[Federal Register: August 23, 2006 (Volume 71, Number 163)]
[Proposed Rules]
[Page 49505-49977]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr23au06-34]
[[Page 49505]]
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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 410, 414, et al. Medicare: Hospital Outpatient Prospective
Payment System and CY 2007 Payment Rates; Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 410, 414, 416, 419, 421, 485, and 488
[CMS-1506-P; CMS-4125-P]
RIN 0938-AO15
Medicare Program; Hospital Outpatient Prospective Payment System
and CY 2007 Payment Rates; CY 2007 Update to the Ambulatory Surgical
Center Covered Procedures List; Ambulatory Surgical Center Payment
System and CY 2008 Payment Rates; Medicare Administrative Contractors;
and Reporting Hospital Quality Data for FY 2008 Inpatient Prospective
Payment System Annual Payment Update Program--HCAHPS[supreg] Survey,
SCIP, and Mortality
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would revise the Medicare hospital
outpatient prospective payment system to implement applicable statutory
requirements and changes arising from our continuing experience with
this system, and to implement certain related provisions of the
Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of
2003, and the Deficit Reduction Act (DRA) of 2005. The proposed rule
describes proposed changes to the amounts and factors used to determine
the payment rates for Medicare hospital outpatient services paid under
the prospective payment system. These changes would be applicable to
services furnished on or after January 1, 2007.
In addition, this proposed rule would revise the current list of
procedures that are approved when furnished in a Medicare-approved
ambulatory surgical center (ASC), which would be applicable to services
furnished on or after January 1, 2007. Further, this proposed rule
would revise the ASC facility payment system to implement provisions of
the MMA and other applicable statutory requirements, and update the ASC
payment rates. Changes to the ASC facility payment system and the
payment rates would be applicable to services furnished on or after
January 1, 2008.
This proposed rule would revise the emergency medical screening
requirements for critical access hospitals (CAHs).
In addition, this proposed rule would support implementation of a
restructuring of the contracting entities responsibilities and
functions that support the adjudication of Medicare fee-for-service
(FFS) claims. This restructuring is directed by section 1874A of the
Act, as added by section 911 of the MMA. The prior separate Medicare
intermediary and Medicare carrier contracting authorities under Title
XVIII of the Act have been replaced with the Medicare Administrative
Contractor (MAC) authority.
This proposed rule would also continue to implement the
requirements of the DRA that require that we expand the ``starter set''
of 10 quality measures that we used in FY 2005 and FY 2006 for the
hospital Inpatient Prospective Payment System (IPPS) Reporting Hospital
Quality Data for the Annual Payment Update (RHQDAPU) program. We began
to adopt expanded measures effective for payments beginning in FY 2007.
We are proposing to add additional quality measures to the expanded set
of measures for FY 2008 payment purposes. These measures include the
HCAHPS[supreg] survey, as well as Surgical Care Improvement Project
(SCIP, formerly Surgical Infection Prevention (SIP)), and Mortality
quality measures.
DATES: To be assured consideration, comments on all sections of the
preamble of this proposed rule, except section XVIII. and section
XXIII., must be received at one of the addresses provided in the
ADDRESSES section, no later than 5 p.m. October 10, 2006.
To be assured consideration, comments on section XVIII. of this
preamble relating to the proposed revised ASC payment system and the
related regulation changes for implementation January 1, 2008, must be
received at one of the addresses provided in the ADDRESSES section, no
later than 5 p.m. on November 6, 2006.
ADDRESSES: In commenting on all provisions except those found in
section XXIII. of the preamble, please refer to file code CMS-1506-P.
In commenting on the provisions found in section XXIII. of the preamble
for the FY 2008 IPPS RHQDAPU program, please refer to file code CMS-
4125-P. Because of staff and resource limitations, we cannot accept
comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word.)
2. By regular mail. You may mail written comments (one original and
two copies) to the following address ONLY: Centers for Medicare &
Medicaid Services, Department of Health and Human Services, Attention:
CMS-1506-P, or CMS-4125-P, P.O. Box 8011, Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1506-P, or CMS-4125-P, Mail Stop C4-26-05, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses: Room
445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244-
1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal Government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain proof of filing by
stamping in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of Comments on Paperwork Requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
[[Page 49507]]
Alberta Dwivedi, (410) 786-0378, Hospital outpatient prospective
payment issues.
Dana Burley, (410) 786-0378, Ambulatory surgery center issues.
Suzanne Asplen, (410) 786-4558, Partial hospitalization and community
mental health centers issues.
Mary Collins, (410) 786-3189, Critical access hospital emergency
medical planning issues.
Sandra M. Clarke, (410) 786-6975, Medicare Administrative Contractors
issues.
Mark Zobel, (410) 786-6905, Medicare Administrative Contractors issues.
Liz Goldstein, (410) 786-6665, FY 2008 IPPS RHQDAPU HCAHPS[supreg]
issues.
Bill Lehrman, (410) 786-1037, FY 2008 IPPS RHQDAPU HCAHPS[supreg]
issues.
Sheila Blackstock, (410) 786-3506, FY 2008 IPPS RHQDAPU SCIP and
mortality issues.
SUPPLEMENTARY INFORMATION:
Submitting Comments We welcome comments from the public on all
issues set forth in this proposed rule to assist us in fully
considering issues and developing policies. You can assist us by
referencing the file code CMS-1506-P or file code CMS-4125-P for FY
2008 RHQDAPU program issues, and the specific ``issue identifier'' that
precedes the section on which you choose to comment.Inspection of
Public Comments: All comments received before the close of the comment
period are available for viewing by the public, including any
personally identifiable or confidential business information that is
included in a comment. We post all comments received before the close
of the comment period on the following Web site as soon as possible
after they have been received: http://www.cms.hhs.gov/eRulemaking.
Click on the link ``Electronic Comments on CMS Regulations'' on that
Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, MD 21244, on Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Electronic Access
This Federal Register document is also available from the Federal
Register online database through GPO Access, a service of the U.S.
Government Printing Office. Free public access is available on a Wide
Area Information Server (WAIS) through the Internet and via
asynchronous dial-in. Internet users can access the database by using
the World Wide Web; the Superintendent of Documents' home page address
is http://www.gpoaccess.gov/index.html, by using local WAIS client
software, or by telnet to swais.access.gpo.gov, then login as guest (no
password required). Dial-in users should use communications software
and modem to call (202) 512-1661; type swais, then login as guest (no
password required).
Alphabetical List of Acronyms Appearing in the Proposed Rule
ACEP American College of Emergency Physicians
AHA American Hospital Association
AHIMA American Health Information Management Association
AMA American Medical Association
APC Ambulatory payment classification
AMP Average manufacturer price
ASC Ambulatory Surgical Center
ASP Average sales price
AWP Average wholesale price
BBA Balanced Budget Act of 1997, Pub. L. 105-33
BBRA Medicare, Medicaid, and SCHIP [State Children's Health
Insurance Program] Balanced Budget Refinement Act of 1999, Pub. L.
106-113
BCA Blue Cross Association
BCBSA Blue Cross and Blue Shield Association
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act of 2000, Pub. L. 106-554
CAH Critical access hospital
CBSA Core-Based Statistical Area
CCR Cost-to-charge ratio
CMHC Community mental health center
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CORF Comprehensive outpatient rehabilitation facility
CPT [Physicians'] Current Procedural Terminology, Fourth Edition,
2006, copyrighted by the American Medical Association
CRNA Certified registered nurse anesthetist
CY Calendar year
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DMERC Durable medical equipment regional carrier
DRA Deficit Reduction Act of 2005, Pub. L. 109-171
DSH Disproportionate share hospital
EACH Essential Access Community Hospital
E/M Evaluation and management
EPO Erythropoietin
ESRD End-stage renal disease
FACA Federal Advisory Committee Act, Pub. L. 92-463
FAR Federal Acquisition Regulations
FDA Food and Drug Administration
FFS Fee-for-service
FSS Federal Supply Schedule
FY Federal fiscal year
GAO Government Accountability Office
HCPCS Healthcare Common Procedure Coding System
HCRIS Hospital Cost Report Information System
HHA Home health agency
HIPAA Health Insurance Portability and Accountability Act of 1996,
Pub. L. 104-191
ICD-9-CM International Classification of Diseases, Ninth Edition,
Clinical Modification
IDE Investigational device exemption
IPPS [Hospital] Inpatient prospective payment system
IVIG Intravenous immune globulin
MAC Medicare Administrative Contractors
MedPAC Medicare Payment Advisory Commission
MDH Medicare-dependent, small rural hospital
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, Pub. L. 108-173
MPFS Medicare Physician Fee Schedule
MSA Metropolitan Statistical Area
NCCI National Correct Coding Initiative
NCD National Coverage Determination
NTIOL New technology intraocular lens
OCE Outpatient Code Editor
OMB Office of Management and Budget
OPD [Hospital] Outpatient department
OPPS [Hospital] Outpatient prospective payment system
PA Physician assistant
PHP Partial hospitalization program
PM Program memorandum
PPI Producer Price Index
PPS Prospective payment system
PPV Pneumococcal pneumonia (virus)
PRA Paperwork Reduction Act
QIO Quality Improvement Organization
RFA Regulatory Flexibility Act
RHQDAPU Reporting hospital quality data for annual payment update
RHHI Regional home health intermediary
SBA Small Business Administration
SCH Sole community hospital
SDP Single Drug Pricer
SI Status indicator
TEFRA Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97-
248
TOPS Transitional outpatient payments
USPDI United States Pharmacopoeia Drug Information
In this document, we address three payment systems under the
Medicare program: the hospital outpatient prospective payment system
(OPPS), the hospital inpatient prospective payment system (IPPS), and
the ambulatory surgical center (ASC) payment system. The provisions
relating to the OPPS are included in sections I. through XIII., XV.,
XVI., XX., XXIV., XXVI., and XXVII. of the preamble and in Addenda A,
B, C (available on the Internet only; see section XXIV. of the preamble
of this proposed rule), D1, D2, and E of this proposed rule. The
provisions related to IPPS are included in sections XXIII., XXV.
through XXVII. of the preamble. The provisions related to ASCs are
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included in sections XVII,. XVIII., and XXIV. through XXVII. of the
preamble and in Addenda AA, BB, and CC of the proposed rule.
In addition, in this document, we address our proposed
implementation of the Medicare contracting reform provisions of the MMA
that replace the prior Medicare intermediary and carrier authorities
formerly found in sections 1816 and 1842 of the Act with Medicare
administrative contractor (MAC) authority under a new section 1874A of
the Act. The provisions relating to MACs are included in sections XIX.,
XXVI., and XXVII.E. of this preamble. To assist readers in referencing
sections contained in this document, we are providing the following
table of contents:
Table of Contents
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital
Outpatient Prospective Payment System
B. Excluded OPPS Services and Hospitals
C. Prior Rulemaking
D. APC Advisory Panel
1. Authority of the APC Panel
2. Establishment of the APC Panel
3. APC Panel Meetings and Organizational Structure
E. Provisions of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003
1. Reduction in Threshold for Separate APCs for Drugs
2. Special Payment for Brachytherapy
F. Provisions of the Deficit Reduction Act of 2005
1. 3-Year Transition of Hold Harmless Payments
2. Medicare Coverage of Ultrasound Screening for Abdominal
Aortic Aneurysms
G. Summary of the Major Contents of This Proposed Rule
1. Proposed Updates Affecting Payment for CY 2007
2. Proposed Ambulatory Payment Classification (APC) Group
Policies
3. Proposed Payment Changes for Devices
4. Proposed Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
5. Estimate of Transitional Pass-Through Spending in CY 2007 for
Drugs, Biologicals, and Radiopharmaceuticals
6. Proposed Brachytherapy Payment Changes
7. Proposed Coding and Payment for Drug and Vaccine
Administration
8. Proposed Hospital Coding for Evaluation and Management (E/M)
Services
9. Proposed Payment for Blood and Blood Products
10. Proposed Payment for Observation Services
11. Procedures That Will Be Paid Only as Inpatient Services
12. Proposed Nonrecurring Policy Changes
13. Emergency Medical Screening in Critical Access Hospitals
(CAHs)
14. Proposed OPPS Payment Status and Comment Indicator
15. OPPS Policy and Payment Recommendations
16. Proposed Policies Affecting Ambulatory Surgical Centers
(ASCs) for CY 2007
17. Proposed Revised Ambulatory Surgical Center (ASC) Payment
System for Implementation January 1, 2008
18. Medicare Provider Contractor Reform Mandate
19. Reporting Quality Data for Improved Quality and Costs under
the OPPS
20. Promoting Effective Use of Health Information Technology
21. Health Care Information Transparency Initiative
22. Reporting Hospital Quality Data for Annual Payment Update
under the IPPS
23. Impact Analysis
II. Proposed Updates Affecting OPPS Payments for CY 2007
A. Proposed Recalibration of APC Relative Weights for CY 2007
1. Database Construction
a. Database Source and Methodology
b. Proposed Use of Single and Multiple Procedure Claims
c. Proposed Revision to the Overall Cost-to-Charge Ratio (CCR)
