[Federal Register: August 12, 2005 (Volume 70, Number 155)]
[Rules and Regulations]
[Page 47277-47707]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12au05-18]
[[Page 47277]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 405, 412, 413, 415, et al.
Medicare Program; Changes to the Hospital Inpatient Prospective Payment
Systems and Fiscal Year 2006 Rates; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 405, 412, 413, 415, 419, 422, and 485
[CMS-1500-F]
RIN 0938-AN57
Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2006 Rates
AGENCY: Centers for Medicare and Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: We are revising the Medicare hospital inpatient prospective
payment systems (IPPS) for operating and capital-related costs to
implement changes arising from our continuing experience with these
systems. In addition, in the Addendum to this final rule, we describe
the changes to the amounts and factors used to determine the rates for
Medicare hospital inpatient services for operating costs and capital-
related costs. We also are setting forth rate-of-increase limits as
well as policy changes for hospitals and hospital units excluded from
the IPPS that are paid in full or in part on a reasonable cost basis
subject to these limits. These changes are applicable to discharges
occurring on or after October 1, 2005, with one exception: The changes
relating to submittal of hospital wage data by a campus or campuses of
a multicampus hospital system (that is, the changes to Sec.
412.230(d)(2) of the regulations) are effective on August 12, 2005.
Among the policy changes that we are making are changes relating
to: The classification of cases to the diagnosis-related groups (DRGs);
the long-term care (LTC)-DRGs and relative weights; the wage data,
including the occupational mix data, used to compute the wage index;
rebasing and revision of the hospital market basket; applications for
new technologies and medical services add-on payments; policies
governing postacute care transfers, payments to hospitals for the
direct and indirect costs of graduate medical education, submission of
hospital quality data, payment adjustment for low-volume hospitals,
changes in the requirements for provider-based facilities; and changes
in the requirements for critical access hospitals (CAHs).
DATES: Effective Dates: The provisions of this final rule, except the
provisions of Sec. 412.230(d)(2), are effective on October 1, 2005.
The provisions of Sec. 412.230(d)(2) are effective on August 12, 2005.
This rule is a major rule as defined in 5 U.S.C. 804(2). Pursuant to 5
U.S.C. 801(a)(1)(A), we are submitting a report to Congress on this
rule on August 1, 2005.
FOR FURTHER INFORMATION CONTACT:
Marc Hartstein, (410) 786-4548, Operating Prospective Payment,
Diagnosis-Related Groups (DRGs), Wage Index, New Medical Services and
Technology Add-On Payments, Hospital Geographic Reclassifications,
Postacute Care Transfers, and Disproportionate Share Hospital Issues.
Tzvi Hefter, (410) 786-4487, Capital Prospective Payment, Excluded
Hospitals, Graduate Medical Education, Critical Access Hospitals, and
Long-Term Care (LTC)-DRGs, and Provider-Based Facilities Issues.
Steve Heffler, (410) 786-1211, Hospital Market Basket Revision and
Rebasing.
Siddhartha Mazumdar, (410) 786-6673, Rural Hospital Community
Demonstration Project Issues.
Mary Collins, (410) 786-3189, Critical Access Hospitals (CAHs)
Issues.
Debbra Hattery, (410) 786-1855, Quality Data for Annual Payment
Update Issues.
Martha Kuespert, (410) 786-4605, Specialty Hospitals Definition
Issues.
SUPPLEMENTARY INFORMATION:
Electronic Access
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Acronyms
AAOS American Association of Orthopedic Surgeons
ACGME Accreditation Council on Graduate Medical Education
AHIMA American Health Information Management Association
AHA American Hospital Association
AICD Automatic implantable cardioverter defibrillator
AMI Acute myocardial infarction
AOA American Osteopathic Association
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BES Business Expenses Survey
BIPA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Benefits Improvement and Protection Act of 2000,
Pub. L. 106-554
BLS Bureau of Labor Statistics
CAH Critical access hospital
CBSAs Core-Based Statistical Areas
CC Complication or comorbidity
CIPI Capital Input Price Index
CMS Centers for Medicare & Medicaid Services
CMSA Consolidated Metropolitan Statistical Area
COBRA Consolidated Omnibus Reconciliation Act of 1985, Pub. L. 99-
272
CoP Condition of Participation
CPI Consumer Price Index
CRNA Certified registered nurse anesthetist
CRT Cardiac Resynchronization Therapy
DRG Diagnosis-related group
DSH Disproportionate share hospital
ECI Employment Cost Index
FDA Food and Drug Administration
FIPS Federal Information Processing Standards
FQHC Federally qualified health center
FTE Full-time equivalent
FY Federal fiscal year
GAAP Generally accepted accounting principles
GAF Geographic adjustment factor
HIC Health Insurance Card
HIS Health Information System
GME Graduate medical education
HCRIS Hospital Cost Report Information System
HIPC Health Information Policy Council
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
HHA Home health agency
HHS Department of Health and Human Services
HPSA Health Professions Shortage Area
HQA Hospital Quality Alliance
ICD-9-CM International Classification of Diseases, Ninth Revision,
Clinical Modification
ICD-10-PCS International Classification of Diseases, Tenth Edition,
Procedure Coding System
ICU Intensive Care Unit
IHS Indian Health Service
IME Indirect medical education
IPPS Acute care hospital inpatient prospective payment system
IPF Inpatient psychiatric facility
IRF Inpatient rehabilitation facility
IRP Initial residency period
JCAHO Joint Commission on Accreditation of Healthcare Organizations
LAMCs Large area metropolitan counties
LTC-DRG Long-term care diagnosis-related group
LTCH Long-term care hospital
MCE Medicare Code Editor
MCO Managed care organization
MDC Major diagnostic category
[[Page 47279]]
MDH Medicare-dependent small rural hospital
MedPAC Medicare Payment Advisory Commission
MedPAR Medicare Provider Analysis and Review File
MEI Medicare Economic Index
MGCRB Medicare Geographic Classification Review Board
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MRHFP Medicare Rural Hospital Flexibility Program
MSA Metropolitan Statistical Area
NAICS North American Industrial Classification System
NCD National coverage determination
NCHS National Center for Health Statistics
NCVHS National Committee on Vital and Health Statistics
NECMA New England County Metropolitan Areas
NICU Neonatal intensive care unit
NQF National Quality Forum
NTIS National Technical Information Service
NVHRI National Voluntary Hospital Reporting Initiative
OES Occupational Employment Statistics
OIG Office of the Inspector General
OMB Executive Office of Management and Budget
O.R. Operating room
OSCAR Online Survey Certification and Reporting (System)
PRM Provider Reimbursement Manual
PPI Producer Price Index
PMS Performance Measurement System
PMSAs Primary Metropolitan Statistical Areas
PPS Prospective payment system
PRA Per resident amount
ProPAC Prospective Payment Assessment Commission
PRRB Provider Reimbursement Review Board
PS&R Provider Statistical and Reimbursement System
QIA Quality Improvement Organizations
RHC Rural health clinic
RHQDAPU Reporting Hospital Quality Data for Annual Payment Update
RNHCI Religious nonmedical health care institution
RRC Rural referral center
RUCAs Rural-Urban Commuting Area Codes
SCH Sole community hospital
SDP Single Drug Pricer
SIC Standard Industrial Codes
SNF Skilled nursing facility
SOCs Standard occupational classifications
SOM State Operations Manual
SSA Social Security Administration
SSI Supplemental Security Income
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-
248
UHDDS Uniform Hospital Discharge Data Set
Table of Contents
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System
(IPPS)
2. Hospitals and Hospital Units Excluded from the IPPS
a. IRFs
b. LTCH
c. IPFs
3. Critical Access Hospitals (CAHs)
4. Payments for Graduate Medical Education (GME)
B. Summary of Provisions of the FY 2006 IPPS Proposed Rule
1. Changes to the DRG Reclassifications and Recalibrations of
Relative Weights
2. Changes to the Hospital Wage Index
3. Revision and Rebasing of the Hospital Market Basket
4. Other Decisions and Changes to the PPS for Inpatient
Operating and GME Costs
5. PPS for Capital-Related Costs
6. Changes for Hospitals and Hospital Units Excluded From the
IPPS
7. Payment for Blood Clotting Factors for Inpatients With
Hemophilia
8. Determining Prospective Payment Operating and Capital Rates
and Rate-of-Increase Limits
9. Impact Analysis
10. Recommendation of Update Factor for Hospital Inpatient
Operating Costs
11. Discussion of Medicare Payment Advisory Commission
Recommendations
C. Public Comments Received in Response to the FY 2006 IPPS
Proposed Rule
II. Changes to DRG Classifications and Relative Weights
A. Background
B. DRG Reclassifications
1. General
2. Yearly Review for Making DRG Changes; Request for Public
Comment
3. Pre-MDC: Intestinal Transplantation
4. MDC 1 (Diseases and Disorders of the Nervous System)
a. Strokes
b. Unruptured Cerebral Aneurysms
5. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Severity Adjusted Cardiovascular Procedures
b. Automatic Implantable Cardioverter/Defibrillator
c. Coronary Artery Stents
d. Insertion of Left Atrial Appendage Device
e. External Heart Assist System Implant
f. Carotid Artery Stent
g. Extracorporeal Membrane Oxygenation (ECMO)
6. MDC 6 (Diseases and Disorders of the Digestive System):
Artificial Anal Sphincter
7. MDC 8 (Diseases and Disorders of the Musculoskeletal System
and Connective Tissue)
a. Hip and Knee Replacements
b. Kyphoplasty
c. Multiple Level Spinal Fusion
d. Charite(tm) Spinal Disc Replacement Device
8. MDC 18 (Infectious and Parasitic Diseases (Systemic or
Unspecified Sites)): Severe Sepsis
9. MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic
Mental Disorders): Drug-Induced Dementia
10. Medicare Code Editor (MCE) Changes
a. Newborn Age Edit
b. Newborn Diagnoses Edit
c. Diagnoses Allowed for ``Males Only'' Edit
d. Tobacco Use Disorder Edit
e. Noncovered Procedure Edit
11. Surgical Hierarchies
12. Refinement of Complications and Comorbidities (CC) List
a. Background
b. Comprehensive Review of the CC List
c. CC Exclusion List for FY 2006
13. Review of Procedure Codes in DRGs 468, 476, and 477
a. Moving Procedure Codes from DRG 468 or DRG 477 to MDCs
b. Reassignment of Procedures among DRGs 468, 476, and 477
c. Adding Diagnosis or Procedure Codes to MDCs
14. Changes to the ICD-9-CM Coding System
15. Other Issues
a. Acute Intermittent Porphyria
b. Prosthetic Cardiac Support Device (Code 37.41)
c. Coronary Intravascular Ultrasound (IVUS) (Procedure Code
00.24)
d. Islet Cell Transplantation
C. Recalibration of DRG Weights
D. LTC-DRG Reclassifications and Relative Weights for LTCHs for
FY 2006
1. Background
2. Changes in the LTC-DRG Classifications
a. Background
b. Patient Classifications into DRGs
3. Development of the Proposed FY 2006 LTC-DRG Relative Weights
a. General Overview of Development of the LTC-DRG Relative
Weights
b. Data
c. Hospital-Specific Relative Value Methodology
d. Low-Volume LTC-DRGs
4. Steps for Determining the FY 2006 LTC-DRG Relative Weights
5. Other Public Comments Relating to the LTCH PPS Payment
Policies
E. Add-On Payments for New Services and Technologies
1. Background
2. FY 2006 Status of Technology Approved for FY 2005 Add-On
Payments
3. Reevaluation of FY 2005 Applications That Were Not Approved
4. FY 2006 Applicants for New Technology Add-On Payments
III. Changes to the Hospital Wage Index
A. Background
B. Core-Based Statistical Areas for the Hospital Wage Index
C. Occupational Mix Adjustment to FY 2006 Index
1. Development of Data for the Occupational Mix Adjustment
2. Calculation of the Occupational Mix Adjustment Factor and the
Occupational Mix Adjusted Wage Index
D. Worksheet S-3 Wage Data for the FY 2006 Wage Index Update
E. Verification of Worksheet S-3 Wage Data
F. Computation of the FY 2006 Unadjusted Wage Index
G. Computation of the FY 2006 Blended Wage Index
H. Revisions to the Wage Index Based on Hospital Redesignation
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1. General
2. Effects of Reclassification
3. Application of Hold Harmless Protection for Certain Urban
Hospitals Redesignated as Rural
4. FY 2006 MGCRB Reclassifications
5. FY 2006 Redesignations under Section 1886(d)(8)(B) of the Act
6. Reclassifications under Section 508 of Pub. L. 108-173
I. FY 2006 Wage Index Adjustment Based on Commuting Patterns of
Hospital Employees
J. Requests for Wage Index Data Corrections
IV. Rebasing and Revision of the Hospital Market Baskets
A. Background
B. Rebasing and Revising the Hospital Market Basket
1. Development of Cost Categories and Weights
2. PPS--Selection of Price Proxies
3. Labor-Related Share
C. Separate Market Basket for Hospitals and Hospital Units
Excluded from the IPPS
1. Hospitals Paid Based on Their Reasonable Costs
2. Excluded Hospitals Paid Under Blend Methodology
3. Development of Cost Categories and Weights for the 2002-Based
Excluded Hospital Market Basket
D. Frequency of Updates of Weights in IPPS Hospital Market
Basket
E. Capital Input Price Index Section
V. Other Decisions and Changes to the IPPS for Operating Costs and
GME Costs
A. Postacute Care Transfer Payment Policy
1. Background
2. Changes to DRGs Subject to the Postacute Care Transfer Policy
B. Reporting of Hospital Quality Data for Annual Hospital
Payment Update
1. Background
2. Requirements for Hospital Reporting of Quality Data
C. Sole Community Hospitals and Medicare Dependent Hospitals
1. Background
2. Budget Neutrality Adjustment to Hospital Payments Based on
Hospital-Specific Rate
3. Technical Change
D. Rural Referral Centers
1. Case-Mix Index
2. Discharges
3. Technical Change
E. Payment Adjustment for Low-Volume Hospitals
F. Indirect Medical Education (IME) Adjustment
1. Background
2. IME Adjustment for IPPS-Excluded Hospitals Converting to IPPS
Hospitals
3. Section 1886(d)(3)(E) Teaching Hospitals That Withdraw Rural
Reclassification
G. Payment to Disproportionate Share Hospitals (DSHs)
1. Background
2. Implementation of Section 951 of Pub. L. 108-173
3. Calculation of the Medicare Fraction
4. Calculation of the Medicaid Fraction
H. Geographic Reclassifications
1. Background
2. Multicampus Hospitals
3. Urban Group Hospital Reclassifications
4. Clarification of Goldsmith Modification Criterion for Urban
Hospitals Seeking Reclassification as Rural
I. Payment for Direct Graduate Medical Education
1. Background
2. Direct GME Initial Residency Period
a. Background
b. Direct GME Initial Residency Period Limitation: Simultaneous
Match
3. New Teaching Hospitals' Participation in Medicare GME
Affiliated Groups
4. GME FTE Cap Adjustments for Rural Hospitals
5. Technical Changes: Cross-References
J. Provider-Based Status of Facilities under Medicare
1. Background
2. Limits on Scope of Provider-Based Regulations--Facilities for
Which Provider-Based Determinations Will Not Be Made
3. Location Requirement for Off-Campus Facilities: Application
to Certain Neonatal Intensive Care Units
4. Technical and Clarifying Changes
K. Rural Community Hospital Demonstration Program
L. Definition of a Hospital in Connection with Specialty
Hospitals
VI. PPS for Capital-Related Costs
VII. Changes for Hospitals and Hospital Units Excluded From the IPPS
A. Payments to Excluded Hospitals and Hospital Units
1. Payments to Existing Excluded Hospitals and Hospital Units
2. Updated Caps for New Excluded Hospitals and Units
3. Implementation of a PPS for IRFs
4. Implementation of a PPS for LTCHs
5. Implementation of a PPS for IPFs
6. Report of Adjustment (Exception) Payments
B. Critical Access Hospitals (CAHs)
1. Background
2. Policy Change Relating to Continued Participation by CAHs in
Lugar Counties
3. Policy Change Relating to Designation of CAHs as Necessary
Providers
a. Determination of the Relocation Status of a CAH
b. Relocation of a CAH Using a Waiver To Meet the CoP for
Distance
VIII. Payment for Blood Clotting Factor Administered to Hemophilia
Inpatients
IX. MedPAC Recommendations
A. Medicare Payment Policy
1. Update Factor
2. Quality Incentive Payment Policy
3. Refinement of DRGs Based on Severity of Illness
4. APR-DRGs
5. DRG Relative Weights
6. High-Cost Outliers
B. Other MedPAC Recommendations
X. Other Required Information
A. Requests for Data From the Public
B. Collection of Information Requirements
Regulation Text
Addendum--Schedule of Standardized Amounts Effective with Discharges
Occurring On or After October 1, 2005 and Update Factors and Rate-of-
Increase Percentages Effective With Cost Reporting Periods Beginning On
or After October 1, 2005
I. Summary and Background
II. Changes to Prospective Payment Rates for Hospital Inpatient
Operating Costs for FY 2006
A. Calculation of the Adjusted Standardized Amount
1. Standardization of Base-Year Costs or Target Amounts
2. Computing the Average Standardized Amount
3. Updating the Average Standardized Amount
4. Other Adjustments to the Average Standardized Amount
a. Recalibration of DRG Weights and Updated Wage Index--Budget
Neutrality Adjustment
b. Reclassified Hospitals--Budget Neutrality Adjustment
c. Outliers
d. Rural Community Hospital Demonstration Program Adjustment
(Section 410A of Pub. L. 108-173)
5. FY 2006 Standardized Amount
B. Adjustments for Area Wage Levels and Cost-of-Living
1. Adjustment for Area Wage Levels
2. Adjustment for Cost-of-Living in Alaska and Hawaii
C. DRG Relative Weights
D. Calculation of Prospective Payment Rates for FY 2006
1. Federal Rate
2. Hospital-Specific Rate (Applicable Only to SCHs and MDHs)
a. Calculation of Hospital-Specific Rate
b. Updating the FY 1982, FY 1987, and FY 1996 Hospital-Specific
Rates for FY 2006
3. General Formula for Calculation of Prospective Payment Rates
for Hospitals Located in Puerto Rico Beginning On or After October
1, 2005 and Before October 1, 2006
a. Puerto Rico Rate
b. National Rate
III. Changes to Payment Rates for Acute Care Hospital Inpatient
Capital-Related Costs for FY 2006
A. Determination of Federal Hospital Inpatient Capital-Related
Prospective Payment Rate Update
1. Capital Standard Federal Rate Update
a. Description of the Update Framework
b. Comparison of CMS and MedPAC Update Recommendation
2. Outlier Payment Adjustment Factor
3. Budget Neutrality Adjustment Factor for Changes in DRG
Classifications and Weights and the Geographic Adjustment Factor
4. Exceptions Payment Adjustment Factor
5. Capital Standard Federal Rate for FY 2006
6. Special Capital Rate for Puerto Rico Hospitals
B. Calculation of Inpatient Capital-Related Prospective Payments
for FY 2006
C. Capital Input Price Index
1. Background
[[Page 47281]]
2. Forecast of the CIPI for FY 2006
IV. Changes to Payment Rates for Excluded Hospitals and Hospital
Units: Rate-of-Increase Percentages
A. Payments to Existing Excluded Hospitals and Units
B. Updated Caps for New Excluded Hospitals and Units
V. Payment for Blood Clotting Factor Administered to Hemophilia
Inpatients
Tables
Table 1A--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor (69.7 Percent Labor Share/30.3 Percent Nonlabor Share If
Wage Index Is Greater Than 1)
Table 1B--National Adjusted Operating Standardized Amounts, Labor/
Nonlabor (62 Percent Labor Share/38 Percent Nonlabor Share If Wage
Index Is Less Than or Equal to 1)
Table 1C--Adjusted Operating Standardized Amounts for Puerto Rico,
Labor/Nonlabor
Table 1D--Capital Standard Federal Payment Rate
Table 2--Hospital Case-Mix Indexes for Discharges Occurring in
Federal Fiscal Year 2004; Hospital Wage Indexes for Federal Fiscal
Year 2006; Hospital Average Hourly Wage for Federal Fiscal Years
2004 (2000 Wage Data), 2005 (2001 Wage Data), and 2006 (2002 Wage
Data); Wage Indexes and 3-Year Average of Hospital Average Hourly
Wages
Table 3A--FY 2006 and 3-Year Average Hourly Wage for Urban Areas by
CBSA
Table 3B--FY 2006 and 3-Year Average Hourly Wage for Rural Areas by
CBSA
Table 4A--Wage Index and Capital Geographic Adjustment Factor (GAF)
for Urban Areas by CBSA
Table 4B--Wage Index and Capital Geographic Adjustment Factor (GAF)
for Rural Areas by CBSA
Table 4C--Wage Index and Capital Geographic Adjustment Factor (GAF)
for Hospitals That Are Reclassified by CBSA
Table 4F--Puerto Rico Wage Index and Capital Geographic Adjustment
Factor (GAF) by CBSA
Table 4J--Out-Migration Wage Adjustment--FY 2006
Table 5--List of Diagnosis-Related Groups (DRGs), Relative Weighting
Factors, and Geometric and Arithmetic Mean Length of Stay (LOS)
Table 6A--New Diagnosis Codes
Table 6B--New Procedure Codes
Table 6C--Invalid Diagnosis Codes
Table 6D--Invalid Procedure Codes
Table 6E--Revised Diagnosis Code Titles
Table 6F--Revised Procedure Code Titles
Table 6G--Additions to the CC Exclusions List
Table 6H--Deletions from the CC Exclusions List
Table 7A--Medicare Prospective Payment System Selected Percentile
Lengths of Stay [FY 2004 MedPAR Update March 2005 GROUPER V22.0]
Table 7B--Medicare Prospective Payment System Selected Percentile
Lengths of Stay: [FY 2004 MedPAR Update March 2005 GROUPER V23.0]
Table 8A--Statewide Average Operating Cost-to-Charge Ratios-July
2005
Table 8B--Statewide Average Capital Cost-to-Charge Ratios-July 2005
Table 9A--Hospital Reclassifications and Redesignations by
Individual Hospital and CBSA--FY 2006
Table 9B--Hospital Reclassifications and Redesignation by Individual
Hospital Under Section 508 of Pub. L. 108-173--FY 2006
Table 9C--Hospitals Redesignated as Rural under Section
1886(d)(8)(E) of the Act--FY 2006
Table 10--Geometric Mean Plus the Lesser of .75 of the National
Adjusted Operating Standardized Payment Amount (Increased to Reflect
the Difference Between Costs and Charges) or .75 of One Standard
Deviation of Mean Charges by Diagnosis-Related Groups (DRGs)--July
2005
Table 11--FY 2006 LTC-DRGs, Relative Weights, Geometric Average
Length of Stay, and 5/6ths of the Geometric Average Length of Stay
Appendix A--Regulatory Impact Analysis
Appendix B--Recommendation of Update Factors for Operating Cost
Rates of Payment for Inpatient Hospital Services
I. Background
A. Summary
1. Acute Care Hospital Inpatient Prospective Payment System (IPPS)
Section 1886(d) of the Social Security Act (the Act) sets forth a
system of payment for the operating costs of acute care hospital
inpatient stays under Medicare Part A (Hospital Insurance) based on
prospectively set rates. Section 1886(g) of the Act requires the
Secretary to pay for the capital-related costs of hospital inpatient
stays under a prospective payment system (PPS). Under these PPSs,
Medicare payment for hospital inpatient operating and capital-related
costs is made at predetermined, specific rates for each hospital
discharge. Discharges are classified according to a list of diagnosis-
related groups (DRGs).
The base payment rate is comprised of a standardized amount that is
divided into a labor-related share and a nonlabor-related share. The
labor-related share is adjusted by the wage index applicable to the
area where the hospital is located; and if the hospital is located in
Alaska or Hawaii, the nonlabor-related share is adjusted by a cost-of-
living adjustment factor. This base payment rate is multiplied by the
DRG relative weight.
If the hospital treats a high percentage of low-income patients, it
receives a percentage add-on payment applied to the DRG-adjusted base
payment rate. This add-on payment, known as the disproportionate share
hospital (DSH) adjustment, provides for a percentage increase in
Medicare payments to hospitals that qualify under either of two
statutory formulas designed to identify hospitals that serve a
disproportionate share of low-income patient. For qualifying hospitals,
the amount of this adjustment may vary based on the outcome of the
statutory calculations.
If the hospital is an approved teaching hospital, it receives a
percentage add-on payment for each case paid under the IPPS (known as
the indirect medical education (IME) adjustment). This percentage
varies, depending on the ratio of residents to beds.
Additional payments may be made for cases that involve new
technologies or medical services that have been approved for special
add-on payments. To qualify, a new technology or medical service must
demonstrate that it is a substantial clinical improvement over
technologies or services otherwise available, and that, absent an add-
on payment, it would be inadequately paid under the regular DRG
payment.
The costs incurred by the hospital for a case are evaluated to
determine whether the hospital is eligible for an additional payment as
an outlier case. This additional payment is designed to protect the
hospital from large financial losses due to unusually expensive cases.
Any outlier payment due is added to the DRG-adjusted base payment rate,
plus any DSH, IME, and new technology or medical service add-on
adjustments.
Although payments to most hospitals under the IPPS are made on the
basis of the standardized amounts, some categories of hospitals are
paid the higher of a hospital-specific rate based on their costs in a
base year (the higher of FY 1982, FY 1987, or FY 1996) or the IPPS rate
based on the standardized amount. For example, sole community hospitals
(SCHs) are the sole source of care in their areas, and Medicare-
dependent, small rural hospitals (MDHs) are a major source of care for
Medicare beneficiaries in their areas. Both of these categories of
hospitals are afforded this special payment protection in order to
maintain access to services for beneficiaries. (An MDH receives only 50
percent of the difference between the IPPS rate and its hospital-
specific rates if the hospital-specific rate is higher than the IPPS
rate. In addition, an MDH does not have the option of using FY 1996 as
the base year for its hospital-specific rate.)
Section 1886(g) of the Act requires the Secretary to pay for the
capital-related costs of inpatient hospital services ``in accordance
with a prospective payment system established by the Secretary.'' The
basic methodology for determining
[[Page 47282]]
capital prospective payments is set forth in our regulations at 42 CFR
412.308 and 412.312. Under the capital PPS, payments are adjusted by
the same DRG for the case as they are under the operating IPPS. Similar
adjustments are also made for IME and DSH as under the operating IPPS.
In addition, hospitals may receive an outlier payment for those cases
that have unusually high costs.
The existing regulations governing payments to hospitals under the
IPPS are located in 42 CFR Part 412, Subparts A through M.
2. Hospitals and Hospital Units Excluded From the IPPS
Under section 1886(d)(1)(B) of the Act, as amended, certain
specialty hospitals and hospital units are excluded from the IPPS.
These hospitals and units are: Psychiatric hospitals and units;
rehabilitation hospitals and units; long-term care hospitals (LTCHs);
children's hospitals; and cancer hospitals. Various sections of the
Balanced Budget Act of 1997 (Pub. L. 105-33), the Medicare, Medicaid
and SCHIP [State Children's Health Insurance Program] Balanced Budget
Refinement Act of 1999 (Pub. L. 106-113), and the Medicare, Medicaid,
and SCHIP Benefits Improvement and Protection Act of 2000 (Pub. L. 106-
554) provide for the implementation of PPSs for rehabilitation
hospitals and units (referred to as inpatient rehabilitation facilities
(IRFs)), psychiatric hospitals and units (referred to as inpatient
psychiatric facilities (IPFs)), and LTCHs, as discussed below.
Children's hospitals and cancer hospitals continue to be paid under
reasonable cost-based reimbursement.
The existing regulations governing payments to excluded hospitals
and hospital units are located in 42 CFR parts 412 and 413.
a. IRFs
Under section 1886(j) of the Act, as amended, rehabilitation
hospitals and units (IRFs) have been transitioned from payment based on
a blend of reasonable cost reimbursement subject to a hospital-specific
annual limit under section 1886(b) of the Act and the adjusted facility
Federal prospective payment rate for cost reporting periods beginning
on or after January 1, 2002 through September 30, 2002, to payment at
100 percent of the Federal rate effective for cost reporting periods
beginning on or after October 1, 2002 (66 FR 41316, August 7, 2001; 67
FR 49982, August 1, 2002; 68 FR 45674, August 1, 2003, and 69 FR 45721,
July 30, 2004). The existing regulations governing payments under the
IRF PPS are located in 42 CFR part 412, subpart P.
b. LTCHs
Under the authority of sections 123(a) and (c) of Pub. L. 106-113
and section 307(b)(1) of Pub. L. 106-554, LTCHs are being transitioned
from being paid for inpatient hospital services based on a blend of
reasonable cost-based reimbursement under section 1886(b) of the Act to
100 percent of the Federal rate during a 5-year period, beginning with
cost reporting periods that start on or after October 1, 2002. For cost
reporting periods beginning on or after October 1, 2006, LTCHs will be
paid 100 percent of the Federal rate (LTCH PPS final rule (70 FR
24168)). LTCHs not meeting the definition in Sec. 412.23(e)(4) of the
regulations may elect to be paid based on 100 percent of the Federal
rate instead of a blended payment in any year during the 5-year
transition period. LTCHs meeting the definition in Sec. 412.23(e)(4)
will be paid based on 100 percent of the standard Federal rate. The
existing regulations governing payment under the LTCH PPS are located
in 42 CFR part 412, subpart O.
c. IPFs
Under the authority of sections 124(a) and (c) of Pub. L. 106-113,
inpatient psychiatric facilities (IPFs) (formerly psychiatric hospitals
and psychiatric units of acute care hospitals) are paid under the new
IPF PPS. Under the IPF PPS, some IPFs are transitioning from being paid
for inpatient hospital services based on a blend of reasonable cost-
based payment and a Federal per diem payment rate, effective for cost
reporting periods beginning on or after January 1, 2005 (November 15,
2004 IPF PPS final rule (69 FR 66921)). For cost reporting periods
beginning on or after January 1, 2008, IPFs will be paid 100 percent of
the Federal per diem payment amount. The existing regulations governing
payment under the IPF PPS are located in 42 CFR 412, subpart N.
3. Critical Access Hospitals (CAHs)
Under sections 1814, 1820, and 1834(g) of the Act, payments are
made to critical access hospitals (CAHs) (that is, rural hospitals or
facilities that meet certain statutory requirements) for inpatient and
outpatient services based on 101 percent of reasonable cost. Reasonable
cost is determined under the provisions of section 1861(v)(1)(A) of the
Act and existing regulations under 42 CFR parts 413 and 415.
4. Payments for Graduate Medical Education (GME)
Under section 1886(a)(4) of the Act, costs of approved educational
activities are excluded from the operating costs of inpatient hospital
services. Hospitals with approved graduate medical education (GME)
programs are paid for the direct costs of GME in accordance with
section 1886(h) of the Act; the amount of payment for direct GME costs
for a cost reporting period is based on the hospital's number of
residents in that period and the hospital's costs per resident in a
base year. The existing regulations governing payments to the various
types of hospitals are located in 42 CFR part 413.
B. Summary of the Provisions of the FY 2006 IPPS Proposed Rule
In the FY 2006 IPPS proposed rule (70 FR 23306), we set forth
proposed changes to the Medicare IPPS for operating costs and for
capital-related costs in FY 2006. We also set forth proposed changes
relating to payments for GME costs, payments to certain hospitals and
units that continue to be excluded from the IPPS and paid on a
reasonable cost basis, payments for DSHs, and requirements and payments
for CAHs. The changes were proposed to be effective for discharges
occurring on or after October 1, 2005, unless otherwise noted.
The following is a summary of the major changes that we proposed
and the issues we addressed in the FY 2006 IPPS proposed rule.
1. Changes to the DRG Reclassifications and Recalibrations of Relative
Weights
As required by section 1886(d)(4)(C) of the Act, we proposed annual
adjustments to the DRG classifications and relative weights. Based on
analyses of Medicare claims data, we proposed to establish a number of
new DRGs and make changes to the designation of diagnosis and procedure
codes under other existing DRGs.
We also presented analysis of FY 2006 applicants for add-on
payments for high-cost new medical services and technologies (including
public input, as directed by Pub. L. 108-173, obtained in a town hall
meeting).
We proposed the annual update of the long-term care diagnosis-
related group (LTC-DRG) classifications and relative weights for use
under the LTCH PPS for FY 2006.
2. Changes to the Hospital Wage Index
We proposed revisions to the wage index and the annual update of
the wage data. Specific issues addressed included the following:
[[Page 47283]]
The FY 2006 wage index update, using wage data from cost
reporting periods that began during FY 2002.
The occupational mix adjustment to the wage index that we
began to apply effective October 1, 2004.
The revisions to the wage index based on hospital
redesignations and reclassifications.
The adjustment to the wage index for FY 2006 based on
commuting patterns of hospital employees who reside in a county and
work in a different area with a higher wage index.
The timetable for reviewing and verifying the wage data
that were in effect for the FY 2006 wage index.
3. Revision and Rebasing of the Hospital Market Baskets
We proposed rebasing and revising the hospital operating and
capital market baskets to be used in developing the FY 2006 update
factor for the operating prospective payment rates and the excluded
hospital market basket to be used in developing the FY 2006 update
factor for the excluded hospital rate-of-increase limits. We also set
forth the data sources used to determine the proposed revised market
basket relative weights and choice of price proxies.
4. Other Decisions and Changes to the PPS for Inpatient Operating and
GME Costs
In the proposed rule, we discussed a number of provisions of the
regulations in 42 CFR parts 412 and 413 and set forth proposed changes
concerning the following:
Solicitation of public comments on two options for
possible expansion of the current postacute care transfer policy.
The reporting of hospital quality data as a condition for
receiving the full annual payment update increase.
Changes in the application of the budget neutrality
adjustment to MDHs and SCHs for computing the hospital-specific rate.
Updated national and regional case-mix values and
discharges for purposes of determining rural referral center status.
The payment adjustment for low-volume hospitals.
The IME adjustment for TEFRA hospitals that are converting
to IPPS hospitals, and IME FTE resident caps for urban hospitals that
are granted rural reclassification and then withdraw that rural
classification.
Changes to implement section 951 of Pub. L. 108-173
relating to the provision of patient stay days/SSI data maintained by
CMS to hospitals for the purpose of determining their DSH percentage.
Changes relating to hospitals' geographic classifications,
including multicampus hospitals and urban group hospital
reclassifications.
Changes and clarifications relating to GME, including GME
initial residency period limitation, new teaching hospitals'
participation in Medicare GME affiliated groups, and the GME FTE cap
adjustment for rural hospitals;
Solicitation of public comments on possible changes in
requirements for provider-based entities relating to the location
requirements for certain neonatal intensive care units as off-campus
facilities;
Discussion of the second year of implementation of the
Rural Community Hospital Demonstration Program; and
Clarification of the definition of a hospital as it
relates to ``specialty hospitals'' participating in the Medicare
program.
5. PPS for Capital-Related Costs
In the proposed rule, we did not propose any policy changes to the
capital-related prospective payment system. For the readers' benefit,
we discussed the payment policy requirements for capital-related costs
and capital payments to hospitals.
6. Changes for Hospitals and Hospital Units Excluded from the IPPS
In the proposed rule, we discussed the proposed revisions and
clarifications concerning excluded hospitals and hospital units,
proposed policy changes relating to continued participation by CAHs
located in counties redesignated under section 1886(d)(8)(B) of the Act
(Lugar counties), and proposed policy changes relating to designation
of CAHs as necessary providers.
7. Changes in Payment for Blood Clotting Factor
In the proposed rule, we discussed the proposed change in payment
for blood clotting factor administered to inpatients with hemophilia
for FY 2006.
8. Determining Prospective Payment Operating and Capital Rates and
Rate-of-Increase Limits
In the Addendum to the proposed rule, we set forth proposed changes
to the amounts and factors for determining the FY 2006 prospective
payment rates for operating costs and capital-related costs. We also
established the proposed threshold amounts for outlier cases. In
addition, we addressed the proposed update factors for determining the
rate-of-increase limits for cost reporting periods beginning in FY 2006
for hospitals and hospital units excluded from the PPS.
9. Impact Analysis
In Appendix A of the proposed rule, we set forth an analysis of the
impact that the proposed changes would have on affected hospitals.
10. Recommendation of Update Factor for Hospital Inpatient Operating
Costs
In Appendix B of the proposed rule, as required by sections
1886(e)(4) and (e)(5) of the Act, we provided our recommendations of
the appropriate percentage changes for FY 2006 for the following:
A single average standardized amount for all areas for
hospital inpatient services paid under the IPPS for operating costs
(and hospital-specific rates applicable to SCHs and MDHs).
Target rate-of-increase limits to the allowable operating
costs of hospital inpatient services furnished by hospitals and
hospital units excluded from the IPPS.
11. Discussion of Medicare Payment Advisory Commission Recommendations
Under section 1805(b) of the Act, the Medicare Payment Advisory
Commission (MedPAC) is required to submit a report to Congress, no
later than March 1 of each year, in which MedPAC reviews and makes
recommendations on Medicare payment policies. MedPAC's March 2005
recommendation concerning hospital inpatient payment policies addressed
only the update factor for inpatient hospital operating costs and
capital-related costs under the IPPS and for hospitals and distinct
part hospital units excluded from the IPPS. This recommendation is
addressed in Appendix B of the proposed rule. MedPAC issued a second
Report to Congress: Physician-Owned Specialty Hospitals, March 2005,
which addressed other issues relating to Medicare payments to hospitals
for inpatient services. The recommendations on these issues from this
second report were addressed in section IX. of the preamble of the
proposed rule. For further information relating specifically to the
MedPAC March 2005 reports or to obtain a copy of the reports, contact
MedPAC at (202) 220-3700 or visit MedPAC's Web site at: http://www.medpac.gov
.
[[Page 47284]]
C. Public Comments Received in Response to the FY 2006 IPPS Proposed
Rule
We received over 2,000 timely items of correspondence containing
multiple comments on the FY 2006 IPPS proposed rule. Summaries of the
public comments and our responses to those comments are set forth below
under the appropriate heading.
II. Changes to DRG Classifications and Relative Weights
A. Background
Section 1886(d) of the Act specifies that the Secretary shall
establish a classification system (referred to as DRGs) for inpatient
discharges and adjust payments under the IPPS based on appropriate
weighting factors assigned to each DRG. Therefore, under the IPPS, we
pay for inpatient hospital services on a rate per discharge basis that
varies according to the DRG to which a beneficiary's stay is assigned.
The formula used to calculate payment for a specific case multiplies an
individual hospital's payment rate per case by the weight of the DRG to
which the case is assigned. Each DRG weight represents the average
resources required to care for cases in that particular DRG, relative
to the average resources used to treat cases in all DRGs.
Congress recognized that it would be necessary to recalculate the
DRG relative weights periodically to account for changes in resource
consumption. Accordingly, section 1886(d)(4)(C) of the Act requires
that the Secretary adjust the DRG classifications and relative weights
at least annually. These adjustments are made to reflect changes in
treatment patterns, technology, and any other factors that may change
the relative use of hospital resources. The changes to the DRG
classification system and the recalibration of the DRG weights for
discharges occurring on or after October 1, 2005, are discussed below.
1. General
Cases are classified into DRGs for payment under the IPPS based on
the principal diagnosis, up to eight additional diagnoses, and up to
six procedures performed during the stay. In a small number of DRGs,
classification is also based on the age, sex, and discharge status of
the patient. The diagnosis and procedure information is reported by the
hospital using codes from the International Classification of Diseases,
Ninth Revision, Clinical Modification (ICD-9-CM).
The process of forming the DRGs was begun by dividing all possible
principal diagnoses into mutually exclusive principal diagnosis areas
referred to as Major Diagnostic Categories (MDCs). The MDCs were formed
by physician panels as the first step toward ensuring that the DRGs
would be clinically coherent. The diagnoses in each MDC correspond to a
single organ system or etiology and, in general, are associated with a
particular medical specialty. Thus, in order to maintain the
requirement of clinical coherence, no final DRG could contain patients
in different MDCs. Most MDCs are based on a particular organ system of
the body. For example, MDC 6 is Diseases and Disorders of the Digestive
System. This approach is used because clinical care is generally
organized in accordance with the organ system affected. However, some
MDCs are not constructed on this basis because they involve multiple
organ systems (for example, MDC 22 (Burns)). For FY 2005, cases are
assigned to one of 520 DRGs in 25 MDCs. (We note that, in the FY 2006
proposed rule (70 FR 23313), we inadvertently stated that there were
519 DRGs.) The table below lists the 25 MDCs.
Major Diagnostic Categories (MDCs)
------------------------------------------------------------------------
-------------------------------------------------------------------------
1 Diseases and Disorders of the Nervous System.
2 Diseases and Disorders of the Eye.
3 Diseases and Disorders of the Ear, Nose, Mouth, and Throat.
4 Diseases and Disorders of the Respiratory System.
5 Diseases and Disorders of the Circulatory System.
6 Diseases and Disorders of the Digestive System.
7 Diseases and Disorders of the Hepatobiliary System and Pancreas.
8 Diseases and Disorders of the Musculoskeletal System and Connective
Tissue.
9 Diseases and Disorders of the Skin, Subcutaneous Tissue, and Breast.
10 Endocrine, Nutritional and Metabolic Diseases and Disorders.
11 Diseases and Disorders of the Kidney and Urinary Tract.
12 Diseases and Disorders of the Male Reproductive System.
13 Diseases and Disorders of the Female Reproductive System.
14 Pregnancy, Childbirth, and the Puerperium.
15 Newborns and Other Neonates with Conditions Originating in the
Perinatal Period.
16 Diseases and Disorders of the Blood and Blood Forming Organs and
Immunological Disorders.
17 Myeloproliferative Diseases and Disorders and Poorly Differentiated
Neoplasms.
18 Infectious and Parasitic Diseases (Systemic or Unspecified Sites).
19 Mental Diseases and Disorders.
20 Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental Disorders.
21 Injuries, Poisonings, and Toxic Effects of Drugs.
22 Burns.
23 Factors Influencing Health Status and Other Contacts with Health
Services.
24 Multiple Significant Trauma.
25 Human Immunodeficiency Virus Infections.
------------------------------------------------------------------------
In general, cases are assigned to an MDC based on the patient's
principal diagnosis before assignment to a DRG. However, for FY 2005,
there are nine DRGs to which cases are directly assigned on the basis
of ICD-9-CM procedure codes. These DRGs are for heart transplant or
implant of heart assist systems, liver and/or intestinal transplants,
bone marrow, lung, simultaneous pancreas/kidney, and pancreas
transplants and for tracheostomies. Cases are assigned to these DRGs
before they are classified to an MDC. The table below lists the current
nine pre-MDCs.
[[Page 47285]]
Pre-Major Diagnostic Categories (Pre-MDCs)
------------------------------------------------------------------------
------------------------------------------------------------------------
DRG 103.............................. Heart Transplant or Implant of
Heart Assist System
DRG 480.............................. Liver Transplant and/or
Intestinal Transplant
DRG 481.............................. Bone Marrow Transplant
DRG 482.............................. Tracheostomy for Face, Mouth, and
Neck Diagnoses
DRG 495.............................. Lung Transplant
DRG 512.............................. Simultaneous Pancreas/Kidney
Transplant
DRG 513.............................. Pancreas Transplant
DRG 541.............................. Tracheostomy with Mechanical
Ventilation 96+ Hours or
Principal Diagnosis Except for
Face, Mouth, and Neck Diagnosis
with Major Operating Room
Procedures
DRG 542.............................. Tracheostomy with Mechanical
Ventilation 96+ Hours or
Principal Diagnosis Except for
Face, Mouth, and Neck Diagnosis
Without Major Operating Room
Procedures
------------------------------------------------------------------------
Once the MDCs were defined, each MDC was evaluated to identify
those additional patient characteristics that would have a consistent
effect on the consumption of hospital resources. Since the presence of
a surgical procedure that required the use of the operating room would
have a significant effect on the type of hospital resources used by a
patient, most MDCs were initially divided into surgical DRGs and
medical DRGs. Surgical DRGs are based on a hierarchy that orders
operating room (O.R.) procedures or groups of O.R. procedures by
resource intensity. Medical DRGs generally are differentiated on the
basis of diagnosis and age (less than or greater than 17 years of age).
Some surgical and medical DRGs are further differentiated based on the
presence or absence of a complication or a comorbidity (CC).
Generally, nonsurgical procedures and minor surgical procedures
that are not usually performed in an operating room are not treated as
O.R. procedures. However, there are a few non-O.R. procedures that do
affect DRG assignment for certain principal diagnoses, for example,
extracorporeal shock wave lithotripsy for patients with a principal
diagnosis of urinary stones.
Once the medical and surgical classes for an MDC were formed, each
class of patients was evaluated to determine if complications,
comorbidities, or the patient's age would consistently affect the
consumption of hospital resources. Physician panels classified each
diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition which, because of its presence with a specific principal
diagnosis, would cause an increase in the length of stay by at least
one day in at least 75 percent of the patients. Each medical and
surgical class within an MDC was tested to determine if the presence of
any substantial comorbidities or complications would consistently
affect the consumption of hospital resources.
A patient's diagnosis, procedure, discharge status, and demographic
information is fed into the Medicare claims processing systems and
subjected to a series of automated screens called the Medicare Code
Editor (MCE). The MCE screens are designed to identify cases that
require further review before classification into a DRG.
After patient information is screened through the MCE and any
further development of the claim is conducted, the cases are classified
into the appropriate DRG by the Medicare GROUPER software program. The
GROUPER program was developed as a means of classifying each case into
a DRG on the basis of the diagnosis and procedure codes and, for a
limited number of DRGs, demographic information (that is, sex, age, and
discharge status).
After cases are screened through the MCE and assigned to a DRG by
the GROUPER, the PRICER software calculates a base DRG payment. The
PRICER calculates the payments for each case covered by the IPPS based
on the DRG relative weight and additional factors associated with each
hospital, such as IME and DSH adjustments. These additional factors
increase the payment amount to hospitals above the base DRG payment.
The records for all Medicare hospital inpatient discharges are
maintained in the Medicare Provider Analysis and Review (MedPAR) file.
The data in this file are used to evaluate possible DRG classification
changes and to recalibrate the DRG weights. However, in the July 30,
1999 IPPS final rule (64 FR 41500), we discussed a process for
considering non-MedPAR data in the recalibration process. In order for
us to consider using particular non-MedPAR data, we must have
sufficient time to evaluate and test the data. The time necessary to do
so depends upon the nature and quality of the non-MedPAR data
submitted. Generally, however, a significant sample of the non-MedPAR
data should be submitted by mid-October for consideration in
conjunction with the next year's proposed rule. This allows us time to
test the data and make a preliminary assessment as to the feasibility
of using the data. Subsequently, a complete database should be
submitted by early December for consideration in conjunction with the
next year's proposed rule.
In the FY 2006 IPPS proposed rule (70 FR 23312), we proposed
numerous changes to the DRG classification system for FY 2006 and to
the methodology used to recalibrate the DRG weights. The changes we
proposed to the DRG classification system, the public comments we
received concerning the proposed changes, the final DRG changes, and
the methodology used to recalibrate the DRG weights are set forth
below. The changes we are implementing in this final rule will be
reflected in the FY 2006 GROUPER, version 23.0, and are effective for
discharges occurring on or after October 1, 2005. Unless otherwise
noted in this final rule, our DRG analysis is based on data from the
September 2004 update of the FY 2004 MedPAR file, which contains
hospital bills received through September 30, 2004 for discharges in FY
2004.
2. Yearly Review for Making DRG Changes; Request for Public Comment
Many of the changes to the DRG classifications are the result of
specific issues brought to our attention by interested parties. We
encourage individuals with concerns about DRG classifications to bring
those concerns to our attention in a timely manner so they can be
carefully considered for possible inclusion in the next proposed rule
and, if included, may be subjected to public review and comment.
Therefore, similar to the timetable for interested parties to submit
non-MedPAR data for consideration in the DRG recalibration process,
concerns about DRG classification issues should be brought to our
attention no later than early
[[Page 47286]]
December in order to be considered and possibly included in the next
annual proposed rule updating the IPPS.
The actual process of forming the DRGs was, and continues to be,
highly iterative, involving a combination of statistical results from
test data combined with clinical judgment. In deciding whether to
create a separate DRG, we consider whether the resource consumption and
clinical characteristics of the patients with a given set of conditions
are significantly different than the remaining patients in the DRG. We
evaluate patient care costs using average charges and lengths of stay
as proxies for costs and rely on the judgment of our medical officers
to decide whether patients are distinct or clinically similar to other
patients in the DRG. In evaluating resource costs, we consider both the
absolute and percentage differences in average charges between the
cases we are selecting for review and the remainder of cases in the
DRG. We also consider variation in charges within these groups; that
is, whether observed average differences are consistent across patients
or attributable to cases that are extreme in terms of charges or length
of stay, or both. Further, we also consider the number of patients who
will have a given set of characteristics and generally prefer not to
create a new DRG unless it will include a substantial number of cases.
As we explain in more detail in section IX. of this preamble, MedPAC
has made a number of recommendations regarding the DRG system.
To date, we have not used specific statistical standards as part of
our guidelines for determining when DRG changes are warranted. However,
we could potentially establish objective guidelines that are used in
the DRG development process. For instance, such standards could include
a minimum percentage or absolute difference in average charges or
length of stay and number of cases in order for us to create a DRG or
change the DRG assignment of a particular code or service. As part of
our review and analysis of MedPAC's recommendations, we will consider
whether to establish such guidelines for making DRG reclassification
decisions. We welcome public comments on this issue.
