or temporarily), or applied in or on a wound or other skin lesion. In addition, according to Sec. 419.66(b)(4), a device is not eligible to be considered for device pass-through payment if it is any of the following: (1) Equipment, an instrument, apparatus, implement, or item of this type for which depreciation and financing expenses are recovered as depreciation assets as defined in Chapter 1 of the Medicare Provider Reimbursement Manual (CMS Pub. 15-1); or (2) a material or supply furnished incident to a service (for example, a suture, customized surgical kit, or clip, other than a radiological site marker).

    Separately, we use the following criteria, as set forth under Sec. 419.66(c), to determine whether a new category of pass-through payment devices should be established. The device to be included in the new category must--

    Not be appropriately described by an existing category or by any category previously in effect established for transitional pass-

    through payments, and was not being paid for as an outpatient service as of December 31, 1996;

    Have an average cost that is not ``insignificant'' relative to the payment amount for the procedure or service with which the device is associated as determined under Sec. 419.66(d) by demonstrating: (1) The estimated average reasonable costs of devices in the category exceeds 25 percent of the applicable APC payment amount for the service related to the category of devices; (2) the estimated average reasonable cost of the devices in the category exceeds the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent; and (3) the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device exceeds 10 percent of the APC payment amount for the related service (with the exception of brachytherapy and temperature-monitored cryoblation, which are exempt from the cost

    Page 59324

    requirements as specified at Sec. Sec. 419.66(c)(3) and (e)); and

    Demonstrate a substantial clinical improvement, that is, substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment.

    Beginning in CY 2016, we changed our device pass-through evaluation and determination process. Device pass-through applications are still submitted to CMS through the quarterly subregulatory process, but the applications will be subject to notice-and-comment rulemaking in the next applicable OPPS annual rulemaking cycle. Under this process, all applications that are preliminarily approved upon quarterly review will automatically be included in the next applicable OPPS annual rulemaking cycle, while submitters of applications that are not approved upon quarterly review will have the option of being included in the next applicable OPPS annual rulemaking cycle or withdrawing their application from consideration. Under this notice-and-comment process, applicants may submit new evidence, such as clinical trial results published in a peer-reviewed journal or other materials for consideration during the public comment process for the proposed rule. This process allows those applications that we are able to determine meet all the criteria for device pass-through payment under the quarterly review process to receive timely pass-through payment status, while still allowing for a transparent, public review process for all applications (80 FR 70417 through 70418).

    More details on the requirements for device pass-through payment applications are included on the CMS Web site in the application form itself at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html, in the ``Downloads'' section. In addition, CMS is amenable to meeting with applicants or potential applicants to discuss research trial design in advance of any device pass-through application or to discuss application criteria, including the substantial clinical improvement criterion.

  105. Applications Received for Device Pass-Through Payment for CY 2018

    We received five applications by the March 1, 2017 quarterly deadline, which was the last quarterly deadline for applications to be received in time to be included for the CY 2018 OPPS/ASC proposed rule. All applications were received in the second quarter of 2016. None of the five applications were approved for device pass-through payment during the quarterly review process.

    Applications received for the later deadlines for the remaining 2017 quarters (June 1, September 1, and December 1), if any, will be presented in the CY 2019 OPPS/ASC proposed rule. We note that the quarterly application process and requirements have not changed in light of the addition of rulemaking review. Detailed instructions on submission of a quarterly device pass-through payment application are included on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/catapp.pdf. A discussion of the five applications received by the March 1, 2017 deadline is presented below, as detailed in the CY 2018 OPPS/ASC proposed rule (82 FR 33611 through 33618).

    (1) Architectsupreg Px

    Harbor MedTech, Inc. submitted an application for a new device category for transitional pass-through payment status for Architectsupreg Px. Architectsupreg Px is a collagen biomatrix comprised of a stabilized extracellular matrix derived from equine pericardium. The equine pericardium is stabilized to become a catalyst and scaffold for use by autologous tissue regeneration factors. Architectsupreg Px is packaged as an individual unit in sizes ranging from 2 cm x 2 cm up to 10 cm x 15 cm and is approximately 0.75 mm thick. Architectsupreg Px typically requires only one application. The applicant asserted that it is clinically superior to other skin substitutes that work by flooding the wound with nonautologous collagen and growth factors because Architectsupreg Px attracts and concentrates the patient's own autologous collagen and growth factors to support healing.

    With respect to the newness criterion at Sec. 419.66(b)(1), the applicant received FDA clearance for Architectsupreg Px on September 12, 2014, and its June 1, 2016 application was submitted within 3 years of FDA clearance. However, Unite BioMatrix, cleared by the FDA on June 20, 2007, is claimed as a predicate of Architectsupreg Px. The Architectsupreg Px application states that ``. . . while packaged differently, Architectsupreg Px and Unite BioMatrix are identical . . . they are both stabilized equine pericardium manufactured using the same processes . . . .'' If the date for FDA clearance for Unite BioMatrix is used to evaluate the newness criterion, Architectsupreg Px may not meet the newness criterion. We invited public comments on this issue.

    Comment: One commenter, the manufacturer, stated that Architectsupreg Px is substantially different than its predicate product, Unite Biomatrix, and should be considered to meet the newness criterion for device pass-through payment. The commenter pointed out the following: Architectsupreg Px uses a different process from Unite Biomatrix to stabilize the equine pericardium. Architectsupreg Px is de-hydrated, packaged dry in a foil pouch, and is sterilized by radiation. Unite Biomatrix is packaged wet in a jar and is not sterilized using radiation. The new process that is used to manufacturer Architectsupreg Px was found by researchers in 2016 to add key properties to the device that promote the use of endogenous collagen and growth factors to support healing. The commenter implied that Unite Biomatrix does not contain these key properties.

    Response: The statements by the manufacturer about the differences in performance between Architectsupreg Px and Unite Biomatrix appear to be different than what was stated in the device pass-through application. The application stated that, despite different packaging, the two products were identical. However, we acknowledge that the research cited by the manufacturer of substantial performance differences between Architectsupreg Px and Unite Biomatrix is from 2016, and the findings may not have been available when the device pass-through payment application was submitted. For purposes of the device pass-through payment process, we are persuaded by this additional information and have determined that Architectsupreg Px does meet the newness criterion based on the additional performance information supplied by the manufacturer.

    With respect to the eligibility criterion at Sec. 419.66(b)(3), according to the applicant, Architectsupreg Px is a skin substitute product that is integral to the service provided, is used for one patient only, comes in contact with human skin, and is surgically inserted into the patient. The applicant also claims Architectsupreg Px meets the device eligibility requirements of Sec. 419.66(b)(4) because Architectsupreg Px is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material.

    The criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS

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    determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through category that describes Architectsupreg Px. Harbor MedTech, Inc. suggested a new device category descriptor of ``Stabilized Skin Substitute for Autologous Tissue Regeneration'' for Architectsupreg Px. We invited public comments on this issue.

    We did not receive any public comments on this issue. We are confirming that there is no existing pass-through category that describes Architectsupreg Px and have determined that Architectsupreg Px meets this eligibility criterion.

    The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With regard to the substantial clinical improvement criterion, the applicant only identified two references, neither of which we believe provide evidence of substantial clinical improvement. One reference is a 2012 summary report \3\ of skin substitute products that can be used to treat chronic wounds that only describes characteristics of the predecessor product to Architectsupreg Px with no efficacy or performance information. The second reference \4\ is a small observational study of 34 subjects with no comparison group. We invited public comments on whether Architectsupreg Px meets the substantial clinical improvement criterion.

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    \3\ Snyder, D.L. et al. Skin Substitutes for Treating Chronic Wounds. Technology Assessment Report. Project ID: HCPR0610. AHRQ. December 18, 2012.

    \4\ Alexander JH, Yeager DA, et al. Equine Pericardium as a Biological Covering for the Treatment of Diabetic Foot Wounds; a Prospective Study. J Am Podiatric Assoc., 2012 Sep-Oct.:102 (5): 352-358.

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    Comment: One commenter, the manufacturer, stated that the inclusion of stabilized equine pericardium is an extremely important property of Architectsupreg Px and Unite Biomatrix, and that this property allows these products to stay on a chronic wound, resist degradation, and remain on the wound until it heals. The commenter stated that Architectsupreg Px is a nondegrading skin substitute that constantly supports healing and does not need to be reapplied. The commmenter also stated that skin substitutes that degrade need to be reapplied multiple times and there is the risk that reapplying the skin substitute may interrupt the wound healing process which drives up the costs of medical care. The commenter believed that Architectsupreg Px is the first skin substitute that totally aligned with the Quality and Value of Care objectives of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Lastly, the commenter stated that other skin substitute products have previously received pass-through payment approval by presenting similar data as have been presented for Architectsupreg Px.

    Response: The commenter has provided additional information about the potential beneficial qualities of Architectsupreg Px. However, the commenter has provided no additional studies that demonstrate that its use results in a substantial clinical improvement relative to other skin substitute and wound healing products available on the market. The commenter mentioned that skin substitutes had previously received pass-

    through payment status based on the same type of information the manufacturer provided in its device pass-through payment application and in its comments on the proposed rule. However, the commenter is referring to a previous process to evaluate skin substitutes for pass-

    through payment eligibility (the drugs and biological pass-through payment process), which did not require evidence of a substantial clinical improvement. Since CY 2015, skin substitutes have been evaluated using the medical device pass-through payment process (79 FR 66885 through 66888), which includes the criterion for substantial clinical improvement. Applicants must demonstrate that the device under consideration for pass-through payment status will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. The commenter has not provided additional information showing substantial clinical improvement. Therefore, we determine that Architectsupreg Px does not meet the criterion for substantial clinical improvement.

    The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements: Architectsupreg Px would be reported with CPT codes 15271 through 15278, which cover the application of skin substitute grafts to different areas of the body for high-cost skin substitutes. To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criteria for at least one APC. CPT codes 15271 through 15278 are assigned to either APC 5054 (Level 4 Skin Procedures), with a CY 2016 payment rate of $1,411.21 and a device offset of $4.52, or APC 5055 (Level 5 Skin Procedures), with a CY 2016 payment rate of $2,137.49 and a device offset of $25.44. According to the applicant, the cost of the substitute graft procedures when performed with Architectsupreg Px is $5,495.

    Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $5,495 for Architectsupreg Px exceeds the applicable APC amount for the service related to the category of devices of $1,411.21 by 389 percent ($5,495/$1,411.21 x 100 percent = 389 percent). Therefore, it appears that Architectsupreg Px meets the first cost significance test.

    The second cost significance test, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $5,495 for Architectsupreg Px exceeds the device-related portion of the APC payment amount for the related service of $4.52 by 121,571 percent ($5,495/$4.52 x 100 percent = 121,571 percent). Therefore, we stated in the proposed rule that it appears that Architectsupreg Px meets the second cost significance test.

    Section 419.66(d)(3), the third cost significance test, requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $5,495 for Architectsupreg Px and the portion of the APC payment amount for the device of

    Page 59326

    $4.52 exceeds 10 percent at 389 percent (($5,495-$4.52)/$1,411.21) x 100 percent = 389 percent). Therefore, it appears that Architectsupreg Px meets the third cost significance test. Based on the costs submitted by the applicant and the calculations noted earlier, we believe that Architectsupreg Px meets the cost criterion at Sec. 419.66(c)(3) for new device categories.

    We invited public comments on whether Architectsupreg Px meets the device pass-through payment criteria discussed in this section.

    We did not receive any public comments relating to whether Architectsupreg Px meets the device pass-through payment cost criterion. As stated earlier, we believe that Architectsupreg Px meets the cost criterion at Sec. 419.66(c)(3) for new device categories. However after consideration of the public comments we received, we are not approving device pass-through payment status for Architectsupreg Px for CY 2018.

    (2) Dermavest and Plurivest Human Placental Connective Tissue Matrix (HPCTM)

    Aedicell, Inc. submitted an application for a new device category for transitional pass-through payment status for Dermavest and Plurivest human placental connective tissue matrix (HPCTM). Dermavest and Plurivest HPCTM use tissue sourced from the placental disk, amnion/

    chorion, and umbilical cord to replace or supplement damaged tissue. The applicant stated that Dermavest and Plurivest replace or supplement damaged or inadequate integumental tissue by providing a scaffold to entrap migrating cells for repopulation. The applicant stated that the products may be clinically indicated for the following conditions: Partial and full thickness wounds; pressure ulcers; venous ulcers; chronic vascular ulcers; diabetic ulcers; trauma wounds (abrasions, lacerations, second degree burns, and skin tears); drainage wounds; and surgical wounds (donor sites/grafts post mohs surgery, post laser surgery, and podiatric). Dermavest and Plurivest HPCTM are applied to the area of inadequate or damaged tissue, moistened if necessary and covered with a nonadherent secondary dressing. While the application does not distinguish between the Dermavest and Plurivest products, the AediCell Inc. Web site states that the two products differ by dosage. According to information on the Web site at www.aedicell.com, each product contains different tissue cell attachment proteins (CAP) and cytokine/growth factors (GF) profiles. There is a lower cytokine/GF concentration profile in Plurivest and a higher concentration of CAP and cytokine/GF in Dermavest.

    With respect to the newness criterion at Sec. 419.66(b)(1), the applicant indicated that the product conforms to the requirements for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) regulated solely under section 361 of the Public Health Service (PHS) Act and 21 CFR part 1271. For these products, FDA requires, among other things, that the manufacturer register and list its HCT/Ps with the Center for Biologics Evaluation and Research (CBER) within 5 days after beginning operations and update their registrations annually. AediCell, Inc. has an FDA field establishment identifier (FEI) under the HHS-FDA-

    Establishment Registration and Listing for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) and submitted with its application the annual registration/listing for Dermavest and Plurivest dated November 9, 2015. The applicant noted that the initial registration for the manufacture of Dermavest was submitted to the CBER on October 28, 2013, and the registration of Plurivest was submitted the following year on November 14, 2014. The registration forms including these dates were not included in the application. Therefore, it is unclear if the newness criterion is met.

    Comment: One commenter, the manufacturer, provided an FDA registration form for the product that indicated that there was change in information for the Dermavest product submitted on December 18, 2013. The manufacturer also submitted a document indicating that a registration form was submitted to FDA on October 20, 2014 to change the name of the product to Dermavest/Plurivest.

    Response: Based on the information submitted by the manufacturer, we are unable to determine that Dermavest and Plurivest meet the newness criterion at Sec. 419.66(b)(1).

    With respect to the eligibility criterion at Sec. 419.66(b)(3), according to the applicant, Dermavest and Plurivest are skin substitute products that are integral to the service provided, are used for one patient only, come in contact with human skin, and are applied in or on a wound or other skin lesion. The applicant also claimed Dermavest and Plurivest meet the device eligibility requirements of Sec. 419.66(b)(4) because they are not instruments, apparatuses, implements, or items for which depreciation and financing expenses are recovered, and they are not supplies or materials furnished incident to a service.

    The criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through payment category that describes Dermavest and Plurivest HPCTM. The applicant proposed a category descriptor for Dermavest and Plurivest of ``Human placental connective tissue matrix (HPCTM), comprised of tissue sourced from the placental disk, amnion/chorion, and umbilical cord for the intention of replacing or supplementing damaged or inadequate integumental issue.'' We invited public comments on this issue.

    Comment: One commenter, the manufacturer, supported CMS' statement that CMS had not identified an existing pass-through payment category that describes Dermavest and Plurivest HPTCM.

    Response: At this time, we still have not identified an existing pass-through payment category that describes Dermavest and Plurivest HPCTM.

    The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With respect to this criterion, the applicant provided several background studies showing general evidence that placental tissue, umbilical cord, and amnion membrane products are effective in the treatment of various wounds and ulcers. However, these studies were not specific to Dermavest and Plurivest HPCTM. The applicant submitted two poster presentations describing case studies that evaluated the wound healing time and wound characteristics of patients with diabetic and venous ulcers treated with Dermavest and Plurivest HPCTM. Both studies were described as case series and, as such, lacked blinding, randomization, and control groups. The first poster,\5\ presented in 2015,

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    described a prospective, multi-center case series with a small number of participants (n=15). The study evaluated wound healing time and wound characteristics of patients with various etiologies. The patients were treated with up to two 6 cm\2\ pieces of Dermavest per application on wounds up to 44 cm\2\. Results were presented for diabetic and venous ulcer cases and showed a week 4 percent area reduction (PAR) of 71 percent for diabetic ulcers and 50 percent for venous ulcers. Eighty percent of the diabetic ulcer cases and 50 percent of the venous ulcer cases had a week 4 PAR of greater than 40 percent.

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    \5\ Connell et al., Human placental connective tissue matrix in the treatment of chronic wounds: A prospective multi-center case series. 2015 at Society of Advanced Wound Healing (SAWC) Spring meeting.

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    The second poster,\6\ presented in 2016, also described a case series that evaluated wound healing time and wound characteristics of patients with various etiologies (n=8). The poster stated that the patients were treated with pieces of HPCTM according to manufacturer guidelines on wounds ranging in size up to 3.8 cm\2\. The methods presented in the poster do not specify whether the patients were treated with Dermavest or Plurivest, or both. The results presented in the poster compile Dermavest data from two case series presented at the Society for Advanced Wound Care (SAWC) annual meeting. It was unclear whether there was overlap between the patients used in the 2015 and 2016 case series included in the application. The compiled Dermavest data were compared to the 4-week PAR results for diabetic and venous ulcers from two other noncontemporaneous studies evaluating different skin replacement products. The results showed, at week 4, approximately 80 percent of the Dermavest-treated diabetic ulcer cases had a PAR of greater than 50 percent in comparison to approximately 60 percent of cases and approximately 30 percent of cases, respectively, in the comparison studies using other skin replacement products. The results also showed that, at week 4, approximately 60 percent of the Dermavest-

    treated venous ulcer cases had a PAR of greater than 40 percent in comparison to approximately 50 percent of cases and approximately 30 percent of cases in the comparison studies treated with other skin replacement products. There were multiple differences between the Dermavest studies included in the poster presentations and these two additional studies presented as comparators, including the number of patients included in the studies, the number of wounds treated, and the purpose of the study. Based on the results presented in the poster, the applicant concluded that HPCTM provides an effective alternative to other skin replacement products.

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    \6\ McGuire and Sebag, The use of a new placental acellular tissue product in the management of chronic wounds: A case series. 2016 at the Society of Advanced Wound Healing (SAWC) Spring meeting.

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    In the CY 2018 OPPS/ASC proposed rule, we stated that we were concerned that the research provided did not clinically demonstrate the active ingredients of the product(s) that might distinguish the product from others, the correct dosing of the product(s), the amount of durable wound closure with the product(s) compared to standard of care in studies with rigorous trial design/implementation, and the amount of durable wound closure with the product(s) compared to other products in studies with rigorous trial design/implementation. We stated in the proposed rule that, based on the evidence submitted with the application, we were not yet convinced that the Dermavest and Plurivest HPCTM provide a substantial clinical improvement over other treatments for wound care. We invited public comments on whether the Dermavest and Plurivest HPCTM meet this criterion.

    Comment: One commenter, the manufacturer, provided information regarding the active ingredients and concentrations of active ingredients of the product as compared to other skin substitutes. The comment also included personal statements from physicians who used the product and attested to its clinical benefit over the current standard of care. The physicians' statements also noted that a randomized controlled trial that compares the product to the standard of care and to other advanced human tissue products, as well as registry studies, would be helpful in proving the substantial clinical improvement provided by Dermavest/Plurivest HPTCM. The manufacturer also stated that it was endeavoring to enter into a registry study and two randomized controlled trials using other high tiered skin substitutes as comparators.

    Response: We appreciate the commenters' responses on the Dermavest and Plurivest HPCTM application. However, the commenters did not provide new empirical evidence that addressed our concerns that the studies included with the application were described as case series and, as such, lacked blinding, randomization, and control groups. At this time, we have not been able to determine that Dermavest and Plurivest HPCTM represents a substantial clinical improvement relative to existing therapies currently available for wound care.

    The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated that Dermavest and Plurivest HPCTM would be reported with CPT codes 15271, 15272, 15273, 15274, 15275, 15276, 15277, and 15278. CPT codes 15272, 15274, 15276, and 15278 are add-on codes assigned status indicator ``N'', which means payment is packaged under the OPPS. CPT codes 15271 and 15275 are assigned to APC 5054 (Level 4 Skin Procedures), and CPT codes 15273 and 15277 are assigned to APC 5055 (Level 5 Skin Procedures). To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criterion for at least one APC. For our calculations, we used APC 5054 (Level 4 Skin Procedures), which had a CY 2016 payment rate of $1,411 and a device offset amount of $4.52 at the time the application was received. According to the applicant, the cost of a sheet of 2x3 cm Dermavest is $550, and the cost of a sheet of 2x3 cm Plurivest is $500.

    Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $550 for Dermavest and Plurivest exceeds 39 percent of the applicable APC payment amount for the service related to the category of devices of $1,411 ($550/$1,411 x 100 = 39 percent). Therefore, we stated in the proposed rule that we believe Dermavest and Plurivest meet the first cost significance test.

    The second cost significance test, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The estimated average reasonable cost of $550 for Dermavest and Plurivest exceeds the cost of the device-related portion of the APC payment amount for the related service of $4.52 by 12,168 percent

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    ($550/$4.52) x 100 = 12,168 percent). Therefore, we stated in the proposed rule that we believe that Dermavest and Plurivest meet the second cost significance test.

    The third cost significance test, at Sec. 419.66(d)(3), requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the estimated average reasonable cost of $550 for Dermavest and Plurivest and the portion of the APC payment amount for the device of $4.52 exceeds the APC payment amount for the related service of $1,411 by 38.6 percent (($550-$4.52)/

    $1,411 x 100 = 38.6 percent). Therefore, we stated in the proposed rule that we believe that Dermavest and Plurivest meet the third cost significance test.

    We invited public comments on whether Dermavest and Plurivest meet the device pass-through payment cost criteria discussed in this section.

    We did not receive any public comments on this issue. We continue to believe that Dermavest and Plurivest meet the device pass-through payment cost criteria.

    After consideration of the public comments we received, we are not approving device pass-through payment status for the Dermavest and Plurivest HPCTM for CY 2018.

    (3) FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg

    Applied Biologics, LLC submitted an application for a new device category for transitional pass-through payment status for FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg. FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg is an injectable, human placental amniotic fluid. It is an allograft derived from human birth tissue recovered from a live, healthy C-section birth. The allograft is used to augment tissue to bone and tissue to tissue repairs. The allograft is implanted at the surgical site at the end of the procedure using a needle and syringe under direct visualization. The applicant claimed that the product helps drive healing towards native tissue regeneration and away from scar formation. FlomacrGraftsupreg has a standardized potency of 2 million cells. FlomacrGraft Neogenesissupreg has a standardized potency of 1.5 million cells. The applicant indicated that the product may be used with several surgical procedures, including joint replacement procedures, traumatic bone and soft tissue injury, meniscal repairs, meniscal transplantation, articular cartilage restoration, foot and ankle repairs, and chronic wounds.

    With respect to the newness criterion at Sec. 419.66(b)(1), the applicant indicated that FlomacrGraftsupreg and Flomacrgraft Neogenesissupreg conform to the requirements for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) regulated solely under section 361 of the PHS Act and 21 CFR part 1271. For these products, FDA requires, among other things, that the manufacturer register and list their HCT/Ps with the Center for Biologics Evaluation and Research (CBER) within 5 days after beginning operations and update their registrations annually. Applied Biologics, LLC has two FDA field establishment identifiers (FEI) under the HHS-FDA-Establishment Registration and Listing for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps). Both registration forms list the product as ``FlomacrGraftsupreg''. The applicant submitted an initial registration/listing for one FEI dated June 8, 2015, as well as an annual registration/listing for a different FEI dated December 1, 2014. The first date of U.S. sale for FlomacrGraftsupreg was May 23, 2013. It is not clear when the initial CBER filing occurred for the FlomacrGraftsupreg product. Therefore, it is unclear if the newness criterion for the FlomacrGraftsupreg product is met.

    Comment: One commenter, the manufacturer, supplied information indicating that the initial registration forms for FlomacrGraftsupreg and FlomacrGraft Neogenesissupreg were submitted on February 24, 2015 and were validated by FDA on June 8, 2015.

    Response: Based on the information submitted by the manufacturer, we believe that the product meets the newness criterion at Sec. 419.66(b)(1).

    With respect to the eligibility criterion at Sec. 419.66(b)(3), according to the applicant, FlomacrGraftsupreg and Flomacrgraft Neogenesissupreg are integral to the service provided, are used for one patient only, come in contact with human skin, and are applied in or on a wound or other skin lesion. The applicant also claimed FlomacrGraftsupreg and Flomacrgraft Neogenesis meet the device eligibility requirements of Sec. 419.66(b)(4) because they are not instruments, apparatuses, implements, or items for which depreciation and financing expenses are recovered, and they are not supplies or materials furnished incident to a service.