Calculation
2. Proposed Calculation of Median Costs for CY 2007
3. Proposed Calculation of Scaled OPPS Payment Weights
4. Proposed Changes to Packaged Services
B. Proposed Payment for Partial Hospitalization
1. Background
2. Proposed PHP APC Update for CY 2007
3. Proposed Separate Threshold for Outlier Payments to CMHCs
C. Proposed Conversion Factor Update for CY 2007
D. Proposed Wage Index Changes for CY 2007
E. Proposed Statewide Average Default CCRs
F. OPPS Payments to Certain Rural Hospitals
1. Hold Harmless Transitional Payment Changes Made by Pub. L.
109-171 (DRA)
2. Proposed Adjustment for Rural SCHs Implemented in CY 2006
Related to Pub. L. 108-173 (MMA)
G. Proposed CY 2007 Hospital Outpatient Outlier Payments
H. Calculation of the Proposed OPPS National Unadjusted Medicare
Payment
I. Proposed Beneficiary Copayments for CY 2007
1. Background
2. Proposed Copayment for CY 2007
3. Calculation of a Proposed Adjusted Copayment Amount for an
APC Group for CY 2007
III. Proposed OPPS Ambulatory Payment Classification (APC) Group
Policies
A. Proposed Treatment of New HCPCS and CPT Codes
1. Proposed Treatment of New HCPCS Codes Included in the Second
and Third Quarterly OPPS Updates for CY 2006
2. Proposed Treatment of New CY 2007 Category I and III CPT
Codes and Level II HCPCS Codes
3. Proposed Treatment of New Mid-Year CPT Codes
B. Proposed Changes--Variations Within APCs
1. Background
2. Application of the 2 Times Rule
3. Exceptions to the 2 Times Rule
C. New Technology APCs
1. Introduction
2. Proposed Movement of Procedures from New Technology APCs to
Clinical APCs
a. Nonmyocardial Positron Emission Tomography (PET) Scans
b. PET/Computed Tomography (CT) Scans
c. Stereotactic Radiosurgery (SRS) Treatment Delivery Services
d. Magnetoencephalography (MEG) Services
e. Other Services in New Technology APCs
D. Proposed APC-Specific Policies
1. Skin Replacement Surgery and Skin Substitutes (APCs 0024,
0025 and 0027)
2. Treatment of Fracture/Dislocation (APC 0046)
3. Electrophysiologic Recording/Mapping (APC 0087)
4. Insertion of Mesh or Other Prosthesis (APC 0154)
5. Percutaneous Renal Cryoablation (APC 0163)
6. Keratoprosthesis (APC 0244)
7. Medication Therapy Management Services
8. Complex Interstitial Radiation Source Application (APC 0651)
9. Single Allergy Tests (APC 0381)
10. Hyperbaric Oxygen Therapy (APC 0659)
11. Myocardial Positron Emission Tomography (PET) Scans (APCs
0306, 0307)
12. Radiology Procedures (APCs 0333, 0662, and Other Imaging
APCs)
IV. Proposed OPPS Payment Changes for Devices
A. Proposed Treatment of Device-Dependent APCs
1. Background
2. Proposed CY 2007 Payment Policy
3. Devices Billed in the Absence of an Appropriate Procedure
Code
4. Proposed Payment Policy When Devices are Replaced Without
Cost or Where Credit for a Replaced Device is Furnished to the
Hospital
B. Proposed Pass-Through Payments for Devices
1. Expiration of Transitional Pass-Through Payments for Certain
Devices
a. Background
b. Proposed Policy for CY 2007
2. Provisions for Reducing Transitional Pass-Through Payments to
Offset Costs Packaged Into APC Groups
a. Background
b. Proposed Policy for CY 2007
V. Proposed OPPS Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
A. Proposed Transitional Pass-Through Payment for Additional
Costs of Drugs and Biologicals
1. Background
2. Expiration in CY 2006 of Pass-Through Status for Drugs and
Biologicals
3. Drugs and Biologicals With Proposed Pass-Through Status in CY
2007
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B. Proposed Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Status
1. Background
2. Proposed Criteria for Packaging Payment for Drugs,
Biologicals, and Radiopharmaceuticals
3. Proposed Payment for Drugs, Biologicals, and
Radiopharmaceuticals Without Pass-Through Status That Are Not
Packaged
a. Proposed Payment for Specified Covered Outpatient Drugs
b. Proposed CY 2007 Payment for Nonpass-Through Drugs,
Biologicals, Radiopharmaceuticals With HCPCS Codes, But Without OPPS
Hospital Claims Data
VI. Proposed Estimate of OPPS Transitional Pass-Through Spending in
CY 2007 for Drugs, Biologicals, Radiopharmaceuticals, and Devices
A. Total Allowed Pass-Through Spending
B. Proposed Estimate of Pass-Through Spending for CY 2007
VII. Proposed Brachytherapy Source Payment Changes
A. Background
B. Proposed Payments for Brachytherapy Sources in CY 2007
VIII. Proposed Changes to OPPS Drug Administration Coding and
Payment for CY 2007
A. Background
B. Proposed CY 2007 Drug Administration Coding Changes
C. Proposed CY 2007 Drug Administration Payment Changes
IX. Proposed Hospital Coding and Payment for Visits
A. Background
1. Guidelines Based on the Number or Type of Staff Interventions
2. Guidelines Based on the Time Staff Spent With the Patient
3. Guidelines Based on a Point System Where a Certain Number of
Points Are Assigned to Each Staff Intervention Based on the Time,
Intensity, and Staff Type Required for the Intervention
4. Guidelines Based on Patient Complexity
B. CY 2007 Proposed Coding
1. Clinic Visits
2. Emergency Department Visits
3. Critical Care Services
C. CY 2007 Proposed Payment Policy
D. CY 2007 Proposed Treatment of Guidelines
1. Background
2. Outstanding Concerns With the AHA/AHIMA Guidelines
a. Three Versus Five Levels of Codes
b. Lack of Clarity for Some Interventions
c. Treatment of Separately Payable Services
d. Some Interventions Appear Overvalued
e. Concerns of Specialty Clinics
f. American with Disabilities Act
g. Differentiation Between New and Established Patients, and
Between Standard Visits and Consultations
h. Distinction Between Type A and Type B Emergency Departments
X. Proposed Payment for Blood and Blood Products
A. Background
B. Proposed Policy Changes for CY 2007
XI. Proposed OPPS Payment for Observation Services
XII. Proposed Procedures That Will Be Paid Only as Inpatient
Procedures
A. Background
B. Proposed Changes to the Inpatient Only List
C. Proposed CY 2007 Payment for Ancillary Outpatient Services
When Patient Expires (-CA Modifier)
1. Background
2. Proposed Policy for CY 2007
XIII. Proposed OPPS Nonrecurring Policy Changes
A. Removal of Comprehensive Outpatient Rehabilitation Facility
(CORF) Services from the List of Services Paid under the OPPS
B. Addition of Ultrasound Screening for Abdominal Aortic
Aneurysms (AAAs) (Section 5112 of Pub. L. 109-171 (DRA))
1. Background
2. Proposed Assignment of New HCPCS Code for Payment of
Ultrasound Screening for Abdominal Aortic Aneurysm (AAA) (Section
5112)
3. Handling of Comments Received in Response to This Proposal
XIV. Emergency Medical Screening in Critical Access Hospitals (CAHs)
A. Background
B. Proposed Policy Change
XV. Proposed OPPS Payment Status and Comment Indicators
A. Proposed CY 2007 Status Indicator Definitions
1. Proposed Payment Status Indicators to Designate Services That
Are Paid Under the OPPS
2. Proposed Payment Status Indicators to Designate Services That
Are Paid Under a Payment System Other Than the OPPS
3. Proposed Payment Status Indicators to Designate Services That
Are Not Recognized Under the OPPS But That May Be Recognized by
Other Institutional Providers
4. Proposed Payment Status Indicators to Designate Services That
Are Not Payable by Medicare
B. Proposed CY 2007 Comment Indicator Definitions
XVI. OPPS Policy and Payment Recommendations
A. MedPAC Recommendations
B. APC Panel Recommendations
C. GAO Recommendations
XVII. Proposed Policies Affecting Ambulatory Surgical Centers (ASCs)
for CY 2007
A. ASC Background
1. Legislative History
2. Current Payment Method
3. Published Changes to the ASC List
B. Proposed ASC List Update Effective for Services Furnished on
or After January 1, 2007
1. Criteria for Additions to or Deletions from the ASC List
2. Response to Comments to the May 4, 2005 Interim Final Rule
for the ASC Update
3. Procedures Proposed for Additions to the ASC List
4. Suggested Additions Not Accepted
5. Rationale for Payment Assignment
6. Other Comments on the May 4, 2005 Interim Final Rule
C. Proposed Regulatory Changes for CY 2007
D. Implementation of Section 5103 of Pub. L. 109-171 (DRA)
E. Proposal to Modify the Current ASC Process for Adjusting
Payment for New Technology Intraocular Lenses (NTIOLs)
1. Background
a. Current ASC Payment for Insertion of IOLs
b. Classes of NTIOLs Approved for Payment Adjustment
2. Proposed Changes
a. Process for Recognizing IOLs as Belonging to an Active IOL
Class
b. Public Notice and Comment Regarding Adjustments of NTIOL
Payment Amounts
c. Factors CMS Considers in Determining Whether a Payment
Adjustment for Insertion of a New Class of IOL is Appropriate
d. Proposal to Revise Content of a Request to Review
e. Notice of CMS Determination
f. Proposed Payment Adjustment
XVIII. Proposed Revised ASC Payment System for Implementation
January 1, 2008
A. Background
1. Provisions of Pub. L. 108-173
2. Other Factors Considered
B. Procedures Proposed for Medicare Payment in ASCs Effective
for Services Furnished on or After January 1, 2008
1. Proposed Payable Procedures
a. Proposed Definition of Surgical Procedure
b. Procedures Proposed for Exclusion from Payment Under the
Revised ASC System
2. Proposed Treatment of Unlisted Procedure Codes and Procedures
That Are Not Paid Separately Under the OPPS
3. Proposed Treatment of Office-Based Procedures
4. Listing of Surgical Procedures Proposed for Exclusion from
Payment of an ASC Facility Fee Under the Revised Payment System
C. Proposed Ratesetting Method
1. Overview of Current ASC Payment System
2. Proposal to Base ASC Relative Payment Weights on APC Groups
and Relative Payment Weights Established Under the OPPS
3. Proposed Packaging Policy
4. Payment for Corneal Tissue Under the Revised ASC Payment
System
5. Proposed Payment for Office-Based Procedures
6. Payment Policy for Multiple Procedure Discounting
7. Proposed Geographic Adjustment
8. Proposed Adjustment for Inflation
9. Proposed Beneficiary Coinsurance
10. Proposed to Phase in Implementation of Payment Rates
Calculated Under the CY 2008 Revised ASC Payment System
11. Proposed Calculation of ASC Conversion Factor and Payment
Rates for CY 2008
a. Overview
b. Budget Neutrality Requirement
[[Page 49510]]
c. Proposed Calculation of the ASC Payment Rates for CY 2008
d. Proposed Calculation of the ASC Payment Rates for CY 2009 and
Future Years
e. Alternative Option for Calculating the Budget Neutrality
Adjustment Considered
12. Proposed Annual Updates
D. Information in Addenda Related to the Revised CY 2008 ASC
Payment System
E. Technical Changes to 42 CFR Parts 414 and 416
XIX. Medicare Contracting Reform Mandate
A. Background
B. CMS's Vision for Medicare Fee-for-Service and MACs
C. Provider Nomination and the Former Medicare Acquisition
Authorities
D. Summary of Changes Made to Sections 1816 of the Act
E. Provisions of the Proposed Regulations
1. Definitions
2. Assignments of Providers and Suppliers to MACs
3. Other Proposed Technical and Conforming Changes
a. Definition of ``Intermediary''
b. Intermediary Functions
c. Options Available to Providers and CMS
d. Nomination for Intermediary
e. Notification of Actions on Nominations, Changes to Another
Intermediary or to Director Payment, and Requirements for Approval
of an Agreement
f. Considerations Relating to the Effective and Efficient
Administration of the Medicare Program
g. Assignment and Reassignment of Providers by CMS
h. Designation of National or Regional Intermediaries and
Designation of Regional and Alternative Designated Regional
Intermediaries for Home Health Agencies and Hospices
i. Awarding of Experimental Contracts
XX. Reporting Quality Data for Improved Quality and Costs under the
OPPS
XXI. Promoting Effective Use of Health Care Technology
XXII. Health Care Information Transparency Initiative
XXIII. Additional Quality Measures and Procedures for Hospital
Reporting of Quality Data for the FY 2008 IPPS Annual Payment Update
A. Background
B. Proposed Additional Quality Measures for FY 2008
1. Introduction
2. HCAHPS[supreg] Survey and the Hospital Quality Initiative
3. Surgical Care Improvement Project (SCIP) Quality Measures
4. Mortality Outcome Measures
C. General Procedures and Participation Requirements for the FY
2008 IPPS RHQDAPU Program
D. HCAHPS[supreg] Procedures and Participation Requirements for
the FY 2008 IPPS RHQDAPU Program
1. Introduction
2. HCAHPS[supreg] Hospital Pledge and Beginning Date for Data
Collection
3. HCAHPS[supreg] Dry Run
4. HCAHPS[supreg] Data Collection Requirements
5. HCAHPS[supreg] Registration Requirements
6. HCAHPS[supreg] Additional Steps
7. HCAHPS[supreg] Survey Completion Requirements
8. HCAHPS[supreg] Public Reporting
9. Reporting HCAHPS[supreg] Results for Multi-Campus Hospitals
E. SCIP & Mortality Measure Requirements for the FY 2008 RHQDAPU
Program
F. Conclusion
XXIV. Files Available to the Public Via the Internet