3. Pre-MDC: Intestinal Transplantation
In the FY 2005 IPPS final rule (69 FR 48976), we moved intestinal
transplantation cases that were assigned to ICD-9-CM procedure code
46.97 (Transplant of intestine) out of DRG 148 (Major Small and Large
Bowel Procedures with CC) and DRG 149 (Major Small and Large Bowel
Procedures Without CC) and into DRG 480 (Liver Transplant). We also
changed the title for DRG 480 to ``Liver Transplant and/or Intestinal
Transplant.'' We moved these cases out of DRGs 148 and 149 because our
analysis demonstrated that the average charges for intestinal
transplants are significantly higher than the average charges for other
cases in these DRGs. We stated at that time that we would continue to
monitor these cases.
Based on our review of the FY 2004 MedPAR data, we found 959 cases
assigned to DRG 480 with overall average charges of approximately
$165,622. There were only three cases involving an intestinal
transplant alone and one case in which both an intestinal transplant
and a liver transplant were performed. The average charges for the
intestinal transplant cases ($138,922) were comparable to the average
charges for the liver transplant cases ($165,314), while the remaining
combination of an intestinal transplant and a liver transplant case had
much higher charges ($539,841), and would be paid as an outlier case.
Therefore, we did not propose any DRG modification for intestinal
transplantation cases for FY 2006.
We note that an institution that performs intestinal
transplantation, in correspondence to us written following the
publication of the FY 2005 IPPS final rule, agreed with our decision to
move cases assigned to code 46.97 to DRG 480.
Comment: Several commenters, including an institute that performs
intestinal transplantation, supported our decision to reassign
intestinal transplantation cases to DRG 480. One commenter commended
CMS for its progress, but urged us to continue to evaluate a separate
DRG for intestinal transplantation. While payment has improved, the
commenter stated that it is still inadequate, and insufficient
reimbursement could ultimately hinder beneficiary access to care.
Response: As indicated in the FY 2006 IPPS proposed rule (70 FR
23315), we found only three cases in the Medicare data that included an
intestinal transplant. We found that the average charges were less for
intestinal transplant cases ($138,922) than liver transplant cases
($165,314). Thus, even though we have a very low number of cases to
make these comparisons, the data do not suggest that intestinal
transplants are underpaid in DRG 480. We remain committed to assigning
procedures to the most appropriate DRG based on clinical coherence and
utilization of resources using the most recently available data. As we
stated in the FY 2005 IPPS final rule (69 FR 48977), when we receive
sufficient additional Medicare data on intestinal transplantation
cases, we will again consider the DRG assignment for intestinal
transplants.
Comment: One commenter concurred with the decision to assign
intestinal transplant cases to DRG 480 but recommended that CMS create
separate DRGs for liver-intestinal and liver-kidney transplants. The
commenter requested that CMS report average charges for these cases in
the final rule. The commenter noted that DRGs have been created for
double organ transplants such as DRG 512 (Simultaneous Pancreas/Kidney
Transplant).
Response: While the focus of our review in the proposed rule was
limited to whether we should reassign intestinal transplants to DRG
480, we reviewed all cases in this DRG. Based on our review of the FY
2004 MedPAR data, the following table illustrates our findings:
----------------------------------------------------------------------------------------------------------------
Number of Average length Average
DRG cases of stay charges
----------------------------------------------------------------------------------------------------------------
DRG 480......................................................... 959 16.65 $165,622
Liver Transplantation........................................... 876 16.5 165,314
Intestinal Transplantation...................................... 3 26.0 138,922
Liver-Intestinal Transplantation................................ 1 72.0 539,841
Liver-Kidney Transplantation.................................... 79 21.3 237,759
----------------------------------------------------------------------------------------------------------------
As we stated in the proposed rule (70 FR 23315), while the average
charges and length of stay were much higher for the one liver-
intestinal transplantation case, for which we had data, than the other
cases in DRG 480, the case would likely be paid as an outlier. One case
is insufficient to create a new DRG. Similarly, we are reluctant to
create a
[[Page 47287]]
new DRG for such a small number of liver-kidney transplant cases, even
though average charges and length of stay are higher for liver-kidney
transplants than other cases in DRG 480. As discussed, in section IX.A.
of this final rule, we plan in the next year to undertake a
comprehensive review of the existing Medicare DRG system and expect to
make changes to the DRGs to better reflect the severity of illness. As
we study this issue, we will further analyze hospital costs for
patients needing multiple organ transplants. At this time, we are not
making any further modifications to the DRGs for multiple transplants
in FY 2006.
4. MDC 1 (Diseases and Disorders of the Nervous System)
a. Strokes
In 1996, the Food and Drug Administration (FDA) approved the use of
tissue plasminogen activator (tPA), one type of thrombolytic agent that
dissolves blood clots. In 1998, the ICD-9-CM Coordination and
Maintenance Committee created code 99.10 (Injection or infusion of
thrombolytic agent) in order to be able to uniquely identify the
administration of thrombolytic agents. Studies have shown that tPA can
be effective in reducing the amount of damage the brain sustains during
an ischemic stroke, which is caused by blood clots that block blood
flow to the brain. tPA is approved for patients who have blood clots in
the brain, but not for patients who have a bleeding or hemorrhagic
stroke. Thrombolytic therapy has been shown to be most effective when
used within the first 3 hours after the onset of a stroke, and it is
contraindicated in hemorrhagic stroke. The presence or absence of code
99.10 does not currently influence DRG assignment. Since code 99.10
became effective, CMS has been monitoring the DRGs and cases in which
this code can be found, particularly with respect to cardiac and stroke
DRGs.
Last year, CMS met with representatives from several hospital
stroke centers who recommended modification of the existing stroke DRGs
14 (Intracranial Hemorrhage or Cerebral Infarction) and 15 (Nonspecific
CVA and Precerebral Occlusion Without Infarction) by using the
administration of tPA as a proxy to identify patients who have severe
strokes. The representatives stated that using tPA as a proxy would
help to identify patients who have strokes that are more severely and
costly and would recognize the higher charges that these cases generate
because of their higher hospital resource utilization. At that time,
the presenters provided evidence that strokes where tPA was used were
both more severe and more resource intensive. Specifically, they showed
that patients who were given tPA for strokes had higher stroke severity
scores at presentation, and that they were more expensive to care for
because of increased intensive care unit monitoring requirements,
increased diagnostic imaging costs, and increased laboratory and
pharmacy costs. They also demonstrated that these patients had markedly
better clinical outcomes. The stroke representatives made two
suggestions concerning the stroke DRGs.
The first proposal suggested modifying DRG 14 by renaming it
``Ischemic Stroke Treatment with a Reperfusion Agent'', and including
only those cases containing code 99.10. The remainder of stroke cases
where the patient was not treated with a reperfusion agent would be
included in DRG 15, renamed ``Hemorrhagic Stroke or Ischemic Stroke
without a Reperfusion Agent''. Hemorrhagic stroke cases now found in
DRG 14 that are not treated with a reperfusion agent would migrate to
DRG 15.
The second suggestion was to leave DRGs 14 and 15 as they currently
exist, and create a new DRG, with a recommended title ``Ischemic Stroke
Treatment with a Reperfusion Agent''. This suggested DRG would include
only cases where patients with strokes caused by arterial occlusion (or
clot(s)) are also treated with tPA thrombolytic therapy.
We have examined the MedPAR data for the cases in DRGs 14 and 15.
We divided the cases based on the presence of a principal diagnosis of
hemorrhage or occlusive ischemia and the presence of procedure code
99.10. The following table displays the results:
----------------------------------------------------------------------------------------------------------------
Average length Average
DRG Count of stay charges
----------------------------------------------------------------------------------------------------------------
14--All Cases................................................... 221,879 5.67 $18,997
14--Cases with intracranial hemorrhage.......................... 41,506 5.40 19,193
14--Cases with intracranial hemorrhage with code 99.10.......... 61 7.4 37,045
14--Cases with intracranial hemorrhage without code 99.10....... 41,445 5.3 19,167
14--Cases without intracranial hemorrhage....................... 180,373 5.74 18,952
14--Cases without intracranial hemorrhage with code 99.10....... 2,085 7.20 35,128
14--Cases without intracranial hemorrhage without code 99.10.... 178,288 5.72 18,763
15--All cases................................................... 71,335 4.53 14,382
15--Cases with intracranial hemorrhage.......................... 0 0 0
15--Cases without intracranial hemorrhage....................... 71,335 4.53 14,382
15--Cases without intracranial hemorrhage with code 99.10....... 302 5.10 24,876
15--Cases without intracranial hemorrhage without code 99.10.... 71,033 4.53 14,337
----------------------------------------------------------------------------------------------------------------
The above table shows that the average standardized charges for
cases treated with a reperfusion agent are more than $16,000 and
$10,000 higher than all other cases in DRGs 14 and 15, respectively.
While these data suggest that patients treated with a reperfusion agent
are more expensive than all other stroke patients, this conclusion is
based on a small number of cases. In the FY 2006 IPPS proposed rule, we
did not propose a change to the stroke DRGs because of the small number
of reperfusion cases reported. However, we stated that we believe it is
possible that more patients are being treated with a reperfusion agent
than indicated by our data because the presence of code 99.10 does not
affect DRG assignment and may be underreported.
In the FY 2006 IPPS proposed rule, we invited public comment on the
changes to DRGs 14 and 15 suggested by the hospital representatives. In
addition, we solicited public comment on the number of patients
currently being treated with a reperfusion agent as well as the
potential costs of these patients relative to others with strokes that
are also included in DRGs 14 and 15.
Comment: Forty commenters supported the creation of a new DRG to
recognize the group of patients who presented with stroke and who also
received thrombolytic therapy. The commenters cited the following
reasons for supporting this proposal: Increased costs of caring for
these patients, specifically in intensive care unit, more
[[Page 47288]]
diagnostic imaging studies, and laboratory and pharmacy resources. In
addition, the commenters noted that the proposal is also supported by
evidence that patients receiving thrombolytic therapy have strokes of
increased severity. The commenters also stated that the proposal
demonstrates the need for hospitals to have an incentive to establish
the infrastructure necessary to provide stroke patients with aggressive
evaluation and management services, such as thrombolytic therapy, which
have become the standard of care.
Response: We appreciate the commenters' responses in reply to our
solicitation for public comment on the changes to DRGs 14 and 15 as
suggested in the proposed rule. The level of detail provide in the
responses helped us to formulate a change to the medical stroke DRGs.
We agree with the commenters that there is an increased cost in caring
for these patients including increased use of the intensive care unit,
more diagnostic imaging studies, and laboratory and pharmacy resources.
We also agree that--(1) the data indicate that patients receiving
thrombolytic therapy have increased severity; and (2) reperfusion
therapy is a good means to segregate these patients into a separate
DRG.
Comment: One commenter encouraged CMS to modify DRGs 14 and 15
using one of two options. The first option would be to create DRG ``A''
where hemorrhagic and ischemic strokes were combined, but only
supportive care was given, while DRG ``B'' would contain those
hemorrhagic and ischemic stroke cases in which reperfusion or
hemostatic agents were administered.
Alternatively, the commenter suggested that DRGs 14 and 15 could be
modified by creating four new DRGs. DRG ``A'' would contain cases of
hemorrhagic stroke and supportive care, DRG ``B'' would contain cases
of hemorrhagic stroke treated with hemostatic agents, DRG ``C'' would
contain cases of ischemic stroke and supportive care, and DRG ``D''
would contain cases of ischemic stroke treated with reperfusion agents.
Response: This commenter is suggesting that the DRG system
recognize treatment of hemorrhage strokes with hemostatic agents as
well as ischemic strokes with reperfusion agents. While we anticipate
great industry strides in the treatment of stroke, currently no
approved hemostatic agent is on the market. According to the
manufacturer(s) of hemostatic agents, it is unlikely that these agents
will be available for use during FY 2006. Therefore, we do not have any
Medicare charge information that supports creating separate DRGs for
hemorrhagic stroke patients treated with hemostatic agents as we do for
ischemic stroke patients treated with thrombolytic therapy. When
hemostatic agents are available on the market, we will reevaluate this
issue.
Comment: One commenter believed that the two potential changes to
the stroke DRGs as set forth in the proposed rule are too limited as
written. The commenter believed that the descriptor, ``reperfusion
agent'', is not broad enough to encompass other promising
pharmacotherapies for stroke that are in late stages of clinical
development. The commenter pointed out that these therapies include
treatment for both ischemic stroke and hemorrhagic stroke. The
commenter further noted that it is unlikely that any of the potential
therapies will be approved for use during FY 2006. The commenter
recommended that CMS broaden the title for the proposed new DRG to
include a wider range of any newly approved therapies.
Response: While we look forward to improved therapies for treating
patients with strokes, we are unable to create DRGs that recognize as
yet unapproved treatment modalities. When the FDA has approved
additional pharmaceuticals for the treatment of either ischemic or
hemorrhagic stroke, we will evaluate the data and make DRG changes as
appropriate. We point out that the DRG titles cannot possibly
acknowledge all the codes located therein. The important part of the
DRG is the structure of the logic; that is, what codes are assigned to
the DRG.
Comment: One commenter recommended that CMS commit to creating a
surgical DRG for ischemic stroke patients who are treated with surgical
interventions. The commenter included several scenarios of possible
diagnosis and procedure coding combinations that CMS could use to
identify stroke cases and increase the scope of our analysis.
Response: Our goal was not to review all stroke cases within the
MedPAR database, but to identify those cases in medical DRG 14, and
possibly DRG 15, that might have included the administration of tPA as
identified by procedure code 99.10. DRGs that identify a precise
surgical procedure already exist; all of the combinations of procedure
codes suggested by the commenter already appropriately group to DRGs
within MDC 1.
Comment: One commenter stated that because code 99.10 was not
reimbursable [did not have an impact on DRG assignment], hospital
coders often did not use it. Some hospitals in which reperfusion
therapy was commonplace never used this code.
Response: We would like to take this opportunity to reiterate that
all cases should be accurately and completely coded, irrespective of
the DRG implications of a specific code or codes. By coding accurately
and completely, we will have more information on patient care costs for
different services and treatments that better enable us to research
further changes to the DRG system.
Comment: One commenter noted that, because only a single type of
reperfusion agent is presently approved for stroke treatment, the
proposed change would create a DRG that is, de facto, product specific.
In addition, the commenter stated that the DRG change on which CMS
requested comment would improve access to therapy for only a small
fraction of all stroke patients. The commenter added that
implementation of a narrowly-defined change [by creating a specific
stroke-plus-tPA DRG] may necessitate further changes to the stroke DRGs
in the near future to ensure patient access to emerging drug therapies
once approved.
Response: While we did not propose a specific change to the stroke
DRGs in the proposed notice, we have decided to modify the DRGs to
distinguish those cases in which tPA is used as a treatment modality
based on the strong support for this change voiced by commenters. When
we reviewed the data represented in the above table, we noted that the
average standardized charges for all cases in DRG 14 were $18,997, but
that the subset of 2,085 cases in which tPA was used had average
standardized charges of $35,128. We noted that the cases in DRG 14
without hemorrhage that did not report the use of tPA had average
standardized charges of $18,763, which was comparable with the figures
for all cases in the DRG. Given that these cases are easily
identifiable through the use of procedure code 99.10, and that the
average standardized charges are $16,131 higher for the cases using
tPA, we decided to carve these cases out of the existing DRGs 14 and
15, and represent them in a new DRG. We are changing the structure of
stroke DRGs not to award higher payment for a specific drug but to
recognize the need for better overall care for this group of patients.
Even though a tPA is indicated only for a small proportion of stroke
patients (only those experiencing ischemic strokes treated within 3
hours of the onset of symptoms), our data suggest that there are enough
patients to support the DRG change. While our goal
[[Page 47289]]
is to make payment relate more closely to resource use, we also note
that use of a tPA in a carefully selected patient population will lead
to better outcomes and overall care and may lessen the need for
postacute care. With regard to the potential need to modify stroke DRGs
in the future, we note that we perform an update to the DRGs and modify
DRGs every year. We reiterate that should additional types of therapy
be approved, we will evaluate them, and after judicious study, will
make appropriate DRG title and/or logic changes as required.
In this final rule, after consideration of public comments received
and based on our analysis of MedPAR data that supports the creation of
a DRG that identifies embolic stroke combined with tPA treatment, we
are creating new DRG 559 (Acute Ischemic Stroke with Use of
Thrombolytic Agent). From a data consistency standpoint, we believe
that adding a new DRG identifying these cases will be less disruptive
to our stakeholders than creating three new DRGs, two of which would
mimic existing DRGs 14 and 15. The GROUPER logic for DRGs 14 and 15
will not be affected by this change; that is, the GROUPER content of
DRGs 14 and 15 will be the same in FY 2006 as it was in FY 2005. The
structure of the new DRG 559 includes the following codes:
Principal Diagnosis
433.01, Occlusion and stenosis of basilar artery, with
cerebral infarction
433.11, Occlusion and stenosis of carotid artery, with
cerebral infarction
433.21, Occlusion and stenosis of vertebral artery, with
cerebral infarction
433.31, Occlusion and stenosis of multiple and bilateral
arteries, with cerebral infarction
433.81, Occlusion and stenosis of other specified
precerebral artery, with cerebral infarction
433.91, Occlusion and stenosis of unspecified precerebral
artery, with cerebral infarction
434.01, Cerebral thrombosis, with cerebral infarction
434.11, Cerebral embolism, with cerebral infarction
434.91, Cerebral artery occlusion, unspecified, with
cerebral infarction
and
Nonoperating Room Procedure
99.10, Injection or infusion of thrombolytic agent
We will continue to monitor stroke DRGs in the future. As noted
above, should treatment modalities change, we will be open to making
changes to the DRG structure that will recognize improvements in
treatment and technology.
b. Unruptured Cerebral Aneurysms
In the FY 2004 IPPS final rule (68 FR 45353), we created DRG 528
(Intracranial Vascular Procedures With a Principal Diagnosis of
Hemorrhage) in MDC 1. We received a comment at that time that suggested
we create another DRG for intracranial vascular procedures for
unruptured cerebral aneurysms. For the FY 2004 IPPS final rule (68 FR
45353) and the FY 2005 IPPS final rule (69 FR 48957), we evaluated the
data for cases in the MedPAR file involving unruptured cerebral
aneurysms assigned to DRG 1 (Craniotomy Age >17 With CC) and DRG 2
(Craniotomy Age >17 Without CC) and concluded that the average charges
were consistent with those for other cases found in DRGs 1 and 2.
Therefore, we did not propose a change to the DRG assignment for
unruptured cerebral aneurysms.
We have reviewed data for unruptured cerebral aneurysms cases in
DRGs 1 and 2. In our analysis of these FY 2004 MedPAR data, we found
1,136 unruptured cerebral aneurysm cases assigned to DRG 1 and 964
unruptured cerebral aneurysm cases assigned to DRG 2. Although the
average charges for the unruptured cerebral aneurysm cases in DRG 1
($53,455) and DRG 2 ($34,028) were slightly higher than the average
charges for all cases in DRG 1 ($51,466) and DRG 2 ($30,346), we do not
believe these differences are significant enough to warrant a change in
these two DRGs at this time. Therefore, we did not propose a change in
the structure of these DRGs relating to unruptured cerebral aneurysm
cases for FY 2006.
Comment: Several commenters agreed that the minimal differences in
charges for unruptured cerebral aneurysms cases compared to all cases
assigned to DRGs 1 and 2 do not justify a change in the DRG assignment
for these cases. One commenter stated that unruptured cerebral aneurysm
cases should be reclassified into a new DRG. The commenter stated that
a new DRG is warranted to understand the true weight of these
procedures and to establish reimbursement that recognizes the cost of
medical devices used to treat unruptured cerebral aneurysms.
Response: Our analysis is based on the most recent charge
information available reflecting the overall resources used to treat
unruptured cerebral aneurysms in Medicare patients. We concur with the
commenters that there are minimal differences in the charges for the
unruptured cerebral aneurysm cases compared to all cases assigned to
DRGs 1 and 2 and that the results of the data do not justify creation
of a new DRG. We believe that unruptured cerebral aneurysms are
appropriately assigned to DRGs 1 and 2. Therefore, we are not making
any modifications to the DRG assignment for unruptured cerebral
aneurysms.
5. MDC 5 (Diseases and Disorders of the Circulatory System)
a. Severity Adjusted Cardiovascular Procedures
In response to the FY 2006 IPPS proposed rule, one commenter noted
that section 507(c) of Pub. L. 108-173 required MedPAC to conduct a
study to determine how the DRG system should be updated to better
reflect the cost of delivering care in a hospital setting. The
commenter noted that MedPAC reported that the ``cardiac surgery DRGs
had high relative profitability ratios.'' While the commenter noted
that it may take time to conduct and complete a thorough evaluation of
the MedPAC payment recommendations for all DRGs, the commenter strongly
encouraged CMS to revise the cardiac DRGs through patient severity
refinements as part of the final rule to be effective for FY 2006. In
section IX.A. of the preamble to this final rule, we are responding in
detail to this comment by making significant revisions to a number of
cardiovascular DRGs that currently contain patients with a wide range
of severity and resource consumption in order to reflect more
accurately the resources required to care for different kinds of
cardiovascular patients. Accordingly, in response to the issues raised
by the commenter and as an interim step until we can complete a
comprehensive review of MedPAC's recommendations, we are deleting
current DRGs 107, 109, 111, 116, 478, 516, 517, 526, and 527, and
creating new DRGs 547 through 558 in their place.
We received several comments on the FY 2006 IPPS proposed rule that
recommended that we split additional cardiovascular DRGs based on the
presence or absence of heart failure, acute myocardial infarction, and
shock. As indicated in section IX.A. of this final rule, we conducted a
focused review of a number of different cardiovascular DRGs and are
making revisions to them based on a newly designated list of ``major
cardiovascular conditions.''
We believe these new DRGs will help to address a number of the
concerns raised by these commenters. We intend to monitor these DRGs
carefully in upcoming years and welcome input regarding the success of
these DRGs in
[[Page 47290]]
reflecting patient severity and resource use.
b. Automatic Implantable Cardioverter/Defibrillator
As part of our annual review of DRGs, for FY 2006, we performed a
review of cases in the FY 2004 MedPAR file involving the implantation
of a defibrillator in the following DRGs:
DRG 515 (Cardiac Defibrillator Implant Without Cardiac Catheterization)
DRG 535 (Cardiac Defibrillator Implant With Cardiac Catheterization
With Acute Myocardial Infarction, Heart Failure, or Shock)
DRG 536 (Cardiac Defibrillator Implant With Cardiac Catheterization
Without Acute Myocardial Infarction, Heart Failure, or Shock)
While conducting our review, we noted that there had been
considerable comments from hospital coders on code 37.26 (Cardiac
electrophysiologic stimulation and recording studies (EPS)), which is
included in these DRGs. These comments from hospital coders were
directed to both CMS and the American Hospital Association. The
procedure codes for these three DRGs describe the procedures that are
considered to be a cardiac catheterization. Code 37.26 is classified as
a cardiac catheterization within these DRGs. Therefore, the submission
of code 37.26 affects the DRG assignment for defibrillator cases and
leads to the assignment of DRGs 535 or 536. When a cardiac
catheterization is performed, the case is assigned to DRGs 535 or 536,
depending on whether or not the patient also had an acute myocardial
infarction, heart failure, or shock. The following chart shows the
number of cases in each DRG, along with their average length of stay
and average charges, found in the data:
----------------------------------------------------------------------------------------------------------------
Number of Average length Average
DRG cases of stay charges
----------------------------------------------------------------------------------------------------------------
515............................................................. 25,236 4.32 $83,659.76
535............................................................. 12,118 8.27 113,175.43
536............................................................. 18,305 5.39 94,453.62
----------------------------------------------------------------------------------------------------------------
We have received a number of questions from hospital coders
regarding the correct use of code 37.26. There is considerable
confusion about whether or not code 37.26 should be reported when the
procedure is performed as part of the defibrillator implantation.
Currently, the ICD-9-CM instructs the coder not to report code 37.26
when a defibrillator is inserted. There is an inclusion term under the
defibrillator code 37.94 (Implantation or replacement of automatic
cardioverter/defibrillator, total system [AICD]) which states that EPS
is included in code 37.94. We discussed modifying this instruction at
the October 7-8, 2004 meeting of the ICD-9-CM Coordination and
Maintenance Committee. We received a number of comments opposing a
modification to the use of code 37.26 that would also allow it to be
reported with an AICD insertion. A report of this meeting can be found
on the Web site: http://www.cms.hhs.gov/paymentsystem/icd9.
We performed an analysis of cases within DRGs 535 and 536 with
cardiac catheterization and with and without code 37.26 and with code
37.26 only reported without cardiac catheterization and found the
following:
----------------------------------------------------------------------------------------------------------------
Number of Average length- Average
DRG cases of-stay charges
----------------------------------------------------------------------------------------------------------------
535--Cardiac Catheterization Without Code 37.26................. 5,060 10.63 $127,130.79
535--With Code 37.26 Only Without Cardiac Catheterization....... 5,264 5.61 98,900.13
535--With Cardiac Catheterization and Code 37.26................ 1,794 9.44 115,701.09
536--Cardiac Catheterization Without Code 37.26................. 4,799 8.11 110,493.86
536--With Code 37.26 Only Without Cardiac Catheterization....... 10,829 3.85 85,390.88
536--With Cardiac Catheterization and Code 37.26................ 2,677 6.76 102,359.21
----------------------------------------------------------------------------------------------------------------
The data show that when code 37.26 is the only procedure reported
from the list of cardiac catheterizations, the average charges and the
average length of stay are considerably lower. For example, the average
standardized charges for a defibrillator implant with only an EPS are
$85,390.88 in DRG 536, while the average standardized charges for DRG
536 with a cardiac catheterization, but not an EPS, are $110,493.86.
The average standardized charges for all cases in DRG 536 are
$94,453.62. The data show similar findings for DRG 535, with lower
lengths of stay and average charges when the only code reported from
the cardiac catheterization list is an EPS. When we also consider the
acknowledged coding problems in the use of code 37.26, we believe it is
inappropriate to base a defibrillator DRG assignment on the EPS code.
Cases identified with this code capture patients who require less
resource use than patients who have a cardiac catheterization.
Data reflected in the chart above show that the average
standardized charges for DRG 515 were $83,659.76. These average charges
are closer to those in DRG 536 with code 37.26 and without any other
cardiac catheterization code reported. While the cases in DRG 535 with
code 37.26 and without a cardiac catheterization have higher average
charges than the average charges for cases in DRG 515, these cases have
much lower average charges than the average charges for overall cases
in DRG 535. For these reasons, we proposed to remove code 37.26 from
the list of cardiac catheterizations for DRGs 535 and 536. If a
defibrillator is implanted and an EPS is performed with no other type
of cardiac catheterization, the case would be assigned to DRG 515.
CMS issued a National Coverage Determination for implantable
cardioverter defibrillators, effective January 27, 2005, that expands
coverage and requires, in certain cases, that patient data be reported
when the defibrillator is implanted for the clinical indication of
primary prevention of sudden cardiac death. The submission of data on
patients receiving an implantable cardioverter defibrillator for
primary prevention to a data collection system is needed for the
determination that the implantable cardioverter defibrillator is
reasonable and necessary and for quality improvement. These
[[Page 47291]]
data will be made available in some form to providers and practitioners
to inform their decisions, monitor performance quality, and benchmark
and identify best practices. We made a temporary registry available for
use when the policy became effective and used the Quality Net Exchange
for data submission because Medicare-participating hospitals already
use the Exchange to report data.
We intend to transition from the temporary registry using the
Quality Net Exchange to a more sophisticated follow-on registry that
will have the ability to collect longitudinal data. Some providers have
suggested that CMS increase reimbursement for implantable cardioverter
defibrillators to compensate the provider for reporting data. ICD data
reporting includes elements of patient demographics, clinical
characteristics and indications, medications, provider information, and
complications. Since these data elements are commonly found in patient
medical records, it is CMS' expectation that these data are readily
available to the individuals abstracting and reporting data. Therefore,
we believe that increased reimbursement is not needed at this time.
Comment: One commenter stated that there has been considerable
confusion surrounding the use of code 37.26. The commenter indicated
that coders are unclear whether code 37.26 should be reported when an
electrophysiologic study (EPS) is performed as part of a defibrillator
implantation or only when defibrillator device checks are performed.
The commenter pointed out that the continuing efforts of the Editorial
Advisory Board for Coding Clinic to clarify the use of this code have
led to changes in coding advice published in Coding Clinic for ICD-9-CM
by the American Hospital Association. However, the commenter stated,
while the change in coding advice was intended to clarify use of code
37.26, coders continue to have questions about it. The commenter
supported our proposal to remove code 37.26 from the list of cardiac
catheterizations for DRGs 535 and 536 and agreed with CMS' plans to
continue working to clarify use of this code or modify the code through
the ICD-9-CM Coordination and Maintenance Committee. The commenter
suggested that, once the coding issues are resolved and consistent data
are collected, CMS should reexamine the DRG assignment(s) for code
37.26.
Other commenters opposed our proposal to remove code 37.26 from
DRGs 535 and 536. These commenters stated that code 37.26 is used to
capture a variety of disparate procedures with varying purposes, sites
of service, and intensity, and that the resultant data are not
representative of any one of these. Other commenters stated that the
code contains three separate procedures of varying intensity:
Electrophysiology study, intraoperative device interrogation, and
noninvasive programmed stimulation. Several commenters believed that
the payment change would have a severe financial impact on their
hospitals. They believed it is inappropriate to make the change without
the data to justify the change. Several commenters stated that the
change would have a significant impact on the use of CRT-D implants
because the devices are more costly. The commenters suggested that,
before considering a revision to DRGs 535 and 536 for code 37.26, CMS
should resolve the coding confusion. The commenters asked that the code
be discussed at the September 29, 2005 ICD-9-CM Coordination and
Maintenance Committee meeting and suggested that separate codes be
created for the different procedures currently captured by code 37.26.
According to the commenters, the new codes that are created could go
into effect on October 1, 2006. The commenters suggested that, once
data are available, CMS should consider a revision to DRGs 535 and 536
for EPS procedures.
Response: We agree with the commenter that there is considerable
confusion regarding the use of code 37.26. It is possible that code
37.26 is being used for a variety of electrophysiologic procedures such
as EPS, noninvasive programmed electrical stimulation, and programmed
electrical stimulation. However, as indicated in the proposed rule and
above in this final rule, our data show that the cases coded with 37.26
that were not separately coded with a cardiac catheterization had
average charges of $98,900.13 in DRG 535 and $85,390.88 in DRG 536
compared to $127,130.79 and $110,493.86, respectively, for all other
cases in these DRGs. For this reason, we believe it is appropriate to
include code 37.26 in DRG 515 and no longer assign it to DRGs 535 and
536 that are for patients who receive a cardiac catheterization.
As we discussed earlier in this section of the preamble, Medicare
significantly expanded coverage of implantable defibrillators on
January 27, 2005 (Pub. No. 100-3, section 20.4) to patients who have a
prior history of heart disease but are not in acute heart failure.
These prophylactic defibrillator implants are expected to significantly
increase the number of patients in DRGs 515, 535, and 536. It is our
experience that most of these patients will not be receiving a cardiac
catheterization and will be less resource-intensive than the acute
heart failure patients receiving an implantable defibrillator. We note
that the Bernstein Research Call publication of April 27, 2005 stated
that this DRG change could ``dampen the elective implantation of de-
novo CRT-D or dual chamber devices into relatively stable patients.''
The article further states that CMS ``realizes that the new
prophylactic ICD [implantable cardioverter defibrillators] eligibility
requirements do not require an EP test, and that EP tests per se do not
consume sufficient resources to justify the reimbursement differentials
seen between DRGs 515 versus 535 and 536.'' We believe it is
particularly important to make the change to DRGs 515, 535, and 536 at
this time, given the expansion of Medicare coverage of implantable
defibrillators and the evidence that suggests that patients who receive
an EP test, but not a cardiac catheterization, are less expensive than
other patients receiving these devices.
We will address code 37.26 at our September 29-30, 2005 meeting of
the ICD-9-CM Coordination and Maintenance Committee meeting. The public
is encouraged to participate in this meeting and offer suggestions for
code modifications. Information on this meeting can be found at: http://www.cms.hhs.gov/paymentsystems/icd9
.
Comment: Five commenters stated that CMS' data show that the
average charges for cases with code 37.26 are significantly higher than
those in DRG 515. The commenters suggested that the volume of cases is
significant enough to create a new DRG for cases with cardiac
defibrillator implant without cardiac catheterization, but with code
37.26.
Response: Given the extensive comments concerning coding problems
with code 37.26, we do not believe it is appropriate to create a new
DRG that would specifically capture defibrillator implants with this
code. Therefore, we are not creating the suggested new DRG at this
time. As stated earlier, we will continue to work with the coding and
health care community to modify code 37.26 so that it will lead to more
consistent reporting. Once we have better data, we will evaluate
additional DRG modifications.
After consideration of the public comments received on the proposed
rule, in this final rule, we are implementing the modification of DRGs
535 and 536 as proposed for FY 2006. We are removing code 37.26 from
the list of cardiac catheterizations for DRGs
[[Page 47292]]
535 and 536 and adding the code in DRG 515.
c. Coronary Artery Stents
In the FY 2005 IPPS final rule (69 FR 48971 through 48974), we
addressed two comments from industry representatives about the DRG
assignments for coronary artery stents. These commenters had expressed
concern about whether the reimbursement for stents is adequate,
especially for insertion of multiple stents. They also expressed
concern about whether the current DRG structure represents the most
clinically coherent classification of stent cases. In the FY 2006
proposed rule (70 FR 23318 through 23319), we included the following
discussion regarding the commenter's concerns:
The current DRG structure incorporates stent cases into the
following two pairs of DRGs, depending on whether bare metal or
drug-eluting stents are used and whether acute myocardial infarction
(AMI) is present:
DRG 516 (Percutaneous Cardiovascular Procedures with
AMI)
DRG 517 (Percutaneous Cardiovascular Procedures with
Nondrug-Eluting Stent without AMI)
DRG 526 (Percutaneous Cardiovascular Procedures with
Drug-Eluting Stent with AMI)
DRG 527 (Percutaneous Cardiovascular Procedures with
Drug-Eluting Stent without AMI)
The commenters presented two recommendations for refinement and
restructuring of the current coronary stent DRGs. One of the
recommendations involved restructuring these DRGs to create two
additional stent DRGs that are closely patterned after the existing
pairs, and would reflect insertion of multiple stents with and
without AMI. The commenters recommended incorporating either
stenting code 36.06 (Insertion of nondrug-eluting coronary artery
stent(s)) or code 36.07 (Insertion of drug-eluting coronary artery
stent(s)) when they are reported along with code 36.05 (Multiple
vessel percutaneous transluminal coronary angioplasty [PTCA] or
coronary atherectomy performed during the same operation, with or
without mention of thrombolytic agent). The commenter's first
concern was that hospitals may be steering patients toward coronary
artery bypass graft surgery in place of stenting in order to avoid
significant financial losses due to what it considered the
inadequate reimbursement for inserting multiple stents.
In our response to comments in the FY 2005 IPPS final rule, we
indicated that it was premature to act on this recommendation
because the current coding structure for coronary artery stents
cannot distinguish cases in which multiple stents are inserted from
those in which only a single stent is inserted. Current codes are
able to identify performance of PTCA in more than one vessel by use
of code 36.05. However, while this code indicates that PTCA was
performed in more than one vessel, its use does not reflect the
exact number of procedures performed or the exact number of vessels
treated. Similarly, when codes 36.06 and 36.07 are used, they
document the insertion of at least one stent. However, these
stenting codes do not identify how many stents were inserted in a
procedure, nor distinguish insertion of a single stent from
insertion of multiple stents. Even the use of one of the stenting
codes in conjunction with multiple-PTCA code 36.05 does not
distinguish insertion of a single stent from multiple stents. The
use of code 36.05 in conjunction with code 36.06 or code 36.07
indicates only performance of PTCA in more than one vessel, along
with insertion of at least one stent. The precise numbers of PTCA-
treated vessels, the number of vessels into which stents were
inserted, and the total number of stents inserted in all treated
vessels cannot be determined. Therefore, the capabilities of the
current coding structure do not permit the distinction between
single and multiple vessel stenting that would be required under the
recommended restructuring of the coronary stent DRGs.
We agree that the DRG classification of cases involving coronary
stents must be clinically coherent and provide for adequate
reimbursement, including those cases requiring multiple stents. For
this reason, we created four new ICD-9-CM codes identifying multiple
stent insertion (codes 00.45, 00.46, 00.47, and 00.48) and four new
codes identifying multiple vessel treatment (codes 00.40, 00.41,
00.42, and 00.43) at the October 7, 2004 ICD-9-CM Coordination and
Maintenance Committee Meeting. These eight new codes can be found in
Table 6B of this proposed rule. We have worked closely with the
coronary stent industry and the clinical community to identify the
most logical code structure to identify new codes for both multiple
vessel and multiple stent use. Effective October 1, 2005, code 36.05
will be deleted and the eight new codes will be used in its place.
Coders are encouraged to use as many codes as necessary to describe
each case, using one code to describe the angioplasty or
atherectomy, and one code each for the number of vessels treated and
the number of stents inserted. Coders are encouraged to record codes
accurately, as these data will potentially be the basis for future
DRG restructuring. While we agree that use of multiple vessel and
stent codes will provide useful information in the future on
hospital costs associated with percutaneous coronary procedures, we
believe it remains premature to proceed with a restructuring of the
current coronary stent DRGs on the basis of the number of vessels
treated or the number of stents inserted, or both, in the absence of
data reflecting use of this new coding structure. The commenter's
second recommendation was that we distinguish ``complex'' from
``noncomplex'' cases in the stent DRGs by expanding the higher
weighted DRGs (516 and 526) to include conditions other than AMI.
The commenter recommended recognizing certain comorbid and
complicating conditions, including hypertensive renal failure,
congestive heart failure, diabetes, arteriosclerotic cardiovascular
disease, cerebrovascular disease, and certain procedures such as
multiple vessel angioplasty or atherectomy (as evidenced by the
presence of procedure code 36.05), as indicators of complex cases
for this purpose. Specifically, the commenters recommended replacing
the current structure with the following four DRGs:
Recommended restructured DRG 516 (Complex percutaneous
cardiovascular procedures with non-drug-eluting stents).
Recommended restructured DRG 517 (Noncomplex
percutaneous cardiovascular procedures with non-drug-eluting
stents).
Recommended restructured DRG 526 (Complex percutaneous
cardiovascular procedures with drug-eluting stents).
Recommended restructured DRG 527 (Noncomplex
percutaneous cardiovascular procedures with drug-eluting stents).
The commenter argued that this structure would provide an
improvement in both clinical and resource coherence over the current
structure that classifies cases according to the type of stent
inserted and the presence or absence of AMI alone, without
considering other complicating conditions. The commenter also
presented an analysis, based on previous MedPAR data, that evaluated
charges and lengths of stay for cases with expected high resource
use and reclassified cases into its recommended new structure of
paired ``complex'' and ``noncomplex'' DRGs. The commenter's analysis
showed some evidence of clinical and resource coherence in the
recommended DRG structure. However, we did not adopt the proposal in
the FY 2005 IPPS final rule. First, the data presented by the
commenter still represented preliminary experience under a
relatively new DRG structure. Second, the analysis did not reveal
significant gains in resource coherence compared to existing DRGs
for stenting cases. Therefore, we were reluctant to adopt this
approach because of comments and concern about whether the overall
level of payment in the coronary stent DRGs was adequate. However,
we indicated that this issue deserved further study and
consideration, and that we would conduct an analysis of this
recommendation and other approaches to restructuring these DRGs with
updated data in the FY 2006 proposed rule.''
In response to those comments, we analyzed the MedPAR data to
determine the impact of certain secondary diagnoses or complicating
conditions on the four stent DRGs. Specifically, we examined the data
in DRGs 516, 517, 526, and 527, based on the presence of coronary
stents (codes 36.06 and 36.07) and the following additional diagnoses:
Congestive heart failure (represented by codes 398.91
(Rheumatic heart failure (congestive)), 402.01 (Hypertensive heart
disease, malignant, with heart failure), 402.11, (Hypertensive heart
disease, benign, with heart failure), 402.91 (Hypertensive heart
disease, unspecified, with heart failure), 404.01 (Hypertensive heart
and renal disease, malignant, with heart failure), 404.03 (Hypertensive
heart and renal disease, malignant, with heart
[[Page 47293]]
failure and renal failure), 404.11 (Hypertensive heart and renal
disease, benign, with heart failure), 404.13 (Hypertensive heart and
renal disease, benign, with heart failure and renal failure), 404.91
(Hypertensive heart and renal disease, unspecified, with heart
failure), 404.93 (Hypertensive heart and renal disease, unspecified,
with heart failure and renal failure), 428.0 (Congestive heart failure,
unspecified), and 428.1 (Left heart failure)).
Arteriosclerotic cardiovascular disease (represented by
code 429.2 (Cardiovascular disease, unspecified)).
Cerebrovascular disease (represented by codes 430
(Subarachnoid hemorrhage), 431 (Intracerebral hemorrhage), 432.0
(Nontraumatic extradural hemorrhage), 432.1, Subdural hemorrhage,
432.9, (Unspecified intracranial hemorrhage), 433.01 (Occlusion and
stenosis of basilar artery, with cerebral infarction), 433.11
(Occlusion and stenosis of carotid artery, with cerebral infarction),
433.21 (Occlusion and stenosis of vertebral artery, with cerebral
infarction), 433.31 (Occlusion and stenosis of multiple and bilateral
precerebral arteries, with cerebral infarction), 433.81 (Occlusion and
stenosis of other specified precerebral artery, with cerebral
infarction), 434.01 (Cerebral thrombosis with cerebral infarction),
434.11 (Cerebral embolism with cerebral infarction), 434.91 (Cerebral
artery occlusion with cerebral infarction, unspecified), 436 (Acute,
but ill-defined, cerebrovascular disease)).
Secondary diagnosis of acute myocardial infarction
(represented by codes 410.01 (Acute myocardial infarction of
anterolateral wall, initial episode of care), 410.11 (Acute myocardial
infarction of other anterior wall, initial episode of care), 410.21
(Acute myocardial infarction of inferolateral wall, initial episode of
care), 410.31 (Acute myocardial infarction of inferoposterior wall,
initial episode of care), 410.41 (Acute myocardial infarction of other
inferior wall, initial episode of care), 410.51 (Acute myocardial
infarction of other lateral wall, initial episode of care), 410.61
(True posterior wall infarction, initial episode of care), 410.71
(Subendocardial infarction, initial episode of care), 410.81 (Acute
myocardial infarction of other specified sites, initial episode of
care), 410.91 (Acute myocardial infarction of unspecified site, initial
episode of care)).
Renal failure (represented by codes 403.01 (Hypertensive
renal disease, malignant, with renal failure), 403.11 (Hypertensive
renal disease, benign, with renal failure), 403.91 (Hypertensive renal
disease, unspecified, with renal failure), 585 (Chronic renal failure),
V42.0 (Organ or tissue replaced by transplant, kidney), V45.1 (Renal
dialysis status), V56.0 (Extracorporeal dialysis), V56.1 (Fitting and
adjustment of extracorporeal dialysis catheter), V56.2 (Fitting and
adjustment of peritoneal dialysis catheter)). Any renal failure with
congestive heart failure will be captured in the 404.xx codes listed
above.
We reviewed the cases in the four coronary stent DRGs and found
that most of the additional or ``complicated'' cases did, in fact, have
higher average charges in most instances. However, these results could
potentially be duplicated for many DRGs, or sets of DRGs, within the
PPS structure. That is, cases with selected complicating factors will
tend to have higher average lengths of stay and average charges than
cases without those complicating factors. Because cases with the
selected complicating factors necessarily contain sicker patients,
longer lengths of stay and higher average charges are to be expected.
For example, cases in which patients with a cardiac condition also have
renal failure are quite likely to consume higher resources than
patients only with a cardiac condition. The presence of code 403.11
(Hypertensive renal disease, malignant, with renal failure) may
distinguish cases with higher average charges, but the same argument
could be raised for many other procedures across other MDCs.
Generally, we have taken into account the higher costs of cases
with complications by maintaining a general list of comorbidities and
complications (the CC) list), and, where appropriate, distinguishing
pairs of DRGs by ``with and without CCs.'' (This system also specifies
exclusions from each pair, to account for cases where a condition on
the CC list is an expected and normal constituent of the diagnoses
reflected in the paired DRGs.)
Thus, we proposed to restructure the coronary stent DRGs on the
basis of the standard CC list to differentiate cases that require
greater resources. We believed this list to be more inclusive of true
comorbid or complicating conditions than selection of specific
secondary diagnosis codes. Therefore, we anticipated that restructuring
these DRGs on this basis would result in a logical arrangement of cases
with regard to both clinical coherence and resource consumption. We
compared the existing CC list with the list of the codes recommended by
the commenter as secondary diagnoses. All of the recommended codes
already appear on the CC list except for codes 429.2, 432.9, V56.1, and
V56.2. Code 429.2 represents a very vague diagnosis (arteriosclerotic
cardiovascular disease (ASCVD)). Code 432.9 represents a nonspecific
principal diagnosis that is rejected by the MCE when reported as the
principal diagnosis. Codes V56.1 and V56.2 describe conditions relating
to dialysis for renal failure. Therefore, we believe that our proposal
to utilize the existing CC list encompassed most of the cases on the
recommended list, as well as other cases with additional CCs requiring
additional resources. We examined the MedPAR data for the cases in the
coronary stent DRGs, distinguishing cases that include CCs and those
that do not. The following table displays the results:
----------------------------------------------------------------------------------------------------------------
Number of Average length- Average
DRG cases of-stay charges
----------------------------------------------------------------------------------------------------------------
DRG 516--All Cases.............................................. 37,325 4.79 $40,278
DRG 516 Cases With CC........................................... 25,806 5.5 43,691
DRG 516 Cases Without CC........................................ 11,519 3.0 32,631
DRG 517--All Cases.............................................. 64,022 2.58 32,145
DRG 517 Cases With CC........................................... 50,960 2.8 33,178
DRG 517 Cases Without CC........................................ 13,062 1.5 28,113
DRG 526--All Cases.............................................. 51,431 4.36 45,924
DRG 526 Cases With CC........................................... 32,904 5.2 49,751
DRG 526 Cases Without CC........................................ 18,527 2.8 39,126
DRG 527--All Cases.............................................. 176,956 2.23 36,087
DRG 527 Cases With CC........................................... 137,641 2.4 37,142
DRG 527 Cases Without CC........................................ 39,315 1.3 32,392
----------------------------------------------------------------------------------------------------------------
[[Page 47294]]
The data show a clear differentiation in average charges between
the cases in DRG 516 and 526 ``with CC'' and those ``without CC.''
Therefore, the data suggested that a ``with and without CC'' split in
DRG 516 and 526 was warranted. At the same time, the data did not show
such a clear differentiation, in either average charges or lengths of
stay, among the cases in DRGs 517 and 527.
As a result of this analysis, in the proposed rule, we had
originally proposed to delete DRGs 516 and 526, and to substitute four
new DRGs in their place. These new DRGs were to have been patterned
after existing DRGs 516 and 526, except that they would be split based
on the presence or absence of a secondary diagnosis on the existing CC
list. Specifically, we intended to create DRG 547 (Percutaneous
Cardiovascular Procedure with AMI with CC), DRG 548 (Percutaneous
Cardiovascular Procedure with AMI without CC), DRG 549 (Percutaneous
Cardiovascular Procedure with Drug-Eluting Stent with AMI with CC), and
DRG 550 (Percutaneous Cardiovascular Procedure with Drug-Eluting Stent
with AMI without CC). As we noted above, the MedPAR data did not
support restructuring DRGs 517 and 527 based on the presence or absence
of a CC. Therefore, we proposed to retain these two DRGs in their
current forms. We believed this revised structure would result in a
more inclusive and comprehensive array of cases within MDC 5 without
selectively recognizing certain secondary diagnoses as ``complex.''
We received a number of comments on the proposed restructuring of
DRGs 516, 517, 526, and 527 in the FY 2006 IPPS proposed rule.
Comment: All of the commenters approved of the proposed
restructuring of these DRGs, especially with regard to dividing DRGs
516 and 526 on the basis of the presence or absence of complicating
secondary diagnoses.
Response: We appreciate the comments submitted in support of this
proposal.
Comment: One commenter noted that the average patient receives 1.5
stents, and expressed the desire for CMS to begin ``appropriate
reimbursement'' in FY 2006, consistent with the additional expense
involved when multiple stents are inserted. One commenter remained
concerned that the DRG weights significantly underestimate the true
costs of performing drug-eluting stent procedures, especially for
multiple vessel, multiple stent procedures, and expressed concern that
the proposed relative weights could result in financial losses for
hospitals, with the result that access to stent procedures is
discouraged.
Response: We created new ICD-9-CM procedure codes effective for
discharges on or after October 1, 2005, to capture both the number of
stents inserted and the number of vessels treated. Absent accurate
charge data, we cannot predict the correct relative weight for a DRG
containing more than one stent. We reiterate that we will continue to
monitor the MedPAR data, and will make future evidence-based changes to
the DRG structure and logic as warranted.
Comment: Several commenters supported the maintenance of separate
reimbursement structures for drug-eluting stents and recommended that
we continue to separate drug-eluting and bare metal stents in different
DRGs until such time as the bare metal stents represent an
insignificant proportion of the total coronary stent discharges.
Response: We recognize that the resources surrounding bare metal
stents and drug-eluting stents differ appreciably and will continue to
keep these cases separate from each other until such time as it is
appropriate, according to the evidence provided in our MedPAR data,
that these cases can be combined.
Comment: Several commenters supported CMS' proposal to create eight
new procedure codes; four codes describing the number of vessels
treated and four codes describing the number of stents inserted. In
addition, two commenters suggested that CMS should issue a separate
communication reiterating the correct use of these codes.
Response: We take this opportunity to clear up a misconception. The
codes published in Tables 6A through 6F are not proposed codes. They
are final codes, and as such, are not subject to comment. Absent any
typographical errors or late changes to the codes, they may be
considered available for use on October 1 of the following fiscal year.