    The criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through payment device category that describes FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg. The application suggested a payment device category for FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg with a category descriptor of ``Injectable Amniotic Fluid Allograft''. We invited public comments on this issue.

    We did not receive any public comments on this issue, and at this time, we have not identified an existing pass-through category that describes FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg.

    The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With respect to the substantial clinical improvement criterion, the applicant submitted several peer-reviewed publications that provided general evidence that amniotic fluid and amniotic membrane-based products significantly reduce recovery time. However, these studies did not include the use of the FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg product. The applicant did list several studies in the application that involved the use of the FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg product. Of these studies, five unpublished studies were available for review. The five studies submitted with the application were described as case studies, case series, or retrospective cohort studies. The studies lacked random allocation, blinding, and a comparison group. The first study \7\ described a retrospective cohort study of 30 patients. The studies showed that 93 percent of the patients (n=14) who received a FlomacrGraftsupreg injection, coupled with conservative, nonsurgical treatment plan to treat their Morton's Nerve entrapment condition, had their issue resolved compared to 20 percent of patients (n=3) who did not receive FlomacrGraftsupreg injection, coupled with conservative, nonsurgical treatment plan to treat their Morton's Nerve entrapment condition. A greater percentage of patients who did not receive a FlomacrGraftsupreg injection with their conservative treatment required surgery (80 percent versus 7 percent). Patients who required surgery had a 95-percent

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    success rate when surgery was coupled with a FlomacrGraftsupreg injection.

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    \7\ Bregman, Peter. (2014). Addressing Morton's Nerve Entrapment Surgically and Non-surgically with FloGraft.

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    The next study \8\ was a retrospective analysis that involved 27 patients who were treated for stalled wounds. The patients had a broad spectrum of etiologies. Over a 12-month period, the applicant indicated that 96 percent of wounds that had stalled demonstrated rapid acceleration towards closure within a 21-day period when treated with FlomacrGraftsupreg. The article recommended a randomized controlled trial (RCT) to confirm the results. The applicant also submitted two case studies,9 10 each involving one patient, which described the use of FlomacrGraftsupreg to treat distal fibula fracture and tarsal tunnel compression neuropathy. Lastly, the application included a study \11\ which presented the results from a case study of one patient as well as a retrospective cohort of 34 patients who received a Brostroumlm-Evans procedure with the FlomacrGraftsupreg product. In general, the studies submitted lacked a clear description of the outcome variable and study population, and did not include statistical analysis.

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    \8\ Gottleib, et al. FloGraft Rapidly Moves Stalled Wounds Into the Proliferative Phase.

    \9\ Jacoby, Richard. Case Study 221: Non-surgical Resolution of Distal Fibula Fracture with Flograft Implant; 82 YO Male.

    \10\ Jacoby, Richard. Tarsal Tunnel Compression Neuropathy Case Study Using Flograft.

    \11\ Maling, Scott. A Case Series: A retrospective analysis of 34 patients receiving modified Bronstom-Evans procedure with Flograft reduce time to full mobility by 52%.

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    Based on the evidence submitted, we stated in the proposed rule that we believe there is insufficient data to determine whether FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg offers a substantial clinical improvement over other treatments for wound care. We invited public comments on whether the FlomacrGraftsupreg/

    Flomacrgraft Neogenesissupreg meets the substantial clinical improvement criterion.

    Comment: Several commenters described the clinical benefits that they have observed using the FlomacrGraftsupreg product in the treatment of wounds, bone, and soft tissue repairs. Other commenters described their current, ongoing studies involving the impact of FlomacrGraftsupreg on rotator cuff healing after repair. One study described a randomized single blind study (n=20). One commenter was enthusiastic about the potential impact the product could have on improving healing for patients with rotator cuff injuries, while another commenter presented a more neutral position and stated that he could not confirm that the use of the product would impact the healing, but hoped that the study would guide the use of the product in the future. Other commenters submitted case studies of wound care patients treated with FlomacrGraftsupreg. One commenter submitted several studies related to amniotic fluid and amniotic membrane-based products; however, none of these studies were specific to the FlomacrGraftsupreg product.

    Response: We appreciate the commenters' responses on the FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg product. However, the commenters did not provide new empirical evidence that addressed our concerns regarding the evidence of substantial clinical improvement that was submitted with the application. These concerns included the lack of a clear description of the outcome variable and study population and the lack of statistical analysis. The comments also did not address our concerns that the studies submitted with the application were case studies, case series, or retrospective cohort studies that lacked random allocation, blinding, and a comparison group. The commenters also discussed studies that did not include the use of FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg and studies that were still in progress. At this time, we have not been able to determine that FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg represents a substantial clinical improvement relative to existing therapies currently available for wound care.

    The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. The applicant stated several CPT codes would be used to report FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg, including CPT codes 29826, 29827, 29828, 23473, 23420, 23412, 27605, 27650, 29891, 29888, 29889, 28008, 22551, 22856, 27179, 29861, and 29862. To meet the cost criterion for device pass-

    through payment, a device must pass all three tests of the cost criterion for at least one APC. These CPT codes are assigned to APCs 5121 through 5125 (Level 1 through Level 5 Musculoskeletal Procedures). For our calculations, we used APC 5121 (Level 1 Musculoskeletal Procedures), which had a CY 2016 payment rate of $1,455 and a device offset of $15.86 at the time the application was received. According to the applicant, the FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg product is available in a variety of vial sizes, the largest size being 18 cc with a cost of $19,925.

    Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. We used the highest priced product for this determination. The estimated average reasonable cost of $19,925 for FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg exceeds the applicable APC payment amount for the service related to the category of devices of $1,455 by 1,369 percent ($19,925/$1,455 x 100 = 1,369 percent). Therefore, we stated in the proposed rule that we believe FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg meets the first cost significance test.

    The second cost significance test, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The average reasonable cost of $19,925 for FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg exceeds the device-related portion of the APC payment amount of $15,86 by 125,360 percent ($19,925/$15.86) x 100 = 125,630 percent). Therefore, in the proposed rule, we stated that we believe that FlomacrGraftsupreg/

    Flomacrgraft Neogenesissupreg meets the second cost significance test.

    The third cost significance test, at Sec. 419.66(d)(3), requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the average reasonable cost of $19,925 for FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg and the portion of the APC payment amount for the device of $15.86 exceeds the APC payment amount for the related service of $1,455 by 1,368 percent (($19,925-$15.86)/$1,455 x 100 = 1,368 percent). Therefore, in the proposed rule, we stated that we believe FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg meets the third cost significance test.

    We invited public comments on whether FlomacrGraftsupreg/

    Flomacrgraft Neogenesissupreg meets the device pass-through payment cost criteria discussed in this section.

    We did not receive any public comments on this issue. We continue to believe that FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg meets the device pass-through payment cost criteria.

    Page 59330

    After consideration of the public comments we received, we are not approving device pass-through payment status for the FlomacrGraftsupreg/Flomacrgraft Neogenesissupreg product for CY 2018.

    (4) KerecisTM Omega3 Wound (Skin Substitute)

    Kerecis, LLC submitted an application for a new device category for transitional pass-through payment status for KerecisTM Omega3 Wound. KerecisTM Omega3 Wound is made from acellular fish skin from wild Atlantic cod (Gadus morhua) caught in the North Atlantic Ocean that is used to regenerate damaged human tissue in chronic wounds. The applicant claimed that there is no disease transmission risk and noted that the fish skin is not required to undergo the viral inactivation process that the FDA dictates for tissues from farm animals. The applicant noted that the Omega3 fatty acids offer multiple health benefits, including anti-inflammation. KerecisTM Omega3 Wound is supplied as a sterile, single-use sheet in peel-open pouches. KerecisTM Omega3 Wound does not elicit an immune response because the major antigenic components present within cell membranes are removed in a gentle manner during processing. Unlike mammalian and human sourced products, the fish skin possesses extremely low risk of disease transmission and offers no known cultural or religious constraints for usage. The fish skin product is both halal and kosher compatible and avoids potential conflicts with Sikhism and Hinduism (Vaishnavism).

    With respect to the newness criterion at Sec. 419.66(b)(1), the applicant received FDA clearance for KerecisTM Omega3 Wound through the premarket notification section 510(k) process on October 23, 2013 and its June 1, 2016 application was within 3 years of FDA clearance.

    With respect to the eligibility criterion at Sec. 419.66(b)(3), according to the applicant, KerecisTM Omega3 Wound is a skin substitute product that is integral to the service provided, is used for one patient only, comes in contact with human skin, and is surgically inserted into the patient. The applicant also claimed KerecisTM Omega3 Wound meets the device eligibility requirements of Sec. 419.66(b)(4) because it is not an instrument, apparatus, implement, or item for which depreciation and financing expenses are recovered, and it is not a supply or material.

    The criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through payment category that describes KerecisTM Omega3 Wound. The applicant proposed a pass-

    through payment device category for KerecisTM Omega3 Wound with category descriptor of ``Piscine skin substitute.'' We invited public comments on this issue.

    We did not receive any public comments on this issue. As we stated earlier, we have not identified an existing pass-through category that describes KerecisTM Omega3 Wound. Therefore, for the reasons discussed earlier, we believe KerecisTM Omega3 Wound meets the eligibility criterion.

    The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With regard to the substantial clinical improvement criterion, the applicant stated that individuals who would normally refuse to use skin substitute products from animal sources, including pigs, cows, horses, and sheep, would use KerecisTM Omega3 Wound because it is a fish-based skin substitute. The applicant also asserted that KerecisTM Omega3 Wound provides several beneficial outcomes, including faster resolution of the disease process compared to similar products, decreased antibiotic use, decreased pain, and reduced amounts of device-related complications.

    The applicant cited three studies in support of the application. The first study \12\ was a parallel-group, double-blinded, randomized controlled trial undertaken to determine if healing time of whole thickness biopsy wounds treated with KerecisTM Omega3 Wound is noninferior to that of wounds treated with porcine SIS ECM (Oasis). The study was an intention-to-treat study. Participants had two 4-mm full thickness punch wounds made on the proximal anterolateral aspect of their nondominant arm. The study population was comprised of volunteers aged between 18 and 67 years with most volunteers between the ages of 18 and 30. There were 80 volunteers who received KerecisTM Omega3 Wound and 82 volunteers who received porcine SIS ECM (Oasis).

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    \12\ Tumi Baldursson, T, MD, Ph.D. et al. Healing Rate and Autoimmune Safety of Full-Thickness Wounds Treated With Fish Skin Acellular Dermal Matrix Versus Porcine Small-Intestine Submucosa: A Noninferiority Study; The International Journal of Lower Extremity Wounds 2015, Vol. 14(1) 37-43.

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    The results showed that, at 21 days, 58 (72.5 percent) of the fish skin ADM group were healed, compared with 46 (56 percent) of the porcine SIS ECM group. At 25 days, 62 (77.5 percent) of the fish skin ADM and 53 (65 percent) of the porcine SIS ECM group had healed. At the completion of the trial (28 days), 76 of the 80 wounds treated with fish skin ADM (95 percent) and 79 of the 82 wounds treated with porcine SIS ECM (96.3 percent) were healed. The odds ratio of a fish skin ADM-

    treated wound being healed as compared with that treated with porcine SIS ECM at any given time point was estimated to be 4.75. The difference between the treatments was statistically significant (P = 0.041). The immunological part of the study was designed to detect autoimmune reactions in those individuals treated with KerecisTM Omega3 Wound. There was no evidence of antibodies forming in the presence of KerecisTM Omega3 Wound.

    There were issues with this study that may limit its usefulness to determine substantial clinical improvement including the use of nonpatient volunteers; studying the healing of biopsy sites rather than actual wounds requiring treatment; and the use of a 1-month endpoint of care instead of a longer period, such as a 6-month endpoint of care.

    The second study \13\ was a case series study of 18 patients to assess the percentage of wound closure area from baseline after 5 weekly fish-skin graft applications with at least one ``hard-to-heal'' criterion. Patients underwent application of the fish skin for 5 sequential weeks, followed by 3 weeks of standard care. Wound area, skin assessments, and pain were analyzed weekly.

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    \13\ Yang, CK et al. A Prospective, Postmarket, Compassionate Clinical Evaluation of a Novel Acellular Fish-skin Graft Which Contains Omega-3 Fatty Acids for the Closure of Hard-to-heal Lower Extremity Chronic Ulcers. Wounds 2016;28(4): 112-118.

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    The study results showed a 40-percent decrease in wound surface area (P TM Omega3 Wound compared to other skin substitute products.

    The third study \14\ was a case series study of five patients with diabetes mellitus and complicated wounds in the lower limbs with exposed bone segments. The five patients had a total of seven wounds. Initial debridement occurred in the operating room, followed by application of wound matrix and covered with silicone mesh. All seven wounds healed and the patients did not have to have planned amputations on the limbs with the wounds. The mean duration of treatment to achieve full closure of the wound was 25 10 weeks and ranged from 13 to 41 weeks. This study did not have a comparator group to determine if there was substantial clinical improvement with KerecisTM Omega3 Wound compared to other skin substitute products.

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    \14\ Trinh, TT, et al. Marine Omega3 wound matrix for: the treatment of complicated wounds; Phlebologie 2016; 45: 93-98.

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    There are no clinical data provided by the applicant to suggest that KerecisTM Omega3 Wound provides a substantial clinical improvement over other similar skin substitute products. We invited public comments on whether KerecisTM Omega3 Wound meets the substantial clinical improvement criterion.

    Comment: One commenter, the manufacturer, stated that KerecisTM Omega3 Wound significantly improves acute wound healing, nearly eliminates risk from side effects and adverse events, and provides a skin substitute option for beneficiaries who have allergic reactions or personal objections to mammalian or human sourced skin substitutes. The commenter referred to a study, believed to be the first study reviewed in the proposed rule,\15\ and stated that it was the largest study performed in skin substitute research and that the study showed substantial clinical improvement from KerecisTM Omega3 Wound. The commenter believed it had submitted more comparative data than skin substitute products that had previously received pass-

    through payment approval.

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    \15\ Tumi Baldursson, T, MD, Ph.D. et al. Healing Rate and Autoimmune Safety of Full-Thickness Wounds Treated With Fish Skin Acellular Dermal Matrix Versus Porcine Small-Intestine Submucosa: A Noninferiority Study; The International Journal of Lower Extremity Wounds 2015, Vol. 14(1) 37-43.

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    Lastly, the commenter believed that a skin substitute product that eliminates religious objections to its use, because KerecisTM Omega3 Wound is fish sourced and not a mammalian or human sourced skin substitute, provides a significant benefit to beneficiaries with those objections, as they now have access to skin substitute products when previously skin substitute products may not be available to them.

    Response: The commenter did not provide information to demonstrate that KerecisTM Omega3 Wound represents a substantial clinical improvement relative to other wound care products currently available on the market. The commenter did not provide additional studies to support its claims of improvement with acute wound healing and low risk of side effects and adverse events. The commenter also did not address the concerns of the first study reviewed for this criterion, including the use of nonpatient volunteers; studying the healing of biopsy sites rather than actual wounds requiring treatment; and the use of an unrealistic 1-month endpoint of care instead of a 6-

    month endpoint of care. Instead, the manufacturer simply stated the study ``epitomizes'' substantial clinical improvement.

    The commenter stated that other skin substitute products that had presented less evidence of substantial clinical improvement had previously been approved for pass-through payment status. However, we believe that the commenter may have been referring to skin substitutes approved for transitional pass-through payments before these products were subject to the transitional pass-through payment approval for medical devices. Since CY 2015, skin substitutes have been evaluated using the medical device pass-through payment process (79 FR 66885 through 66888), which includes the criterion for substantial clinical improvement. Applicants must demonstrate that the device under consideration for pass-through status will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. The commenter did not provided additional information showing substantial clinical improvement.

    Finally, the commenter stated that KerecisTM Omega3 Wound should meet the substantial clinical improvement criterion because it provides a skin substitute option for beneficiaries with allergies or personal objections to mammalian or human sourced products. However, the commenter did not provide any studies nor cite any data to show that this population would receive a substantial clinical improvement through the use of KerecisTM Omega3 Wound, as compared to the wound care treatments available to this group of beneficiaries. Therefore, we determine that KerecisTM Omega3 Wound does not meet the criterion for substantial clinical improvement.

    The third criterion for establishing a device category, at Sec. 419.66(c)(3), requires us to determine that the cost of the device is not insignificant, as described in Sec. 419.66(d). Section 419.66(d) includes three cost significance criteria that must each be met. The applicant provided the following information in support of the cost significance requirements. With respect to the cost criterion, the applicant stated that KerecisTM Omega3 Wound would be reported with CPT codes 15271 through 15278, which cover the application of skin substitute grafts to different areas of the body for high-cost skin substitutes. To meet the cost criterion for device pass-through payment, a device must pass all three tests of the cost criterion for at least one APC. CPT codes 15271 through 15278 are assigned to either APC 5054 (Level 4 Skin Procedures), with a CY 2016 payment rate of $1,411.21 and a device offset amount of $4.52, or APC 5055 (Level 5 Skin Procedures), with a CY 2016 payment rate of $2,137.49 and a device offset amount of $25.44. According to the applicant, the cost of substitute graft procedures when performed with KerecisTM Omega3 Wound is $2,030.

    Section 419.66(d)(1), the first cost significance requirement, provides that the estimated average reasonable cost of devices in the category must exceed 25 percent of the applicable APC payment amount for the service related to the category of devices. The estimated average reasonable cost of $2,030 for KerecisTM Omega3 Wound exceeds the applicable APC payment amount for the service related to the category of devices of $1,411.21 by 144 percent ($2,030/$1,411.21 x 100 percent = 144 percent). Therefore, we stated in the proposed rule that it appears that KerecisTM Omega3 Wound meets the first cost significance test.

    The second cost significance test, at Sec. 419.66(d)(2), provides that the estimated average reasonable cost of the devices in the category must exceed the cost of the device-related portion of the APC payment amount for the related service by at least 25 percent, which means that the device cost needs to be at least 125 percent of the offset amount (the device-related portion of the APC found on the offset list). The average reasonable cost of $2,030 for KerecisTM

    Page 59332

    Omega3 Wound exceeds the device-related portion of the APC payment amount of $4.52 by 44,911 percent ($2,030/$4.52 x 100 percent = 44,911 percent). Therefore, it appears that KerecisTM Omega3 Wound meets the second cost significance test.

    The third cost significance test, at Sec. 419.66(d)(3), requires that the difference between the estimated average reasonable cost of the devices in the category and the portion of the APC payment amount for the device must exceed 10 percent of the APC payment amount for the related service. The difference between the average reasonable cost of $2,030 for KerecisTM Omega3 Wound and the portion of the APC payment amount for the device of $4.52 exceeds the APC payment amount for the related service of $1,411 by 144 percent (($2,030-$4.52)/

    $1,411.21) x 100 percent = 144 percent). Therefore, we stated in the proposed rule that it appears that KerecisTM Omega3 Wound meets the third cost significance test. Based on the costs submitted by the applicant and the calculations noted earlier, it appears that KerecisTM Omega3 Wound meets the cost criterion.

    We invited public comments on whether KerecisTM Omega3 Wound meets the device pass-through payment criteria discussed in this section.

    We did not receive any public comments for this section. We confirm that KerecisTM Omega3 Wound meets the cost criteria for new device categories.

    After consideration of the public comments we received, we are not approving device pass-through payment status for KerecisTM Omega3 Wound for CY 2018.

    (5) X-WRAPsupreg

    Applied Biologics, LLC submitted an application for a new device category for transitional pass-through payment status for X-

    WRAPsupreg. X-WRAPsupreg is a chorion-free, amnion membrane allograft that can be used as a biological wrap or patch at any surgical site. It is used as a treatment for surgical or traumatic injury to bone or soft tissue. It is used to minimize adhesions, reduce inflammation, and promote soft tissue healing. The X-WRAPsupreg is made from the intermediate amniotic epithelial layer of the placenta, recovered from a Cesarean delivery of pre-screened donors. It is available in a variety of sizes and is used as a biologic augmentation to a variety of orthopedic repairs.

    With respect to the newness criterion at Sec. 419.66(b)(1), the applicant indicated that X-WRAPsupreg conforms to the requirements for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/

    Ps) regulated solely under section 361 of the PHS Act and 21 CFR part 1271. For these products, FDA requires, among other things, that the manufacturers register and list their HCT/Ps with the Center for Biologics Evaluation and Research (CBER) within 5 days after beginning operations and update their registrations annually. Applied Biologics, LLC has a FDA field establishment identifier (FEI) under the HHS-FDA-

    Establishment Registration and Listing for Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps). The applicant submitted an annual registration/listing dated December 30, 2015. It is not clear when the initial CBER filing occurred for the X-WRAPsupreg product, and therefore, it is unclear if the newness criterion for X-

    WRAPsupreg is met.

    Comment: One commenter, the manufacturer, supplied information indicating that the initial registration form for X-WRAPsupreg was submitted on February 24, 2015 and validated by FDA on June 8, 2015.

    Response: Based on the information submitted by the manufacturer, we believe that the product meets the newness criterion at Sec. 419.66(b)(1).

    With respect to the eligibility criterion at Sec. 419.66(b)(3), according to the applicant, X-WRAPsupreg is integral to the service provided, is used for one patient only, comes in contact with human skin, and is applied in or on a wound or other skin lesion. The applicant also claimed X-WRAPsupreg meets the device eligibility requirements of Sec. 419.66(b)(4) because it is not an instrument, apparatus, implement or item for which depreciation and financing expenses are recovered, and it is not a supply or material furnished incident to a service.

    The criteria for establishing new device categories are specified at Sec. 419.66(c). The first criterion, at Sec. 419.66(c)(1), provides that CMS determines that a device to be included in the category is not appropriately described by any of the existing categories or by any category previously in effect, and was not being paid for as an outpatient service as of December 31, 1996. We have not identified an existing pass-through payment device category that describes X-WRAPsupreg. The applicant proposed a pass-through device category for X-WRAPsupreg with a category descriptor of ``Amniotic Membrane Soft Tissue Allografts''. We invited public comments on this issue.

    We did not receive any public comments on this issue, and at this time, we have not identified an existing pass-through category that describes X-WRAPsupreg.

    The second criterion for establishing a device category, at Sec. 419.66(c)(2), provides that CMS determines that a device to be included in the category has demonstrated that it will substantially improve the diagnosis or treatment of an illness or injury or improve the functioning of a malformed body part compared to the benefits of a device or devices in a previously established category or other available treatment. With regard to the substantial clinical improvement criterion, the applicant submitted a list of studies in the application that showed general effectiveness of amniotic fluid and amniotic membrane-based products. However, these studies were not specific to the X-WRAPsupreg product. The applicant also submitted one study \16\ that was a retrospective review with prospective follow-

    up of patients (n=8) with recurrent surgical primary cubital tunnel syndrome (CuTS) who had undergone at least two previous ulnar nerve surgeries before having an ulnar neurolysis with X-WRAPsupreg dry amniotic membrane barrier. The results showed that the participants experienced significant improvement in VAS pain scores, QuickDASH outcome scores, and grip strength in comparison to these scores prior to the surgery. Mean VAS improved by 3.5, from 7.3 to 3.8 (P email protected. Additional information can be submitted prior to issuance of an OPPS/ASC proposed rule or as a public comment in response to an issued OPPS/ASC proposed rule. Device offset percentages will be set in each year's final rule.

    We did not propose any changes to this policy for CY 2018.

    Comment: Several commenters suggested that CMS use alternate device offset percentage thresholds for assigning device-intensive status. One of those commenters suggested that the device-intensive designation be given for any specified procedure with a HCPCS code level device offset percentage of greater than 30 percent. Another commenter suggested that CMS apply the device-intensive designation to any procedure for which the individual HCPCS code level device offset is greater than 40 percent of the procedure's unadjusted ASC payment rate. In addition, one commenter requested that CMS provide clarification on the criteria for device-intensive procedures, specifically with respect to temporarily inserted devices.

    Response: We thank the commenters for their suggestions. However, we continue to believe that our current methodology to assign device-

    intensive status to all procedures that require the implantation of a device and have an individual HCPCS code-level device offset of greater than 40 percent is appropriate. With respect to the request for clarification about the criteria for device-intensive procedures pertaining to temporarily inserted devices, we would like to clarify that device-intensive procedures require the implantation of a device and additionally are subject to the following criteria: (1) All procedures must involve implantable devices that would be reported if device insertion procedures were performed; (2) the required devices must be surgically inserted or implanted devices that remain in the patient's body after the conclusion of the procedure (at least temporarily); and (3) the device offset amount must be significant, which is defined as exceeding 40 percent of the procedure's mean cost.