XXV. Collection of Information Requirements
XXVI. Response to Comments
XXVII. Regulatory Impact Analysis
A. Overall Impact
1. Executive Order 12866
2. Regulatory Flexibility Act (RFA)
3. Small Rural Hospitals
4. Unfunded Mandates
5. Federalism
B. Effects of Proposed OPPS Changes in This Proposed Rule
1. Alternatives Considered
a. Alternatives Considered for CPT Coding and Payment Policy for
Evaluation and Management Codes
b. Options Considered for Brachytherapy Source Payments
c. Options Considered for Payment of Radiopharmaceuticals
2. Limitation of Our Analysis
3. Estimated Impact of This Proposed Rule on Hospitals
4. Estimated Effect of This Proposed Rule on Beneficiaries
5. Accounting Statement
6. Conclusion
C. Effects of Proposed Changes to the ASC Payment System for CY
2007
1. Alternatives Considered
2. Limitations on Our Analysis
3. Estimated Effects of This Proposed Rule on ASCs
4. Estimated Effects of This Proposed Rule on Beneficiaries
5. Conclusion
6. Accounting Statement
D. Effects of the Proposed Revisions to the ASC Payment System
for CY 2008
1. Alternatives Considered
2. Limitations on Our Analysis
3. Estimated Effects of This Proposed Rule on ASCs
4. Estimated Effects of This Proposed Rule on Beneficiaries
5. Conclusion
E. Effects of the Medicare Contractor Reform Mandate
F. Effects of Proposed Additional Quality Measures and
Procedures for Hospital Reporting of Quality Data for IPPS FY 2008
1. Alternatives Considered
2. Estimated Effects of This Proposed Rule
a. Effects on Hospitals
b. Effects on Other Providers
c. Effects on the Medicare and Medicaid Program
G. Executive Order 12866
Regulation Text
Addenda
Addendum A--OPPS Proposed List of Ambulatory Payment Classification
(APCs) With Status Indicators (SI), Relative Weights, Payment Rates,
and Copayment Amounts-- CY 2007
Addendum AA--Proposed List of Medicare Approved ASC Procedures for
CY 2007 With Additions and Payment Rates; Including Rates That
Result From Implementation of Section 5103 of the DRA
Addendum B--OPPS Proposed Payment Status by HCPCS Code and Related
Information Calendar Year 2007
Addendum BB--Proposed List of Medicare Approved ASC Procedures for
CY 2008 With Additions and Payment Rates
Addendum CC--Proposed List of Procedures for CY 2008 Subject to
Payment Limitation at the Medicare Physician Fee Schedule (MPFS)
Nonfacility Amount
Addendum D1--Proposed Payment Status Indicators
Addendum D2--Proposed Comment Indicators
Addendum E--Proposed CPT Codes That Are Paid Only as Inpatient
Procedures
I. Background for the OPPS
A. Legislative and Regulatory Authority for the Hospital Outpatient
Prospective Payment System
When the Medicare statute was originally enacted, Medicare payment
for hospital outpatient services was based on hospital-specific costs.
In an effort to ensure that Medicare and its beneficiaries pay
appropriately for services and to encourage more efficient delivery of
care, the Congress mandated replacement of the reasonable cost-based
payment methodology with a prospective payment system (PPS). The
Balanced Budget Act (BBA) of 1997 (Pub. L. 105-33), added section
1833(t) to the Social Security Act (the Act) authorizing implementation
of a PPS for hospital outpatient services (OPPS).
The Medicare, Medicaid, and SCHIP Balanced Budget Refinement Act
(BBRA) of 1999 (Pub. L. 106-113), made major changes in the hospital
OPPS. The Medicare, Medicaid, and SCHIP Benefits Improvement and
Protection Act (BIPA) of 2000 (Pub. L. 106-554), made further changes
in the OPPS. Section 1833(t) of the Act was also amended by the
Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of
2003 (Pub. L. 108-173). The Deficit Reduction Act (DRA) of 2005 (Pub.
L. 109-171), enacted on February 8, 2006, made additional changes in
the OPPS. A discussion of the provisions contained in Pub. L. 109-171
that are specific to the calendar year (CY) 2007 OPPS is included in
section II.F. of this preamble.
The OPPS was first implemented for services furnished on or after
August 1, 2000. Implementing regulations for the OPPS are located at 42
CFR Part 419.
Under the OPPS, we pay for hospital outpatient services on a rate-
per-service
[[Page 49511]]
basis that varies according to the ambulatory payment classification
(APC) group to which the service is assigned. We use Healthcare Common
Procedure Coding System (HCPCS) codes (which include certain Current
Procedural Terminology (CPT) codes) and descriptors to identify and
group the services within each APC group. The OPPS includes payment for
most hospital outpatient services, except those identified in section
I.B. of this preamble. Section 1833(t)(1)(B)(ii) of the Act provides
for Medicare payment under the OPPS for hospital outpatient services
designated by the Secretary (which includes partial hospitalization
services furnished by community mental health centers (CMHCs)) and
hospital outpatient services that are furnished to inpatients who have
exhausted their Part A benefits or who are otherwise not in a covered
Part A stay. Section 611 of Pub. L. 108-173 added provisions for
Medicare coverage of an initial preventive physical examination,
subject to the applicable deductible and coinsurance, as an outpatient
department service, payable under the OPPS.
The OPPS rate is an unadjusted national payment amount that
includes the Medicare payment and the beneficiary copayment. This rate
is divided into a labor-related amount and a nonlabor-related amount.
The labor-related amount is adjusted for area wage differences using
the inpatient hospital wage index value for the locality in which the
hospital or CMHC is located.
All services and items within an APC group are comparable
clinically and with respect to resource use (section 1833(t)(2)(B) of
the Act). In accordance with section 1833(t)(2) of the Act, subject to
certain exceptions, services and items within an APC group cannot be
considered comparable with respect to the use of resources if the
highest median (or mean cost, if elected by the Secretary) for an item
or service in the APC group is more than 2 times greater than the
lowest median cost for an item or service within the same APC group
(referred to as the ``2 times rule''). In implementing this provision,
we use the median cost of the item or service assigned to an APC group.
Special payments under the OPPS may be made for new technology
items and services in one of two ways. Section 1833(t)(6) of the Act
provides for temporary additional payments which we refer to as
``transitional pass-through payments'' for at least 2 but not more than
3 years for certain drugs, biological agents, brachytherapy devices
used for the treatment of cancer, and categories of other medical
devices. For new technology services that are not eligible for
transitional pass-through payments and for which we lack sufficient
data to appropriately assign them to a clinical APC group, we have
established special APC groups based on costs, which we refer to as new
technology APCs. These new technology APCs are designated by cost bands
which allow us to provide appropriate and consistent payment for
designated new procedures that are not yet reflected in our claims
data. Similar to pass-through payments, an assignment to a new
technology APC is temporary; that is, we retain a service within a new
technology APC until we acquire sufficient data to assign it to a
clinically appropriate APC group.
B. Excluded OPPS Services and Hospitals
Section 1833(t)(1)(B)(i) of the Act authorizes the Secretary to
designate the hospital outpatient services that are paid under the
OPPS. While most hospital outpatient services are payable under the
OPPS, section 1833(t)(1)(B)(iv) of the Act excludes payment for
ambulance, physical and occupational therapy, and speech-language
pathology services, for which payment is made under a fee schedule.
Section 614 of Pub. L. 108-173 amended section 1833(t)(1)(B)(iv) of the
Act to exclude OPPS payment for screening and diagnostic mammography
services. The Secretary exercised the authority granted under the
statute to exclude from the OPPS those services that are paid under fee
schedules or other payment systems. Such excluded services include, for
example, the professional services of physicians and nonphysician
practitioners paid under the Medicare Physician Fee Schedule (MPFS);
laboratory services paid under the clinical diagnostic laboratory fee
schedule; services for beneficiaries with end-stage renal disease
(ESRD) that are paid under the ESRD composite rate; and, services and
procedures that require an inpatient stay that are paid under the
hospital inpatient prospective payment system (IPPS). We set forth the
services that are excluded from payment under the OPPS in Sec. 419.22
of the regulations.
Under Sec. 419.20(b) of the regulations, we specify the types of
hospitals and entities that are excluded from payment under the OPPS.
These excluded entities include Maryland hospitals, but only for
services that are paid under a cost containment waiver in accordance
with section 1814(b)(3) of the Act; critical access hospitals (CAHs);
hospitals located outside of the 50 States, the District of Columbia,
and Puerto Rico; and Indian Health Service hospitals.
C. Prior Rulemaking
On April 7, 2000, we published in the Federal Register a final rule
with comment period (65 FR 18434) to implement a prospective payment
system for hospital outpatient services. The hospital OPPS was first
implemented for services furnished on or after August 1, 2000. Section
1833(t)(9) of the Act requires the Secretary to review certain
components of the OPPS not less often than annually and to revise the
groups, relative payment weights, and other adjustments to take into
account changes in medical practice, changes in technology, and the
addition of new services, new cost data, and other relevant information
and factors.
Since initially implementing the OPPS, we have published final
rules in the Federal Register annually to implement statutory
requirements and changes arising from our experience with this system.
We last published such a document on November 10, 2005 (70 FR 68516).
In that final rule with comment period, we revised the OPPS to update
the payment weights and conversion factor for services payable under
the CY 2006 OPPS on the basis of claims data from January 1, 2004,
through December 31, 2004, and to implement certain provisions of Pub.
L. 108-173. In addition, we responded to public comments received on
the provisions of November 15, 2004 final rule with comment period
pertaining to the APC assignment of HCPCS codes identified in Addendum
B of that rule with the new interim (NI) comment indicators; and public
comments received on the July 25, 2005 OPPS proposed rule for CY 2006
(70 FR 42674).
We published a correction of the November 10, 2005 final rule with
comment period on December 23, 2005 (70 FR 76176). This correction
document corrected a number of technical errors that appeared in the
November 10, 2005 final rule with comment period.
D. APC Advisory Panel
1. Authority of the APC Panel
Section 1833(t)(9)(A) of the Act, as amended by section 201(h) of
the BBRA, requires that we consult with an outside panel of experts to
review the clinical integrity of the payment groups and their weights
under the OPPS. The Act further specifies that the panel will act in an
advisory capacity. The Advisory Panel on Ambulatory Payment
[[Page 49512]]
Classification (APC) Groups (the APC Panel), discussed under section
I.D.2. of this preamble, fulfills these requirements. The APC Panel is
not restricted to using data compiled by CMS and may use data collected
or developed by organizations outside the Department in conducting its
review.
2. Establishment of the APC Panel
On November 21, 2000, the Secretary signed the initial charter
establishing the APC Panel. This expert panel, which may be composed of
up to 15 representatives of providers subject to the OPPS (currently
employed full-time, not as consultants, in their respective areas of
expertise), reviews and advises CMS about the clinical integrity of the
APC groups and their weights. For purposes of this Panel, consultants
or independent contractors are not considered to be full-time
employees. The APC Panel is technical in nature and is governed by the
provisions of the Federal Advisory Committee Act (FACA). Since its
initial chartering, the Secretary has twice renewed the APC Panel's
charter: on November 1, 2002, and on November 1, 2004. The current
charter indicates, among other requirements, that the APC Panel
continues to be technical in nature; is governed by the provisions of
the FACA; may convene up to three meetings per year; has a Designated
Federal Officer (DFO); and is chaired by a Federal official who also
serves as a CMS medical officer.