This year, because of the changes made by the March 31, 2005 and April
1, 2005 ICD-9-CM Coordination and Maintenance Committee, the codes in
the proposed rule were not as complete as those codes published in this
final rule. The codes contained in Tables 6A through 6F of this final
rule include all new codes for FY 2006, which will go into effect on
October 1, 2005.
CMS partners with the American Hospital Association with regard to
correct coding advice published in the Coding Clinic for ICD-9-CM.
AHA's fourth edition of the year always includes the new codes for the
upcoming year and includes examples on their proper use. In addition,
CMS' MedLearn site at http://www.cms.hhs.gov/medlearn/icd9code.asp#top
contains coding information.
Comment: One commenter recommended that the use of the eight new
codes describing number of vessels and number of stents be used on both
coronary and peripheral vessels.
Response: The note that will appear at the top of the 00.4 (Adjunct
Vascular System Procedures) section of Tabular section of the ICD-9-CM
Procedure Coding Book will read as follows: ``These codes can apply to
both coronary and peripheral vessels. These codes are to be used in
conjunction with other therapeutic procedure codes to provide
additional information on the number of vessels upon which a procedure
was performed or the number of stents inserted, or both. As
appropriate, hospitals should code both the number of vessels operated
on (00.40 through 00.43) and the number of stents inserted (00.45
through 00.48).
Comment: One commenter stated that by the time CMS gets data on the
eight new codes, it will be FY 2008, and hospitals will have had
inadequate reimbursement for multiple stents until then. The commenter
suggested that CMS incorporated additional payment for multiple stents
and multiple vessels treated into the FY 2007 weights.
Response: We will follow the use of these codes, but may not be
prepared to make any DRG changes based on their use with only one
year's worth of data.
Comment: One commenter stated that DRGs should not be restructured
for multiple stent insertion without adequate data to support our
decisionmaking process.
Response: We agree and intend to closely follow the use of these
eight new codes in the MedPAR data.
Comment: One commenter was not convinced that the proposed new
structure of DRGs 516 and 526, with and without comorbidities and
complications should be the permanent solution for all coronary stent
DRGs. This commenter agreed that the new structure of these DRGs should
not preclude subsequent restructuring of the stent DRGs.
Response: We agree that restructuring DRGs 516 and 526 in the
proposed manner might not be a permanent solution for classifying all
stent DRGs. However, we have now decided not to adopt the proposed
restructuring of DRGs 516 and 526 that was described in the proposed
rule. We have now determined that it is appropriate to restructure nine
DRGs in MDC 5, including DRGs 516, 517, 526, and 527,
[[Page 47295]]
on the basis of the presence or absence of a major cardiovascular
condition. We are making this change in the DRG structure in response
to public comments concerning our response to MedPAC's recommendations
to better recognize severity in the DRG system. The full text of the
changes we are making to the cardiovascular DRG, including the coronary
artery stent DRGs, can be found in section IX.A. of this final rule.
Comment: One commenter requested that CMS adopt an ICD-9-CM code
that was discussed at the October 7, 2004 ICD-9-CM Coordination and
Maintenance Committee. That code, had it been adopted, would have been
00.44 (Procedure on bifurcated vessels) in the new series of codes
describing the number of vessels treated. The commenter stated that the
creation of this code is critical to understanding the contemporary
approaches to treatment of coronary artery disease. The commenter
further stated that treatment of stenosis [of a blood vessel] at a
bifurcation represents 25 to 30 percent of percutaneous coronary
interventions and recommended that coders use one code for number of
vessels, one code for number of stents, and an additional code to note
that a bifurcated vessel was treated. According to the commenter, a new
code for the treatment of a bifurcated vessel is necessary because the
existing codes that describe the number of vessels treated (codes 00.40
through 00.43) will only be used by coders for the counting of
uninterrupted, straight vessels.
Response: We did not choose to create a new code for procedure on a
bifurcated vessel for two reasons. First, we do not believe that level
of granularity is needed in order to accurately code stent insertion
for bifurcated vessels. We believe that the codes for multiple stents
and vessels will provide the necessary information about resource use
for the procedure. Second, we are concerned that coders will not have
sufficient information documented in the medical record to identify
procedures on bifurcated vessels as opposed to a specific number of
procedures on a specific number of vessels. Because procedures on
bifurcated vessels are so prevalent (25 to 30 percent, according to the
commenter), they should be considered technical variants rather than
distinct entities to be coded separately. We solicited input from the
industry when creating the new coronary stent codes, and we believe
that the new codes as they exist adequately capture resource
utilization. We also note that this level of detail is not present in
the Current Procedural Terminology (CPT) coding structure, which is the
basis upon which physicians are paid.
Accordingly, in this final rule, for FY 2006, we are deleting DRGs
516, 517, 526, and 527 for percutaneous placement of both drug-eluting
and nondrug-eluting stents. We are creating four new DRGs in their
places. Rather than divide these DRG pairs based on whether the patient
had an acute myocardial (AMI), we are splitting each pair of DRGs based
on the presence or absence of a major cardiovascular condition.
Although, as discussed in the proposed rule, in the past we have
expressed concerns regarding selectively recognizing secondary
diagnoses or complicating conditions, particularly conditions from
other MDCs, in making DRG assignments, we believe these concerns are
not relevant to the new cardiovascular DRGs. While we are adopting an
approach for distinguishing patients with complex conditions, with a
few exceptions, our approach uses complex cardiovascular conditions (or
diagnoses within the MDC) to decide whether a patient should be
assigned to the higher weighted DRG. In those cases where we have used
a diagnosis from another MDC in assigning a patient to the MCV DRG, the
condition is generally a closely related vascular condition that is
linked to the patient's cardiovascular illness. We believe that this
revised structure identifies subgroups of significantly more severe
patients who use greater hospital resources more accurately than was
possible under the previous DRGs. The new DRG titles are:
DRG 555 (Percutaneous Cardiovascular Procedure With Major
Cardiovascular Diagnosis (formerly DRG 516)
DRG 556 (Percutaneous Cardiovascular Procedure With Non-
Drug-Eluting Stent Without Major Cardiovascular Diagnosis (formerly DRG
517)
DRG 557 (Percutaneous Cardiovascular Procedure With Drug-
Eluting Stent With Major Cardiovascular Diagnosis (formerly DRG 526)
DRG 558 (Percutaneous Cardiovascular Procedure With Drug-
Eluting Stent Without Major Cardiovascular Diagnosis (formerly DRG 527)
We refer the reader to section IX.A. of the preamble to this final
rule for a full presentation of the changes to the DRGs for coronary
artery stents for FY 2006.
Although we are adopting some restructuring of the coronary stent
DRGs for FY 2006, it is important to note that this change does not
preclude proposals in subsequent years to further restructure the
coronary stent DRGs based on the number of vessels treated. We will
continue to monitor and analyze clinical and resource trends in this
area. For example, we have found indications in the current data that
treatment may be moving toward use of drug-eluting stents, and away
from use of bare metal stents. Specifically, cases in DRGs 516 and 517,
which utilize bare metal stents, comprise only 44.4 percent, or less
than half, of the cases in the four coronary stent DRGs in the MedPAR
data we analyzed. As use of drug-eluting stents becomes the standard of
treatment, we may consider over time whether to dispense with the
distinction between these stents and the older bare metal stent
technology in the structure of the coronary stent DRGs. In addition, we
will continue to consider whether the structure of these DRGs ought to
reflect differences in the number of vessels treated or the number of
stents inserted, or both. As we discussed above, a new coding structure
capable of identifying multiple vessel treatment and the insertion of
multiple stents will go into effect on October 1, 2005. It remains
premature to restructure the coronary stent DRGs on the basis of the
number of vessels treated or the number of stents inserted, or both,
until data reflecting the use of these new codes become available.
After we have pertinent data in our historical MedPAR database, we will
analyze those data in order to determine whether a restructuring of the
DRGs based on multiple vessel treatment or insertion of multiple
stents, or both, is warranted.
We refer the reader to Table 6B of this final rule for the
descriptions of four new ICD-9-CM codes identifying multiple stent
insertion (codes 00.45, 00.46, 00.47, and 00.48) and four new codes
identifying multiple vessel treatment (codes 00.40, 00.41, 00.42, and
00.43). Coders are encouraged to use as many codes as necessary to
describe each case, using new code 00.66 (Percutaneous transluminal
coronary angioplasty [PTCA] or coronary atherectomy) and one code each
for the number of vessels treated and the number of stents inserted.
Coders are encouraged to record codes accurately, irrespective of
whether the code has an impact on the DRG assignment, as these data
will potentially be the basis for future DRG restructuring.
d. Insertion of Left Atrial Appendage Device
Atrial fibrillation is a common heart rhythm disorder that can lead
to a cardiovascular blood clot formation
[[Page 47296]]
leading to increased risk of stroke. According to product literature,
nearly all strokes are from embolic clots arising in the left atrial
appendage of the heart: an appendage for which there is no useful
function. Standard therapy uses anticoagulation drugs. However, these
drugs may be contraindicated in certain patients and may cause
complications such as bleeding. The underlying concept behind the left
atrial appendage device is to block off the left atrial appendage, so
that the blood clots formed therein cannot travel to other sites in the
vascular system. The device is implanted using a percutaneous catheter
procedure under fluoroscopy through the femoral vein. Implantation is
performed in a hospital catheterization laboratory using standard
transseptal technique, with the patient generally under local
anesthesia. The procedure takes approximately 1 hour, and most patients
stay overnight in the hospital.
In the FY 2005 IPPS final rule (69 FR 48978, August 11, 2004), we
discussed the DRG assignment of new ICD-9-CM procedure code 37.90
(Insertion of left atrial appendage device) for clinical trials,
effective for discharges occurring on or after October 1, 2004, to DRG
518 (Percutaneous Cardiovascular Procedure without Coronary Artery
Stent or Acute Myocardial Infarction). In that final rule, we addressed
the DRG assignment of procedure code 37.90 in response to a comment
from a manufacturer who suggested that placement of the code in DRG 108
(Other Cardiothoracic Procedures) was more representative of the
complexity of the procedure than placement in DRG 518. The manufacturer
indicated that the suggested placement of procedure code 37.90 in DRG
108 was justified because another percutaneous procedure, described by
ICD-9-CM procedure code 35.52 (Repair of atrial septal defect with
prosthesis, closed technique), was assigned to DRG 108. As we indicated
in the FY 2005 final rule (69 FR 48978), this comment prompted us to
examine data in the FY 2003 MedPAR file for cases of code 35.52
assigned to DRG 108 and DRG 518 in comparison to all cases assigned to
DRG 108. We found the following:
----------------------------------------------------------------------------------------------------------------
Number of Average length Average
DRG cases of stay charges
----------------------------------------------------------------------------------------------------------------
DRG 108 With Code 35.52 Reported................................ 523 2.69 $29,231
DRG 108--All cases.............................................. 5,293 10.1 76,274
DRG 518--All cases.............................................. 39,553 4.3 31,955
----------------------------------------------------------------------------------------------------------------
Therefore, we concluded that procedure code 35.52 showed a decided
similarity to the cases found in DRG 518, not DRG 108. At that time, we
determined that we would analyze the cases for both clinical coherence
and charge data as part of the IPPS FY 2006 process of identifying the
most appropriate DRG assignment for procedure code 35.52.
We examined data from the FY 2004 MedPAR file and found results for
cases assigned to DRG 108 and DRG 518 that are similar to last year's
findings as indicated in the chart below:
----------------------------------------------------------------------------------------------------------------
Number of Average length- Average
DRG cases of-stay charges
----------------------------------------------------------------------------------------------------------------
DRG 108 With Code 35.52 Reported................................ 872 2.42 $29,579
DRG 108--All cases.............................................. 8,264 9.81 81,323
DRG 518--All cases.............................................. 38,624 3.49 27,591
----------------------------------------------------------------------------------------------------------------
From this comparison, we found that when an atrial septal defect is
percutaneously repaired, and procedure code 35.52 is the only code
reported in DRG 108, there is a significant discrepancy in both the
average charges and the average length of stay between the cases with
procedure code 35.52 reported in DRG 108 and the total cases in DRG
108. The total cases in DRG 108 have average charges of $51,744 greater
than the 872 cases in DRG 108 reporting procedure code 35.52 as the
only procedure. The total cases in DRG 108 also have an average length
of stay of 7.39 days greater than the average length of stay for cases
in DRG 108 with procedure code 35.52 reported. In comparison, the total
cases in DRG 518 have average charges of only $1,988 lower than the
cases in DRG 108 with only procedure code 35.52 reported. In addition,
the length of stay in total cases in DRG 518 is more closely related to
cases in DRG 108 with only procedure code 35.52 reported. Based on this
analysis, we proposed to move procedure code 35.52 out of DRG 108 and
place it in DRG 518.
Comment: One commenter agreed that the left atrial appendage device
procedure code should be moved out of DRG 108 and into DRG 518 based on
significantly lower average charges and length of stay as compared to
the majority of cases within the current classification.
Response: Even though this comment did not exactly reflect our
proposal regarding the left atrial appendage device, we are
interpreting the commenter's statement to mean that it agreed that code
35.52 should be removed from DRG 108.
Comment: One commenter addressed the proposed removal of code 35.52
from DRG 108. The commenter acknowledged that the resource intensity
for patients undergoing percutaneous atrial septal defect repair is
less than that of open repair, but did not believe that the costs are
akin to procedures presently assigned to DRG 518 because of the cost of
the closure device and additional testing, such as electrocardiography.
The commenter recommended that CMS not move code 35.52 out of DRG 108
until better data can be gathered and a more appropriate reimbursement
calculation can be developed.
Response: This year, CMS undertook an extensive review of MDC 5
after issuance of the FY 2006 IPPS proposed rule in response to
MedPAC's recommendations regarding restructuring the Medicare DRG
system to improve payment accuracy under the IPPS. A discussion of the
results of that review and our subsequent decision in response to a
comment on the proposed rule to make changes to nine cardiovascular
DRGs, can be found in section IX.A. of this preamble. During that
review, we evaluated each surgical DRG within MDC 5. In addition,
within each DRG, we evaluated each procedure code to determine the
number of cases,
[[Page 47297]]
the average length of stay, and the average standardized charges. In
DRG 108, the results were the same as in the table shown above in this
section, and published in the FY 2006 IPPS proposed rule. Code 35.52
had an average length of stay of approximately one fourth of the rest
of the cases in that DRG, and had average charges that were greater
than $51,700 less than the remainder of the cases in DRG 108. In
addition, code 35.52 represents a closed technique approach, unlike the
other cases in DRG 108. We believe this is compelling evidence that
this procedure is not most appropriately assigned to DRG 108.
Therefore, we are finalizing our proposal to move code 35.52 out of DRG
108 and into DRG 518 with cases that resemble it in average length of
stay, average charges, and clinical coherence. We believe that this
move will result in a more coherent group of cases in DRG 518 that
reflect all percutaneous procedures.
Comment: Three commenters did not believe that the left atrial
appendage device, represented by new code 37.90, should be placed in
DRG 518. They believed that DRG 518 does not cover the costs for the
procedure and device, and suggested placement in another DRG that would
include similar procedures and a better reimbursement. Two commenters
suggested that a more appropriate DRG would be either DRG 108 or DRG
111 (Major Cardiovascular Procedures Without CC).
Response: Based on our data review and discussion above, we do not
believe that placement of code 37.90 is appropriate in DRG 108. Code
37.90 is a percutaneously placed device utilizing local anesthesia, and
with an expected length of stay of one day.
We reviewed cases in the MedPAR file assigned to both DRG 110
(Major Cardiovascular Procedures With CC) and DRG 111. The results of
the review show that both open and percutaneous procedures are grouped
in these paired DRGs. A comparison of the MedPAR data in DRGs 110, 111,
and 518 is shown in the following table:
----------------------------------------------------------------------------------------------------------------
Average
DRG Number of Average length standardized
cases of stay charges
----------------------------------------------------------------------------------------------------------------
DRG 110......................................................... 53,527 \1\ 8.4 $66,475
DRG 111......................................................... 9,438 \1\ 3.43 26,941
DRG 518--All cases.............................................. 38,624 3.49 27,591
DRG 518 with code 37.90......................................... 0 0 0
----------------------------------------------------------------------------------------------------------------
\1\ Days.
As shown in the table, code 37.90 in DRG 518 has not been reported
in the database yet. It is a new code; therefore, it has no payment
history. We note that the cases in DRG 518 closely match those in DRG
111 in terms of both average length of stay and average charges.
However, we also note that DRGs 110 and 111 are paired DRGs with
significantly different average charges and lengths of stay. Even with
a CC, we believe it is unlikely that an endovascular placement of a
left atrial appendage device will approximate the costs of cases to be
assigned to DRG 110. Therefore, in our view, there is the potential for
significant overpayment if we were to assign the left atrial appendage
device to DRG pairs 110 and 111. We continue to believe that placement
of the left atrial appendage device in DRG 518 is appropriate absent
any evidence that would convince us otherwise. Therefore, we are not
making any changes in our proposal in this final rule. We will continue
to monitor its data in our annual review of DRGs and the IPPS.
As we proposed, in this final rule we are moving procedure code
35.52 out of DRG 108 and placing it in DRG 518. We believe that this
move will result in a more coherent group of cases in DRG 518 that
reflect all percutaneous procedures.
e. External Heart Assist System Implant
In the August 1, 2002 final rule (67 FR 49989), we attempted to
clinically and financially align ventricular assist device (VAD)
procedures by creating DRG 525 (Heart Assist System Implant). We also
noted that cases in which a heart transplant also occurred during the
same hospitalization episode would continue to be assigned to DRG 103
(Heart Transplant).
After further data review during the subsequent 2 years, we decided
to realign the DRGs containing VAD codes for FY 2005. In the August 11,
2004 final rule (69 FR 48927), we announced changes to DRG 103, DRG 104
(Cardiac Valve and Other Major Cardiothoracic Procedure with Cardiac
Catheterization), DRG 105 (Cardiac Valve and Other Major Cardiothoracic
Procedures Without Cardiac Catheterization), and DRG 525.
In summary, these changes included--
Moving code 37.66 (Insertion of implantable heart assist
system) out of DRG 525 and into DRG 103.
Renaming DRG 525 as ``Other Heart Assist System Implant.''
Moving code 37.62 (Insertion of non-implantable heart
assist system) out of DRGs 104 and 105 and back into DRG 525.
DRG 525 currently consists of any principal diagnosis in MDC 5,
plus the following surgical procedure codes:
37.52, Implantation of total replacement heart system*
37.53, Replacement or repair of thoracic unit of total
replacement heart system*
37.54, Replacement or repair of other implantable
component of total replacement heart system*
37.62, Insertion of non-implantable heart assist system
37.63, Repair of heart assist system
37.65, Implant of external heart assist system
*These codes represent noncovered services for Medicare
beneficiaries. However, it is our longstanding practice to assign every
code in the ICD-9-CM classification to a DRG. Therefore, they have been
assigned to DRG 525.
Since that decision, we have been encouraged by a manufacturer to
reevaluate DRG 525 for FY 2006. The manufacturer requested that we
again review the data surrounding cases reporting code 37.65, and
suggested moving these cases into DRG 103. The manufacturer pointed out
the following: Code 37.65 describes the implantation of an external
heart assist system and is currently approved by the FDA as a bridge-
to-recovery device. From the standpoint of clinical status, the
patients in DRG 103 and the patients receiving an external heart assist
system are similar because their native hearts cannot support
circulation, and absent a heart transplant, a mechanical pump is needed
for patient survival. The surgical procedures for implantation of both
an internal VAD and an external VAD are very similar. However, the
external heart assist system (code 37.65) is a less expensive device
than the implantable heart assist system (code 37.66).
[[Page 47298]]
Further, the Medicare charge data show that patients in DRG 525
receiving the external heart assist system had an average length of
stay that was more than 28 days less than all patients in DRG 103.
The manufacturer suggested that the payment differential between
DRGs 103 and 525 provides an incentive to choose the higher paying
device, and asserted that only a subset of patients receiving an
implantable heart assist system are best served by this device (code
37.66). The manufacturer also suggested that the initial use of the
least expensive therapeutically appropriate device yields both the best
clinical outcomes and the lowest total system costs.
We note that, under the DRG system, our intent is to create
payments that are reflective of the average resources required to treat
a particular case. Our goal is that physicians and hospitals should
make treatment decisions based on the clinical needs of the patient and
not financial incentives.
When we reviewed the FY 2004 MedPAR data, we were able to
demonstrate the following comparisons:
----------------------------------------------------------------------------------------------------------------
Number of Average length Average
DRG cases of stay charges
----------------------------------------------------------------------------------------------------------------
DRG 103--All cases.............................................. 633 37.5 $313,583
DRG 103 with code 37.65 reported................................ 9 81.3 625,065
DRG 525--All cases.............................................. 291 13.66 173,854
DRG 525 with code 37.65 reported................................ 110 9.26 206,497
DRG 525 without code 37.65 reported............................. 181 16.34 154,015
----------------------------------------------------------------------------------------------------------------
Note: This table does not contain the same data that appear in the table in the proposed rule (70 FR 23322). The
row containing ``DRG 103 without code 37.65'' had values of ``0'' in all fields. These entries were confusing
and therefore deleted.
The above table shows that the 37.8 percent of cases in DRG 525
that reported code 37.65 have average charges that are nearly $33,000
higher than the average charges for all cases in the DRG. However, the
average charges for the subset of cases with code 37.65 in DRG 525
($206,497) are more than $107,086 lower than the average charges for
all cases in DRG 103 ($313,583). Furthermore, the average length of
stay for the subset of patients in DRG 525 receiving an external heart
assist system was 9.26 days compared to 37.5 days for the 633 cases in
DRG 103.
We note that the analysis above presents the difference in average
charges, not costs. Because hospitals' charges are higher than costs,
the difference in hospital costs will be less than the figures shown
here.
Moving all cases containing code 37.65 from DRG 525 to DRG 103
would have two consequences. The cases in DRG 103 reporting code 37.65
would be appreciably overpaid, which would be inconsistent with our
goal of coherent reimbursement structure within the DRGs. In addition,
the relative weight of DRG 103 would ultimately decrease by moving the
less resource-intensive external heart procedures into the same DRG
with the more expensive heart transplant cases. The net effect would be
an underpayment for heart transplant cases. Alternatively, we also
reconsidered our position on moving the insertion of an implantable
heart assist system (code 37.66) back into DRG 525. However, as shown
in the FY 2005 IPPS final rule (69 FR 48929), the resource costs
associated with caring for a patient receiving an implantable heart
assist system are far more similar to those cases receiving a heart
transplant in DRG 103 than they are to cases in DRG 525. For these
reasons, we did not propose to make any changes to the structure of
either DRG 103 or DRG 525.
Comment: Six commenters mentioned the high cost of the external
heart assist device and for treatment for implantation of the device,
and requested that CMS increase payment to cover the cost of caring for
the patients that can benefit from this technology.
Two commenters agreed with CMS' assessment that the cost associated
with implantation of an external heart assist system are considerably
less than a heart transplant or insertion of an implantable heart
assist system. One commenter echoed CMS' concerns that movement of code
37.65 to DRG 103 would result in overpayment for that service and would
result in a decrease of the relative weight of the heart transplant
DRG, ultimately resulting in underpayment of heart transplant cases.
Both commenters agreed with CMS' decision not to include the
implantation of external heart assist systems in DRG 103.
Several commenters noted that significant achievements in the areas
of patient selection, implantation technique, and post-implant
management have been made surrounding this technology. They added that
improvements in the external heart assist device itself have been
reported to make the newer devices safer and more durable. One
commenter noted that observations from personal experience and research
demonstrate that recent improvements to the device have resulted in
increased survival rates from 35 percent (the national average) to
nearly 50 percent. Several commenters mentioned that, with experience,
they have discovered that a longer period of support is required than
was originally anticipated for the patient's native heart to recover.
The commenters stated that, originally, patients were supported an
average of 5 to 7 days, but it has been found that patient outcomes
were better with a longer support period, perhaps as long as 30 to 60
days. These commenters cited the increased expenses related to
supporting the patient and the major financial commitment on the part
of the hospitals choosing to treat this severely ill group of patients
as reasons for requesting increased payment for this population of
cases.
One commenter offered the following four proposals to address the
payment differences between the external heart assist device and an
implantable device:
Create a new DRG for patients requiring heart assist
devices who also sustained an Acute Myocardial Infarction (AMI) because
these patients have higher resource consumption than patients with
other diagnoses in MDC 5.
Assign all cases with AMI and a procedure code of 37.65 to
DRG 103.
Increase the overall weight of DRG 525 to better align it
with ``true hospital charges.''
Allow a second DRG payment or an add-on payment for heart
transplantations if recovery of the patient's native heart is first
attempted.
Response: We appreciate the commenters' thorough understanding of
the IPPS DRG grouping and payment process. We are aware that the
external heart assist device cases represent a very resource-intensive
group of patients. For this reason, we carefully reviewed the
suggestions from the commenter about potential DRG payment policy
changes that we could make to address the issue. We reviewed the MedPAR
data in DRG 525, using ICD-9-CM codes 410.01 through 410.91 to identify
AMIs. In
[[Page 47299]]
addition, we reviewed all cases of patients who received the external
heart assist device procedure represented by ICD-9-CM code 37.65. The
results are summarized in the following table:
----------------------------------------------------------------------------------------------------------------
Average length
Number of of stay Average
cases (days) charges
----------------------------------------------------------------------------------------------------------------
DRG 525--Cases with Any Diagnosis of AMI........................ 46 8.5 $195,758
DRG 525--Cases of Principal Diagnosis of AMI.................... 31 8.9 210,369
DRG 525--Cases with Secondary Diagnosis of AMI.................. 15 7.7 165,562
DRG 525--Cases with No Diagnosis of AMI......................... 71 9.2 204,472
DRG 525--All Cases.............................................. 291 13.66 206,497
----------------------------------------------------------------------------------------------------------------
We do not believe that these data demonstrate that the presence of
an AMI has significant impact on either the length of stay or the
average standardized charges. All cases with AMI have lower lengths of
stay than both the average of all cases in DRG 525 (13.66 days) and the
71 cases in which no AMI was documented (9.2 days). Likewise, only
those cases with a principal diagnosis of AMI have slightly higher
charges than either the group without AMI, or the total of all cases.
Because the data do not justify it, we are rejecting the suggestion of
creating a new DRG for patients receiving an external heart assist
device, as identified by procedure code 37.65, with any diagnosis of
AMI.
With respect to the commenter's second suggestion, our data clearly
demonstrate in the above table that patients with an AMI and procedure
code 37.65 have average standardized charges of $210,369. The first
table in this section that was included in the proposed rule shows that
cases in DRG 103 have average standardized charges of $313,583. We
believe that the relative weight of DRG 103 would eventually decrease
by moving all of the less resource-intensive external heart procedures
into the same DRG with the more expensive heart transplant cases. For
these reasons, we are rejecting the commenter's proposal to assign
cases with AMI and code 37.65 to DRG 103.
With regard to the suggestion (received many times) to selectively
increase the relative weight of specific DRGs, the DRG relative weights
are annually recalibrated based on Medicare hospital discharges using
the most current charge information available (FY 2004 MedPAR file for
the FY 2006 relative weights). We use a complex mathematical algorithm
to determine the relative weights that is fully explained in section
II. of this preamble. The DRG relative weights are neither arbitrarily
nor capriciously assigned. However, if we adopted the suggestion to
select a relative weight for a specific DRG outside of this process, we
are concerned that the relative weight determination would be viewed as
arbitrary and capricious, and we would lose the advantage of having an
objective methodology that bases the relative weight on average
hospital charges. For this reason, we are not adopting the commenter's
suggestion to select a relative weight for external heart assist device
cases outside of our traditional process.
The commenter's fourth suggestion was to make two payments for a
single inpatient stay when the patient receives the external heart
assist system, recovery of the patient's native heart is attempted and
fails, and the patient receives a heart transplant. In cases where the
patient received the external heart assist system and later receives a
heart transplant, the case is already paid using DRG 103. In this
situation, the relative weight for DRG 103 will reflect the average
charges for all patients in the DRG, including those described in the
scenario presented by the commenter. Thus, to the extent that hospital
charges for these patients are already reflected in the relative weight
for the DRG, we do not believe that it is necessary for Medicare to
make a second payment. To arbitrarily select one DRG, or a group of
DRGs, and add an additional DRG payment to those cases is contrary to
our stated goal of having a system in which all cases are fairly
considered by the same recalibration formula. Therefore, we do not
intend to either determine an additional DRG payment or an add-on
payment for this category of patients.
We reiterate that our data do not support the argument that
patients receiving the external heart assist device have longer lengths
of stay than other patients in DRG 525, even though the data show that
their average charges are higher, as noted in the above table. In
determining the possible reasons for higher average charges and lower
lengths of stay, we further examined the Medicare billing data. We
found that almost 76 percent of the Medicare beneficiaries receiving
the external heart device expired during the hospital stay. Thus, the
shorter length of stay and the higher average charges for these
patients compared to other patients in DRG 525 are likely explained by
the high cost of the device and the fact that these patients are
severely ill and frequently expire.
Upon further analysis of the data, we did find that there was a
single subgroup of patients who are comparable in resource usage and
length of stay to those included in DRG 103. These patients received
both the external heart assist device and later had it removed after a
lengthy period of rest and recovery. We note that commenters provided
information indicating that survival rates are improving for patients
receiving more advanced versions of these devices. In addition,
commenters provided information indicating that longer periods of
support with the external heart assist device are improving patients'
survival chances and opportunity to be discharged with their native
heart. According to information included with the comments, the data
show a 50-percent survival rate with an average total length of stay of
43 days for all AMI heart recovery patients. On average, a surviving
patient will receive 31 days of average support time followed by an
additional 38 days in the hospital after the device is removed. Based
on the commenter's information from a later year than our MedPAR data,
it is clear that patients weaned from the external heart assist system
have longer lengths of stay and are very different from the average
patients having this procedure that are in our FY 2004 data. Given the
newness of this procedure, the Medicare charge data included a limited
number of patients having the device implanted and removed. However,
the Medicare charge data did support that patients receiving both an
implant and removal of an external heart assist system in a single
hospital stay had an average length of stay exceeding 50 days and
average charges of $378,000 that are more comparable to
[[Page 47300]]
patients in DRG 103 than DRG 525. While we did not suggest a change to
DRG 103 in the proposed rule, we believe that consideration of the
comments is best served by recognizing this unique subset of patients
and making a DRG change which acknowledges the increased resources
required for improvements in their care.
The commenter has provided us with data showing that with superior
patient selection, and increased duration of treatment with an improved
device, the patients are more likely to be discharged from the hospital
with the native heart intact. While we have limited Medicare data and
the data are from a different year than the commenter's data, our data
do support that patients having an external heart assist device
implanted and removed during the same admission are comparable to in
costs and average length of stay to heart transplant and implantable
heart assist system patients in DRG 103. While we did not suggest a
change to DRG 103 in the proposed rule, we believe that consideration
of the comments is best served by recognizing this unique subset of
patients, and making a DRG change that acknowledges the increased
resources required for improvement in their care. Because we believe
that this therapy offers a treatment option to patients who have
limited alternatives, we are making a change to the DRG using the
limited Medicare data we have available rather than waiting a year to
receive more supporting data.
For the reasons stated above, for FY 2006, we are reconfiguring DRG
103 in the following manner: Those patients who have both the
implantation of the external VAD (code 37.65) and the explantation of
that VAD (code 37.64) prior to the hospital discharge will be assigned
to DRG 103. The revised DRG 103 contains the following codes:
33.6, Combined heart-lung transplantation
37.51, Heart transplantation
37.66, Insertion of implantable heart assist system
Or
37.65, Implant of external heart assist system
And
37.64, Removal of heart assist system.
By making this change, Medicare will be making higher payments for
patients who receive both an implant and an explant of an external
heart assist system during a single hospital stay. Our intent in
establishing this policy is to recognize the higher costs of patients
who have a longer length of stay and are discharged alive with their
native heart. Cases in which a heart transplant also occurs during the
same hospitalization episode would continue to be assigned to DRG 103.
In order to accurately monitor these patients and obtain more
information on patients with these conditions, we intend to have the
Quality Improvement Organizations (QIOs, formerly the PROs) review all
cases in DRG 103 under the auspices of their eighth scope of work to
determine whether implantation and care during the admission were
reasonable and necessary to promote the recovery of the injured
myocardium and lead to improvement of the patient's condition. For
medical review under this contract, the QIOs determine whether items
and services are reasonable and medically necessary and whether the
quality of such services meets professionally recognized standards of
health care. In addition, in hospitals subject to the IPPS, the QIOs
review the validity of diagnostic information, the completeness,
adequacy, and quality of care provided, and the appropriateness of
admissions and discharges. We will continue to examine the claims data
in upcoming years to determine if CMS' consideration surrounding the
unique circumstances of these patients and this treatment modality were
in the best interest of both the patients and the Medicare program.
f. Carotid Artery Stent
Stroke is the third leading cause of death in the United States and
the leading cause of serious, long-term disability. Approximately 70
percent of all strokes occur in people age 65 and older. The carotid
artery, located in the neck, is the principal artery supplying the head
and neck with blood. Accumulation of plaque in the carotid artery can
lead to stroke either by decreasing the blood flow to the brain or by
having plaque break free and lodge in the brain or in other arteries to
the head. The percutaneous transluminal angioplasty (PTA) procedure
involves inflating a balloon-like device in the narrowed section of the
carotid artery to reopen the vessel. A carotid stent is then deployed
in the artery to prevent the vessel from closing or restenosing. A
distal filter device (embolic protection device) may also be present,
which is intended to prevent pieces of plaque from entering the
bloodstream.
Effective July 1, 2001, Medicare covers PTA of the carotid artery
concurrent with carotid stent placement when furnished in accordance
with the FDA-approved protocols governing Category B Investigational
Device Exemption (IDE) clinical trials. PTA of the carotid artery, when
provided solely for the purpose of carotid artery dilation concurrent
with carotid stent placement, is considered to be a reasonable and
necessary service only when provided in the context of such clinical
trials and, therefore, is considered a covered service for the purposes
of these trials. Performance of PTA in the carotid artery when used to
treat obstructive lesions outside of approved protocols governing
Category B IDE clinical trials remains a noncovered service. At its
April 1, 2004 meeting, the ICD-9-CM Coordination and Maintenance
Committee discussed creation of a new code or codes to identify carotid
artery stenting, along with a concomitant percutaneous angioplasty or
atherectomy (PTA) code for delivery of the stent(s). We established
codes for carotid artery stenting procedures for use with discharges
occurring on or after October 1, 2004 inpatients who are enrolled in an
FDA-approved clinical trial and are using on-label FDA-approved stents
and embolic protection devices. These codes are as follows:
00.61 (Percutaneous angioplasty or atherectomy of
precerebral (extracranial vessel(s)); and
00.63 (Percutaneous insertion of carotid artery stent(s)).
We assigned procedure code 00.61 to four MDCs and seven DRGs. The
most likely scenario is that in which cases are assigned to MDC 1
(Diseases and Disorders of the Nervous System) in DRGs 533
(Extracranial Procedures with CC) and 534 (Extracranial Procedures
without CC). Other DRG assignments can be found in Table 6B of the
Addendum to the FY 2005 IPPS final rule (69 FR 49624).
In the FY 2005 IPPS final rule, we indicated that we would continue
to monitor DRGs 533 and 534 and procedure code 00.61 in combination
with procedure code 00.63 in upcoming annual DRG reviews. For the FY
2006 IPPS proposed rule and this final rule, we used proxy codes to
evaluate the costs and DRG assignments for carotid artery stenting
because codes 00.61 and 00.63 were only approved for use beginning
October 1, 2004, and MedPAR data for this period are not yet available.
We used procedure code 39.50 (Angioplasty or atherectomy of other
noncoronary vessel(s)) in combination with procedure code 39.90
(Insertion of nondrug-eluting peripheral vessel stent(s)) in DRGs 533
and 534 as the proxy codes for carotid artery stenting. For this
evaluation, we used principal diagnosis code 433.10 (Occlusion and
stenosis of carotid artery, without mention of cerebral
[[Page 47301]]
infarction) to reflect the clinical trial criteria.
The following chart shows our findings:
----------------------------------------------------------------------------------------------------------------
Number of Average length Average
DRG cases of stay charges
----------------------------------------------------------------------------------------------------------------
DRG 533--All cases.............................................. 44,677 3.73 $24,464
DRG 533 with codes 39.50 and 39.90 reported..................... 1,586 3.13 29,737
DRG 534--All cases.............................................. 42,493 1.79 15,873
DRG 534 with codes 39.50 and 39.90 reported..................... 1,397 1.54 22,002
----------------------------------------------------------------------------------------------------------------
The patients receiving a carotid stent (codes 39.50 and 39.90)
represented 3.5 percent of all cases in DRG 534. On average, patients
receiving a carotid stent had slightly shorter average lengths of stay
than other patients in DRGs 533 and 534. While the average charges for
patients receiving a carotid artery stent were higher than for other
patients in DRG 534, in our view, the small number of cases and the
magnitude of the difference in average charges are not sufficient to
justify a change in the DRGs.
Because we have a paucity of data for the carotid stent device and
its insertion, we believe it is premature to revise the DRG structure
at this time. We expect to revisit this analysis once data become
available on the new codes for carotid artery stents.
We received 11 comments on our presentation of the carotid stent
device issue in the FY 2006 IPPS proposed rule.
Comment: One commenter recommended that CMS include carotid
stenting in the DRG for carotid endarterectomy in FY 2006 and ensure
that the data it is collecting for setting payment rates in FY 2007
appropriately accounts for the cost of the device.
Response: Code 38.12 (Endarterectomy, other vessels of head and
neck) describes the open endarterectomy procedure, and is assigned to
DRGs 533 and 534 which is the same DRG assignment as the endovascular
endarterectomy. Therefore, both the open endarterectomy and the
placement of carotid stent result in assignment to the same DRG, which
reflects CMS' policy of placing new codes in predecessor DRGs. We point
out that codes 00.61 and 00.63 must be used together to allow payment
for carotid stenting. Code 00.63 is not recognized by the GROUPER
program as a stand-alone O.R. procedure and, as such, has no impact on
DRG assignment. Therefore, we anticipate that the cost of the device
will be reflected in the hospital charges.
Comment: One commenter agreed with our presentation in the proposed
rule and suggested that we should make no change to the DRG assignment
for carotid artery stenting.
Response: We agree and will not be making a change to the DRG
assignment for carotid artery stenting.
Comment: Nine commenters encouraged CMS to create two new DRGs for
carotid stent procedures and split these new DRGs on the basis of the
presence or absence of comorbidities or complications. They believed
that, even though the current volume of carotid artery stenting cases
appears small, the recent availability of FDA-approved devices, new and
ongoing clinical trials, multiple post-market registries, as well as
expanded Medicare coverage, will result in a large increase in the
number of cases. They also expressed concern that the potential
increase in patient volume and their perceived inadequate payment for
carotid artery stent cases will create a financial hardship on
facilities providing this technology, potentially resulting in
decreased Medicare beneficiary access to this beneficial therapy.
Response: We continue to believe that the most appropriate changes
to the IPPS and the structure of the DRGs are based on evidence of a
significant difference in average costs between technology itself and
the DRG where its code is assigned. Because the ICD-9-CM procedure
codes are new, we do not have data showing that carotid artery stents
are more costly than other cases in DRGs 533 and 534. Further, using
codes 39.50 and 39.90 as proxies for carotid artery stenting, we did
not observe a substantial difference in average charges between cases
using these codes and other cases in the DRGs. For this reason, we do
not have sufficient evidence to warrant a DRG change at this time.
In this final rule, we are retaining code 00.61 in DRGs 533 and 534
for FY 2006. We will continue to monitor the Medicare charge data in
our annual review of DRGs and the IPPS.
g. Extracorporeal Membrane Oxygenation (ECMO)
Extracorporeal membrane oxygenation (ECMO) is a procedure to create
a closed chest, heart-lung bypass system by insertion of vascular
catheters. Patients receiving this procedure require mechanical
ventilation. ECMO is performed for a small number of severely ill
patients who are at high risk of dying without this procedure. Most
often it is done for neonates with persistent pulmonary hypertension
and respiratory failure for whom other treatments have failed, certain
severely ill neonates receiving major cardiac procedures or
diaphragmatic hernia repair, and certain older children and adults,
most of whom are receiving major cardiac procedures.
Prior to the proposed rule, we received several letters from
institutions that perform ECMO. The commenters stated that, in the CMS
GROUPER logic, this procedure has little or no impact on the DRG
assignment in the newborn, pediatric, and adult population. According
to these letters, patients receiving ECMO are highly resource intensive
and should have a unique DRG that reflects the costs of these
resources. The commenters recommended the creation of a new DRG for
ECMO with a DRG weight equal to or greater than the DRG weight for
tracheostomy.
ECMO is assigned to procedure code 39.65 (Extracorporeal membrane
oxygenation). This code is classified as an O.R. procedure and is
assigned to DRG 104 (Cardiac Valve and Other Major Cardiothoracic
Procedure With Cardiac Catheterization) and DRG 105 (Cardiac Valve and
Other Major Cardiothoracic Procedure Without Cardiac Catheterization).
When ECMO is performed with other O.R. procedures, the case is assigned
to the higher weighted DRG. For example, when ECMO and a tracheostomy
are performed during the same admission, the case would be assigned to
DRG 541 (Tracheostomy with Mechanical Ventilation 96+ Hours or
Principal Diagnosis Except Face, Mouth, and Neck Diagnoses With Major
O.R.).
We note that the primary focus of updates to the Medicare DRG
classification system is changes relating to the Medicare patient
population, not the pediatric patient population.
[[Page 47302]]
Because ECMO is primarily a pediatric procedure and rarely performed in
an adult population, we have few cases in our data to use to evaluate
resource costs. We are aware that other insurers sometimes use
Medicare's rates to make payments. We advise private insurers to make
appropriate modifications to our payment system when it is being used
for children or other patients who are not generally found in the
Medicare population.
To evaluate the appropriateness of payment under the current DRG
assignment, we have reviewed the FY 2004 MedPAR data and found 78 ECMO
cases in 13 DRGs.
The following table illustrates the results of our findings:
----------------------------------------------------------------------------------------------------------------
Average
Number of Average length Average charges for
DRG with code 39.65 reported cases of stay charges for all cases in
ECMO cases the DRG
----------------------------------------------------------------------------------------------------------------
4.............................................. 23 9 $147,766 $120,496
105............................................ 21 8 131,700 89,831
541............................................ 14 62.9 561,210 273,656
All Other DRGs................................. 20 18.1 308,341 NA
----------------------------------------------------------------------------------------------------------------
The average charges for all ECMO cases were approximately $258,821,
and the average length of stay was approximately 20.7 days. The average
charges for the ECMO cases are closer to the average charges for DRG
541 ($273,656) than to the average charges of DRG 104 ($147,766) and
DRG 105 ($131,700). Of the 78 ECMO cases, 14 cases are already assigned
to DRG 541. We believe that the data indicate that DRG 541 would be a
more appropriate DRG assignment for cases where ECMO is performed. We
further note that under the All Payer DRG System used in New York
State, cases involving ECMO are assigned to the tracheostomy DRG. Thus,
the assignment of ECMO cases to the tracheostomy DRG for Medicare would
be similar to how these cases are grouped in another DRG system. For
these reasons, we proposed to reassign ECMO cases reporting code 39.65
to DRG 541. We also proposed to change the title of DRG 541 to: ``ECMO
or Tracheostomy With Mechanical Ventilation 96+ Hours or Principal
Diagnosis Except Face, Mouth and Neck Diagnoses With Major O.R.
Procedure''.
Comment: Several commenters supported the proposed modification to
ECMO cases reporting code 39.65 to DRG 541.
Response: We appreciate the commenters' support.
Accordingly, in this final rule, we are adopting as final the
proposed change to ECMO cases reporting code 39.65 to DRG 541 with
minor modification. To further clarify the change, we are changing the
title of DRG 541 to ``ECMO or Tracheostomy With Mechanical Ventilation
96+ Hours or Principal Diagnosis Except Face, Mouth, and Neck With
Major O.R.'' This title has been modified since the proposed rule (70
FR 23324) to delete the term ``Diagnoses'' from the title. For
consistency purposes, we are also changing the DRG title for DRG 542
from ``Tracheostomy With Mechanical Ventilation 96+ Hours or Principal
Diagnosis Except Face, Mouth, and Neck Diagnoses Without Major O.R.
Procedure'' to ``Tracheostomy With Mechanical Ventilation 96+ Hours or
Principal Diagnosis Except Face, Mouth, and Neck Without Major O.R.''
6. MDC 6 (Diseases and Disorders of the Digestive System): Artificial
Anal Sphincter
In the FY 2003 IPPS final rule (67 FR 50242), we created two new
codes for procedures involving an artificial anal sphincter, effective
for discharges occurring on or after October 1, 2002: Code 49.75
(Implantation or revision of artificial anal sphincter) is used to
identify cases involving implantation or revision of an artificial anal
sphincter and code 49.76 (Removal of artificial anal sphincter) is used
to identify cases involving the removal of the device. In Table 6B of
that final rule, we assigned both codes to one of four MDCs, based on
principal diagnosis, and one of six DRGs within those MDCs: MDC 6
(Diseases and Disorders of the Digestive System), DRGs 157 and 158
(Anal and Stomal Procedures With and Without CC, respectively); MDC 9
(Diseases and Disorders of the Skin, Subcutaneous Tissue and Breast),
DRG 267 (Perianal and Pilonidal Procedures); MDC 21 (Injuries,
Poisonings, and Toxic Effects of Drugs), DRGs 442 and 443 (Other O.R.
Procedures for Injuries With and Without CC, respectively); and MDC 24
(Multiple Significant Trauma), DRG 486 (Other O.R. Procedures for
Multiple Significant Trauma).
In the FY 2004 IPPS final rule (68 FR 45372), we discussed the
assignment of these codes in response to a request we received to
consider reassignment of these two codes to different MDCs and DRGs.
The requester believed that the average charges ($44,000) for these
codes warranted reassignment. In the FY 2004 IPPS final rule, we stated
that we did not have sufficient MedPAR data available on the reporting
of codes 49.75 and 49.76 to make a determination on DRG reassignment of
these codes. We agreed that, if warranted, we would give further
consideration to the DRG assignments of these codes because it is our
customary practice to review DRG assignment(s) for newly created codes
to determine clinical coherence and similar resource consumption after
we have had the opportunity to collect MedPAR data on utilization,
average lengths of stay, average charges, and distribution throughout
the system. In the FY 2005 IPPS final rule, we reviewed the FY 2003
MedPAR data for the presence of codes 49.75 and 49.76 and determined
that these procedures were not a clinical match with the other
procedures in DRGs 157 and 158. Therefore, for FY 2005, we moved
procedure codes 49.75 and 49.76 out of DRGs 157 and 158 and into DRGs
146 and 147 (Rectal Resection With and Without CC, respectively). This
change had the effect of doubling the payment for the cases with
procedure codes 49.75 and 49.76 assigned to DRGs 146 and 147 based on
increases in the relative weights. One commenter suggested that we
create a new DRG for ``Complex Anal/Rectal Procedure with Implant.''
However, we noted that the DRG structure is a system of averages and is
based on groups of patients with similar characteristics. At that time,
we indicated that we would continue to monitor procedure codes 49.75
and 49.76 and the DRGs to which they are assigned.
For the FY 2006 proposed rule, we reviewed the FY 2004 MedPAR data
for the presence of codes 49.75 and 49.76. We found that these two
procedures are still of low incidence. Among the six possible DRG
assignments, we found a total of 18 cases reported with codes 49.75 and
49.76 for the implant,
[[Page 47303]]
revision, or removal of the artificial anal sphincter. We found 13 of
these cases in DRGs 146 and 147 (compared to 12,558 total cases in
these DRGs), and the remaining 5 cases in DRGs 442 and 443 (compared to
19,701 total cases in these DRGs).
We believe the number of cases with codes 49.75 and 49.76 in these
DRGs is too low to provide meaningful data of statistical significance.
Therefore, we did not propose any further changes to the DRGs for these
procedures at this time. Neither did we propose to change the structure
of DRGs 146 or 147 at this time.
Comment: One commenter agreed that we should maintain the current
DRG assignment for codes 49.75 and 49.76. The commenter recommended
that CMS continue to monitor the use of these codes and their DRG
assignment.
Response: We acknowledge the support of the commenter and will
continue to monitor utilization of the services with codes 49.75 and
49.76.
For FY 2006, we are retaining codes 49.75 and 49.76 within DRGs 146
and 147, as proposed.
7. MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue)
a. Hip and Knee Replacements
Orthopedic surgeons representing the American Association of
Orthopaedic Surgeons (AAOS) requested that we subdivide DRG 209 (Major
Joint and Limb Reattachment Procedures of Lower Extremity) in MDC 8 by
creating a new DRG for revision of lower joint procedures. The AAOS
made a presentation at the October 7-8, 2004 meeting of the ICD-9-CM
Coordination and Maintenance Committee meeting. A summary report of
this meeting can be found at the CMS Web site: http://www. cms. hhs.
gov/ payment systems/ icd9/. We also received written comments on this
request prior to the issuance of the FY 2006 IPPS proposed rule.
The AAOS surgeons stated that cases involving patients who require
a revision of a prior replacement of a knee or hip require
significantly more resources than cases in which patients receive an
initial joint replacement. They pointed out that total joint
replacement is one of the most commonly performed and successful
operations in orthopedic surgery. The surgeons mentioned that, in 2002,
over 300,000 hip replacement and 350,000 knee replacement procedures
were performed in the United States. They also pointed out that these
procedures are a frequent reason for Medicare hospitalization. The
surgeons stated that total joint replacements have been shown to be
highly cost-effective procedures, resulting in dramatic improvements in
quality of life for patients suffering from disabling arthritic
conditions involving the hip or knee. In addition, they reported that
the medical literature indicates success rates of greater than 90
percent for implant survivorship, reduction in pain, and improvement in
function at a 10- to 15-year followup. However, despite these excellent
results with primary total joint replacement, factors related to
implant longevity and evolving patient demographics have led to an
increase in the volume of revision total joint procedures performed in
the United States over the past decade.