    Comment: One commenter supported the proposed designation of CPT code 28740 (Arthrodesis, midtarsal or tarsometatarsal, single joint) as a device-intensive procedure. A few commenters requested that the following HCPCS codes be assigned device-intensive status: HCPCS codes 55874 (placeholder code 55X87) (Transperineal placement of biodegradable material, peri-prostatic, single or multiple injection(s), including image guidance, when performed); 0275T (Percutaneous laminotomy/laminectomy (interlaminar approach) for decompression of neural elements, (with or without ligamentous resection, discectomy, facetectomy and/or foraminotomy), any method, under indirect image guidance (e.g., fluoroscopic, ct), single or multiple levels, unilateral or bilateral; lumbar); and 28297 (Correction, hallux valgus (bunionectomy), with sesamoidectomy, when performed; with first metatarsal and medial cuneiform joint arthrodesis, any method).

    Response: We thank the commenter for its support for our proposed designation of CPT code 28740. With respect to the commenters' request that we assign the device-intensive designation to HCPCS codes 55874, 0275T, and 28297, we note that the device offset percentage for all three of these procedures (as identified by the above mentioned HCPCS codes or predecessor codes) is not above the 40 percent threshold, and therefore, these procedures are not eligible to be assigned device-

    intensive status.

    Comment: Several commenters suggested that CMS develop a mechanism that prevents significant payment reductions for device-intensive procedures due to wage index adjustments.

    Response: In response to the commenters' suggestion that CMS develop a mechanism that prevents significant payment reductions for device-intensive procedures due to wage index adjustments, we note that we did not include such a proposal in the CY 2018 proposed rule. However, we will take this comment into consideration for future rulemaking.

    3. Device Edit Policy

    In the CY 2015 OPPS/ASC final rule with comment period (79 FR 66795), we

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    finalized a policy and implemented claims processing edits that require any of the device codes used in the previous device-to-procedure edits to be present on the claim whenever a procedure code assigned to any of the APCs listed in Table 5 of the CY 2015 OPPS/ASC final rule with comment period (the CY 2015 device-dependent APCs) is reported on the claim. In addition, in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70422), we modified our previously existing policy and applied the device coding requirements exclusively to procedures that require the implantation of a device that are assigned to a device-

    intensive APC. In the CY 2016 OPPS/ASC final rule with comment period, we also finalized our policy that the claims processing edits are such that any device code, when reported on a claim with a procedure assigned to a device-intensive APC (listed in Table 42 of the CY 2016 OPPS/ASC final rule with comment period (80 FR 70422)) will satisfy the edit.

    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79658 through 79659), we changed our policy for CY 2017 and subsequent years to apply the CY 2016 device coding requirements to the newly defined (individual HCPCS code-level device offset greater than 40 percent) device-intensive procedures. For CY 2017 and subsequent years, we also specified that any device code, when reported on a claim with a device-

    intensive procedure, will satisfy the edit. In addition, we created HCPCS code C1889 to recognize devices furnished during a device-

    intensive procedure that are not described by a specific Level II HCPCS Category C-code. Reporting HCPCS code C1889 with a device-intensive procedure will satisfy the edit requiring a device code to be reported on a claim with a device-intensive procedure.

    We did not propose any changes to this policy for CY 2018.

    Comment: One commenter requested that CMS restore the device-to-

    procedure and procedure-to-device edits. Another commenter requested that CMS adopt an additional policy for device-intensive procedures that have a device offset percentage above 75 percent, that would implement device-to-procedure and procedure-to-device edits for all such procedures (having a device offset percentage above 75 percent) and would only utilize claims that passed those edits for establishing the geometric mean cost and the HCPCS-level device offset for those procedures. Also, as part of this commenter's suggested new policy, the commenter requested that CMS only allow clinically similar, device-

    intensive procedures with a device offset above 75 percent to be grouped into an APC together and that all other procedures be excluded (both nondevice-intensive procedures and device-intensive procedures that have a device offset percentage below 75 percent).

    Response: As we stated in the CY 2015 OPPS/ASC final rule with comment period (79 FR 66794), we continue to believe that the elimination of device-to-procedure edits and procedure-to-device edits is appropriate due to the experience hospitals now have in coding and reporting these claims fully. More specifically, for the more costly devices, we believe the C-APCs will reliably reflect the cost of the device if charges for the device are included anywhere on the claim. We remind commenters that, under our current policy, hospitals are still expected to adhere to the guidelines of correct coding and append the correct device code to the claim when applicable. We also remind commenters that, as with all other items and services recognized under the OPPS, we expect hospitals to code and report their costs appropriately, regardless of whether there are claims processing edits in place. In addition, we remind commenters that, under our current policy, the APC assignment of a device-intensive procedure has no bearing on the procedure's device-intensive designation. With respect to the commenter's request for an additional policy specifically for device-intensive procedures that have a device offset percentage above 75 percent, for the reasons stated above in this comment response, we do not believe that such a policy is needed.

    4. Adjustment to OPPS Payment for No Cost/Full Credit and Partial Credit Devices

  106. Background

    To ensure equitable OPPS payment when a hospital receives a device without cost or with full credit, in CY 2007, we implemented a policy to reduce the payment for specified device-dependent APCs by the estimated portion of the APC payment attributable to device costs (that is, the device offset) when the hospital receives a specified device at no cost or with full credit (71 FR 68071 through 68077). Hospitals were instructed to report no cost/full credit device cases on the claim using the ``FB'' modifier on the line with the procedure code in which the no cost/full credit device is used. In cases in which the device is furnished without cost or with full credit, hospitals were instructed to report a token device charge of less than $1.01. In cases in which the device being inserted is an upgrade (either of the same type of device or to a different type of device) with a full credit for the device being replaced, hospitals were instructed to report as the device charge the difference between the hospital's usual charge for the device being implanted and the hospital's usual charge for the device for which it received full credit. In CY 2008, we expanded this payment adjustment policy to include cases in which hospitals receive partial credit of 50 percent or more of the cost of a specified device. Hospitals were instructed to append the ``FC'' modifier to the procedure code that reports the service provided to furnish the device when they receive a partial credit of 50 percent or more of the cost of the new device. We refer readers to the CY 2008 OPPS/ASC final rule with comment period for more background information on the ``FB'' and ``FC'' modifiers payment adjustment policies (72 FR 66743 through 66749).

    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 75005 through 75007), beginning in CY 2014, we modified our policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit. For CY 2013 and prior years, our policy had been to reduce OPPS payment by 100 percent of the device offset amount when a hospital furnishes a specified device without cost or with a full credit and by 50 percent of the device offset amount when the hospital receives partial credit in the amount of 50 percent or more of the cost for the specified device. For CY 2014, we reduced OPPS payment, for the applicable APCs, by the full or partial credit a hospital receives for a replaced device. Specifically, under this modified policy, hospitals are required to report on the claim the amount of the credit in the amount portion for value code ``FD'' (Credit Received from the Manufacturer for a Replaced Medical Device) when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device. For CY 2014, we also limited the OPPS payment deduction for the applicable APCs to the total amount of the device offset when the ``FD'' value code appears on a claim. For CY 2015, we continued our existing policy of reducing OPPS payment for specified APCs when a hospital furnishes a specified device without cost or with a full or partial credit and to use the three

    Page 59336

    criteria established in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68072 through 68077) for determining the APCs to which our CY 2015 policy will apply (79 FR 66872 through 66873). In the CY 2016 OPPS/ASC final rule with comment period (80 FR 70424), we finalized our policy to no longer specify a list of devices to which the OPPS payment adjustment for no cost/full credit and partial credit devices would apply and instead apply this APC payment adjustment to all replaced devices furnished in conjunction with a procedure assigned to a device-intensive APC when the hospital receives a credit for a replaced specified device that is 50 percent or greater than the cost of the device.

  107. Policy for No Cost/Full Credit and Partial Credit Devices

    In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79659 through 79660), for CY 2017 and subsequent years, we finalized our policy to reduce OPPS payment for device-intensive procedures, by the full or partial credit a provider receives for a replaced device, when a hospital furnishes a specified device without cost or with a full or partial credit. Under our current policy, hospitals continue to be required to report on the claim the amount of the credit in the amount portion for value code ``FD'' when the hospital receives a credit for a replaced device that is 50 percent or greater than the cost of the device.

    In addition, for CY 2017 and subsequent years, we finalized our policy to use the following three criteria for determining the procedures to which our final policy applies: (1) All procedures must involve implantable devices that would be reported if device insertion procedures were performed; (2) the required devices must be surgically inserted or implanted devices that remain in the patient's body after the conclusion of the procedure (at least temporarily); and (3) the procedure must be device intensive; that is, the device offset amount must be significant, which is defined as exceeding 40 percent of the procedure's mean cost.

    We did not propose any changes to this policy for CY 2018 and did not receive any public comments on this policy.

    5. Payment Policy for Low-Volume Device-Intensive Procedures

    For CY 2016, we used our equitable adjustment authority under section 1833(t)(2)(E) of the Act and used the median cost (instead of the geometric mean cost per our standard methodology) to calculate the payment rate for the implantable miniature telescope procedure described by CPT code 0308T (Insertion of ocular telescope prosthesis including removal of crystalline lens or intraocular lens prosthesis), which is the only code assigned to APC 5494 (Level 4 Intraocular Procedures) (80 FR 70388). We note that, as stated in the CY 2017 OPPS/

    ASC proposed rule (81 FR 45656), we proposed to reassign the procedure described by CPT code 0308T to APC 5495 (Level 5 Intraocular Procedures) for CY 2017, but it would be the only procedure code assigned to APC 5495. The payment rates for a procedure described by CPT code 0308T (including the predecessor HCPCS code C9732) were $15,551 in CY 2014, $23,084 in CY 2015, and $17,551 in CY 2016. The procedure described by CPT code 0308T is a high-cost device-intensive surgical procedure that has a very low volume of claims (in part because most of the procedures described by CPT code 0308T are performed in ASCs), and we believe that the median cost is a more appropriate measure of the central tendency for purposes of calculating the cost and the payment rate for this procedure because the median cost is impacted to a lesser degree than the geometric mean cost by more extreme observations. We stated that, in future rulemaking, we would consider proposing a general policy for the payment rate calculation for very low-volume device-intensive APCs (80 FR 70389).

    For CY 2017, we proposed and finalized a payment policy for low-

    volume device-intensive procedures that is similar to the policy applied to the procedure described by CPT code 0308T in CY 2016. In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79660 through 79661), we established our current policy that the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC be calculated using the median cost instead of the geometric mean cost, for the reasons described above for the policy applied to the procedure described by CPT code 0308T in CY 2016. The CY 2017 final rule geometric mean cost for the procedure described by CPT code 0308T (based on 19 claims containing the device HCPCS C-code in accordance with the device-intensive edit policy) was approximately $21,302, and the median cost was approximately $19,521. The final CY 2017 payment rate (calculated using the median cost) is approximately $18,984.

    For CY 2018, in the CY 2018 OPPS/ASC proposed rule (82 FR 33620), we proposed to continue with our current policy of establishing the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC based on calculations using the median cost instead of the geometric mean cost. For CY 2018, this policy would continue to apply only to a procedure described by CPT code 0308T in APC 5495 because this APC is the only clinical APC containing a device-intensive procedure with fewer than 100 total claims in the APC. As we have stated before (81 FR 79660), we believe that this approach will help to mitigate significant year-to-year payment rate fluctuations while preserving accurate claims data-based payment rates for low-volume device-intensive procedures. The CY 2018 proposed rule median cost for the procedure described by CPT code 0308T was approximately $17,643.75. The proposed CY 2018 payment rate (calculated using the median cost and the claims that reported the device consistent with our device edit policy for device intensive procedures) was approximately $16,963.69.

    Comment: Some commenters supported CMS' proposal to base payment on the median cost instead of the geometric mean cost for any device-

    intensive procedure that is assigned to an APC with fewer than 100 total claims. Other commenters requested that CMS limit the impact of geometric mean cost reductions on payment rates for low-volume procedures by a certain percentage to ensure payment stability for low-

    volume procedures.

    Response: We thank commenters for their support. With respect to the commenters' request to limit the impact of the geometric mean cost reductions on payment rates for low volume procedures by a certain percentage, we disagree with commenters that such a percentage-based limitation is necessary. We continue to believe our current policy--

    establishing the payment rate for any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC based on calculations using the median cost instead of the geometric mean cost--will help to mitigate significant year-to-year payment rate fluctuations while preserving accurate claims data-based payment rates for low-volume device-intensive procedures.

    After consideration of the public comments we received, we are finalizing our proposal, without modification, that the payment rate for

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    any device-intensive procedure that is assigned to a clinical APC with fewer than 100 total claims for all procedures in the APC be calculated using the median cost instead of the geometric mean cost. The CY 2018 final rule median cost for the procedure described by CPT code 0308T is $17,550.18. The final CY 2018 payment rate (calculated using updated median cost and the claims that reported the device consistent with our device edit policy for device-intensive procedures) is $17,560.07.

    1. OPPS Payment Changes for Drugs, Biologicals, and Radiopharmaceuticals

    1. OPPS Transitional Pass-Through Payment for Additional Costs of Drugs, Biologicals, and Radiopharmaceuticals

      1. Background

      Section 1833(t)(6) of the Act provides for temporary additional payments or ``transitional pass-through payments'' for certain drugs and biologicals. Throughout this final rule with comment period, the term ``biological'' is used because this is the term that appears in section 1861(t) of the Act. A ``biological'' as used in this final rule with comment period includes (but is not necessarily limited to) a ``biological product'' or a ``biologic'' as defined in the Public Health Service Act. As enacted by the Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act of 1999 (BBRA) (Pub. L. 106-113), this pass-through payment provision requires the Secretary to make additional payments to hospitals for: Current orphan drugs, as designated under section 526 of the Federal Food, Drug, and Cosmetic Act; current drugs and biologicals and brachytherapy sources used in cancer therapy; and current radiopharmaceutical drugs and biologicals. ``Current'' refers to those types of drugs or biologicals mentioned above that are hospital outpatient services under Medicare Part B for which transitional pass-through payment was made on the first date the hospital OPPS was implemented.

      Transitional pass-through payments also are provided for certain ``new'' drugs and biologicals that were not being paid for as an HOPD service as of December 31, 1996 and whose cost is ``not insignificant'' in relation to the OPPS payments for the procedures or services associated with the new drug or biological. For pass-through payment purposes, radiopharmaceuticals are included as ``drugs.'' As required by statute, transitional pass-through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the product as a hospital outpatient service under Medicare Part B. CY 2018 pass-through drugs and biologicals and their designated APCs are assigned status indicator ``G'' in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site).

      Section 1833(t)(6)(D)(i) of the Act specifies that the pass-through payment amount, in the case of a drug or biological, is the amount by which the amount determined under section 1842(o) of the Act for the drug or biological exceeds the portion of the otherwise applicable Medicare OPD fee schedule that the Secretary determines is associated with the drug or biological. The methodology for determining the pass-

      through payment amount is set forth in regulations at 42 CFR 419.64. These regulations specify that the pass-through payment equals the amount determined under section 1842(o) of the Act minus the portion of the APC payment that CMS determines is associated with the drug or biological.

      Section 1847A of the Act establishes the average sales price (ASP) methodology, which is used for payment for drugs and biologicals described in section 1842(o)(1)(C) of the Act furnished on or after January 1, 2005. The ASP methodology, as applied under the OPPS, uses several sources of data as a basis for payment, including the ASP, the wholesale acquisition cost (WAC), and the average wholesale price (AWP). In this final rule with comment period, the term ``ASP methodology'' and ``ASP-based'' are inclusive of all data sources and methodologies described therein. Additional information on the ASP methodology can be found on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.

      The pass-through application and review process for drugs and biologicals is described on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/passthrough_payment.html.

      2. 3-Year Transitional Pass-Through Payment Period for All Pass-Through Drugs, Biologicals, and Radiopharmaceuticals and Quarterly Expiration of Pass-Through Status

      As required by statute, transitional pass-through payments for a drug or biological described in section 1833(t)(6)(C)(i)(II) of the Act can be made for a period of at least 2 years, but not more than 3 years, after the payment was first made for the product as a hospital outpatient service under Medicare Part B. Our current policy is to accept pass-through applications on a quarterly basis and to begin pass-through payments for newly approved pass-through drugs and biologicals on a quarterly basis through the next available OPPS quarterly update after the approval of a product's pass-through status. However, prior to CY 2017, we expired pass-through status for drugs and biologicals on an annual basis through notice-and-comment rulemaking (74 FR 60480). In the CY 2017 OPPS/ASC final rule with comment period (81 FR 79662), we finalized a policy change, beginning with pass-

      through drugs and biologicals newly approved in CY 2017 and subsequent calendar years, to allow for a quarterly expiration of pass-through payment status for drugs and biologicals to afford a pass-through payment period that is as close to a full 3 years as possible for all pass-through drugs, biologicals, and radiopharmaceuticals.

      This change eliminated the variability of the pass-through payment eligibility period, which previously varied based on when a particular application was initially received. We adopted this change for pass-

      through approvals beginning on or after CY 2017, to allow, on a prospective basis, for the maximum pass-through payment period for each pass-through drug without exceeding the statutory limit of 3 years.

      3. Drugs and Biologicals With Expiring Pass-Through Payment Status in CY 2017

      In the CY 2018 OPPS/ASC proposed rule (82 FR 33621), we proposed that the pass-through payment status of 19 drugs and biologicals would expire on December 31, 2017, as listed in Table 21 of the proposed rule (82 FR 33622). All of these drugs and biologicals will have received OPPS pass-through payment for at least 2 years and no more than 3 years by December 31, 2017. These drugs and biologicals were approved for pass-through payment status on or before January 1, 2016. In accordance with the policy finalized last year and described above, pass-through payment status for drugs and biologicals newly approved in CY 2017 and subsequent years will expire on a quarterly basis, with a pass-through payment period as close to 3 years as possible. With the exception of those groups of drugs and biologicals that are always packaged when they do not have pass-through payment status (specifically, anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as

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      supplies when used in a diagnostic test or procedure (including diagnostic radiopharmaceuticals, contrast agents, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure), our standard methodology for providing payment for drugs and biologicals with expiring pass-through payment status in an upcoming calendar year is to determine the product's estimated per day cost and compare it with the OPPS drug packaging threshold for that calendar year (which is $120 for CY 2018), as discussed further in section V.B.2. of this final rule with comment period. In the CY 2018 OPPS/ASC proposed rule (82 FR 33622), we proposed that if the estimated per day cost for the drug or biological is less than or equal to the applicable OPPS drug packaging threshold, we would package payment for the drug or biological into the payment for the associated procedure in the upcoming calendar year. If the estimated per day cost of the drug or biological is greater than the OPPS drug packaging threshold, we proposed to provide separate payment at the applicable relative ASP-

      based payment amount (which was proposed at ASP+6 percent for CY 2018, and is finalized at ASP+6 percent for CY 2018, as discussed further in section V.B.3. of this final rule with comment period).

      Comment: Several commenters responded to the proposed expiration of pass-through status for HCPCS code A9586 (Florbetapir f18) on December 31, 2017. (We note that the brand name for the radiopharmaceutical described by HCPCS code A9586 is Amyvidsupreg. Amyvid is a FDA-

      approved radioactive diagnostic agent for Positron Emission Tomography (PET) imaging of the brain to estimate beta-amyloid neuritic plaque density in adult patients with cognitive impairment who are being evaluated for Alzheimer's Disease and other causes of cognitive decline. Amyvid was approved for drug pass-through payment status effective January 1, 2015.)

      One commenter, the manufacturer of Amyvid, urged CMS to extend pass-through payment status for another year on the basis that CMS could not have paid a legitimately billed claim for Amyvid in CY 2015, given the manufacturer's assertion regarding CED trial sites' dates of approval and start dates for patient enrollment. In addition, while the commenter acknowledged that the period of drug and biological pass-

      through payment status starts on the first date on which payment is made for the drug or biological as an outpatient hospital service (42 CFR 419.64(c)(2)), the commenter believed that an erroneous payment by Medicare should not have triggered the start of pass-through payment for Amyvid in 2015. In addition, the commenter asserted that expiration of pass-through payment status for Amyvid prior to completion of the CED trial will adversely affect the trial results. The commenter requested that, if CMS finalized expiration of pass-through payment status as proposed, CMS create a new APC for PET procedures with Amyvid to avoid violating the 2 times rule--which provides that items and services within an APC group cannot be considered comparable with respect to the use of resources if the highest median cost (or mean cost, if elected by the Secretary) for an item or service in the APC group is more than 2 times greater than the lowest median cost (or mean cost, if elected by the Secretary) for an item or service within the same APC group. The commenter stated that the median cost of Amyvid is approximately $2,756, over two times the median cost of the PET scan procedure.

      One commenter, a manufacturer of another radiopharmaceutical, recommended that CMS allow for those products whose pass-through payment status will expire after a period of at least 2 years and no more than 3 years to expire as proposed, as a matter of applying policy consistently.

      Several commenters recommended that CMS allow products covered by Medicare in the context of coverage with evidence development (CED) clinical trial to retain their pass-through status for the duration of the CED trial.

      Response: CMS issued a Medicare National Coverage Determination (NCD) on September 27, 2013, which allows conditional coverage of amyloid PET under CED. Currently, there are three Medicare-approved amyloid PET CED trials. The first CED trial was approved on April 2, 2014. The second CED trial was approved on March 3, 2015. The third CED trial was approved January 5, 2016. Information on these clinical trials is available on the CMS amyloid PET Web page available via the Internet at: https://www.cms.gov/Medicare/Coverage/Coverage-with-Evidence-Development/Amyloid-PET.html. The effective date of Medicare billing for CED trial sites is the CMS approval date. CMS has provided billing instructions for providers and practitioner that specify proper coding for clinical trial claims. For example, providers and practitioner must report certain diagnosis codes, procedure codes, modifiers, and a national clinical trial number. Therefore, providers enrolled in one of these trials could have begun appropriate billing Medicare for the amyloid PET procedures and associated Amyloid PET tracers beginning April 2, 2014.

      Based on our claims analysis, we found that HCPCS code A9586 was billed by hospital providers 14 times in CY 2015, with 1 claim being paid. Based on our review of provider enrollment in the CED trials, it appears that this paid Medicare claim from CY 2015 was submitted from a CED clinical trial participant and not paid in error as the commenter suggests. According to section 1833(t)(6)(C)(i)(II) of the Act and the regulations at 42 CFR 419.66(g), the pass-through payment eligibility period begins on the first date on which pass-through payment is made. Because there is a paid claim from CY 2015, the pass-through payment period for HCPCS code A9586 began in CY 2015. Therefore, based on the CY 2015 paid claim for HCPCS code A9586 as a hospital outpatient service, which triggered the start of the pass-through payment period, we are expiring pass-through payment status on December 31, 2017. From the start of the pass-through payment period through December 31, 2017, Medicare will have provided an OPPS pass-through payment for at least 2 years and no more than 3 years by December 31, 2017. Extending pass-

      through payment status into CY 2018 would cause pass-through payments for HCPCS code A9586 to extend into a fourth year, thereby exceeding the pass-through payment period authorized by section 1833(t)(6)(C)(i)(II) of the Act.

      In addition, regarding the commenters' concern that expiration of pass-through payment status for Amyvid, and subsequent packaging of it as a ``policy-packaged'' drug, will skew trial results (presumably because providers will not receive an ASP-based payment), we disagree, given that analysis of CY 2016 claims data across different sites of care shows that the vast majority of billings for HCPCS code A9586 is concentrated in the physician office and the independent diagnostic testing facility (IDTF) setting. Further, we note that hospitals are not precluded from billing for HCPCS code A9586 in the context of a CED trial once its pass-through payment status expires. We also note that the payment for HCPCS A9586 would be reflected in the payment rate for the associated procedure.

      With respect to the request that we create a new APC for PET procedures with Amyvid, we do not believe it is appropriate, prudent, or practicable to create unique APCs for specific drugs or biologicals or other individual items

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      that are furnished with a particular procedure or procedures. We disagree with the commenter's assertion that packaging of Amyvid with the associated PET procedure described by CPT code 78814 (Pet image w/

      ct lmtd) creates a 2 times rule violation in APC 5594 (Level 4 Nuclear Medicine) (we refer readers to section III.B. of this final rule with comment period for discussion of 2 times rule) and believe that the commenter may have misunderstood the application of the 2 times rule. Specifically, we note that, in determining the APCs with a 2 times rule violation, we do not consider the cost of an individual packaged item that may be furnished with a procedure or service, but rather the geometric mean cost of the service (which includes aggregate cost of packaged items that may be furnished with a procedure). Moreover, we disagree with the commenter's statement that the median cost of Amyvid is approximately $2,756. While it is correct that the CY 2017 pass-

      through payment for Amyvid is $2,756, the pass-through payment rate of ASP+6 percent is not indicative of the cost incurred by hospitals to acquire, store, handle, and dispense Amyvid. Our analysis of the updated CY 2016 claims data used for CY 2018 ratesetting for this CY 2018 OPPS/ASC final rule with comment period shows that the median cost of Amyvid is $1,275.75, which when combined with the aggregate cost of packaged items that may be furnished with CPT code 78814, would not create a 2 times rule violation.