The current APC Panel membership and other information pertaining
to the Panel, including its charter, Federal Register notices, meeting
dates, agenda topics, and meeting reports can be viewed on the CMS Web
site at http://new.cms.hhs.gov/[fxsp0]FACA/05--
Advisory[fxsp0]PanelonAmbulatoryPayment[fxsp0]ClassificationGroups.asp.
3. APC Panel Meetings and Organizational Structure
The APC Panel first met on February 27, February 28, and March 1,
2001. Since that initial meeting, the APC Panel has held nine
subsequent meetings, with the last meeting taking place on March 1 and
2, 2006. (The APC Panel did not meet on March 3, 2006, as announced in
the meeting notice published on December 23, 2005 (70 FR 76313).) Prior
to each meeting, we publish a notice in the Federal Register to
announce the meeting and, when necessary, to solicit and announce
nominations for APC Panel membership.
The APC Panel has established an operational structure that, in
part, includes the use of three subcommittees to facilitate its
required APC review process. The three current subcommittees are the
Data Subcommittee, the Observation Subcommittee, and the Packaging
Subcommittee. The Data Subcommittee is responsible for studying the
data issues confronting the APC Panel and for recommending options for
resolving them. The Observation Subcommittee reviews and makes
recommendations to the APC Panel on all issues pertaining to
observation services paid under the OPPS, such as coding and
operational issues. The Packaging Subcommittee studies and makes
recommendations on issues pertaining to services that are not
separately payable under the OPPS, but are bundled or packaged APC
payments. Each of these subcommittees was established by a majority
vote of the APC Panel during a scheduled APC Panel meeting. All
subcommittee recommendations are discussed and voted upon by the full
APC Panel.
Discussions of the recommendations resulting from the APC Panel's
March 2006 meeting are included in the sections of this preamble that
are specific to each recommendation. For discussions of earlier APC
Panel meetings and recommendations, we reference previous hospital OPPS
final rules or the Web site mentioned earlier in this section.
E. Provisions of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003
The Medicare Prescription Drug, Improvement, and Modernization Act
(MMA) of 2003, Pub. L. 108-173, made changes to the Act relating to the
Medicare OPPS. In the January 6, 2004 interim final rule with comment
period and the November 15, 2004 final rule with comment period, we
implemented provisions of Pub. L. 108-173 relating to the OPPS that
were effective for services provided in CY 2004 and CY 2005,
respectively. In the November 10, 2005 final rule with comment period,
we implemented provisions of Pub. L. 108-173 relating to the OPPS that
went into effect for services provided in CY 2006 (70 FR 68521). We
note below those provisions of Pub. L. 108-173 that will expire at the
end of CY 2006.
1. Reduction in Threshold for Separate APCs for Drugs
Section 621(a)(2) of Pub. L. 108-173 amended section 1833(t)(16) of
the Act to set a $50 per administration threshold for the establishment
of separate APCs for drugs and biologicals furnished from January 1,
2005, through December 31, 2006. Because this statutory provision will
no longer be in effect for CY 2007, we have included a discussion of
the proposed methodology that we would use for the drug administration
threshold for CY 2007 in section V. of this preamble.
2. Special Payment for Brachytherapy
Section 621(b)(1) of Pub. L. 108-173 amended section 1833(t)(16) of
the Act to require that payment for brachytherapy devices consisting of
a seed or seeds (or radioactive source) furnished on or after January
1, 2004, and before January 1, 2007, be paid based on the hospital's
charge for each device furnished, adjusted to cost. Because this
statutory provision will no longer be in effect for CY 2007, we discuss
our proposed methodology for payment for brachytherapy devices for CY
2007 in section VII.B. of this preamble.
F. Provisions of the Deficit Reduction Act of 2005
The Deficit Reduction Act (DRA) of 2005, Pub. L. 109-171, enacted
on February 8, 2006, included three provisions affecting the OPPS, as
discussed below.
1. 3-Year Transition of Hold Harmless Payments
Section 5105 of Pub. L. 109-171 provides a 3-year transition of
hold harmless OPPS payments for hospitals located in a rural area with
not more than 100 beds that are not defined as sole community hospitals
(SCHs). This provision provides an increased payment for such hospitals
for covered OPD services furnished on or after January 1, 2006, and
before January 1, 2009, if the OPPS payment they receive is less than
the pre-BBA payment amount that they would have received for the same
covered OPD services. This provision specifies that, in such cases, the
amount of payment to the specified hospitals shall be increased by the
applicable percentage of such difference. Section 5105 specifies the
applicable percentage as 95 percent for CY 2006, 90 percent for CY
2007, and 85 percent for CY 2008.
2. Medicare Coverage of Ultrasound Screening for Abdominal Aortic
Aneurysms
Section 5112 of Pub. L. 109-171 amended section 1861 of the Act to
include coverage of ultrasound screening for abdominal aortic aneurysms
for certain individuals on or after January 1, 2007. The provision will
apply to individuals (a) Who receive a referral for such an ultrasound
screening as a result of an initial preventive physical examination;
(b) who have not
[[Page 49513]]
been previously furnished with an ultrasound screening under Medicare;
and (c) who have a family history of abdominal aortic aneurysm or
manifest risk factors included in a beneficiary category recommended
for screening (as determined by the United States Preventive Services
Task Force). Ultrasound screening for abdominal aortic aneurysm will be
included in the initial preventive physical examination. Section 5112
also added ultrasound screening for abdominal aortic aneurysm to the
list of services for which the beneficiary deductible does not apply.
These amendments apply to services furnished on or after January 1,
2007.
G. Summary of the Major Content of This Proposed Rule
In this proposed rule, we are setting forth proposed changes to the
Medicare hospital OPPS for CY 2007. These changes would be effective
for services furnished on or after January 1, 2007. We are setting
forth proposed changes to the Medicare ASC program for CY 2007 and CY
2008. We are setting forth proposed changes to the way we process FFS
claims under Medicare Part A and Part B. Some of these changes were
effective on October 1, 2005 and all of the changes are to be fully
implemented by October 1, 2011. Finally, we are setting forth a notice
seeking comments on the RHQDAPU program under the Medicare hospital
IPPS for FY 2008. These changes would be effective for payments
beginning with FY 2008. The following is a summary of the major changes
that we are proposing to make:
1. Proposed Updates Affecting Payments for CY 2007
In section II. of this preamble, we set forth--
The methodology used to recalibrate the proposed APC
relative payment weights and the proposed recalibration of the relative
payment weights for CY 2007.
The proposed payment for partial hospitalization,
including the proposed separate threshold for outlier payments for
CMHCs.
The proposed update to the conversion factor used to
determine payment rates under the OPPS for CY 2007.
The proposed retention of our current policy to apply the
IPPS wage indices to wage adjust the APC median costs in determining
the OPPS payment rate and the copayment standardized amount for CY
2007.
The proposed update of statewide average default cost-to-
charge ratios.
Proposed changes relating to the expiring hold harmless
payment provision.
Proposed changes to payment for rural sole community
hospitals for CY 2007.
Proposed changes in the way we calculate hospital
outpatient outlier payments for CY 2007.
Calculation of the proposed national unadjusted Medicare
OPPS payment.
The proposed beneficiary copayment for OPPS services for
CY 2007.
2. Proposed Ambulatory Payment Classification (APC) Group Policies
In section III. of this preamble, we discuss the proposed additions
of new procedure codes to the APCs; our proposal to establish a number
of new APCs; and our proposal to make changes to the assignment of
HCPCS codes under a number of existing APCs based on our analyses of
Medicare claims data and recommendations of the APC Panel. We also
discuss the application of the 2 times rule and proposed exceptions to
it; proposed changes for specific APCs; the proposed refinement of the
New Technology cost bands; and the proposed movement of procedures from
the New Technology APCs.
3. Proposed Payment Changes for Devices
In section IV. of this preamble, we discuss proposed changes to the
device-dependent APCs, and to the pass-through payment for categories
of devices.
4. Proposed Payment Changes for Drugs, Biologicals, and
Radiopharmaceuticals
In section V. of this preamble, we discuss proposed changes for
drugs, biologicals, and radiopharmaceuticals.
5. Estimate of Transitional Pass-Through Spending in CY 2007 for Drugs,
Biologicals, and Devices
In section VI. of this preamble, we discuss the proposed
methodology for estimating total pass-through spending and whether
there should be a pro rata reduction for transitional pass-through
drugs, biologicals, radiopharmaceuticals, and categories of devices for
CY 2007.
6. Proposed Brachytherapy Payment Changes
In section VII. of this preamble, we discuss our proposal
concerning coding and payment for the sources of brachytherapy.
7. Proposed Coding and Payment for Drug and Vaccine Administration
In section VIII. of this preamble, we discuss our proposed coding
and payment changes for drug and vaccine administration services.
8. Proposed Hospital Coding for Evaluation and Management (E/M)
Services
In section IX. of this preamble, we discuss our proposal for
developing the coding guidelines for evaluation and management
services.
9. Proposed Payment for Blood and Blood Products
In section X. of this preamble, we discuss our proposed payment
changes for blood and blood products.
10. Proposed Payment for Observation Services
In section XI. of this preamble, we discuss our proposed criteria
and coding changes for separately payable observation services.
11. Procedures That Will Be Paid Only as Inpatient Services
In section XII. of this preamble, we discuss the procedures that we
propose to remove from the inpatient list and assign to APCs.
12. Proposed Nonrecurring Policy Changes
In section XIII. of this preamble, we discuss proposed changes to
certain comprehensive outpatient rehabilitation facility (CORF)
services paid under the OPPS. In this section, we also discuss proposed
payment for ultrasound screening for abdominal aortic aneurysms (AAAs).
13. Emergency Medical Screening in Critical Access Hospitals (CAHs)
In section XIV. of this preamble, we discuss proposed changes to a
regulation governing emergency medical screening in critical access
hospitals (CAHs).
14. Proposed OPPS Payment Status and Comment Indicator
In section XV. of this preamble, we discuss proposed changes to the
list of status indicators assigned to APCs and present our proposed
comment indicators for the CY 2007 OPPS final rule.
15. OPPS Policy and Payment Recommendations
In section XVI. of this preamble, we address recommendations made
by MedPAC and the APC Panel regarding the OPPS for CY 2007.
[[Page 49514]]
16. Proposed Policies Affecting Ambulatory Surgical Centers (ASCs) for
CY 2007
In section XVII. of this preamble we discuss proposed payment
changes affecting ASCs in CY 2007, the proposed list of updated ASC
procedures, and proposed modification of the ASC payment adjustment
process for new technology intraocular lenses (NTIOLs).
17. Proposed Revised Ambulatory Surgical Center (ASC) Payment System
for Implementation January 1, 2008
In section XVIII. of this preamble, we discuss our proposal to
implement a new ASC payment system for services furnished on or after
January 1, 2008, and the regulatory changes related to the proposed new
system.
18. Medicare Provider Contractor Reform Mandate
In section XIX. of this preamble, we discuss proposed changes to
the regulations under 42 CFR Part 421, Subpart B to conform them to the
statutory changes required by section 911 of Public Law 108-173 related
to Medicare contracting reform.
19. Reporting Quality Data for Improved Quality and Costs Under the
OPPS
In section XX. of this preamble, we discuss the expenditure growth
in outpatient hospital services, invite comment on value-based
purchasing specifically related to hospital outpatient departments, and
discuss a value-based purchasing program proposal for the CY 2007 OPPS.
20. Promoting Effective Use of Health Information Technology
In section XXI. of this preamble, we invite comments on promoting
hospitals' effective use of health information technology.
21. Health Care Information Transparency Initiative
In section XXII. of this preamble, we discuss HHS' major health
information transparency initiative which we are launching in 2006.
22. Reporting Hospital Quality Data for Annual Payment Update Under the
IPPS
In section XXIII. of this preamble, we invite comment on our
proposal for the FY 2008 IPPS annual payment update to add the
HCAHPS[supreg] survey, measures from the Surgical Care Improvement
Project (SCIP), and Mortality measures to the quality of care measures
to be used in FY 2007 for purposes of the IPPS annual payment update.
23. Impact Analysis
In section XXVII. of this preamble, we set forth an analysis of the
impact that the proposed changes will have on affected entities and
beneficiaries.
II. Proposed Updates Affecting OPPS Payments for CY 2007
A. Proposed Recalibration of APC Relative Weights for CY 2007
(If you choose to comment on the issues in this section, please
include the caption ``APC Relative Weights'' at the beginning of your
comment.)
1. Database Construction
a. Database Source and Methodology
Section 1833(t)(9)(A) of the Act requires that the Secretary review
and revise the relative payment weights for APCs at least annually. In
the April 7, 2000 OPPS final rule with comment period (65 FR 18482), we
explained in detail how we calculated the relative payment weights that
were implemented on August 1, 2000, for each APC group. Except for some
reweighting due to a small number of APC changes, these relative
payment weights continued to be in effect for CY 2001. This policy is
discussed in the November 13, 2000 interim final rule (65 FR 67824
through 67827).