Total hip replacement is an operation that is intended to reduce
pain and restore function in the hip joint by replacing the arthritic
hip joint with a prosthetic ball and socket joint. The prosthetic hip
joint consists of a metal alloy femoral component with a modular
femoral head made of either metal or ceramic (the ``ball'') that
articulates with a metal acetabular component with a modular liner made
of either metal, ceramic, or high-density polyethylene (the
``socket'').
The AAOS surgeons stated that, in a normal knee, four ligaments
help hold the bones in place so that the joint works properly. When a
knee becomes arthritic, these ligaments can become scarred or damaged.
During knee replacement surgery, some of these ligaments, as well as
the joint surfaces, are substituted or replaced by the new artificial
prostheses. Two types of fixation are used to hold the prostheses in
place. Cemented designs use polymethyl methacrylate to hold the
prostheses in place. Cementless designs rely on bone growing into the
surface of the implant for fixation.
The surgeons stated that all hip and knee replacements have an
articular bearing surface that is subject to wear (the acetabular
bearing surface in the hip and the tibial bearing surface in the knee).
Traditionally, these bearing surfaces have been made of metal-on-metal
or metal-on-polyethylene, although newer materials (both metals and
ceramics) have been used more recently. Earlier hip and knee implant
designs had nonmodular bearing surfaces, but later designs included
modular articular bearing surfaces to reduce inventory and potentially
simplify revision surgery. Wear of the articular bearing surface occurs
over time and has been found to be related to many factors, including
the age and activity level of the patient. In some cases, wear of the
articular bearing surface can produce significant debris particles that
can cause peri-prosthetic bone resorption (also known as osteolysis)
and mechanical loosening of the prosthesis. Wear of the bearing surface
can also lead to instability or prosthetic dislocation, or both, and is
a common cause of revision hip or knee replacement surgery.
Depending on the cause of failure of the hip replacement, the type
of implants used in the previous surgery, the amount and quality of the
patient's remaining bone stock, and factors related to the patient's
overall health and anatomy, revision hip replacement surgery can be
relatively straightforward or extremely complex. Revision hip
replacement can involve replacing any part or all of the implant,
including the femoral or acetabular components, and the bearing surface
(the femoral head and acetabular liner), and may involve major
reconstruction of the bones and soft tissues around the hip. All of
these procedures differ significantly in their clinical indications,
outcomes, and resource intensity.
The AAOS surgeons provided the following summary of the types of
revision knee replacement procedures: Among revision knee replacement
procedures, patients who underwent complete revision of all components
had longer operative times, higher complication rates, longer lengths
of stay, and significantly higher resource utilization, according to
studies conducted by the AAOS. Revision of the isolated modular tibial
insert component was the next most resource-intensive procedure, and
primary total knee replacement was the least resource-intensive of all
the procedures studied.
Isolated Modular Tibial Insert Exchange. Isolated removal
and exchange of the modular tibial bearing surface involves replacing
the modular polyethylene bearing surface without removing the femoral,
tibial, or patellar components of the prosthetic joint. Common
indications for this procedure include wear of the polyethylene bearing
surface or instability (for example, looseness) of the prosthetic knee
joint. Patient recovery times are much shorter with this procedure than
with removal and exchange of either the tibial, femoral, or patellar
components.
Revision of the Tibial Component. Revision of the tibial
component involves removal and exchange of the entire tibial component,
including both the metal base plate and the modular polyethylene
bearing surface. Common indications for tibial component revision are
wear of the modular bearing surface, aseptic loosening (often
[[Page 47304]]
associated with osteolysis), or infection. Depending on the amount of
associated bone loss and the integrity of the ligaments around the
knee, tibial component revision may require the use of specialized
implants with stems that extend into the tibial canal and/or the use of
metal augments or bone graft to fill bony defects.
Revision of the Femoral Component. Revision of the femoral
component involves removal and exchange of the metal implant that
covers the end of the thigh-bone (the distal femur). Common indications
for femoral component revision are aseptic loosening with or without
associated osteolysis/bone loss, or infection. Similar to tibial
revision, femoral component revision that is associated with extensive
bone loss often involves the use of specialized implants with stems
that extend into the femoral canal and/or the use of metal augments or
bone graft to fill bony defects.
Revision of the Patellar Component. Complications related
to the patella-femoral joint are one of the most common indications for
revision knee replacement surgery. Early patellar implant designs had a
metal backing covered by high-density polyethylene; these implants were
associated with a high rate of failure due to fracture of the
relatively thin polyethylene bearing surface. Other common reasons for
isolated patellar component revision include poor tracking of the
patella in the femoral groove leading to wear and breakage of the
implant, fracture of the patella with or without loosening of the
patellar implant, rupture of the quadriceps or patellar tendon, and
infection.
Revision of All Components (Tibial, Femoral, and
Patellar). The most common type of revision knee replacement procedure
is a complete total knee revision. A complete revision of all implants
is more common in knee replacements than hip replacements because the
components of an artificial knee are not compatible across vendors or
types of prostheses. Therefore, even if only one of the implants is
loose or broken, a complete revision of all components is often
required in order to ensure that the implants are compatible. Complete
total knee revision often involves extensive surgical approaches,
including osteotomizing (for example, cutting) the tibia bone in order
to adequately expose the knee joint and gain access to the implants.
These procedures often involve extensive bone loss, requiring
reconstruction with specialized implants with long stems and metal
augments or bone graft to fill bony defects. Depending on the status of
the ligaments in the knee, complete total knee revision at times
requires implantation of a highly constrained or ``hinged'' knee
replacement in order to ensure stability of the knee joint.
Reimplantation from previous resection or cement spacer.
In cases of deep infection of a prosthetic knee, removal of the
implants with implantation of an antibiotic-impregnated cement spacer,
followed by 6 weeks of intravenous antibiotics is often required in
order to clear the infection. Revision knee replacement from an
antibiotic impregnated cement spacer often involves complex bony
reconstruction due to extensive bone loss that occurs as a result of
the infection and removal of the often well-fixed implants. As noted
above, the clinical outcomes following revision from a spacer are often
poor due to limited functional capacity while the spacer is in place,
prolonged periods of protected weight bearing (following reconstruction
of extensive bony defects), and the possibility of chronic infection.
The surgeons stated that the current ICD-9-CM codes did not
adequately capture the complex nature of revisions of hip and knee
replacements. Currently, code 81.53 (Revision of hip replacement)
captures all ``partial'' and ``total'' revision hip replacement
procedures. Code 81.55 (Revision of knee replacement) captures all
revision knee replacement procedures. These two codes currently capture
a wide variety of procedures that differ in their clinical indications,
resource intensity, and clinical outcomes.
An AAOS representative made a presentation at the October 7-8, 2004
ICD-9-CM Coordination and Maintenance Committee. Based on the comments
received at the October 7-8, 2004 meeting and subsequent written
comments, new ICD-9-CM procedure codes were developed to better capture
the variety of ways that revision of hip and knee replacements can be
performed: Codes 00.70 through 00.73 and code 81.53 for revisions of
hip replacements and codes 00.80 through 00.84 and code 81.55 for
revisions of knee replacements. These new and revised procedure codes,
which will be effective on October 1, 2005, can be found in Table 6B
and Table 6F of this final rule. The commenters stated that claims data
using these new and specific codes should provide improved data on
these procedures for future DRG modifications.
However, the commenters requested that CMS consider DRG
modifications based on current data using the existing revision codes.
The commenters reported on a recently completed study comparing
detailed hospital resource utilization and clinical characteristics in
over 10,000 primary and revision hip and knee replacement procedures at
3 high volume institutions: The Massachusetts General Hospital, the
Mayo Clinic, and the University of California at San Francisco. The
purpose of this study was to evaluate differences in clinical outcomes
and resource utilization among patients who underwent different types
of primary and revision hip or knee replacement procedures. The study
found significant differences in operative time, complication rates,
hospital length of stay, discharge disposition, and resource
utilization among patients who underwent different types of revision
hip or knee replacement procedures.
Among revision hip replacement procedures, patients who underwent
both femoral and acetabular component revision had longer operative
times, higher complication rates, longer lengths of stay, significantly
higher resource utilization, and were more likely to be discharged to a
subacute care facility. Isolated femoral component revision was the
next most resource-intensive procedure, followed by isolated acetabular
revision. Primary hip replacement was the least resource intensive of
all the procedures studied. Similarly, among revision knee replacement
procedures, patients who underwent complete revision of all components
had longer operative times, higher complication rates, longer lengths
of stay, and significantly higher resource utilization. Revision of one
component was the next most resource-intensive procedure. Primary total
knee replacement was the least resource intensive of all the procedures
studied.
In addition, the commenters indicated that the data showed that
extensive bone loss around the implants and the presence of a peri-
prosthetic fracture were the most significant predictors of higher
resource utilization among all revision hip and knee replacement
procedures, even when controlling for other significant patient and
procedural characteristics.
For the FY 2006 IPPS proposed rule, we examined data in the FY 2004
MedPAR file on the current hip replacement procedures (codes 81.51,
81.52, 81.53) as well as the replacements and revisions of knee
replacement procedures (codes 81.54 and 81.55) in DRG 209. We found
that revisions were significantly more resource intensive than the
original hip and knee replacements. We found average charges for
revisions of hip and knee replacements were approximately
[[Page 47305]]
$7,000 higher than average charges for the original joint replacements,
as shown in the following charts. The average charges for revisions of
hip replacements were 21 percent higher than the average charges for
initial hip replacements. The average charges for revisions of knee
replacements were 25 percent higher than for initial knee replacements.
----------------------------------------------------------------------------------------------------------------
Average length
DRG Number of of stay Average
cases (days) charges
----------------------------------------------------------------------------------------------------------------
209--All cases.................................................. 430,776 4.57 $30,695.41
209 With hip replacement codes 81.51 and 81.52 reported......... 181,460 5.21 31,795.84
209 With hip revision code 81.53 reported....................... 20,894 5.57 38,432.04
209 With knee replacement code 81.54 reported................... 209,338 3.92 28,525.66
209 With knee revision code 81.55 reported...................... 18,590 4.64 35,671.66
----------------------------------------------------------------------------------------------------------------
We note that there were no cases in DRG 209 for reattachment of the
foot, lower leg, or thigh (codes 84.29, 84.27, and 84.28).
To address the higher resource costs associated with hip and knee
revisions relative to the initial joint replacement procedure, we
proposed to delete DRG 209, create a proposed new DRG 544 (Major Joint
Replacement or Reattachment of Lower Extremity), and create a proposed
new DRG 545 (Revision of Hip or Knee Replacement).
We proposed to assign the following codes to the new proposed DRG
544: 81.51, 81.52, 81.54, 81.56, 84.26, 84.27, and 84.28.
We proposed to assign the following codes to the proposed new DRG
545: 00.70, 00.71, 00.72, 00.73, 00.80, 00.81, 00.82, 00.83, 00.84,
81.53, and 81.55.
In response to the FY 2006 IPPS proposed rule, we received the
following public comments:
Comment. Four commenters supported our proposal to delete DRG 209
and to create proposed new DRGs 544 and DRG 545. One commenter stated
that the proposed rule reveals that the average joint revision charges
are $7,000 higher than original joint replacements, which supports the
point that joint revision procedures are more resource-intensive than
initial replacements.
Another commenter commended CMS for its efforts to provide
appropriate payment for revision hip and knee arthroplasty by proposing
to split DRG 209 into DRG 544 and 545, and to expand the scope of the
relevant ICD-9-CM procedure codes included in these DRGs. The commenter
stated that the new codes, in particular, are an important component in
aligning hospital reimbursement with hospital costs and patient
benefits of total joint arthroplasty. The commenter encouraged CMS to
continue its dialogue with industry and providers regarding further DRG
changes to primary joint arthroplasty procedures, which represent
approximately 90 percent of total hip and knee arthroplasty procedures.
One commenter recommended that CMS consider the number of
individual components used in the joint replacement when future DRG
revisions are made. The commenter stated the hospital's costs will vary
based on the number of parts replaced during the procedure. According
to the commenter, we may be overpaying simple head and/or liner
exchanges in hips, and patellar/insert exchanges in knees relative to
primary hip and knee procedures. The commenter indicated that, with the
more specific ICD-9-CM codes, CMS will be able to evaluate further
changes in the joint replacement and revision DRGs.
We did not receive any comments that opposed the proposed DRG
revisions for hip and knee replacements.
Response: We appreciate the support of the commenters. We will use
the data obtained from use of the new codes to consider future DRG
revisions for joint replacement and revision procedures.
In this final rule, for FY 2006, we are adopting the DRG revisions
relating to hip and knee replacements as proposed. We are deleting DRG
209 and creating new DRG 544 (Major Joint Replacement or Reattachment
of Lower Extremity) and new DRG 545 (Revision of Hip or Knee
Replacement). The new DRG 544 includes the following code assignments:
81.51, Total hip replacement
81.52, Partial hip replacement
81.54, Total knee replacement
81.56, Total ankle replacement
84.26, Foot reattachment
84.27, Lower leg/ankle reattach
84.28, Thigh reattachment
The new DRG 545 includes the following code assignments:
00.70, Revision of hip replacement, both acetabular and
femoral components
00.71, Revision of hip replacement, acetabular component
00.72, Revision of hip replacement, femoral component
00.73, Revision of hip replacement, acetabular liner and/
or femoral head only
00.80, Revision of knee replacement, total (all
components)
00.81, Revision of knee replacement, tibial component
00.82, Revision of knee replacement, femoral component
00.83, Revision of knee replacement, patellar component
00.84, Revision of knee replacement, tibial insert (liner)
81.53, Revision of hip replacement, not otherwise
specified
81.55, Revision of knee replacement, not otherwise
specified
We believe that the creation of the new DRGs for revisions of hip
and knee replacements should resolve payment issues for hospitals that
perform the more difficult revisions of joint replacements. In
addition, as stated earlier, we have worked with the orthopedic
community to develop new procedure codes that better capture data on
the types of revisions of hip and knee replacements. These new codes
will be implemented on October 1, 2005. Once we receive claims data
using these new codes, we will review data to determine if additional
DRG modifications are needed. This effort may include assigning some of
the revision codes, such as 00.83 and 00.84, to a separate DRG. As
stated earlier, the AAOS has found that some of the procedures may not
be as resource intensive. Therefore, the AAOS has requested that CMS
closely examine data from the use of the new codes and consider future
revisions.
b. Kyphoplasty
In the FY 2005 IPPS final rule (69 FR 48938), we discussed the
creation of new codes for vertebroplasty (81.65) and kyphoplasty
(81.66), which went into effect on October 1, 2004. Prior to October 1,
2004, both of these surgical procedures were assigned to code 78.49
(Other repair or plastic operation on bone). For FY 2005, we assigned
these codes to DRGs 233 and 234 (Other
[[Page 47306]]
Musculoskeletal System and Connective Tissue O.R. Procedure With and
Without CC, respectively) in MDC 8 (Table 6B of the FY 2005 final
rule). (In the FY 2005 IPPS final rule (69 FR 48938), we indicated that
new codes 81.65 and 81.66 were assigned to DRGs 223 and 234. We made a
typographical error when indicating that these codes were assigned to
DRG 223. Codes 81.65 and 81.66 have been assigned to DRGs 233 and 234.)
Last year, we received comments opposing the assignment of code 81.66
to DRGs 233 and 234. The commenters supported the creation of the codes
for kyphoplasty and vertebroplasty, but recommended that code 81.66 be
assigned to DRGs 497 and 498 (Spinal Fusion Except Cervical With and
Without CC, respectively). The commenters stated that kyphoplasty
requires special inflatable bone tamps and bone cement and is a
significantly more resource intensive procedure than vertebroplasty.
The commenters further stated that, while kyphoplasty involves internal
fixation of the spinal fracture and restoration of vertebral heights,
vertebroplasty involves only fixation. The commenters indicated that
hospital costs for kyphoplasty procedures are more similar to resources
used in a spinal fusion.
We stated in the FY 2005 IPPS final rule that we did not have data
in the MedPAR file on kyphoplasty and vertebroplasty. Prior to October
1, 2004, both procedures were assigned in code 78.49, which was
assigned to DRGs 233 and 234 in MDC 8. We stated that we would continue
to review this area as part of our annual review of MedPAR data. While
we do not have separate data for kyphoplasty because code 81.66 was not
established until October 1, 2004, for the FY 2006 IPPS proposed rule,
we did examine data on code 78.49, which includes both kyphoplasty and
vertebroplasty procedures reported in DRGs 233 and 234. The following
chart illustrates our findings:
----------------------------------------------------------------------------------------------------------------
Number of Average length Average
DRG cases of stay (days) charges
----------------------------------------------------------------------------------------------------------------
233--All cases.................................................. 14,066 6.66 $28,967.78
233 With code 78.49 reported.................................... 8,702 5.91 25,402.71
233 Without code 78.49 reported................................. 5,364 7.88 34,571.39
234--All cases.................................................. 7,106 2.79 18,954.80
234 With code 78.49 reported.................................... 4,437 2.61 18,426.11
234 Without code 78.94 reported................................. 2,669 3.09 19,833.71
----------------------------------------------------------------------------------------------------------------
We do not believe these data findings support moving cases
represented by code 78.49 out of DRGs 233 and 234. While we cannot
distinguish cases that are kyphoplasty from cases that are
vertebroplasty, cases represented by code 78.49 have lower charges than
do other cases within DRGs 233 and 234. Therefore, in the FY 2006 IPPS
proposed rule, we did not propose to change the DRG assignment of code
81.66 to DRGs 233 and 234.
Comment: Two commenters supported our proposal not to change the
DRG assignment of code 81.66 (Kyphoplasty). Both commenters agreed with
our proposal to keep code 81.66 in DRGs 233 and 234. They also agreed
that we should wait for bill data using the new kyphoplasty code prior
to considering any DRG modification.
Response: We appreciate the commenters' support for our proposal.
In this final rule, for FY 2006, we are retaining the assignment of
code 81.66 in DRGs 233 and 234. As we proposed, we will consider
whether further changes are warranted once additional hospital charge
data are available using the new code.
c. Multiple Level Spinal Fusion
On October 1, 2003, the following ICD-9-CM codes were created to
identify the number of levels of vertebra fused during a spinal fusion
procedure:
81.62, Fusion or refusion of 2-3 vertebrae
81.63, Fusion or refusion of 4-8 vertebrae
81.64, Fusion or refusion of 9 or more vertebrae
Prior to the creation of these codes, we received a comment
recommending the establishment of new DRGs that would be differentiated
based on the number of vertebrae fused. In the FY 2005 IPPS final rule
(69 FR 48936), we stated that we did not yet have any reported cases
utilizing these multiple level spinal fusion codes. We stated that we
would wait until sufficient data were available prior to making a final
determination on whether to create separate DRGs based on the number of
vertebrae fused. We also stated that spinal fusion surgery was an area
undergoing rapid changes.
Effective October 1, 2004, we created a series of codes that
describe a new type of spinal surgery, spinal disc replacement. Our
medical advisors describe these procedures as a more conservative
approach for back pain than the spinal fusion surgical procedure. These
codes are as follows:
84.60, Insertion of spinal disc prosthesis, not otherwise
specified
84.61, Insertion of partial spinal disc prosthesis,
cervical
84.62, Insertion of total spinal disc prosthesis, cervical
84.63, Insertion of spinal disc prosthesis, thoracic
84.64, Insertion of partial spinal disc prosthesis,
lumbosacral
84.65, Insertion of total spinal disc prosthesis,
lumbosacral
84.66, Revision or replacement of artificial spinal disc
prosthesis, cervical
84.67, Revision or replacement of artificial spinal disc
prosthesis, thoracic
84.68, Revision or replacement of artificial spinal disc
prosthesis, lumbosacral
84.69, Revision or replacement of artificial spinal disc
prosthesis, not otherwise specified
We also created the following two codes effective October 1, 2004,
for these new types of spinal surgery that are also a more conservative
approach to back pain than is spinal fusion:
81.65, Vertebroplasty
81.66, Kyphoplasty
We do not yet have data in the MedPAR file on these new types of
procedures. Therefore, we cannot yet determine what effect these new
types of procedures will have on the frequency of spinal fusion
procedures.
However, we do have data in the MedPAR file on multiple level
spinal procedures for analysis for this year's IPPS rule. We examined
data in the FY 2004 MedPAR file on spinal fusion cases in the following
DRGs:
DRG 496 (Combined Anterior/Posterior Spinal Fusion)
DRG 497 (Spinal Fusion Except Cervical With CC)
DRG 498 (Spinal Fusion Except Cervical Without CC)
DRG 519 (Cervical Spinal Fusion With CC)
[[Page 47307]]
DRG 520 (Cervical Spinal Fusion Without CC)
Multiple level spinal fusion is captured by code 81.63 (Fusion or
refusion of 4-8 vertebrae) and code 81.64 (Fusion or refusion of 9 or
more vertebrae). Code 81.62 includes the fusion of 2-3 vertebrae and is
not considered a multiple level spinal fusion. Orthopedic surgeons
stated at the October 7-8, 2004 ICD-9-CM Coordination and Maintenance
Committee meeting that the most simple and common type of spinal fusion
involves fusing either 2 or 3 vertebrae. These surgeons stated that
there was not a significant difference in resource utilization for
cases involving the fusion of 2 versus 3 vertebrae. For this reason,
the orthopedic surgeons recommended that fusion of 2 and 3 vertebrae
remain grouped into one ICD-9-CM code.
We reviewed the Medicare charge data to determine whether the
number of vertebrae fused or specific diagnoses have an effect on
average length of stay and resource use for a patient. We found that,
while fusing 4 or more levels of the spine results in a small increase
in the average length of stay and a somewhat larger increase in average
charges for spinal fusion patients, an even greater impact was made by
the presence of a principal diagnosis of curvature of the spine or
malignancy. The following list of diagnoses describes conditions that
have a significant impact on resource use for spinal fusion patients:
170.2, Malignant neoplasm of vertebral column, excluding
sacrum and coccyx
198.5, Secondary malignant neoplasm of bone and bone
marrow
732.0, Juvenile osteochondrosis of spine
733.13, Pathologic fracture of vertebrae
737.0, Adolescent postural kyphosis
737.10, Kyphosis (acquired) (postural)
737.11, Kyphosis due to radiation
737.12, Kyphosis, postlaminectomy
737.19, Kyphosis (acquired), other
737.20, Lordosis (acquired) (postural)
737.21, Lordosis, postlaminectomy
737.22, Other postsurgical lordosis
737.29, Lordosis (acquired), other
737.30, Scoliosis [and kyphoscoliosis], idiopathic
737.31, Resolving infantile idiopathic scoliosis
737.32, Progressive infantile idiopathic scoliosis
737.33, Scoliosis due to radiation
737.34, Thoracogenic scoliosis
737.39, Other kyphoscoliosis and scoliosis
737.40, Curvature of spine, unspecified
737.41, Curvature of spine associated with other
conditions, kyphosis
737.42, Curvature of spine associated with other
conditions, lordosis
737.43, Curvature of spine associated with other
conditions, scoliosis
737.8, Other curvatures of spine
737.9, Unspecified curvature of spine
754.2, Congenital scoliosis
756.51, Osteogenesis imperfecta
The majority of fusion patients with these diagnoses were in DRGs
497 and 498. The chart below reflects our findings. We also include in
the chart statistics for cases in DRGs 497 and 498 with spinal fusion
of 4 or more vertebrae and cases with a principal diagnosis of
curvature of the spine or bone malignancy.
----------------------------------------------------------------------------------------------------------------
Average length
DRG Number of of stay Average
cases (days) charges
----------------------------------------------------------------------------------------------------------------
497............................................................. 27,346 6.08 $64,471.82
498............................................................. 17,943 3.80 48,440.80
497 and 498 With spinal fusions of 4 or more vertebrae reported. 7,881 6.3 77,352.00
497 and 498 With principal diagnosis of curvature of the spine 2,006 8.91 95,315.00
or bone malignancy.............................................
----------------------------------------------------------------------------------------------------------------
Thus, these diagnoses result in a significant increase in resource
use. While the fusing of 4 or more vertebrae resulted in average
charges of $77,352, the impact of a principal diagnosis of curvature of
the spine or bone malignancy was substantially greater with average
charges of $95,315.
Based on this analysis, we proposed to create a new DRG 546 for
noncervical spinal fusions with a principal diagnosis of curvature of
the spine and malignancies: proposed new DRG 546 (Spinal Fusions Except
Cervical With Principal Diagnosis of Curvature of the Spine or
Malignancy). We proposed to include in the proposed new DRG cases all
noncervical spinal fusions cases previously assigned to DRGs 497 and
498 that have a principal diagnosis of curvature of the spine or
malignancy and with the following codes listed above: 170.2, 198.5,
732.0, 733.13, 737.0, 737.10, 737.11, 737.12, 737.19, 737.20, 737.21,
737.22, 737.29, 737.30, 737.31, 737.32, 737.33, 737.34, 737.39, 737.40,
737.41, 737.42, 737.43, 737.8, 737.9, 754.2, and 756.51. We proposed
that the proposed DRG 546 would not include cases currently assigned to
DRGs 496, 519, or 520 that have a principal diagnosis of curvature of
the spine or malignancy and that the structure of DRGs 496, 519, and
520 would remain the same.
As part of our meeting with the AAOS on DRG 209 in February 2005
(discussed under section II.B.6.a. of this preamble), the AAOS offered
to work with CMS to analyze clinical issues and make revisions to the
spinal fusion DRGs (DRGs 496 through 498 and 519 and 520). Therefore,
we limited our proposed changes to the spinal fusion DRGs for FY 2006
to the creation of the proposed DRG 546 discussed above. However, we
indicated that we look forward to working with the AAOS to obtain its
clinical recommendations concerning our proposed changes and potential
additional modifications to the spinal fusion DRGs. We also solicited
comments from the public on our proposed changes and how to incorporate
new types of spinal procedures such as kyphoplasty and spinal disc
prostheses into the spinal fusion DRGs.
Comment: A number of commenters supported our proposal to create
new DRG 546 (Spinal Fusions Except Cervical With Principal Diagnosis of
Curvature of the Spine or Malignancy) to include all noncervical spinal
fusions previously assigned to DRGs 497 and 498 that have a principal
diagnosis of curvature of the spine or malignancy. One commenter stated
that the addition of new DRG 546, with its higher weight, would help
reimburse hospitals more adequately for the resources used in treating
patients with significant spinal deformities and other problems. One
commenter stated that the cost associated with a multilevel spine
fusion when the patient has a diagnosis of curvature of the spine or
malignancy exceeds the current Medicare reimbursement.
Several commenters noted that the following four ICD-9-CM diagnosis
[[Page 47308]]
codes are manifestation codes that cannot be reported as a principal
diagnosis:
737.40, Curvature of spine, unspecified
737.41, Curvature of spine associated with other
conditions, kyphosis
737.42, Curvature of spine associated with other
conditions, lordosis
737.43, Curvature of spine associated with other
conditions, scoliosis
The commenter pointed out that these codes can only be reported as
a secondary diagnosis. Therefore, the commenters stated that our
proposed DRG logic for DRG 546 would not work with these four codes.
Response: We appreciate the support of the commenters for the
creation of the new DRG 546. We agree that this new DRG would better
align Medicare payment with hospital costs for treating these more
severe orthopedic cases. We also agree that codes 737.40, 737.41,
737.42, and 737.43 are not to be reported as a principal diagnosis
because they are manifestation codes. We inadvertently included them
among the list of principal diagnoses that would be assigned to DRG
546. In this final rule, we are removing codes 737.40, 737.41, 737.42,
and 737.43 from the list of principal diagnosis codes that would lead
to an assignment of DRG 546. However, we will retain these codes as a
secondary diagnosis that will result in an assignment to DRG 546
because they describe curvature of the spine. Therefore, patients
admitted with an orthopedic diagnosis who receive a spinal fusion will
be assigned to DRG 546 if codes 737.40, 737.41, 737.42, and 737.43 are
present as a secondary diagnosis. Consistent with this change in the
GROUPER logic, we will also remove the term ``principal diagnosis''
from the proposed title so that DRG 546 will be titled ``Spinal Fusions
Except Cervical With Curvature of the Spine or Malignancy.''
Comment: One commenter suggested that CMS consider adding the
following diagnoses to the list of codes that would be assigned to the
new DRG 546:
213.2, Benign neoplasm of bone and articular cartilage;
vertebral column, excluding sacrum and coccyx
238.0, Neoplasm of uncertain behavior of other and
unspecified sites and tissues; Bone and articular cartilage
239.2, Neoplasms of unspecified nature; Bone, soft tissue,
and skin
721.7, Spondylosis and allied disorders; Traumatic
spondylopathy
724.3, Other and unspecified disorders of back; Sciatica
732.8, Other specified forms of osteochondropathy
756.19, Anomalies of spine; Other
Response: We discussed these additional diagnosis codes recommended
by the commenter with our medical advisors and they agree that the
first three listed codes (213.2, 238.0, and 239.2) should be added
because they are neoplasm codes. Therefore, they are clinically similar
to the other neoplasm codes on our proposed list. Our medical advisors
did not support the addition on the latter four codes because they are
vague codes that do not necessarily represent significant conditions.
Therefore, in this final rule, we are adding codes 213.2, 238.0, 239.2
to our list of conditions in DRG 546. We are not adding codes 721.7,
724.3, 732.8, or 756.19.
After careful consideration of the public comments received, in
this final rule, we are establishing a new DRG 546 (Spinal Fusions
Except Cervical with Curvature of the Spine or Malignancy). New DRG 546
will be composed of all noncervical spinal fusions previously assigned
to DRGs 497 and 498 that have a principal or secondary diagnosis of
curvature of the spine or a principal diagnosis of a malignancy. The
principal diagnosis codes that will lead to this DRG assignment are the
following:
170.2, Malignant neoplasm of vertebral column, excluding
sacrum and coccyx
198.5, Secondary malignant neoplasm of bone and bone
marrow
213.2, Benign neoplasm of bone and articular cartilage;
vertebral column, excluding sacrum and coccyx
238.0, Neoplasm of uncertain behavior of other and
unspecified sites and tissues; Bone and articular cartilage
239.2, Neoplasms of unspecified nature; bone, soft tissue,
and skin
732.0, Juvenile osteochondrosis of spine
733.13, Pathologic fracture of vertebrae
737.0, Adolescent postural kyphosis
737.10, Kyphosis (acquired) (postural)
737.11, Kyphosis due to radiation
737.12, Kyphosis, postlaminectomy
737.19, Kyphosis (acquired), other
737.20, Lordosis (acquired) (postural)
737.21, Lordosis, postlaminectomy
737.22, Other postsurgical lordosis
737.29, Lordosis (acquired), other
737.30, Scoliosis [and kyphoscoliosis], idiopathic
737.31, Resolving infantile idiopathic scoliosis
737.32, Progressive infantile idiopathic scoliosis
737.33, Scoliosis due to radiation
737.34, Thoracogenic scoliosis
737.39, Other kyphoscoliosis and scoliosis
737.8, Other curvatures of spine
737.9, Unspecified curvature of spine
754.2, Congenital scoliosis
756.51, Osteogenesis imperfecta
The secondary diagnoses that will lead to the new DRG 546
assignment are:
737.40, Curvature of spine, unspecified
737.41, Curvature of spine associated with other
conditions, kyphosis
737.42, Curvature of spine associated with other
conditions, lordosis
737.43, Curvature of spine associated with other
conditions, scoliosis
d. CHARITE\TM\ Spinal Disc Replacement Device
As we noted in our discussion of applications for new technology
add-on payments for FY 2006 in section II.E. of the IPPS proposed rule
(70 FR 23362), the applicant for new technology for CHARITE\TM\
requested a DRG reassignment for cases involving implantation of the
CHARITE\TM\ Artificial Disc. CHARITE\TM\ is a prosthetic intervertebral
disc. On October 26, 2004, the FDA approved the CHARITE\TM\ Artificial
Disc for single level spinal arthroplasty in skeletally mature patients
with degenerative disc disease between L4 and S1. The applicant
requested a DRG assignment for these cases from DRG 499 (Back and Neck
Procedures Except Spinal Fusion With CC) and 500 (Back and Neck
Procedures Except Spinal Fusion Without CC) to DRGs 497 (Spinal Fusion
Except Cervical With CC) and 498 (Spinal Fusion Except Cervical Without
CC). The applicant argued that the costs of an inpatient stay to
implant an artificial disc prosthesis are similar to spinal fusion and
inclusion in DRGs 497 and 498 should be made consistent with section
1886(d)(5)(K) of the Act that indicates a clear preference for
assigning a new technology to a DRG based on similar clinical or
anatomical characteristics and costs. As indicated in section II.E. of
this final rule, we did not find that CHARITE\TM\ meets the substantial
clinical improvement criterion and are not considering a DRG
reassignment under the new technology provisions. However, we did
evaluate whether to reassign CHARITE\TM\ to a different DRG using the
Secretary's authority under section 1886(d)(4) of the Act.
[[Page 47309]]
On October 1, 2004, we created new codes for the insertion of
spinal disc prostheses (codes 84.60 through 84.69). In the FY 2005 IPPS
proposed and final rules, we described the new DRG assignments for
these new codes in Table 6B of the Addendum to those rules. We received
a number of comments on the FY 2005 IPPS proposed rule recommending
that we change the assignments for these codes from DRG DRGs 499 and
500 to the DRGs for spinal fusion (DRGs 497 and 498). In the FY 2005
IPPS final rule (69 FR 48938), we indicated that DRGs 497 and 498 are
limited to spinal fusion procedures. Because the surgery involving the
CHARITE\TM\ is not a spinal fusion, we decided not to include this
procedure in these DRGs. However, we stated that we would continue to
analyze this issue and solicited further public comments on the DRG
assignment for spinal disc prostheses.
We received a number of public comments in response to the FY 2006
proposed rule. A summary of the comments and our responses follow.
Comment: One commenter supported our recommendation to keep the
CHARITE\TM\ spinal disc procedure code in DRGs 499 and 500. The
commenter took no position on CMS' decision on whether to grant add-on
payment for new technology for the CHARITE\TM\ spinal disc procedure.
However, the commenter stated that until further data becomes publicly
available, it would be premature to reassign spinal disc prostheses to
DRGs 497 and 498. The commenter stated that waiting for Medicare data
would be consistent with the approach CMS used in considering changes
to DRGs 497 and 498 for account for multilevel spinal fusion. (We did
not propose a change for FY 2006 to account for multilevel spinal
fusions because sufficient data were not available in MedPAR under the
new multilevel spine fusion procedure codes.) The commenter also stated
that the spinal fusion DRGs were well-established based on several
years of utilization and accrual of cost experience. Without a fuller
understanding of the expected resource use of cases with spinal disc
prostheses, the commenter was concerned that reassignment of these
procedures to DRGs 497 and 498 may have the potential to cause an
inappropriate reduction in future weights for spinal fusion. Therefore,
the commenter recommended that spinal disc replacements be kept in DRGs
499 and 500 until data are available to evaluate this change.
Response: We agree with the commenter that our policy is to assign
a new procedure code to a DRG based on the assignment of its
predecessor code until we have Medicare charge data to evaluate a DRG
modification. We also agree that the spinal fusion cases are well-
established based on several years of utilization and cost experience.
Without Medicare data that shows Medicare charges for CHARITE\TM\
artificial discs in DRGs 499 and 500 and until we receive Medicare
charge data using the new procedure codes, it is difficult to evaluate
a request for a DRG modification.
Comment: Eight commenters opposed our proposal of keeping
CHARITE\TM\ artificial discs in DRGs 499 and 500 until we received
Medicare charge data. These commenters recommended that the CHARITE\TM\
spinal disc procedure (code 84.65) be moved out of DRGs 499 and 500 and
into the spinal fusion DRGs (DRG 497 and 498). According to the
commenters, the current DRG assignment to DRGs 499 and 500 provides a
very significant economic disincentive for hospitals to use CHARITE\TM\
in the Medicare population. Based on information submitted with its new
technology application, these commenters argued that hospital resources
for patients receiving CHARITE\TM\ artificial discs are most closely
comparable to patients in DRGs 497 and 498 (the data provided to
support the new technology application are discussed in detail in
section II.E. of this final rule). The commenters also stated that the
Health Service Cost Review Commission (HSCRC) of Maryland developed new
artificial disc DRGs for its DRG system.
Response: With respect to the commenter's point regarding the
HSCRC, we acknowledge that they recently decided to create new DRGs for
artificial disc patients. We understand that the HSCRC established
these new DRGs with relative weights that are higher than DRGs 499 and
500 and less than the spinal fusion DRGs (DRGs 497 and 498). We are
unaware of the criteria that the HSCRC uses for creating separate DRGs.
Currently, we do not have a basis for creating a separate DRG for
spinal disc protheses because we have no FY 2004 Medicare charge data
that could be used to set the FY 2006 relative weight. Therefore, we
are unable to adopt an option similar to that of the HSCRC at this
time.
For its new technology application, we note that the applicant
supplied cost data for 376 total cases where CHARITE\TM\ was actually
used, including 12 cases involving Medicare patients. The data for the
12 Medicare patients did not come from the MedPAR data systems because
that information is not yet available due to the fact that give that
FDA approval and the code used to identify these patients was not
effective until October 2004. Thus, as with all new technology
applications, the data supporting whether the technology meets the cost
criterion came directly from the applicant and not from Medicare's data
systems. While the applicant also supplied data from the FY 2003 MedPAR
file, we note that these cases did not actually involve the CHARITE\TM\
artificial disc. Rather the applicant modified the claims data for
spinal fusion cases by removing the medical and surgical costs
associated with the spinal fusions. The applicant then replaced these
costs with costs represented to be those of a typical CHARITE\TM\
artificial disc. These data are acceptable to evaluate whether a new
technology meets the cost criterion in a new technology application
because, by definition, there is limited or no Medicare data upon which
to evaluate a new technology's costs. However, these data do not meet
the standards that we apply for making a change to a DRG. That is, we
use the predecessor code for a new technology until we have evidence
from Medicare's data systems that suggest a change to the DRG
assignment is warranted.
As stated previously, we do not have Medicare charge information to
evaluate a DRG change at this time. For this reason, we are not making
a change to the DRG assignment for CHARIT[Eacute]TM.
However, we will consider whether a DRG reassignment for
CHARIT[Eacute]TM is warranted for FY 2007, once we have
information from Medicare's data system that will assist us in
evaluating the cost of these patients.
8. MDC 18 (Infectious and Parasitic Diseases (Systemic or Unspecified
Sites)): Severe Sepsis
As we did for FY 2005, we received a request to consider the
creation of a separate DRG for the diagnosis of severe sepsis for FY
2006. Severe sepsis is described by ICD-9-CM code 995.92 (Systemic
inflammatory response syndrome due to infection with organ
dysfunction). Patients admitted with sepsis as a principal diagnosis
currently are assigned to DRG 416 (Septicemia Age >17) and DRG 417
(Septicemia Age 0-17) in MDC 18 (Infectious and Parasitic Diseases
(Systemic or Unspecified Sites)). The commenter requested that all
cases in which severe sepsis is present on admission, as well as those
cases in which it develops after admission (which are currently
classified elsewhere), be included in this new DRG. We again addressed
this issue in the FY 2006 IPPS proposed rule
[[Page 47310]]
(70 FR 23329) as we had in the FY 2005 IPPS final rule (69 FR 48975).
In both instances, we did not believe the current clinical definition
of severe sepsis is specific enough to identify a meaningful cohort of
patients in terms of clinical coherence and resource utilization to
warrant a separate DRG. Sepsis is found across hundreds of medical and
surgical DRGs, and the term ``organ dysfunction'' implicates numerous
currently existing diagnosis codes. While we recognize that Medicare
beneficiaries with severe sepsis are quite ill and require extensive
hospital resources, we do not believe that they can be identified
adequately to justify removing them from all of the other DRGs in which
they appear. For this reason, we did not propose a new DRG for severe
sepsis for FY 2006.
Comment: Two commenters expressed concerns about the sequencing
instructions for severe sepsis. They pointed out that current ICD-9-CM
coding guidelines mandate that a code from category 038.x be sequenced
as the principal diagnosis followed by code 995.92 for patients
admitted in respiratory failure who also have severe sepsis. The
commenters expressed concerns that this sequencing instruction results
in lower hospital reimbursement for patients with severe sepsis placed
on mechanical ventilation. These commenters did not recommend that CMS
create a new DRG for patients with severe sepsis. Instead, they
suggested that the codes or guidelines, or both, be modified so that
other conditions can be sequenced as the principal diagnosis.
Response: We share the concern of the commenters about sequencing
guidelines for patients with severe sepsis and respiratory failure. The
current ICD-9-CM codes for systemic inflammatory response syndrome
(SIRS), codes 995.91 through 995.94, that include severe sepsis mandate
these sequencing guidelines. However, the National Center for Health
Statistics (NCHS) discussed modifications to these codes at the April
1, 2005 ICD-9-CM Coordination and Maintenance Committee meeting. NCHS
has scheduled this topic for further discussion at the September 29-30,
2005 Committee meeting. Suggestions for revising these codes and any
resulting guidelines should be sent to Donna Pickett, NCHS, 3311 Toledo
Road, Room 2402, Hyattsville, MD 2082, or to the e-mail address
dfp4@cdc.gov.
Comment: One commenter expressed disappointment that CMS did not
create a new DRG for severe sepsis. The commenter disagreed with our
statement that these patients could not be easily identified within our
Medicare data. The commenter stated that severe sepsis is a systemic
inflammatory syndrome in response to infection that is associated with
acute organ dysfunction. The commenter suggested that CMS use the SIRS
ICD-9-CM codes for infection plus organ dysfunction along with an ICD-
9-CM procedure code for organ support such as ventilation management
(code 96.7x), acute renal replacement (codes 39.95 and 54.98), or
vasopressor support (code 00.17), to identify these patients. The
commenter recommended that CMS create two new DRGs, one for medical
severe sepsis patients with organ support and another for surgical
severe sepsis patients with organ support. The commenter recommended
that these two DRGs be assigned as pre-MDCs.
Response: There were extensive discussions about the problems in
using the current SIRS codes at the March 31-April 1, 2005 ICD-9-CM
Coordination and Maintenance Committee meeting. A summary report of
this meeting can be found at the Web site: http://www.cdc.gov/nchs/icd9cm.
As stated earlier, NCHS has scheduled further discussions on
this topic for the September 29-30 Committee meeting.
Given the considerable confusion among the coding community
regarding the use of these codes, we believe it would be premature to
consider new DRGs for severe sepsis patients at this time. Therefore,
we are not making revisions to the DRG for severe sepsis patients at
this time. We will continue to work with NCHS to improve the codes so
that our data on these patients improve. We will continue to examine
data on these patients as we consider future modifications.
9. MDC 20 (Alcohol/Drug Use and Alcohol/Drug Induced Organic Mental
Disorders): Drug-Induced Dementia
In the FY 2005 IPPS final rule (69 FR 48939, August 11, 2004), we
discussed a request that CMS modify DRGs 521 through 523 by removing
the principal diagnosis code 292.82 (Drug-induced dementia) from these
alcohol and drug abuse DRGs. These DRGs are as follows:
DRG 521 (Alcohol/Drug Abuse or Dependence With CC).
DRG 522 (Alcohol/Drug Abuse or Dependence With
Rehabilitation Therapy Without CC).
DRG 523 (Alcohol/Drug Abuse or Dependence Without
Rehabilitation Therapy Without CC).
The commenter indicated that a patient who has a drug-induced
dementia should not be classified to an alcohol/drug DRG. However, the
commenter did not propose a new DRG assignment for code 292.82. Our
medical advisors evaluated the request and determined that the most
appropriate DRG classification for a patient with drug-induced dementia
was within MDC 20. The medical advisors indicated that because the
dementia is drug induced, it is appropriately classified to DRGs 521
through 523 in MDC 20. Therefore, we did not propose a new DRG
classification for the principal diagnosis code 292.82.
In the FY 2005 IPPS final rule, we addressed a comment from an
organization representing hospital coders that disagreed with our
decision to keep code 292.82 in DRGs 521 through 523. The commenter
stated that DRGs 521 through 523 are described as alcohol/drug abuse
and dependence DRGs, and that drug-induced dementia can be caused by an
adverse effect of a prescribed medication or a poisoning. The commenter
did not believe that assignment to DRGs 521 through 523 was appropriate
if the drug-induced dementia is due to one of these events and the
patient is not alcohol or drug dependent. The commenter recommended
that admissions for drug-induced dementia be classified to DRGs 521
through 523 only if there is a secondary diagnosis indicating alcohol/
drug abuse or dependence.
The commenter recommended that drug-induced dementia that is due to
the adverse effect of a drug or poisoning be classified to the same
DRGs as other types of dementia, such as DRG 429 (Organic Disturbances
and Mental Retardation). The commenter believed that when drug-induced
dementia is caused by a poisoning, either accidental or intentional,
the appropriate poisoning code would be sequenced as the principal
diagnosis and, therefore, these cases would likely already be assigned
to DRGs 449 and 450 (Poisoning and Toxic Effects of Drugs, Age Greater
than 17, With and Without CC, respectively) and DRG 451 (Poisoning and
Toxic Effects of Drugs, Age 0-17). The commenter stated that these
would be the appropriate DRG assignments for drug-induced dementia due
to a poisoning. We received a similar comment from a hospital
organization.
In the FY 2005 IPPS final rule, we acknowledged that the commenters
raised additional issues surrounding the DRG assignment for code 292.82
that should be considered. The commenters provided alternatives for DRG
assignment based on sequencing of the principal diagnosis and reporting
of additional secondary diagnoses. We recognized that patients may
develop drug-induced dementia from drugs that
[[Page 47311]]
are prescribed, as well as from drugs that are not prescribed. However,
because dementia develops as a result of use of a drug, we believed the
current DRG assignment to DRGs 521 through 523 remained appropriate.
Some commenters have agreed with the current DRG assignment of code
292.82 since the dementia was caused by use of a drug. We agree that if
either accidental or intentional poisoning caused the drug-induced
dementia, the appropriate poisoning code should be sequenced as the
principal diagnosis. As one commenter stated, these cases would be
assigned to DRGs 449 through 451. We encouraged hospitals to examine
the coding for these types of cases to determine if there were any
coding or sequencing errors. As suggested by the commenter, if code
292.82 were reported as a secondary diagnosis and not a principal
diagnosis in cases of poisoning or adverse drug reactions, the number
of cases on DRGs 521 through 523 would decline.
In the FY 2005 IPPS final rule, we agreed to analyze this area for
FY 2006 and to look at the alternative DRG assignments suggested by the
commenters. As indicated in the FY 2006 IPPS proposed rule, we examined
data from the FY 2004 MedPAR file on cases in DRGs 521 through 523 with
a principal diagnosis of code 292.82. We found that there were only 134
cases reported with the principal diagnosis code 292.82 in DRGs 521
through 523 without a diagnosis of drug and alcohol abuse. The average
standardized charges for cases with a principal diagnosis of code
292.82 that did not have a secondary diagnosis of drug/alcohol abuse or
dependence were $12,244.35, compared to the average standardized
charges for all cases in DRG 521, which were $10,543.69. There were no
cases in DRG 522 with a principal diagnosis of code 292.82. We found
only 24 cases in DRG 523 with a principal diagnosis of code 292.82.
Given the small number of cases in DRG 522 and 523, and the similarity
in average standardized charges between those cases in DRG 521 with a
principal diagnosis of code 292.82 and without a secondary diagnosis of
drug/alcohol abuse or dependence to the overall average for all cases
in the DRG, we do not believe the data suggest that a modification to
DRGs 521 through 523 is warranted. Therefore, we did not propose
changes to the current structure of DRGs 521 through 523 for FY 2006.
Comment: One commenter expressed concern that CMS did not propose
any DRG change to code 292.82, drug-induced dementia. The commenter
stated that a patient admitted with dementia due to an adverse effect
of a drug would result in code 292.82, followed by the appropriate E
code as a secondary diagnosis, grouping to one of the alcohol and drug
abuse DRGs (521 through 523). The commenter indicated an adverse effect
of a drug should not be confused with alcohol or drug abuse and
recommended that CMS examine the potential impact of not reassigning
code 292.82 into a new DRG from both a quality of care and a financial
perspective.
Response: We appreciate the commenter's recommendation. However, as
we indicated above and in the FY 2006 IPPS proposed rule, drug-induced
dementia develops as a result of use of a drug. Therefore, it is
appropriate to assign the code to DRGs 521, 522, or 523. As we
indicated in the FY 2006 proposed rule (70 FR 23330), we did receive
suggestions that drug-induced dementia due to the adverse effects of a
drug or poisoning be assigned to DRGs 429, 449, 450, or 451. However,
we believe these DRGs should only be assigned when the hospital uses
the appropriate poisoning or other codes sequenced as the principal
diagnosis. In addition, the data analyzed from the FY 2004 MedPAR file
did not support a modification to DRGs 521 through 523. Our data show
that hospital charges for patients assigned to DRGs 521 through 523
with a principal diagnosis of code 292.82 and no drug abuse secondary
diagnosis were similar to other patients in these DRGs. Given that no
other secondary diagnosis codes were used, it is not possible to know
whether these patients were more clinically similar to patients in DRGs
426, 449, 450, 451, or 521 through 523. Absent any other diagnoses
other than code 292.82, we have no evidence that these patients were
clinically different than other patients in DRGs 521 through 523.
After consideration of the comments received, as we proposed, in
this final rule we are not changing the DRG assignment for drug-induced
dementia (code 292.82) for FY 2006.
10. Medicare Code Editor (MCE) Changes
As explained under section II.B.1. of this preamble, the Medicare
Code Editor (MCE) is a software program that detects and reports errors
in the coding of Medicare claims data. Patient diagnoses, procedure(s),
discharge status, and demographic information go into the Medicare
claims processing systems and are subjected to a series of automated
screens. The MCE screens are designed to identify cases that require
further review before classification into a DRG.
a. Newborn Age Edit
In the past, we have discussed and received comments concerning
revision of the pediatric portions of the Medicare IPPS DRG
classification system, that is, MDC 15 (Newborns and Other Neonates
With Conditions Originating in the Perinatal Period). Most recently, we
addressed these comments in both the FY 2005 proposed rule (69 FR
28210) and the FY 2005 IPPS final rule (69 FR 48938). In those rules,
we indicated that we would be responsive to specific requests for
updating MDC 15 on a limited, case-by-case basis.