      With respect to the commenters' request that we allow drug or biological pass-through payment status for products covered by CED for the duration of the CED trial, we reiterate that the statute limits the period of pass-through payment eligibility to at least 2 years, but no more than 3 years, after the product's first payment as a hospital outpatient service under Medicare Part B. As such, we are unable to extend pass-through payment status beyond 3 years.

      Finally, with respect to the commenter's support of our proposal to finalize the expiration of pass-through payment status as proposed for consistent policy application, we agree with the commenter.

      In summary, we are finalizing our proposal to expire pass-through payment status for HCPCS code A9586 on December 31, 2017. Because pass-

      through payment was effective in CY 2015, HCPCS code A9586 will have had pass-through payment status for at least 2 years but no more than 3 years in accordance with section 1833(t)(6) of the Act.

      Comment: Several commenters requested that CMS not package payment for Omidriasupreg (described by HCPCS code C9447) upon expiration of pass-through payment status on December 31, 2017, and continue to pay separately for the drug at ASP+6 percent. One commenter, the manufacturer of Omidria, reiterated many previous arguments (81 FR 79667) for why CMS should dispense with classifying Omidria as drug that functions as a surgical supply when used in a surgical procedure. Specially, the commenter made the following arguments:

      The language used to construct the ``packaging as a surgical supply'' policy is overly broad and not consistent with Congressional intent that requires clinically comparable APC groups. CMS has not defined surgery or provided a rationale for applying different packaging policies to surgery than would be applied to other drugs with therapeutic indications;

      Mischaracterization of drugs used in surgery as ``supplies'', given regulatory requirements that apply to drugs. The FDA-approved label indicates its specific use in intraocular procedures;

      Packaging Omidria and other drugs as surgical supplies creates barriers to access, especially in ASC settings, low-volume HOPDs, and hospitals with low percentage of insured patients (presumably because providers may choose lower cost alternatives because separate payment would no longer be made);

      Packaging Omidria and other drugs as surgical supplies may affect quality of care improvements and patient outcomes; and

      Packaging drugs as ``surgical supplies'' interferes with physician discretion and is inconsistent with the principles that guide packaging under the OPPS.

      A few commenters requested that CMS consider a narrow exception to the ``drug as a supply'' packaging policy to enable separate payment for Omidria.

      Response: We have addressed many of these comments in prior rulemaking. We refer readers to the CY 2017 OPPS/ASC final rule with comment period for a detailed discussion on why we believe Omidria is a drug that functions as a surgical supply (81 FR 79668). We did not propose any policy changes to the criteria applied to a drug that functions as a surgical supply when used in a surgical procedure in the CY 2018 OPPS/ASC proposed rule, nor do we believe the commenters provided any new information that would cause us to change our position that Omidria is a drug that functions as a surgical supply. Therefore, we are not addressing these comments in this final rule with comment period. However, in the proposed rule, we did solicit comments on packaging policies generally, including drugs that function as a surgical supply, and will take responses to the comment solicitation, along with these commenters' recommendations and suggestions, into consideration in future rulemaking.

      Comment: Commenters urged CMS to apply quarterly expiration of drug pass-through payment to drugs and biologicals first added to the pass-

      through payment list in CYs 2015 and 2016 that would otherwise transition off pass-through payment in less than 3 years. Commenters suggested CMS could apply the quarterly expiration of pass-through payment policy to devices approved for pass-through payment status in CY 2015 or 2016 because it would not cause harm to providers or beneficiaries. As stated earlier in this section, one commenter suggested that CMS allow for those products whose pass-through payment status will expire after a period of at least 2 years and no more than 3 years to expire as proposed, as a matter of applying policy consistently.

      Response: As finalized in the CY 2017 OPPS/ASC final rule with comment period (81 FR 79662), the quarterly expiration of pass-through payment policy applies to drugs and biologicals newly approved for pass-through payment in CY 2017. We note that, even prior to the policy change adopted in CY 2017 rulemaking, the Agency's prior policy practice of making drug pass-through payments for a minimum of 2 years, but not more than 3 years, was consistent with statutory authority. Further, once a drug's pass-through payment status period expires, its costs are packaged into the associated procedure(s) with which it is billed, and accordingly, reversing past expirations of pass-through payment would potentially cause payment rates established for a prior year for certain services to be incorrect.

      We agree with the commenter who stated that we should expire the drug-pass-through payment status for drugs and biologicals as proposed, to allow for consistent application of our policy.

      After consideration of the public comments we received, we are finalizing our proposal, without modification, to expire the pass-

      through payment status of the 19 drugs and biologicals listed in Table 69 below on December 31, 2017.

      Page 59340

      Table 69--Drugs and Biologicals for Which Pass-Through Payment Status Expires December 31, 2017

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

      Final CY 2018 Pass-through

      CY 2018 HCPCS code CY 2018 long descriptor status Final CY 2018 payment

      indicator APC effective date

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

      A9586........................... Florbetapir f18, diagnostic, N N/A 01/01/2015

      per study dose, up to 10

      millicuries.

      C9447........................... Injection, phenylephrine and N N/A 01/01/2015

      ketorolac, 4 ml vial.

      J0596........................... Injection, c-1 esterase K 9445 04/01/2015

      inhibitor (human), Ruconest,

      10 units.

      J0695........................... Injection, ceftolozane 50 mg K 9452 04/01/2015

      and tazobactam 25 mg.

      J0875........................... Injection, dalbavancin, 5 mg. K 1823 01/01/2015

      J1833........................... Injection, isavuconazonium K 9456 10/01/2015

      sulfate, 1 mg.

      J2407........................... Injection, oritavancin, 10 mg K 1660 01/01/2015

      J2502........................... Injection, pasireotide long K 9454 07/01/2015

      acting, 1 mg.

      J2547........................... Injection, peramivir, 1 mg... K 9451 04/01/2015

      J2860........................... Injection, siltuximab, 10 mg. K 9455 07/01/2015

      J3090........................... Injection, tedizolid K 1662 01/01/2015

      phosphate, 1 mg.

      J7313........................... Injection, fluocinolone K 9450 04/01/2015

      acetonide intravitreal

      implant, 0.01 mg.

      J8655........................... Netupitant (300 mg) and K 9448 04/01/2015

      palonosetron (0.5 mg).

      J9032........................... Injection, belinostat, 10 mg. K 1658 01/01/2015

      J9039........................... Injection, blinatumomab, 1 K 9449 04/01/2015

      mcg.

      J9271........................... Injection, pembrolizumab, 1 K 1490 01/01/2015

      mg.

      J9299........................... Injection, nivolumab, 1 mg... K 9453 07/01/2015

      Q4172........................... PuraPly, and PuraPly N N/A 01/01/2015

      Antimicrobial, any type, per

      square centimeter.

      Q9950........................... Injection, sulfur N N/A 10/01/2015

      hexafluoride lipid

      microsphere, per ml.

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

      The final packaged or separately payable status of each of these drugs or biologicals is listed in Addendum B to this final rule with comment period (which is available via the Internet on the CMS Web site).

      4. Drugs, Biologicals, and Radiopharmaceuticals With New or Continuing Pass-Through Payment Status in CY 2018

      In the CY 2018 OPPS/ASC proposed rule (82 FR 33622), we proposed to continue pass-through payment status in CY 2018 for 38 drugs and biologicals. None of these drugs and biologicals will have received OPPS pass-through payment for at least 2 years and no more than 3 years by December 31, 2017. These drugs and biologicals, which were approved for pass-through payment status between January 1, 2016, and July 1, 2017, were listed in Table 22 of the proposed rule (82 FR 33623). The APCs and HCPCS codes for these drugs and biologicals approved for pass-

      through payment status through July 1, 2017 were assigned status indicator ``G'' in Addenda A and B to the proposed rule (which are available via the Internet on the CMS Web site).

      Section 1833(t)(6)(D)(i) of the Act sets the amount of pass-through payment for pass-through drugs and biologicals (the pass-through payment amount) as the difference between the amount authorized under section 1842(o) of the Act and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is associated with the drug or biological. For CY 2018, we proposed to continue to pay for pass-through drugs and biologicals at ASP+6 percent, equivalent to the payment rate these drugs and biologicals would receive in the physician's office setting in CY 2018. We proposed that a $0 pass-

      through payment amount would be paid for pass-through drugs and biologicals under the CY 2018 OPPS because the difference between the amount authorized under section 1842(o) of the Act, which was proposed at ASP+6 percent, and the portion of the otherwise applicable OPD fee schedule that the Secretary determines is appropriate, which was proposed at ASP+6 percent, is $0.

      In the case of policy-packaged drugs (which include the following: Anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including contrast agents, diagnostic radiopharmaceuticals, and stress agents); and drugs and biologicals that function as supplies when used in a surgical procedure), we proposed that their pass-through payment amount would be equal to ASP+6 percent for CY 2018 because, if not for their pass-through payment status, payment for these products would be packaged into the associated procedure.

      In addition, we proposed to continue to update pass-through payment rates on a quarterly basis on the CMS Web site during CY 2018 if later quarter ASP submissions (or more recent WAC or AWP information, as applicable) indicate that adjustments to the payment rates for these pass-through drugs or biologicals are necessary. For a full description of this policy, we refer readers to the CY 2006 OPPS/ASC final rule with comment period (70 FR 68632 through 68635).

      For CY 2018, consistent with our CY 2017 policy for diagnostic and therapeutic radiopharmaceuticals, we proposed to provide payment for both diagnostic and therapeutic radiopharmaceuticals that are granted pass-through payment status based on the ASP methodology. As stated earlier, for purposes of pass-through payment, we consider radiopharmaceuticals to be drugs under the OPPS. Therefore, if a diagnostic or therapeutic radiopharmaceutical receives pass-through payment status during CY 2018, we proposed to follow the standard ASP methodology to determine the pass-through payment rate that drugs receive under section 1842(o) of the Act, which was proposed at ASP+6 percent. If ASP data are not available for a radiopharmaceutical, we proposed to provide pass-through payment at WAC+6 percent, the equivalent payment provided to pass-through payment drugs and biologicals without ASP information. If WAC information also is not available, we proposed to provide payment for the pass-through radiopharmaceutical at 95 percent of its most recent AWP.

      Comment: Commenters supported CMS' proposal to provide payment at ASP+6 percent for drugs, biologicals, contrast agents, and radiopharmaceuticals that are granted pass-through payment status.

      Response: We appreciate the commenters' support.

      After consideration of the public comments we received, we are finalizing our proposal to provide

      Page 59341

      payment for drugs, biologicals, diagnostic and therapeutic radiopharmaceuticals, and contrast agents that are granted pass-through payment status based on the ASP methodology. If a diagnostic or therapeutic radiopharmaceutical receives pass-through payment status during CY 2018, we will follow the standard ASP methodology to determine the pass-through payment rate that drugs receive under section 1842(o) of the Act, which is ASP+6 percent. If ASP data are not available for a radiopharmaceutical, we will provide pass-through payment at WAC+6 percent, the equivalent payment provided to pass-

      through payment drugs and biologicals without ASP information. If WAC information also is not available, we will provide payment for the pass-through payment radiopharmaceutical at 95 percent of its most recent AWP.

      The 50 drugs and biologicals that continue to have pass-through payment status for CY 2018 or have been granted pass-through payment status as of January 2018 are shown in Table 70 below.

      Table 70--Drugs and Biologicals With Pass-Through Payment Status in CY 2018

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

      Pass-through

      CY 2017 HCPCS code CY 2018 HCPCS code CY 2018 long CY 2018 status CY 2018 APC payment

      descriptor indicator effective date

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

      A9515.............. A9515.............. Choline C 11, G 9461 04/01/2016

      diagnostic, per

      study dose.

      A9587.............. A9587.............. Gallium ga-68, G 9056 01/01/2017

      dotatate,

      diagnostic, 0.1

      millicurie.

      A9588.............. A9588.............. Fluciclovine f-18, G 9052 01/01/2017

      diagnostic, 1

      millicurie.

      C9140.............. J7210.............. Injection, Factor G 9043 01/01/2017

      VIII (antihemophilic

      factor, recombinant)

      (Afstyla), 1 I.U.

      C9460.............. C9460.............. Injection, cangrelor, G 9460 01/01/2016

      1 mg.

      C9482.............. C9482.............. Injection, sotalol G 9482 10/01/2016

      hydrochloride, 1 mg.

      C9483.............. J9022.............. Injection, G 9483 10/01/2016

      atezolizumab, 10 mg.

      C9484.............. J1428.............. Injection, G 9484 04/01/2017

      eteplirsen, 10 mg.

      C9485.............. J9285.............. Injection, G 9485 04/01/2017

      olaratumab, 10 mg.

      C9486.............. J1627.............. Injection, G 9486 04/01/2017

      granisetron extended

      release, 0.1 mg.

      C9488.............. C9488.............. Injection, conivaptan G 9488 04/01/2017

      hydrochloride, 1 mg.

      C9489.............. J2326.............. Injection, G 9489 07/01/2017

      nusinersen, 0.1 mg.

      C9490.............. J0565.............. Injection, G 9490 07/01/2017

      bezlotoxumab, 10 mg.

      C9491.............. J9023.............. Injection, avelumab, G 9491 10/01/2017

      10 mg.

      C9492.............. C9492.............. Injection, G 9492 10/01/2017

      durvalumab, 10 mg.

      C9493.............. C9493.............. Injection, edaravone, G 9493 10/01/2017

      1 mg.

      C9494.............. J2350.............. Injection, G 9494 10/01/2017

      ocrelizumab, 1 mg.

      J0570.............. J0570.............. Buprenorphine G 9058 01/01/2017

      implant, 74.2 mg.

      J1942.............. J1942.............. Injection, G 9470 04/01/2016

      aripiprazole

      lauroxil, 1 mg.

      J2182.............. J2182.............. Injection, G 9473 04/01/2016

      mepolizumab, 1 mg.

      J2786.............. J2786.............. Injection, G 9481 10/01/2016

      reslizumab, 1 mg.

      J2840.............. J2840.............. Injection, sebelipase G 9478 07/01/2016

      alfa, 1 mg.

      J7179.............. J7179.............. Injection, von G 9059 01/01/2017

      willebrand factor

      (recombinant),

      (Vonvendi), 1 i.u.

      vwf:rco.

      J7202.............. J7202.............. Injection, Factor IX, G 9171 10/01/2016

      albumin fusion

      protein

      (recombinant),

      Idelvion, 1 i.u.

      J7207.............. J7207.............. Injection, Factor G 1844 04/01/2016

      VIII (antihemophilic

      factor, recombinant)

      PEGylated, 1 I.U.

      J7209.............. J7209.............. Injection, Factor G 1846 04/01/2016

      VIII (antihemophilic

      factor, recombinant)

      (Nuwiq), per i.u.

      J7322.............. J7322.............. Hyaluronan or G 9471 04/01/2016

      derivative, Hymovis,

      for intra-articular

      injection, 1 mg.

      J7328.............. J7328.............. Hyaluronan or G 1862 04/01/2017

      derivative, Gelsyn-

      3, for intra-

      articular injection,

      0.1 mg.

      J7342.............. J7342.............. Instillation, G 9479 07/01/2016

      ciprofloxacin otic

      suspension, 6 mg.

      J7503.............. J7503.............. Tacrolimus, extended G 1845 04/01/2016

      release, (envarsus

      xr), oral, 0.25 mg.

      J9034.............. J9034.............. Injection, G 1861 01/01/2017

      bendamustine hcl

      (Bendeka), 1 mg.

      J9145.............. J9145.............. Injection, G 9476 07/01/2016

      daratumumab, 10 mg.

      J9176.............. J9176.............. Injection, G 9477 07/01/2016

      elotuzumab, 1 mg.

      J9205.............. J9205.............. Injection, irinotecan G 9474 04/01/2016

      liposome, 1 mg.

      J9295.............. J9295.............. Injection, G 9475 04/01/2016

      necitumumab, 1 mg.

      J9325.............. J9325.............. Injection, talimogene G 9472 04/01/2016

      laherparepvec, 1

      million plaque

      forming units (PFU).

      J9352.............. J9352.............. Injection, G 9480 07/01/2016

      trabectedin, 0.1 mg.

      N/A................ J9203.............. Injection, gemtuzumab G 9495 01/01/2018

      ozogamicin, 0.1 mg.

      Q5101.............. Q5101.............. Injection, Filgrastim G 1822 01/01/2016

      (G-CSF), Biosimilar,

      1 microgram.

      Q5102.............. Q5102.............. Injection, G 1847 04/01/2017

      Infliximab,

      Biosimilar, 10 mg.

      Q9982.............. Q9982.............. Flutemetamol F18, G 9459 01/01/2016

      diagnostic, per

      study dose, up to 5

      millicuries.

      Q9983.............. Q9983.............. Florbetaben F18, G 9458 01/01/2016

      diagnostic, per

      study dose, up to

      8.1 millicuries.

      Q9989.............. J3358.............. Ustekinumab, for G 9487 04/01/2017

      Intravenous

      Injection, 1 mg.

      N/A................ C9014.............. Injection, G 9014 01/01/2018

      cerliponase alfa, 1

      mg.

      N/A................ C9015.............. Injection, c-1 G 9015 01/01/2018

      esterase inhibitor

      (human), Haegarda,

      10 units.

      Page 59342

      N/A................ C9016.............. Injection, G 9016 01/01/2018

      triptorelin extended

      release, 3.75 mg.

      N/A................ C9024.............. Injection, liposomal, G 9302 01/01/2018

      1 mg daunorubicin

      and 2.27 mg

      cytarabine.

      N/A................ C9028.............. Injection, inotuzumab G 9028 01/01/2018

      ozogamicin, 0.1 mg.

      N/A................ C9029.............. Injection, G 9029 01/01/2018

      guselkumab, 1 mg.

      N/A................ J7345.............. Aminolevulinic acid G 9301 01/01/2018

      hcl for topical

      administration, 10%

      gel, 10 mg.

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

      5. Provisions for Reducing Transitional Pass-Through Payments for Policy-Packaged Drugs, Biologicals, and Radiopharmaceuticals To Offset Costs Packaged Into APC Groups

      Under the regulations at 42 CFR 419.2(b), nonpass-through drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure are packaged in the OPPS. This category includes diagnostic radiopharmaceuticals, contrast agents, stress agents, and other diagnostic drugs. Also under 42 CFR 419.2(b), nonpass-through drugs and biologicals that function as supplies in a surgical procedure are packaged in the OPPS. This category includes skin substitutes and other surgical-supply drugs and biologicals. As described earlier, section 1833(t)(6)(D)(i) of the Act specifies that the transitional pass-through payment amount for pass-through drugs and biologicals is the difference between the amount paid under section 1842(o) of the Act and the otherwise applicable OPD fee schedule amount. Because a payment offset is necessary in order to provide an appropriate transitional pass-through payment, we deduct from the pass-

      through payment for policy packaged drugs, biologicals, and radiopharmaceuticals an amount reflecting the portion of the APC payment associated with predecessor products in order to ensure no duplicate payment is made. This amount reflecting the portion of the APC payment associated with predecessor products is called the payment offset.

      The payment offset policy applies to all policy packaged drugs, biologicals, and radiopharmaceuticals. For a full description of the payment offset policy as applied to diagnostic radiopharmaceuticals, contrast agents, stress agents, and skin substitutes, we refer readers to the discussion in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70430 through 70432). In the CY 2018 OPPS/ASC proposed rule (82 FR 33624), for CY 2018, as we did in CY 2017, we proposed to continue to apply the same policy packaged offset policy to payment for pass-through diagnostic radiopharmaceuticals, pass-through contrast agents, pass-through stress agents, and pass-through skin substitutes. The proposed APCs to which a payment offset may be applicable for pass-

      through diagnostic radiopharmaceuticals, pass-through contrast agents, pass-through stress agents, and pass-through skin substitutes were identified in Table 23 of the proposed rule.

      Comment: A few commenters requested that CMS separate the costs of diagnostic radiopharmaceuticals and stress agents from the ``packaged drug cost'' in the APC offset file published with the yearly proposed and final rules.

      Response: We thank the commenter for this recommendation. However, we do not believe that the suggested change is necessary at this time. The offset amount is the portion of each APC payment rate that could reasonably be attributed to the cost of a predecessor contrast agent, diagnostic radiopharmaceutical, or stress agent when considering a new contrast agent, diagnostic radiopharmaceutical, or stress agent for pass-through payment and has no bearing on APC assignment. The exact data used to calculate all of the proposed and final payment rates, including the associated offset amounts, for this CY 2018 OPPS final rule with comment are available for purchase under a CMS data use agreement through the CMS Web site available via the Internet at: https://www.cms.gov/Research-Statistics-Data-and-Systems/Files-for-Order/IdentifiableDataFiles/index.html.

      After consideration of the public comments we received, we are finalizing our proposal, without modification, for CY 2018, to continue to apply the same policy-packaged offset policy to payment for pass-

      through diagnostic radiopharmaceuticals, pass-through contrast agents, pass-through stress agents, and pass-through skin substitutes as we did in CY 2017.

      Table 71--APCS to Which a Policy-Packaged Drug or Radiopharmaceutical

      Offset Are Applicable in CY 2018

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

      CY 2018 APC CY 2018 APC title

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

      Diagnostic Radiopharmaceutical

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

      5591.............................. Level 1 Nuclear Medicine and Related

      Services.

      5592.............................. Level 2 Nuclear Medicine and Related

      Services.

      5593.............................. Level 3 Nuclear Medicine and Related

      Services.

      5594.............................. Level 4 Nuclear Medicine and Related

      Services.

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

      Contrast Agent

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

      5571.............................. Level 1 Imaging with Contrast.

      5572.............................. Level 2 Imaging with Contrast.

      5573.............................. Level 3 Imaging with Contrast.

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

      Stress Agent

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

      5722.............................. Level 2 Diagnostic Tests and Related

      Services.

      5593.............................. Level 3 Nuclear Medicine and Related

      Services.

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

      Skin Substitute

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

      5054.............................. Level 4 Skin Procedures.

      5055.............................. Level 5 Skin Procedures.

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

      We also are finalizing our proposal to continue to post annually on the CMS Web site at: https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Annual-Policy-Files.html a file that contains the APC offset amounts that will be used for that year for purposes of both evaluating cost significance for candidate pass-

      through payment device categories and drugs and biologicals and establishing any appropriate APC offset amounts. Specifically, the file will continue to provide the amounts and percentages of APC payment associated with packaged implantable devices, policy-packaged drugs, and threshold

      Page 59343

      packaged drugs and biologicals for every OPPS clinical APC.

    2. OPPS Payment for Drugs, Biologicals, and Radiopharmaceuticals Without Pass-Through Payment Status

      1. Criteria for Packaging Payment for Drugs, Biologicals, and Radiopharmaceuticals

  108. Packaging Threshold

    In accordance with section 1833(t)(16)(B) of the Act, the threshold for establishing separate APCs for payment of drugs and biologicals was set to $50 per administration during CYs 2005 and 2006. In CY 2007, we used the four quarter moving average Producer Price Index (PPI) levels for Pharmaceutical Preparations (Prescription) to trend the $50 threshold forward from the third quarter of CY 2005 (when the Pub. L. 108-173 mandated threshold became effective) to the third quarter of CY 2007. We then rounded the resulting dollar amount to the nearest $5 increment in order to determine the CY 2007 threshold amount of $55. Using the same methodology as that used in CY 2007 (which is discussed in more detail in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68085 through 68086)), we set the packaging threshold for establishing separate APCs for drugs and biologicals at $110 for CY 2017 (81 FR 79665).

    Following the CY 2007 methodology, for this CY 2018 OPPS/ASC final rule with comment period, we used the most recently available four quarter moving average PPI levels to trend the $50 threshold forward from the third quarter of CY 2005 to the third quarter of CY 2018 and rounded the resulting dollar amount ($118.52) to the nearest $5 increment, which yielded a figure of $120. In performing this calculation, we used the most recent forecast of the quarterly index levels for the PPI for Pharmaceuticals for Human Use (Prescription) (Bureau of Labor Statistics series code WPUSI07003) from CMS' Office of the Actuary.

    Therefore, for this CY 2018 OPPS/ASC final rule with comment period, using the CY 2007 OPPS methodology, we are finalizing a packaging threshold for CY 2018 of $120.