We are proposing to use the same basic methodology that we
described in the April 7, 2000 final rule with comment period to
recalibrate the APC relative payment weights for services furnished on
or after January 1, 2007, and before January 1, 2008. That is, we would
recalibrate the relative payment weights for each APC based on claims
and cost report data for outpatient services. We are proposing to use
the most recent available data to construct the database for
calculating APC group weights. For the purpose of recalibrating APC
relative payment weights in this proposed rule for CY 2007, we used
approximately 131.9 million final action claims for hospital OPD
services furnished on or after January 1, 2005, and before January 1,
2006. Of the 131.9 million final action claims for services provided in
hospital outpatient settings, 102.9 million claims were of the type of
bill potentially appropriate for use in setting rates for OPPS services
(but did not necessarily contain services payable under the OPPS). Of
the 102.9 million claims, approximately 48.5 million were not for
services paid under the OPPS or were excluded as not appropriate for
use (for example, erroneous cost-to-charge ratios or no HCPCS codes
reported on the claim). We were able to use 50.7 million whole claims
of the remaining 54.4 million claims to set the proposed OPPS APC
relative weights for CY 2007 OPPS. From the 50.7 million whole claims,
we created 91.4 million single records, of which 62.8 million were
``pseudo'' single claims (created from multiple procedure claims using
the process we discuss in this section).
The proposed APC relative weights and payments for CY 2007 in
Addenda A and B to this proposed rule were calculated using claims from
this period that had been processed before January 1, 2006. We selected
claims for services paid under the OPPS and matched these claims to the
most recent cost report filed by the individual hospitals represented
in our claims data. We are proposing that the APC relative weights for
CY 2007 continue to be based on the median hospital costs for services
in the APC groups. For the CY 2007 OPPS final rule, we are proposing to
base APC median costs on claims for services furnished in CY 2005 and
processed before June 30, 2006.
b. Proposed Use of Single and Multiple Procedure Claims
For CY 2007, we are proposing to continue to use single procedure
claims to set the medians on which the APC relative payment weights
would be based. We have received many requests asking that we ensure
that the data from claims that contain charges for multiple procedures
are included in the data from which we calculate the relative payment
weights. Requesters believe that relying solely on single procedure
claims to recalibrate APC relative payment weights fails to take into
account data for many frequently performed procedures, particularly
those commonly performed in combination with other procedures. They
believe that, by depending upon single procedure claims, we base
relative payment weights on the least costly services, thereby
introducing downward bias to the medians on which the weights are
based.
We agree that, optimally, it is desirable to use the data from as
many claims as possible to recalibrate the APC relative payment
weights, including those with multiple procedures. We generally use
single procedure claims to set the median costs for APCs because we
are, so far, unable to ensure that packaged costs can be appropriately
allocated across multiple procedures performed on the same date of
service. However, by bypassing specified codes that we believe do not
have significant packaged costs, we are able to use more data from
multiple procedure claims. In many cases, this enables us to create
multiple ``pseudo'' single claims from claims that, as submitted,
contained
[[Page 49515]]
multiple separately paid procedures on the same claim. For the CY 2007
OPPS, we are proposing to use the date of service on the claims and a
list of codes to be bypassed to create ``pseudo'' single claims from
multiple procedure claims, as we did in recalibrating the CY 2006 APC
relative payment weights. We refer to these newly created single
procedure claims as ``pseudo'' single claims because they were
submitted by providers as multiple procedure claims.
For CY 2003, we created ``pseudo'' single claims by bypassing HCPCS
codes 93005 (Electrocardiogram, tracing), 71010 (Chest x-ray), and
71020 (Chest x-ray) on a submitted claim. However, we did not use
claims data for the bypassed codes in the creation of the median costs
for the APCs to which these three codes were assigned because the level
of packaging that would have remained on the claim after we selected
the bypass code was not apparent and, therefore, it was difficult to
determine if the medians for these codes would be correct.
For CY 2004, we created ``pseudo'' single claims by bypassing these
three codes and also by bypassing an additional 269 HCPCS codes in
APCs. We selected these codes based on a clinical review of the
services and because it was presumed that these codes had only very
limited packaging and could appropriately be bypassed for the purpose
of creating ``pseudo'' single claims. The APCs to which these codes
were assigned were varied and included mammography, cardiac
rehabilitation, and Level I plain film x-rays. To derive more
``pseudo'' single claims, we also split the claims where there were
dates of service for revenue code charges on that claim that could be
matched to a single procedure code on the claim on the same date.
For the CY 2004 OPPS, as in CY 2003, we did not include the claims
data for the bypassed codes in the creation of the APCs to which the
269 codes were assigned because, again, we had not established that
such an approach was appropriate and would aid in accurately estimating
the median costs for those APCs. For CY 2004, from approximately 16.3
million otherwise unusable claims, we used approximately 9.5 million
multiple procedure claims to create approximately 27 million ``pseudo''
single claims. For CY 2005, we identified 383 bypass codes and from
approximately 24 million otherwise unusable claims, we used
approximately 18 million multiple procedure claims to create
approximately 52 million ``pseudo'' single claims. For CY 2005, we used
the claims data for the bypass codes combined with the single procedure
claims to set the median costs for the bypass codes.
For CY 2006, we continued using the codes on the CY 2005 OPPS
bypass list and expanded it to include 404 bypass codes, including 3
bladder catheterization codes (CPT codes 51701, 51702, and 51703),
which did not meet the empirical criteria discussed below for the
selection of bypass codes. We added these three codes to the CY 2006
bypass list because a decision to change their payment status from
packaged to separately paid would have resulted in a reduction of the
number of single bills on which we could base median costs for other
major separately paid procedures that were billed on the same claim
with these three procedure codes. That is, single bills which contained
other procedures would have become multiple procedure claims when these
bladder catheterization codes were converted to separately paid status.
We believed and continue to believe that bypassing these three codes
does not adversely affect the medians for other procedures because we
believe that when these services are performed on the same day as
another separately paid service, any packaging that appears on the
claim would be appropriately associated with the other procedure and
not with these codes.
Consequently, for CY 2006, we identified 404 bypass codes for use
in creating ``pseudo'' single claims and used some part of 90 percent
of the total claims that were eligible for use in OPPS ratesetting and
modeling in developing the final rule with comment period. This process
enabled us to use, for CY 2006 OPPS, 88 million single bills for
ratesetting: 55 million ``pseudo'' singles and 34 million ``natural''
single bills (bills that were submitted containing only one separately
payable major HCPCS code). (These numbers do not sum to 88 million
because more than 800,000 single bills were removed when we trimmed at
the HCPCS level at +/-3 standard deviations from the geometric mean.)
For CY 2007, we are proposing to continue using date-of-service
matching as a tool for creation of ``pseudo'' single claims and to
continue the use of a bypass list to create ``pseudo'' single claims.
The process we are proposing for CY 2007 OPPS results in our being able
to use some part of 94.8 percent of the total claims that are eligible
for use in the OPPS ratesetting and modeling in developing this
proposed rule. This process enabled us to use, for CY 2007, 62.8
million ``pseudo'' singles and 29.6 million ``natural'' single bills.
We are proposing to bypass the 454 codes identified in Table 1 to
create new single claims and to use the line-item costs associated with
the bypass codes on these claims, together with the single procedure
claims, in the creation of the median costs for the APCS into which
they are assigned. Of the codes on this list, 404 codes were used for
bypass in CY 2006. We are proposing to continue the use of the codes on
the CY 2006 OPPS bypass list and to expand it by adding codes that,
using data presented to the APC Panel at its March 2006 meeting, meet
the same empirical criteria as those used in CY 2006 to create the
bypass list, or which our clinicians believe would contain minimal
packaging if the services were correctly coded (for example, ultrasound
guidance). Our examination of the data against the criteria for
inclusion on the bypass list, as discussed below for the addition of
new codes, shows that the empirically selected codes used for bypass
for the CY 2006 OPPS generally continue to meet the criteria or come
very close to meeting the criteria, and we have received no comments
against bypassing them.
To facilitate comment, Table 1 indicates the list of codes we are
proposing to bypass for creation of ``pseudo'' singles for CY 2007
OPPS. Bypass codes shown in Table 1 with an asterisk indicate the HCPCS
codes we are proposing to add to the CY 2006 OPPS listed codes for
bypass in CY 2007. The criteria we are proposing to use to determine
the additional codes to add to the CY 2006 OPPS bypass list in order to
create the bypass list for CY 2007 OPPS are discussed below.
The following empirical criteria were developed by reviewing the
frequency and magnitude of packaging in the single claims for payable
codes other than drugs and biologicals. We assumed that the
representation of packaging on the single claims for any given code is
comparable to packaging for that code in the multiple claims:
There were 100 or more single claims for the code. This
number of single claims ensured that observed outcomes were
sufficiently representative of packaging that might occur in the
multiple claims.
Five percent or fewer of the single claims for the code
had packaged costs on that single claim for the code. This criterion
results in limiting the amount of packaging being redistributed to the
payable procedure remaining on the claim after the bypass code is
removed and ensures that the costs associated with the bypass code
represent the cost of the bypassed service.
[[Page 49516]]
The median cost of packaging observed in the single claim
was equal to or less than $50. This limits the amount of error in
redistributed costs.
The code is not a code for an unlisted service.
In addition, we are proposing to add to the bypass list codes that
our clinicians believe contain minimal packaging and codes for
specified drug administration for which hospitals have requested
separate payment but for which it is not possible to acquire median
costs unless we add these codes to the bypass list. A more complete
discussion of the effects of adding these drug administration codes to
the bypass list is contained in the discussion of drug administration
in section VIII.C. of this preamble.
We specifically invite public comment on the ``pseudo'' single
process, including the bypass list and the criteria.
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c. Proposed Revision to the Overall Cost-to-Charge Ratio (CCR)
Calculation
We calculate both an overall CCR and cost center-specific cost-to-
charge ratios (CCRs) for each hospital. For CY 2007 OPPS, we are
proposing to change the methodology for calculating the overall CCR.
The overall CCR is used in many components of the OPPS. We use the
overall CCR to estimate costs from charges on a claim when we do not
have an accurate cost center CCR. This does not happen very often. For
the vast majority of services, we are able to use a cost center CCR to
estimate costs from charges. However, we also use the overall CCR to
identify the outlier threshold, to model payments for services that are
paid at charges reduced to cost, and, during implementation, to
determine outlier payments and payments for other services.
We have discovered that the calculation of the overall CCR that the
fiscal intermediaries are using to determine outlier payment and
payment for services paid at charges reduced to cost differs from the
overall CCR that we use to model the OPPS. In Program Transmittal A-03-
04 on ``Calculating Provider-Specific Outpatient Cost-to-Charge Ratios
(CCRs) and Instructions on Cost Report Treatment of Hospital Outpatient
Services Paid on a Reasonable Cost Basis'' (January 17, 2003), we
revised the overall CCR calculation that the fiscal intermediaries use
in determining outlier and other cost payments. Until this point, each
fiscal intermediary had used an overall CCR provided by CMS, or
calculated an updated CCR at the provider's request using the same
calculation. The calculation in Program Transmittal A-03-04, that is,
the fiscal intermediary calculation, diverged from the ``traditional''
overall CCR that we used for modeling. It should be noted that the
fiscal intermediary overall CCR calculation noted in Program
Transmittal A-03-04 was created with feedback and input from the fiscal
intermediaries.
CMS' ``traditional'' calculation consists of summing the total
costs from Worksheet B, Part I (Column 27), after removing the costs
for nursing and paramedical education (Columns 21 and 24), for those
ancillary cost centers that we believe contain most OPPS services,
summing the total charges from Worksheet C, Part I (Columns 6 and 7)
for the same set of ancillary cost centers, and dividing the former by
the later. We exclude selected ancillary cost centers from our overall
CCR calculation, such as 5700 Renal Dialysis, because we believe that
the costs and charges in these cost centers are largely paid for under
other payment systems. The specific list of ancillary cost centers,
both standard and nonstandard, included in our overall CCR calculation
is available on our Web site in the revenue center-to-cost center
crosswalk workbook: http://www.cms.hhs.gov/HospitalOutpatientPPS.
The overall CCR calculation provided in Program Transmittal A-03-
04, on the other hand, takes the CCRs from Worksheet C, Part I, Column
9, for each specified ancillary cost center; multiplies them by the
Medicare Part B outpatient specific charges in each corresponding
ancillary cost center from Worksheet D, Parts V and VI (Columns 2, 3,
4, and 5 and subscripts thereof); and then divides the sum of these
costs by the sum of charges for the specified ancillary cost centers
from Worksheet D, Parts V and VI (Columns 2, 3, 4, and 5 and subscripts
thereof). Compared with our ``traditional'' overall CCR calculation
that has been used for modeling OPPS and to calculate the median costs,
this fiscal intermediary calculation of overall CCR fails to remove
allied health costs and adds weighting by Medicare Part B charges.