We have recently received a request through the Open Door Forum to
revise the MCE ``newborn age edit'' by removing over 100 codes located
in Chapter 15 of ICD-9-CM that are identified as ``newborn'' codes.
This request was made because these codes usually cause an edit or
denial to be triggered when they are used on children greater than 1
year of age. However, the underlying issue with these particular edits
is that other payers have adopted the CMS Medicare Code Editor in a
wholesale manner, instead of adapting it for use in their own patient
populations.
We acknowledge that Medicare DRGs are sometimes used to classify
other patient groups. However, CMS' primary focus of updates to the
Medicare DRG classification system is on changes relating to the
Medicare patient population, not the pediatric or neonatal patient
populations.
There are practical considerations regarding the assumption of a
larger role for the Medicare DRGs in the pediatric or neonatal areas,
given the difference between the Medicare population and that of
newborns and children. There are also challenges surrounding the
development of DRG classification systems and applications appropriate
to children. We do not have the clinical expertise to make decisions
about these patients, and must rely on outside clinicians for advice.
In addition, because newborns and other children are generally not
eligible for Medicare, we must rely on outside data to make decisions.
We recognize that there are evolving alternative classification systems
for children and encourage payers to use the CMS MCE as a template
while making modifications appropriate for pediatric patients.
Therefore, we would encourage those non-Medicare systems needing a
more comprehensive pediatric system of edits to update their systems by
choosing from other existing systems or programs that are currently in
use. Because of our reluctance to assume expertise in the
[[Page 47312]]
pediatric arena, as we proposed we are not making the commenter's
suggested changes to the MCE ``newborn age edit'' for FY 2006.
Comment: One commenter requested that CMS reconsider making the
necessary revisions to the ``newborn age edit'' and other pediatric
data. The commenter suggested that if CMS continues its current stance
regarding the internal level of expertise to develop newborn and
pediatric edits, then these edit should be removed from the MCE.
Response: We believe the commenter's recommendation to remove the
newborn and pediatric edits from the MCE has merits and will consider
it for FY 2007. However, we believe it is important that we have an
opportunity to analyze this issue further and consider any comments
from interested parties before eliminating these edits.
b. Newborn Diagnoses Edit
Last year, in our changes to the MCE, we inadvertently added code
796.6 (Abnormal findings on neonatal screening) to both the MCE edit
for ``Maternity Diagnoses--age 12 through 55'', and the MCE edit for
``Diagnoses Allowed for Females Only''. In the FY 2006 IPPS proposed
rule, we proposed to remove code 796.6 from these two edits and add it
to the ``Newborn Diagnoses'' edit.
We did not receive any comments on this proposal. Therefore, in
this final rule, we are adopting the proposal as final without
modification.
c. Diagnoses Allowed for ``Males Only'' Edit
We have received a request to remove two codes from the ``Diagnoses
Allowed for Males Only'' edit, related to androgen insensitivity
syndrome (AIS). AIS is a new term for testicular feminization. Code
257.8 (Other testicular dysfunction) is used to describe individuals
who, despite having XY chromosomes, develop as females with normal
female genitalia and mammary glands. Testicles are present in the same
general area as the ovaries, but are undescended and are at risk for
development of testicular cancer, so are generally surgically removed.
These individuals have been raised as females, and would continue to be
considered female, despite their XY chromosome makeup. Therefore, as
AIS is coded to 257.8, and has posed a problem associated with the
gender edit, in the FY 2006 IPPS proposed rule, we proposed to remove
this code from the ``Males Only'' edit in the MCE.
A similar clinical scenario can occur with certain disorders that
cause a defective biosynthesis of testicular androgen. This disorder is
included in code 257.2 (Other testicular hypofunction). Therefore, we
also proposed to remove code 257.2 from the ``Male Only'' gender edit
in the MCE.
We did not receive any comments on these proposals. Therefore, in
this final rule, we are adopting the proposals as final without
modification.
d. Tobacco Use Disorder Edit
We have become aware of the possible need to add code 305.1
(Tobacco use disorder) to the MCE in order to make admissions for
tobacco use disorder a noncovered Medicare service when code 305.1 is
reported as the principal diagnosis. On March 22, 2005, CMS published a
final decision memorandum and related national coverage determination
(NCD) on smoking cessation counseling services on its Web site: (http://www.cms.hhs.gov/coverage/
). Among other things, this NCD provides
that: ``Inpatient hospital stays with the principal diagnosis of 305.1,
Tobacco Use Disorder, are not reasonable and necessary for the
effective delivery of tobacco cessation counseling services. Therefore,
we will not cover tobacco cessation services if tobacco cessation is
the primary reason for the patient's hospital stay.'' Therefore, in
order to maintain internal consistency with CMS programs and decisions,
we proposed to add code 305.1 to the MCE edit ``Questionable Admission-
Principal Diagnosis Only'' in order to make tobacco use disorder a
noncovered admission.
We did not receive any comments on this proposal. Therefore, in
this final rule, we are adopting the proposal as final without
modification.
e. Noncovered Procedure Edit
Effective October 1, 2004, CMS adopted the use of code 00.61
(Percutaneous angioplasty or atherectomy of precerebral (extracranial)
vessel(s) (PTA)) and code 00.63 (Percutaneous insertion of carotid
artery stent(s). Both codes are to be recorded to indicate the
insertion of a carotid artery stent or stents. At the time of the
creation of the codes, the coverage indication for carotid artery
stenting was only for patients in a clinical trial setting, and
diagnostic code V70.7 (Examination of participation in a clinical
trial) was required for payment of these cases. However, effective
October 12, 2004, Medicare covers PTA of the carotid artery concurrent
with the placement of an FDA-approved carotid stent for an FDA-approved
indication when furnished in accordance with FDA-approved protocols
governing post-approval studies. Therefore, as the coverage indication
has changed, we proposed to remove codes 00.61, 00.63, and V70.7 from
the MCE noncovered procedure edit.
We did not receive any comments on this proposal. Therefore, in
this final rule, we are adopting the proposal as final without
modification.
f. Error in Non-Covered Procedure Edit--code 36.32
It has come to our attention that an entry in the Non-Covered
Procedures section of the MCE was made in error. Procedure code 36.32
(Other transmyocardial revascularization) is covered as a late or last
resort for patients with severe (Canadian Cardiovascular Society
classification Classes III or IV) angina (stable or unstable). The
angina symptoms must be caused by areas of the heart not amenable to
surgical therapies. Therefore, as code 36.32 is erroneously in the Non-
Covered Procedure edit in the MCE, we are removing it from the edits
for FY 2006.
11. Surgical Hierarchies
Some inpatient stays entail multiple surgical procedures, each one
of which, occurring by itself, could result in assignment of the case
to a different DRG within the MDC to which the principal diagnosis is
assigned. Therefore, it is necessary to have a decision rule within the
GROUPER by which these cases are assigned to a single DRG. The surgical
hierarchy, an ordering of surgical classes from most resource-intensive
to least resource-intensive, performs that function. Application of
this hierarchy ensures that cases involving multiple surgical
procedures are assigned to the DRG associated with the most resource-
intensive surgical class.
Because the relative resource intensity of surgical classes can
shift as a function of DRG reclassification and recalibrations, we
reviewed the surgical hierarchy of each MDC, as we have for previous
reclassifications and recalibrations, to determine if the ordering of
classes coincides with the intensity of resource utilization.
A surgical class can be composed of one or more DRGs. For example,
in MDC 11, the surgical class ``kidney transplant'' consists of a
single DRG (DRG 302) and the class ``kidney, ureter and major bladder
procedures'' consists of three DRGs (DRGs 303, 304, and 305).
Consequently, in many cases, the surgical hierarchy has an impact on
more than one DRG. The methodology for determining the most resource-
intensive surgical class involves
[[Page 47313]]
weighting the average resources for each DRG by frequency to determine
the weighted average resources for each surgical class. For example,
assume surgical class A includes DRGs 1 and 2 and surgical class B
includes DRGs 3, 4, and 5. Assume also that the average charge of DRG 1
is higher than that of DRG 3, but the average charges of DRGs 4 and 5
are higher than the average charge of DRG 2. To determine whether
surgical class A should be higher or lower than surgical class B in the
surgical hierarchy, we would weight the average charge of each DRG in
the class by frequency (that is, by the number of cases in the DRG) to
determine average resource consumption for the surgical class. The
surgical classes would then be ordered from the class with the highest
average resource utilization to that with the lowest, with the
exception of ``other O.R. procedures'' as discussed below.
This methodology may occasionally result in assignment of a case
involving multiple procedures to the lower-weighted DRG (in the
highest, most resource-intensive surgical class) of the available
alternatives. However, given that the logic underlying the surgical
hierarchy provides that the GROUPER search for the procedure in the
most resource-intensive surgical class, in cases involving multiple
procedures, this result is sometimes unavoidable.
We note that, notwithstanding the foregoing discussion, there are a
few instances when a surgical class with a lower average charge is
ordered above a surgical class with a higher average charge. For
example, the ``other O.R. procedures'' surgical class is uniformly
ordered last in the surgical hierarchy of each MDC in which it occurs,
regardless of the fact that the average charge for the DRG or DRGs in
that surgical class may be higher than that for other surgical classes
in the MDC. The ``other O.R. procedures'' class is a group of
procedures that are only infrequently related to the diagnoses in the
MDC, but are still occasionally performed on patients in the MDC with
these diagnoses. Therefore, assignment to these surgical classes should
only occur if no other surgical class more closely related to the
diagnoses in the MDC is appropriate.
A second example occurs when the difference between the average
charges for two surgical classes is very small. We have found that
small differences generally do not warrant reordering of the hierarchy
because, as a result of reassigning cases on the basis of the hierarchy
change, the average charges are likely to shift such that the higher-
ordered surgical class has a lower average charge than the class
ordered below it.
Based on the preliminary recalibration of the DRGs, in the FY 2006
IPPS proposed rule (70 FR 23332), we proposed to revise the surgical
hierarchy for MDC 5 (Diseases and Disorders of the Circulatory System)
and MDC 8 (Diseases and Disorders of the Musculoskeletal System and
Connective Tissue) as follows:
In MDC 5, we proposed reordering--
DRG 116 (Other Permanent Cardiac Pacemaker Implant) above
DRG 549 (Percutaneous Cardiovascular Procedure With Drug-Eluting Stent
With AMI With CC).
DRG 549 above DRG 550 (Percutaneous Cardiovascular
Procedure With Drug-Eluting Stent With AMI Without CC).
DRG 550 above DRG 547 (Percutaneous Cardiovascular
Procedure With AMI With CC).
DRG 547 above DRG 548 (Percutaneous Cardiovascular
Procedure With AMI Without CC).
DRG 548 above DRG 527 (Percutaneous Cardiovascular
Procedure With Drug-Eluting Stent Without AMI).
DRG 527 above DRG 517 (Percutaneous Cardiovascular
Procedure With Non-Drug Eluting Stent Without AMI).
DRG 517 above DRG 518 (Percutaneous Cardiovascular
Procedure Without Coronary Artery Stent or AMI).
DRG 518 above DRGs 478 and 479 (Other Vascular Procedures
With and Without CC, respectively).
Comment: Several commenters agreed with the proposed changes in the
surgical hierarchy for MDC 5.
Response: We appreciate the commenters' support. However, because
in this final rule we are deleting 9 DRGS and creating 12 new DRGs in
MDC 5, as discussed under ``MedPAC Recommendations'' in section IX.A of
this preamble, we are reordering the following DRGs in MDC 5:
DRG 106 (Coronary Bypass With PTCA) above DRGs 547 and 548
(Coronary Bypass With Cardiac Catheterization With and Without Major CV
Diagnosis, respectively);
DRGs 547-548 above DRGs 549 and 550 (Coronary Bypass
Without Cardiac Catheterization With and Without Major CV Diagnosis,
respectively);
DRG 113 (Amputation For Circulatory System Disorders
Except Upper Limb or Toe) above DRG 551 (Permanent Cardiac Pacemaker
Implant With Major CV Diagnosis or AICD Lead or Generator);
DRG 551 above DRG 552 (Other Permanent Cardiac Pacemaker
Implant Without Major CV Diagnosis);
DRG 552 above DRG 557 (Percutaneous Cardiovascular
Procedure With Drug Eluting Stent With Major CV Diagnosis);
DRG 557 above DRG 555 (Percutaneous Cardiovascular
Procedure With Major CV Diagnosis);
DRG 555 above DRG 558 (Percutaneous Cardiovascular
Procedure With Drug Eluting Stent Without Major CV Diagnosis);
DRG 558 above DRG 556 (Percutaneous Cardiovascular
Procedure Without Major CV Diagnosis);
DRG 556 above DRG 518 (Percutaneous Cardiovascular
Procedure Without Coronary Artery Stent Or AMI);
DRG 518 above DRG 553 (Other Vascular Procedures With CC
With Major CV Diagnosis);
DRG 553 above DRG 554 (Other Vascular Procedures With CC
Without Major CV Diagnosis);
DRG 554 above DRG 479 (Other Vascular Procedures Without
CC).
In MDC 8, we proposed to reorder--
DRG 496 (Combined Anterior/Posterior Spinal Fusion) above
DRG 546 (Spinal Fusions Except Cervical With Curvature of the Spine or
Malignancy).
DRG 546 above DRGs 497 and 498 (Spinal Fusions Except
Cervical With and Without CC, respectively).
DRG 217 (Wound Debridement and Skin Graft Except Hand, For
Musculoskeletal and Connective Tissue Disease) above DRG 545 (Revision
of Hip or Knee Replacement).
DRG 545 above DRG 544 (Major Joint Replacement or
Reattachment).
DRG 544 above DRGs 519 and 520 (Cervical Spinal Fusion
With and Without CC, respectively).
Comment: Several commenters agreed with the proposed changes in the
surgical hierarchy for MDC 8.
Response: We appreciate the commenters' support. Based on a test of
the proposed revisions using the March 2005 update of the FY 2004
MedPAR file and the revised GROUPER software, we found that the
revisions to MDC 8 are still supported by the data.
Accordingly, in this final rule, we are adopting the proposed
change in the surgical hierarchy for MDC 8 as final, without
modification.
12. Refinement of Complications and Comorbidities (CC) List
a. Background
As indicated earlier in this preamble, under the IPPS DRG
classification system, we have developed a standard list of diagnoses
that are considered complications or comorbidities (CCs). Historically,
we developed this list using physician panels that classified
[[Page 47314]]
each diagnosis code based on whether the diagnosis, when present as a
secondary condition, would be considered a substantial complication or
comorbidity. A substantial complication or comorbidity was defined as a
condition that, because of its presence with a specific principal
diagnosis, would cause an increase in the length of stay by at least 1
day in at least 75 percent of the patients.
b. Comprehensive Review of the CC List
In previous years, we have made changes to the standard list of
CCs, either by adding new CCs or deleting CCs already on the list, but
we have never conducted a comprehensive review of the list. There are
currently 3,285 diagnosis codes on the CC list. There are 121-paired
DRGs that are split on the presence or absence of a CC.
We have reviewed these paired DRGs and found that the majority of
cases that are assigned to DRGs that have a CC split fall into the DRG
with CC. While this fact is not new, we have found that a much higher
proportion of cases are being grouped to the DRG with a CC than had
occurred in the past. In our review of the DRGs included in Table 7b of
the September 1, 1987 Federal Register rule (52 FR 33125), we found the
following percentages of cases assigned a CC in those DRGs that had a
CC split (DRG Definitions Manual, GROUPER Version 5.0 (1986 data)):
Cases with CC: 61.9 percent
Cases without CC: 38.1 percent
When we compared the above 1986 DRG data to the 2004 DRG data that
were included in the DRGs Definitions Manual, GROUPER Version 22.0, we
found the following:
Cases with CC: 79.9 percent
Cases without CC: 20.1 percent
(We used DRGs Definitions Manual, GROUPER Version 5.0, for this
analysis because prior versions of the DRGs Definitions Manual used age
as a surrogate for a CC and the split was ``CC and/or age greater than
69''.)
The vast majority of patients being treated in inpatient settings
have a CC as currently defined, and we believe that it is possible that
the CC distinction has lost much of its ability to differentiate the
resource needs of patients. The original definition used to develop the
CC list (the presence of a CC would be expected to extend the length of
stay of at least 75 percent of the patients who had the CC by at least
one day) was used beginning in 1981 and has been part of the IPPS since
its inception in 1983. There has been no substantive review of the CC
list since its original development. In reviewing this issue, our
clinical experts found several diseases that appear to be obvious
candidates to be on the CC list, but currently are not:
------------------------------------------------------------------------
Code Code description 2004 count
------------------------------------------------------------------------
041.7...................... Pseudomonas Infection in 47,350
Conditions Classified
Elsewhere and/or of
Unspecified Site.
253.6...................... Disorders of 23,613
Neurohypophysis.
414.12..................... Dissection of Coronary 2,377
Artery.
359.4...................... Toxic Myopathy............. 1,875
031.2...................... Disseminated Disease Due to 1,428
Mycobacteria.
451.83..................... Phlebitis and 376
Thrombophlebitis of Deep
Veins of Upper Extremities.
------------------------------------------------------------------------
Conversely, our medical experts believe the following conditions
are examples of common conditions that are on the CC list, but are not
likely lead to higher treatment costs when present as a secondary
diagnosis:
------------------------------------------------------------------------
Code Code description 2004 count
------------------------------------------------------------------------
424.0...................... Mitral Valve Disorder...... 401,359
305.00..................... Alcohol Abuse Unspecified 69,099
Use.
578.1...................... Blood in Stool............. 53,453
723.4...................... Brachial Neuritis/ 5,829
Radiculitis, Not Otherwise
Specified.
684........................ Impetigo................... 1,230
293.84..................... Anxiety Disorder in 1,153
Conditions Classified
Elsewhere.
------------------------------------------------------------------------
We note that the above conditions are examples only of why we
believe the CC list needs a comprehensive review. In addition to this
review, we note that these conditions may be treated differently under
several DRG systems currently in use. For instance, ICD-9-CM code
414.12 (Dissection of coronary artery) is listed as a ``Major CC''
under the All Patient (AP) DRGs, GROUPER Version 21.0 and an
``Extreme'' CC under the All Patient Refined (APR) DRGs, GROUPER
Version 20.0, but is not listed as a CC at all in GROUPER Version 22.0
of the DRGs Definitions Manual used by Medicare. Similarly, ICD-9-CM
code 424.0 (Mitral valve disorder) is a CC under GROUPER Version 22.0
of the DRGs Definitions Manual for Medicare's DRG system, a minor CC
under the GROUPER Version 20.0 of the APR-DRGs, and not a CC at all
under GROUPER Version 21.0 of the AP-DRGs.
Given the long period of time that has elapsed since the original
CC list was developed, the incremental nature of changes to it, and
changes in the way inpatient care is delivered, as indicated in the FY
2006 IPPS proposed rule, we are planning a comprehensive and systematic
review of the CC list for the IPPS rule for FY 2007. As part of this
process, we plan to consider revising the standard for determining when
a condition is a CC. For instance, we may use an alternative to
classifying a condition as a CC based on how it affects the length of
stay of a case. Similar to other aspects of the DRG system, we may
consider the effect of a specific secondary diagnosis on the charges or
costs of a case to evaluate whether to include the condition on the CC
list. Using a statistical algorithm, we may classify each diagnosis
based on its effect on hospital charges (or costs) relative to other
cases when present as a secondary diagnosis to obtain better
information on when a particular condition is likely to increase
hospital costs. For example, code 293.84 (Anxiety disorder in
conditions classified elsewhere), which is currently listed as a CC,
might be removed from the CC list if analysis of the data indicates
that the data do not support the fact that it represents a significant
increase in resource utilization, and a code such as 359.4 (Toxic
myopathy), which is currently not listed as a CC, could be added to the
CC list if the data support it. In addition to using hospital
[[Page 47315]]
charge data as a basis for a review, we would expect to supplement the
process with review by our medical experts. Further, we may also
consider doing a comparison of the Medicare DRG CC list with other DRG
systems such as the AP-DRGs and the APR-DRGs to determine how the same
secondary diagnoses are treated under these systems.
By performing a comprehensive review of the CC list, we expect to
revise the DRG classification system to better reflect resource
utilization and remove conditions from the CC list that only have a
marginal impact on a hospital's costs. We believe that a comprehensive
review of the CC list would be consistent with MedPAC's recommendation
that we improve the DRG system to better recognize severity. We will
provide more detail about how we expect to undertake this analysis in
the future, and any significant structural changes to the CC list will
only be adopted after a notice and comment rulemaking that fully
explains the methodology we plan to use in conducting this review. In
the FY 2006 IPPS proposed rule, we encouraged comment regarding
possible ways that more meaningful indicators of clinical severity and
their implications for resource use can be incorporated into our
comprehensive review and possible restructuring of the CC list.
Comment: Several commenters agreed with CMS that changes in
resource utilization and in inpatient hospital care, particularly the
focus on decreasing length of stay, may be resulting in the CC
distinction not being able to differentiate resource utilization and
patient severity as well as it has in the past. Several commenters
agreed that it may be valuable to conduct a substantial and
comprehensive review of the CC list for the future. While some
commenters applauded CMS' efforts to keep refining the DRG system, the
commenters believed that review of the CC list can only be taken as an
interim step and a more refined DRG system can only be accomplished
with more specific clinical classification systems capable of providing
more complete information about a patient's condition and the services
provided to treat those conditions--namely, ICD-10-CM and ICD-10-PCS.
Some commenters suggested waiting to adopt the MedPAC recommendations
until these new coding classification systems are implemented.
MedPAC stated that a comprehensive review and revision of the CC
list might lead to a desirable improvement in the extent to which
payment rates reflect patient severity of illness. However, MedPAC does
not expect that even a major revision of the list would greatly improve
the extent to which the IPPS payment rates recognize the effects of
differences in patient severity of illness. MedPAC noted that the CC
distinction is based entirely on the presence or absence of any CC,
implicitly assuming that all CCs have equal effects on severity of
illness and costs. Even if the CC review process were to correctly
identify all secondary diagnoses that significantly affect hospitals'
costs, MedPAC's research and CMS' earlier work have shown that simply
distinguishing between patients with and without CCs fails to capture
large, predictable differences in costs among patients. MedPAC stated
that further differentiation is necessary to make the most effective
use of information about patients' secondary diagnoses and to help
minimize opportunities for hospitals to benefit financially from
patient selection.
Response: There has not been a comprehensive review of the CC list
in over 20 years. Such a review may indicate that a more focused list
will better distinguish the effects of CCs on severity of illness than
earlier analysis. Until this comprehensive review and analysis are
complete, we will not know whether there is merit in adopting a
modification of the CC list or whether it will be necessary to adopt a
more comprehensive change to the DRG system such as APR-DRGs. We
currently plan to continue with our comprehensive review of the CC
list. In addition, we expect shortly to engage a contractor highly
experienced with DRG development to study the APR-DRGs over the next
year. We appreciate the commenters' suggestions about waiting to adopt
MedPAC's recommendations until ICD-10-CM and ICD-10-PCS have been
implemented. While we do not have a proposal in place at this time to
implement ICD-10-CM and ICD-10-PCS, before adopting any major changes
to the DRG system, we will consider the implications of potential
future changes to our coding systems as part of our analysis of
MedPAC's recommendation.
Comment: Commenters gave numerous suggestions for performing the
analysis of the CC list. The suggestions include:
Analyze all diagnosis and procedures codes reported on the
claim, not just nine diagnosis codes and six procedure codes.
Examine the impact of multiple CCs on hospital resource
consumption and length of stay.
Examine further differentiation beyond simply
distinguishing between patients with and without CCs to make the most
effective use of information about patients' secondary diagnoses and
minimize opportunities for hospitals to benefit financially from
patient selection.
Study the need for a general/standard list of CCs that
addresses patient conditions across all body systems and a list of
special severity conditions that are unique to specific population/
diseases.
Consider abandoning length of stay as an indicator for
severity because, in today's clinical environment, length of stay is
determined more by postacute care referral dynamics than patient need.
Consider differentiating comorbidities from complications.
The former are predictable and can be used to easily affect admission
selection.
Compare the existing CC list with those used with other
DRG systems.
Conduct the comprehensive review and analysis cautiously,
systemically, and thoroughly, using external expertise and maintaining
transparency and stakeholder involvement throughout the process, and do
not rush the analysis simply to meet the deadline for the FY 2007 IPPS
rule.
Use open door forums to inform the public of progress.
Consider combining the cases from each DRG pair in one
homogenous DRG. Under such a change, hospitals would still receive the
same total reimbursement for the same patients but would have more
financial incentive to improve the quality and efficiency of care.
Before inclusion as a CC condition, a diagnosis should
meet the following four criteria: (1) The patient group represents a
higher cost in that DRG than those without the comorbid condition; (2)
the condition cannot be prevented, in any possible way, by superior
care in the hospital; (3) the condition is not related to the principal
diagnosis; and (4) there is at least some indication that the patient
would face inadequate options for finding appropriate medical care
without a more appropriate payment.
Response: We appreciate these many suggestions. As we indicated
above, we will continue to conduct a thorough review of the CC list. We
also will be engaging a contractor shortly to assist us with evaluating
APR-DRGs and other mechanisms to better recognize severity in our
payment systems.
c. CC Exclusions List for FY 2006
In the September 1, 1987 final notice (52 FR 33143) concerning
changes to the DRG classification system, we modified the GROUPER logic
so that certain diagnoses included on the standard list
[[Page 47316]]
of CCs would not be considered valid CCs in combination with a
particular principal diagnosis. We created the CC Exclusions List for
the following reasons: (1) To preclude coding of CCs for closely
related conditions; (2) to preclude duplicative or inconsistent coding
from being treated as CCs; and (3) to ensure that cases are
appropriately classified between the complicated and uncomplicated DRGs
in a pair. As we indicated above, we developed a list of diagnoses,
using physician panels, to include those diagnoses that, when present
as a secondary condition, would be considered a substantial
complication or comorbidity. In previous years, we have made changes to
the list of CCs, either by adding new CCs or deleting CCs already on
the list. We did not receive any comments specific to the diagnosis
codes on the FY 2006 CC list. Therefore, as we proposed in the FY 2006
IPPS proposed rule, we are not deleting any of the diagnosis codes on
the CC list for FY 2006.
In the May 19, 1987 proposed notice (52 FR 18877) and the September
1, 1987 final notice (52 FR 33154), we explained that the excluded
secondary diagnoses were established using the following five
principles:
Chronic and acute manifestations of the same condition
should not be considered CCs for one another.
Specific and nonspecific (that is, not otherwise specified
(NOS)) diagnosis codes for the same condition should not be considered
CCs for one another.
Codes for the same condition that cannot coexist, such as
partial/total, unilateral/bilateral, obstructed/unobstructed, and
benign/malignant, should not be considered CCs for one another.
Codes for the same condition in anatomically proximal
sites should not be considered CCs for one another.
Closely related conditions should not be considered CCs
for one another.
The creation of the CC Exclusions List was a major project
involving hundreds of codes. We have continued to review the remaining
CCs to identify additional exclusions and to remove diagnoses from the
master list that have been shown not to meet the definition of a CC.\1\
---------------------------------------------------------------------------
\1\ See the FY 1989 final rule (53 FR 38485) September 30, 1988,
for the revision made for the discharges occurring in FY 1989; the
FY 1990 final rule (54 FR 36552) September 1, 1989, for the FY 1990
revision; the FY 1991 final rule (55 FR 36126) September 4, 1990,
for the FY 1991 revision; the FY 1992 final rule (56 FR 43209)
August 30, 1991, for the FY 1992 revision; the FY 1993 final rule
(57 FR 39753) September 1, 1992, for the FY 1993 revision; the FY
1994 final rule (58 FR 46278) September 1, 1993, for the FY 1994
revisions; the FY 1995 final rule (59 FR 45334), September 1, 1994,
for the FY 1995 revisions; the FY 1996 final rule (60 FR 45782)
September 1, 1995, for the FY 1996 revisions; the FY 1997 final rule
(61 FR 46171), August 30, 1996, for the FY 1997 revisions; the FY
1998 final rule (62 FR 45966), August 29, 1997, for the FY 1998
revisions; the FY 1999 final rule (63 FR 40954), July 31, 1998, for
the FY 1999 revisions; the FY 2001 final rule (65 FR 47064), August
1, 2000, for the FY 2001 revisions; the FY 2002 final rule (66 FR
39851) August 1, 2001, for the FY 2002 revisions; the FY 2003 final
rule (67 FR 49998), August 1, 2002, for the FY 2003 revisions; the
FY 2004 final rule (68 FR 45364) August 1, 2003, for the FY 2004
revisions; and the FY 2005 final rule (69 FR 49848) August 11, 2004,
for the FY 2005 revisions. In the FY 2000 final rule (64 FR 41490)
July 30, 1999, we did not modify the CC Exclusions List because we
did not make any changes to the ICD-9-CM codes for FY 2000.
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As proposed, we are making a limited revision of the CC Exclusions
List to take into account the changes that will be made in the ICD-9-CM
diagnosis coding system effective October 1, 2005. (See section
II.B.14. of this preamble for a discussion of ICD-9-CM changes.) We are
making these changes in accordance with the principles established when
we created the CC Exclusions List in 1987.
We receive one comment that agreed with the revised CC Exclusion
List based on the information provided.
Tables 6G and 6H in the Addendum to this final rule contain the
revisions to the CC Exclusions List that will be effective for
discharges occurring on or after October 1, 2005. Each table shows the
principal diagnoses with changes to the excluded CCs. Each of these
principal diagnoses is shown with an asterisk, and the additions or
deletions to the CC Exclusions List are provided in an indented column
immediately following the affected principal diagnosis.
CCs that are added to the list are in Table 6G--Additions to the CC
Exclusions List. Beginning with discharges on or after October 1, 2005,
the indented diagnoses will not be recognized by the GROUPER as valid
CCs for the asterisked principal diagnosis.
CCs that are deleted from the list are in Table 6H--Deletions from
the CC Exclusions List. Beginning with discharges on or after October
1, 2005, the indented diagnoses will be recognized by the GROUPER as
valid CCs for the asterisked principal diagnosis.
Copies of the original CC Exclusions List applicable to FY 1988 can
be obtained from the National Technical Information Service (NTIS) of
the Department of Commerce. It is available in hard copy for $152.50
plus shipping and handling. A request for the FY 1988 CC Exclusions
List (which should include the identification accession number (PB) 88-
133970) should be made to the following address: National Technical
Information Service, United States Department of Commerce, 5285 Port
Royal Road, Springfield, VA 22161; or by calling (800) 553-6847.
Users should be aware of the fact that all revisions to the CC
Exclusions List (FYs 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996,
1997, 1998, 1999, 2001, 2002, 2003, 2004, and 2005) and those in Tables
6G and 6H of this final rule for FY 2006 must be incorporated into the
list purchased from NTIS in order to obtain the CC Exclusions List
applicable for discharges occurring on or after October 1, 2005. (Note:
There was no CC Exclusions List in FY 2000 because we did not make
changes to the ICD-9-CM codes for FY 2000.)
Alternatively, the complete documentation of the GROUPER logic,
including the current CC Exclusions List, is available from 3M/Health
Information Systems (HIS), which, under contract with CMS, is
responsible for updating and maintaining the GROUPER program. The
current DRG Definitions Manual, Version 22.0, is available for $225.00,
which includes $15.00 for shipping and handling. Version 23.0 of this
manual, which will include the final FY 2006 DRG changes, will be
available in hard copy for $250.00. Version 23.0 of the manual is also
available on a CD for $200.00; a combination hard copy and CD is
available for $400.00. These manuals may be obtained by writing 3M/HIS
at the following address: 100 Barnes Road, Wallingford, CT 06492; or by
calling (203) 949-0303. Please specify the revision or revisions
requested.
13. Review of Procedure Codes in DRGs 468, 476, and 477
Each year, we review cases assigned to DRG 468 (Extensive O.R.
Procedure Unrelated to Principal Diagnosis), DRG 476 (Prostatic O.R.
Procedure Unrelated to Principal Diagnosis), and DRG 477 (Nonextensive
O.R. Procedure Unrelated to Principal Diagnosis) to determine whether
it would be appropriate to change the procedures assigned among these
DRGs.
DRGs 468, 476, and 477 are reserved for those cases in which none
of the O.R. procedures performed are related to the principal
diagnosis. These DRGs are intended to capture atypical cases, that is,
those cases not occurring with sufficient frequency to represent a
distinct, recognizable clinical group. DRG 476 is assigned to those
discharges in which one or more of the following prostatic procedures
are performed and are unrelated to the principal diagnosis:
[[Page 47317]]
60.0, Incision of prostate
60.12, Open biopsy of prostate
60.15, Biopsy of periprostatic tissue
60.18, Other diagnostic procedures on prostate and
periprostatic tissue
60.21, Transurethral prostatectomy
60.29, Other transurethral prostatectomy
60.61, Local excision of lesion of prostate
60.69, Prostatectomy, not elsewhere classified
60.81, Incision of periprostatic tissue
60.82, Excision of periprostatic tissue
60.93, Repair of prostate
60.94, Control of (postoperative) hemorrhage of prostate
60.95, Transurethral balloon dilation of the prostatic
urethra
60.96, Transurethral destruction of prostate tissue by
microwave thermotherapy
60.97, Other transurethral destruction of prostate tissue
by other thermotherapy
60.99, Other operations on prostate
All remaining O.R. procedures are assigned to DRGs 468 and 477,
with DRG 477 assigned to those discharges in which the only procedures
performed are nonextensive procedures that are unrelated to the
principal diagnosis.\2\
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\2\ The original list of the ICD-9-CM procedure codes for the
procedures we consider nonextensive procedures, if performed with an
unrelated principal diagnosis, was published in Table 6C in section
IV. of the Addendum to the FY 1989 final rule (53 FR 38591). As part
of the FY 1991 final rule (55 FR 36135), the FY 1992 final rule (56
FR 43212), the FY 1993 final rule (57 FR 23625), the FY 1994 final
rule (58 FR 46279), the FY 1995 final rule (59 FR 45336), the FY
1996 final rule (60 FR 45783), the FY 1997 final rule (61 FR 46173),
and the FY 1998 final rule (62 FR 45981), we moved several other
procedures from DRG 468 to DRG 477, and some procedures from DRG 477
to DRG 468. No procedures were moved in FY 1999, as noted in the
final rule (63 FR 40962); in FY 2000 (64 FR 41496); in FY 2001 (65
FR 47064); or in FY 2002 (66 FR 39852). In the FY 2003 final rule
(67 FR 49999) we did not move any procedures from DRG 477. However,
we did move procedure codes from DRG 468 and placed them in more
clinically coherent DRGs. In the FY 2004 final rule (68 FR 45365),
we moved several procedures from DRG 468 to DRGs 476 and 477 because
the procedures are nonextensive. In the FY 2005 final rule (69 FR
48950), we moved one procedure from DRG 468 to 477. In addition, we
added several existing procedures to DRGs 476 and 477.
---------------------------------------------------------------------------
a. Moving Procedure Codes from DRG 468 or DRG 477 to MDCs
We annually conduct a review of procedures producing assignment to
DRG 468 or DRG 477 on the basis of volume, by procedure, to see if it
would be appropriate to move procedure codes out of these DRGs into one
of the surgical DRGs for the MDC into which the principal diagnosis
falls. The data are arrayed two ways for comparison purposes. We look
at a frequency count of each major operative procedure code. We also
compare procedures across MDCs by volume of procedure codes within each
MDC.
We identify those procedures occurring in conjunction with certain
principal diagnoses with sufficient frequency to justify adding them to
one of the surgical DRGs for the MDC in which the diagnosis falls.
Based on this year's review, we did not identify any procedures in DRGs
468 or 477 that should be removed to one of the surgical DRGs. We did
not receive any comments on this provision. Therefore, in this final
rule, we are not making any changes for FY 2006.
b. Reassignment of Procedures Among DRGs 468, 476, and 477
We also annually review the list of ICD-9-CM procedures that, when
in combination with their principal diagnosis code, result in
assignment to DRGs 468, 476, and 477, to ascertain if any of those
procedures should be reassigned from one of these three DRGs to another
of the three DRGs based on average charges and the length of stay. We
look at the data for trends such as shifts in treatment practice or
reporting practice that would make the resulting DRG assignment
illogical. If we find these shifts, we would propose to move cases to
keep the DRGs clinically similar or to provide payment for the cases in
a similar manner. Generally, we move only those procedures for which we
have an adequate number of discharges to analyze the data.
It has come to our attention that procedure code 26.12 (Open biopsy
of salivary gland or duct) is assigned to DRG 468 (Extensive O.R.
Procedure Unrelated to Principal Diagnosis). We believe this to be an
error, as code 26.31 (Partial sialoadenectomy), which is a more
extensive procedure than code 26.12, is assigned to DRG 477. Therefore,
we proposed to correct this error by moving code 26.12 out of DRG 468
and reassigning it to DRG 477. We received one comment in support of
our proposal to move code 26.12 out of DRG 468 and reassign it to DRG
477. Therefore, we are adopting as final our proposal to move procedure
code 26.12 out of DRG 468 and reassigning it to DRG 477. We received no
comments opposing our plan of not moving any procedure codes from DRG
476 to DRGs 468 or 477 or from DRG 477 to DRG 468. Therefore, as we
proposed, we are not moving any procedure codes from DRG 476 to DRGs
468 or 477, or from DRG 477 to DRGs 468 or 476.
c. Adding Diagnosis or Procedure Codes to MDCs
Based on our review this year, as we proposed, we are not adding
any diagnosis codes to MDCs. We did not receive any comments on our
proposal and are therefore not adding any diagnosis codes to any MDCs.
14. Changes to the ICD-9-CM Coding System
As described in section II.B.1. of this preamble, the ICD-9-CM is a
coding system used for the reporting of diagnoses and procedures
performed on a patient. In September 1985, the ICD-9-CM Coordination
and Maintenance Committee was formed. This is a Federal
interdepartmental committee, co-chaired by the National Center for
Health Statistics (NCHS), the Centers for Disease Control and
Prevention, and CMS, charged with maintaining and updating the ICD-9-CM
system. The Committee is jointly responsible for approving coding
changes, and developing errata, addenda, and other modifications to the
ICD-9-CM to reflect newly developed procedures and technologies and
newly identified diseases. The Committee is also responsible for
promoting the use of Federal and non-Federal educational programs and
other communication techniques with a view toward standardizing coding
applications and upgrading the quality of the classification system.
The Official Version of the ICD-9-CM contains the list of valid
diagnosis and procedure codes. (The Official Version of the ICD-9-CM is
available from the Government Printing Office on CD-ROM for $25.00 by
calling (202) 512-1800.) The Official Version of the ICD-9-CM is no
longer available in printed manual form from the Federal Government; it
is only available on CD-ROM. Users who need a paper version are
referred to one of the many products available from publishing houses.
The NCHS has lead responsibility for the ICD-9-CM diagnosis codes
included in the Tabular List and Alphabetic Index for Diseases, while
CMS has lead responsibility for the ICD-9-CM procedure codes included
in the Tabular List and Alphabetic Index for Procedures.
The Committee encourages participation in the above process by
health-related organizations. In this regard, the Committee holds
public meetings for discussion of educational issues and proposed
coding changes. These meetings provide an opportunity for
representatives of recognized organizations in the coding field, such
[[Page 47318]]
as the American Health Information Management Association (AHIMA), the
American Hospital Association (AHA), and various physician specialty
groups, as well as individual physicians, health information management
professionals, and other members of the public, to contribute ideas on
coding matters. After considering the opinions expressed at the public
meetings and in writing, the Committee formulates recommendations,
which then must be approved by the agencies.
The Committee presented proposals for coding changes for
implementation in FY 2006 at a public meeting held on October 7-8,
2004, and finalized the coding changes after consideration of comments
received at the meetings and in writing by January 12, 2005. Those
coding changes are announced in Tables 6A through 6F of the Addendum to
this final rule. The Committee held its 2005 meeting on March 31-April
l, 2005. New codes for which there was a consensus of public support
and for which complete tabular and indexing changes were made by May
2005 are included in the October 1, 2005 update to ICD-9-CM. Code
revisions that were discussed at the March 31-April 1, 2005 Committee
meeting were not finalized in time to include them in the FY 2006 IPPS
proposed rule. These additional codes are included in Tables 6A through
6F of this final rule and are marked with an asterisk (*).
Copies of the minutes of the procedure codes discussions at the
Committee's October 7-8, 2004 meeting can be obtained from the CMS Web
site: http://www.cms.hhs.gov/paymentsystems/icd9/. The minutes of the
diagnoses codes discussions at the October 7-8, 2004 meeting are found
at: http://www.cdc.gov/nchs/icd9.htm. Paper copies of these minutes are
no longer available and the mailing list has been discontinued. These
Web sites also provide detailed information about the Committee,
including information on requesting a new code, attending a Committee
meeting, and timeline requirements and meeting dates.
We encourage commenters to address suggestions on coding issues
involving diagnosis codes to: Donna Pickett, Co-Chairperson, ICD-9-CM
Coordination and Maintenance Committee, NCHS, Room 2402, 3311 Toledo
Road, Hyattsville, MD 20782. Comments may be sent by E-mail to:
dfp4@cdc.gov.
Questions and comments concerning the procedure codes should be
addressed to: Patricia E. Brooks, Co-Chairperson, ICD-9-CM Coordination
and Maintenance Committee, CMS, Center for Medicare Management,
Hospital and Ambulatory Policy Group, Division of Acute Care, C4-08-06,
7500 Security Boulevard, Baltimore, MD 21244-1850. Comments may be sent
by E-mail to: Patricia.Brooks1@cms.hhs.gov.
The ICD-9-CM code changes that have been approved will become
effective October 1, 2005. The new ICD-9-CM codes are listed, along
with their DRG classifications, in Tables 6A and 6B (New Diagnosis
Codes and New Procedure Codes, respectively) in the Addendum to this
final rule. As we stated above, the code numbers and their titles were
presented for public comment at the ICD-9-CM Coordination and
Maintenance Committee meetings. Both oral and written comments were
considered before the codes were approved. In the FY 2006 IPPS proposed
rule, we only solicited comments on the proposed classification of
these new codes.
For codes that have been replaced by new or expanded codes, the
corresponding new or expanded diagnosis codes are included in Table 6A.
New procedure codes are shown in Table 6B. Diagnosis codes that have
been replaced by expanded codes or other codes or have been deleted are
in Table 6C (Invalid Diagnosis Codes). These invalid diagnosis codes
will not be recognized by the GROUPER beginning with discharges
occurring on or after October 1, 2005. Table 6D contains invalid
procedure codes. These invalid procedure codes will not be recognized
by the GROUPER beginning with discharges occurring on or after October
1, 2005. Revisions to diagnosis code titles are in Table 6E (Revised
Diagnosis Code Titles), which also includes the DRG assignments for
these revised codes. Table 6F includes revised procedure code titles
for FY 2006.
In the September 7, 2001 final rule implementing the IPPS new
technology add-on payments (66 FR 46906), we indicated we would attempt
to include proposals for procedure codes that would describe new
technology discussed and approved at the April meeting as part of the
code revisions effective the following October. As stated previously,
ICD-9-CM codes discussed at the March 31-April 1, 2005 Committee
meeting that received consensus and that were finalized are included in
Tables 6A through 6F of this final rule.
Section 503(a) of Pub. L. 108-173 included a requirement for
updating ICD-9-CM codes twice a year instead of a single update on
October 1 of each year. This requirement was included as part of the
amendments to the Act relating to recognition of new technology under
the IPPS. Section 503(a) amended section 1886(d)(5)(K) of the Act by
adding a clause (vii) which states that the ``Secretary shall provide
for the addition of new diagnosis and procedure codes in April 1 of
each year, but the addition of such codes shall not require the
Secretary to adjust the payment (or diagnosis-related group
classification) * * * until the fiscal year that begins after such
date.'' This requirement improves the recognition of new technologies
under the IPPS system by providing information on these new
technologies at an earlier date. Data will be available 6 months
earlier than would be possible with updates occurring only once a year
on October 1.
While section 503(a) states that the addition of new diagnosis and
procedure codes on April 1 of each year shall not require the Secretary
to adjust the payment, or DRG classification under section 1886(d) of
the Act until the fiscal year that begins after such date, we have to
update the DRG software and other systems in order to recognize and
accept the new codes. We also publicize the code changes and the need
for a mid-year systems update by providers to capture the new codes.
Hospitals also have to obtain the new code books and encoder updates,
and make other system changes in order to capture and report the new
codes.
The ICD-9-CM Coordination and Maintenance Committee holds its
meetings in the Spring and Fall in order to update the codes and the
applicable payment and reporting systems by October 1 of each year.
Items are placed on the agenda for the ICD-9-CM Coordination and
Maintenance Committee meeting if the request is received at least 2
months prior to the meeting. This requirement allows time for staff to
review and research the coding issues and prepare material for
discussion at the meeting. It also allows time for the topic to be
publicized in meeting announcements in the Federal Register as well as
on the CMS Web site. The public decides whether or not to attend the
meeting based on the topics listed on the agenda. Final decisions on
code title revisions are currently made by March 1 so that these titles
can be included in the IPPS proposed rule. A complete addendum
describing details of all changes to ICD-9-CM, both tabular and index,
are publicized on CMS and NCHS web pages in May of each year.
Publishers of coding books and software use this information to modify
their products that are used by health care providers. This 5-month
time period has proved to be necessary for hospitals and other
providers to update their systems.
[[Page 47319]]
A discussion of this timeline and the need for changes are included
in March 31-April 1, 2005 ICD-9-CM Coordination and Maintenance
Committee minutes. The public agreed that there was a need to hold the
fall meetings earlier, in September or October, in order to meet the
new implementation dates. The public provided comment that additional
time would be needed to update hospital systems and obtain new code
books and coding software. There was considerable concern expressed
about the impact this new April update would have on providers.
In the FY 2005 IPPS final rule, we implemented section 503(a) by
developing a mechanism for approving, in time for the April update,
diagnoses and procedure code revisions needed to describe new
technologies and medical services for purposes of the new technology
add-on payment process. We also established the following process for
making these determinations. Topics considered during the Fall ICD-9-CM
Coordination and Maintenance Committee meeting are considered for an
April 1 update if a strong and convincing case is made by the requester
at the Committee's public meeting. The request must identify the reason
why a new code is needed in April for purposes of the new technology
process. The participants at the meeting and those reviewing the
Committee meeting summary report are provided the opportunity to
comment on this expedited request. All other topics are considered for
the October 1 update. Participants at the Committee meeting are
encouraged to comment on all such requests. There were no requests for
an expedited April l, 2005 implementation of an ICD-9-CM code at the
October 7-8, 2004 Committee meeting. Therefore, there were no new ICD-
9-CM codes implemented on April 1, 2005.
We believe that this process captures the intent of section 503(a).
This requirement was included in the provision revising the standards
and process for recognizing new technology under the IPPS. In addition,
the need for approval of new codes outside the existing cycle (October
1) arises most frequently and most acutely where the new codes will
capture new technologies that are (or will be) under consideration for
new technology add-on payments. Thus, we believe this provision was
intended to expedite data collection through the assignment of new ICD-
9-CM codes for new technologies seeking higher payments.
Current addendum and code title information is published on the CMS
Web page at: http://www.cms.hhs.gov/paymentsystems/icd9. Summary tables
showing new, revised, and deleted code titles are also posted on the
following CMS Web page: http://www.cms.hhs.gov/medlearn/icd9code.asp.
Information on ICD-9-CM diagnosis codes, along with the Official ICD-9-
CM Coding Guidelines, can be found on the Web page at: http://www.cdc.gov/nchs/icd9.htm.
Information on new, revised, and deleted
ICD-9-CM codes is also provided to the AHA for publication in the
Coding Clinic for ICD-9-CM. AHA also distributes information to
publishers and software vendors.
CMS also sends copies of all ICD-9-CM coding changes to its
contractors for use in updating their systems and providing education
to providers.
These same means of disseminating information on new, revised, and
deleted ICD-9-CM codes will be used to notify providers, publishers,
software vendors, contractors, and others of any changes to the ICD-9-
CM codes that are implemented in April. Currently, code titles are also
published in the IPPS proposed and final rules. The code titles are
adopted as part of the ICD-9-CM Coordination and Maintenance Committee
process. The code titles are not subject to comment in the proposed or
final rules. We will continue to publish the October code updates in
this manner within the IPPS proposed and final rules. For codes that
are implemented in April, we will assign the new procedure code to the
same DRG in which its predecessor code was assigned so there will be no
DRG impact as far as DRG assignment. This mapping was specified by
section 503(a) of Pub. L. 108-173. Any midyear coding updates will be
available through the Web sites indicated above and through the Coding
Clinic for ICD-9-CM. Publishers and software vendors currently obtain
code changes through these sources in order to update their code books
and software systems. We will strive to have the April 1 updates
available through these Web sites 5 months prior to implementation
(that is, early November of the previous year), as is the case for the
October 1 updates. Codebook publishers are evaluating how they will
provide any code updates to their subscribers. Some publishers may
decide to publish mid-year book updates. Others may decide to sell an
addendum that lists the changes to the October 1 code book. Coding
personnel should contact publishers to determine how they will update
their books. CMS and its contractors will also consider developing
provider education articles concerning this change to the effective
date of certain ICD-9-CM codes.