  109. Packaging of Payment for HCPCS Codes That Describe Certain Drugs, Certain Biologicals, and Therapeutic Radiopharmaceuticals Under the Cost Threshold (``Threshold-Packaged Drugs'')

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33625), to determine the proposed CY 2018 packaging status for all nonpass-through drugs and biologicals that are not policy packaged, we calculated, on a HCPCS code-specific basis, the per day cost of all drugs, biologicals, and therapeutic radiopharmaceuticals (collectively called ``threshold-

    packaged'' drugs) that had a HCPCS code in CY 2016 and were paid (via packaged or separate payment) under the OPPS. We used data from CY 2016 claims processed before January 1, 2017 for this calculation. However, we did not perform this calculation for those drugs and biologicals with multiple HCPCS codes that include different dosages, as described in section V.B.1.d. of the proposed rule, or for the following policy-

    packaged items that we proposed to continue to package in CY 2018: anesthesia drugs; drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure; and drugs and biologicals that function as supplies when used in a surgical procedure.

    In order to calculate the per day costs for drugs, biologicals, and therapeutic radiopharmaceuticals to determine their proposed packaging status in CY 2018, we used the methodology that was described in detail in the CY 2006 OPPS proposed rule (70 FR 42723 through 42724) and finalized in the CY 2006 OPPS final rule with comment period (70 FR 68636 through 68638). For each drug and biological HCPCS code, we used an estimated payment rate of ASP+6 percent (which is the payment rate we proposed for separately payable drugs and biologicals for CY 2018, as discussed in more detail in section V.B.2.b. of the proposed rule) to calculate the CY 2018 proposed rule per day costs. We used the manufacturer submitted ASP data from the fourth quarter of CY 2016 (data that were used for payment purposes in the physician's office setting, effective April 1, 2017) to determine the proposed rule per day cost.

    As is our standard methodology, for CY 2018, we proposed to use payment rates based on the ASP data from the first quarter of CY 2017 for budget neutrality estimates, packaging determinations, impact analyses, and completion of Addenda A and B to the proposed rule (which are available via the Internet on the CMS Web site) because these were the most recent data available for use at the time of development of the proposed rule. These data also were the basis for drug payments in the physician's office setting, effective April 1, 2017. For items that did not have an ASP-based payment rate, such as some therapeutic radiopharmaceuticals, we used their mean unit cost derived from the CY 2016 hospital claims data to determine their per day cost.

    We proposed to package items with a per day cost less than or equal to $120, and identify items with a per day cost greater than $120 as separately payable. Consistent with our past practice, we cross-walked historical OPPS claims data from the CY 2016 HCPCS codes that were reported to the CY 2017 HCPCS codes that we displayed in Addendum B to the proposed rule (which is available via the Internet on the CMS Web site) for proposed payment in CY 2018.

    Comment: Many commenters requested that CMS eliminate the threshold packaging policy and pay separately for all drugs and biologicals described by a unique HCPCS code. Several commenters expressed concern with the annual increases in the drug packaging threshold, citing that yearly increases have outpaced conversion factor updates and place a financial burden on hospitals. A few commenters recommended that CMS delay the proposed increase in the packaging threshold for drugs or freeze the packaging threshold at the current level ($110).

    Response: We have received and addressed similar comments in prior rules and most recently in CY 2017 OPPS/ASC final rule with comment (81 FR 79666). As we stated in the CY 2007 OPPS/ASC final rule with comment period (71 FR 68086), we believe that packaging certain items is a fundamental component of a prospective payment system, that updating the packaging threshold of $50 for the CY 2005 OPPS is consistent with industry and government practices, and that the PPI for Prescription Drugs is an appropriate mechanism to gauge Part B drug inflation. Therefore, because packaging is a fundamental component of a prospective payment system that continues to provide important flexibility and efficiency in the delivery of high quality hospital outpatient services, we are not adopting the commenters' recommendations to pay separately for all drugs, biologicals, and radiopharmaceuticals for CY 2018, eliminate the packaging threshold, and delay updating the packaging threshold or freeze the packaging threshold at $110.

    After consideration of the public comments we received, and consistent with our methodology for establishing the packaging threshold using the most recent PPI forecast data, we are adopting a CY 2018 packaging threshold of $120.

    Our policy during previous cycles of the OPPS has been to use updated ASP and claims data to make final

    Page 59344

    determinations of the packaging status of HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals for the OPPS/ASC final rule with comment period. We note that it is also our policy to make an annual packaging determination for a HCPCS code only when we develop the OPPS/ASC final rule with comment period for the update year. Only HCPCS codes that are identified as separately payable in the final rule with comment period are subject to quarterly updates. For our calculation of per day costs of HCPCS codes for drugs and biologicals in this CY 2018 OPPS/ASC final rule with comment period, we used ASP data from the first quarter of CY 2017, which is the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective July 1, 2017, along with updated hospital claims data from CY 2016. We note that we also used these data for budget neutrality estimates and impact analyses for this CY 2018 OPPS/ASC final rule with comment period.

    Payment rates for HCPCS codes for separately payable drugs and biologicals included in Addenda A and B for this final rule with comment period are based on ASP data from the third quarter of CY 2017. These data are the basis for calculating payment rates for drugs and biologicals in the physician's office setting using the ASP methodology, effective October 1, 2017. These payment rates will be updated in the January 2018 OPPS update, based on the most recent ASP data to be used for physician's office and OPPS payment as of January 1, 2018. For items that do not currently have an ASP-based payment rate, we proposed to recalculate their mean unit cost from all of the CY 2016 claims data and updated cost report information available for this CY 2018 final rule with comment period to determine their final per day cost.

    Consequently, as stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33625), the packaging status of some HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals in the proposed rule may be different from the same drug HCPCS code's packaging status determined based on the data used for this final rule with comment period. Under such circumstances, in the CY 2018 OPPS/ASC proposed rule, we proposed to continue to follow the established policies initially adopted for the CY 2005 OPPS (69 FR 65780) in order to more equitably pay for those drugs whose cost fluctuates relative to the proposed CY 2018 OPPS drug packaging threshold and the drug's payment status (packaged or separately payable) in CY 2017. These established policies have not changed for many years and are the same as described in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434). Specifically, for CY 2018, consistent with our historical practice, we proposed to apply the following policies to these HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals whose relationship to the drug packaging threshold changes based on the updated drug packaging threshold and on the final updated data:

    HCPCS codes for drugs and biologicals that were paid separately in CY 2017 and that were proposed for separate payment in CY 2018, and that then have per day costs equal to or less than the CY 2018 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for this CY 2018 final rule, would continue to receive separate payment in CY 2018.

    HCPCS codes for drugs and biologicals that were packaged in CY 2017 and that were proposed for separate payment in CY 2018, and that then have per day costs equal to or less than the CY 2018 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for this CY 2018 final rule, would remain packaged in CY 2018.

    HCPCS codes for drugs and biologicals for which we proposed packaged payment in CY 2018 but then have per day costs greater than the CY 2018 final rule drug packaging threshold, based on the updated ASPs and hospital claims data used for this CY 2018 final rule, would receive separate payment in CY 2018.

    We did not receive any public comments on our proposal to recalculate the mean unit cost for items that do not currently have an ASP-based payment rate from all of the CY 2016 claims data and updated cost report information available for this CY 2018 final rule with comment period to determine their final per day cost. We also did not receive any public comments on our proposal to continue to follow the established policies initially adopted for the CY 2005 OPPS (69 FR 65780), when the packaging status of some HCPCS codes for drugs, biologicals, and therapeutic radiopharmaceuticals in the proposed rule may be different from the same drug HCPCS code's packaging status determined based on the data used for the final rule with comment period. Therefore, for CY 2018, we are finalizing these two CY 2018 proposals without modification.

  110. Policy Packaged Drugs, Biologicals, and Radiopharmaceuticals

    As mentioned briefly earlier, in the OPPS, we package several categories of drugs, biologicals, and radiopharmaceuticals, regardless of the cost of the products. Because the products are packaged according to the policies in 42 CFR 419.2(b), we refer to these packaged drugs, biologicals, and radiopharmaceuticals as ``policy-

    packaged'' drugs, biologicals, and radiopharmaceuticals. These policies are either longstanding or based on longstanding principles and inherent to the OPPS and are as follows:

    Anesthesia, certain drugs, biologicals, and other pharmaceuticals; medical and surgical supplies and equipment; surgical dressings; and devices used for external reduction of fractures and dislocations (Sec. 419.2(b)(4));

    Intraoperative items and services (Sec. 419.2(b)(14));

    Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure (including but not limited to, diagnostic radiopharmaceuticals, contrast agents, and pharmacologic stress agents (Sec. 419.2(b)(15)); and

    Drugs and biologicals that function as supplies when used in a surgical procedure (including, but not limited to, skin substitutes and similar products that aid wound healing and implantable biologicals) (Sec. 419.2(b)(16)).

    The policy at Sec. 419.2(b)(16) is broader than that at Sec. 419.2(b)(14). As we stated in the CY 2015 OPPS/ASC final rule with comment period: ``We consider all items related to the surgical outcome and provided during the hospital stay in which the surgery is performed, including postsurgical pain management drugs, to be part of the surgery for purposes of our drug and biological surgical supply packaging policy'' (79 FR 66875). The category described by Sec. 419.2(b)(15) is large and includes diagnostic radiopharmaceuticals, contrast agents, stress agents, and some other products. The category described by Sec. 419.2(b)(16) includes skin substitutes and some other products. We believe it is important to reiterate that cost consideration is not a factor when determining whether an item is a surgical supply (79 FR 66875).

    We did not make any proposals to revise our policy-packaged drug policy. We solicited public comment on the general OPPS packaging policies as discussed in section II.A.3.d. of this final rule with comment period.

    Comment: Several commenters requested that CMS revise its packaging

    Page 59345

    policies to allow for separate payment for Cysviewsupreg (hexaminolevulinate HCl), which is described by HCPCS code C9275, according to the ASP methodology. The commenters also provided recommendations in response to the general comment solicitation on packaging under the OPPS.

    Response: We appreciate the comments in response to the packaging solicitation, including feedback on the ``packaging as a supply'' policy and will consider these recommendations in future rulemaking. However, because we did not propose to modify our policy-packaged drug policy for drugs that function as a supply when used in a diagnostic test or procedure, or receive information from commenters that caused us to believe that Cysviewsupreg is not a drug that functions as a supply when used in a diagnostic test or procedure and, accordingly, should be paid separately, payment for HCPCS code C9275 will continue to be packaged with the primary procedure in CY 2018.

    Comment: Numerous commenters requested that CMS pay separately for Exparelsupreg, an FDA approved post-surgical analgesia drug. Several commenters, including many commenters who received care from the same provider, shared their experience with receiving Exparelsupreg after their knee replacement surgery and urged CMS to pay hospitals and/or physicians for the use of Exparelsupreg.

    Response: We refer readers to the CY 2015 OPPS/ASC final rule with comment (79 FR 66874 and 66875) for a detailed discussion on our decision to package Exparelsupreg (bupivacaine liposome injectable suspension) described by HCPCS code C9290 (Injection, bupivicaine liposome, 1 mg) as a drug that functions as a supply in a surgical procedure. Because we did not propose to modify our packaged drug policy for drugs that function as a surgical supply when used in a surgical procedure, and believe payment for HCPCS code C9290 is appropriately packaged with the primary surgical procedure, payment for HCPCS code C9290 will remain packaged in CY 2018.

    Comment: A few commenters recommended that CMS continue to apply the nuclear medicine procedure to radiolabeled product edits to ensure that all packaged costs are included on nuclear medicine claims in order to establish appropriate payment rates in the future.

    Response: We do not agree with commenters that we should reinstate the nuclear medicine procedure to radiolabeled product edits, which required a diagnostic radiopharmaceutical to be present on the same claim as a nuclear medicine procedure for payment under the OPPS to be made. The edits were in place between CY 2008 and CY 2014 (78 FR 75033). We believe the period of time in which the edits were in place was sufficient for hospitals to gain experience reporting procedures involving radiolabeled products and to grow accustomed to ensuring that they code and report charges so that their claims fully and appropriately reflect the costs of those radiolabeled products. As with all other items and services recognized under the OPPS, we expect hospitals to code and report their costs appropriately, regardless of whether there are claims processing edits in place.

    Comment: One commenter recommended that CMS use ASP information, when voluntarily reported by the manufacturer, as a better price input to account for the packaged costs of the diagnostic radiopharmaceuticals and more appropriately reflect hospitals' actual acquisition costs. This commenter also requested that CMS provide an additional payment for radiopharmaceuticals that are granted pass-

    through payment status.

    Response: We disagree with commenter's recommendation that we use voluntarily-reported ASP information for nonpass-through payment for radiopharmaceuticals as an approximation of their acquisition cost. Packaging hospital costs based on hospital claims data is how all the costs of all packaged items are factored into payment rates for associated procedures under the OPPS, and we do not believe it is appropriate to depart from that policy for radiopharmaceuticals.

    Radiopharmaceuticals for which we have not established a separate APC will receive packaged payment under the OPPS. We provide payment for diagnostic radiopharmaceuticals based on a proxy for average acquisition cost. We continue to believe that the line-item estimated cost for a diagnostic radiopharmaceutical in our claims data is a reasonable approximation of average acquisition and preparation and handling costs for diagnostic radiopharmaceuticals.

    In addition, we note that not all manufacturers would be able to submit ASP data through the established ASP reporting methodology. Therefore, if we were to use ASP data to package the costs of some diagnostic radiopharmaceuticals, but use hospital claims data for others, our methodologies for packaging the costs of diagnostic radiopharmaceuticals into their associated nuclear medicine procedures would be inconsistent among nuclear medicine procedures. The foundation of a system of relative weights is the relativity of the costs of all services to one another, as derived from a standardized system that uses standardized inputs and a consistent methodology. Adoption of a ratesetting methodology for certain APCs containing nuclear medicine procedures that is different from the standard APC ratesetting methodology would undermine this relativity. For this reason, we do not believe it would be appropriate to use external pricing information in place of the costs derived from the claims and Medicare cost report data because to do so would distort the relativity that is fundamental to the integrity of the OPPS.

    With respect to the request to provide an additional payment for radiopharmaceuticals that are granted pass-through payment status, the commenter did not provide information on what expenses or costs incurred by providers would be covered by an additional payment. We continue to believe that a single payment is appropriate for radiopharmaceuticals with pass-through payment status in CY 2018 and that the payment rate of ASP+6 percent is appropriate to provide payment for both the radiopharmaceutical's acquisition cost and any associated nuclear medicine handling and compounding costs.

  111. High Cost/Low Cost Threshold for Packaged Skin Substitutes

    In the CY 2014 OPPS/ASC final rule with comment period (78 FR 74938), we unconditionally packaged skin substitute products into their associated surgical procedures as part of a broader policy to package all drugs and biologicals that function as supplies when used in a surgical procedure. As part of the policy to finalize the packaging of skin substitutes, we also finalized a methodology that divides the skin substitutes into a high cost group and a low cost group, in order to ensure adequate resource homogeneity among APC assignments for the skin substitute application procedures (78 FR 74933).

    Skin substitutes assigned to the high cost group are described by HCPCS codes 15271 through 15278. Skin substitutes assigned to the low cost group are described by HCPCS codes C5271 through C5278. Geometric mean costs for the various procedures are calculated using only claims for the skin substitutes that are assigned to each group. Specifically, claims billed with HCPCS code 15271, 15273, 15275, or 15277 are used to calculate the

    Page 59346

    geometric mean costs for procedures assigned to the high cost group, and claims billed with HCPCS code C5271, C5273, C5275, or C5277 are used to calculate the geometric mean costs for procedures assigned to the low cost group (78 FR 74935).

    Each of the HCPCS codes described above are assigned to one of the following three skin procedure APCs according to the geometric mean cost for the code: APC 5053 (Level 3 Skin Procedures) (HCPCS codes C5271, C5275, and C5277); APC 5054 (Level 4 Skin Procedures) (HCPCS codes C5273, 15271, 15275, and 15277); or APC 5055 (Level 5 Skin Procedures) (HCPCS code 15273). In CY 2017, the payment rate for APC 5053 (Level 3 Skin Procedures) was $466, the payment rate for APC 5054 (Level 4 Skin Procedures) was $1,468, and the payment rate for APC 5055 (Level 5 Skin Procedures) was $2,575. This information also is available in Addenda A and B of the CY 2017 OPPS/ASC final rule with comment period (which is available via the Internet on the CMS Web site).

    We have continued the high cost/low cost categories policy since CY 2014, and in the CY 2018 OPPS/ASC proposed rule (82 FR 33626 through 33627), we proposed to continue it for CY 2018 with the modification discussed below. Under this current policy, skin substitutes in the high cost category are reported with the skin substitute application CPT codes, and skin substitutes in the low cost category are reported with the analogous skin substitute HCPCS C-codes. For a discussion of the CY 2014 and CY 2015 methodologies for assigning skin substitutes to either the high cost group or the low cost group, we refer readers to the CY 2014 OPPS/ASC final rule with comment period (78 FR 74932 through 74935) and the CY 2015 OPPS/ASC final rule with comment period (79 FR 66882 through 66885).

    For a discussion of the high cost/low cost methodology that was adopted in CY 2016 and has been in effect since then, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70434 through 70435). For CY 2018, as in CY 2016 and CY 2017, we proposed to continue to determine the high/low cost status for each skin substitute product based on either a product's geometric mean unit cost (MUC) exceeding the geometric MUC threshold or the product's per day cost (PDC) (the total units of a skin substitute multiplied by the mean unit cost and divided by the total number of days) exceeding the PDC threshold. For CY 2018, as for CY 2017, we proposed to assign each skin substitute that exceeds either the MUC threshold or the PDC threshold to the high cost group. In addition, as described in more detail later in this section, for CY 2018, as for CY 2017, we proposed to assign any skin substitute with an MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low cost group. For CY 2018, we proposed that any skin substitute product that was assigned to the high cost group in CY 2017 would be assigned to the high cost group for CY 2018, regardless of whether it exceeds or falls below the CY 2018 MUC or PDC threshold.

    For this CY 2018 OPPS/ASC final rule with comment period, consistent with the methodology as established in the CY 2014 through CY 2017 final rules with comment period, we analyzed updated CY 2016 claims data to calculate the MUC threshold (a weighted average of all skin substitutes' MUCs) and the PDC threshold (a weighted average of all skin substitutes' PDCs). The final CY 2018 MUC threshold is $46 per cm\2\ (rounded to the nearest $1) (proposed at $47 per cm\2\) and the final CY 2018 PDC threshold is $861 (rounded to the nearest $1) (proposed at $755).

    For CY 2018, we proposed to continue to assign skin substitutes with pass-through payment status to the high cost category. However, there are no skin substitutes that are proposed to have pass-through payment status for CY 2018. We proposed to assign skin substitutes with pricing information but without claims data to calculate a geometric MUC or PDC to either the high cost or low cost category based on the product's ASP+6 percent payment rate as compared to the MUC threshold. If ASP is not available, we stated in the proposed rule that we would use WAC+6 percent or 95 percent of AWP to assign a product to either the high cost or low cost category. We also stated in the proposed rule that new skin substitutes without pricing information would be assigned to the low cost category until pricing information is available to compare to the CY 2018 MUC threshold. For a discussion of our existing policy under which we assign skin substitutes without pricing information to the low cost category until pricing information is available, we refer readers to the CY 2016 OPPS/ASC final rule with comment period (80 FR 70436).

    Some skin substitute manufacturers have raised concerns about significant fluctuation in both the MUC threshold and the PDC threshold from year to year. The fluctuation in the thresholds may result in the reassignment of several skin substitutes from the high cost group to the low cost group which, under current payment rates, can be a difference of approximately $1,000 in the payment amount for the same procedure. In addition, these stakeholders were concerned that the inclusion of cost data from skin substitutes with pass-through payment status in the MUC and PDC calculations would artificially inflate the thresholds. Skin substitute stakeholders requested that CMS consider alternatives to the current methodology used to calculate the MUC and PDC thresholds and also requested that CMS consider whether it might be appropriate to establish a new cost group in between the low cost group and the high cost group to allow for assignment of moderately priced skin substitutes to a newly created middle group.

    We share the goal of promoting payment stability for skin substitute products and their related procedures as price stability allows hospitals using such products to more easily anticipate future payments associated with these products. We have attempted to limit year to year shifts for skin substitute products between the high cost and low cost groups through multiple initiatives implemented since CY 2014, including: establishing separate skin substitute application procedure codes for low-cost skin substitutes (78 FR 74935); using a skin substitute's MUC calculated from outpatient hospital claims data instead of an average of ASP+6 percent as the primary methodology to assign products to the high cost or low cost group (79 FR 66883); and establishing the PDC threshold as an alternate methodology to assign a skin substitute to the high cost group (80 FR 70434 through 70435).

    In order to allow additional time to evaluate concerns and suggestions from stakeholders about the volatility of the MUC and PDC thresholds, for CY 2018, we proposed that a skin substitute that was assigned to the high cost group for CY 2017 would be assigned to the high cost group for CY 2018, even if it does not exceed the CY 2018 MUC or PDC thresholds. Our analysis has found that seven skin substitute products that would have otherwise been assigned to the low cost group for CY 2018 would instead be assigned to the high cost group under this proposed policy. The skin substitute products affected by this proposed policy were identified with an ``*'' in Table 24 of the proposed rule (82 FR 33627 through 33628). For CY 2019 and subsequent years, we requested public comments on how we should calculate data for products in determining the MUC and PDC

    Page 59347

    thresholds that are included in the high cost group solely based on assignment to the high cost group in CY 2017.

    We stated in the proposed rule that the goal of our proposal to retain the same skin substitute cost group assignments in CY 2018 as in CY 2017 is to maintain similar levels of payment for skin substitute products for CY 2018 while we study our current skin substitute payment methodology to determine whether refinement to the existing policies is consistent with our policy goal of providing payment stability for skin substitutes. We requested public comments on the methodologies that are used to calculate pricing thresholds as well as the payment groupings that recognize a low cost group and a high cost group. We stated that we are especially interested in suggestions that are based on analysis of Medicare claims data from hospital outpatient departments that might better promote improved payment stability for skin substitute products under the OPPS. This proposal was intended to apply for CY 2018 to allow time for the public to submit other ideas that could be evaluated for the CY 2019 rulemaking.

    In summary, we proposed to assign skin substitutes with a MUC or a PDC that does not exceed either the MUC threshold or the PDC threshold to the low cost group, unless the product was assigned to the high cost group in CY 2017, in which case we proposed to assign the product to the high cost group for CY 2018, regardless of whether it exceeds the CY 2018 MUC or PDC threshold. We also proposed to assign to the high cost group skin substitute products that exceed the CY 2018 MUC or PDC threshold and assign to the low cost group skin substitute products that did not exceed either the CY 2017 or CY 2018 MUC or PDC thresholds and were not assigned to the high cost group in CY 2017. We proposed to continue to use payment methodologies including ASP+6 percent, WAC+6 percent, or 95 percent of AWP for skin substitute products that have pricing information but do not have claims data to determine if their costs exceed the CY 2018 MUC threshold. Finally, we proposed to continue to assign new skin substitute products without pricing information to the low cost group.

    Comment: Several commenters responded to CMS' request for public comments on the methodologies that are used to calculate pricing thresholds as well as the payment groupings that recognize a low cost group and a high cost group with the goal of improving payment stability for skin substitute products in the OPPS. The commenters covered such issues as: Improving the quality of claims data CMS uses to determine the MUC and PDC thresholds; using ASP pricing data for the skin substitutes either in addition to or in place of claims data to determine the MUC and PDC thresholds; limiting annual changes to the MUC and PDC thresholds to the change in the consumer price index; adding more cost groups where skin substitutes may be assigned; ending the packaging of skin substitute products in general and ending packaging costs for add-on codes into the primary service codes for skin substitute procedures; establishing device offsets when the cost of a skin substitute used in a procedure is more than 40 percent of total cost of the procedure; and reducing incentives that favor the use of more expensive skin substitutes or products that require an excessive number of applications.

    Response: We appreciate the feedback we received from the commenters. We will continue to study issues related to the payment of skin substitutes and take these comments into consideration for future rulemaking.

    Comment: One commenter requested that PuraPly and PuraPly antimic reported with HCPCS code Q4172 retain its pass-through status in CY 2018. The commenter believed that giving PuraPly and PuraPly antimic an additional year of pass-through payment status would be consistent with CMS' policy proposal to assign all skin substitute products that were in the high cost skin substitute group in CY 2017 to the high cost skin substitute group in CY 2018. The commenter believed that, consistent with the spirit of this proposal, PuraPly and PuraPly antimic should receive the same payment treatment in CY 2017 as it did in CY 2018; that is, continued pass-through payment status.

    Response: PuraPly and PuraPly antimic (HCPCS code Q4172) became eligible for drug and biological pass-through payments effective January 1, 2015. Therefore, 2017 is the third year of pass-through payment status for these skin substitutes. Section 1833(t)(6)(B)(iii) provides for temporary pass-through payments for devices for a period of at least 2 years but not more than 3 years. Extending PuraPly and PuraPly antimic for a fourth year of pass-through payment status would be contrary to the statute. Therefore, PuraPly and PuraPly antimic will be assigned to the high-cost skin substitute group for CY 2018 and the product will receive payment in the same manner as other skin substitute products assigned to the high cost group.