In comparing these two calculations, we discovered that, on
average, the overall CCR calculation being used by the fiscal
intermediary resulted in higher overall CCRs than under our
``traditional'' calculation. Using the most recent cost report data
available for every provider with valid claims for CY 2004 as of
November 2005, we estimated the median overall CCR using the
traditional calculation to be 0.3040 (mean 0.3223) and the median
overall CCR using the fiscal intermediary calculation to be 0.3309
(mean 0.3742). There also was much greater variability in the fiscal
intermediary calculation of the overall CCR. The standard deviation
under the ``traditional'' calculation was 0.1318, while the standard
deviation using the fiscal intermediary's calculation was 0.2143. In
part, the higher median estimate for the fiscal intermediary
calculation is attributable to the inclusion of allied health costs for
the over 700 hospitals with allied health programs. It is inappropriate
to include these costs in the overall CCR calculation, because CMS
already reimburses hospitals for the costs of these programs through
cost report settlement. The higher median estimate and greater
variability also is a function of the weighting by Medicare Part B
charges. Because the fiscal intermediary overall CCR calculation is
higher, on average, CMS has underestimated the outlier payment
thresholds and, therefore, overpaid outlier payments. We also have
underestimated spending for services paid at charges reduced to cost in
our budget neutrality estimates.
In examining the two different calculations, we decided that
elements of each methodology had merit. Clearly, as noted above, allied
health costs should not be included in an overall CCR calculation.
However, weighting by Medicare Part B charges from Worksheet D, Parts V
and VI, makes the overall CCR calculation more specific to OPPS.
Therefore, we are proposing to adopt a single overall CCR calculation
that incorporates weighting by Medicare Part B charges but excludes
allied health costs for modeling and payment. Specifically, the
proposed calculation removes allied health costs from cost center CCR
calculations for specified ancillary cost centers, as discussed above,
multiplies them by the Medicare Part B charges on Worksheet D, Parts V
and VI, and sums these estimated Medicare costs. This sum is then
divided by the sum of the same Medicare Part B charges for the same
specified set of ancillary cost centers.
Using the same cost report data, we estimated a median overall CCR
for the proposed calculation of 0.3081 (mean 0.3389) with a standard
deviation of 0.1583. The similarity to the median and standard
deviation of the ``traditional'' overall CCR calculation noted above
(median 0.3040 and standard deviation of 0.1318) masks some sizeable
changes in overall CCR calculations for specific hospitals due largely
to the inclusion of Medicare Part B weighting.
In order to isolate the overall impact of adopting this methodology
on APC medians, we used the first 9 months of CY 2005 claims data to
estimate APC median costs varying only the two methods of determining
overall CCR. We expected the impact to be limited because the majority
of costs are estimated using a cost center-specific CCR and not the
overall. As predicted, we observed minor changes in APC median costs
from the adoption of the proposed overall CCR calculation. We largely
observed differences of no more than 5 percent in either direction. The
median overall percent change in APC cost estimates was -0.3 percent.
We typically observe comparable changes in APC medians when we update
our cost report data. The impact of the proposed CCR calculation on the
outlier threshold is discussed further in section II. G. of this
preamble. Using updated cost report data for the calculations in this
proposed rule, we estimate a median overall CCR across all hospitals of
0.2999 using the proposed overall CCR calculation.
[[Page 49529]]
We believe that a single overall CCR calculation should be used for
all components of the OPPS for both modeling and payment. Therefore, we
are proposing to use the modified overall CCR calculation as discussed
above when the hospital-specific overall CCR is used for any of the
following calculations--in the CMS calculation of median costs for OPPS
ratesetting, in the CMS calculation of the outlier threshold, in the
fiscal intermediary calculation of outlier payments, in the CMS
calculation of statewide CCRs, in the fiscal intermediary calculation
of pass-through payments for devices, and for any other fiscal
intermediary payment calculation in which the current hospital-specific
overall CCR may be used now or in the future. If this proposal is
finalized, we would issue a Medicare program instruction to fiscal
intermediaries that would instruct them to recalculate and use the
hospital-specific overall CCR as we are proposing for these purposes.
2. Proposed Calculation of Median Costs for CY 2007
In this section of the preamble, we discuss the use of claims to
calculate the proposed OPPS payment rates for CY 2007. The hospital
outpatient prospective payment page on the CMS Web site on which this
proposed rule is posted provides an accounting of claims used in the
development of the proposed rates: http://www.cms.hhs.gov/HospitalOutpatientPPS.
The accounting of claims used in the development
of this proposed rule is included on the Web site under supplemental
materials for the CY 2007 proposed rule. That accounting provides
additional detail regarding the number of claims derived at each stage
of the process. In addition, below we discuss the files of claims that
comprise the data sets that are available for purchase under a CMS data
user contract. Our CMS Web site, http://www.cms.hhs.gov/HospitalOutpatientPPS
, includes information about purchasing the
following two OPPS data files: ``OPPS Limited Data Set'' and ``OPPS
Identifiable Data Set.''
We are proposing to use the following methodology to establish the
relative weights to be used in calculating the proposed OPPS payment
rates for CY 2007 shown in Addenda A and B to this proposed rule. This
methodology is as follows:
We used outpatient claims for the full CY 2005, processed before
January 1, 2006, to set the relative weights for this proposed rule for
CY 2007. To begin the calculation of the relative weights for CY 2007,
we pulled all claims for outpatient services furnished in CY 2005 from
the national claims history file. This is not the population of claims
paid under the OPPS, but all outpatient claims (including, for example,
CAH claims, and hospital claims for clinical laboratory services for
persons who are neither inpatients nor outpatients of the hospital).
We then excluded claims with condition codes 04, 20, 21, and 77.
These are claims that providers submitted to Medicare knowing that no
payment will be made. For example, providers submit claims with a
condition code 21 to elicit an official denial notice from Medicare and
document that a service is not covered. We then excluded claims for
services furnished in Maryland, Guam, and the U.S. Virgin Islands
because hospitals in those geographic areas are not paid under the
OPPS.
We divided the remaining claims into the three groups shown below.
Groups 2 and 3 comprise the 103 million claims that contain hospital
bill types paid under the OPPS.
1. Claims that were not bill types 12X, 13X, 14X (hospital bill
types), or 76X (CMHC bill types). Other bill types are not paid under
the OPPS and, therefore, these claims were not used to set OPPS
payment.
2. Claims that were bill types 12X, 13X, or 14X (hospital bill
types). These claims are hospital outpatient claims.
3. Claims that were bill type 76X (CMHC). (These claims are later
combined with any claims in item 2 above with a condition code 41 to
set the per diem partial hospitalization rate determined through a
separate process.)
For the CCR calculation process, we used the same general approach
as we used in developing the final APC rates for CY 2006 (70 FR 68537),
with a change to the development of the overall CCR as discussed above.
That is, we first limited the population of cost reports to only those
for hospitals that filed outpatient claims in CY 2005 before
determining whether the CCRs for such hospitals were valid.
We then calculated the CCRs at a cost center level and overall for
each hospital for which we had claims data. We did this using hospital-
specific data from the Healthcare Cost Report Information System
(HCRIS). We used the most recent available cost report data, in most
cases, cost reports for CY 2004. For this proposed rule, we used the
most recent cost report available, whether submitted or settled. If the
most recent available cost report was submitted but not settled, we
looked at the last settled cost report to determine the ratio of
submitted to settled cost using the overall CCR, and we then adjusted
the most recent available submitted but not settled cost report using
that ratio. We are proposing to use the most recently submitted cost
reports to calculate the CCRs to be used to calculate median costs for
the OPPS CY 2007 final rule. We calculated both an overall CCR and cost
center-specific CCRs for each hospital. We used the proposed overall
CCR calculation discussed in II.A.1.c. of this preamble for all
purposes.
We then flagged CAH claims, which are not paid under the OPPS, and
claims from hospitals with invalid CCRs. The latter included claims
from hospitals without a CCR; those from hospitals paid an all-
inclusive rate; those from hospitals with obviously erroneous CCRs
(greater than 90 or less than .0001); and those from hospitals with
CCRs that were identified as outliers (3 standard deviations from the
geometric mean after removing error CCRs). In addition, we trimmed the
CCRs at the cost center level by removing the CCRs for each cost center
as outliers if they exceeded +/-3 standard deviations from the
geometric mean. This is the same methodology that we used in developing
the final CY 2006 CCRs. For CY 2007, we are proposing to trim at the
departmental CCR level to eliminate aberrant CCRs that, if found in
high volume hospitals, could skew the medians. We used a four-tiered
hierarchy of cost center CCRs to match a cost center to every possible
revenue code appearing in the outpatient claims, with the top tier
being the most common cost center and the last tier being the default
CCR. If a hospital's cost center CCR was deleted by trimming, we set
the CCR for that cost center to ``missing,'' so that another cost
center CCR in the revenue center hierarchy could apply. If no other
departmental CCR could apply to the revenue code on the claim, we used
the hospital's overall CCR for the revenue code in question. For
example, a visit reported under the clinic revenue code, but the
hospital did not have a clinic cost center, we mapped the hospital-
specific overall CCR to the clinic revenue code. The hierarchy of CCRs
is available for inspection and comment at the CMS Web site: http://www.cms.hhs.gov/HospitalOutpatientPPS
.
We then converted the charges to costs on each claim by applying
the CCR that we believed was best suited to the revenue code indicated
on the line with the charge. Table 2 below contains a list of the
allowed revenue codes. Revenue codes not included in Table 2 are those
[[Page 49530]]
not allowed under the OPPS because their services cannot be paid under
the OPPS (for example, inpatient room and board charges) and, thus
charges with those revenue codes were not packaged for creation of the
OPPS median costs. One exception is the calculation of median blood
costs, as discussed in section X. of this preamble.
Thus, we applied CCRs as described above to claims with bill types
12X, 13X, or 14X, excluding all claims from CAHs and hospitals in
Maryland, Guam, and the U.S. Virgin Islands, and claims from all
hospitals for which CCRs were flagged as invalid.
We identified claims with condition code 41 as partial
hospitalization services of hospitals and moved them to another file.
These claims were combined with the 76X claims identified previously to
calculate the partial hospitalization per diem rate.
We then excluded claims without a HCPCS code. We also moved claims
for observation services to another file. We moved to another file
claims that contained nothing but flu and pneumococcal pneumonia
(``PPV'') vaccine. Influenza and PPV vaccines are paid at reasonable
cost and, therefore, these claims are not used to set OPPS rates. We
note that the two above mentioned separate files containing partial
hospitalization claims and the observation services claims are included
in the files that are available for purchase as discussed above.
We next copied line-item costs for drugs, blood, and devices (the
lines stay on the claim, but are copied off onto another file) to a
separate file. No claims were deleted when we copied these lines onto
another file. These line-items are used to calculate a per unit mean
and median and a per administration mean and median for drugs,
radiopharmaceutical agents, blood and blood products, and devices,
including but not limited to brachytherapy sources, as well as other
information used to set payment rates, including a unit to day ratio
for drugs.
We then divided the remaining claims into the following five
groups:
1. Single Major Claims: Claims with a single separately payable
procedure (that is, status indicator S, T, V, or X), all of which would
be used in median setting.
2. Multiple Major Claims: Claims with more than one separately
payable procedure (that is, status indicator S, T, V, or X), or
multiple units for one payable procedure. As discussed below, some of
these can be used in median setting.
3. Single Minor Claims: Claims with a single HCPCS code that is
packaged (that is, status indicator N) and not separately payable.
4. Multiple Minor Claims: Claims with multiple HCPCS codes that are
packaged (that is, status indicator N) and not separately payable.
5. Non-OPPS Claims: Claims that contain no services payable under
the OPPS (that is, all status indicators other than S, T, V, X, or N).
These claims are excluded from the files used for the OPPS. Non-OPPS
claims have codes paid under other fee schedules, for example, durable
medical equipment or clinical laboratory, and do not contain either a
code for a separately paid service or a code for a packaged service.
In previous years, we made a determination of whether each HCPCS
code was a major code, or a minor code, or a code other than a major or
minor code. We used those code specific determinations to sort claims
into these five identified groups. For CY 2007 OPPS, we are proposing
to use status indicators, as described above, to sort the claims into
these groups. We believe that using status indicators is an appropriate
way to sort the claims into these groups and also to make our process
more transparent to the public. We further believe that this proposed
method of sorting claims will enhance the public's ability to derive
useful information and become a more informed commenter on this
proposed rule.
We note that the claims listed in numbers 1, 2, 3, and 4 above are
included in the data files that can be purchased as described above.
We set aside the single minor, multiple minor claims and the non-
OPPS claims (numbers 3, 4, and 5 above) because we did not use these
claims in calculating median cost. We then examined the multiple major
claims for date of service to determine if we could break them into
single procedure claims using the dates of service on all lines on the
claim. If we could create claims with single major procedures by using
date of service, we created a single procedure claim record for each
separately paid procedure on a different date of service (that is, a
``pseudo'' single).