Comment: Five commenters recommended that CMS modify its DRG
GROUPER and instruct fiscal intermediaries to expand the number of
diagnoses processed from 9 to 25 and the number of procedures processed
from 6 to 25. The commenters were concerned that CMS was not evaluating
all reported diagnoses and procedures that could possibly affect a
patient's severity of illness or the resources used, or both. The
commenters pointed out that the current DRG GROUPER only considers 9
diagnoses and up to 6 procedures; that hospitals submit claims to CMS
in electronic format, and that the HIPAA compliant electronic
transaction standard, HIPAA 837i, allows up to 25 diagnoses and 25
procedures. The commenters stated that fiscal intermediaries are
currently ignoring or omitting the additional codes (beyond 9 diagnoses
and 6 procedures) submitted by hospital providers, since these
additional diagnoses and procedures are not needed by the GROUPER to
assign a DRG. Several commenters stated that, while it is important for
inpatient acute hospitals, it is even more crucial for LTCHs whose
patients are medically complex and have multiple illnesses beyond the
nine diagnoses allowed by CMS. Several commenters further stated that a
list of CCs qualifying for comorbidity adjustments for inpatient
psychiatric facility services was only recently introduced under the
new IRP PPS. Thus, the commenter added, these hospitals have not
historically used the software available to sort and rearrange
secondary diagnosis cods so that all CCs possibly affecting the DRG
grouping are prioritized. One commenter stated that the continued use
of more limited diagnosis and procedure codes acts as a disincentive
for the reporting of additional codes, and will result in less precise
assignment of DRGs.
Response: The commenters are correct that the current Medicare
GROUPER does not process codes submitted electronically on the 837i
electronic format beyond the first 9 diagnoses and the first 6
procedures. This limitation is not being imposed by the GROUPER. CMS
made the decision to process only the first 9 diagnosis codes and first
6 procedure codes. While HIPAA requires CMS to accept up to 25 ICD-9-CM
diagnosis and procedure codes on the HIPAA 837i electronic format, it
does not require that CMS process that many diagnosis and procedure
codes.
As suggested by the commenters, there is value in retaining
additional data on patient conditions that would
[[Page 47320]]
result from expanding Medicare's data system so it can accommodate
additional diagnosis and procedure codes. We will consider this issue
further as we contemplate further refinements to our DRG system to
better recognize patient severity. However, while it would be a simple
matter to modify our GROUPER software to accept and evaluate 25
diagnosis and 25 procedure codes, extensive lead time to allow for
modifications to our internal and contractors' electronic systems would
be necessary before we could process and store this additional
information. We are unable to move forward with this recommendation
without carefully evaluating implementation issues. Nevertheless, we
plan to proceed with this evaluation as we consider further changes to
our DRG systems.
Comment: Many commenters recommended that CMS act immediately to
adopt coordinated implementation of ICD-10-CM and ICD-10-PCS in the
United States. Some of these commenters noted that Pub. L. 108-173
(MMA) included report language urging the Secretary to move forward
with the implementation of ICD-10 as quickly as possible. The
commenters noted that the National Committee on Vital and Health
Statistics (NCVHS) raised concerns about the viability of ICD-9-CM in
2003 and stated it was ``increasingly unable to address the needs for
accurate data for health care billing, quality assurance, public health
reporting, and health services research.'' The commenter further noted
that the NCVHS recommended in 2003 that DHHS act expeditiously to
initiate the regulatory process for adoption of ICD-10-CM and ICD-10-
PCS. The commenter stated that, as of 2005, ``we are still awaiting a
process from HHS to begin this important transition.'' While some of
the commenters acknowledged the complexities involved with the
transition from ICD-9-CM to ICD-10, the commenters still recommended
that we act quickly to begin adoption of ICD-10. Other commenters also
indicated that the 4-digit structure of ICD-9-CM is limiting the
ability of the procedure coding system to identify new procedures and
new technologies and it is becoming increasingly outdated. According to
these commenters, it is becoming more difficult each year to make
changes to the ICD-9-CM coding system because of the availability of
new codes. One commenter noted that several participants at the March
31-April 1, 2005 ICD-9-CM Coordination and Maintenance Committee
``appeared to be advocating a higher threshold for the award of new
codes based on the ever decreasing number of available codes under ICD-
9-CM.'' Many of the commenters indicated that the coding system's
limitations are making it difficult to compare outcomes and efficacy
between older and newer technologies, identify costs associated with
the new technology, or revise reimbursement policies to appropriately
reflect the cost of patient care when new technology is used. One
commenter indicated that failure to recognize the looming problems with
the ICD-9-CM coding system will impede efforts to meet the President's
goal of adopting electronic health records by 2013.
Many of the commenters referred to ICD-10-PCS as the next
generation of coding systems. They stated that ICD-10-PCS would
modernize and expand CMS' capacity to keep pace with changes in medical
practice and technology. In addition, these commenters stated that the
structure of ICD-10-PCS would incorporate all new procedures as unique
codes that would explicitly identify the technology used to perform the
procedure.
Response: We agree that it is becoming increasingly difficult to
update ICD-9-CM. However, we are continuing to make revisions to ICD-9-
CM and create codes that recognize new medical technology. We continue
to update ICD-10-PCS on an annual basis to keep it up to date with
changing technology. We agree that it is important to have an accurate
and precise coding system for this purpose. However, as noted by many
of the commenters, the transition from one coding system to another
raises many complex operational issues. The Department will continue to
study this matter as we consider whether to adopt ICD-10.
15. Other Issues
a. Acute Intermittent Porphyria
Acute intermittent porphyria is a rare metabolic disorder. The
condition is described by code 277.1 (Disorders of porphyrin
metabolism). Code 277.1 is assigned to DRG 299 (Inborn Errors of
Metabolism) under MDC 10 (Endocrine, Nutritional, and Metabolic
Diseases and Disorders).
In the FY 2005 final rule (69 FR 48981), we discussed the DRG
assignment of acute intermittent porphyria. This discussion was a
result of correspondence that we received during the comment period for
the FY 2005 proposed rule in which the commenter suggested that
Medicare hospitalization payments do not accurately reflect the cost of
treatment. At that time, we indicated that we would take this comment
into consideration when we analyzed the MedPAR data for this proposed
rule for FY 2006.
Our review of the most recent MedPAR data shows a total of 1,370
cases overall in DRG 299, of which 471 had a principal diagnosis coded
as 277.1. The average length of stay for all cases in DRG 299 was 5.17
days, while the average length of stay for porphyria cases with code
277.1 was 6.0 days. The average charges for all cases in DRG 299 were
$15,891, while the average changes for porphyria cases with code 277.1
were $21,920. Based on our analysis of these data, we did not believe
that there is a sufficient difference between the average charges and
average length of stay for these cases to justify proposing a change to
the DRG assignment for treating this condition.
Comment: One commenter agreed with our proposal not to modify the
DRG assignment for acute intermittent porphyria, code 277.1, to DRG 229
due to the minor variance in average charges and length of stay between
porphyria cases and other cases in this DRG.
Response: We appreciate the commenter's support of our proposal.
Review of the MedPAR data did not demonstrate a significant disparity
in the average charges compared to average length of stay.
For FY 2006, as we proposed, we are not modifying the DRG
assignment for code 277.1 (Acute intermittent porphyria) to DRG 229.
b. Prosthetic Cardiac Support Device (Code 37.41)
Code 37.41 (Implantation of prosthetic cardiac support device
around the heart) was addressed in the FY 2006 IPPS proposed rule only
as a notification in Table 6B that the new code was being created to
describe a prosthetic cardiac support device (70 FR 23594). Code 37.41
was deemed to be an O.R. procedure and was assigned to MDC 5 (Diseases
and Disorders of the Circulatory System), DRGs 110 and 111 (Major
Cardiovascular Procedures With and Without CC, respectively). This
device is being marketed as the CorCapTM Cardiac Support
Device and is intended to prevent and reverse heart failure by
improving the heart's structure and function.
This topic was discussed at the ICD-9-CM Coordination and
Maintenance Meeting on October 7, 2004. At that time, there was no
specific ICD-9-CM code that more precisely identified this procedure,
so coders were advised to use code 37.99 (Other operations on
[[Page 47321]]
heart and pericardium) to describe the operation. Code 37.99 is
currently assigned to DRGs 110 and 111.
As is our established pattern, we assign a new code to its
predecessor code's DRG until we obtain a pattern of use of the code in
the MedPAR data file. After we have evidence-based justification for
reassignment of codes within DRGs, we are better able to make decisions
about the most appropriate placement of those new codes.
We received 11 comments on this topic as part of the comments on
the FY 2006 IPPS proposed rule.
Comment: Most of the commenters responding were cardiovascular
surgeons who were principal investigators participating in the United
States' CorCapTM clinical trials. All of the commenters
requested that we reconsider the assignment of the prosthetic cardiac
support device from DRGs 110 and 111 to DRG 108, where the resources
[in DRG 108] more closely approximate those associated with
implantation of the device. The commenters stated that procedures in
DRG 108 are more clinically similar to the implantation of the
prosthetic cardiac support device, being exclusively performed on the
internal or external structures of the heart and generally requiring
access through a sternotomy.
One commenter likened this procedure to the maze procedure,
described by code 37.33 (Excision or destruction of other lesion or
tissue of heart, open approach). Another commenter compared it to
transmyocardial revascularization, described by code 36.31 (Open chest
transmyocardial revascularization). Both of these procedure codes are
assigned to DRG 108. Commenters also stated that classification of this
procedure to DRGs 110 and 111 would establish a financial disincentive
for hospitals to adopt this potentially life-saving and cost-reducing
treatment for Medicare beneficiaries suffering from a problem that may
otherwise require implantation of a ventricular assist device or heart
transplant.
Response: As noted above, we have classified procedure 37.41 to the
same DRG as its predecessor code, in accordance with our established
policy. Until we have Medicare billing data that will allow us to
assess whether the new procedure code has been correctly assigned, our
default position is to assign a new procedure code to the same DRG as
its predecessor code. Of major concern to CMS is the late June 2005
decision by an FDA advisory panel urging FDA to reject approval of the
CorCapTM device on the basis that the panel had not seen
sufficient evidence of benefit for patients with heart failure. The
FDA's concerns included the efficacy of the device in achieving a
longer lifespan for patients, and the possibility that the device's
benefits did not outweigh the risks of surgery. In addition, the FDA
advisory panel had other concerns, including whether the application of
this device around the ventricles of the heart might make future heart
surgeries more difficult.
Code 37.41 is too new to be included in the MedPAR data. Therefore,
we will continue to monitor this prosthetic cardiac support device in
future IPPS updates. As noted above, should FDA approve this device and
should there be an evidence-based justification for reassignment of
codes within these DRGs, we will be open to making changes to the DRG
structure.
c. Coronary Intravascular Ultrasound (IVUS) (Procedure Code 00.24)
Procedure code 00.24 (Coronary intravascular ultrasound) was
addressed in the FY 2005 IPPS proposed rule only as a notification in
Table 6B that for FY 2005 a new code had been created to describe this
imaging technique (69 FR 49624). Code 00.24 describes ultrasonic
imaging within the coronary vessels. It was not assigned ``O.R.''
status within the GROUPER program; that is, the presence or absence of
this code does not affect a claim's DRG assignment or payment.
We received one comment on this procedure code as part of the
public comments on the FY 2006 IPPS proposed rule.
Comment: One commenter noted that IVUS is an added cost to
hospitals. The commenter stated that it has conducted an analysis of
coronary IVUS resource use in calendar year 2004 hospital data to
determine possible impact. The commenter reported its findings that, in
DRGs 516, 517, 526, and 527, cases utilizing IVUS had higher total
charges and higher total costs. The commenter requested that CMS
perform an analysis of FY 2005 coronary IVUS cases and consider
reassigning ICD-9-CM procedure code 00.24 to DRGs where the average
resource use most closely approximates the resource use of cases in
which an IVUS technique has been employed.
Response: We will perform the requested data analysis using FY 2005
MedPAR data for the FY 2007 annual IPPS update.
d. Islet Cell Transplantation
Islet cell transplantation was not a topic addressed in the FY 2006
IPPS proposed rule. The issue of payment for pancreatic islet cell
transplantation in clinical trials was addressed in detail in the FY
2005 IPPS final rule (69 FR 48950). At that time, we discussed section
733(b) of Pub. L. 108-173, which provides that Medicare payments,
beginning no earlier than October 1, 2004, for the routine costs as
well as the costs of the transplantation and appropriate related items
and services will be allowed for Medicare beneficiaries who are
participating in clinical trials as if such transplantations were
covered under Medicare Part A or Part B. In addition, the DRG payment
will be supplemented by an add-on payment that includes pre-transplant
tests and services, pancreas procurement, and islet isolation services.
Cases were assigned to DRG 315 (Other Kidney and Urinary Tract
Procedures).
We received one comment on this topic as part of the public
comments on the FY 2006 IPPS proposed rule.
Comment: One commenter was concerned that the proposed relative
weight for DRG 315 published in the FY 2006 IPPS proposed rule
represented a decrease of almost 33 percent. The commenter also
indicated that it continues to believe that this procedure is
inappropriately classified, and suggested that these cases be
reassigned into pre-MDC DRG 513 (Pancreas Transplant). The commenter
believed the suggested DRG change is justified because islet cell and
pancreas transplants involve substantially similar patient populations.
The commenter further pointed out that the transplants both serve the
same clinical function--that of freeing the patient from insulin
dependence. The commenter requested that CMS identify those admissions
in DRG 315 that involve islet cell transplantation and determine the
actual costs involved to decide whether islet cell transplant cases
should be reclassified to DRG 513.
Response: We do not understand why the commenter believes that the
relative weight for DRG 315 decreased by 33 percent. The FY 2006
proposed relative weight (2.0801 (see Table 5 of the FY 2006 proposed
rule, 70 FR 23587)) is approximately 0.3 percent less than the FY 2005
relative weight (2.0861 (see Table 5 of the FY 2005 final rule, 69 FR
49603)). We have reviewed the MedPAR data for the first quarter of FY
2005, and have found no cases of islet cell transplantation in DRG 315.
Therefore, we do not have a basis for comparison of islet cell
transplantation cases to the remainder of the cases in DRG 315. We also
take this opportunity to clarify that the DRGs are groupings of cases
that are similar both from a clinical perspective
[[Page 47322]]
as well as a resource-intensity perspective. While the commenter's
position is that the same clinical endpoint is attempted with both
islet cell transplantation and pancreas transplant, the result or
endpoint of treatment results is not one of the axis upon which the
DRGs are structured. In addtion, the pancreas transplant involves an
open abdominal procedure in which one pancreas is surgically removed
and a cadaveric pancreas is transplanted. Conversely, islet cells are
infused via catheter. Therefore, from the standpoint of clinical
similarity, we do not believe that the cases are comparable enough to
consider putting the islet cell transplantation into DRG 513.
Comment: The same commenter was concerned about payment for islet
cell transplants under a National Institutes of Health (NIH) clinical
trial. The commenter believed that the $18,848 islet cell isolation
add-on amount is insufficient. This commenter also believed that the
data used to calculate the add-on amount were inadequate to form the
basis for establishing payment.
Response: The $18,848 isolation add-on amount was based on the best
data available, and we remain convinced that it is an appropriate
payment for isolating the islet cells from one pancreas. However, we
have learned that it typically requires two isolations to acquire
enough cells for one infusion. Therefore, while we will maintain the
current rate of $18,848 per isolation, we will pay up to two islet
isolations per discharge. If only one islet isolation is necessary,
Medicare will make an add-on payment of $18,848; if two are necessary,
Medicare will make an add-on payment of $37,696. In cases that require
two islet isolations, CMS will pay for two pancreata. Pancreata will
continue to be paid as a cost pass-through.
We will review the MedPAR data as requested using more complete FY
2005 MedPAR data during our next annual IPPS update for FY 2007.
C. Recalibration of DRG Weights
We are using the same basic methodology for the FY 2006
recalibration as we did for FY 2005 (FY 2005 IPPS final rule (69 FR
48981)). That is, we have recalibrated the DRG weights based on charge
data for Medicare discharges using the most current charge information
available (the FY 2004 MedPAR file).
The MedPAR file is based on fully coded diagnostic and procedure
data for all Medicare inpatient hospital bills. The FY 2004 MedPAR data
used in this final rule include discharges occurring between October 1,
2003 and September 30, 2004, based on bills received by CMS through
March 31, 2005, from all hospitals subject to the IPPS and short-term
acute care hospitals in Maryland (which are under a waiver from the
IPPS under section 1814(b)(3) of the Act). The FY 2004 MedPAR file
includes data for approximately 12,006,022 Medicare discharges.
Discharges for Medicare beneficiaries enrolled in a Medicare+Choice
managed care plan are excluded from this analysis. The data excludes
CAHs, including hospitals that subsequently became CAHs after the
period from which the data were taken.
The methodology used to calculate the DRG relative weights from the
FY 2004 MedPAR file is as follows:
To the extent possible, all the claims were regrouped
using the DRG classification revisions discussed in section II.B. of
this preamble.
The transplant cases that were used to establish the
relative weight for heart and heart-lung, liver and/or intestinal, and
lung transplants (DRGs 103, 480, and 495) were limited to those
Medicare-approved transplant centers that have cases in the FY 2004
MedPAR file. (Medicare coverage for heart, heart-lung, liver and/or
intestinal, and lung transplants is limited to those facilities that
have received approval from CMS as transplant centers.)
Organ acquisition costs for kidney, heart, heart-lung,
liver, lung, pancreas, and intestinal (or multivisceral organs)
transplants continue to be paid on a reasonable cost basis. Because
these acquisition costs are paid separately from the prospective
payment rate, it is necessary to subtract the acquisition charges from
the total charges on each transplant bill that showed acquisition
charges before computing the average charge for the DRG and before
eliminating statistical outliers.
Charges were standardized to remove the effects of
differences in area wage levels, indirect medical education and
disproportionate share payments, and, for hospitals in Alaska and
Hawaii, the applicable cost-of-living adjustment.
The average standardized charge per DRG was calculated by
summing the standardized charges for all cases in the DRG and dividing
that amount by the number of cases classified in the DRG. A transfer
case is counted as a fraction of a case based on the ratio of its
transfer payment under the per diem payment methodology to the full DRG
payment for nontransfer cases. That is, a transfer case receiving
payment under the transfer methodology equal to half of what the case
would receive as a nontransfer would be counted as 0.5 of a total case.
Statistical outliers were eliminated by removing all cases
that are beyond 3.0 standard deviations from the mean of the log
distribution of both the charges per case and the charges per day for
each DRG.
The average charge for each DRG was then recomputed
(excluding the statistical outliers) and divided by the national
average standardized charge per case to determine the relative weight.
The new weights are normalized by an adjustment factor of 1.47462
so that the average case weight after recalibration is equal to the
average case weight before recalibration. This adjustment is intended
to ensure that recalibration by itself neither increases nor decreases
total payments under the IPPS.
When we recalibrated the DRG weights for previous years, we set a
threshold of 10 cases as the minimum number of cases required to
compute a reasonable weight. We used that same case threshold in
recalibrating the DRG weights for FY 2006. Using the FY 2004 MedPAR
data set, there are 41 DRGs that contain fewer than 10 cases. We
compute the weights for these low-volume DRGs by adjusting the FY 2005
weights of these DRGs by the percentage change in the average weight of
the cases in the other DRGs.
Section 1886(d)(4)(C)(iii) of the Act requires that, beginning with
FY 1991, reclassification and recalibration changes be made in a manner
that assures that the aggregate payments are neither greater than nor
less than the aggregate payments that would have been made without the
changes. Although normalization is intended to achieve this effect,
equating the average case weight after recalibration to the average
case weight before recalibration does not necessarily achieve budget
neutrality with respect to aggregate payments to hospitals because
payments to hospitals are affected by factors other than average case
weight. Therefore, as we have done in past years and as discussed in
section II.A.4.a. of the Addendum to this final rule, we are making a
budget neutrality adjustment to ensure that the requirement of section
1886(d)(4)(C)(iii) of the Act is met.
Comment: One commenter noted that there is a reduction in the
proposed weights for DRG 103 (Heart Transplant or Implant of Heart
Assist System) and DRG 512 (Simultaneous Pancreas/Kidney Transplant).
According to the commenter, the proposed weights represent a 6-percent
reduction in DRG 103 and an 11-percent reduction in DRG 512. The
commenter inquired as to whether these reductions may have
[[Page 47323]]
resulted from a methodological change in the way organ acquisition
costs are addressed in the DRG weighting process.
Response: There is no change in the calculation of the DRG relative
weight. Organ acquisition costs for kidney, heart, heart-lung, liver,
lung, pancreas, and intestinal (or multivisceral organs) transplants
continue to be paid on a reasonable cost basis. Because these
acquisition costs are paid separately from the prospective payment
rate, it is necessary to subtract the acquisition charges from the
total charges on each transplant bill that showed acquisition charges
before computing the average charge for the DRG.
As described above, the relative weight for each DRG is calculated
by comparing the average charge for cases within each DRG (after
removing statistical outliers) with the national average charge per
case. Therefore, there are several factors that can cause a shift in
the relative weight of a DRG from one fiscal year to the next. For
example, even though the average charges of cases within DRG 103
increased from $278,096 in the FY 2005 final rule to $285,317 in the
proposed rule, it did not increase by an equal or greater percentage
than the national average. As a result, the DRG weight for DRG 103
declined. For DRG 512, the average charges decreased from $85,630 in
the FY 2005 final rule to $83,113 in the proposed rule which accounts
for the decline in the weight.
Comment: One commenter pointed out three typographical errors in
DRG titles in Table 5 (List of Diagnosis Related Groups (DRGs),
Relative Weighting Factors, Geometric and Arithmetic Mean Length of
Stay) in the Addendum to the FY 2006 IPPS proposed rule. The commenter
indicated that the title for DRG 14 should read ``Intracranial
Hemorrhage or Cerebral Infarction'' based on the change in FY 2005 IPPS
final rule (69 FR 48927) and the title for DRG 315 should read ``Other
Kidney & Urinary Tract Procedures'' based on the change in the FY 2003
IPPS final rule (67 FR 49993). The commenter also pointed out a
misspelling of the word ``Malignant'' in the title for DRG 276.
Response: The commenter is correct. We have made these corrections
in Table 5 in the Addendum to this final rule.
D. LTC-DRG Reclassifications and Relative Weights for LTCHs for FY 2006
1. Background
In the June 6, 2003 LTCH PPS final rule (68 FR 34122), we changed
the LTCH PPS annual payment rate update cycle to be effective July 1
through June 30 instead of October 1 through September 30. In addition,
because the patient classification system utilized under the LTCH PPS
is based directly on the DRGs used under the IPPS for acute care
hospitals, in that same final rule, we explained that the annual update
of the long-term care diagnosis-related group (LTC-DRG) classifications
and relative weights will continue to remain linked to the annual
reclassification and recalibration of the CMS-DRGs used under the IPPS.
In that same final rule, we specified that we will continue to update
the LTC-DRG classifications and relative weights to be effective for
discharges occurring on or after October 1 through September 30 each
year. Furthermore, we stated that we will publish the annual update of
the LTC-DRGs in the proposed and final rules for the IPPS.
In the past, the annual update to the IPPS DRGs has been based on
the annual revisions to the ICD-9-CM codes and was effective each
October 1. As discussed in the FY 2005 IPPS final rule (69 FR 48954
through 48957) and in the Rate Year (RY) 2006 LTCH PPS final rule (70
FR 24173 through 24175), with the implementation of section 503(a) of
Pub. L. 108-173, there is the possibility that one feature of the
GROUPER software program may be updated twice during a Federal fiscal
year (October 1 and April 1) as required by the statute for the IPPS.
Specifically, ICD-9-CM diagnosis and procedure codes for new medical
technology may be created and added to existing DRGs in the middle of
the Federal fiscal year on April 1. However, this policy change will
have no effect on the LTC-DRG relative weights which will continue to
be updated only once a year (October 1), nor will there be any impact
on Medicare payments under the LTCH PPS. The use of the ICD-9-CM code
set is also compliant with the current requirements of the Transactions
and Code Sets Standards regulations at 45 CFR Parts 160 and 162,
promulgated in accordance with the Health Insurance Portability and
Accountability Act of 1996 (HIPAA), Pub. L. 104-191.
As we explained in the FY 2006 IPPS proposed rule (70 FR 23338
through 23339), in the health care industry, historically annual
changes to the ICD-9-CM codes were effective for discharges occurring
on or after October 1 each year. Thus, the manual and electronic
versions of the GROUPER software, which are based on the ICD-9-CM
codes, were also revised annually and effective for discharges
occurring on or after October 1 each year. As noted above, the patient
classification system used under the LTCH PPS (LTC-DRGs) is based on
the patient classification system used under the IPPS (CMS-DRGs), which
historically had been updated annually and effective for discharges
occurring on or after October 1 through September 30 each year. As
mentioned above, the ICD-9-CM coding update process has been revised,
as discussed in greater detail in the FY 2005 IPPS final rule (69 FR
48954 through 48957) and in section II.B. 14. of this final rule.
Specifically, section 503(a) of Pub. L. 108-173 includes a requirement
for updating ICD-9-CM codes as often as twice a year instead of the
current process of annual updates on October 1 of each year. This
requirement is included as part of the amendments to the Act relating
to recognition of new medical technology under the IPPS. Section 503(a)
of Pub L. 108-173 amended section 1886(d)(5)(K) of the Act by adding a
new clause (vii) which states that ``the Secretary shall provide for
the addition of new diagnosis and procedure codes in [sic] April 1 of
each year, but the addition of such codes shall not require the
Secretary to adjust the payment (or diagnosis-related group
classification) * * * until the fiscal year that begins after such
date.'' This requirement will improve the recognition of new
technologies under the IPPS by accounting for those ICD-9-CM codes in
the MedPAR claims data at an earlier date. Despite the fact that
aspects of the GROUPER software may be updated to recognize any new
technology ICD-9-CM codes, as discussed in the RY 2006 LTCH PPS final
rule (70 FR 24173 through 24175) and the FY 2006 IPPS proposed rule (70
FR 23338 through 23339), there will be no impact on either LTC-DRG
assignments or payments under the LTCH PPS at that time. That is,
changes to the LTC-DRGs (such as the creation or deletion of LTC-DRGs)
and the relative weights will continue to be updated in the manner and
timing (October 1) as they are now.
As noted above and as described in both the RY 2006 LTCH PPS final
rule (70 FR 24174) and the FY 2006 IPPS proposed rule (70 FR 23339),
updates to the GROUPER for both the IPPS and the LTCH PPS (with respect
to relative weights and the creation or deletion of DRGs) are made in
the annual IPPS proposed and final rules and are effective each October
1. We explained in the FY 2005 IPPS final rule (69 FR 48955 and 48956),
and in section II.B.13. of this preamble, that since we do not publish
a midyear IPPS rule, April 1 code updates discussed above
[[Page 47324]]
will not be published in a midyear IPPS rule. Rather, we will assign
any new diagnosis or procedure codes to the same DRG in which its
predecessor code was assigned, so that there will be no impact on the
DRG assignments. Any coding updates will be available through the Web
sites indicated in the same rule and provided above in section II.B. of
this preamble and through the Coding Clinic for ICD-9-CM. Publishers
and software vendors currently obtain code changes through these
sources in order to update their code books and software system. If new
codes are implemented on April 1, revised code books and software
systems, including the GROUPER software program, will be necessary
because we must use current ICD-9-CM codes. Therefore, for purposes of
the LTCH PPS, because each ICD-9-CM code must be included in the
GROUPER algorithm to classify each case into a LTC-DRG, the GROUPER
software program used under the LTCH PPS would need to be revised to
accommodate any new codes.
As we discussed in the FY 2005 IPPS final rule (69 FR 48956) and in
section II.B.14. of this preamble, in implementing section 503(a) of
Pub. L. 108-173, there will only be an April 1 update if new technology
codes are requested and approved. We note that any new codes created
for April 1 implementation will be limited to those diagnosis and
procedure code revisions primarily needed to describe new technologies
and medical services. However, we reiterate that the process of
discussing updates to the ICD-9-CM has been an open process through the
ICD-9-CM Coordination and Maintenance Committee since 1995. Requestors
will be given the opportunity to present the merits for a new code and
make a clear and convincing case for the need to update ICD-9-CM codes
for purposes of the IPPS new technology add-on payment process through
an April 1 update.
However, as we explained in the FY 2006 IPPS proposed rule (70 FR
23339), at the October 2004 ICD-9-CM Coordination and Maintenance
Committee meeting, there were no requests for an April 1, 2005
implementation of ICD-9-CM codes, and the next update to the ICD-9-CM
coding system would not occur until October 1, 2005 (FY 2006).
Presently, as there were no coding changes suggested for an April 1,
2005 update, the ICD-9-CM coding set implemented on October 1, 2004,
will continue through September 30, 2005 (FY 2005). The update to the
ICD-9-CM coding system for FY 2006 is discussed above in section
II.B.14. of this preamble.
As we proposed in the FY 2006 IPPS proposed rule (70 FR 23339), in
this final rule we are making revisions to the LTC-DRG classifications
and relative weights, effective October 1, 2005 through September 30,
2006 (FY 2006), using the latest available data. As we proposed in that
same IPPS proposed rule, the final LTC-DRGs and relative weights for FY
2006 in this final rule are based on the final IPPS DRGs (GROUPER
Version 23.0) discussed in section II. of the preamble to this final
rule.
2. Changes in the LTC-DRG Classifications
a. Background
Section 123 of Pub. L. 106-113 specifically requires that the PPS
for LTCHs be a per discharge system with a DRG-based patient
classification system reflecting the differences in patient resources
and costs in LTCHs while maintaining budget neutrality. Section
307(b)(1) of Pub. L. 106-554 modified the requirements of section 123
of Pub. L. 106-113 by specifically requiring that the Secretary examine
``the feasibility and the impact of basing payment under such a system
[the LTCH PPS] on the use of existing (or refined) hospital diagnosis-
related groups (DRGs) that have been modified to account for different
resource use of long-term care hospital patients as well as the use of
the most recently available hospital discharge data.''
In accordance with section 307(b)(1) of Pub. L. 106-554 and Sec.
412.515 of our existing regulations, the LTCH PPS uses information from
LTCH patient records to classify patient cases into distinct LTC-DRGs
based on clinical characteristics and expected resource needs. The LTC-
DRGs used as the patient classification component of the LTCH PPS
correspond to the DRGs under the IPPS for acute care hospitals. Thus,
as we proposed in the FY 2006 IPPS proposed rule (70 FR 23339), in this
final rule, we are establishing the use of the IPPS GROUPER Version
23.0 for FY 2006 to process LTCH PPS claims for LTCH discharges
occurring from October 1, 2005 through September 30, 2006. The final
changes to the CMS-DRG classification system used under the IPPS for FY
2006 (GROUPER Version 23.0) are discussed in section II.B. of the
preamble to this final rule.
Under the LTCH PPS, we determine relative weights for each of the
DRGs to account for the difference in resource use by patients
exhibiting the case complexity and multiple medical problems
characteristics of LTCH patients. In a departure from the IPPS, as we
discussed in the August 30, 2002 LTCH PPS final rule (67 FR 55985),
which implemented the LTCH PPS, and the FY 2006 IPPS proposed rule (70
FR 23340), we use low-volume quintiles in determining the LTC-DRG
weights for LTC-DRGs with less than 25 LTCH cases, because LTCHs do not
typically treat the full range of diagnoses as do acute care hospitals.
Specifically, we group those low-volume LTC-DRGs (LTC-DRGs with fewer
than 25 cases) into 5 quintiles based on average charge per discharge.
We also adjust for cases in which the stay at the LTCH is less than or
equal to five-sixths of the geometric average length of stay; that is,
short-stay outlier cases (Sec. 412.529), as discussed below in section
II.D.4. of this preamble.
b. Patient Classifications into DRGs
Generally, under the LTCH PPS, Medicare payment is made at a
predetermined specific rate for each discharge; that is, payment varies
by the LTC-DRG to which a beneficiary's stay is assigned. Just as cases
are classified for acute care hospitals under the IPPS (see section
II.B. of this preamble), cases are classified into LTC-DRGs for payment
under the LTCH PPS based on the principal diagnosis, up to eight
additional diagnoses, and up to six procedures performed during the
stay, as well as age, sex, and discharge status of the patient. The
diagnosis and procedure information is reported by the hospital using
the ICD-9-CM codes.
As discussed in section II.B. of this preamble, the CMS-DRGs are
organized into 25 major diagnostic categories (MDCs), most of which are
based on a particular organ system of the body; the remainder involve
multiple organ systems (such as MDC 22, Burns). Accordingly, the
principal diagnosis determines MDC assignment. Within most MDCs, cases
are then divided into surgical DRGs and medical DRGs. Some surgical and
medical DRGs are further differentiated based on the presence or
absence of CCs. (See section II.B. of this preamble for further
discussion of surgical DRGs and medical DRGs.)
Because the assignment of a case to a particular LTC-DRG will help
determine the amount that is paid for the case, it is important that
the coding is accurate. As used under the IPPS, classifications and
terminology used under the LTCH PPS are consistent with the ICD-9-CM
and the Uniform Hospital Discharge Data Set (UHDDS), as recommended to
the Secretary by the National Committee on Vital and Health Statistics
(``Uniform Hospital Discharge Data: Minimum Data Set, National Center
for Health Statistics, April
[[Page 47325]]
1980'') and as revised in 1984 by the Health Information Policy Council
(HIPC) of the U.S. Department of Health and Human Services. We point
out again that the ICD-9-CM coding terminology and the definitions of
principal and other diagnoses of the UHDDS are consistent with the
requirements of the Transactions and Code Sets Standards under HIPAA
(45 CFR Parts 160 and 162).
The emphasis on the need for proper coding cannot be overstated.
Inappropriate coding of cases can adversely affect the uniformity of
cases in each LTC-DRG and produce inappropriate weighting factors at
recalibration and result in inappropriate payments under the LTCH PPS.
LTCHs are to follow the same coding guidelines used by acute care
hospitals to ensure accuracy and consistency in coding practices. There
will be only one LTC-DRG assigned per long-term care hospitalization;
it will be assigned at the time of discharge of the patient. Therefore,
it is mandatory that the coders continue to report the same principal
diagnosis on all claims and include all diagnosis codes that coexist at
the time of admission, that are subsequently developed, or that affect
the treatment received. Similarly, all procedures performed during that
stay are to be reported on each claim.
Upon the discharge of the patient from a LTCH, the LTCH must assign
appropriate diagnosis and procedure codes from the ICD-9-CM. Completed
claim forms are to be submitted electronically to the LTCH's Medicare
fiscal intermediary. Medicare fiscal intermediaries enter the clinical
and demographic information into their claims processing systems and
subject this information to a series of automated screening processes
called the Medicare Code Editor (MCE). These screens are designed to
identify cases that require further review before assignment into an
LTC-DRG can be made.
After screening through the MCE, each LTCH claim will be classified
into the appropriate LTC-DRG by the Medicare LTCH GROUPER. The LTCH
GROUPER is specialized computer software and is the same GROUPER used
under the IPPS. After the LTC-DRG is assigned, the Medicare fiscal
intermediary determines the prospective payment by using the Medicare
LTCH PPS PRICER program, which accounts for LTCH hospital-specific
adjustments and payment rates. As provided for under the IPPS, we
provide an opportunity for the LTCH to review the LTC-DRG assignments
made by the fiscal intermediary and to submit additional information
within a specified timeframe (Sec. 412.513(c)).
The LTCH GROUPER is used both to classify past cases in order to
measure relative hospital resource consumption to establish the LTC-DRG
weights and to classify current cases for purposes of determining
payment. The records for all Medicare hospital inpatient discharges are
maintained in the MedPAR file. The data in this file are used to
evaluate possible DRG classification changes and to recalibrate the DRG
weights during our annual update (as discussed in section II. of this
preamble). The LTC-DRG relative weights are based on data for the
population of LTCH discharges, reflecting the fact that LTCH patients
represent a different patient-mix than patients in short-term acute
care hospitals.
3. Development of the FY 2006 LTC-DRG Relative Weights
a. General Overview of Development of the LTC-DRG Relative Weights
As we stated in the August 30, 2002 LTCH PPS final rule (67 FR
55981), one of the primary goals for the implementation of the LTCH PPS
is to pay each LTCH an appropriate amount for the efficient delivery of
care to Medicare patients. The system must be able to account
adequately for each LTCH's case-mix in order to ensure both fair
distribution of Medicare payments and access to adequate care for those
Medicare patients whose care is more costly. To accomplish these goals,
we adjust the LTCH PPS standard Federal prospective payment system rate
by the applicable LTC-DRG relative weight in determining payment to
LTCHs for each case. Under the LTCH PPS, relative weights for each LTC-
DRG are a primary element used to account for the variations in cost
per discharge and resource utilization among the payment groups (Sec.
412.515). To ensure that Medicare patients classified to each LTC-DRG
have access to an appropriate level of services and to encourage
efficiency, we calculate a relative weight for each LTC-DRG that
represents the resources needed by an average inpatient LTCH case in
that LTC-DRG. For example, cases in an LTC-DRG with a relative weight
of 2 will, on average, cost twice as much as cases in an LTC-DRG with a
weight of 1.
b. Data
In the FY 2006 IPPS proposed rule (70 FR 23341), we proposed to
calculate the proposed LTC-DRG relative weights for FY 2006 using total
Medicare allowable charges from FY 2004 Medicare hospital bill data
from the December 2004 update of the MedPAR file, which were the best
available data at that time, and we proposed to use the proposed
Version 23.0 of the CMS GROUPER used under the IPPS (as discussed in
that same proposed rule) to classify cases. To calculate the LTC-DRG
relative weights for FY 2006 in this final rule, we obtained total
Medicare allowable charges from FY 2004 Medicare hospital bill data
from the March 2005 update of the MedPAR file, which are the most
recent available data, and we used the Version 23.0 of the CMS GROUPER
used under the IPPS (as discussed in section II.B. of this preamble) to
classify cases. In the FY 2006 IPPS proposed rule (70 FR 23341), we
stated that ``consistent with the methodology under the IPPS, we are
proposing to recalculate the FY 2006 LTC-DRG relative weights based on
the best available data.'' For this final rule, we are using the best
available data, that is, the March 2005 update of the MedPAR file.
As we discussed in the FY 2006 IPPS proposed rule (70 FR 23341), we
have excluded the data from LTCHs that are all-inclusive rate providers
and LTCHs that are reimbursed in accordance with demonstration projects
authorized under section 402(a) of Pub. L. 90-248 (42 U.S.C. 1395b-1)
or section 222(a) of Pub. L. 92-603 (42 U.S.C. 1395b-1). Therefore, in
the development of the final FY 2006 LTC-DRG relative weights, we have
excluded the data of the 19 all-inclusive rate providers and the 3
LTCHs that are paid in accordance with demonstration projects that had
claims in the FY 2004 MedPAR file.
In the FY 2005 IPPS final rule (69 FR 48984), we discussed coding
inaccuracies that were found in the claims data for a large chain of
LTCHs in the FY 2002 MedPAR file, which were used to determine the LTC-
DRG relative weights for FY 2004. As we discussed in the same final
rule, after notifying the large chain of LTCHs whose claims contained
the coding inaccuracies to request that they resubmit those claims with
the correct diagnosis, from an analysis of LTCH claims data from the
December 2003 update of the FY 2003 MedPAR file, it appeared that such
claims data no longer contain coding errors. Therefore, it was not
necessary to correct the FY 2003 MedPAR data for the development of the
FY 2005 LTC-DRGs and relative weights established in the same final
rule.
As noted above, in the FY 2006 IPPS proposed rule, we proposed to
calculate the proposed LTC-DRG relative weights for FY 2006 using the
December 2004
[[Page 47326]]
update of the MedPAR file, which were the most recent available data at
that time. As stated above, in this final rule, we are using the March
2005 update of the FY 2004 MedPAR file for the determination of the FY
2006 LTC-DRG relative weights as these are the best available data. As
we discussed in the FY 2006 IPPS proposed rule (70 FR 23341), based on
an analysis of LTCH claims data from the FY 2004 MedPAR file, it
appears that such claims data do not contain coding inaccuracies found
previously in LTCH claims data. Therefore, it was not necessary to
correct the FY 2004 MedPAR data for the development of the FY 2006 LTC-
DRGs and relative weights presented in that proposed rule or in this
final rule.
Comment: Several commenters cited a study that concluded that the
claims data used to develop the proposed LTC-DRG relative weights (that
is, the December 2004 update of the FY 2004 MedPAR file) contain
irregularities or errors. The commenters' concern was based on a
comparison, by a private research group that was commissioned by one of
the commenters, of the LTCH FY 2004 MedPAR data to the internal records
of one LTCH. The commenters were specifically concerned that the MedPAR
data may underrepresent interrupted stay cases and cases during which
the beneficiary exhausted Medicare Part A benefits. In addition to the
possible underrepresentation of interrupted stay and exhausted benefit
cases, these commenters indicated that they had reviewed the FY 2004
MedPAR data used to develop the proposed FY 2006 LTC-DRG relative
weights and asserted that there are some cases in the FY 2004 MedPAR
file that include overstated or understated charges. They also
indicated that there were ``missing'' LTCH cases that they believe
should be included in the MedPAR file. The commenters further believed
that the missing LTCH cases may be the consequence of ``a high level of
suspended claims which were occurring due to the transition [to a
different billing system during FY 2004].'' Specifically, the
commenters stated that because payment for these suspended claims was
received by April 2004, their claims and associated charges for these
cases should have been reflected in the December 2004 update of the FY
2004 MedPAR file that was used to compute the proposed FY 2006 LTC-DRG
relative weights.
The commenters believed that such errors or irregularities may be
the source of the observed decrease in the average charges of many LTC-
DRGs. Therefore, they urged CMS to reexamine the MedPAR data to ensure
that the charges for all cases are fully accounted for in computing the
final FY 2006 LTC-DRG relative weights.
The commenter who commissioned the study gave a number of examples
of the alleged irregularities/errors in LTCH claims in the FY 2004
MedPAR file. The commenter's findings from a comparison of one
provider's internal records and data reported in the December 2004
update of the FY 2004 MedPAR file, which were used in setting the
proposed LTC-DRG relative weights, were extrapolated to all LTCHs and
then the proposed FY 2006 LTC-DRG relative weights were recalculated
``to correct for these errors.'' The commenter challenged the integrity
of the proposed LTC-DRG relative weights, as well as the final relative
weights, which would be based on a more recent update (March 2005) of
the FY 2004 MedPAR file, in keeping with our historical practice that
uses the best available data for computing payment adjustments for all
Medicare PPSs.
Response: After an extensive analysis of the data submitted by one
of the commenters, we do not agree with the commenters' assertion that
the proposed FY 2006 LTC-DRG relative weights are based on faulty
claims data in the FY 2004 MedPAR file. We believe that the use of
highly case-specific and interim data drawn from the claims records of
one LTCH to challenge the integrity of the LTCH claims in the entire FY
2004 MedPAR file is inappropriate. Our analysis did not reveal systemic
problems that would have undermined the data upon which we based the
proposed FY 2006 LTC-DRG relative weights or the data upon which we are
basing our final FY 2006 LTC-DRG relative weights in this final rule
(as discussed above). As indicated by our analysis of the issues
presented by the commenter, detailed below, we continue to believe that
the March 2005 update of the FY 2004 MedPAR file is the best available
data for setting the FY 2006 LTC-DRG relative weights and it accurately
reflects LTCH charges per discharge.
The comments were based on the commenters' analysis of one LTCH's
data and the results of that analysis were extrapolated to the universe
of LTCHs. We reviewed the LTCH data used by the commenter and compared
that data to the data in both the December 2004 update of the FY 2004
MedPAR file that were used to determine the proposed FY 2006 LTC-DRG
relative weights and in the March 2005 update of the FY 2004 MedPAR
file that are being used to determine the final FY 2006 LTC-DRG
relative weights in this final rule. The commenter raised four
categories of alleged problems: missing discharges related to the
exhaustion of Medicare Part A benefits; inaccurate representation of
interrupted stay cases; cases not reported in the MedPAR file due to
``an atypical level of suspension of LTCH claims''; and cases with
incorrectly reported charges (overstated or understated). Our analysis
revealed that rather than being distinct problems, three of the
concerns raised by the commenters--the benefits-exhausted cases, the
interrupted stay cases, and missing hospital claims--are caused by the
same basic problems. That is, the December 2003 update of the FY 2004
MedPAR file did not include some patient claims from the records of the
one LTCH in question. Because the MedPAR file represents a total
beneficiary stay (total single episode of care) in an inpatient
hospital once a beneficiary has been physically discharged from the
inpatient hospital, as described below, we evaluated the reasons why
such a situation could occur under normal claims processing procedures.
The MedPAR file is a discharge file for inpatient claims and,
therefore, during the creation of the MedPAR file, inpatient hospital
data without a discharge date would not be included. When a claim is
processed for payment calculation, the data from the fiscal
intermediary are included in the Medicare Common Working File (CWF), at
which time payment authorization or denial will be made and, if
authorized, a remittance will be generated to the provider. After the
remittance is generated, the National Claims History (NCH) is updated
to reflect all of the claims submitted for an entire stay, which may
include one claim or multiple claims. The NCH inpatient hospital data
are used in the creation of the MedPAR file and all adjustments are
resolved prior to the creation of a stay record in the MedPAR file. The
creation of the MedPAR file takes all claims submitted for a
beneficiary at the same facility and collapses all the data so that one
record is created that represents a single record of the entire stay at
the facility.
A claim that is correctly coded and submitted timely by the
provider will be captured by the specific update of the NCH files, the
data source for the MedPAR file. However, if there are issues with the
claim, the claim may be suspended. Therefore, even though the hospital
will have a record of the stay, until the issue with the claim is
resolved, it will not process into the NCH and, therefore, will not be
recorded in the MedPAR file. Issues leading to claim suspension may
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[[pp. 47327-47376]] Medicare Program; Changes to the Hospital Inpatient Prospective
Payment Systems and Fiscal Year 2006 Rates
[[Continued from page 47326]]
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include submission-systems failures by the provider, including the
absence of crucial information or incorrect coding of patient status by
the provider. Alternatively, issues may arise during the fiscal
intermediary processing of the claim, as a result of data processing
problems or broader standard systems issues. The fiscal intermediary
may also delay processing the claim pending resolution of policy issues
in specific situations. A fiscal intermediary may need to contact a
subject-matter specialist at Medicare, for example, for assistance in
determining whether a particular atypical patient discharge, treatment,
and readmittance scenario would be governed by the payment rules
established under either of the interrupted stay policies at Sec.
412.531.
Therefore, there are several reasons why claims could be held in
suspension and hence not be ``resolved'' either for payment purposes or
for inclusion in the MedPAR file. We understand that, at any one time,
there may be as many as 25 percent of a hospital's claims in suspension
pending resolution of one or more of the above issues. This statistic
is not reflective of any unique problems in the processing procedure
but rather is a standard feature of a dynamic claims payment process.
In recognition of this fact, and in order to enable a cash flow to a
provider where there may be a disproportionate number of unresolved
claims in suspension, our regulations at Sec. 412.541(f) provide for
accelerated payments, which are reconciled with actual remittances at a
future date.
The commenter's first concern was that a substantial number of
benefits-exhaust claims from the one LTCH were not included in the
March 2004 update of the FY 2004 MedPAR file. Our case-level analysis
revealed several reasons for this, which are discussed below.
Primarily, we believe that there has been some degree of confusion on
by that LTCH as to the policy distinction established under the LTCH
PPS between a discharge for payment purposes and a patient's physical
discharge. In the August 30, 2002 final rule for the LTCH PPS, we
established regulations at Sec. 412.503 specifying that a Medicare
patient is considered ``discharged'' for payment purposes when the
patient no longer has any Medicare covered days (that is, when Medicare
Part A benefits are exhausted). At that point, a LTCH may submit a
``discharge'' claim to its fiscal intermediary and Medicare will issue
a payment for covered care (CMS Pub. 100-4 Chapter 1, Section 50.2)
delivered until the benefits were exhausted. The patient may continue
to receive care at the LTCH, but Medicare Part A will no longer be
financially responsible for that treatment. In that same final rule, we
also established that we would include data for all inpatient days that
a Medicare beneficiary was physically in the LTCH for purposes of
meeting the length of stay requirements to qualify as a LTCH as set
forth under Sec. 412.23(e) (67 FR 55974) and for developing LTC-DRG
relative weights (67 FR 55984). Therefore, for purposes of these two
policies, data from the fiscal year during which the patient is
physically discharged from the LTCH will include the total day count
for the patient's entire stay as well as the total charges for the
entire length of stay, including data from noncovered days, even where
the Medicare payment to the LTCH was made in a prior fiscal year, based
on the earlier bill submitted by the LTCH when the patient's benefits
exhausted.
In response to the commenter's allegation that the data from the
December 2004 update of the FY 2004 MedPAR file did not capture 16 of
35 benefits-exhaust claims for one specific LTCH, CMS' analysis
revealed that 5 of these 16 cases noted by the commenter are, in fact,
included in the more recent March 2005 update of the FY 2004 MedPAR
file. This indicates that if the bill did not appear on the earlier
December update due to a processing suspension, these 5 cases appear in
the March 2005 update of the MedPAR file because the issue for which
the bill was suspended has been resolved by that time. Furthermore, an
additional 7 of the 16 claims that the hospital identified as
``discharged'' represented beneficiaries who were still in the hospital
at the end of FY 2004 (September 30, 2004), even though Medicare was no
longer making payments for their care (and they had been ``discharged
for payment purposes'' under Sec. 412.503). As noted above, only at
physical discharge will data be included in the corresponding MedPAR
file. Once those 7 patients are discharged physically from the LTCH in
question, their data will appear in the MedPAR file for the fiscal year
of their discharge. Accordingly, we do not believe that the absence
from the March 2005 update of the FY 2004 MedPAR file of the four
discharges for this one LTCH represents a systematic and serious
underrepresentation of benefits-exhaust cases in the LTCH FY 2004
MedPAR file.