    Comment: One commenter opposed CMS' proposal to assign all skin substitutes that qualified for the high cost group in CY 2017 to the high cost group in CY 2018, including those skin substitutes that would have not met either the MUC or PDC threshold in CY 2018 and would have instead been assigned to the low-cost group. The commenter stated that the products included in the high cost group that otherwise would have been assigned to the low cost group have generated enough payment data for CMS to estimate their costs. The commenter believed the proposal would encourage excessive use of the skin substitute products that should have been assigned to the low cost group.

    Response: We appreciate the concerns of the commenter. However, as we stated in the proposed rule, we aim to encourage the goal of payment stability for all skin substitute products to help hospitals anticipate future costs related to skin substitute procedures. The MUC has nearly doubled since CY 2016, with an increase from $25 per cm\2\ to the proposed CY 2018 threshold of $47 per cm\2\. Likewise, the PDC has fluctuated over $300, between $715 and $1,050, since it was established in CY 2016. We requested suggestions from the public to help address these stability issues in future rulemaking. We believe allowing all skin substitute products assigned to the high cost group in CY 2017 to remain in the high cost group for CY 2018 gives us time to consider revisions to the payment of skin substitute procedures and products while avoiding substantial payment reductions to hospitals during our review period.

    Comment: Several commenters supported the proposal to assign all skin substitutes that qualified for the high cost group in CY 2017 to the high cost group in CY 2018, including those skin substitutes that would have not met either the MUC or PDC threshold in CY 2018 and would have instead been assigned to the low cost group.

    Response: We appreciate the commenters' support.

    Comment: One commenter supported the proposed assignment of HCPCS code Q4150 (Allowrap DS or Dry 1 sq cm) to the high cost group.

    Response: We appreciate the commenter's support.

    After consideration of the public comments we received, we are finalizing our proposals without modification for CY 2018. Table 72 below displays the CY 2018 cost category assignment for each skin substitute product.

    For this final rule with comment period, we have identified 10 skin

    Page 59348

    substitute products that would otherwise have been assigned to the low cost group for CY 2018, but will instead be assigned to the high cost group under our policy to include in the high cost group for CY 2018 any skin substitute that was in the high cost group for CY 2017. The skin substitute products affected by this policy are identified with an asterisk ``*'' in Table 72 below.

    Table 72--Skin Substitute Assignments to High Cost and Low Cost Groups for CY 2018

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

    CY 2017 high/low CY 2018 high/low

    CY 2018 HCPCS code CY 2018 short descriptor assignment assignment

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

    C9363................ Integra Meshed Bil Wound Mat............... High................. High.

    Q4100................ Skin Substitute, NOS....................... Low.................. Low.

    Q4101................ Apligraf................................... High................. High.

    Q4102................ Oasis Wound Matrix......................... Low.................. Low.

    Q4103................ Oasis Burn Matrix.......................... High................. High.*

    Q4104................ Integra BMWD............................... High................. High.

    Q4105................ Integra DRT................................ High................. High.*

    Q4106................ Dermagraft................................. High................. High.

    Q4107................ GraftJacket................................ High................. High.

    Q4108................ Integra Matrix............................. High................. High.*

    Q4110................ Primatrix.................................. High................. High.*

    Q4111................ Gammagraft................................. Low.................. Low.

    Q4115................ Alloskin................................... Low.................. Low.

    Q4116................ Alloderm................................... High................. High.

    Q4117................ Hyalomatrix................................ Low.................. Low.

    Q4121................ Theraskin.................................. High................. High.

    Q4122................ Dermacell.................................. High................. High.

    Q4123................ Alloskin................................... High................. High.*

    Q4124................ Oasis Tri-layer Wound Matrix............... Low.................. Low.

    Q4126................ Memoderm/derma/tranz/integup............... High................. High.

    Q4127................ Talymed.................................... High................. High.*

    Q4128................ Flexhd/Allopatchhd/Matrixhd................ High................. High.

    Q4131................ Epifix..................................... High................. High

    Q4132................ Grafix core and grafixpl core, per square High................. High.

    centimeter.

    Q4133................ Grafix prime and grafixpl prime, per square High................. High.

    centimeter.

    Q4134................ hMatrix.................................... Low.................. Low.

    Q4135................ Mediskin................................... Low.................. Low.

    Q4136................ Ezderm..................................... Low.................. Low.

    Q4137................ Amnioexcel or Biodexcel, 1cm............... High................. High.

    Q4138................ Biodfence DryFlex, 1cm..................... High................. High.

    Q4140................ Biodfence 1cm.............................. High................. High.

    Q4141................ Alloskin ac, 1cm........................... High................. High.*

    Q4143................ Repriza, 1cm............................... High................. High.

    Q4146................ Tensix, 1CM................................ High................. High.

    Q4147................ Architect ecm, 1cm......................... High................. High.*

    Q4148................ Neox cord 1k, neox cord rt, or clarix cord High................. High.

    1k, per square centimeter.

    Q4150................ Allowrap DS or Dry 1 sq cm................. High................. High.

    Q4151................ AmnioBand, Guardian 1 sq cm................ High................. High.

    Q4152................ Dermapure 1 square cm...................... High................. High.

    Q4153................ Dermavest 1 square cm...................... High................. High.

    Q4154................ Biovance 1 square cm....................... High................. High.

    Q4156................ Neox 100 or clarix 100, per square High................. High.

    centimeter.

    Q4157................ Revitalon 1 square cm...................... High................. High.

    Q4158................ Kerecis omega3, per square centimeter...... High................. High.*

    Q4159................ Affinity 1 square cm....................... High................. High.

    Q4160................ NuShield 1 square cm....................... High................. High.

    Q4161................ Bio-Connekt per square cm.................. High................. High.*

    Q4163................ Woundex, bioskin, per square centimeter.... High................. High.

    Q4164................ Helicoll, per square cm.................... High................. High.

    Q4165................ Keramatrix, per square cm.................. Low.................. Low.

    Q4166................ Cytal, per square cm....................... Low.................. Low.

    Q4167................ Truskin, per square cm..................... Low.................. Low.

    Q4169................ Artacent wound, per square cm.............. High................. High.

    Q4170................ Cygnus, per square cm...................... Low.................. Low.

    Q4172................ PuraPly, PuraPly antimic................... High................. High.

    Q4173................ Palingen or palingen xplus, per sq cm...... High................. High.

    Q4175................ Miroderm, per square cm.................... High................. High.

    Q4176................ Neopatch, per square centimeter............ Low.................. Low.

    Q4178................ Floweramniopatch, per square centimeter.... Low.................. Low.

    Q4179................ Flowerderm, per square centimeter.......... Low.................. Low.

    Q4180................ Revita, per square centimeter.............. Low.................. Low.

    Q4181................ Amnio wound, per square centimeter......... Low.................. Low.

    Q4182................ Transcyte, per square centimeter........... Low.................. Low.

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

    * These products do not exceed either the MUC or PDC threshold for CY 2018, but are assigned to the high cost

    group because they were assigned to the high cost group in CY 2017.

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  112. Packaging Determination for HCPCS Codes That Describe the Same Drug or Biological but Different Dosages

    In the CY 2010 OPPS/ASC final rule with comment period (74 FR 60490 through 60491), we finalized a policy to make a single packaging determination for a drug, rather than an individual HCPCS code, when a drug has multiple HCPCS codes describing different dosages because we believed that adopting the standard HCPCS code-specific packaging determinations for these codes could lead to inappropriate payment incentives for hospitals to report certain HCPCS codes instead of others. We continue to believe that making packaging determinations on a drug-specific basis eliminates payment incentives for hospitals to report certain HCPCS codes for drugs and allows hospitals flexibility in choosing to report all HCPCS codes for different dosages of the same drug or only the lowest dosage HCPCS code. Therefore, in the CY 2018 OPPS/ASC proposed rule (82 FR 33628), we proposed to continue our policy to make packaging determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for those HCPCS codes that describe the same drug or biological but different dosages in CY 2018.

    For CY 2018, in order to propose a packaging determination that is consistent across all HCPCS codes that describe different dosages of the same drug or biological, we aggregated both our CY 2016 claims data and our pricing information at ASP+6 percent across all of the HCPCS codes that describe each distinct drug or biological in order to determine the mean units per day of the drug or biological in terms of the HCPCS code with the lowest dosage descriptor. The following drugs did not have pricing information available for the ASP methodology for the CY 2018 OPPS/ASC proposed rule, and as is our current policy for determining the packaging status of other drugs, we used the mean unit cost available from the CY 2016 claims data to make the proposed packaging determinations for these drugs: HCPCS code J7100 (infusion, dextran 40,500 ml) and HCPCS code J7110 (infusion, dextran 75,500 ml).

    For all other drugs and biologicals that have HCPCS codes describing different doses, we then multiplied the proposed weighted average ASP+6 percent per unit payment amount across all dosage levels of a specific drug or biological by the estimated units per day for all HCPCS codes that describe each drug or biological from our claims data to determine the estimated per day cost of each drug or biological at less than or equal to the proposed CY 2018 drug packaging threshold of $120 (so that all HCPCS codes for the same drug or biological would be packaged) or greater than the proposed CY 2018 drug packaging threshold of $120 (so that all HCPCS codes for the same drug or biological would be separately payable). The proposed packaging status of each drug and biological HCPCS code to which this methodology would apply in CY 2018 was displayed in Table 25 of the CY 2018 OPPS/ASC proposed rule (82 FR 33629).

    We did not receive any public comments on this proposal. Therefore, for CY 2018, we are finalizing our CY 2018 proposal, without modification, to continue our policy to make packaging determinations on a drug-specific basis, rather than a HCPCS code-specific basis, for those HCPCS codes that describe the same drug or biological but different dosages. Table 73 below displays the final packaging status of each drug and biological HCPCS code to which the finalized methodology applies for CY 2018.

    Table 73--HCPCS Codes to Which the CY 2018 Drug-Specific Packaging Determination Methodology Applies

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

    CY 2018 HCPCS code CY 2018 long descriptor CY 2018 SI

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

    C9257................................ Injection, bevacizumab, 0.25 mg......................... K

    J9035................................ Injection, bevacizumab, 10 mg........................... K

    J1020................................ Injection, methylprednisolone acetate, 20 mg............ N

    J1030................................ Injection, methylprednisolone acetate, 40 mg............ N

    J1040................................ Injection, methylprednisolone acetate, 80 mg............ N

    J1460................................ Injection, gamma globulin, intramuscular, 1 cc.......... K

    J1560................................ Injection, gamma globulin, intramuscular over 10 cc..... K

    J1642................................ Injection, heparin sodium, (heparin lock flush), per 10 N

    units.

    J1644................................ Injection, heparin sodium, per 1000 units............... N

    J1840................................ Injection, kanamycin sulfate, up to 500 mg.............. N

    J1850................................ Injection, kanamycin sulfate, up to 75 mg............... N

    J2788................................ Injection, rho d immune globulin, human, minidose, 50 N

    micrograms (250 i.u.).

    J2790................................ Injection, rho d immune globulin, human, full dose, 300 N

    micrograms (1500 i.u.).

    J2920................................ Injection, methylprednisolone sodium succinate, up to 40 N

    mg.

    J2930................................ Injection, methylprednisolone sodium succinate, up to N

    125 mg.

    J3471................................ Injection, hyaluronidase, ovine, preservative free, per N

    1 usp unit (up to 999 usp units).

    J3472................................ Injection, hyaluronidase, ovine, preservative free, per N

    1000 usp units.

    J7030................................ Infusion, normal saline solution, 1000 cc............... N

    J7040................................ Infusion, normal saline solution, sterile (500 ml = 1 N

    unit).

    J7050................................ Infusion, normal saline solution, 250 cc................ N

    J7100................................ Infusion, dextran 40, 500 ml............................ N

    J7110................................ Infusion, dextran 75, 500 ml............................ N

    J7515................................ Cyclosporine, oral, 25 mg............................... N

    J7502................................ Cyclosporine, oral, 100 mg.............................. N

    J8520................................ Capecitabine, oral, 150 mg.............................. N

    J8521................................ Capecitabine, oral, 500 mg.............................. N

    J9250................................ Methotrexate sodium, 5 mg............................... N

    J9260................................ Methotrexate sodium, 50 mg.............................. N

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

    Page 59350

    2. Payment for Drugs and Biologicals Without Pass-Through Status That Are Not Packaged

  113. Payment for Specified Covered Outpatient Drugs (SCODs) and Other Separately Payable and Packaged Drugs and Biologicals

    Section 1833(t)(14) of the Act defines certain separately payable radiopharmaceuticals, drugs, and biologicals and mandates specific payments for these items. Under section 1833(t)(14)(B)(i) of the Act, a ``specified covered outpatient drug'' (known as a SCOD) is defined as a covered outpatient drug, as defined in section 1927(k)(2) of the Act, for which a separate APC has been established and that either is a radiopharmaceutical agent or is a drug or biological for which payment was made on a pass-through basis on or before December 31, 2002.

    Under section 1833(t)(14)(B)(ii) of the Act, certain drugs and biologicals are designated as exceptions and are not included in the definition of SCODs. These exceptions are--

    A drug or biological for which payment is first made on or after January 1, 2003, under the transitional pass-through payment provision in section 1833(t)(6) of the Act.

    A drug or biological for which a temporary HCPCS code has not been assigned.

    During CYs 2004 and 2005, an orphan drug (as designated by the Secretary).

    Section 1833(t)(14)(A)(iii) of the Act requires that payment for SCODs in CY 2006 and subsequent years be equal to the average acquisition cost for the drug for that year as determined by the Secretary, subject to any adjustment for overhead costs and taking into account the hospital acquisition cost survey data collected by the Government Accountability Office (GAO) in CYs 2004 and 2005, and later periodic surveys conducted by the Secretary as set forth in the statute. If hospital acquisition cost data are not available, the law requires that payment be equal to payment rates established under the methodology described in section 1842(o), section 1847A, or section 1847B of the Act, as calculated and adjusted by the Secretary as necessary. We refer to this alternative methodology as the ``statutory default.'' Most physician Part B drugs are paid at ASP+6 percent in accordance with section 1842(o) and section 1847A of the Act.

    Section 1833(t)(14)(E)(ii) of the Act provides for an adjustment in OPPS payment rates for SCODs to take into account overhead and related expenses, such as pharmacy services and handling costs. Section 1833(t)(14)(E)(i) of the Act required MedPAC to study pharmacy overhead and related expenses and to make recommendations to the Secretary regarding whether, and if so how, a payment adjustment should be made to compensate hospitals for overhead and related expenses. Section 1833(t)(14)(E)(ii) of the Act authorizes the Secretary to adjust the weights for ambulatory procedure classifications for SCODs to take into account the findings of the MedPAC study.\17\

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    \17\ Medicare Payment Advisory Committee. June 2005 Report to the Congress. Chapter 6: Payment for pharmacy handling costs in hospital outpatient departments. Available at: http://www.medpac.gov/docs/default-source/reports/June05_ch6.pdf?sfvrsn=0.

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    It has been our policy since CY 2006 to apply the same treatment to all separately payable drugs and biologicals, which include SCODs, and drugs and biologicals that are not SCODs. Therefore, we apply the payment methodology in section 1833(t)(14)(A)(iii) of the Act to SCODs, as required by statute, but we also apply it to separately payable drugs and biologicals that are not SCODs, which is a policy determination rather than a statutory requirement. In the CY 2018 OPPS/

    ASC proposed rule (82 FR 33630), we proposed to apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and biologicals, including SCODs. Although we do not distinguish SCODs in this discussion, we note that we are required to apply section 1833(t)(14)(A)(iii)(II) of the Act to SCODs, but we also are applying this provision to other separately payable drugs and biologicals, consistent with our history of using the same payment methodology for all separately payable drugs and biologicals.

    For a detailed discussion of our OPPS drug payment policies from CY 2006 to CY 2012, we refer readers to the CY 2013 OPPS/ASC final rule with comment period (77 FR 68383 through 68385). In the CY 2013 OPPS/

    ASC final rule with comment period (77 FR 68386 through 68389), we first adopted the statutory default policy to pay for separately payable drugs and biologicals at ASP+6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act. We continued this policy of paying for separately payable drugs and biologicals at the statutory default for CY 2014, CY 2015, CY 2016, and CY 2017 (81 FR 79673).

  114. CY 2018 Payment Policy

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, we proposed to continue our payment policy that has been in effect from CY 2013 to present and pay for separately payable drugs and biologicals at ASP+6 percent in accordance with section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default). We proposed that the ASP+6 percent payment amount for separately payable drugs and biologicals requires no further adjustment and represents the combined acquisition and pharmacy overhead payment for drugs and biologicals. We also proposed that payments for separately payable drugs and biologicals are included in the budget neutrality adjustments, under the requirements in section 1833(t)(9)(B) of the Act, and that the budget neutral weight scalar is not applied in determining payments for these separately paid drugs and biologicals.

    We note that we proposed, as specified below, to pay for separately payable, nonpass-through drugs acquired with a 340B discount at a rate of ASP minus 22.5 percent. We refer readers to the full discussion of this proposal in section V.B.7. of the proposed rule and this final rule with comment period.

    Comment: Numerous commenters supported CMS' proposal to continue to pay for separately payable drugs and biologicals based on the statutory default rate of ASP+6 percent.

    Response: We thank commenters for their support.

    After consideration of the public comments we received, we are finalizing our proposal, without modification, to pay for separately payable drugs and biologicals at ASP+6 percent based on section 1833(t)(14)(A)(iii)(II) of the Act (the statutory default). The ASP+6 percent payment amount for separately payable drugs and biologicals requires no further adjustment and represents the combined acquisition and pharmacy overhead payment for drugs and biologicals for CY 2018. In addition, we are finalizing our proposal that payment for separately payable drugs and biologicals be included in the budget neutrality adjustments, under the requirements of section 1833(t)(9)(B) of the Act, and that the budget neutral weight scalar is not applied in determining payment of these separately paid drugs and biologicals. We refer readers to section V.B.7. of the final rule with comment period for the final payment policy for drugs acquired with a 340B discount.

    We note that separately payable drug and biological payment rates listed in Addenda A and B to this final rule with comment period (available via the Internet on the CMS Web site), which illustrate the final CY 2018 payment of

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    ASP+6 percent for separately payable nonpass-through drugs and biologicals and ASP+6 percent for pass-through drugs and biologicals, reflect either ASP information that is the basis for calculating payment rates for drugs and biologicals in the physician's office setting effective October 1, 2017, or WAC, AWP, or mean unit cost from CY 2016 claims data and updated cost report information available for this final rule with comment period. In general, these published payment rates are not the same as the actual January 2018 payment rates. This is because payment rates for drugs and biologicals with ASP information for January 2018 will be determined through the standard quarterly process where ASP data submitted by manufacturers for the third quarter of 2017 (July 1, 2017 through September 30, 2017) will be used to set the payment rates that are released for the quarter beginning in January 2018 near the end of December 2017. In addition, payment rates for drugs and biologicals in Addenda A and B to this final rule with comment period for which there was no ASP information available for October 2017 are based on mean unit cost in the available CY 2016 claims data. If ASP information becomes available for payment for the quarter beginning in January 2018, we will price payment for these drugs and biologicals based on their newly available ASP information. Finally, there may be drugs and biologicals that have ASP information available for this final rule with comment period (reflecting October 2017 ASP data) that do not have ASP information available for the quarter beginning in January 2018. As stated in the CY 2018 OPPS/ASC proposed rule (82 FR 33630), these drugs and biologicals will then be paid based on mean unit cost data derived from CY 2016 hospital claims. Therefore, the payment rates listed in Addenda A and B to this final rule with comment period are not for January 2018 payment purposes and are only illustrative of the CY 2018 OPPS payment methodology using the most recently available information at the time of issuance of this final rule with comment period.

  115. Biosimilar Biological Products

    For CY 2016 and CY 2017, we finalized a policy to pay for biosimilar biological products based on the payment allowance of the product as determined under section 1847A of the Act and to subject nonpass-through biosimilar biological products to our annual threshold-

    packaged policy (for CY 2016, 80 FR 70445 through 70446; and for CY 2017, 81 FR 79674). In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, we proposed to continue this same payment policy for biosimilar biological products.

    We noted in the proposed rule that public comments on the Medicare Part B biosimilar biological product payment policy should be submitted in response to the biosimilar biological product payment policy comment solicitation in the CY 2018 MPFS proposed rule.

    Comment: Several comments urged CMS to assign separate HCPCS codes for each biosimilar biological product rather than combining biosimilar biological products of the same reference product into one HCPCS code. Some commenters who addressed the biosimilar payment policy as it relates to the 340B proposal stated that current policy (adopted in the CY 2016 OPPS/ASC final rule with comment period (80 FR 70445)) for pass-through payment for biosimilar biological products is restricted to the first biosimilar biological product of a reference product. The commenters believed that, if the 340B proposal is finalized as proposed, the preclusion on pass-through payment eligibility for second and subsequent biosimilar biological products of the same reference product would be significantly disadvantaged by the reduced payment if purchased with a 340B discount. These commenters urged CMS to reevaluate pass-through payment eligibility for biosimilar biological products and their payment under the 340B payment proposal in the proposed rule.

    Response: Comments related to policy for coding for biosimilar biological products are outside of the scope of the CY 2018 OPPS/ASC proposed rule. As we indicated in the CY 2018 OPPS/ASC proposed rule, commenters should refer to the CY 2018 MPFS final rule for discussion of the biosimilar biological product coding policy. With respect to comments regarding OPPS payment for biosimilar biological products, in the CY 2018 MPFS final rule, CMS finalized a policy to implement separate HCPCS codes for biosimilar biological products. Therefore, consistent with our established OPPS drug, biological, and radiopharmaceutical payment policy, HCPCS coding for biosimilar biological products will be based on policy established under the CY 2018 MPFS rule.

    Comments related to 340B and biosimilar biological products are discussed in section V.B.7. of this final rule with comment period.

    After consideration of the public comments we received, we are finalizing our proposed payment policy for biosimilar biological products, with the following technical correction: All biosimilar biological products will be eligible for pass-through payment and not just the first biosimilar biological product for a reference product.

    3. Payment Policy for Therapeutic Radiopharmaceuticals

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33630), for CY 2018, we proposed to continue the payment policy for therapeutic radiopharmaceuticals that began in CY 2010. We pay for separately paid therapeutic radiopharmaceuticals under the ASP methodology adopted for separately payable drugs and biologicals. If ASP information is unavailable for a therapeutic radiopharmaceutical, we base therapeutic radiopharmaceutical payment on mean unit cost data derived from hospital claims. We believe that the rationale outlined in the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524 through 60525) for applying the principles of separately payable drug pricing to therapeutic radiopharmaceuticals continues to be appropriate for nonpass-through, separately payable therapeutic radiopharmaceuticals in CY 2018. Therefore, we proposed for CY 2018 to pay all nonpass-through, separately payable therapeutic radiopharmaceuticals at ASP+6 percent, based on the statutory default described in section 1833(t)(14)(A)(iii)(II) of the Act. For a full discussion of ASP-based payment for therapeutic radiopharmaceuticals, we refer readers to the CY 2010 OPPS/ASC final rule with comment period (74 FR 60520 through 60521). We also proposed to rely on CY 2016 mean unit cost data derived from hospital claims data for payment rates for therapeutic radiopharmaceuticals for which ASP data are unavailable and to update the payment rates for separately payable therapeutic radiopharmaceuticals according to our usual process for updating the payment rates for separately payable drugs and biologicals on a quarterly basis if updated ASP information is unavailable. For a complete history of the OPPS payment policy for therapeutic radiopharmaceuticals, we refer readers to the CY 2005 OPPS final rule with comment period (69 FR 65811), the CY 2006 OPPS final rule with comment period (70 FR 68655), and the CY 2010 OPPS/ASC final rule with comment period (74 FR 60524). The proposed CY 2018 payment rates for nonpass-through, separately payable therapeutic radiopharmaceuticals were in Addenda A and B to the proposed rule (which are

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    available via the Internet on the CMS Web site).

    Comment: Commenters supported continuation of the policy to pay ASP+6 percent for therapeutic radiopharmaceuticals, if available, and to base payment on the mean unit cost derived from hospital claims data when not available. Commenters also requested that CMS examine ways to compensate hospitals for their documented higher overhead and handling costs associated with radiopharmaceuticals.

    Response: We appreciate the commenters' support. However, as we stated earlier in section V.B.1.c. of this final rule with comment period in response to a similar request for additional radiopharmaceutical payment, we continue to believe that a single payment is appropriate for radiopharmaceuticals with pass-through payment status in CY 2018 and that the payment rate of ASP+6 percent is appropriate to provide payment for both the radiopharmaceutical's acquisition cost and any associated nuclear medicine handling and compounding costs incurred by the hospital pharmacy. Payment for the radiopharmaceutical and radiopharmaceutical processing services is made through the single ASP-based payment. We refer readers to the CMS guidance document available via the Internet at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Archives.html for details on submission of ASP data for therapeutic radiopharmaceuticals.