We then used the ``bypass codes'' listed in Table 1 of this
preamble and discussed in section II.A.1.b. to remove separately
payable procedures that we determined contain limited costs or no
packaged costs, or were otherwise suitable for inclusion on the bypass
list, from a multiple procedure bill. When one of the two separately
payable procedures on a multiple procedure claim was on the bypass code
list, we split the claim into two single procedure claims records. The
single procedure claim record that contained the bypass code did not
retain packaged services. The single procedure claim record that
contained the other separately payable procedure (but no bypass code)
retained the packaged revenue code charges and the packaged HCPCS
charges.
We also removed lines that contained multiple units of codes on the
bypass list and treated them as ``pseudo'' single claims by dividing
the cost for the multiple units by the number of units on the line.
Where one unit of a single separately paid procedure code remained on
the claim after removal of the multiple units of the bypass code, we
created a ``pseudo'' single claim from that residual claim record,
which retained the costs of packaged revenue codes and packaged HCPCS
codes. This enables us to use claims that would otherwise be multiple
procedure claims and could not be used. We excluded those claims that
we were not able to convert to singles even after applying all of the
techniques for creation of ``pseudo'' singles.
We then packaged the costs of packaged HCPCS codes (codes with
status indicator ``N'' listed in Addendum B to this proposed rule) and
packaged revenue codes into the cost of the single major procedure
remaining on the claim. The list of packaged revenue codes is shown
below in Table 2.
After removing claims for hospitals with error CCRs, claims without
HCPCS codes, claims for immunizations not covered under the OPPS, and
claims for services not paid under the OPPS, 97.5 million claims were
left. Of these 97.5 million claims, we were able to use some portion of
50.7 million whole claims (93.2 percent of the 54.4 million potentially
usable claims) to create the 91.4 million single and ``pseudo'' single
claims for use in the CY 2007 median payment ratesetting. Approximately
43 million claims were for services not paid under the OPPS.
We also excluded (1) Claims that had zero costs after summing all
costs on the claim and (2) claims containing payment flag 3. Effective
for services furnished on or after July 1, 2004, the Outpatient Code
Editor (OCE) assigns payment flag number 3 to claims on which hospitals
submitted token charges for a service with status indicator ``S'' or
``T'' (a major separately paid service under OPPS) for which the fiscal
intermediary is required to allocate the sum of charges for services
with a status indicator equaling ``S'' or ``T'' based on the weight for
the APC to which each code is assigned. We do not believe that these
charges, which were token charges as submitted by the
[[Page 49531]]
hospital, are valid reflections of hospital resources. Therefore, we
are proposing to delete these claims. We also deleted claims for which
the charges equal the revenue center payment (that is, the Medicare
payment) on the assumption that where the charge equals the payment, to
apply a CCR to the charge would not yield a valid estimate of relative
provider cost.
For the remaining claims, we then standardized 60 percent of the
costs of the claim (which we have previously determined to be the
labor-related portion) for geographic differences in labor input costs.
We made this adjustment by determining the wage index that applied to
the hospital that furnished the service and dividing the cost for the
separately paid HCPCS code furnished by the hospital by that wage
index. As has been our policy since the inception of the OPPS, we are
proposing to use the pre-reclassified wage indices for standardization
because we believe that they better reflect the true costs of items and
services in the area in which the hospital is located than the post-
reclassification wage indices, and would result in the most accurate
adjusted median costs.
We also excluded claims that were outside 3 standard deviations
from the geometric mean of units for each HCPCS code on the bypass list
(because, as discussed above, we used claims that contain multiple
units of the bypass codes). We then deleted 299,022 single bills
reported with modifier 50 that were assigned to APCs that contained
HCPCS codes that are considered to be conditional or independent
bilateral procedures under the OPPS and that are subject to special
payment provisions implemented through the OCE. Modifier 50 signifies
that the procedure was performed bilaterally. Although these are
apparently single claims for a separately payable service and although
there is only one unit of the code reported on the claim, the presence
of modifier 50 signifies that two services were furnished. Therefore,
costs reported on these claims are for two procedures and not for a
single procedure. Hence, we deleted these multiple procedure records,
which we would have treated as single procedure claims in prior OPPS
updates. We are seeking comments on the relative benefits of deleting
these claims versus dividing the costs for the two procedures by two to
create two ``pseudo'' single claims.
We used the remaining claims to calculate median costs for each
separately payable HCPCS code and each APC. The comparison of HCPCS and
APC medians determines the applicability of the ``2 times'' rule. As
stated previously, section 1833(t)(2) of the Act provides that, subject
to certain exceptions, the items and services within an APC group
cannot be considered comparable with respect to the use of resources if
the highest median (or mean cost, if elected by the Secretary) for an
item or service in the group is more than 2 times greater than the
lowest median cost for an item or service within the same group (``the
2 times rule''). Finally, we reviewed the medians and reassigned HCPCS
codes to different APCs as deemed appropriate. Section III.B. of this
preamble includes a discussion of the HCPCS code assignment changes
that resulted from examination of the medians and for other reasons.
The APC medians were recalculated after we reassigned the affected
HCPCS codes. Both the HCPCS medians and the APC medians were weighted
to account for the inclusion of multiple units of the bypass codes in
the creation of pseudo single bills.
A detailed discussion of the proposed medians for blood and blood
products is included in section X. of this preamble. A discussion of
the proposed medians for APCs that require one or more devices when the
service is performed is included in section IV.A. of this preamble. A
discussion of the proposed median for observation services is included
in section XI. of this preamble and a discussion of the proposed median
for partial hospitalization is included below in section II.B. of this
preamble.
BILLING CODE 4120-01-P
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[GRAPHIC] [TIFF OMITTED] TP23AU06.011
BILLING CODE 4120-01-C
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3. Proposed Calculation of Scaled OPPS Payment Weights
Using the median APC costs discussed previously, we calculated the
proposed relative payment weights for each APC for CY 2007 shown in
Addenda A and B of this proposed rule. In prior years, we scaled all
the relative payment weights to APC 0601 (Mid Level Clinic Visit)
because it is one of the most frequently performed services in the
hospital outpatient setting. We assigned APC 0601 a relative payment
weight of 1.00 and divided the median cost for each APC by the median
cost for APC 0601 to derive the relative payment weight for each APC.
For CY 2007 OPPS, we are proposing to scale all of the relative
payment weights to APC 0606 (Level III Clinic Visits) because we are
proposing to delete APC 0601 as part of the reconfiguration of the
visit APCs. We chose APC 0606 as the scaling base because under our
proposal to reconfigure the APCs where clinic visits are assigned for
CY 2007, APC 0606 is the middle level clinic visit APC (that is, Level
III of five levels). We have historically used the median cost of the
middle level clinic visit APC (that is APC 0601 through CY 2006) to
calculate unscaled weights because mid-level clinic visits are among
the most frequently performed services in the hospital outpatient
setting. Therefore, to maintain consistency in using as a median the
most frequently used services, we are proposing to continue to use the
median cost of the middle clinic level, proposed ASC 0606, to calculate
unscaled weights. Following our standard methodology, but using the
proposed CY 2007 median for APC 0606, we assigned APC 0606 a relative
payment weight of 1.00 and divided the median cost of each APC by the
median cost for APC 0606 to derive the unscaled relative payment weight
for each APC. The choice of the APC on which to base the relative
weights for all other APCs does not affect the payments made under the
OPPS because we scale the weights for budget neutrality.
Section 1833(t)(9)(B) of the Act requires that APC reclassification
and recalibration changes, wage index changes, and other adjustments be
made in a manner that assures that aggregate payments under the OPPS
for CY 2007 are neither greater than nor less than the aggregate
payments that would have been made without the changes. To comply with
this requirement concerning the APC changes, we compared aggregate
payments using the CY 2006 relative weights to aggregate payments using
the CY 2007 proposed relative payment weights. Based on this
comparison, we adjusted the relative weights for purposes of budget
neutrality. The unscaled relative payment weights were adjusted by
1.354626473 for budget neutrality. We recognize the scaler, or weight
scaling factor, for budget neutrality that we are proposing for CY 2007
is higher than any previous OPPS weight scaler as a result of our
proposal to use APC 0606 as the base for calculation of relative
weights. Our proposed use of the median cost for APC 0606 of $83.67
causes the unscaled weights to be lower than they would have been if we
had chosen APC 0605 (Level 2 Clinic Visits; median $62.12) as the
scaling base. The CY 2007 median cost of APC 0606 is significantly
higher than the CY 2006 median cost of APC 0601 for mid-level clinic
visits, which was used in CY 2006 and earlier years to calculate
unscaled weights. Historically, the median cost for APC 0601 has been
similar to the CY 2007 proposed median cost for APC 0605. In order to
appropriately scale the total weight estimated for OPPS in CY 2007 to
be similar to the total weight in OPPS for CY 2006, we calculated a
scaler of 1.354626473, which is higher using APC 0606 as the base than
it would be if we used APC 0605 as the base. In addition to adjusting
for increases and decreases in weight due the recalibration of APC
medians, the scaler also accounts for any change in the base.
The proposed relative payment weights listed in Addenda A and B of
this proposed rule incorporate the recalibration adjustments discussed
in sections II.A.1. and 2. of this preamble.
Section 1833(t)(14)(H) of the Act, as added by section 621(a)(1) of
Pub. L. 108-173, states that ``Additional expenditures resulting from
this paragraph shall not be taken into account in establishing the
conversion factor, weighting and other adjustment factors for 2004 and
2005 under paragraph (9) but shall be taken into account for subsequent
years.'' Section 1833(t)(14) of the Act provides the payment rates for
certain ``specified covered outpatient drugs.'' Therefore, the cost of
those specified covered outpatient drugs (as discussed in section V. of
this preamble) is now included in the budget neutrality calculations
for CY 2007 OPPS.
Under section 1833(t)(16)(C) of the Act, as added by section
621(b)(1) of Pub. L. 108-173, payment for devices of brachytherapy
consisting of a seed or seeds (or radioactive source) is to be made at
charges adjusted to cost for services furnished on or after January 1,
2004, and before January 1, 2007. As we stated in our January 6, 2004
interim final rule, charges for the brachytherapy sources were not used
in determining outlier payments, and payments for these items were
excluded from budget neutrality calculations for the CY 2006 OPPS. We
excluded these payments from budget neutrality calculations, in part,
because of the challenge posed by estimating hospital-specific cost
payment. For CY 2007, we are proposing a specific payment rate for
brachytherapy sources, which will be subject to scaling for budget
neutrality. (We provide a discussion of brachytherapy payment issues,
including their continued exclusion from outlier payments, under
section VII. of this preamble.) Therefore, the costs of brachytherapy
sources are accounted for in the scaler of 1.354626473.
4. Proposed Changes to Packaged Services
(If you choose to comment on the issues in this section, please
include the caption ``Packaged Services'' at the beginning of your
comment.)
Payments for packaged services under the OPPS are bundled into the
payments providers receive for separately payable services provided on
the same day. Packaged services are identified by the status indicator
``N.'' Hospitals include charges for packaged services on their claims,
and the costs associated with these packaged services are then bundled
into the costs for separately payable procedures on those same claims
in establishing payment rates for the separately payable services. This
is consistent with the principles of a prospective payment system based
upon groupings of services and in contrast to a fee schedule that
provides individual payment for each service billed. Hospitals may use
CPT codes to report any packaged services that were performed,
consistent with CPT coding guidelines.
As a result of requests from the public, a Packaging Subcommittee
to the APC Panel was established to review all the procedural CPT codes
with a status indicator of ``N.'' Providers have often suggested that
many packaged services could be provided alone, without any other
separately payable services on the claim, and requested that these
codes not be assigned status indicator ``N.'' In deciding whether to
package a service or pay for a code separately, we consider a variety
of factors, including whether the service is normally provided
separately or in conjunction with other services; how likely it is for
the costs of the packaged code to be appropriately mapped to the
separately payable codes
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with which it was performed; and whether the expected cost of the
service is relatively low.
The Packaging Subcommittee identified areas for change for some
packaged CPT codes that it believed could frequently be provided to
patients as the sole service on a given date and that required
significant hospital resources as determined from hospital claims data.
Based on the comments received, additional issues, and new data
that we shared with the Packaging Subcommittee concerning the packaging
status of codes for CY 2007, the Packaging Subcommittee reviewed the
packaging status of numerous HCPCS codes and reported its findings to
the APC Panel at its March 2006 meeting. The APC Panel accepted the
report of the Packaging Subcommittee, heard several presentations on
certain packaged services, discussed the deliberations of the Packaging
Subcommittee, and recommended that--
CMS pay separately for HCPCS code 0069T (Acoustic heart
sound recording and computer analysis only).