The commenter also claimed that the MedPAR file had inaccurately
reported interrupted stay cases, that is, a LTCH stay that has an
intervening stay at an acute care hospital for 9 days or less, an IRF
for 27 days or less, or a SNF for 45 days or less during the LTCH stay
(Sec. 412.531). The one LTCH upon which the commenter bases his
concerns had records of 102 interrupted stay cases discharged during FY
2004. Of these, it is claimed that 44 were reported correctly in the
December 2004 update of the FY 2004 MedPAR file upon which the proposed
LTC-DRG relative weights were based. If an episode of care is governed
by the greater than 3 days interruption of stay policy, both segments
of the stay at the LTCH are paid as one. The commenter claimed that, in
such cases, only one-half of particular interrupted stay cases in that
LTCH that were reported were included in the December 2004 update of
the FY 2004 MedPAR file. The commenter also claimed that in other
interrupted stay cases, the entire stay was absent from the December
2004 update of the FY 2004 MedPAR file. We reviewed the commenter's
claims and concluded that most of these cases are included in the
recent March 2005 update of the FY 2004 MedPAR file. We believe that
these cases were not included in the December 2004 update of the FY
2004 MedPAR file because the provider's final bill was in suspension.
It is likely that the cases appear in the March 2005 update of the
FY 2004 MedPAR file because the patient was finally physically
discharged or issues relating to the claim were otherwise settled and
the claims were no longer in suspension. Other claims reported by the
LTCH but still not included in the March 2005 update of the FY 2004
MedPAR file are appropriately not in the MedPAR file because they are
still in suspension for various reasons (as noted above and discussed
in greater detail below).
As stated above, there may be one or even several valid and
appropriate reasons why the interrupted stay cases are suspended. We
understand that the initial implementation of certain LTCH PPS system
changes resulted in problems, including the mechanics of claim
submission. Specifically, for many fiscal intermediaries, the
implementation of the 3-day or less interruption of stay policy at
Sec. 412.531(a) (69 FR 25690) initially led to submission of
overlapping claims, inappropriate payments, recoupment of payments, and
subsequent withdrawal and resubmission of claims, and required
considerable provider education and resulted in initial suspension of
the claims during FY 2004. However, this is no longer a significant
problem for fiscal intermediaries. In fact, the fiscal intermediary
that services the LTCH cited by the commenter noted that several of its
providers worked
[[Page 47328]]
aggressively and in a timely manner to ensure that their claims
governed by this policy were being submitted according to CMS
instructions, and paid and reported accurately. However, other LTCHs
were still working to rectify their claims submission procedures under
the new policies or their internal records. Among those LTCHs that
apparently had data submission and payment problems, the fiscal
intermediary identified the LTCH that was the subject of the
commenter's original data collection. Therefore, while we acknowledge
that there were initial claims processing difficulties with interrupted
stay cases, based on our conversations with the fiscal intermediary
that services approximately two-thirds of all LTCHs, as well as with
the fiscal intermediary that services the LTCH in question and 10 other
LTCHs, we do not believe that there continues to be a significant
issue. Furthermore, we believe that, currently, for the vast majority
of LTCHs, internal records are consistent with the actual payment
adjustments made by their fiscal intermediaries that are reported in
the MedPAR file. However, the few LTCHs that experience an
inconsistency between their internal records and the data reported in
the MedPAR file do so as a result of provider specific billing issues
which are in no way indicative of a widespread or even a significant
problem with the integrity of the FY 2003 MedPAR data.
As noted above, the commenter believes that ``an atypical level of
suspension of LTCH claims'' results from dealing with the FY 2004
conversion from the Arkansas Part A Standard System (APASS) billing
system to the Fiscal Intermediary Share System (FISS) billing system.
The commenter believed this transition resulted in inaccurate and
underreported claims in the FY 2004 MedPAR data. While there were some
initial difficulties with the system transition, our analysis of the
MedPAR data again indicates that those difficulties have been addressed
and, in fact, the MedPAR data accurately reflect provider billings and
are reliable.
Based on discussions with the fiscal intermediaries that process
the vast majority of LTCH bills, we conclude that, although initially
there were some problems with the system's processing of a limited
number of claims that were impacted by either the 3-day or less
interrupted stay policy (Sec. 412.531(a)) or cases of exhaustion of
Medicare benefits, the problems were typically resolved in a timely
manner and the claims are reflected in the March 2005 update of the FY
2004 MedPAR file. Furthermore, the fiscal intermediary that serves the
LTCH in question also noted experiencing some difficulties with its
conversion to the FISS billing system originally, but presently, it is
no longer experiencing a significant number of suspended claims as a
result of those issues.
We also analyzed the commenter's assertions that, for a number of
the LTCH bills in question, the LTCH's internal records of charges
included either additional or fewer charges than the amount reported as
the charges in the December 2004 update of the FY 2004 MedPAR file. The
commenter believed that, because the FY 2004 MedPAR file does not
reflect all of the bill's charges for this LTCH, there is a systemic
problem that affects the calculations of the FY 2006 LTC-DRG relative
weights. We believe the FY 2004 MedPAR file is providing cases with
accurate charge data for that fiscal year. Because all Medicare charges
that are reported in the MedPAR file are taken directly from claims
submitted by providers, in order to further evaluate the commenter's
assertion, we requested that the fiscal intermediary serving this LTCH
review claims that the commenter alleged exemplified the
``discrepancy'' between the LTCH charges identified in its records and
those that appear in the FY 2004 MedPAR file. A comparison of the
electronic claims submitted by the LTCH to the fiscal intermediary did
not reveal any inconsistencies. That is, the charges on the electronic
claims for those cases matched those charges that appeared in the most
recent update (March 2005) of the MedPAR file. Therefore, the MedPAR
data are consistent with charge data submitted by the LTCH to CMS.
Furthermore, as we analyzed each of the commenter's specific
allegations of systemic flaws in the FY 2004 MedPAR data, we have
concluded that the only way that the actual charges could be higher or
lower on the hospital's own records than those charges that appear on
the claim in the NCH (upon which the MedPAR file is derived) would be
if the provider did not include those charges on the bill submitted to
the fiscal intermediary for processing. We note that this issue of a
discrepancy between billed charges and the MedPAR data is not an issue
for other providers. Therefore, we believe that any inconsistencies
between charges for a few cases as listed in the internal records of
one LTCH and those reported for those same cases in the FY 2004 MedPAR
file are due to internal data reporting practices of a specific LTCH
and are not indicative of a widespread problem with the reporting of
charges for LTCHs throughout the country in the FY 2004 MedPAR data
that affects the final LTC-DRG relative weights.
Based upon our detailed analysis of the commenter's assertions, we
believe that there are no systematic errors in the LTCH FY 2004 MedPAR
data and we continue to believe it is appropriate to base the FY 2006
LTC-DRG relative weights on the March 2005 update of the FY 2004 MedPAR
file. We believe that the December 2004 update of the FY 2004 MedPAR
file that we used to determine the proposed LTC-DRG relative weights
for FY 2006 in the FY 2006 IPPS proposed rule reflected the best
available data at that time. Moreover, we maintain that calculating the
final LTC-DRG payment weights set forth in this final rule using the
March 2005 update of the FY 2004 MedPAR file eliminates most of the
issues raised by the commenter, even with the specific claims submitted
by the one LTCH cited by the commenter. Furthermore, based on our
analysis, we conclude that many of the issues experienced by that LTCH
were unique to that hospital and were not systemic issues.
In summary, as explained above, we do not believe there is evidence
to support the contention that there is a systemic flaw in the LTCH FY
2004 MedPAR data or the integrity of the FY 2006 final LTC-DRG relative
weights. Rather, we believe that extrapolation to the entire universe
of LTCHs of the issues of one particular LTCH with its own submission
and reporting history as proof of the unreliability of our FY 2004
MedPAR data is both misleading and inaccurate. Therefore, in this final
rule, we are using the LTCH claims data from the March 2005 update of
the FY 2004 MedPAR file to determine the FY 2006 LTC-DRG relative
weights using the methodology described below.
c. Hospital-Specific Relative Value Methodology
By nature, LTCHs often specialize in certain areas, such as
ventilator-dependent patients and rehabilitation and wound care. Some
case types (DRGs) may be treated, to a large extent, in hospitals that
have, from a perspective of charges, relatively high (or low) charges.
This nonarbitrary distribution of cases with relatively high (or low)
charges in specific LTC-DRGs has the potential to inappropriately
distort the measure of average charges. To account for the fact that
cases may not be randomly distributed across LTCHs, we use a hospital-
specific relative value method to calculate the LTC-DRG relative
weights instead of the
[[Page 47329]]
methodology used to determine the DRG relative weights under the IPPS
described in section II.C. of this preamble. We believe this method
will remove this hospital-specific source of bias in measuring LTCH
average charges. Specifically, we reduce the impact of the variation in
charges across providers on any particular LTC-DRG relative weight by
converting each LTCH's charge for a case to a relative value based on
that LTCH's average charge.
Under the hospital-specific relative value method, we standardize
charges for each LTCH by converting its charges for each case to
hospital-specific relative charge values and then adjusting those
values for the LTCH's case-mix. The adjustment for case-mix is needed
to rescale the hospital-specific relative charge values (which, by
definition, averages 1.0 for each LTCH). The average relative weight
for a LTCH is its case-mix, so it is reasonable to scale each LTCH's
average relative charge value by its case-mix. In this way, each LTCH's
relative charge value is adjusted by its case-mix to an average that
reflects the complexity of the cases it treats relative to the
complexity of the cases treated by all other LTCHs (the average case-
mix of all LTCHs).
In accordance with the methodology established under Sec. 412.523,
as implemented in the August 30, 2002 LTCH PPS final rule (67 FR 55989
through 55991), we standardize charges for each case by first dividing
the adjusted charge for the case (adjusted for short-stay outliers
under Sec. 412.529 as described in section II.D.4. (step 3) of this
preamble) by the average adjusted charge for all cases at the LTCH in
which the case was treated. Short-stay outliers under Sec. 412.529 are
cases with a length of stay that is less than or equal to five-sixths
the average length of stay of the LTC-DRG. The average adjusted charge
reflects the average intensity of the health care services delivered by
a particular LTCH and the average cost level of that LTCH. The
resulting ratio is multiplied by that LTCH's case-mix index to
determine the standardized charge for the case.
Multiplying by the LTCH's case-mix index accounts for the fact that
the same relative charges are given greater weight in a LTCH with
higher average costs than they would at a LTCH with low average costs
which is needed to adjust each LTCH's relative charge value to reflect
its case-mix relative to the average case-mix for all LTCHs. Because we
standardize charges in this manner, we count charges for a Medicare
patient at a LTCH with high average charges as less resource intensive
than they would be at a LTCH with low average charges. For example, a
$10,000 charge for a case in a LTCH with an average adjusted charge of
$17,500 reflects a higher level of relative resource use than a $10,000
charge for a case in a LTCH with the same case-mix, but an average
adjusted charge of $35,000. We believe that the adjusted charge of an
individual case more accurately reflects actual resource use for an
individual LTCH because the variation in charges due to systematic
differences in the markup of charges among LTCHs is taken into account.
d. Low-Volume LTC-DRGs
In order to account for LTC-DRGs with low-volume (that is, with
fewer than 25 LTCH cases), in accordance with the methodology
established in the August 30, 2002 LTCH PPS final rule (67 FR 55984),
we group those ``low-volume LTC-DRGs'' (that is, DRGs that contained
between 1 and 24 cases annually) into one of five categories
(quintiles) based on average charges, for the purposes of determining
relative weights. In the FY 2006 IPPS proposed rule (70 FR 23341), we
stated that we would continue to employ this treatment of low volume
LTC-DRGs in determining the FY 2006 LTC-DRG relative weights using the
best available LTCH data. In that same proposed rule, using LTCH cases
from the December 2004 update of the FY 2004 MedPAR file, we identified
172 LTC-DRGs that contained between 1 and 24 cases. For this final
rule, using LTCH cases from the March 2005 update of the FY 2004 MedPAR
file, we identified 171 LTC-DRGs that contained between 1 and 24 cases.
This list of LTC-DRGs was then divided into one of the 5 low-volume
quintiles, each containing a minimum of 34 LTC-DRGs (171/5 = 34 with 1
LTC-DRG as the remainder). In accordance with our established
methodology, we then make an assignment to a specific low-volume
quintile by sorting the low-volume LTC-DRGs in ascending order by
average charge. For this final rule, this results in an assignment to a
specific low volume quintile of the sorted 171 low-volume LTC-DRGs by
ascending order by average charge. Because the number of LTC-DRGs with
less than 25 LTCH cases is not evenly divisible by five, the average
charge of the low-volume LTC-DRG was used to determine which low-volume
quintile received the additional LTC-DRG. After sorting the 171 low-
volume LTC-DRGs in ascending order, we group the first fifth of low-
volume LTC-DRGs with the lowest average charge into Quintile 1. The
highest average charge cases are grouped into Quintile 5. Since the
average charge of the 69th LTC-DRG in the sorted list is closer to the
68th LTC-DRG's average charge (assigned to Quintile 2) than to the
average charge of the 70th LTC-DRG in the sorted list (to be assigned
to Quintile 3), we placed it into Quintile 2. This process was repeated
through the remaining low-volume LTC-DRGs so that 1 low-volume quintile
contains 35 LTC-DRGs and 4 low-volume quintiles contain 34 LTC-DRGs.
In order to determine the relative weights for the LTC-DRGs with
low volume for FY 2006, in accordance with the methodology established
in the August 30, 2002 LTCH PPS final rule (67 FR 55984), we used the
five low-volume quintiles described above. The composition of each of
the five low-volume quintiles shown in the chart below was used in
determining the LTC-DRG relative weights for FY 2006. We determined a
relative weight and (geometric) average length of stay for each of the
five low-volume quintiles using the formula that we apply to the
regular LTC-DRGs (25 or more cases), as described below in section
II.D.4. of this preamble. We assigned the same relative weight and
average length of stay to each of the LTC-DRGs that make up that low-
volume quintile. We note that, as this system is dynamic, it is
possible that the number and specific type of LTC-DRGs with a low
volume of LTCH cases will vary in the future. We use the best available
claims data in the MedPAR file to identify low-volume LTC-DRGs and to
calculate the relative weights based on our methodology.
Composition of Low-Volume Quintiles for FY 2006
------------------------------------------------------------------------
LTC-DRG Description
------------------------------------------------------------------------
QUINTILE 1
------------------------------------------------------------------------
17................................... NONSPECIFIC CEREBROVASCULAR
DISORDERS W/O CC.
25................................... SEIZURE & HEADACHE AGE >17 W/O
CC.
[[Page 47330]]
65................................... DYSEQUILIBRIUM.
69................................... OTITIS MEDIA & URI AGE >17 W/O
CC.
86................................... PLEURAL EFFUSION W/O CC.
95................................... PNEUMOTHORAX W/O CC.
102.................................. OTHER RESPIRATORY SYSTEM
DIAGNOSES W/O CC.
133.................................. ATHEROSCLEROSIS W/O CC.
140.................................. ANGINA PECTORIS.
142 ***.............................. SYNCOPE & COLLAPSE W/O CC.
143.................................. CHEST PAIN.
171.................................. OTHER DIGESTIVE SYSTEM O.R.
PROCEDURES W/O CC.
175.................................. G.I. HEMORRHAGE W/O CC.
219.................................. LOWER EXTREM & HUMER PROC EXCEPT
HIP, FOOT, FEMUR AGE >17 W/O CC.
237.................................. SPRAINS, STRAINS, & DISLOCATIONS
OF HIP, PELVIS & THIGH.
241.................................. CONNECTIVE TISSUE DISORDERS W/O
CC.
246.................................. NON-SPECIFIC ARTHROPATHIES.
251.................................. FX, SPRN, STRN & DISL OF FOREARM,
HAND, FOOT AGE >17 W/O CC.
262.................................. BREAST BIOPSY & LOCAL EXCISION
FOR NON-MALIGNANCY.
273.................................. MAJOR SKIN DISORDERS W/O CC.
281.................................. TRAUMA TO THE SKIN, SUBCUT TISS &
BREAST AGE >17 W/O CC.
284.................................. MINOR SKIN DISORDERS W/O CC.
301.................................. ENDOCRINE DISORDERS W/O CC.
305.................................. KIDNEY, URETER & MAJOR BLADDER
PROC FOR NON-NEOPL W/O CC.
312.................................. URETHRAL PROCEDURES, AGE >17 W
CC.
319.................................. KIDNEY & URINARY TRACT NEOPLASMS
W/O CC.
328.................................. URETHRAL STRICTURE AGE >17 W CC.
344.................................. OTHER MALE REPRODUCTIVE SYSTEM
O.R. PROCEDURES FOR MALIGNANCY.
428.................................. DISORDERS OF PERSONALITY &
IMPULSE CONTROL.
431.................................. CHILDHOOD MENTAL DISORDERS.
441.................................. HAND PROCEDURES FOR INJURIES.
445.................................. TRAUMATIC INJURY AGE >17 W/O CC.
509.................................. FULL THICKNESS BURN W/O SKIN GRFT
OR INH INJ W/O CC OR SIG TRAUMA.
511.................................. NON-EXTENSIVE BURNS W/O CC OR
SIGNIFICANT TRAUMA .
--------------------------------------
QUINTILE 2
------------------------------------------------------------------------
11................................... NERVOUS SYSTEM NEOPLASMS W/O CC.
29................................... TRAUMATIC STUPOR & COMA, COMA < 1
HR AGE >17 W/O CC.
44................................... ACUTE MAJOR EYE INFECTIONS.
46................................... OTHER DISORDERS OF THE EYE AGE
>17 W CC.
83................................... MAJOR CHEST TRAUMA W CC.
93................................... INTERSTITIAL LUNG DISEASE W/O CC.
97................................... BRONCHITIS & ASTHMA AGE >17 W/O
CC.
122.................................. CIRCULATORY DISORDERS W AMI W/O
MAJOR COMP, DISCHARGED ALIVE.
128.................................. DEEP VEIN THROMBOPHLEBITIS.
136.................................. CARDIAC CONGENITAL & VALVULAR
DISORDERS AGE >17 W/O CC.
139.................................. CARDIAC ARRHYTHMIA & CONDUCTION
DISORDERS W/O CC.
151.................................. PERITONEAL ADHESIOLYSIS W/O CC.
173.................................. DIGESTIVE MALIGNANCY W/O CC.
206.................................. DISORDERS OF LIVER EXCEPT MALIG,
CIRR, ALC HEPA W/O CC.
208.................................. DISORDERS OF THE BILIARY TRACT W/
O CC.
250.................................. FX, SPRN, STRN & DISL OF FOREARM,
HAND, FOOT AGE >17 W CC.
254.................................. FX, SPRN, STRN & DISL OF UPARM,
LOWLEG EX FOOT AGE >17 W/O CC.
259.................................. SUBTOTAL MASTECTOMY FOR
MALIGNANCY W CC.
276.................................. NON-MALIGANT BREAST DISORDERS.
293.................................. OTHER ENDOCRINE, NUTRIT & METAB
O.R. PROC W/O CC.
306.................................. PROSTATECTOMY W CC.
325.................................. KIDNEY & URINARY TRACT SIGNS &
SYMPTOMS AGE >17 W CC.
332.................................. OTHER KIDNEY & URINARY TRACT
DIAGNOSES AGE >17 W/O CC.
334.................................. MAJOR MALE PELVIC PROCEDURES W
CC.
336.................................. TRANSURETHRAL PROSTATECTOMY W CC.
347.................................. MALIGNANCY, MALE REPRODUCTIVE
SYSTEM, W/O CC.
348.................................. BENIGN PROSTATIC HYPERTROPHY W
CC.
399.................................. RETICULOENDOTHELIAL & IMMUNITY
DISORDERS W/O CC.
404.................................. LYMPHOMA & NON-ACUTE LEUKEMIA W/O
CC.
425.................................. ACUTE ADJUSTMENT REACTION &
PSYCHOLOGICAL DYSFUNCTION.
432.................................. OTHER MENTAL DISORDER DIAGNOSES.
433.................................. ALCOHOL/DRUG ABUSE OR DEPENDENCE,
LEFT AMA.
447.................................. ALLERGIC REACTIONS AGE >17.
484.................................. CRANIOTOMY FOR MULTIPLE
SIGNIFICANT TRAUMA.
503.................................. KNEE PROCEDURES W/O PDX OF
INFECTION.
--------------------------------------
[[Page 47331]]
QUINTILE 3
------------------------------------------------------------------------
8.................................... PERIPH & CRANIAL NERVE & OTHER
NERV SYST PROC W/O CC.
21................................... VIRAL MENINGITIS.
31................................... CONCUSSION AGE >17 W CC.
61................................... MYRINGOTOMY W TUBE INSERTION AGE
>17.
67................................... EPIGLOTTITIS.
100.................................. RESPIRATORY SIGNS & SYMPTOMS W/O
CC.
110.................................. MAJOR CARDIOVASCULAR PROCEDURES W
CC.
119.................................. VEIN LIGATION & STRIPPING.
125.................................. CIRCULATORY DISORDERS EXCEPT AMI,
W CARD CATH W/O COMPLEX DIAG.
152.................................. MINOR SMALL & LARGE BOWEL
PROCEDURES W CC.
177.................................. UNCOMPLICATED PEPTIC ULCER W CC.
178.................................. UNCOMPLICATED PEPTIC ULCER W/O
CC.
181.................................. G.I. OBSTRUCTION W/O CC.
185.................................. DENTAL & ORAL DIS EXCEPT
EXTRACTIONS & RESTORATIONS, AGE
>17.
193.................................. BILIARY TRACT PROC EXCEPT ONLY
CHOLECYST W OR W/O C.D.E. W CC.
195.................................. CHOLECYSTECTOMY W C.D.E. W CC.
197.................................. CHOLECYSTECTOMY EXCEPT BY
LAPAROSCOPE W/O C.D.E. W CC.
223.................................. MAJOR SHOULDER/ELBOW PROC, OR
OTHER UPPER EXTREMITY PROC W CC.
227.................................. SOFT TISSUE PROCEDURES W/O CC.
235.................................. FRACTURES OF FEMUR.
266.................................. SKIN GRAFT &/OR DEBRID EXCEPT FOR
SKIN ULCER OR CELLULITIS W/O CC.
270.................................. OTHER SKIN, SUBCUT TISS & BREAST
PROC W/O CC.
274.................................. MALIGNANT BREAST DISORDERS W CC.
295.................................. DIABETES AGE 0-35.
308.................................. MINOR BLADDER PROCEDURES W CC.
369.................................. MENSTRUAL & OTHER FEMALE
REPRODUCTIVE SYSTEM DISORDERS.
424.................................. O.R. PROCEDURE W PRINCIPAL
DIAGNOSES OF MENTAL ILLNESS.
443.................................. OTHER O.R. PROCEDURES FOR
INJURIES W/O CC.
449.................................. POISONING & TOXIC EFFECTS OF
DRUGS AGE >17 W CC.
454.................................. OTHER INJURY, POISONING & TOXIC
EFFECT DIAG W CC.
467.................................. OTHER FACTORS INFLUENCING HEALTH
STATUS.
507.................................. FULL THICKNESS BURN W SKIN GRFT
OR INHAL INJ W/O CC OR SIG
TRAUMA.
531.................................. SPINAL PROCEDURES WITH CC.
532.................................. SPINAL PROCEDURES WITHOUT CC.
--------------------------------------
QUINTILE 4
------------------------------------------------------------------------
22................................... HYPERTENSIVE ENCEPHALOPATHY.
40................................... EXTRAOCULAR PROCEDURES EXCEPT
ORBIT AGE >17.
63................................... OTHER EAR, NOSE, MOUTH & THROAT
O.R. PROCEDURES.
117.................................. CARDIAC PACEMAKER REVISION EXCEPT
DEVICE REPLACEMENT.
118.................................. CARDIAC PACEMAKER DEVICE
REPLACEMENT.
124.................................. CIRCULATORY DISORDERS EXCEPT AMI,
W CARD CATH & COMPLEX DIAG.
150.................................. PERITONEAL ADHESIOLYSIS W CC.
157.................................. ANAL & STOMAL PROCEDURES W CC.
168.................................. MOUTH PROCEDURES W CC.
191.................................. PANCREAS, LIVER & SHUNT
PROCEDURES W CC.
211.................................. HIP & FEMUR PROCEDURES EXCEPT
MAJOR JOINT AGE >17 W/O CC.
216.................................. BIOPSIES OF MUSCULOSKELETAL
SYSTEM & CONNECTIVE TISSUE.
228.................................. MAJOR THUMB OR JOINT PROC, OR OTH
HAND OR WRIST PROC W CC.
288.................................. O.R. PROCEDURES FOR OBESITY.
299.................................. INBORN ERRORS OF METABOLISM.
303.................................. KIDNEY, URETER & MAJOR BLADDER
PROCEDURES FOR NEOPLASM.
310.................................. TRANSURETHRAL PROCEDURES W CC.
323.................................. URINARY STONES W CC, &/OR ESW
LITHOTRIPSY.
339.................................. TESTES PROCEDURES, NON-MALIGNANCY
AGE >17.
341.................................. PENIS PROCEDURES.
360.................................. VAGINA, CERVIX & VULVA
PROCEDURES.
406.................................. MYELOPROLIF DISORD OR POORLY DIFF
NEOPL W MAJ O.R. PROC W CC.
408.................................. MYELOPROLIF DISORD OR POORLY DIFF
NEOPL W OTHER O.R. PROC.
419.................................. FEVER OF UNKNOWN ORIGIN AGE >17 W
CC.
476.................................. PROSTATIC O.R. PROCEDURE
UNRELATED TO PRINCIPAL
DIAGNOSIS.
497.................................. SPINAL FUSION W CC.
500.................................. BACK & NECK PROCEDURES EXCEPT
SPINAL FUSION W/O CC.
502.................................. KNEE PROCEDURES W PDX OF
INFECTION W/O CC.
505.................................. EXTENSIVE BURN OR FULL THICKNESS
BURNS WITH MECH VENT 96+ HOURS
WITHOUT SKIN GRAFT.
506.................................. FULL THICKNESS BURN W SKIN GRAFT
OR INHAL INJ W CC OR SIG TRAUMA.
539.................................. LYMPHOMA AND LEUKEMIA WITH MAJOR
O.R. PROCEDURE WITH CC.
551.................................. PERMANENT CARDIAC PACEMAKER
IMPLANT WITH MAJOR CV DIAGNOSIS
OR AICD LEAD OR GNRTR.
552.................................. OTHER PERMANENT CARDIAC PACEMAKER
IMPLANT WITHOUT MAJOR CV
DIAGNOSIS.
[[Page 47332]]
555.................................. PERCUTANEOUS CARDIOVASCULAR PROC
WITH MAJOR CV DIAGNOSIS.
556*................................. PERCUTANEOUS CARDIOVASCULAR PROC
WITH NON-DRUG-ELUTING STENT
WITHOUT MAJOR CV DIAGNOSIS.
557*................................. PERCUTANEOUS CARDIOVASCULAR PROC
WITH DRUG-ELUTING STENT WITH
MAJOR CV DIAGNOSIS.
--------------------------------------
QUINTILE 5
------------------------------------------------------------------------
1.................................... CRANIOTOMY AGE >17 W CC.
75................................... MAJOR CHEST PROCEDURES.
77................................... OTHER RESP SYSTEM O.R. PROCEDURES
W/O CC.
154.................................. STOMACH, ESOPHAGEAL & DUODENAL
PROCEDURES AGE >17 W CC.
161.................................. INGUINAL & FEMORAL HERNIA
PROCEDURES AGE >17 W CC.
200.................................. HEPATOBILIARY DIAGNOSTIC
PROCEDURE FOR NON-MALIGNANCY.
210.................................. HIP & FEMUR PROCEDURES EXCEPT
MAJOR JOINT AGE >17 W CC.
218.................................. LOWER EXTREM & HUMER PROC EXCEPT
HIP, FOOT, FEMUR AGE >17 W CC.
230.................................. LOCAL EXCISION & REMOVAL OF INT
FIX DEVICES OF HIP & FEMUR.
268.................................. SKIN, SUBCUTANEOUS TISSUE &
BREAST PLASTIC PROCEDURES.
290.................................. THYROID PROCEDURES.
304.................................. KIDNEY, URETER & MAJOR BLADDER
PROC FOR NON-NEOPL W CC.
345.................................. OTHER MALE REPRODUCTIVE SYSTEM
O.R. PROC EXCEPT FOR MALIGNANCY.
364.................................. D&C, CONIZATION EXCEPT FOR
MALIGNANCY.
365.................................. OTHER FEMALE REPRODUCTIVE SYSTEM
O.R. PROCEDURES.
394.................................. OTHER O.R. PROCEDURES OF THE
BLOOD AND BLOOD FORMING ORGANS.
401.................................. LYMPHOMA & NON-ACUTE LEUKEMIA W
OTHER O.R. PROC W CC.
471.................................. BILATERAL OR MULTIPLE MAJOR JOINT
PROCS OF LOWER EXTREMITY.
482.................................. TRACHEOSTOMY FOR FACE, MOUTH &
NECK DIAGNOSES.
486.................................. OTHER O.R. PROCEDURES FOR
MULTIPLE SIGNIFICANT TRAUMA.
488.................................. HIV W EXTENSIVE O.R. PROCEDURE.
491.................................. MAJOR JOINT & LIMB REATTACHMENT
PROCEDURES OF UPPER EXTREMITY.
493.................................. LAPAROSCOPIC CHOLECYSTECTOMY W/O
C.D.E. W CC.
499.................................. BACK & NECK PROCEDURES EXCEPT
SPINAL FUSION W CC.
501.................................. KNEE PROCEDURES W PDX OF
INFECTION W CC.
515.................................. CARDIAC DEFIBRILATOR IMPLANT W/O
CARDIAC CATH.
519.................................. CERVICAL SPINAL FUSION W CC.
529.................................. VENTRICULAR SHUNT PROCEDURES W
CC.
533.................................. EXTRACRANIAL VASCULAR PROCEDURES
WITH CC.
543.................................. CRANIOTOMY W IMPLANT OF CHEMO
AGENT OR ACUTE COMPLEX CNS PDX.
544.................................. MAJOR JOINT REPLACEMENT OR
REATTACHMENT OF LOWER EXTREMITY.
545.................................. REVISION OF HIP OR KNEE
REPLACEMENT.
556 **............................... PERCUTANEOUS CARDIOVASCULAR PROC
WITH NON-DRUG-ELUTING STENT
WITHOUT MAJOR CV DIAGNOSIS.
557 **............................... PERCUTANEOUS CARDIOVASCULAR PROC
WITH DRUG-ELUTING STENT WITH
MAJOR CV DIAGNOSIS.
------------------------------------------------------------------------
* One of the original 171 low-volume LTC-DRGs initially assigned to a
different low-volume quintile; reassigned to this low-volume quintile
in addressing nonmonotonicity (see step 4 below).
** One of the original 171 low-volume LTC-DRGs initially assigned to
this low-volume quintile; reassigned to a different low-volume
quintile in addressing nonmonotonicity (see step 4 below).
*** One of the original 171 low-volume LTC-DRGs initially assigned to
this low-volume quintile; removed from this low-volume quintile in
addressing nonmonotonicity (see step 4 below).
4. Steps for Determining the FY 2006 LTC-DRG Relative Weights
As we noted in the FY 2006 IPPS proposed rule (70 FR 23346), the FY
2006 LTC-DRG relative weights are determined in accordance with the
methodology established in the August 30, 2002 LTCH PPS final rule (67
FR 55989 through 55991). In summary, LTCH cases must be grouped in the
appropriate LTC-DRG, while taking into account the low-volume LTC-DRGs
as described above, before the FY 2006 LTC-DRG relative weights can be
determined. After grouping the cases in the appropriate LTC-DRG, we
calculated the relative weights for FY 2006 in this final rule by first
removing statistical outliers and cases with a length of stay of 7 days
or less, as discussed in greater detail below. Next, we adjusted the
number of cases in each LTC-DRG for the effect of short-stay outlier
cases under Sec. 412.529, as also discussed in greater detail below.
The short-stay adjusted discharges and corresponding charges are used
to calculate ``relative adjusted weights'' in each LTC-DRG using the
hospital-specific relative value method described above.
Comment: A few commenters expressed concern regarding what they
believed to be a proposed change in the methodology to compute the LTC-
DRG relative weights. Specifically, they asserted that removing
statistical outlier cases and cases with a length of stay of 7 days or
less may inappropriately remove too many cases from the relative weight
calculations. The commenters believed that, by narrowing the universe
of cases used to compute the LTC-DRG relative weights, the principle of
averaging that is a fundamental feature of a PPS would be eroded or
distorted.
Response: We did not propose any policy change in the methodology
for determining the LTC-DRG relative weights for FY 2006 in the FY 2006
IPPS proposed rule. The commenters are mistaken in their belief that we
did. Rather, the six steps for determining the proposed FY 2006 LTC-DRG
relative weights presented in the FY 2006 IPPS proposed rule (70 FR
23346 through 23353) are the same steps that we have used to determine
the LTC-DRG relative weights since the implementation of the LTCH PPS
in FY 2003 (August 30, 2002 LTCH IPPS final rule (67 FR 55989 through
55991)). In every final rule in which we have updated the LTC-DRG
[[Page 47333]]
relative weights since the October 1, 2002 implementation of the LTCH
PPS (68 FR 45375 through 45385, and 69 FR 48989 through 49000), we
reiterated the same steps of our established methodology to determine
the annual update to the LTC-DRG relative weights. We continue to
believe that this methodology continues to be valid, and we do not find
any reason at this time to revise it.
As we explained in the FY 2006 IPPS proposed rule (70 FR 23346), we
believe it is appropriate to remove statistical outlier cases and cases
with a length of stay of 7 days or less because including those LTCH
cases in the calculation of the relative weights could result in an
inaccurate relative weight, and therefore an inappropriate payment
amount, that does not truly reflect relative resource use among the
LTC-DRGs. Specifically, we continue to believe that statistical outlier
cases may represent aberrations in the data that distort the measure of
average resource use and that, as we explained above, including them in
the calculation of the relative weights could result in an
inappropriate payment amount.
In the RY 2006 LTCH PPS final rule (70 FR 23346) and as we
discussed in greater detail in the FY 2005 IPPS final rule (69 FR
48990), we also explained that, generally, cases with a length of stay
7 days or less are not representative of either typical or perhaps even
appropriate LTCH patients. Furthermore, in general, in a hospital
established solely to treat very long-stay patients, and with a payment
system calibrated to reflect the costs incurred in treating such
patients, stays of 7 days or less would not fully receive or benefit
from treatment or the range of resource use that is typical in a LTCH
stay, and full resources are often not used in the earlier stages of
admission to a LTCH. We continue to believe that, if we were to include
stays of 7 days or less in the computation of the LTC-DRG relative
weights, the value of many relative weights would decrease and,
therefore, payments would decrease to a level that may no longer be
appropriate. Specifically, because LTCH cases with very short lengths
of stay (that is, 7 days or less) do not use the same amount or type of
resources as typical LTCH inlier cases (that is, cases in which
Medicare covered days exceed five-sixths of the geometric average
length of stay for the LTC-DRG) and the patient is discharged prior to
receiving a LTCH PPS high-cost outlier payment, our simulations
indicate that including these cases would significantly bias payments
against LTCH inlier cases to a point where LTCH inlier cases would be
underpaid (69 FR 48990). Thus, we do not believe that it would be
appropriate to compromise the integrity of the payment determination
for those LTCH cases that actually benefit from and receive a full
course of treatment at a LTCH, in order to include data from these very
short-stays. Consequently, we disagree with the commenters that
removing aberrant LTCH cases (that is, statistical outlier cases and
cases with a length of stay of 7 days or less) undermines the averaging
principle upon which PPSs are developed.
Although we did not propose any change in the methodology for
determining the LTC-DRG relative weights for FY 2006, we disagree with
the assertions that removing statistical outlier cases and cases with a
length of stay of 7 days or less inappropriately narrows the universe
of cases used to compute the LTC-DRG relative weights, resulting in a
distortion of the principle of averaging. Rather, because each LTC-DRG
relative weight represents the average resources required to treat
cases in that particular LTC-DRG, relative to the average resources
used to treat cases in all LTC-DRGs, we believe that, by removing cases
that do not represent the ``average resource use'' of the mix of LTCH
cases within a DRG (that is, statistical outlier cases and cases with a
length of stay of 7 days or less), for the reasons explained above, we
are preserving the integrity of a system that is based on averages.
Therefore, in establishing the FY 2006 LTC-DRG relative weights in this
final rule, we have continued to remove statistical outlier cases and
cases with a length of stay of 7 days or less from the MedPAR data used
to compute the FY 2006 LTC-DRG relative weights.
Comment: Four commenters believed the estimated decrease in LTCH
PPS payments resulting from the proposed changes to the LTC-DRG
relative weights is inconsistent with the statutory mandate that the
LTCH PPS be maintained in a budget neutral manner. These commenters
recommended that we apply a budget neutrality adjustment to the LTC-DRG
relative weights in order to mitigate the estimated LTCH PPS payment
reductions that we estimated would result from the proposed changes to
the LTC-DRG relative weights for FY 2006. Two of those commenters cited
the statutory language authorizing the establishment of the LTCH PPS
and argued that the language requires that the LTCH PPS continue to
operate under ``budget neutrality.'' They further asserted that,
although we did not interpret this language as mandating budget
neutrality beyond the initial year of the LTCH PPS, the Secretary
should use his or her broad discretionary authority to assure ``the
same level of payments projected in the FY 2006 LTCH update
regulation'' by making a budget neutrality adjustment in developing the
FY 2006 LTC-DRG relative weights.
Response: We understand that these commenters are concerned about
the estimated decrease in payments under LTCH PPS based upon changes in
the LTC-DRG relative weights for FY 2006. However, we believe that this
issue is distinct from the Secretary's budget neutrality obligation
under the statute for the first year of implementation of the LTCH PPS.
After the first year of the LTCH PPS, the statute gives the Secretary
broad authority to determine the appropriateness of system updates and
matters such as annual updates and policy changes. As we discussed in
the FY 2005 IPPS final rule (69 FR 48999), with respect to budget
neutrality, we interpreted section 123(a)(1) of Pub. L. 106-113 to
require that total payments under the LTCH PPS during FY 2003 will be
projected to equal estimated payments that would have been made for
LTCHs' operating and capital-related inpatient hospital costs had the
LTCH PPS not have been implemented. Thus we believe the statute's
mandate for budget neutrality applies only to the first year of
implementation of the LTCH PPS (that is, FY 2003). Consistent with the
broad discretional authority conferred upon the Secretary under section
123(a)(1) of Pub. L. 103-116, as amended by section 307 of Pub. L. 106-
554, the Secretary is exercising his broad authority to make updates
the LTCH PPS in a nonbudget neutral manner after FY 2003 for various
components of the LTCH PPS, including the annual update of the LTC-DRG
classifications and relative weights.
Consistent with this budget neutrality requirement for the first
year of implementation of the LTCH PPS, under Sec. 412.523(d)(2) of
the regulations, an adjustment is made in determining the standard
Federal rate for FY 2003 so that aggregate payments under the LTCH PPS
are estimated to equal the amount that would have been paid to LTCHs
under the reasonable cost-based (TEFRA) payment system if the LTCH PPS
were not implemented. Therefore, in the August 30, 2002 LTCH PPS final
rule (67 FR 56027 through 56037), which implemented the LTCH PPS, in
order to maintain budget neutrality, we adjusted the LTCH PPS Federal
rate for FY 2003 so that aggregate payments under the LTCH PPS are
estimated to equal the amount that would have been paid to LTCHs under
the reasonable cost-based (TEFRA) payment system
[[Page 47334]]
had the LTCH PPS not been implemented.
As we stated in the FY 2005 IPPS final rule (70 FR 48999 through
49000), we continue to believe that section 123 of the Pub. L. 106-113
does not require that the annual update to the LTC-DRG classifications
and relative weights maintain budget neutrality. We believe we have
satisfied the budget neutrality requirement of section 123 of the Pub.
L. 106-113 by establishing the LTCH PPS Federal rate for FY 2003 under
Sec. 412.523(d)(2) so that aggregate payment under the LTCH PPS are
projected equal to estimated aggregate payments under the reasonable
cost-based payment system if the LTCH PPS were not implemented.
Therefore, we disagree with the commenters that a budget neutrality
adjustment to the LTC-DRG relative weights or to the LTCH PPS Federal
rate is required by statute or as a result of the annual update to the
LTC-DRGs under Sec. 412.517 for FY 2006.
We agree with the commenters that, under section 123 of the BBRA
and section 307 of the BIPA, the Secretary generally has broad
authority in developing the LTCH PPS, including whether and how to make
adjustments to the LTCH PPS. As we discussed in the RY 2006 LTCH PPS
final rule (70 FR 24188), we will consider whether it is appropriate
for us to propose a budget neutrality adjustment in the annual update
of some aspects of the LTCH PPS under our broad discretionary authority
under the statute to provide ``appropriate adjustments'' to the LTCH
PPS. As several commenters noted, LTCHs are still transitioning to a
PPS and, while coding practices continue to improve, the FY 2004 claims
data may ``not yet fully reflect the nature and types of services,
staff, and other resources'' that LTCH provide to their patients. In
the RY 2005 LTCH PPS final rule, we indicated that, until the 5-year
transition from reasonable cost-based reimbursement to prospective
payment is complete, we believe it may not be appropriate to update any
aspects of the LTCH PPS in a budget neutral manner. As noted above, the
most recent available LTCH PPS claims data are from discharges
occurring during FY 2004. These LTCH claims data are from the second
year of the LTCH PPS (FY 2004), which is the only first full year since
the LTCH PPS was implemented for cost reporting periods beginning on or
after October 1, 2002 (FY 2003). Because it is still early in the 5-
year LTCH PPS transition period, we continue to believe that it is
inappropriate to update any aspects of the LTCH PPS in a budget neutral
manner. A primary reason for waiting until after the transition is
complete before evaluating aspects of the LTCH PPS, including the
budget neutrality issue, is that the data available to analyze such
issues are very limited because the LTCH PPS is still relatively new
and there is a lag time in data availability. As several commenters
pointed out, the FY 2004 MedPAR data are the first full year of LTCH
PPS data since the LTCH PPS was implemented for cost reporting periods
beginning on or after October 1, 2002 (FY 2003). In addition, the fact
that a number of LTCHs were and some are still transitioning to 100
percent of the Federal prospective payment rate may make the available
data on which to base a budget neutrality adjustment even less
appropriate because LTCHs may still be modifying their behavior based
on their transition to prospective payment and, therefore, our data may
not yet fully reflect any operational changes LTCHs may have made in
response to prospective payment. We continue to believe that, once we
have progressed further through the 5-year transition period, we will
have a better opportunity to evaluate the impacts of the implementation
of this new payment system based on a number of years of LTCH PPS data,
which will most appropriately reflect LTCHs' experience under a PPS.
For the reasons stated above, we do not believe that a budget
neutrality adjustment to the FY 2006 LTC-DRG relative weights or to the
LTCH PPS Federal rate is necessary or appropriate. Accordingly, in
developing the FY 2006 LTC-DRGs and relative weights shown in Table 11
of the Addendum of this final rule, we have not applied an adjustment
for budget neutrality nor are we adjusting the 2006 LTCH PPS rate year
Federal rate established in the 2006 LTCH PPS final rule (70 FR 24180)
to account for the estimated change in LTCH PPS payments that will
result from the annual update to the LTC-DRG classifications and
relative weights for FY 2006.
Comment: Several commenters recommended implementing a ``dampening
policy,'' similar to that which was implemented for the Ambulatory
Payment Classification (APC) changes under the Hospital Outpatient PPS
(OPPS) in CY 2003, which would reduce the decrease in any relative
weight in excess of a threshold (for example, 15 percent) by half, to
mitigate instability in LTCH PPS payments because of the ``significant/
substantial'' decrease in many of the relative weights.
Response: A ``dampening policy,'' as recommended by the commenters,
would limit the decrease in any of the LTC-DRG relative weights to a
maximum amount, which would reduce the estimated decrease in LTCH PPS
payments that we projected in the FY 2006 IPPS proposed rule as a
result of the proposed changes to the LTC-DRG relative weights for FY
2006 (70 FR 23667). The commenters believed that the estimated decrease
in the LTCH PPS payments resulting from the proposed changes to the
LTC-DRGs for FY 2006 would create a ``destabilizing effect'' on LTCH
PPS payments. For the reasons discussed below, we do not believe the
estimated decrease in LTCH PPS payments resulting from the changes we
are making to the LTC-DRG relative weights for FY 2006 in this final
rule will lead to instability in LTCH PPS payments, and therefore, we
are not implementing a ``dampening policy,'' as recommended by the
commenters.
As discussed in the November 1, 2002 OPPS final rule (67 FR 66749
through 66750), we believed it was appropriate to implement the
``dampening policy'' under the OPPS referenced by the commenters
because many of the decreases in payment rates for some of the APCs
appeared to be linked to ``changes in the methodology for those drugs
and devices that will no longer be eligible for pass-through payments;
miscoding; restructuring of APCs (in which movement of a single code
from one APC to another may change the median cost of both APCs), or
use of data from the period following the implementation of the OPPS.''
Although Medicare payment for both hospital outpatient services and
inpatient LTCH services are reimbursed under a PPS (respectively),
there are significant distinctions between the two payment systems. For
instance, under the LTCH PPS, a single per LTC-DRG payment is made for
all inpatient hospital services provided to a patient for each stay,
where in contrast, under the OPPS, payments based on APCs may include
distinct payment methodologies for certain drugs and devices that are
eligible for pass-through payments. Thus, there are significant
distinctions between the two payment systems that warrant different
considerations when evaluating the need for a ``dampening policy.''
Below we discuss the reasons we believe that a ``dampening policy'' to
mitigate the effects of the changes in the LTC-DRG relative weights for
FY 2006 on LTCH PPS payments are not necessary or appropriate.
As noted by the commenters, many of the proposed FY 2006 LTC-DRG
relative weights decreased in
[[Page 47335]]
comparison to the FY 2005 LTC-DRG relative weights, which would result
in an aggregate estimated decrease in FY 2006 LTCH PPS payments. As we
explained in the FY 2006 IPPS proposed rule (70 FR 23667), we continue
to observe an increase of relatively lower charge cases being assigned
to LTC-DRGs with higher relative weights in the prior year. The
addition of these lower charge cases results in a decrease in the many
of the LTC-DRG relative weights from FY 2005 to FY 2006. This decrease
in many of the LTC-DRG relative weights, in turn, will result in an
estimated decrease in LTCH PPS payments. As we explained in that same
proposed rule, contributing to this increased number of relatively
lower charge cases being assigned to LTC-DRGs with higher relative
weights in the prior year are improvements in coding practices, which
are typically found when moving from a reasonable cost-based payment
system to a PPS. A further analysis of the LTCH claims in the March
2005 update of the FY 2004 MedPAR data, which we used to determine the
FY 2006 LTC-DRG relative weights in this final rule, continue to show
an increase of relatively lower charge cases being assigned to LTC-DRGs
with higher relative weights in the prior year. As we explained the FY
2006 IPPS proposed rule (70 FR 23667), the impact of including cases
with relatively lower charges into LTC-DRGs that had a relatively
higher relative weight in the version 22.0 (FY 2005) GROUPER is a
decrease in the average relative weight for those LTC-DRGs, which, in
turn, results in an estimated aggregate decrease in LTCH PPS payments.
A few commenters acknowledged that with the move from cost-based
reimbursement to a PPS, LTCHs' coding practices are still undergoing
refinement. Specifically, two commenters stated that ``the LTCH PPS, in
its third year of implementation, is still in transition; the initial
5-year phase-in will end September 2006. During this time of
transition, LTCH coding and data are still undergoing improvement.''
Therefore, it is not unreasonable to observe relatively significant
changes (either higher or lower) in the average charge for many LTC-
DRGs as LTCHs' behavior coding continues to change in response to the
implementation of a PPS. As the transition progresses, we expect that
LTCH's behavior will result in fewer nonuniform changes in the average
charge of many LTC-DRGs, which may impact the LTC-DRG relative weights
from year to year.
As we discussed above, we believe that there are no systemic errors
in the LTCH FY 2004 MedPAR data, and we believe that the increase of
relatively lower charge cases being assigned to LTC-DRGs with higher
relative weights that we observed in the FY 2004 LTCH claims data
(which results in a decrease in the many of the LTC-DRG relative
weights) accurately represents current LTCH costs. Specifically, an
analysis of a comparison of the FY 2003 LTCH claims data (used to
develop the FY 2005 LTC-DRG relative weights) and the FY 2004 LTCH
claims data (used to develop the FY 2006 LTC-DRG relative weights)
shows that, of the 155 LTC-DRGs that are used on a ``regular basis''
(that is, nationally, LTCHs discharge, in total, 25 or more of these
cases annually), about 30 percent of those LTC-DRGs have experienced a
decrease in the average charge per case, which generally results in a
lower relative weight. In addition, about 45 percent of those LTC-DRGs
have experienced an increase in the average charge that is less than
the increase (16 percent) in the overall average charge across all LTC-
DRGs. In general, the LTC-DRG relative weights are determined by
dividing the average charge for each LTC-DRG by the average charge
across all LTC-DRGs. Accordingly, those LTC-DRGs with an increase in
average charge of less than 16 percent (that is, the increase in
average charge across all LTC-DRGs) will also experience a reduction in
their relative weight because the average charge for each of those LTC-
DRGs is being divided by a bigger number (that is, the average charge
across all LTC-DRGs). Therefore, because we believe the FY 2004 LTCH
claims data used to determine the FY 2006 LTC-DRG relative weights
accurately reflect the resources used by LTCHs to treat their patients,
and these data show either a decrease in the average charge of the LTC-
DRG or an increase in the average charge of the LTC-DRG that is less
than the overall increase in the average charge across all LTC-DRGs, we
believe that the decrease in many of the LTC-DRG relative weights is
appropriate.