    After consideration of the public comments we received, we are finalizing our proposal, without modification, to continue to pay all nonpass-through, separately payable therapeutic radiopharmaceuticals at ASP+6 percent. We also are finalizing our proposal to continue to rely on CY 2016 mean unit cost data derived from hospital claims data for payment rates for therapeutic radiopharmaceuticals for which ASP data are unavailable. The CY 2018 final rule payment rates for nonpass-

    through separately payable therapeutic radiopharmaceuticals are included in Addenda A and B to this final rule with comment period (which are available via the Internet on the CMS Web site).

    4. Payment Adjustment Policy for Radioisotopes Derived From Non-Highly Enriched Uranium Sources

    Radioisotopes are widely used in modern medical imaging, particularly for cardiac imaging and predominantly for the Medicare population. Some of the Technetium-99 (Tc-99m), the radioisotope used in the majority of such diagnostic imaging services, is produced in legacy reactors outside of the United States using highly enriched uranium (HEU).

    The United States would like to eliminate domestic reliance on these reactors, and is promoting the conversion of all medical radioisotope production to non-HEU sources. Alternative methods for producing Tc-99m without HEU are technologically and economically viable, and conversion to such production has begun. We expect that this change in the supply source for the radioisotope used for modern medical imaging will introduce new costs into the payment system that are not accounted for in the historical claims data.

    Therefore, beginning in CY 2013, we finalized a policy to provide an additional payment of $10 for the marginal cost for radioisotopes produced by non-HEU sources (77 FR 68323). Under this policy, hospitals report HCPCS code Q9969 (Tc-99m from non-highly enriched uranium source, full cost recovery add-on per study dose) once per dose along with any diagnostic scan or scans furnished using Tc-99m as long as the Tc-99m doses used can be certified by the hospital to be at least 95 percent derived from non-HEU sources (77 FR 68321).

    We stated in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68321) that our expectation is that this additional payment will be needed for the duration of the industry's conversion to alternative methods to producing Tc-99m without HEU. We also stated that we would reassess, and propose if necessary, on an annual basis whether such an adjustment continued to be necessary and whether any changes to the adjustment were warranted (77 FR 68316). We have reassessed this payment for CY 2018 and did not identify any new information that would cause us to modify payment. Therefore, in the CY 2018 OPPS/ASC proposed rule (82 FR 33631), for CY 2018, we proposed to continue to provide an additional $10 payment for radioisotopes produced by non-HEU sources.

    Comment: Commenters supported CMS' proposal to provide an additional $10 payment for the marginal cost of radioisotopes produced by non-HEU sources and supported continuation of the policy. However, the commenters requested that CMS update the payment amount using the hospital market basket update or hospital cost data. The commenters also requested that CMS assess whether the collection of a beneficiary copayment could discourage hospital adoption.

    Response: We appreciate the commenters' support. As discussed in the CY 2013 OPPS/ASC final rule with comment period, we did not finalize a policy to use the usual OPPS methodologies to update the non-HEU add-on payment (77 FR 68317). The purpose for the additional payment is limited to mitigating any adverse impact of transitioning to non-HEU sources and is based on the authority set forth at section 1833(t)(2)(E) of the Act. Accordingly, because we do not have authority to waive beneficiary copayment for this incentive payment, we believe it is unnecessary to assess whether a beneficiary copayment liability would deter a hospital from reporting HCPCS code Q9969. Furthermore, reporting of HCPCS code Q9969 is optional. Hospitals that are not experiencing high volumes of significantly increased costs are not obligated to request this additional payment (77 FR 68323).

    Comment: One commenter requested that CMS publish HCPCS code volume and cost data in the proposed and final rule ``Drug Blood Brachy Cost Statistics'' files yearly.

    Response: We appreciate the request and will consider revising the content of the ``Drug Blood Brachy Cost statistics'' file to include data on HCPCS code Q9969 for future rulemaking. In the interim, claims data on HCPCS code Q9969 are available for purchase in the claims data sets released with publication of this final rule with comment period.

    After consideration of the public comments we received, we are finalizing our proposal, without modification, to continue the policy of providing an additional $10 payment for radioisotopes produced by non-HEU sources for CY 2018, which will be the sixth year in which this policy is in effect in the OPPS. We will continue to reassess this policy annually, consistent with the original policy in the CY 2013 OPPS/ASC final rule with comment period (77 FR 68319).

    5. Payment for Blood Clotting Factors

    For CY 2017, we provided payment for blood clotting factors under the same methodology as other nonpass-through separately payable drugs and biologicals under the OPPS and continued paying an updated furnishing fee (81 FR 79676). That is, for CY 2017, we provided payment for blood clotting factors under the OPPS at ASP+6 percent, plus an additional payment for the furnishing fee. We note that when blood clotting factors are provided in

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    physicians' offices under Medicare Part B and in other Medicare settings, a furnishing fee is also applied to the payment. The CY 2017 updated furnishing fee was $0.209 per unit.

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33631), for CY 2018, we proposed to pay for blood clotting factors at ASP+6 percent, consistent with our proposed payment policy for other nonpass-through, separately payable drugs and biologicals, and to continue our policy for payment of the furnishing fee using an updated amount. Our policy to pay for a furnishing fee for blood clotting factors under the OPPS is consistent with the methodology applied in the physician's office and in the inpatient hospital setting. These methodologies were first articulated in the CY 2006 OPPS final rule with comment period (70 FR 68661) and later discussed in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765). The proposed furnishing fee update was based on the percentage increase in the Consumer Price Index (CPI) for medical care for the 12-month period ending with June of the previous year. Because the Bureau of Labor Statistics releases the applicable CPI data after the MPFS and OPPS/ASC proposed rules are published, we were not able to include the actual updated furnishing fee in the proposed rules. Therefore, in accordance with our policy, as finalized in the CY 2008 OPPS/ASC final rule with comment period (72 FR 66765), we proposed to announce the actual figure for the percent change in the applicable CPI and the updated furnishing fee calculated based on that figure through applicable program instructions and posting on the CMS Web site at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/index.html.

    Comment: Commenters' supported CMS' proposal to continue to pay for a blood clotting factor furnishing fee in the hospital outpatient department.

    Response: We appreciate the commenters' support.

    After consideration of the public comments we received, we are finalizing our proposal, without modification, to provide payment for blood clotting factors under the same methodology as other separately payable drugs and biologicals under the OPPS and to continue payment of an updated furnishing fee. We will announce the actual figure of the percent change in the applicable CPI and the updated furnishing fee calculation based on that figure through the applicable program instructions and posting on the CMS Web site.

    6. Payment for Nonpass-Through Drugs, Biologicals, and Radiopharmaceuticals With HCPCS Codes but Without OPPS Hospital Claims Data

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33631), for CY 2018, we proposed to continue to use the same payment policy as in CY 2017 for nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data, which describes how we determine the payment rate for drugs, biologicals, or radiopharmaceuticals without an ASP. For a detailed discussion of the payment policy and methodology, we refer readers to the CY 2016 OPPS/

    ASC final rule with comment period (80 FR 70442 through 70443). The proposed CY 2018 payment status of each of the nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data was listed in Addendum B to the proposed rule, which is available via the Internet on the CMS Web site.

    Comment: One commenter, the manufacturer of Mylotargsupreg, requested that CMS change the dose descriptor for HCPCS code J9300 from ``Injection, gemtuzumab ozogamicin, 5 mg'' to ``Injection, gemtuzumab ozogamicin, 0.1 mg,'' to accommodate the new 4.5 mg vial size for Mylotargsupreg. The commenter noted that HCPCS code J9300 was inactive for a period of time because the prior version of gemtuzumab ozogamicin was removed from the market. As such, HCPCS code J9300 is assigned status indicator ``E2 (items and services for which pricing information and claims data are not available).'' The commenter also requested that CMS change the status indicator from ``E2'' to a payable status indicator.

    Response: This comment is outside of the scope of the proposed rule. Requests for changes to Level II Alphanumeric HCPCS codes should be submitted to the CMS HCPCS Workgroup using CMS' standard procedures. Information on the Level II HCPCS code process is available via the Internet on the CMS Web site, which is publicly available at: https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/HCPCSCODINGPROCESS.html.

    After consideration of the public comments we received, we are finalizing our CY 2018 proposal without modification, including our proposal to assign drug or biological products status indicator ``K'' and pay for them separately for the remainder of CY 2018 if pricing information becomes available. The CY 2018 payment status of each of the nonpass-through drugs, biologicals, and radiopharmaceuticals with HCPCS codes but without OPPS hospital claims data is listed in Addendum B to this final rule with comment period, which is available via the Internet on the CMS Web site.

    7. Alternative Payment Methodology for Drugs Purchased Under the 340B Program

  116. Background

    The 340B Program, which was established by section 340B of the Public Health Service Act by the Veterans Health Care Act of 1992, is administered by the Health Resources and Services Administration (HRSA) within HHS. The 340B Program allows participating hospitals and other health care providers to purchase certain ``covered outpatient drugs'' (as defined under section 1927(k) of the Act and interpreted by HRSA through various guidance documents) at discounted prices from drug manufacturers. The statutory intent of the 340B Program is to maximize scarce Federal resources as much as possible, reaching more eligible patients, and providing care that is more comprehensive.\18\

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    \18\ The House report that accompanied the authorizing legislation for the 340B Program stated: ``In giving these `covered entities' access to price reductions the Committee intends to enable these entities to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.'' (H.R. Rept. No. 102-384(II), at 12 (1992)).

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    The 340B statute defines which health care providers are eligible to participate in the program (``covered entities''). In addition to Federal health care grant recipients, covered entities include hospitals with a Medicare disproportionate share hospital (DSH) percentage above 11.75 percent. However, under Public Law 111-148, section 7101 expanded eligibility to critical access hospitals (CAHs), children's hospitals with a DSH adjustment greater than 11.75 percent, sole community hospitals (SCHs) with a DSH adjustment percentage of 8.0 percent or higher, rural referral centers (RRCs) with a DSH adjustment percentage of 8.0 percent or higher, and freestanding cancer hospitals with a DSH adjustment percentage above 11.75 percent. In accordance with section 340B(a)(4)(L)(i) of the Public Health Service Act, all participating hospital types must also meet other criteria.

    HRSA calculates the ceiling price for each covered outpatient drug. The ceiling price is the drug's average manufacturer price (AMP) minus the unit rebate amount (URA), which is a statutory formula that varies depending on whether the drug is an innovator

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    single source drug (no generic available), an innovator multiple source drug (a brand drug with available generic(s)), or a non-innovator multiple source (generic) drug.\19\ The ceiling price represents the maximum price a participating drug manufacturer can charge a covered entity for the drug. However, covered entities also have the option to participate in HRSA's Prime Vendor Program (PVP), under which the prime vendor can negotiate even deeper discounts (known as ``subceiling prices'') on some covered outpatient drugs. By the end of FY 2015, the PVP had nearly 7,600 products available to participating entities below the 340B ceiling price, including 3,557 covered outpatient drugs with an estimated average savings of 10 percent below the 340B ceiling price.\20\

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    \19\ 42 U.S.C. 256b(a)(1-2). Occasionally, a drug's URA is equal to its AMP, resulting in a 340B ceiling price of $0. In these instances, HRSA has advised manufacturers to charge covered entities $0.01 per unit.

    \20\ Department of Health and Human Services. 2017. Fiscal Year 2018 Health Resources and Services Administration justification of estimates for appropriations committees. Washington, DC: HHS. Available at: https://www.hrsa.gov/sites/default/files/hrsa/about/budget/budget-justification-2018.pdf.

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    As we discussed in the CY 2018 OPPS/ASC proposed rule (82 FR 33632 and 33633), several recent studies and reports on Medicare Part B payments for 340B purchased drugs highlight a difference in Medicare Part B drug spending between 340B hospitals and non-340B hospitals as well as varying differences in the amount by which the Part B payment exceeds the drug acquisition cost.21 22 23 Links to the full reports referenced in this section can be found in the cited footnotes.

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    \21\ Office of Inspector General. ``Part B Payment for 340B Purchased Drugs. OEI-12-14-00030''. November 2015. Available at: https://oig.hhs.gov/oei/reports/oei-12-14-00030.pdf.

    \22\ Medicare Payment Advisory Commission. Report to the Congress: Overview of the 340B Drug Pricing Program. May 2015. Available at: http://www.medpac.gov/docs/default-source/reports/may-2015-report-to-the-congress-overview-of-the-340b-drug-pricing-program.pdf?sfvrsn=0.

    \23\ Government Accountability Office. ``Medicare Part B Drugs: Action Needed to Reduce Financial Incentives to Prescribe 340B Drugs at Participating Hospitals GAO-15-442''. June 2015. Available at: https://www.gao.gov/assets/680/670676.pdf.

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    In its May 2015 Report to Congress, MedPAC analyzed Medicare hospital outpatient claims (excluding CAHs) along with information from HRSA on which hospitals participate in the 340B Program. MedPAC included data on all separately payable drugs under the OPPS except for vaccines and orphan drugs provided by freestanding cancer hospitals, RRCs, and SCHs. To estimate costs that 340B hospitals incur to acquire drugs covered under the OPPS, MedPAC generally used the formula for calculating the 340B ceiling price: (AMP)--unit rebate amount (URA) x drug package size. The URA is determined by law and depends upon whether a drug is classified as single source, innovator multiple source, non-innovator multiple source, a clotting factor drug, or an exclusively pediatric drug. CMS provides this URA information to States as a courtesy. However, drug manufacturers remain responsible for correctly calculating the URA for their covered outpatient drugs. More information on the URA calculation and the Medicaid Drug Rebate Program may be found on the Web site at: https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/index.html.

    Because MedPAC did not have access to AMP data, it used each drug's ASP as a proxy for AMP. MedPAC noted that ASP is typically slightly lower than AMP. The AMP is defined under section 1927(k)(1) of the Act as the average price paid to the manufacturer by wholesalers in the United States for drugs distributed to the retail pharmacy class of trade, minus customary prompt pay discounts. Manufacturers participating in Medicaid are required to report AMP data quarterly to the Secretary, and these prices are confidential. As described under section 1847A of the Act, the ASP is a manufacturer's unit sales of a drug to all purchasers in the United States in a calendar quarter divided by the total number of units of the drug sold by the manufacturer in that same quarter. The ASP is net of any price concessions such as volume, prompt pay, and cash discounts. Certain sales are exempt from the calculation of ASP, including sales at a nominal charge and 340B discounts.

    In addition, MedPAC noted that, due to data limitations, its estimates of ceiling prices are conservative and likely higher (possibly much higher) than actual ceiling prices. Further details on the methodology used to calculate the average minimum discount for separately payable drugs can be found in Appendix A of MedPAC's May 2015 Report to Congress. In this report, MedPAC estimated that, on average, hospitals in the 340B Program ``receive a minimum discount of 22.5 percent of the ASP for drugs paid under the OPPS.''

    In its March 2016 Report to Congress (page 79), MedPAC noted that another report, which MedPAC attributed to the Office of the Inspector General (OIG), recently estimated that discounts across all 340B providers (hospitals and certain clinics) average 33.6 percent of ASP, allowing these providers to generate significant profits when they administer Part B drugs. According to the U.S. Government Accountability Office (GAO) report, the amount of the 340B discount ranges from an estimated 20 to 50 percent discount, compared to what the entity would have otherwise paid to purchase the drug. In addition, participation in the PVP often results in a covered entity paying a subceiling price on some covered outpatient drugs (estimated to be approximately 10 percent below the ceiling price) (U.S. Department of Health and Human Services, HRSA FY 2018 Budget Justification). Participation in the PVP is voluntary and free.

    As noted in the CY 2018 OPPS/ASC proposed rule, with respect to chemotherapy drugs and drug administration services, MedPAC examined Medicare Part B spending for 340B and non-340B hospitals for a 5-year period from 2008 to 2012 and found that ``Medicare spending grew faster among hospitals that participated in the 340B Program for all five years than among hospitals that did not participate in the 340B Program at any time during the study period'' (MedPAC May 2015 Report to Congress, page 14). This is just one example of drug spending increases that are correlated with participation in the 340B Program and calls into question whether Medicare's current policy to pay for separately payable drugs at ASP+6 percent is appropriate in light of the discounted rates at which 340B hospitals acquire such drugs.

    Further, GAO found that ``in both 2008 and 2012, per beneficiary Medicare Part B drug spending, including oncology drug spending, was substantially higher at 340B DSH hospitals than at non-340B hospitals.'' According to the GAO report, this indicates that, on average, beneficiaries at 340B DSH hospitals were either prescribed more drugs or more expensive drugs than beneficiaries at the other non-

    340B hospitals in GAO's analysis. For example, in 2012, average per beneficiary spending at 340B DSH hospitals was $144, compared to approximately $60 at non-340B hospitals. The differences did not appear to be explained by the hospital characteristics GAO examined or patients' health status (GAO Report 15-442, page 20).

    Under the OPPS, all hospitals (other than CAHs, which are paid based on 101 percent of reasonable costs as required by section 1834(g) of the Act) are currently paid the same rate for separately payable drugs (ASP+6 percent), regardless of whether the hospital purchased the drug at a

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    discount through the 340B Program. Medicare beneficiaries are liable for a copayment that is equal to 20 percent of the OPPS payment rate, which is currently ASP+6 percent (regardless of the 340B purchase price for the drug). Based on an analysis of almost 500 drugs billed in the hospital outpatient setting in 2013, the OIG found that, for 35 drugs, the ``difference between the Part B payment amount and the 340B ceiling price was so large that, in at least one quarter of 2013, the beneficiary's coinsurance alone . . . was greater than the amount a covered entity spent to acquire the drug'' (OIG November 2015, Report OEI-12-14-00030, page 9).

    In the CY 2009 OPPS/ASC final rule with comment period (73 FR 68655), we requested comments regarding the drug costs of hospitals that participate in the 340B Program and whether we should consider an alternative drug payment methodology for participating 340B hospitals. As noted above, in the time since that comment solicitation, access to the 340B Program was expanded under section 7101 of Public Law 111-148, which amended section 340B(a)(4) of the Public Health Service Act to expand the types of covered entities eligible to participate in the 340B Program. It is estimated that covered entities saved $3.8 billion on outpatient drugs purchased through the 340B Program in 2013.\24\ In addition, the number of hospitals participating in the program has grown from 583 in 2005 to 1,365 in 2010 and 2,140 in 2014 (MedPAC May 2015 Report to Congress). In its November 2015 report entitled ``Part B Payments for 340B-Purchased Drugs,'' the OIG found that Part B payments were 58 percent more than 340B ceiling prices, which allowed covered entities to retain approximately $1.3 billion in 2013 (OEI-12-14-00030, page 8). Given the growth in the number of providers participating in the 340B Program and recent trends in high and growing prices of several separately payable drugs administered under Medicare Part B to hospital outpatients, we stated in the CY 2018 OPPS/ASC proposed rule that we believe it is timely to reexamine the appropriateness of continuing to apply the current OPPS methodology of ASP+6 percent to hospitals that have acquired those drugs under the 340B Program at significantly discounted rates.

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    \24\ U.S. Department of Health and Human Services, HRSA FY 2015 Budget Justification, p. 342.

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    MedPAC and OIG have recommended alternative drug payment methodologies for hospitals that participate in the 340B Program. In its March 2016 Report to Congress, MedPAC recommended a legislative proposal related to payment for Part B drugs furnished by 340B hospitals under which Medicare would reduce payment rates for 340B hospitals' separately payable 340B drugs by 10 percent of the ASP and direct the program savings from reducing Part B drug payment rates to the Medicare funded uncompensated care pool.\25\ In its November 2015 report, the OIG described three options under which both the Medicare program and Medicare beneficiaries would be able to share in the program savings realized by hospitals and other covered entities that participate in the 340B Program (OEI-12-14-00030, pages 11-12). These options included: (1) Paying ASP with no additional add-on percentage; (2) paying ASP minus 14.4 percent; and (3) making payment based on the 340B ceiling price plus 6 percent of ASP for each 340B purchased drug (OEI-12-14-00030, page 11). Analysis in several of these reports notes limitations in estimating 340B-purchased drugs' acquisition costs; the inability to identify which drugs were purchased through the 340B Program within Medicare claims data was one of those limitations.

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    \25\ Medicare Payment Advisory Commission. March 2016 Report to the Congress: Medicare Payment Policy. March 2016. Available at: http://www.medpac.gov/docs/default-source/reports/chapter-3-hospital-inpatient-and-outpatient-services-march-2016-report-.pdf?sfvrsn=0.

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  117. OPPS Payment Rate for 340B Purchased Drugs

    In the CY 2018 OPPS/ASC proposed rule (82 FR 33633 through 33634), we proposed changes to our current Medicare Part B drug payment methodology for 340B hospitals that we believe would better, and more appropriately, reflect the resources and acquisition costs that these hospitals incur. Such changes would allow the Medicare program and Medicare beneficiaries to pay less for drugs when hospitals participating in the 340B Program furnish drugs to Medicare beneficiaries that are purchased under the 340B Program.

    Our goal is to make Medicare payment for separately payable drugs more aligned with the resources expended by hospitals to acquire such drugs while recognizing the intent of the 340B Program to allow covered entities, including eligible hospitals, to stretch scarce resources in ways that enable hospitals to continue providing access to care for Medicare beneficiaries and other patients. Medicare expenditures on Part B drugs have been rising and are projected to continue to rise faster than overall health spending, thereby increasing this sector's share of health care spending due to a number of underlying factors such as new higher price drugs and price increases for existing drugs.26 27 While we recognize the intent of the 340B Program, we believe it is inappropriate for Medicare to subsidize other activities through Medicare payments for separately payable drugs. We believe that any payment changes we adopt should be limited to separately payable drugs under the OPPS, with some additional exclusions. As a point of further clarity, CAHs are not included in this 340B policy change because they are paid under section 1834(g) of the Act. As stated in the CY 2018 OPPS/ASC proposed rule, these exclusions are for: (1) Drugs on pass-through payment status, which are required to be paid based on the ASP methodology, and (2) vaccines, which are excluded from the 340B Program. In addition, we solicited public comments on whether other types of drugs, such as blood clotting factors, should also be excluded from the reduced payment.

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    \26\ Department of Health and Human Services. Office of the Assistant Secretary for Planning and Evaluation. Issue Brief: Medicare Part B Drugs: Pricing and Incentives. 2016. Available at: https://aspe.hhs.gov/system/files/pdf/187581/PartBDrug.pdf.

    \27\ Department of Health and Human Services: Office of the Assistant Secretary for Planning and Evaluation. Issue Brief: Observations on Trends in Prescription Drug Spending. March 8, 2016. Available at: https://aspe.hhs.gov/system/files/pdf/187586/Drugspending.pdf.

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    Data limitations inhibit our ability to identify which drugs were acquired under the 340B Program in the Medicare OPPS claims data. This lack of information within the claims data has limited researchers' and our ability to precisely analyze differences in acquisition cost of 340B and non-340B acquired drugs with Medicare claims data. Accordingly, in the CY 2018 OPPS/ASC proposed rule (82 FR 33633), we stated our intent to establish a modifier, to be effective January 1, 2018, for hospitals to report with separately payable drugs that were not acquired under the 340B Program. Because a significant portion of hospitals paid under the OPPS participate in the 340B Program, we stated our belief that it is appropriate to presume that a separately payable drug reported on an OPPS claim was purchased under the 340B Program, unless the hospital identifies that the drug was not purchased under the 340B Program. We stated in the proposed rule that we intended to provide further details about this modifier in this CY 2018 OPPS/ASC final rule with comment period and/or through

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    subregulatory guidance, including guidance related to billing for dually eligible beneficiaries (that is, beneficiaries covered under Medicare and Medicaid) for whom covered entities do not receive a discount under the 340B Program.

    A summary of public comments received and our responses pertaining to the modifier are included later in this section. As described in detail later in this section, we are implementing the modifier such that it is required for drugs that were acquired under the 340B Program instead of requiring its use on drugs that were not acquired under the 340B Program. In addition, we are establishing an informational modifier for use by certain providers who will be excepted from the 340B payment reduction.

    Further, we note that the confidentiality of ceiling and subceiling prices limits our ability to precisely calculate the price paid by 340B hospitals for a particular covered outpatient drug. We recognize that each separately payable OPPS drug will have a different ceiling price (or subceiling price when applicable). Accordingly, we stated in the proposed rule that we believe using an average discounted price was appropriate for our proposal. Therefore, for CY 2018, we proposed to apply an average discounted price of 22.5 percent of the ASP for nonpass-through separately payable drugs purchased under the 340B Program, as estimated by MedPAC (MedPAC's May 2015 Report to Congress, page 7).