CMS maintain the packaged status of HCPCS code 0152T
(Computer aided detection with further physician review for
interpretation, with or without digitization of films radiographic
images; chest radiograph(s)).
CMS maintain the packaged status of CPT code 36500 (venous
catheterization for selective blood organ sampling).
CMS pay separately for CPT code 36540 (Collect blood,
venous access device) if there are no separately payable OPPS services
on the claim.
CMS pay separately for CPT code 36600 (Arterial puncture;
withdrawal of blood for diagnosis) if there are no separately payable
OPPS services on the claim.
CMS pay separately for CPT code 38792 (Sentinel node
identification) if there are no separately payable OPPS services on the
claim.
CMS maintain the packaged status of CPT codes 74328
(Endoscopic catheterization of the biliary ductal system, radiological
supervision and interpretation), 74329 (Endoscopic catheterization of
the pancreatic ductal system, radiological supervision and
interpretation), and 74330 (Combined endoscopic catheterization of the
biliary and pancreatic ductal systems, radiological supervision and
interpretation).
CMS pay separately for CPT code 75893 (Venous sampling
through catheter, with or without angiography, radiological supervision
and interpretation) if there are no separately payable OPPS services on
the claim.
CMS continue to separately pay for CPT code 76000
(Fluoroscopy, up to one hour physician time).
CMS maintain the packaged status of CPT codes 76001
(Fluoroscopy, physician time more than one hour), 76003 ((Fluoroscopic
guidance for needle placement), and 76005 (Fluoroscopic guidance and
localization of needle or catheter tip).
CMS maintain the packaged status of CPT codes 76937
(Ultrasound guidance for vascular access) and 75998 (Fluoroscopic
guidance for central venous access device placement, replacement, or
removal).
CMS provide separate payment for CPT codes 94760
(Noninvasive ear or pulse oximetry for oxygen saturation; single
determination), 94761 (Noninvasive ear or pulse oximetry for oxygen
saturation; multiple determinations), and 94762 (Noninvasive ear or
pulse oximetry for oxygen saturation by continuous overnight
monitoring) if there are no separately payable OPPS services on the
claim.
CMS pay separately for CPT code 96523 (Irrigation of
implanted venous access device) if there are no separately payable OPPS
services on the claim.
CMS maintain the packaged status of HCPCS code G0269
(Placement of occlusive device into either a venous or arterial access
site).
CMS pay separately for HCPCS code P9612 (Catheterization
for collection of specimen, single patient) if there are no separately
payable OPPS services on the claim.
CMS bring data to the next APC Panel meeting that show the
following: (a) how the costs of packaged items and services are
incorporated into the median costs of APCs and (b) how the costs of
these packaged items and services influence payments for associated
procedures.
The Packaging Subcommittee continue until the next APC
Panel meeting.
For CY 2007, we are proposing to maintain CPT code 0069T as a
packaged service and not adopt the APC Panel's recommendation to pay
separately for this code. The service uses signal processing technology
to detect, interpret, and document acoustical activities of the heart
through special sensors applied to a patient's chest. This code was a
new Category III CPT code implemented in the CY 2005 OPPS and assigned
a new interim status indicator of ``N'' in the CY 2005 OPPS final rule.
The APC Panel recommended packaging CPT code 0069T for CY 2006, and we
accepted that recommendation when we finalized the status indicator
``N'' assignment to 0069T for CY 2006. This code is indicated as an
add-on code to an electrocardiography service, according to the AMA's
CY 2006 CPT book. In its presentation to the APC Panel, the
manufacturer requested that we pay separately for CPT code 0069T and
assign it to APC 0099 (Electrocardiograms), based on its estimated cost
and clinical characteristics.
At the APC Panel meeting, the manufacturer stated that the acoustic
heart sounds recording and analysis service may be provided with or
without a separately reportable electrocardiogram. Members of the APC
Panel engaged in extensive discussion of clinical scenarios as they
considered whether CPT code 0069T could or could not be appropriately
reported alone or in conjunction with several different procedure
codes. We note that the parenthetical information following the AMA's
code descriptor indicates that CPT code 0069T is to be reported in
conjunction with CPT code 93005 (Electrocardiogram, routine ECG with at
least 12 leads; tracing only, without interpretation and report). In
addition, we do not believe that, based on its expected clinical uses
as described by the manufacturer, CPT code 0069T would ever be
performed as a sole service without other separately payable OPPS
services and payment for CPT code 0069T could always be packaged into
payments for those other services. Therefore, we believe that CPT code
0069T is appropriately packaged because it is closely linked to the
performance of an ECG, should never be reported alone, and is estimated
to require only modest hospital resources. Using CY 2005 claims, we had
only 9 single claims for CPT code 0069T, with a median line-item cost
of $1.93, consistent with its low expected cost. Packaging payment for
CPT code 0069T is consistent with the principles of a prospective
payment system that provides payments for groups of services. To the
extent that the acoustic heart sounding recording service may be more
frequently provided in the future in association with ECGs or other
OPPS services as its clinical indications evolve, we expect that its
cost would also be increasingly reflected in the median costs for those
other services, particularly ECG procedures.
For CY 2007, we are proposing to accept the APC Panel's
recommendation to maintain the packaged status of CPT code 0152T. The
service involves the application of computer algorithms and
classification technologies to chest x-ray
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images to acquire and display information regarding chest x-ray regions
that may contain indications of cancer. This code was a new Category
III CPT code implemented in the CY 2006 OPPS and assigned a new interim
status indicator of ``N'' in the CY 2006 OPPS final rule with comment
period. The code is indicated as an add-on code to chest x-ray CPT
codes, according to the AMA's CY 2006 CPT book. In its presentation to
the APC Panel, the manufacturer requested that we pay separately for
this service and assign it to a New Technology APC with a payment rate
of $15, based on its estimated cost, clinical considerations, and
similarity to other image post-processing services that are paid
separately.
Under the OPPS we make payment for medically necessary services
either separately or packaged into our payments for other services. We
agree with the APC Panel that packaged payment for diagnostic chest x-
ray computer-aided detection (CAD) under a prospective payment
methodology for outpatient hospital services is appropriate because of
the close relationship of chest x-ray CAD to chest x-ray services and
its projected modest cost. Because 0152T is a new CPT code for CY 2006,
we have no CY 2005 hospital claims data available for analysis. To the
extent that CAD may be more frequently provided in the future to aid in
the review of diagnostic chest x-rays as its clinical indications
evolve, we expect that its cost would also be increasingly reflected in
the median costs for chest x-ray procedures.
For CY 2007, we are proposing to accept the recommendation of the
APC Panel and maintain the packaged status of CPT code 36500. We note
that several providers have commented that CPT code 36500 is sometimes
billed only with its corresponding radiological supervision and
interpretation code, 75893, but with no other separately payable OPPS
services. In those cases, the provider would not receive any payment.
For CY 2006, we accepted the APC Panel's recommendation to package both
CPT codes 36500 and 75893 and to examine claims data. Our initial
review of several clinical scenarios submitted by the public seemed to
suggest that other separately payable procedures, such as venography,
would likely be billed on the same claim. Our claims data indicate that
there are usually separately payable codes that are billed on claims
with CPT codes 36500 and 75893. However, we acknowledge that these two
codes may occasionally be provided without any separately payable
procedures. In these uncommon instances, the provider historically has
not received any payment under the OPPS. We also understand that there
is a cost associated with registering a patient and providing these
services. For CY 2006, we have approximately 160 single claims for CPT
code 75893, with a median cost of $269. Based on the proposal described
below for ``special'' packaged codes, for CY 2007, when CPT codes 36500
and 75893 are billed on a claim with no separately payable OPPS
services, CPT code 75893 would become separately payable and would
receive payment for APC 0668. In this circumstance, payment for CPT
code 36500 would be packaged into the separate payment for CPT code
75893.
For CY 2007, we are proposing to accept the APC Panel's
recommendation and pay separately for CPT codes 36540, 36600, 38792,
75893, 94762, and 96523 when any of these codes appear on a claim with
no separately payable OPPS services also reported for the same date of
service. We will refer to this subset of codes as ``special'' packaged
codes. We acknowledge that there is a cost to the hospital associated
with registering and treating a patient, regardless of whether the
specific service provided requires minimal or significant hospital
resources. While we continue to believe that these ``special'' packaged
codes are almost always provided along with a separately payable
service, our claims analyses indicate that there are rare instances
when one of these services is provided without another separately
payable OPPS service on the claim for the same date of service. In
these instances, providers do not currently receive any payment.
Therefore, we are proposing to provide payment for the ``special''
packaged codes listed above when they are billed on a claim without
another separately payable OPPS service on the same date. When any of
the ``special'' packaged codes are billed with other codes that are
separately payable under the OPPS on the same date of service, the
``special'' packaged code would be treated as a packaged code, and the
cost of the packaged code would be bundled into the costs of the other
separately payable services on the claim. The payments that the
provider receives for the separately payable services would include the
bundled payment for the packaged code(s).
We have heard concerns from the public stating that they are unable
to submit claims to CMS that report only packaged codes. We note that
although these claims are processed by the OCE and are ultimately
rejected for payment, they are received by CMS, and we have cost data
for packaged services based upon these claims. However, we recognize
that the data used in our analyses to assess the frequencies with which
packaged services are provided alone and their median costs are
somewhat limited. It is possible that an unknown number of hospitals
chose not to submit claims to CMS when a packaged code(s) was provided
without other separately payable services on their claims, realizing
that they would not receive payment for those claims. While we have
been told that some hospitals may bill for a low-level visit if a
packaged service only is provided so that they receive some payment for
the encounter, we note that providers should bill a low-level visit
code in such circumstances only if the hospital provides a significant,
separately identifiable low-level visit in association with the
packaged service.
Through OCE logic, the PRICER would automatically assign payment
for a ``special'' packaged service reported on a claim if there are no
other services separately payable under the OPPS on the claim for the
same date of service. In all other circumstances, the ``special''
packaged codes would be treated as packaged services. We are proposing
to assign status indicator ``Q'' to these ``special'' packaged codes to
indicate that they are usually packaged, except for special
circumstances when they are separately payable. Through OCE logic, the
status indicator of a ``special'' packaged code would be changed either
to ``N'' or to the status indicator of the APC to which the code is
assigned for separate payment, depending upon the presence or absence
of other OPPS services also reported on the claim for the same date.
Table 3 below lists the proposed status indicators and APC assignments
for these ``special'' packaged codes when they are separately payable.
We note that the payment for these ``special'' packaged codes is
intended to make payment for all of the hospital costs, which may
include patient registration and establishment of a medical record, in
an outpatient hospital setting even when no separately payable services
are provided to the patient on that day.
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Table 3.--Proposed Status Indicators and APC Assignments for ``Special'' Packaged CPT Codes
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Proposed CY
CPT code Descriptor Proposed CY Proposed status 2007 APC
2007 APC indicator median
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36540........................... Collect blood, venous 0624 S................... $32.96
access device.
36600........................... Arterial puncture; 0035 T................... 12.45
withdrawal of blood for
diagnosis.
38792........................... Sentinel node 0389 S................... 86.92
identification.
75893........................... Venous sampling through 0668 S................... 393.35
catheter, with or
without angiography,
radiological
supervision and
interpretation.
94762........................... Noninvasive ear or pulse 0443 X................... 61.39
oximetry for oxygen
saturation by
continuous overnight
monitoring.
96523........................... Irrigation of implanted 0624 S................... 32.96
venous access device.
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In the case of a claim with two or more ``special'' packaged codes
only reported on a single date of service, the PRICER would assign
separate payment only to the ``special'' packaged code that would
receive the highest payment. The other ``special'' codes would remain
packaged and would not receive separate payment.
We will monitor and analyze the claims frequency and claims detail
for situations in which these codes are billed alone and then
separately paid. This will allow us to determine both which providers
are billing these codes most often and under what circumstances these
codes are billed. We expect that hospitals scheduling and providing
services efficiently to Medicare beneficiaries will continue to
generally provide these minor services in conjunction with other
medically necessary services.
For CY 2007, we are proposing to accept the APC Panel's
recommendation and maintain the packaged status of CPT codes 74328,
74329, and 74330. The AMA notes that these radiological supervision and
interpretation codes should be reported with procedure codes 43260-
43272. In fact, our data indicate that these supervision and
interpretation codes are billed with 43260-43272 more than 90 percent
of the time, indicating their routine use. We believe that some
providers may be concerned that although the payment for the endoscopic
procedure includes the bundled payment for the supervision and
interpretation performed by the radiology department, the payment for
the comprehensive service may be directed to the hospital department
that performed the endoscopic procedure, rather than to the radiology
department. While we understand this concern, the OPPS pays hospital
for services provided, and we believe that hospitals are responsible
for attributing payments to hospital departments as they believe
appropriate. We do not belie