The LTC-DRG relative weights are designed to reflect the average of
resources used to treat representative cases of the discharges within
each LTC-DRG. As we discussed in greater detail above, after our
extensive analysis of the FY 2004 MedPAR data, which we used to
determine the FY 2006 LTC-DRG relative weights, we concluded that there
are no systematic errors in that data. Therefore, we continue to
believe it is appropriate to base the FY 2006 LTC-DRG relative weights
on LTCH claims data in the FY 2004 MedPAR file. Furthermore, we believe
that the decrease in many of the LTC-DRG relative weights is
appropriate and is reflective of the changing behaviors of LTCHs'
response to a PPS environment. As we discussed above, we believe that
the LTCH claims data in the FY 2004 MedPAR file accurately reflects the
resources that are expended to treat LTCH patients in each LTC-DRG.
Although many of the LTC-DRG relative weights (and consequently
aggregate LTCH PPS payments, excluding the update to the LTCH PPS
Federal rate effective July 1, 2005 (70 FR 24217) will be lower in FY
2006 as compared to FY 2005, we do not believe that the payment rates
for those LTC-DRGs are inappropriate based on the LTCH claims data in
the FY 2004 MedPAR files. Rather, we believe that the lower LTC-DRG
relative weights (and consequently a reduction in aggregate LTCH PPS
payments) are appropriate, given that the average resources used to
treat a LTCH patient in a particular LTC-DRG are less than the average
resources used to treat a LTCH patient in a particular LTC-DRG based on
FY 2003 LTCH claims data. Therefore, we do not agree with the
commenters' assertion that the changes to the LTC-DRG relative weights
for FY 2006 will result in instability in LTCH PPS payments. Rather, we
believe that the changes to the LTC-DRG relative weights for FY 2006
will result in appropriate payments for the resources used to treat
LTCH patients in a particular LTC-DRG. Accordingly, for the reasons
discussed above, we are not implementing a ``dampening policy'' in
determining the FY 2006 LTC-DRG relative weights in this final rule. We
also note that the 4.2 percent decrease in LTCH PPS payments estimated
as a result of the changes we are making to the LTC-DRGs and relative
weights in this final rule for FY 2006 (see section VII. of the
Addendum to this final rule) is partially offset by the projected 5.7
percent increase in LTCH PPS payments estimated based on the updated
rates and factors effective for discharges occurring on or after July
1, 2005 established in the FY 2006 LTCH PPS final rule (70 FR 24217).
Below we discuss in detail the steps for calculating the FY 2006
LTC-DRG relative weights as presented in the FY 2006 IPPS proposed rule
(70 FR 23346 through 23353). We note that, as we stated above in
section II.D.3.b. of this preamble, as we proposed, we have excluded
the data of all-inclusive rate LTCHs and LTCHs that are paid in
accordance with demonstration projects
[[Page 47336]]
that had claims in the FY 2004 MedPAR file.
Step 1--Remove statistical outliers.
The first step in the calculation of the FY 2006 LTC-DRG relative
weights is to remove statistical outlier cases. We define statistical
outliers as cases that are outside of 3.0 standard deviations from the
mean of the log distribution of both charges per case and the charges
per day for each LTC-DRG. These statistical outliers are removed prior
to calculating the relative weights. As noted above, we believe that
they may represent aberrations in the data that distort the measure of
average resource use. Including those LTCH cases in the calculation of
the relative weights could result in an inaccurate relative weight that
does not truly reflect relative resource use among the LTC-DRGs.
Step 2--Remove cases with a length of stay of 7 days or less.
The FY 2006 LTC-DRG relative weights reflect the average of
resources used on representative cases of a specific type. Generally,
cases with a length of stay 7 days or less do not belong in a LTCH
because these stays do not fully receive or benefit from treatment that
is typical in a LTCH stay, and full resources are often not used in the
earlier stages of admission to a LTCH. As explained above, if we were
to include stays of 7 days or less in the computation of the FY 2006
LTC-DRG relative weights, the value of many relative weights would
decrease and, therefore, payments would decrease to a level that may no
longer be appropriate.
We do not believe that it would be appropriate to compromise the
integrity of the payment determination for those LTCH cases that
actually benefit from and receive a full course of treatment at a LTCH,
in order to include data from these very short-stays. Thus, as
explained above, in determining the FY 2006 LTC-DRG relative weights,
we remove LTCH cases with a length of stay of 7 days or less.
Step 3--Adjust charges for the effects of short-stay outliers.
After removing cases with a length of stay of 7 days or less, we
are left with cases that have a length of stay of greater than or equal
to 8 days. The next step in the calculation of the FY 2006 LTC-DRG
relative weights is to adjust each LTCH's charges per discharge for
those remaining cases for the effects of short-stay outliers as defined
in Sec. 412.529(a). (However, we note that even if a case was removed
in Step 2 (that is, cases with a length of stay of 7 days or less), it
was paid as a short-stay outlier if its length of stay was less than or
equal to five-sixths of the average length of stay of the LTC-DRG, in
accordance with Sec. 412.529.)
We make this adjustment by counting a short-stay outlier as a
fraction of a discharge based on the ratio of the length of stay of the
case to the average length of stay for the LTC-DRG for nonshort-stay
outlier cases. This has the effect of proportionately reducing the
impact of the lower charges for the short-stay outlier cases in
calculating the average charge for the LTC-DRG. This process produces
the same result as if the actual charges per discharge of a short-stay
outlier case were adjusted to what they would have been had the
patient's length of stay been equal to the average length of stay of
the LTC-DRG.
As we explained in the FY 2006 IPPS proposed rule (70 FR 23346
through 23347), counting short-stay outlier cases as full discharges
with no adjustment in determining the LTC-DRG relative weights would
lower the LTC-DRG relative weight for affected LTC-DRGs because the
relatively lower charges of the short-stay outlier cases would bring
down the average charge for all cases within a LTC-DRG. This would
result in an ``underpayment'' to nonshort-stay outlier cases and an
``overpayment'' to short-stay outlier cases. Therefore, in this final
rule, we adjust for short-stay outlier cases under Sec. 412.529 in
this manner because it results in more appropriate payments for all
LTCH cases.
Step 4--Calculate the FY 2006 LTC-DRG relative weights on an
iterative basis.
The process of calculating the LTC-DRG relative weights using the
hospital-specific relative value methodology is iterative. First, for
each LTCH case, we calculate a hospital-specific relative charge value
by dividing the short-stay outlier adjusted charge per discharge (see
step 3) of the LTCH case (after removing the statistical outliers (see
step 1)) and LTCH cases with a length of stay of 7 days or less (see
step 2) by the average charge per discharge for the LTCH in which the
case occurred. The resulting ratio is then multiplied by the LTCH's
case-mix index to produce an adjusted hospital-specific relative charge
value for the case. An initial case-mix index value of 1.0 is used for
each LTCH.
For each LTC-DRG, the FY 2006 LTC-DRG relative weight is calculated
by dividing the average of the adjusted hospital-specific relative
charge values (from above) for the LTC-DRG by the overall average
hospital-specific relative charge value across all cases for all LTCHs.
Using these recalculated LTC-DRG relative weights, each LTCH's average
relative weight for all of its cases (case-mix) is calculated by
dividing the sum of all the LTCH's LTC-DRG relative weights by its
total number of cases. The LTCHs' hospital-specific relative charge
values above are multiplied by these hospital-specific case-mix
indexes. These hospital-specific case-mix adjusted relative charge
values are then used to calculate a new set of LTC-DRG relative weights
across all LTCHs. In this final rule, this iterative process is
continued until there is convergence between the weights produced at
adjacent steps, for example, when the maximum difference is less than
0.0001.
Step 5--Adjust the FY 2006 LTC-DRG relative weights to account for
nonmonotonically increasing relative weights.
As explained in section II.B. of this preamble, the FY 2006 CMS
DRGs, on which the FY 2006 LTC-DRGs are based, contain ``pairs'' that
are differentiated based on the presence or absence of CCs. The LTC-
DRGs with CCs are defined by certain secondary diagnoses not related to
or inherently a part of the disease process identified by the principal
diagnosis, but the presence of additional diagnoses does not
automatically generate a CC. As we discussed in the FY 2005 IPPS final
rule (69 FR 48991), the value of monotonically increasing relative
weights rises as the resource use increases (for example, from
uncomplicated to more complicated). The presence of CCs in a LTC-DRG
means that cases classified into a ``without CC'' LTC-DRG are expected
to have lower resource use (and lower costs). In other words, resource
use (and costs) are expected to decrease across ``with CC/without CC''
pairs of LTC-DRGs.
For a case to be assigned to a LTC-DRG with CCs, more coded
information is called for (that is, at least one relevant secondary
diagnosis), than for a case to be assigned to a LTC-DRG ``without CCs''
(which is based on only one principal diagnosis and no relevant
secondary diagnoses). Currently, the LTCH claims data include both
accurately coded cases without complications and cases that have
complications (and cost more), but were not coded completely. Both
types of cases are grouped to a LTC-DRG ``without CCs'' when only the
principal diagnosis was coded. Since the LTCH PPS was only implemented
for cost reporting periods beginning on or after October 1, 2002 (FY
2003), and LTCHs were previously paid under cost-based reimbursement,
which is not based on patient diagnoses, coding by LTCHs for
[[Page 47337]]
these cases may not have been as detailed as possible.
Thus, in developing the FY 2003 LTC-DRG relative weights for the
LTCH PPS based on FY 2001 claims data, as we discussed in the August
30, 2002 LTCH PPS final rule (67 FR 55990), we found on occasion that
the data suggested that cases classified to the LTC-DRG ``with CCs'' of
a ``with CC''/``without CC'' pair had a lower average charge than the
corresponding LTC-DRG ``without CCs.'' Similarly, as discussed in the
FY 2005 IPPS final rule (69 FR 48991 through 48992), based on FY 2003
claims data, we also found on occasion that the data suggested that
cases classified to the LTC-DRG ``with CCs'' of a ``with CC''/``without
CC'' pair have a lower average charge than the corresponding LTC-DRG
``without CCs'' for the FY 2005 LTC-DRG relative weights.
We believe this anomaly may be due to coding that may not have
fully reflected all comorbidities that were present. Specifically,
LTCHs may have failed to code relevant secondary diagnoses, which
resulted in cases that actually had CCs being classified into a
``without CC'' LTC-DRG. It would not be appropriate to pay a lower
amount for the ``with CC'' LTC-DRG because, in general, cases
classified into a ``with CC'' LTC-DRG are expected to have higher
resource use (and higher cost) as discussed above. Therefore,
previously when we determined the LTC-DRG relative weights in
accordance with the methodology established in the August 30, 2002 LTCH
PPS final rule (67 FR 55990), we grouped both the cases ``with CCs''
and ``without CCs'' together for the purpose of calculating the LTC-DRG
relative weights since the implementation of the LTCH PPS in FY 2003.
As we stated in that same final rule, we will continue to employ this
methodology to account for nonmonotonically increasing relative weights
until we have adequate data to calculate appropriate separate weights
for these anomalous LTC-DRG pairs. We expect that, as was the case when
we first implemented the IPPS, this problem will be self-correcting, as
LTCHs submit more completely coded data in the future.
There are three types of ``with CC'' and ``without CC'' pairs that
could be nonmonotonic; that is, where the ``without CC'' LTC-DRG would
have a higher average charge than the ``with CC'' LTC-DRG. For this
final rule, using the LTCH cases in the March 2005 update of the FY
2004 MedPAR file (the best available data at this time), we identified
three types of nonmonotonic LTC-DRG pairs. As we stated in the August
30, 2002 LTCH PPS final rule (67 FR 55990), we believe this anomaly may
be due to coding inaccuracies and expect that, as was the case when we
first implemented the acute care hospital IPPS, this problem will be
self-correcting, as LTCHs submit more completely coded data in the
future.
The first category of nonmonotonically increasing relative weights
for FY 2006 LTC-DRG pairs ``with and without CCs'' contains one pair of
LTC-DRGs in which both the LTC-DRG ``with CCs'' and the LTC-DRG
``without CCs'' had 25 or more LTCH cases and, therefore, did not fall
into one of the 5 low-volume quintiles. For those nonmonotonic LTC-DRG
pairs, we combine the LTCH cases and compute a new relative weight
based on the case-weighted average of the combined LTCH cases of the
LTC-DRGs. The case-weighted average charge is determined by dividing
the total charges for all LTCH cases by the total number of LTCH cases
for the combined LTC-DRG. This new relative weight is then assigned to
both of the LTC-DRGs in the pair. In this final rule, for FY 2006, LTC-
DRGs 553 and 554 fall into this category.
The second category of nonmonotonically increasing relative weights
for LTC-DRG pairs ``with and without CCs'' consists of one pair of LTC-
DRGs that has fewer than 25 cases, and each LTC-DRG is grouped to
different low-volume quintiles in which the ``without CC'' LTC-DRG is
in a higher-weighted low-volume quintile than the ``with CC'' LTC-DRG.
For those pairs, we combine the LTCH cases and determine the case-
weighted average charge for all LTCH cases. The case-weighted average
charge is determined by dividing the total charges for all LTCH cases
by the total number of LTCH cases for the combined LTC-DRG. Based on
the case-weighted average LTCH charge, we determine within which low-
volume quintile the ``combined LTC-DRG'' is grouped. Both LTC-DRGs in
the pair are then grouped into the same low-volume quintile, and thus
have the same relative weight. In this final rule, for FY 2006, LTC-
DRGs 555, 556 and 557 fall into this category. (We note, 3 LTC-DRGs
make up this non-monotonic ``pair'' of LTC-DRGs because these
percutaneous cardiovascular procedure DRGs are further split depending
on the presence or absence of a drug eluting stint and the presence or
absence of a major ``CV'' (cardiovascular) diagnosis, which is similar
to the adjustment for non-monotonicity for DRGs 521, 522 and 523 in the
development of the FY 2005 LTC-DRG relative weights (69 FR 78922).
The third category of nonmonotonically increasing relative weights
for LTC-DRG pairs ``with and without CCs'' consists of one pair of LTC-
DRGs where one of the LTC-DRGs has fewer than 25 LTCH cases and is
grouped to a low-volume quintile and the other LTC-DRG has 25 or more
LTCH cases and has its own LTC-DRG relative weight, and the LTC-DRG
``without CCs'' has the higher relative weight. We removed the low-
volume LTC-DRG from the low-volume quintile and combined it with the
other LTC-DRG for the computation of a new relative weight for each of
these LTC-DRGs. This new relative weight is assigned to both LTC-DRGs,
so they each have the same relative weight. In this final rule, for FY
2006, LTC-DRGs 142 and 143 fall into this category.
Step 6--Determine a FY 2006 LTC-DRG relative weight for LTC-DRGs
with no LTCH cases.
As we stated above, we determine the relative weight for each LTC-
DRG using charges reported in the March 2005 update of the FY 2004
MedPAR file. Of the 526 LTC-DRGs for FY 2006, we identified 196 LTC-
DRGs for which there were no LTCH cases in the database. That is, based
on data from the FY 2004 MedPAR file used in this final rule, no
patients who would have been classified to those LTC-DRGs were treated
in LTCHs during FY 2004 and, therefore, no charge data were reported
for those LTC-DRGs. Thus, in the process of determining the LTC-DRG
relative weights, we are unable to determine weights for these 196 LTC-
DRGs using the methodology described in steps 1 through 5 above.
However, because patients with a number of the diagnoses under these
LTC-DRGs may be treated at LTCHs beginning in FY 2006, we assign
relative weights to each of the 196 ``no volume'' LTC-DRGs based on
clinical similarity and relative costliness to one of the remaining 330
(526 - 196 = 330) LTC-DRGs for which we are able to determine relative
weights, based on FY 2004 claims data.
As there are currently no LTCH cases in these ``no volume'' LTC-
DRGs, we determined relative weights for the 196 LTC-DRGs with no LTCH
cases in the FY 2004 MedPAR file used in this final rule by grouping
them to the appropriate low-volume quintile. This methodology is
consistent with our methodology used in determining relative weights to
account for the low-volume LTC-DRGs described above.
Our methodology for determining relative weights for the ``no
volume'' LTC-DRGs is as follows: We crosswalk
[[Page 47338]]
the no volume LTC-DRGs by matching them to other similar LTC-DRGs for
which there were LTCH cases in the FY 2004 MedPAR file based on
clinical similarity and intensity of use of resources as determined by
care provided during the period of time surrounding surgery, surgical
approach (if applicable), length of time of surgical procedure, post-
operative care, and length of stay. We assign the relative weight for
the applicable low-volume quintile to the no volume LTC-DRG if the LTC-
DRG to which it is crosswalked is grouped to one of the low-volume
quintiles. If the LTC-DRG to which the no volume LTC-DRG is crosswalked
is not one of the LTC-DRGs to be grouped to one of the low-volume
quintiles, we compare the relative weight of the LTC-DRG to which the
no volume LTC-DRG is crosswalked to the relative weights of each of the
five quintiles and we assign the no volume LTC-DRG the relative weight
of the low-volume quintile with the closest weight. For this final
rule, a list of the no volume FY 2006 LTC-DRGs and the FY 2006 LTC-DRG
to which it is crosswalked in order to determine the appropriate low-
volume quintile for the assignment of a relative weight for FY 2006 is
shown in the chart below.
No Volume LTC-DRG Crosswalk and Quintile Assignment for FY 2006
------------------------------------------------------------------------
Low-volume
LTC-DRG Description Cross-walked quintile
LTC-DRG assignment
------------------------------------------------------------------------
2............... CRANIOTOMY AGE >17 W/ 1 Quintile 5.
O CC.
3............... CRANIOTOMY AGE 0-17. 1 Quintile 5.
6............... CARPAL TUNNEL 251 Quintile 1.
RELEASE.
26.............. SEIZURE & HEADACHE 25 Quintile 1.
AGE 0-17.
30.............. TRAUMATIC STUPOR & 29 Quintile 2.
COMA, COMA < 1 HR
AGE 0-17.
32.............. CONCUSSION AGE >17 W/ 25 Quintile 1.
O CC.
33.............. CONCUSSION AGE 0-17. 25 Quintile 1.
36.............. RETINAL PROCEDURES.. 40 Quintile 4.
37.............. ORBITAL PROCEDURES.. 40 Quintile 4.
38.............. PRIMARY IRIS 40 Quintile 4.
PROCEDURES.
39.............. LENS PROCEDURES WITH 40 Quintile 4.
OR WITHOUT
VITRECTOMY.
41.............. EXTRAOCULAR 40 Quintile 4.
PROCEDURES EXCEPT
ORBIT AGE 0-17.
42.............. INTRAOCULAR 40 Quintile 4.
PROCEDURES EXCEPT
RETINA, IRIS & LENS.
43.............. HYPHEMA............. 40 Quintile 4.
45.............. NEUROLOGICAL EYE 40 Quintile 4.
DISORDERS.
47.............. OTHER DISORDERS OF 40 Quintile 4.
THE EYE AGE >17 W/O
CC.
48.............. OTHER DISORDERS OF 40 Quintile 4.
THE EYE AGE 0-17.
49.............. ESOPHAGITIS, 64 Quintile 4.
GASTROENT & MISC
DIGEST DISORDERS
AGE 0-17.
50.............. SIALOADENECTOMY..... 63 Quintile 4.
51.............. SALIVARY GLAND 63 Quintile 4.
PROCEDURES EXCEPT
SIALOADENECTOMY.
52.............. CLEFT LIP & PALATE 63 Quintile 4.
REPAIR.
53.............. SINUS & MASTOID 63 Quintile 4.
PROCEDURES AGE >17.
54.............. SINUS & MASTOID 63 Quintile 4.
PROCEDURES AGE 0-17.
55.............. MISCELLANEOUS EAR, 63 Quintile 4.
NOSE, MOUTH &
THROAT PROCEDURES.
56.............. RHINOPLASTY......... 63 Quintile 4.
57.............. T&A PROC, EXCEPT 69 Quintile 1.
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY,
AGE >17.
58.............. T&A PROC, EXCEPT 69 Quintile 1.
TONSILLECTOMY &/OR
ADENOIDECTOMY ONLY,
AGE 0-17.
59.............. TONSILLECTOMY &/OR 69 Quintile 1.
ADENOIDECTOMY ONLY,
AGE >17.
60.............. TONSILLECTOMY &/OR 69 Quintile 1.
ADENOIDECTOMY ONLY,
AGE 0-17.
62.............. MYRINGOTOMY W TUBE 69 Quintile 1.
INSERTION AGE 0-17.
66.............. EPISTAXIS........... 69 Quintile 1.
70.............. OTITIS MEDIA & URI 69 Quintile 1.
AGE 0-17.
71.............. LARYNGOTRACHEITIS... 97 Quintile 2.
72.............. OTHER DIGESTIVE 73 Quintile 3.
SYSTEM DIAGNOSES
AGE 0-17.
74.............. OTHER EAR, NOSE, 69 Quintile 1.
MOUTH & THROAT
DIAGNOSES AGE 0-17.
81.............. RESPIRATORY 69 Quintile 1.
INFECTIONS &
INFLAMMATIONS AGE 0-
17.
84.............. MAJOR CHEST TRAUMA W/ 93 Quintile 2.
O CC.
91.............. ALCOHOL/DRUG ABUSE 90 Quintile 1.
OR DEPENDENCE W
REHABILITATION
THERAPY W/O CC.
98.............. BRONCHITIS & ASTHMA 97 Quintile 2.
AGE 0-17.
104............. CARDIAC VALVE & 110 Quintile 3.
OTHER MAJOR
CARDIOTHORACIC PROC
W CARDIAC CATH.
105............. CARDIAC VALVE & 110 Quintile 3.
OTHER MAJOR
CARDIOTHORACIC PROC
W/O CARDIAC CATH.
106............. CORONARY BYPASS W 110 Quintile 3.
PTCA.
107............. CORONARY BYPASS W 110 Quintile 3.
CARDIAC CATH.
108............. OTHER CARDIOTHORACIC 110 Quintile 3.
PROCEDURES.
109............. CORONARY BYPASS W/O 110 Quintile 3.
PTCA OR CARDIAC
CATH.
111............. MAJOR CARDIOVASCULAR 110 Quintile 3.
PROCEDURES W/O CC.
129............. CARDIAC ARREST, 110 Quintile 3.
UNEXPLAINED.
137............. CARDIAC CONGENITAL & 136 Quintile 2.
VALVULAR DISORDERS
AGE 0-17.
146............. ALCOHOL/DRUG ABUSE 148 Quintile 5.
OR DEPENDENCE W/O
REHABILITATION
THERAPY W/O CC.
147............. NASAL TRAUMA & 148 Quintile 5.
DEFORMITY.
149............. FX, SPRN, STRN & 176 Quintile 3.
DISL OF FOREARM,
HAND, FOOT AGE 0-17.
153............. MINOR SMALL & LARGE 152 Quintile 3.
BOWEL PROCEDURES W/
O CC.
155............. STOMACH, ESOPHAGEAL 154 Quintile 5.
& DUODENAL
PROCEDURES AGE >17
W/O CC.
156............. STOMACH, ESOPHAGEAL 154 Quintile 5.
& DUODENAL
PROCEDURES AGE 0-17.
158............. ANAL & STOMAL 157 Quintile 4.
PROCEDURES W/O CC.
159............. HERNIA PROCEDURES 177 Quintile 3.
EXCEPT INGUINAL &
FEMORAL AGE >17 W
CC.
160............. HERNIA PROCEDURES 177 Quintile 3.
EXCEPT INGUINAL &
FEMORAL AGE >17 W/O
CC.
[[Page 47339]]
162............. INGUINAL & FEMORAL 178 Quintile 3.
HERNIA PROCEDURES
AGE >17 W/O CC.
163............. HERNIA PROCEDURES 178 Quintile 3.
AGE 0-17.
164............. NUTRITIONAL & MISC 148 Quintile 5.
METABOLIC DISORDERS
AGE 0-17.
165............. CESAREAN SECTION W/O 148 Quintile 5.
CC.
166............. LYMPHOMA & NON-ACUTE 148 Quintile 5.
LEUKEMIA W OTHER
O.R. PROC W/O CC.
167............. MAJOR SMALL & LARGE 148 Quintile 5.
BOWEL PROCEDURES W/
O CC.
169............. MOUTH PROCEDURES W/O 185 Quintile 3.
CC.
184............. FX, SPRN, STRN & 183 Quintile 1.
DISL OF
UPARM,LOWLEG EX
FOOT AGE 0-17.
186............. DENTAL & ORAL DIS 185 Quintile 3.
EXCEPT EXTRACTIONS
& RESTORATIONS, AGE
0-17.
187............. DENTAL EXTRACTIONS & 185 Quintile 3.
RESTORATIONS.
190............. PERIANAL & PILONIDAL 189 Quintile 1.
PROCEDURES.
192............. PANCREAS, LIVER & 191 Quintile 4.
SHUNT PROCEDURES W/
O CC.
194............. BILIARY TRACT PROC 193 Quintile 3.
EXCEPT ONLY
CHOLECYST W OR W/O
C.D.E. W/O CC.
196............. CHOLECYSTECTOMY W 197 Quintile 3.
C.D.E. W/O CC.
198............. CHOLECYSTECTOMY 197 Quintile 3.
EXCEPT BY
LAPAROSCOPE W/O
C.D.E. W/O CC.
199............. HEPATOBILIARY 200 Quintile 5.
DIAGNOSTIC
PROCEDURE FOR
MALIGNANCY.
212............. HIP & FEMUR 210 Quintile 5.
PROCEDURES EXCEPT
MAJOR JOINT AGE 0-
17.
220............. LOWER EXTREM & HUMER 218 Quintile 5.
PROC EXCEPT
HIP,FOOT,FEMUR AGE
0-17.
224............. SHOULDER,ELBOW OR 227 Quintile 3.
FOREARM PROC,EXC
MAJOR JOINT PROC, W/
O CC.
229............. HAND OR WRIST PROC, 237 Quintile 1.
EXCEPT MAJOR JOINT
PROC, W/O CC.
232............. ARTHROSCOPY......... 237 Quintile 1.
234............. OTHER MUSCULOSKELET 237 Quintile 1.
SYS & CONN TISS
O.R. PROC W/O CC.
252............. SEPTICEMIA AGE 0-17. 253 Quintile 3.
255............. LIMB REATTACHMENT, 253 Quintile 3.
HIP AND FEMUR PROC
FOR MULTIPLE
SIGNIFICANT TR.
257............. TOTAL MASTECTOMY FOR 274 Quintile 3.
MALIGNANCY W CC.
258............. TOTAL MASTECTOMY FOR 274 Quintile 3.
MALIGNANCY W/O CC.
260............. SUBTOTAL MASTECTOMY 274 Quintile 3.
FOR MALIGNANCY W/O
CC.
261............. BREAST PROC FOR NON- 274 Quintile 3.
MALIGNANCY EXCEPT
BIOPSY & LOCAL
EXCISION.
267............. MAJOR HEAD & NECK 271 Quintile 3.
PROCEDURES.
275............. MALIGNANT BREAST 274 Quintile 3.
DISORDERS W/O CC.
279............. CELLULITIS AGE 0-17. 273 Quintile 1.
282............. TRAUMA TO THE SKIN, 281 Quintile 1.
SUBCUT TISS &
BREAST AGE 0-17.
286............. EXTREME IMMATURITY.. 292 Quintile 5.
289............. PARATHYROID 63 Quintile 4.
PROCEDURES.
291............. THYROGLOSSAL 63 Quintile 4.
PROCEDURES.
298............. PREMATURITY W MAJOR 297 Quintile 2.
PROBLEMS.
307............. PROSTATECTOMY W/O CC 306 Quintile 2.
309............. MINOR BLADDER 308 Quintile 3.
PROCEDURES W/O CC.
311............. TRANSURETHRAL 310 Quintile 4.
PROCEDURES W/O CC.
313............. URETHRAL PROCEDURES, 312 Quintile 1.
AGE >17 W/O CC.
314............. URETHRAL PROCEDURES, 305 Quintile 1.
AGE 0-17.
322............. FULL TERM NEONATE W 321 Quintile 1.
MAJOR PROBLEMS.
324............. NEONATE W OTHER 321 Quintile 1.
SIGNIFICANT
PROBLEMS.
326............. RECTAL RESECTION W/O 321 Quintile 1.
CC.
327............. RECTAL RESECTION W 321 Quintile 1.
CC.
329............. URETHRAL STRICTURE 305 Quintile 1.
AGE >17 W/O CC.
330............. URETHRAL STRICTURE 305 Quintile 1.
AGE 0-17.
333............. OTHER KIDNEY & 332 Quintile 2.
URINARY TRACT
DIAGNOSES AGE 0-17.
335............. MAJOR MALE PELVIC 345 Quintile 5.
PROCEDURES W/O CC.
337............. TRANSURETHRAL 306 Quintile 2.
PROSTATECTOMY W/O
CC.
338............. TESTES PROCEDURES, 336 Quintile 2.
FOR MALIGNANCY.
340............. TESTES PROCEDURES, 339 Quintile 4.
NON-MALIGNANCY AGE
0-17.
342............. CIRCUMCISION AGE >17 339 Quintile 4.
343............. CIRCUMCISION AGE 0- 339 Quintile 4.
17.
349............. BENIGN PROSTATIC 339 Quintile 4.
HYPERTROPHY W/O CC.
351............. STERILIZATION, MALE. 339 Quintile 4.
353............. PELVIC EVISCERATION, 339 Quintile 4.
RADICAL
HYSTERECTOMY &
RADICAL VULVECTOMY.
354............. UTERINE,ADNEXA PROC 339 Quintile 4.
FOR NON-OVARIAN/
ADNEXAL MALIG W CC.
355............. UTERINE,ADNEXA PROC 339 Quintile 4.
FOR NON-OVARIAN/
ADNEXAL MALIG W/O
CC.
356............. FEMALE REPRODUCTIVE 339 Quintile 4.
SYSTEM
RECONSTRUCTIVE
PROCEDURES.
357............. UTERINE & ADNEXA 339 Quintile 4.
PROC FOR OVARIAN OR
ADNEXAL MALIGNANCY.
358............. UTERINE & ADNEXA 339 Quintile 4.
PROC FOR NON-
MALIGNANCY W CC.
359............. UTERINE & ADNEXA 339 Quintile 4.
PROC FOR NON-
MALIGNANCY W/O CC.
361............. LAPAROSCOPY & 110 Quintile 3.
INCISIONAL TUBAL
INTERRUPTION.
362............. ENDOSCOPIC TUBAL 110 Quintile 3.
INTERRUPTION.
363............. D&C, CONIZATION & 110 Quintile 3.
RADIO-IMPLANT, FOR
MALIGNANCY.
367............. MALIGNANCY, FEMALE 110 Quintile 3.
REPRODUCTIVE SYSTEM
W/O CC.
370............. CESAREAN SECTION W 369 Quintile 3.
CC.
371............. APPENDECTOMY W 368 Quintile 2.
COMPLICATED
PRINCIPAL DIAG W CC.
372............. VAGINAL DELIVERY W 110 Quintile 3.
COMPLICATING
DIAGNOSES.
[[Page 47340]]
373............. VAGINAL DELIVERY W/O 110 Quintile 3.
COMPLICATING
DIAGNOSES.
374............. VAGINAL DELIVERY W 110 Quintile 3.
STERILIZATION &/OR
D&C.
375............. VAGINAL DELIVERY W 110 Quintile 3.
O.R. PROC EXCEPT
STERIL &/OR D&C.
376............. POSTPARTUM & POST 110 Quintile 3.
ABORTION DIAGNOSES
W/O O.R. PROCEDURE.
377............. POSTPARTUM & POST 110 Quintile 3.
ABORTION DIAGNOSES
W O.R. PROCEDURE.
378............. ECTOPIC PREGNANCY... 369 Quintile 3.
379............. THREATENED ABORTION. 110 Quintile 3.
380............. ABORTION W/O D&C.... 110 Quintile 3.
381............. ABORTION W D&C, 110 Quintile 3.
ASPIRATION
CURETTAGE OR
HYSTEROTOMY.
382............. FALSE LABOR......... 110 Quintile 3.
383............. OTHER ANTEPARTUM 110 Quintile 3.
DIAGNOSES W MEDICAL
COMPLICATIONS.
384............. OTHER ANTEPARTUM 110 Quintile 3.
DIAGNOSES W/O
MEDICAL
COMPLICATIONS.
385............. NEONATES, DIED OR 110 Quintile 3.
TRANSFERRED TO
ANOTHER ACUTE CARE
FACILITY.
386............. KIDNEY & URINARY 87 Quintile 4.
TRACT INFECTIONS
AGE 0-17.
387............. URINARY STONES W/O 87 Quintile 4.
CC.
388............. PREMATURITY W/O 110 Quintile 3.
MAJOR PROBLEMS.
389............. KIDNEY & URINARY 87 Quintile 4.
TRACT SIGNS &
SYMPTOMS AGE 0-17.
390............. VIRAL ILLNESS & 87 Quintile 4.
FEVER OF UNKNOWN
ORIGIN AGE 0-17.
391............. NORMAL NEWBORN...... 110 Quintile 3.
392............. SPLENECTOMY AGE >17. 197 Quintile 3.
393............. SPLENECTOMY AGE 0-17 197 Quintile 3.
396............. RED BLOOD CELL 399 Quintile 2.
DISORDERS AGE 0-17.
402............. APPENDECTOMY W 395 Quintile 2.
COMPLICATED
PRINCIPAL DIAG W/O
CC.
405............. ACUTE LEUKEMIA W/O 404 Quintile 2.
MAJOR O.R.
PROCEDURE AGE 0-17.
407............. MYELOPROLIF DISORD 408 Quintile 4.
OR POORLY DIFF
NEOPL W MAJ
O.R.PROC W/O CC.
411............. HISTORY OF 110 Quintile 3.
MALIGNANCY W/O
ENDOSCOPY.
412............. HISTORY OF 110 Quintile 3.
MALIGNANCY W
ENDOSCOPY.
414............. OTHER MYELOPROLIF 399 Quintile 2.
DIS OR POORLY DIFF
NEOPL DIAG W/O CC.
417............. APPENDECTOMY W/O 416 Quintile 3.
COMPLICATED
PRINCIPAL DIAG W/O
CC.
420............. FEVER OF UNKNOWN 419 Quintile 4.
ORIGIN AGE >17 W/O
CC.
422............. ADRENAL & PITUITARY 419 Quintile 4.
PROCEDURES.
446............. TRAUMATIC INJURY AGE 445 Quintile 1.
0-17.
448............. ALLERGIC REACTIONS 447 Quintile 2.
AGE 0-17.
450............. POISONING & TOXIC 449 Quintile 3.
EFFECTS OF DRUGS
AGE >17 W/O CC.
451............. POISONING & TOXIC 449 Quintile 3.
EFFECTS OF DRUGS
AGE 0-17.
455............. OTHER INJURY, 449 Quintile 3.
POISONING & TOXIC
EFFECT DIAG W/O CC.
478............. OTHER VASCULAR 110 Quintile 3.
PROCEDURES W CC.
479............. OTHER VASCULAR 110 Quintile 3.
PROCEDURES W/O CC.
481............. BONE MARROW 394 Quintile 5.
TRANSPLANT.
485............. OTHER HEART ASSIST 487 Quintile 4.
SYSTEM IMPLANT.
492............. APPENDECTOMY W/O 410 Quintile 4.
COMPLICATED
PRINCIPAL DIAG W CC.
494............. LAPAROSCOPIC 493 Quintile 5.
CHOLECYSTECTOMY W/O
C.D.E. W/O CC.
496............. COMBINED ANTERIOR/ 497 Quintile 4.
POSTERIOR SPINAL
FUSION.
498............. SPINAL FUSION W/O CC 497 Quintile 4.
504............. CHEMOTHERAPY W ACUTE 468 Quintile 5.
LEUKEMIA AS
SECONDARY DIAGNOSIS.
518............. PERCUTANEOUS 125 Quintile 3.
CARDIVASCULAR PROC
W/O CORONARY ARTERY
STENT OR AMI.
520............. CERVICAL SPINAL 497 Quintile 4.
FUSION W/O CC.
522............. CARDIAC DEFIB 521 Quintile 1.
IMPLANT W CARDIAC
CATH W AMI/HF/SHOCK.
523............. CARDIAC DEFIB 521 Quintile 1.
IMPLANT W CARDIAC
CATH W/O AMI/HF/
SHOCK.
525............. EXTENSIVE BURN OR 468 Quintile 5.
FULL THICKNESS
BURNS WITH MECH
VENT 96+ HOURS WITH
SKIN GRAFT.
528............. INTRACRANIAL 1 Quintile 5.
VASCULAR PROC W PDX
HEMORRHAGE.
530............. VENTRICULAR SHUNT 529 Quintile 5.
PROCEDURES W/O CC.
534............. EXTRACRANIAL 500 Quintile 4.
VASCULAR PROCEDURES
WITHOUT CC.
535............. ACUTE ISCHEMIC 515 Quintile 5.
STROKE WITH USE OF
THROMBOLYTIC AGENT.
536............. KIDNEY & URINARY 515 Quintile 5.
TRACT SIGNS &
SYMPTOMS AGE >17 W/
O CC.
538............. LOCAL EXCISION AND 228 Quintile 4.
REMOVAL OF INTERNAL
FIXATION DEVICES
EXCEPT HIP AND
FEMUR WITHOUT CC.
540............. LYMPHOMA AND 399 Quintile 2.
LEUKEMIA WITH MAJOR
O.R. PROCEDURE
WITHOUT CC.
546............. SPINAL FUSION EXCEPT 499 Quintile 5.
CERVICAL WITH
CURVATURE OF SPINE
OR MALIGNANCY.
------------------------------------------------------------------------
To illustrate this methodology for determining the relative weights
for the 201 LTC-DRGs with no LTCH cases, we are providing the following
examples, which refer to the no volume LTC-DRGs crosswalk information
for FY 2006 provided in the chart above.
Example 1: There were no cases in the FY 2004 MedPAR file used for
this final rule for LTC-DRG 163 (Hernia Procedures Age 0-17). Since the
procedure is similar in resource use and the length and complexity of
the procedures and the length of stay are similar, we determined that
LTC-DRG 178 (Uncomplicated Peptic Ulcer Without CC), which is assigned
to low-
[[Page 47341]]
volume Quintile 3 for the purpose of determining the FY 2006 relative
weights, would display similar clinical and resource use. Therefore, we
assign the same relative weight of LTC-DRG 178 of 0.7637 (Quintile 3)
for FY 2006 (Table 11 in the Addendum to this final rule) to LTC-DRG
163.
Example 2: There were no LTCH cases in the FY 2004 MedPAR file used
in this final rule for LTC-DRG 91 (Simple Pneumonia and Pleurisy Age 0-
17). Since the severity of illness in patients with bronchitis and
asthma is similar in patients regardless of age, we determined that
LTC-DRG 90 (Simple Pneumonia and Pleurisy Age >17 Without CC) would
display similar clinical and resource use characteristics and have a
similar length of stay to LTC-DRG 91. There were over 25 cases in LTC-
DRG 90. Therefore, it would not be assigned to a low-volume quintile
for the purpose of determining the LTC-DRG relative weights. However,
under our established methodology, LTC-DRG 91, with no LTCH cases,
would need to be grouped to a low-volume quintile. We determined that
the low-volume quintile with the closest weight to LTC-DRG 90 (0.4970)
(refer to Table 11 in the Addendum to this final rule) would be low-
volume Quintile 1 (0.4499) (refer to Table 11 in the Addendum to this
final rule). Therefore, we assign LTC-DRG 91 a relative weight of
0.4499 for FY 2006.
Furthermore, we are establishing LTC-DRG relative weights of 0.0000
for heart, kidney, liver, lung, pancreas, and simultaneous pancreas/
kidney transplants (LTC-DRGs 103, 302, 480, 495, 512, and 513,
respectively) for FY 2006 because Medicare will only cover these
procedures if they are performed at a hospital that has been certified
for the specific procedures by Medicare and presently no LTCH has been
so certified.
Based on our research, we found that most LTCHs only perform minor
surgeries, such as minor small and large bowel procedures, to the
extent any surgeries are performed at all. Given the extensive criteria
that must be met to become certified as a transplant center for
Medicare, we believe it is unlikely that any LTCHs would become
certified as a transplant center. In fact, in the nearly 20 years since
the implementation of the IPPS, there has never been a LTCH that even
expressed an interest in becoming a transplant center.
However, if in the future a LTCH applies for certification as a
Medicare-approved transplant center, we believe that the application
and approval procedure would allow sufficient time for us to determine
appropriate weights for the LTC-DRGs affected. At the present time, we
would only include these six transplant LTC-DRGs in the GROUPER program
for administrative purposes. Because we use the same GROUPER program
for LTCHs as is used under the IPPS, removing these LTC-DRGs would be
administratively burdensome.
Again, we note that as this system is dynamic, it is entirely
possible that the number of LTC-DRGs with a zero volume of LTCH cases
based on the system will vary in the future. We used the best most
recent available claims data in the MedPAR file to identify zero volume
LTC-DRGs and to determine the relative weights in this final rule.
Table 11 in the Addendum to this final rule lists the LTC-DRGs and
their respective relative weights, geometric mean length of stay, and
five-sixths of the geometric mean length of stay (to assist in the
determination of short-stay outlier payments under Sec. 412.529) for
FY 2006.
5. Other Public Comments Relating to the LTCH PPS Payment Policies
Comment: One commenter submitted comments that addressed aspects of
the existing LTCH PPS, including the hospital-within-hospital policy,
which was discussed in the FY 2005 IPPS final rule (69 FR 49191), and
the June 2004 MedPAC recommendations concerning the definition of
LTCHs, which was discussed in the RY 2006 LTCH PPS final rule (70 FR
5757), for which we did not propose LTCH policy changes in the FY 2006
IPPS proposed rule.
Response: Because those comments pertain to specific aspects of the
existing LTCH PPS that were not specific proposed changes to the LTCH
PPS presented in the FY 2006 IPPS proposed rule, we are not responding
to them at this time. Rather, we believe it is more appropriate to
address the issues in the annual LTCH PPS proposed and final rules. We
will consider the issues raised in those comments in the context of
future rulemaking for the LTCH PPS.
E. Add-On Payments for New Services and Technologies
1. Background
Sections 1886(d)(5)(K) and (L) of the Act establish a process of
identifying and ensuring adequate payment for new medical services and
technologies under the IPPS. Section 1886(d)(5)(K)(vi) of the Act
specifies that a medical service or technology will be considered new
if it meets criteria established by the Secretary after notice and
opportunity for public comment. Section 1886(d)(5)(K)(ii)(I) of the Act
specifies that the process must apply to a new medical service or
technology if, ``based on the estimated costs incurred with respect to
discharges involving such service or technology, the DRG prospective
payment rate otherwise applicable to such discharges under this
subsection is inadequate.''
The regulations implementing this provision establish three
criteria for new medical services and techniques to receive an
additional payment. First, Sec. 412.87(b)(2) defines when a specific
medical service or technology will be considered new for purposes of
new medical service or technology add-on payments. The statutory
provision contemplated the special payment treatment for new medical
services or technologies until such time as data are available to
reflect the cost of the technology in the DRG weights through
recalibration. There is a lag of 2 to 3 years from the point a new
medical service or technology is first introduced on the market and
when data reflecting the use of the medical service or technology are
used to calculate the DRG weights. For example, data from discharges
occurring during FY 2004 are used to calculate the FY 2006 DRG weights
in this final rule. Section 412.87(b)(2) provides that a ``medical
service or technology may be considered new within 2 or 3 years after
the point at which data begin to become available reflecting the ICD-9-
CM code assigned to the new medical service or technology (depending on
when a new code is assigned and data on the new medical service or
technology become available for DRG recalibration). After CMS has
recalibrated the DRGs, based on available data, to reflect the costs of
an otherwise new medical service or technology, the medical service or
technology will no longer be considered `new' under the criterion for
this section.''
The 2-year to 3-year period during which a technology or medical
service can be considered new would ordinarily begin with FDA approval,
unless there was some documented delay in bringing the product onto the
market after that approval (for instance, component production or drug
production had been postponed until FDA approval due to shelf life
concerns or manufacturing issues). After the DRGs have been
recalibrated to reflect the costs of an otherwise new medical service
or technology, the special add-on payment for new medical services or
technology ceases (Sec. 412.87(b)(2)). For example, an approved new
technology that received FDA approval in October 2004 and entered the
market at that time may be eligible to receive add-on payments as a new
technology until FY 2007
[[Page 47342]]
(discharges occurring before October 1, 2006), when data reflecting the
costs of the technology would be used to recalibrate the DRG weights.
Because the FY 2007 DRG weights will be calculated using FY 2005 MedPAR
data, the costs of such a new technology would likely be reflected in
the FY 2007 DRG weights.
Section 412.87(b)(3) further provides that, to receive special
payment treatment, new medical services or technologies must be
inadequately paid otherwise under the DRG system. To assess whether
technologies would be inadequately paid under the DRGs, we establish
thresholds to evaluate applicants for new technology add-on payments.
In the FY 2004 IPPS final rule (68 FR 45385, August 1, 2003), we
established the threshold at the geometric mean standardized charge for
all cases in the DRG plus 75 percent of 1 standard deviation above the
geometric mean standardized charge (based on the logarithmic values of
the charges and transformed back to charges) for all cases in the DRG
to which the new medical service or technology is assigned (or the
case-weighted average of all relevant DRGs, if the new medical service
or technology occurs in many different DRGs). Table 10 in the Addendum
to the FY 2004 IPPS final rule (68 FR 45648) listed the qualifying
threshold by DRG, based on the discharge data that we used to calculate
the FY 2004 DRG weights.
However, section 503(b)(1) of Pub. L. 108-173 amended section
1886(d)(5)(K)(ii)(I) of the Act to provide for ``applying a threshold *
* * that is the lesser of 75 percent of the standardized amount
(increased to reflect the difference between cost and charges) or 75
percent of 1 standard deviation for the diagnosis-related group
involved.'' The provisions of section 503(b)(1) apply to classification
for fiscal years beginning with FY 2005. We updated Table 10 from the
Federal Register document that corrects the FY 2004 final rule (68 FR
57753, October 6, 2003), which contains the thresholds that we used to
evaluate applications for new service or technology add-on payments for
FY 2005, using the section 503(b)(1) measures stated above, and posted
these new thresholds on our Web site at: http://www.cms.hhs.gov/providers/hipps/newtech.asp.
In the FY 2005 IPPS final rule (in Table
10 of the Addendum), we included the final thresholds that are being
used to evaluate applicants for new technology add-on payments for FY
2006. (Refer to section IV.D. of the preamble to the FY 2005 IPPS final
rule (69 FR 49084, August 11, 2004) for a discussion of a revision of
the regulations to incorporate the change made by section 503(b)(1) of
Pub. L. 108-173.)
Section 412.87(b)(1) of our existing regulations provides that a
new technology is an appropriate candidate for an additional payment
when it represents an advance in medical technology that substantially
improves, relative to technologies previously available, the diagnosis
or treatment of Medicare beneficiaries. For example, a new technology
represents a substantial clinical improvement when it reduces
mortality, decreases the number of hospitalizations or physician
visits, or reduces recovery time compared to the technologies
previously available. (See the September 7, 2001 final rule, 66 FR
46902, for a complete discussion of this criterion.)
The new medical service or technology add-on payment policy
provides additional payments for cases with high costs involving
eligible new medical services or technologies while preserving some of
the incentives under the average-based payment system. The payment
mechanism is based on the cost to hospitals for the new medical service
or technology. Under Sec. 412.88, Medicare pays a marginal cost factor
of 50 percent for the costs of a new medical service or technology in
excess of the full DRG payment. If the actual costs of a new medical
service or technology case exceed the DRG payment by more than the 50-
percent marginal cost factor of the new medical service or technology,
Medicare payment is limited to the DRG payment plus 50 percent of the
estimated costs of the new technology.
The report language accompanying section 533 of Pub. L. 106-554
indicated Congressional intent that the Secretary implement the new
mechanism on a budget neutral basis (H.R. Conf. Rep. No. 106-1033,
106th Cong., 2nd Sess. at 897 (2000)). Section 1886(d)(4)(C)(iii) of
the Act requires that the adjustments to annual DRG classifications and
relative weights must be made in a manner that ensures that aggregate
payments to hospitals are not affected. Therefore, in the past, we
accounted for projected payments under the new medical service and
technology provision during the upcoming fiscal year at the same time
we estimated the payment effect of changes to the DRG classifications
and recalibration. The impact of additional payments under this
provision was then included in the budget neutrality factor, which was
applied to the standardized amounts and the hospital-specific amounts.
Section 1886(d)(5)(K)(ii)(III) of the Act, as amended by section
503(d)(2) of Pub. L. 108-173, provides that there shall be no reduction
or adjustment in aggregate payments under the IPPS due to add-on
payments for new medical services and technologies. Therefore, add-on
payments for new medical services or technologies for FY 2005 and later
years will not be budget neutral.
Applicants for add-on payments for new medical services or
technologies for FY 2007 must submit a formal request, including a full
description of the clinical applications of the medical service or
technology and the results of any clinical evaluations demonstrating
that the new medical service or technology represents a substantial
clinical improvement, along with a significant sample of data to
demonstrate the medical service or technology meets the high-cost
threshold, no later than October 15, 2005. Applicants must submit a
complete database no later than December 30, 2005. Complete application
information, along with final deadlines for submitting a full
application, will be available after publication of this final rule at
our Web site: http://www.cms.hhs.gov/providers/hipps/default.asp. To
allow interested parties to identify the new medical services or
technologies under review before the publication of the proposed rule
for FY 2007, the Web site will also list the tracking forms completed
by each applicant.
2. Public Input Before Publication of a Notice of Proposed Rulemaking
on Add-On Payments
Section 1886(d)(5)(K)(viii) of the Act, as amended by section
503(b)(2) of Pub. L. 108-173, provides for a mechanism for public input
before publication of a notice of proposed rulemaking regarding whether
a medical service or technology represents a substantial improvement or
advancement. The process for evaluating new medical service and
technology applications requires the Secretary to--
Provide, before publication of a proposed rule, for public
input regarding whether a new service or technology represents an
advance in medical technology that substantially improves the diagnosis
or treatment of Medicare beneficiaries.
Make public and periodically update a list of the services
and technologies for which an application for add-on payments is
pending.