    In the near-term, we believe that the estimated average minimum discount MedPAC calculated--22.5 percent of the ASP--adequately represents the average minimum discount that a 340B participating hospital receives for separately payable drugs under the OPPS. Given the limitations in calculating a precise discount for each OPPS separately payable drug, we did not attempt to do so for the proposed rule. Instead, we stated that we believed that using the analysis from the MedPAC report is appropriate and noted that the analysis is spelled out in detail and can be replicated by interested parties. As MedPAC noted, its estimate was conservative and the actual average discount experienced by 340B hospitals is likely much higher than 22.5 percent of the ASP. As GAO mentioned, discounts under the 340B Program range from 20 to 50 percent of the ASP (GAO-11-836, page 2). We believe that such reduced payment would meet the requirements under section 1833(t)(14)(A)(iii)(II) of the Act, which states that if hospital acquisition cost data are not available, the payment for an applicable drug shall be the average price for the drug in the year established under section 1842(o), section 1847A, or section 1847B of the Act, as the case may be, as calculated and adjusted by the Secretary as necessary. We do not have hospital acquisition cost data for 340B drugs and, therefore, proposed to continue to pay for these drugs under our authority at section 1833(t)(14)(A)(iii)(II) of the Act at ASP, and then to adjust that amount by applying a reduction of 22.5 percent, which, as explained throughout this section, is the adjustment we believe is necessary for drugs acquired under the 340B Program.

    Specifically, in the CY 2018 OPPS/ASC proposed rule, we proposed to apply section 1833(t)(14)(A)(iii)(II) of the Act to all separately payable drugs and biologicals, including SCODs. However, we proposed to exercise the Secretary's authority to adjust the applicable payment rate as necessary and, for separately payable drugs and biologicals (other than drugs with pass-through payment status and vaccines) acquired under the 340B Program, we proposed to adjust the rate to ASP minus 22.5 percent, which we believe better represents the average acquisition cost for these drugs and biologicals.

    As indicated earlier, because ceiling prices are confidential, we are unable to publicly disclose those prices or set payment rates in a way that would allow the public to determine the ceiling price for a particular drug. We believe that the MedPAC analysis that found the average minimum discount of 22.5 percent of ASP adequately reflects the average minimum discount that 340B hospitals paid under the OPPS receive. In addition, we believe that using an average discount to set payment rates for OPPS separately payable drugs would achieve the dual goals of (1) adjusting payments to better reflect resources expended to acquire such drugs, and (2) protecting the confidential nature of discounts applied to a specific drug. Moreover, we do not believe that Medicare beneficiaries should be liable for a copayment rate that is tied to the current methodology of ASP+6 percent when the actual cost to the hospital to purchase the drug under the 340B Program is much lower than the ASP for the drug.

    We note that MedPAC excluded vaccines from its analysis because vaccines are not covered under the 340B Program, but it did not exclude drugs with pass-through payment status. Further, because data used to calculate ceiling prices are not publicly available, MedPAC instead estimated ``the lower bound of the average discount received by 340B hospitals for drugs paid under the OPPS'' (MedPAC May 2015 Report to Congress, page 6). Accordingly, it is likely that the average discount is higher, potentially significantly higher, than the average minimum of 22.5 percent that MedPAC found through its analysis. In the proposed rule, we encouraged the public to analyze the analysis presented in Appendix A of MedPAC's May 2015 Report to Congress.

    As noted earlier, we believe that the discount amount of 22.5 percent below the ASP reflects the average minimum discount that 340B participating hospitals receive for drugs acquired under the 340B Program, and in many cases, the average discount may be higher for some covered outpatient drugs due to hospital participation in the PVP, substitution of ASP (which includes additional rebates) for AMP, and that drugs with pass-through payment status were included rather than excluded from the MedPAC analysis. We believe that a payment rate of ASP+6 percent does not sufficiently recognize the significantly lower acquisition costs of such drugs incurred by a 340B-participating hospital. Accordingly, as noted earlier, we proposed to reduce payment for separately payable drugs, excluding drugs on pass-through payment status and vaccines, that were acquired under the 340B Program by 22.5 percent of ASP for all drugs for which a hospital does not append on the claim the modifier mentioned in the proposed rule and discussed further in this final rule with comment period. (As detailed later in this section, we are instead requiring hospitals to append the applicable modifier on the claim line with any drugs that were acquired under the 340B Program.)

    Finally, as detailed in the impact analysis section (section XIX.A.5.a.2) of the proposed rule, we also proposed that the reduced payments for separately payable drugs and biologicals purchased under the 340B Program are included in the budget neutrality adjustments, under the requirements in section 1833(t)(9)(B) of the Act, and that the budget neutral weight scalar is not applied in determining payments for these separately paid drugs and biologicals purchased under the 340B Program. In that section, we also solicited public comments on whether we should apply all or part of the savings generated by this payment reduction to increase payments for specific services paid under the OPPS, or under Part B generally, in CY 2018, rather than simply increasing the conversion factor. In particular, we

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    requested public comments on whether and how the offsetting increase could be targeted to hospitals that treat a large share of indigent patients, especially those patients who are uninsured. In addition, we requested public comments on whether savings associated with this proposal would result in unnecessary increases in the volume of covered services paid under the OPPS that should be adjusted in accordance with section 1833(t)(2)(F) of the Act. More information on the impact estimate associated with this proposal was included in section XIX.A.5.a.2. of the proposed rule. A summary of the public comments received on the impact estimate, along with our responses to those comments and our estimate of this provision for this final rule with comment period, are included in section XVIII.A.5. of this final rule with comment period.

  118. Summaries of Public Comments Received and Our Responses

    (1) Overall Comments

    Comment: Several commenters, including organizations representing physician oncology practices, pharmaceutical research and manufacturing companies, a large network of community-based oncology practices, and several individual Medicare beneficiaries, supported the proposal. Some of these commenters commended CMS for its proposal, which they believed would help address the growth of the 340B Program, stem physician practice consolidation with hospitals, and preserve patient access to community-based care.

    One of these commenters stated that the proposals would reduce drug costs for seniors by an estimated $180 million a year; help to stop hospital ``abuses'' of the 340B program; and help reverse the ``perverse incentives'' that have driven the closure and consolidation of the nation's community cancer care system.

    Another commenter, representing a large network of community-based oncology practices, noted that since 2008, 609 community cancer practices have been acquired or become affiliated with hospitals, with 75 percent of those community cancer practices acquired by 340B-

    participating hospitals. The commenter stated that the consolidation in oncology care has resulted in a 30 percent shift in the site of service for chemotherapy administration from the physician office setting to the more costly hospital outpatient setting.

    One commenter, an organization representing community oncology practices, cited several issues that the proposal would help address, including that only a small minority of 340B participating hospitals are using the program to benefit patients in need; cancer patients in need are being denied care at 340B participating hospitals or placed on wait lists; and hospitals are making extreme profits on expensive cancer drugs and are consolidating the nation's cancer care system, reducing patient choice and access and shifting care away from the private, physician-owned community oncology clinics into the more expensive 340B hospital setting, which is increasing costs for Medicare and its beneficiaries. In addition, this commenter stated that the increasing scope and magnitude of required 340B discounts are increasing drug prices to record-breaking levels as manufacturers factor these discounts into pricing decisions. The commenter also cited a report that it recently released that suggests, and provides anecdotal evidence supporting, that some 340B hospitals offered little charity care and turned away some patients in need because those patients were uninsured.\28\

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    \28\ Community Oncology Alliance. Report: ``How Abuse of the 340B Program is Hurting Patients'' September 2017. Available at: https://www.communityoncology.org/wp-content/uploads/2017/09/COA_340B-PatientStories_FINAL.pdf.

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    With respect to the magnitude of the proposed payment reduction of ASP minus 22.5 percent, one commenter noted that although the proposed decrease in payment may seem ``severe,'' ASP minus 22.5 percent is the minimum discount that hospitals in the 340B Program receive. The commenter further noted that, with 340B discounts on brand drugs approaching, and even exceeding, 50 percent, there is still substantial savings--on the order of 50 percent drug margins--for hospitals to use to provide direct and indirect patient benefits. The commenter also noted that this proposal would result in cost-sharing savings to Medicare beneficiaries, for whom drug cost is an important component of overall outpatient cancer care costs.

    Some commenters urged HHS, specifically CMS and HRSA, to work with Congress to reform the 340B Program. One commenter requested greater transparency and accountability on how 340B savings are being used, as well as a specific definition of the ``340B patient,'' which the commenter noted would require a legislative change.

    Response: We thank the commenters for their support. As mentioned in the proposed rule, we share the commenters' concern that current Medicare payments for drugs acquired under the 340B Program are well in excess of the overhead and acquisition costs for drugs purchased under the 340B Program. We continue to believe that our proposal would better align Medicare payment for separately payable drugs acquired under the 340B Program with the actual resources expended to acquire such drugs. Importantly, we continue to believe that Medicare beneficiaries should be able to share in the savings on drugs acquired through the 340B Program at a significant discount. We also appreciate the comments supporting the proposed payment amount for drugs acquired under the 340B Program of ASP minus 22.5 percent, which we believe, like several commenters, is an amount that allows hospitals to retain a profit on these drugs for use in the care of low-income and uninsured patients. As detailed later in this section, we are finalizing our proposal, with modifications, in response to public comments.

    As previously stated, CMS does not administer the 340B Program. Accordingly, feedback related to eligibility for the 340B Program as well as 340B Program policies are outside the scope of the proposed rule and are not addressed in this final rule with comment period.

    Comment: Several commenters expressed concern with the rising cost of drugs and the impact on beneficiaries and taxpayers. These commenters offered varied opinions on whether the proposal would achieve CMS' goal of lowering drug prices and reducing beneficiary out-

    of-pocket costs. Some commenters stated that the proposal has the potential to alleviate the financial burden that high-cost drugs place on patients. Other commenters stated that, because the proposal does not address the issue of expansion of 340B entities, the volume of 340B discounted drugs, and the affordability of drugs, especially oncology drugs, CMS should not finalize the proposal.

    One commenter, an individual who supported the proposal, stated that although the majority of patients with Medicare Part B coverage have supplemental coverage to pay their coinsurance, significant numbers do not have this additional protection. The commenter noted that, for a drug that is paid at $10,000 per month, the price reduction would save a beneficiary approximately $500 a month, which may be the difference between getting treatment and foregoing treatment due to financial reasons.

    Another commenter, a large organization with many members who are Medicare beneficiaries, stated that the proposal would provide a measure

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    of price relief to the 16 percent of Medicare beneficiaries without supplemental coverage. The commenter also expressed concern that the proposal would have serious health implications for beneficiaries in safety-net hospitals. The commenter urged HHS to develop proposals that will lower underlying drug prices, but did not provide any specific examples of such proposals. Another commenter stated that the cost of drugs is becoming unsustainable and applying the proposed policy is a decent ``baby step'' in controlling a situation that is ``grossly'' unfair to American taxpayers, especially when the development of new drugs is frequently funded to a large extent by taxpayers through Federal grants.

    In addition, one commenter, a large organization representing its physician and medical student members, commented that it shares the Administration's interest in addressing the rising costs of drugs and biologicals. The commenter appreciated that the proposal would address a longstanding concern: That the current payment policy for Part B drugs creates strong incentives to move Medicare beneficiary care from lower cost sites of care (such as physician offices) to higher cost sites of care (such as hospital outpatient departments). The commenter noted that many smaller physician practices have had to refer cancer and other patients who need chemotherapy and other expensive drugs to the hospital outpatient setting because the ASP+6 percent payment does not always cover a physician's acquisition cost, thereby undermining continuity of care and creating burdens for frail and medically compromised patients.

    This commenter also stated that, given the 340B Program's focus on low-income patients, it is imperative to ensure that an across-the-

    board reduction actually reflects the size of the 340B discount to avoid creating barriers to access, should both physician practices and the hospital outpatient departments be unable to cover actual acquisition costs. Further, the commenter noted that it is essential that ``a bright line policy does not inadvertently deleteriously impact patient access in all sites of care.'' Finally, the commenter stated that, while the proposed policy alters the relative disparity between payments for some hospital outpatient departments and physician practices, it still does not address the persistent challenges physician practices face in obtaining payment that covers acquisition costs.

    Response: We thank the commenters' for their feedback and share their concern about the high cost of drugs and their effect on Medicare beneficiaries. As discussed in detail later in this section, we are finalizing a change to the payment rate for certain Medicare Part B drugs purchased by hospitals through the 340B Program in order to lower the cost of drugs for seniors and ensure that they benefit from the discounts provided through the program. We look forward to working with Congress to provide HHS additional 340B programmatic flexibility, which could include tools to provide additional considerations for safety net hospitals, which play a critical role in serving our most vulnerable populations.

    As a general matter, we note that, even though many beneficiaries have supplemental coverage, beneficiaries often pay a premium for such supplemental coverage and those plans make coinsurance payments for the beneficiary. Thus, to the extent Medicare would be lessening the coinsurance amount such supplemental plans would have to make, we would expect the price of such plans to decrease or otherwise reflect these lower costs in the future, thereby lowering the amount that beneficiaries pay for supplemental plan coverage. Further, for those Medicare beneficiaries who do not have supplemental coverage at all or who have a supplemental plan that does not cover all of a beneficiary's cost-sharing obligation, the proposed policy would directly lower out-

    of-pocket spending for 340B-acquired drugs for those beneficiaries.

    In addition, we note that in the hospital setting, not only are beneficiaries liable for cost-sharing for drugs they receive, but they also incur a ``facility fee'' solely because the drug was furnished in the hospital setting. As described in section II.A.3.b. of this final rule with comment period, for CY 2018, we are adopting a policy to conditionally package Level 1 and Level 2 Drug Administration services and believe that these steps, taken together, may help encourage site-

    neutral care in that beneficiaries may receive the same drugs and drug administration services at the physician office setting without a significant difference in their financial liability between settings.

    As previously stated, we believe that ASP minus 22.5 percent is a lower bound estimate of the average discount given to hospitals participating in the 340B Program. Accordingly, we disagree that this proposal represents a ``bright-line'' policy that would hinder safety-

    net hospitals' ability to treat patients.

    While the commenter's request that HHS develop proposals to lower underlying drug prices is outside the scope of the proposals made in the proposed rule, we note that lowering the price of pharmaceuticals is a top priority, and we are committed to finding ways for Medicare payment policy not to incentivize use of overpriced drugs. With respect to Medicare Part B drug payment under the OPPS, we believe that reducing payments on 340B purchased drugs to better align with hospital acquisition costs directly lowers drug costs for those beneficiaries who receive a covered outpatient drug from a 340B participating hospital by reducing their copayments. Further, to the extent that studies have found that 340B participating hospitals tend to use more high cost drugs, we believe that this proposal helps address the incentive for hospitals to utilize these drugs in this manner solely for financial reasons.

    The expansion of 340B entities, the volume of 340B discounted drugs, and the affordability of drugs are outside the authority conferred by section 1833(t) of the Act (and, thus, are outside the scope of the proposed rule), and we see no reason to withdraw the proposal solely on account of these issues not being addressed by the proposal. Likewise, we note that the public comments on Medicare Part B drug payment in the physician office setting are also outside the scope of the proposed rule, and, therefore, are not addressed in this final rule with comment period.

    Comment: Several commenters, including organizations representing 340B-eligible safety-net hospitals in urban and rural areas and teaching hospitals, were generally opposed to the proposed changes and urged CMS to withdraw the proposal from consideration. As detailed further below, these commenters believed that the Secretary lacks statutory authority to impose such a large reduction in the payment rate for 340B drugs, and contended that such change would effectively eviscerate the 340B Program. The commenters further noted that Medicare payment cuts of this magnitude would greatly ``undermine 340B hospitals' ability to continue programs designed to improve access to services--the very goal of the 340B Program.''

    These commenters urged that, rather than ``punitively targeting'' 340B safety-net hospitals serving vulnerable patients, including those in rural areas, CMS instead redirect its efforts to halt the ``unchecked, unsustainable increases'' in the price of drugs.

    Response: We do not believe that our proposed policy ``punitively'' targets safety-net hospitals. The current OPPS payment rate of ASP+6 percent significantly exceeds the discounts

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    received for covered outpatient drugs by hospitals enrolled in the 340B Program, which can be as much as 50 percent below ASP (or higher through the PVP). As stated throughout this section, ASP minus 22.5 percent represents the average minimum discount that 340B enrolled hospitals paid under the OPPS receive. We also have noted that 340B participation does not appear to be well-aligned with the provision of uncompensated care, as some commenters suggested. As stated earlier in this section, while the commenter's request that HHS develop proposals to lower underlying drug prices is outside the scope of the proposals made in the proposed rule, we note that lowering the price of pharmaceuticals is a top priority.

    (2) Comments on the Statutory Authority for the 340B Payment Proposal

    Many commenters challenged the statutory authority of various aspects of the proposal. These comments are summarized into the broad categories below. For the reasons stated below, we disagree with these comments and believe that our proposal is within our statutory authority to promulgate.

    Secretary's Authority to Calculate and Adjust 340B-Acquired Drug Payment Rates

    Comment: Commenters asserted that section 1833(t)(14)(A)(iii)(II) of the Act does not authorize CMS to ``calculate and adjust'' the payment rate in a manner that would ``eviscerate'' the 340B Program as it applies to 340B hospitals. Some commenters asserted that the plain and ordinary meaning of the terms ``calculate'' and ``adjust'' express a limited and circumscribed authority to set the payment rate. The commenters noted that the Oxford Dictionaries define ``calculate'' as ``determine (the amount or number of something) mathematically;'' likewise, to ``adjust'' is to ``alter or move (something) slightly in order to achieve the desired fit, appearance, or result.'' Consequently, the commenters asserted that section 1833(t)(14)(A)(iii)(II) of the Act restricts the agency to mathematically determining ``an appropriate, slight alteration.'' Further, they posited that the law does not convey the power to adopt what they referred to as a novel, sweeping change to the payment rate that is a significant numerical departure from the previous rate and that would result in a reduction in payment to 340B hospitals of at least $900 million, according to the agency's own estimates, or $1.65 billion, according to the commenter's estimates.

    Another commenter stated that the Secretary's limited adjustment authority under section 1833(t)(14)(A)(iii)(II) of the Act does not ``extend so far as to gut'' what it referred to as an ``explicit statutory directive''. For example, the commenter referred the agency to Pettibone Corp. v. United States, 34 F.3d 536, 541 (7th Cir. 1994) (an agency's authority to interpret a statute ``must not be confused with a power to rewrite'').

    Some commenters, including an organization representing over 1,300 providers enrolled in the 340B Program, argued that the proposal would take away almost the entire 340B discount for many 340B drugs, especially brand name drugs (which they asserted were many of the drugs affected by the proposal). These commenters asserted that the Secretary does not have the authority to calculate and adjust 340B-acquired drug rates in this manner and noted that the standard 340B ceiling price for a brand name drug is AMP minus 23.1 percent, although the price can be lower if the drug's best price is lower or if the manufacturer increases the price of the drug more quickly than the rate of inflation. In addition, the commenters asserted that if a brand name drug's 340B ceiling price was based on the standard formula, the proposal would strip the hospital of nearly all its 340B savings because ``AMP has been found to be close to ASP.'' Thus, the commenters asserted, the proposed payment rate of ASP minus 22.5 percent is nearly identical to AMP minus 23.1 percent, leaving the hospital with ``virtually no 340B savings.''

    Some commenters stated that the proposal mistakenly assumes that 340B hospitals purchase most 340B drugs at subceiling prices negotiated by the PVP. These commenters noted that some hospitals estimate that less than 10 percent of the drugs affected by the proposal are available at a subceiling price.

    In addition, some commenters contended that subclause (I) of section 1833(t)(14)((A)(iii) establishes that the payment rate for subsequent years be set to the average acquisition cost of the drug taking into account hospital acquisition costs survey data collected through surveys meeting precise statutory requirements, and that such subclause does not provide adjustment authority for the agency. They stated that subclause (II) of section 1833(t)(14)((A)(iii) of the Act directs CMS, where acquisition cost data are not available, to set payment rates by reference to ASP provisions. Considered in context, the commenters stated that the statute reflects Congress's intent to limit CMS' authority to set payment rates and, consequently, is consistent with adjustment authority under subclause (II)--to convey only limited authority for any agency to adjust the payment rate. The commenters referred to Roberts v. Sea-Land Servs., Inc., 566 U.S. 93, 101 (2012) (Statutory provisions ``. . . cannot be construed in a vacuum. It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme'') to support their conclusions, although the commenters did not elaborate on the particular relevance of this case.

    Finally, some commenters raised concern over the Secretary's use of the May 2015 MedPAC estimate as support for the 340B payment proposal. These commenters stated that the Secretary did not conduct his own independent analysis to support the payment proposal nor did he provide justification for use of MedPAC's analysis. One commenter stated that the Secretary cannot implement a payment cut of the magnitude proposed without providing a sufficient and replicable methodology that supports the proposal and that relying on a MedPAC analysis does not suffice for this ``important fiduciary, and legal, requirement.''

    Response: We believe our authority under section 1833(t)(14)(A)(iii)(II) of the Act to ``calculate and adjust'' drug payments ``as necessary for purposes of this paragraph'' gives the Secretary broad discretion to adjust payments for drugs, which we believe includes an ability to adjust Medicare payment rates according to whether or not certain drugs are acquired at a significant discount. We disagree that this Medicare payment policy would effectively eviscerate the 340B Program and note that this proposal solely applies to applicable drug payments under the Medicare program; it does not change a hospital's eligibility for the 340B program. Further, under our proposal, we anticipate that the Medicare payment rate would continue to exceed the discounted 340B price the hospital received under the 340B program.

    As previously stated, MedPAC's estimate of ASP minus 22.5 percent represents a lower bound estimate of the average minimum discount and the actual discount is likely much higher--up to 50 percent higher, according to some estimates, for certain drugs. In some cases, beneficiary coinsurance alone exceeds the amount the hospital paid to acquire the drug under the 340B Program (OIG November 2015, Report OEI-

    12-14-00030, page 9). We did not

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    receive public comments suggesting an alternative minimum discount off the ASP that would better reflect the hospital acquisition costs for 340B-acquired drugs. We believe this is notable because hospitals have their own data regarding their own acquisition costs, as well as data regarding OPPS payment rates for drugs. The fact that hospitals did not submit comments suggesting an alternative minimum discount that would be a better, more accurate reflection of the discount at issue is instructive for two reasons. One, it gives us confidence that our suggested payment of ASP minus 22.5 percent is, in fact, the low bound of the estimate and keeps Medicare payment within the range where hospitals will not be underpaid for their acquisition costs of such drugs. Two, it gives us confidence that the affected hospital community does not believe there is some other number, such as ASP minus 24 percent or ASP minus 17 percent, that would be a better, more accurate measure of what Medicare Part B should pay for drugs acquired at a discount through the 340B Program. Given the limitations in calculating a precise discount for each OPPS separately payable drug, we did not attempt to do so for the proposed rule. Instead, we stated that we believed that using the analysis from the MedPAC report is appropriate because MedPAC's estimate is based on all drugs separately paid under the OPPS except for vaccines, which are not eligible for 340B prices. Furthermore, the analysis is publicly available and can be replicated by interested parties.

    With respect to the comments about the PVP, as previously stated, by the end of FY 2015, the PVP had nearly 7,600 products available to participating entities below the 340B ceiling price, including 3,557 covered outpatient drugs with an estimated average savings of 10 percent below the 340B ceiling price. Participation in the PVP is voluntary and free, and we are aware of no reason that an eligible entity would not participate.

    Furthermore, we disagree that the Secretary's authority under section 1834(t)(14)(A)(iii)(II) of the Act to calculate and adjust drugs rates as necessary is limited to what some might consider minor changes and find no evidence in the statute to support that position. As previously stated, we believe that ASP minus 22.5 percent represents the average minimum discount that hospitals paid under the OPPS received for drugs acquired under the 340B Program and reiterate that, in many instances, the discount is much higher. Thus, we are using this authority to apply a downward adjustment that is necessary to better reflect acquisition costs of those drugs.

    Authority To Vary Payment by Hospital Group

    Comment: Some commenters asserted that only subparagraph (I), and not subparagraph (II), of section 1833(t)(14)(A)(iii) of the Act permits CMS to vary payment ``by hospital group.'' These commenters suggested that, by including ``by hospital group'' in subparagraph (I) and omitting it in subparagraph (II), Congress expressed its intent that CMS may not vary prices by hospital group under subparagraph (II). They further commented that the subparagraph (II) methodology must apply to ``the drug,'' and CMS may not vary payment for the same drug based upon the type of hospital.

    Response: We disagree with the commenters who argue that the proposed policy would exceed the Secretary's authority under the statute by inappropriately varying payments for drugs by ``hospital group'' because we rely on section 1833(t)(14)(A)(iii)(II) of the Act, even though the explicit authority to vary payment rates by hospital group is in subclause (I) of section 1